FURRS RESTAURANT GROUP INC
CREDIT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>3
<FILENAME>cr-agree.txt
<DESCRIPTION>CREDIT AGREEMENT
<TEXT>
                                REVOLVING CREDIT
                                       AND
                               TERM LOAN AGREEMENT



                           Dated as of April 10, 2001



                                      among



                          FURR'S RESTAURANT GROUP, INC.
                            CAFETERIA OPERATORS, L.P.
                            CAVALCADE HOLDINGS, INC.
                              CAVALCADE FOODS, INC.
                        FURR'S/BISHOP'S CAFETERIAS, L.P.
                           CAVALCADE DEVELOPMENT, L.P.



                     THE LENDERS LISTED ON SCHEDULE 1 HERETO



                                       and



                  FLEET NATIONAL BANK, as Administrative Agent



                                      with



                       FLEET SECURITIES, INC. as Arranger



<PAGE>


                                       -v-


                                TABLE OF CONTENTS





1. DEFINITIONS AND RULES OF INTERPRETATION.....................................1
   1.1. Definitions............................................................1
   1.2. Rules of Interpretation...............................................23

2. THE REVOLVING CREDIT FACILITY..............................................24
   2.1. Commitment to Lend....................................................24
   2.2. Commitment Fee........................................................25
   2.3. Reduction of Total Revolving Commitment...............................25
   2.4. The Revolving Credit Notes............................................25
   2.5. Interest on Revolving Credit Loans....................................26
   2.6. Requests for Revolving Credit Loans...................................26
   2.7. Conversion Options....................................................27
        2.7.1 .  Conversion to Different Type of Revolving Credit Loan........27
        2.7.2 .  Continuation of Type of Revolving Credit Loan................27
        2.7.3 .  Eurodollar Rate Loans........................................27
   2.8. Funds for Revolving Credit Loan.......................................28
        2.8.1 .  Funding Procedures...........................................28
        2.8.2 .  Advances by Administrative Agent.............................28

3. REPAYMENT OF THE REVOLVING CREDIT LOANS....................................29
   3.1. Maturity..............................................................29
   3.2. Mandatory Repayments of Revolving Credit Loans........................29
   3.3. Optional Repayments of Revolving Credit Loans.........................29

4. THE TERM LOANS.............................................................30
   4.1. Commitment to Lend....................................................30
        4.1.1 .  Term Loan A..................................................30
        4.1.2 .  Term Loan B..................................................30
   4.2. The Term Notes........................................................30
        4.2.1 .  Term Loan A..................................................30
        4.2.2 .  Term Loan B..................................................30
   4.3. Scheduled Repayment of Term Loans.....................................31
        4.3.1 .  Term Loan A..................................................31
        4.3.2 .  Term Loan B..................................................32
   4.4. Prepayment of Term Loans..............................................33
        4.4.1 .  Optional Prepayments.........................................33
        4.4.2 .  Mandatory Prepayments........................................33
                 4.4.2.1.   Excess Operating Cash Flow Recapture..............33
                 4.4.2.2.   Net Cash Equity Issuance Proceeds.................34
                 4.4.2.3.   Proceeds of Certain Events........................34
                 4.4.2.4.   Application of Payments...........................35
   4.5. Interest on the Term Loans............................................35
        4.5.1 .  Term Loan A Interest Rates...................................35
        4.5.2 .  Term Loan B Interest Rates...................................36
        4.5.3 Notification by Borrowers.......................................36
        4.5.4 .  Amounts, etc.................................................36

5. LETTERS OF CREDIT..........................................................37
   5.1. Letter of Credit Commitments..........................................37
        5.1.1 .  Commitment to Issue Letters of Credit........................37
        5.1.2 .  Letter of Credit Applications................................37
        5.1.3 .  Terms of Letters of Credit...................................38
        5.1.4 .  Reimbursement Obligations of Lenders.........................38
        5.1.5 .  Participations of Lenders....................................38
   5.2. Reimbursement Obligation of the Borrowers.............................38
   5.3. Letter of Credit Payments.............................................39
   5.4. Obligations Absolute..................................................40
   5.5. Reliance by Issuer....................................................41
   5.6. Letter of Credit Fee..................................................41

6. CERTAIN GENERAL PROVISIONS.................................................41
   6.1. Fees..................................................................41
   6.2. Funds for Payments....................................................41
        6.2.1 .  Payments to Administrative Agent.............................42
        6.2.2 .  No Offset, etc...............................................42
   6.3. Computations..........................................................42
   6.4. Inability to Determine Eurodollar Rate................................42
   6.5. Illegality............................................................43
   6.6. Additional Costs, etc.................................................43
   6.7. Capital Adequacy......................................................45
   6.8. Certificate...........................................................45
   6.9. Indemnity.............................................................45
   6.10. Interest After Default...............................................45
        6.10.1 .  Overdue Amounts.............................................46
        6.10.2 .  Amounts Not Overdue.........................................46
   6.11. Concerning Joint and Several Liability of the Borrowers..............46
   6.12. Furr's as Agent for other Borrowers..................................49

7. COLLATERAL SECURITY........................................................50
   7.1. Security of Borrowers.................................................50
   7.2. Collateral Notes......................................................50

8. REPRESENTATIONS AND WARRANTIES.............................................50
   8.1. Corporate Authority...................................................50
        8.1.1 .  Incorporation; Good Standing.................................50
        8.1.2 .  Authorization................................................50
        8.1.3 .  Enforceability...............................................51
   8.2. Governmental Approvals................................................51
   8.3. Title to Properties; Leases...........................................51
   8.4. Financial Statements and Projections..................................51
        8.4.1 .  Fiscal Year..................................................51
        8.4.2 .  Financial Statements.........................................51
        8.4.3 .  Pro Forma Balance Sheet and Projections......................52
   8.5. No Material Adverse Changes, etc......................................52
   8.6. Laws, Licenses; Franchises, Patents, Copyrights, etc..................52
        8.6.1 .  Laws, Licenses...............................................52
        8.6.2 .  Franchises, Patents, Copyrights, etc.........................53
   8.7. Litigation............................................................53
   8.8. No Materially Adverse Contracts, etc..................................53
   8.9. Compliance with Other Instruments, Laws, etc..........................53
   8.10. Tax Status...........................................................53
   8.11. No Event of Default..................................................54
   8.12. Holding Company and Investment Company Acts..........................54
   8.13. Absence of Financing Statements, etc.................................54
   8.14. Perfection of Security Interest......................................54
   8.15. Certain Transactions.................................................54
   8.16. Employee Benefit Plans...............................................55
        8.16.1 .  In General..................................................55
        8.16.2 .  Terminability of Welfare Plans..............................55
        8.16.3 .  Guaranteed Pension Plans....................................55
        8.16.4 .  Multiemployer Plans.........................................56
   8.17. Use of Proceeds......................................................56
        8.17.1 .  General.....................................................56
        8.17.2 .  Regulations U and X.........................................56
        8.17.3 .  Ineligible Securities.......................................56
   8.18. Environmental Compliance.............................................56
   8.19. Subsidiaries, etc....................................................58
   8.20. Bank Accounts........................................................58
   8.21. Disclosure...........................................................58
   8.22. Leases...............................................................58
   8.23. Solvency.............................................................59
   8.24. Units................................................................59
   8.25. Franchise Agreements.................................................59

9. AFFIRMATIVE COVENANTS......................................................59
   9.1. Punctual Payment......................................................59
   9.2. Maintenance of Office.................................................60
   9.3. Records and Accounts..................................................60
   9.4. Financial Statements, Certificates and Information....................60
   9.5. Notices...............................................................62
           9.5.1 .  Defaults..................................................62
           9.5.2 .  Environmental Events......................................62
           9.5.3 .  Notification of Claim against Collateral..................62
           9.5.4 .  Notice of Litigation and Judgments........................62
           9.5.5 .  Notice and Delivery of Franchise Agreements and New Units.63
   9.6. Legal Existence; Maintenance of Properties............................63
   9.7. Insurance.............................................................64
        9.7.1 .  Required Insurance...........................................64
        9.7.2 .  Insurance Proceeds...........................................64
        9.7.3 .  Notice of Cancellation.......................................65
   9.8. Taxes.................................................................65
   9.9. Inspection of Properties and Books, Environmental Audits, etc.........65
        9.9.1 .  General......................................................65
        9.9.2 .  Environmental Assessments....................................66
        9.9.3 .  Communications with Accountants..............................66
        9.9.4 .  Environmental Monitoring.....................................67
   9.10. Compliance with Laws, Contracts, Licenses, and Permits...............67
   9.11. Employee Benefit Plans...............................................67
   9.12. Use of Proceeds......................................................67
   9.13. Additional Mortgaged Property; Notice of Leases; Surveys and Title
              Insurance.......................................................67
   9.14. Bank Accounts........................................................68
   9.15. Interest Rate Protection.............................................69
   9.16. Conduct of Business; Stores..........................................69
   9.17. New Subsidiaries.....................................................69
   9.18. Further Assurances...................................................69

10. CERTAIN NEGATIVE COVENANTS................................................70
   10.1. Restrictions on Indebtedness.........................................70
   10.2. Restrictions on Liens................................................70
        10.2.1 .  Permitted Liens.............................................70
        10.2.2 .  Restrictions on Negative Pledges and Upstream Limitations...72
   10.3. Restrictions on Investments..........................................73
   10.4. Restricted Payments..................................................73
   10.5. Merger, Consolidation, Disposition of Assets and Acquisitions........74
        10.5.1 .  Mergers and Consolidations..................................74
        10.5.2 .  Disposition of Assets.......................................74
        10.5.3 .  Acquisitions................................................74
   10.6. Sale and Leaseback...................................................75
   10.7. Compliance with Environmental Laws...................................76
   10.8. Employee Benefit Plans...............................................76
   10.9. Fiscal Year..........................................................77
   10.10. Transactions with Affiliates........................................77
   10.11. Bank Accounts.......................................................77
   10.12. Maximum Number of Unprofitable Units................................77

11. FINANCIAL COVENANTS.......................................................77
   11.1. Leverage Ratio.......................................................77
   11.2. Cash Flow............................................................78
   11.3. EBITDAR to Interest and Rental.......................................78
   11.4. Minimum EBITDA.......................................................78
   11.5. Capital Expenditures.................................................79

12. CLOSING CONDITIONS........................................................79
   12.1. Loan Documents.......................................................79
   12.2. Certified Copies of Governing Documents and Indenture................79
   12.3. Corporate or Other Action............................................80
   12.4. Incumbency Certificate...............................................80
   12.5. Validity of Liens....................................................80
   12.6. Perfection Certificates and UCC Search Results.......................80
   12.7. Survey and Taxes.....................................................80
   12.8. Title Insurance......................................................80
   12.9. Landlord Consents....................................................81
   12.10. Environmental Assessments...........................................81
   12.11. Certificates of Insurance...........................................81
   12.12. Agency Account Agreements...........................................81
   12.13. Solvency Certificate................................................81
   12.14. Opinion of Counsel..................................................81
   12.15. Payment of Fees.....................................................81
   12.16. Payoff Letters......................................................82
   12.17. Disbursement Instructions...........................................82
   12.18. No Material Adverse Change..........................................82
   12.19. Financial Statements and Projections; Sources and Uses of Funds.....83
   12.20. No Litigation.......................................................83
   12.21. Real Estate Appraisals..............................................83
   12.22. Leverage Ratio......................................................83
   12.23. Pro Forma EBITDA....................................................83
   12.24. Absence of Default under other Agreements...........................83
   12.25. Maximum Revolving Credit Loans......................................83
   12.26. Other Documentation.................................................83

13. CONDITIONS TO ALL BORROWINGS..............................................84
   13.1. Representations True; No Event of Default............................84
   13.2. No Legal Impediment..................................................84
   13.3. Proceedings and Documents............................................84
   13.4. Governmental Regulation..............................................84

14. EVENTS OF DEFAULT; ACCELERATION; ETC......................................84
   14.1. Events of Default and Acceleration...................................84
   14.2. Termination of Commitments...........................................88
   14.3. Remedies.............................................................88
   14.4. Distribution of Collateral Proceeds..................................89

15. THE ADMINISTRATIVE AGENT..................................................89
   15.1. Authorization........................................................89
   15.2. Employees and Administrative Agents..................................90
   15.3. No Liability.........................................................90
   15.4. No Representations...................................................91
        15.4.1 General........................................................91
        15.4.2 .  Closing Documentation, etc..................................91
   15.5. Payments.............................................................91
        15.5.1 .  Payments to Administrative Agent............................91
        15.5.2 .  Distribution by Administrative Agent........................92
        15.5.3 .  Delinquent Lenders..........................................92
   15.6. Holders of Notes.....................................................92
   15.7. Indemnity............................................................93
   15.8. Administrative Agent as Lender.......................................93
   15.9. Resignation..........................................................93
   15.10. Notification of Defaults and Events of Default......................93
   15.11. Duties in the Case of Enforcement...................................94

16. ASSIGNMENT AND PARTICIPATION..............................................94
   16.1. Conditions to Assignment by Lenders..................................94
   16.2. Certain Representations and Warranties; Limitations; Covenants.......95
   16.3. Register.............................................................96
   16.4. New Notes............................................................96
   16.5. Participations.......................................................97
   16.6. Assignee or Participant Affiliated with the Borrowers................97
   16.7. Miscellaneous Assignment Provisions..................................98
   16.8. Assignment by Borrower...............................................98
   16.9. Syndication..........................................................98

17. PROVISIONS OF GENERAL APPLICATIONS........................................98
   17.1. Setoff...............................................................98
   17.2. Expenses.............................................................99
   17.3. Indemnification.....................................................100
   17.4. Treatment of Certain Confidential Information.......................101
        17.4.1 .  Confidentiality............................................101
        17.4.2 .  Prior Notification.........................................102
        17.4.3 .  Other......................................................102
   17.5. Survival of Covenants, Etc..........................................102
   17.6. Notices.............................................................102
   17.7. Governing Law.......................................................103
   17.8. Headings............................................................104
   17.9. Counterparts........................................................104
   17.10. Entire Agreement, Etc..............................................104
   17.11. Waiver of Jury Trial...............................................104
   17.12. Consents, Amendments, Waivers, Etc.................................104
   17.13. Severability.......................................................106
   17.14. Usury..............................................................106




<PAGE>


                                    EXHIBITS


EXHIBIT A.........         Form of Revolving Credit Note

EXHIBIT B.........         Form of Loan Request

EXHIBIT C.........         Form of Term A Note

EXHIBIT D.........         Form of Term B Note

EXHIBIT E.........         Form of Compliance Certificate

EXHIBIT F.........         Form of Assignment and Acceptance

EXHIBIT G.........         Form of Agency Account Agreement

EXHIBIT H.........         MFG Consulting Scientists and Engineers Letter



                                    SCHEDULES

SCHEDULE 1........         Lenders and Commitments

SCHEDULE 1.1......         Mortgaged Properties

SCHEDULE 8.3......         Title to Properties; Leases

SCHEDULE 8.4.1....         Quarter-End Dates

SCHEDULE 8.7......         Litigation

SCHEDULE 8.18.....         Environmental Compliance

SCHEDULE 8.19.....         Subsidiaries Etc.

SCHEDULE 8.20.....         Bank Accounts

SCHEDULE 8.25.....         Names and Locations of Units

SCHEDULE 10.1.....         Existing Indebtedness

SCHEDULE 10.2.....         Existing Liens

SCHEDULE 10.3.....         Existing Investments

SCHEDULE 12.9.....         Landlord Consents








<PAGE>








                                REVOLVING CREDIT
                                       AND
                               TERM LOAN AGREEMENT

     This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of April 10, 2001,
by and among FURR'S RESTAURANT GROUP,  INC., a Delaware  corporation,  CAFETERIA
OPERATORS,  L.P., a Delaware limited  partnership,  CAVALCADE HOLDINGS,  INC., a
Texas   corporation,    CAVALCADE   FOODS,   INC.,   a   Delaware   corporation,
FURR'S/BISHOP'S  CAFETERIAS,  L.P., a Delaware  limited  partnership,  CAVALCADE
DEVELOPMENT,  L.P.,  a  Delaware  limited  partnership,  and  each of the  other
Subsidiaries of Furr's (other than PBN Beverage,  Inc.) which shall from time to
time hereafter  become a party hereto pursuant to ss.9.17 hereof  (collectively,
the  "BORROWERS"),  FLEET NATIONAL BANK, a national banking  association and the
other  lending  institutions  listed on  SCHEDULE 1 and FLEET  NATIONAL  BANK as
administrative agent for itself and such other lending institutions.

1. DEFINITIONS AND RULES OF INTERPRETATION.

     1.1. DEFINITIONS.  The following terms shall have the meanings set forth in
this ss.1 or elsewhere in the  provisions of this Credit  Agreement  referred to
below:

     ADJUSTMENT DATE. The first day of the month immediately following the month
in which a Compliance  Certificate is to be delivered by the Borrowers  pursuant
to ss.9.4(e).

     ADMINISTRATIVE AGENT'S OFFICE. The Administrative Agent's office located at
100 Federal Street,  Boston,  Massachusetts  02110, or at such other location as
the Administrative Agent may designate from time to time.

     ADMINISTRATIVE  AGENT. Fleet National Bank, acting as administrative  agent
for the Lenders and each other Person appointed as the successor  Administrative
Agent in accordance with ss.15.9.

     ADMINISTRATIVE  AGENT'S  SPECIAL  COUNSEL.  Bingham  Dana LLP or such other
counsel as may be approved by the Administrative Agent.

     AFFILIATE. Any Person that would be considered to be an affiliate of any of
the Borrowers  under Rule 144(a) of the Rules and  Regulations of the Securities
and Exchange Commission,  as in effect on the date hereof, if such Borrower were
issuing securities.

     AGENCY ACCOUNT(S). See ss.9.14.


     AGENCY ACCOUNT AGREEMENT(S). See ss.9.14.

                                      -2-

     APPLICABLE  EXCESS  CASH FLOW  PERCENTAGE.  With  respect to any  mandatory
prepayment  from   Consolidated   Excess  Operating  Cash  Flow  required  under
ss.4.4.2.1, if the Leverage Ratio of the Borrowers and their Subsidiaries (a) as
of the last day of the fiscal year with respect to which such  prepayment  is to
be  calculated  and (b) as of the last  day of the  fiscal  quarter  immediately
following  the  fiscal  year with  respect  to which  such  prepayment  is to be
calculated is (i) less than or equal to 1.50 to 1.00, the applicable Excess Cash
Flow  Percentage  shall be 0%, (ii)  greater  than 1.50 to 1.00 but less than or
equal to 2.00 to 1.00, the applicable  Excess Cash Flow Percentage shall be 50%,
and (iii) greater than 2.00 to 1.00, the Applicable  Excess Cash Flow Percentage
shall be 75%, PROVIDED, that if the applicable Excess Cash Flow Percentage which
would be applicable if reference  were made only to the Leverage Ratio as of the
last day of such fiscal year is different from the  Applicable  Excess Cash Flow
Percentage which would be applicable if reference were made only to the Leverage
Ratio determined as of the last day of the fiscal quarter immediately  following
such fiscal year, the higher percentage shall apply.

     APPLICABLE MARGIN. For each period commencing on an Adjustment Date through
the date immediately preceding the next Adjustment Date (each a "RATE ADJUSTMENT
PERIOD"),  the Applicable  Margin for the Revolving Credit Loans and Term Loan A
(in each  case,  for Base Rate  Loans and  Eurodollar  Rate  Loans)  and for the
Letters  of Credit  shall be the  percentage  set forth  below  across  from the
Leverage Ratio  calculated  for the Reference  Period of the Borrowers and their
Subsidiaries  ending on the last day of the  fiscal  quarter  ended  immediately
prior to the applicable Rate Adjustment Period.

<TABLE>
<CAPTION>
---------------- ------------------------ ------------------ ----------------- ----------------------------

<S>              <C>                      <C>                <C>               <C>
                        Leverage           Base Rate Loans   Eurodollar Rate            Letter of
     Level                Ratio                                   Loans                Credit Fees
---------------- ------------------------ ------------------ ----------------- ----------------------------
---------------- ------------------------ ------------------ ----------------- ----------------------------
       I         Less than 1.00:1.00            1.25%             2.75%                   2.75%
---------------- ------------------------ ------------------ ----------------- ----------------------------
---------------- ------------------------ ------------------ ----------------- ----------------------------
      II         Less than 1.50:1.00
                 but greater than or            1.50%             3.00%                   3.00%
                 equal to 1.00:1.00
---------------- ------------------------ ------------------ ----------------- ----------------------------
---------------- ------------------------ ------------------ ----------------- ----------------------------
      III        Less than 2.00:1.00
                 but greater than or            1.75%             3.25%                   3.25%
                 equal to 1.50:1.00
---------------- ------------------------ ------------------ ----------------- ----------------------------
---------------- ------------------------ ------------------ ----------------- ----------------------------
      IV         Greater than or equal
                 to 2.00:1.00                   2.00%             3.50%                   3.50%
---------------- ------------------------ ------------------ ----------------- ----------------------------
</TABLE>

     Notwithstanding  the  foregoing,  (a) during the period  commencing  on the
Closing Date through the date immediately preceding the first Adjustment Date to

                                      -3-

occur after the fiscal quarter ending September 30, 2001, the Applicable  Margin
shall be the  Applicable  Margin  set  forth in Level IV  above,  and (b) if the
Borrowers  fail to deliver any  Compliance  Certificate  pursuant  to  ss.9.4(e)
hereof then,  for the period  commencing  on the next  Adjustment  Date to occur
subsequent to such failure  through the date  immediately  following the date on
which such Compliance  Certificate is delivered,  the Applicable Margin shall be
the highest Applicable Margin set forth above.

     ARRANGER.  Fleet Securities,  Inc. in its capacity as exclusive syndication
agent and arranger for the credit facilities provided hereunder.

     ASSET SALE. Any one or series of related transactions in which any Borrower
or any of their  Subsidiaries  conveys,  sells,  leases,  licenses or  otherwise
disposes of, directly or indirectly, any of its properties, businesses or assets
(including the sale or issuance of capital stock of any Subsidiary other than to
a  Borrower  or any  Subsidiary  of a  Borrower  or the sale,  closure  or other
disposition  of any  Unprofitable  Unit)  whether  owned on the Closing  Date or
thereafter acquired.

     ASSIGNMENT AND ACCEPTANCE. See ss.16.1.


     BALANCE SHEET DATE. January 2, 2001.

     BASE RATE.  The  higher of (a) the  variable  annual  rate of  interest  so
designated  from time to time by Fleet as its  "prime  rate",  such rate being a
reference rate and not  necessarily  representing  the lowest or best rate being
charged to any  customer,  and (b)  one-half  of one  percent  (0.5%)  above the
Federal Funds  Effective  Rate.  For the purposes of this  definition,  "FEDERAL
FUNDS  EFFECTIVE  RATE" shall mean for any day,  the rate per annum 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,  as
published  for such day (or,  if such day is not a  Business  Day,  for the next
preceding  Business  Day) by the Federal  Reserve Bank of New York,  or, if such
rate is not so published  for any day that is a Business Day, the average of the
quotations  for such day on such  transactions  received  by the  Administrative
Agent  from  three  funds  brokers  of  recognized   standing  selected  by  the
Administrative  Agent.  Changes in the Base Rate  resulting  from any changes in
Fleet's  "PRIME RATE" shall take place  immediately  without notice or demand of
any kind.

     BASE RATE LOANS.  Revolving  Credit  Loans and all or any portion of a Term
Loan bearing interest calculated by reference to the Base Rate.

     BISHOP'S. Furr's/Bishop's Cafeterias, L.P., a Delaware limited partnership.

     BORROWER(S). As defined in the preamble hereto.

                                      -4-

     BUSINESS   DAY.  Any  day  on  which   banking   institutions   in  Boston,
Massachusetts, are open for the transaction of banking business and, in the case
of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.

     CAFETERIA  OPERATORS.   Cafeteria  Operators,   L.P.,  a  Delaware  limited
partnership.

     CAPITAL  ASSETS.  Fixed  assets,  both tangible  (such as land,  buildings,
fixtures,  machinery and equipment) and intangible (such as patents, copyrights,
trademarks,  franchises  and good will);  PROVIDED that Capital Assets shall not
include any item  customarily  charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.

     CAPITAL  EXPENDITURES.   Amounts  paid  or  Indebtedness  incurred  by  the
Borrowers or any of their  Subsidiaries  in connection  with (a) the purchase or
lease by any Borrower or any of their  Subsidiaries of Capital Assets that would
be required to be  capitalized  and shown on the balance sheet of such Person in
accordance  with GAAP, (b) Growth Capital  Expenditures  or (c) the lease of any
assets by any Borrower or any of its  Subsidiaries as lessee under any Synthetic
Lease to the extent  that such  assets  would have been  Capital  Assets had the
Synthetic Lease been treated for accounting purposes as a Capitalized Lease.

     CAPITALIZED  LEASES.  Leases  under  which  any  Borrower  or any of  their
Subsidiaries  is the lessee or obligor,  the  discounted  future rental  payment
obligations  under which are required to be  capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.

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

     CASH FLOW RATIO.  For any Reference  Period,  the ratio of (a) Consolidated
Cash Flow for such period to (b)  Consolidated  Financial  Obligations  for such
period.

     CASUALTY  EVENT.  With respect to any property  (including  any interest in
property) of any Borrower or any of their Subsidiaries,  any loss of, damage to,
or  condemnation  or other taking of, such  property for which such  Borrower or
such Subsidiary receives insurance proceeds, proceeds of a condemnation award or
other compensation.

     CAVALCADE  PENSION  PLAN.  Cavalcade  Employees'  Pension  Plan  and  Trust
established  effective January 1, 1987 and as amended and in effect from time to
time thereafter.

     CERCLA. See ss.8.18(a).

                                      -5-

     CHANGE OF CONTROL.  An event or series of events by which at any time:  (a)
Furr's shall legally or beneficially own less than (i) 100% of the shares of the
Capital Stock of Cavalcade  Holdings,  Inc., (ii) 97.6% of the shares of Capital
Stock of Cavalcade  Foods,  Inc.,  and (iii) 99.76% of the shares of the Capital
Stock of each Borrower,  as adjusted pursuant to any stock split, stock dividend
or recapitalization or reclassification of the capital of such Borrower; (b) any
person or group of  persons  (within  the  meaning  of  Section  13 or 14 of the
Securities  Exchange Act of 1934) other than a shareholder  owning 5% or more of
the  outstanding  shares of Capital  Stock of Furr's on the date of this  Credit
Agreement shall have acquired  beneficial  ownership (within the meaning of Rule
13d-3  promulgated by the Securities  and Exchange  Commission  under said Act),
directly OR indirectly, of fifty percent (50%) or more of the outstanding shares
of  Capital  Stock of Furr's;  or,  (c) during any period of twelve  consecutive
calendar  months,  individuals  who were directors of Furr's on the first day of
such period  shall cease to  constitute  a majority of the board of directors of
Furr's,   and  in  each  such  case,  such  change  is  not  acceptable  to  the
Administrative Agent in its reasonable judgment.

     CLOSING  DATE.  The first date on which the  conditions  set forth in ss.12
have been satisfied and any Revolving  Credit Loans and the Term Loans are to be
made or any Letter of Credit is to be issued hereunder.

     CODE. The Internal Revenue Code of 1986.

     COLLATERAL.  All of the property, rights and interests of the Borrowers and
their  Subsidiaries  that are or are intended to be subject to the Liens created
by the Security Documents.

     COLLATERAL NOTES. See ss.7.2.

     COMMITMENT FEE. See ss.2.2.

     COMPLIANCE CERTIFICATE. See ss.9.4(e).

     CONSOLIDATED  OR  CONSOLIDATED.  With reference to any term defined herein,
shall mean that term as  applied  to the  accounts  of the  Borrowers  and their
Subsidiaries, consolidated in accordance with GAAP.

     CONSOLIDATED  CASH FLOW.  For any period,  an amount equal to  Consolidated
EBITDA for such period,  MINUS the sum of (a) cash income taxes paid during such
period by the Borrowers and their Subsidiaries on a consolidated  basis, (b) the
aggregate  amount  of  Capital  Expenditures  made by the  Borrowers  and  their
Subsidiaries  during such  period and (c) to the extent not already  deducted in
the calculation of Consolidated Pre-Tax Income and without duplication, any cash
payments in respect of the  Cavalcade  Pension  Plan that are made by any of the
Borrowers during such period.

     CONSOLIDATED  EBITDA. With respect to any fiscal period, an amount equal to
the  sum  of  (a)  Consolidated  Pre-Tax  Income  of  the  Borrowers  and  their

                                      -6-

Subsidiaries  for  such  fiscal  period,  PLUS  (b) in each  case to the  extent
deducted in the  calculation  of such Person's  Consolidated  Pre-Tax Income for
such period and without duplication,  (i) depreciation and amortization for such
period,  PLUS (ii)  Consolidated  Restaurant  Pre-Opening Costs for such period,
PLUS (iii)  Consolidated  Total  Interest  Expense  paid or accrued  during such
period,  PLUS (iv) other  noncash  charges for such period,  LESS (c) the extent
included in the  calculation  of such Person's  Consolidated  Pre-Tax Income for
such  period  and  without  duplication,  noncash or  unrealized  gains for such
period, all as determined in accordance with GAAP.

     CONSOLIDATED EBITDAR. For any period, the sum of (a) Consolidated EBITDA of
the  Borrowers and their  Subsidiaries  for such period,  PLUS (b)  Consolidated
Rental Expense for such period.

     CONSOLIDATED  EXCESS OPERATING CASH FLOW. With respect to the Borrowers and
their  Subsidiaries and any particular period, an amount equal to the difference
between (a) the sum of (i)  Consolidated  Pre-Tax  Income for such period,  PLUS
(ii) to the extent deducted in calculating  Consolidated Pre-Tax Income for such
period,  depreciation and amortization for such period, MINUS (b) the sum of (i)
the  aggregate  amount  of  Capital  Expenditures  of the  Borrowers  and  their
Subsidiaries permitted pursuant to ss.11.5 made during such period to the extent
that  such  Capital   Expenditures  were  not  financed  by  the  incurrence  of
Indebtedness (including Revolving Credit Loans borrowed hereunder), (ii) without
duplication, cash income taxes paid during such period, (iii) required principal
repayments  during  such  period  on  Indebtedness  of the  Borrowers  and their
Subsidiaries  (including  mandatory  prepayments required pursuant to ss.3.2 and
ss.4.4.2),  (iv) any voluntary  prepayment of the Term Loans during such period,
(v)  the  amount  of  any  Permitted   Acquisitions  in  excess  of  the  amount
contemporaneously  financed by Permitted Indebtedness and (vi) to the extent not
already  deducted in the calculation of Consolidated  Pre-Tax Income and without
duplication,  cash payments  required to be made to the Cavalcade  Pension Plan,
and actually made, during such period; PROVIDED that such amount does not exceed
the amount which the Cavalcade Pension Plan actuary recommends that the Borrower
pay to the Cavalcade Pension Plan in respect of such period.

     CONSOLIDATED FINANCIAL OBLIGATIONS. With respect to the Borrowers and their
Subsidiaries  and  for  any  period,  the  sum,  without  duplication,   of  (a)
Consolidated  Total  Interest  Expense  for  such  period  PLUS  (b) any and all
scheduled  repayments of principal during such period in respect of Indebtedness
that  becomes due and payable or that are to become due and payable  during such
period  pursuant to any  agreement or instrument to which any Borrower or any of
their  Subsidiaries is a party  (including in respect of any Synthetic Leases or
any  Capitalized  Leases).  Demand  obligations  shall be  deemed  to be due and
payable during any fiscal period during which such obligations are outstanding.

     CONSOLIDATED FUNDED  INDEBTEDNESS.  With respect to the Borrowers and their
Subsidiaries,  the sum,  without  duplication,  of (a) the  aggregate  amount of

                                      -7-

Indebtedness of the Borrowers and their  Subsidiaries,  on a consolidated basis,
relating to (i) the  borrowing of money (but not including  Indebtedness  of the
type  described  in  clause  (i) of the  definition  of  "Indebtedness")  or the
obtaining of credit,  including the issuance of notes or bonds, or in respect of
any Synthetic Leases or any Capitalized Leases, (ii) the deferred purchase price
of  assets  (other  than  trade  payables  incurred  in the  ordinary  course of
business),  and (iii)  the  maximum  drawing  amount  of all  letters  of credit
outstanding  PLUS (b)  Indebtedness  of the type  referred  to in clause  (a) of
another Person guaranteed by any Borrower or any of their Subsidiaries.

     CONSOLIDATED NET INCOME (OR DEFICIT).  For any period, the consolidated net
income (or deficit) of the  Borrowers  and their  Subsidiaries  for such period,
after deduction of all expenses, taxes, and other proper charges attributable to
such period, determined in accordance with GAAP, after eliminating therefrom all
extraordinary and nonrecurring items of income.

     CONSOLIDATED  PRE-TAX INCOME.  For any period,  Consolidated Net Income for
such period,  PLUS to the extent deducted in the calculation of Consolidated Net
Income, income tax paid or payable during such period,  determined in accordance
with GAAP.

     CONSOLIDATED  RENTAL  EXPENSE.  For any period,  all rental  expense of the
Borrowers  and  their   Subsidiaries   during  such  period,   determined  on  a
consolidated basis in accordance with GAAP, incurred under any rental agreements
or leases of real or  personal  property,  including  space  leases  and  ground
leases,  other than  obligations  in respect  of any  Capitalized  Leases or any
Synthetic Lease.

     CONSOLIDATED RESTAURANT PRE-OPENING COSTS. "Start-up costs" (such term used
herein as defined in SOP 98-5  published by the American  Institute of Certified
Public  Accountants)  related to the acquisition,  opening and organizing of new
Units,  such  costs  including,  without  limitation,  the  cost of  feasibility
studies,  staff-training,  and recruiting and travel costs for employees engaged
in such start-up activities.

     CONSOLIDATED  TOTAL INTEREST EXPENSE.  For any period, the aggregate amount
of  interest  required  to be  paid  or  accrued  by  the  Borrowers  and  their
Subsidiaries on a consolidated  basis during such period on all  Indebtedness of
the Borrowers and their Subsidiaries  outstanding during all or any part of such
period,  whether such  interest was or is required to be reflected as an item of
expense or capitalized, including (a) payments consisting of interest in respect
of any Capitalized  Lease or any Synthetic  Lease,  (b) net payments made during
such period by the  Borrowers  or their  Subsidiaries  under any  Interest  Rate
Agreement or other similar arrangement  designed to protect the Borrowers and/or
their  Subsidiaries  against  fluctuations in interest rates, and (c) commitment
fees, agency fees,  facility fees,  balance  deficiency fees and similar fees or
expenses in connection  with the borrowing of money (but not including  one-time
non-recurring fees payable to the Administrative Agent and/or the Lenders on the
Closing Date in  connection  with the closing of the  transactions  contemplated

                                      -8-

hereby);  PROVIDED that Consolidated  Total Interest Expense shall be reduced by
net  payments  receivable  by the  Borrowers or their  Subsidiaries  during such
period under any Interest Rate Agreement or other similar  arrangement  designed
to protect the  Borrowers  and/or their  Subsidiaries  against  fluctuations  in
interest rates.

     CONVERSION  REQUEST.  A notice given by the Borrowers to the Administrative
Agent of the  Borrowers'  election to convert or  continue a Loan in  accordance
with ss.2.7.

     CREDIT AGREEMENT. This Revolving Credit and Term Loan Agreement,  including
the Schedules and Exhibits hereto.

     DEFAULT. See ss.14.1.

     DELINQUENT LENDER. See ss.15.5.3.

     DISTRIBUTION.  The  declaration or payment of any dividend on or in respect
of any shares of any class of Capital Stock of any Person,  other than dividends
payable  solely in shares of common  stock or similar  equity  interests of such
Person; the purchase, redemption, defeasance, retirement or other acquisition of
any shares of any class of Capital  Stock of a Person,  directly  or  indirectly
through a Subsidiary of such Person or otherwise (including the setting apart of
assets for a sinking or other  analogous fund to be used for such purpose);  the
return  of  capital  by a  Person  to its  shareholders  as such;  or any  other
distribution on or in respect of any shares of any class of Capital Stock of any
Person.

     DOLLARS or $. Dollars in lawful currency of the United States of America.

     DOMESTIC LENDING OFFICE. Initially, the office of each Lender designated as
such in SCHEDULE 1 hereto; thereafter, such other office of such Lender, if any,
located  within the United States that will be making or  maintaining  Base Rate
Loans.

     DRAWDOWN DATE. The date on which any Revolving Credit Loan or any Term Loan
is made or is to be made,  and the date on which any  Revolving  Credit  Loan is
converted or continued in accordance with ss.2.7 or all or any portion of a Term
Loan is converted or continued in accordance with ss.4.5.3.

     EMPLOYEE  BENEFIT  PLAN.  Any  employee  benefit plan within the meaning of
ss.3(3) of ERISA  maintained  or  contributed  to by the  Borrower  or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.

     ENVIRONMENTAL LAWS. See ss.8.18(a).

     EPA. See ss.8.18(b).

     EQUITY  ISSUANCE.  The sale or  issuance  by any  Borrower  or any of their
Subsidiaries of any of its Capital Stock.

                                      -9-

     ERISA. The Employee Retirement Income Security Act of 1974.

     ERISA AFFILIATE.  Any Person which is treated as a single employer with the
Borrowers under ss.414 of the Code.

     ERISA  REPORTABLE  EVENT.  A reportable  event with respect to a Guaranteed
Pension  Plan  within  the  meaning  of  ss.4043  of ERISA  and the  regulations
promulgated thereunder.

     EUROCURRENCY  RESERVE RATE.  For any day with respect to a Eurodollar  Rate
Loan,  the  maximum  rate  (expressed  as a decimal)  at which any bank  subject
thereto would be required to maintain  reserves under  Regulation D of the Board
of  Governors  of the  Federal  Reserve  System  (or any  successor  or  similar
regulations  relating  to  such  reserve   requirements)  against  "EUROCURRENCY
LIABILITIES"  (as that term is used in Regulation D), if such  liabilities  were
outstanding.  The Eurocurrency  Reserve Rate shall be adjusted  automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.

     EURODOLLAR  BUSINESS  DAY. Any day on which  commercial  banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.

     EURODOLLAR LENDING OFFICE.  Initially, the office of each Lender designated
as such in SCHEDULE 1 hereto;  thereafter,  such other office of such Lender, if
any, that shall be making or maintaining Eurodollar Rate Loans.

     EURODOLLAR  RATE. For any Interest Period with respect to a Eurodollar Rate
Loan,  the  rate  of  interest   equal  to  (a)  the  rate   determined  by  the
Administrative  Agent at which  Dollar  deposits  for such  Interest  Period are
offered  based on  information  presented on Telerate Page 3750 as of 10:00 a.m.
(Boston  time),  two  Eurodollar  Business  Days prior to the  beginning of such
Interest  Period,  divided  by a number  equal to 1.00  MINUS  the  Eurocurrency
Reserve Rate, if applicable, or (b) if such information on such Telerate Page is
not available,  the rate at which the Administrative  Agent's Eurodollar Lending
Office is offered  Dollar  deposits at 10:00 a.m.  (Boston time) two  Eurodollar
Business Days prior to the  beginning of such  Interest  Period in the interbank
eurodollar  market  where the  eurodollar  and  foreign  currency  and  exchange
operations of such  Eurodollar  Lending Office are  customarily  conducted,  for
delivery  on the  first  day of such  Interest  Period  for the  number  of days
comprised  therein and in an amount  comparable to the amount of the  Eurodollar
Rate Loan of Fleet to which such Interest  Period  applies,  divided by a number
equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable.

     EURODOLLAR RATE LOANS.  Revolving  Credit Loans and all or any portion of a
Term Loan bearing interest calculated by reference to the Eurodollar Rate.

     EVENT OF DEFAULT. See ss.14.1.

                                      -10-

     EXISTING  DEBT.  Collectively,  the Senior  Secured Notes and the Unsecured
Notes.

     FEE LETTER.  The fee letter dated as of March 1, 2001 among the  Borrowers,
the Administrative Agent and the Arranger.

     FEES.  Collectively,  the  Commitment  Fee,  the Letter of Credit Fee,  the
Fronting Fee, the Administrative Agent's fee and all fees referred to in the Fee
Letter.

     FINANCIAL  AFFILIATE.  A Subsidiary of the bank holding company controlling
any Lender,  which Subsidiary is engaging in any of the activities  permitted by
ss.4(e)  of the Bank  Holding  Company  Act of 1956  (12  U.S.C.  ss.1843)  or a
Subsidiary  of the  savings  and loan  company  controlling  any  Lender,  which
Subsidiary  is engaging in any of the  activities  permitted  by ss.10(c) of the
Home Owner's Loan Act (12 U.S.C. ss.1467a).

     FISCAL YEAR. See ss.8.4.1.

     FLEET.  Fleet  National  Bank,  a  national  banking  association,  in  its
individual capacity.

     FRONTING FEE. See ss.5.6.

     FURR'S. Furr's Restaurant Group, Inc., a Delaware corporation.

     GAAP OR GENERALLY ACCEPTED ACCOUNTING  PRINCIPLES.  (a) When used in ss.11,
whether  directly or indirectly  through  reference to a  capitalized  term used
therein,   means  (i)  principles   that  are  consistent  with  the  principles
promulgated  or  adopted by the  Financial  Accounting  Standards  Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles,  the accounting  practice of
the Borrowers  reflected in its financial  statements  for the year ended on the
Balance Sheet Date, and (b) when used in general,  other than as provided above,
means  principles  that are (i) consistent  with the  principles  promulgated or
adopted by the Financial Accounting Standards Board and its predecessors,  as in
effect from time to time,  and (ii)  consistently  applied  with past  financial
statements of the Borrowers adopting the same principles,  provided that in each
case  referred to in this  definition  of "GAAP" a certified  public  accountant
would,  insofar as the use of such accounting  principles is pertinent,  be in a
position to deliver an unqualified opinion (other than a qualification regarding
changes in GAAP) as to financial  statements in which such  principles have been
properly applied.

     GOVERNING  DOCUMENTS.  With  respect  to any  Person,  its  certificate  or
articles of incorporation,  its by-laws and all shareholder  agreements,  voting
trusts and similar arrangements applicable to any of its Capital Stock.

     GOVERNMENTAL  AUTHORITY.  Any foreign,  federal,  state,  regional,  local,
municipal or other government,  or any department,  commission,  board,  bureau,

                                      -11-

agency, public authority or instrumentality thereof, or any court or arbitrator.

     GROWTH  CAPITAL   EXPENDITURES.   Capital   Expenditures   related  to  the
construction,  acquisition  or  opening  of new  Units  PLUS to the  extent  not
included  in  the  calculation  of  such  Capital   Expenditures,   Consolidated
Restaurant Pre-Opening Costs.

     GUARANTEED  PENSION  PLAN.  Any  employee  pension  benefit plan within the
meaning of ss.3(2) of ERISA  maintained or contributed to by any Borrower or any
ERISA  Affiliate the benefits of which are  guaranteed on termination in full or
in part by the PBGC  pursuant to Title IV of ERISA,  other than a  Multiemployer
Plan.

     HAZARDOUS SUBSTANCES. See ss.8.18(b).

     INCURRENCE  RATIO. As at any date of  determination,  the maximum  Leverage
Ratio permitted under ss.11.1 as at the end of the most recently ended Reference
Period for which the Borrowers  have  delivered a Compliance  Certificate,  LESS
0.25.

     INDEBTEDNESS.  As to any Person and  whether  recourse  is secured by or is
otherwise  available  against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:

          (a) every obligation of such Person for money borrowed,

          (b) every  obligation of such Person  evidenced by bonds,  debentures,
     notes or other  similar  instruments,  including  obligations  evidenced by
     bonds,  debentures,  notes or other similar instruments which were incurred
     in connection with the acquisition of property, assets or businesses,

          (c) every  reimbursement  obligation  of such Person  with  respect to
     letters of credit,  bankers'  acceptances or similar  facilities issued for
     the account of such Person,

          (d) every  obligation of such Person issued or assumed as the deferred
     purchase  price of property or services  (including  securities  repurchase
     agreements  but excluding  trade  accounts  payable or accrued  liabilities
     arising in the  ordinary  course of business  which are not overdue by more
     than 30 days or which are being contested in good faith),

          (e) every obligation of such Person under any Capitalized Lease,

          (f) every obligation of such Person under any Synthetic Lease,

                                      -12-

          (g) all sales by such Person of (i)  accounts  or general  intangibles
     for  money  due or to  become  due,  (ii)  chattel  paper,  instruments  or
     documents creating or evidencing a right to payment of money or (iii) other
     receivables  (collectively  "RECEIVABLES"),  whether pursuant to a purchase
     facility or otherwise, other than in connection with the disposition of the
     business  operations of such Person  relating  thereto or a disposition  of
     defaulted  receivables  for collection and not as a financing  arrangement,
     and  together  with any  obligation  of such  Person  to pay any  discount,
     interest, fees, indemnities, penalties, recourse, expenses or other amounts
     in connection therewith,

          (h) every  obligation  of such  Person (an  "EQUITY  RELATED  PURCHASE
     OBLIGATION") to purchase, redeem, retire or otherwise acquire for value any
     shares of Capital Stock issued by such Person or any rights measured by the
     value of such Capital Stock,

          (i)  every  obligation  of such  Person  under any  forward  contract,
     futures contract,  swap, option or other financing agreement or arrangement
     (including,   without  limitation,   caps,  floors,   collars  and  similar
     agreements),  the value of which is dependent upon interest rates, currency
     exchange rates, commodities or other indices (a "DERIVATIVE CONTRACT"),

          (j) every  obligation in respect of  Indebtedness  of any other entity
     (including any  partnership  in which such Person is a general  partner) to
     the extent that such Person is liable therefor as a result of such Person's
     ownership interest in or other relationship with such entity, except to the
     extent that the terms of such Indebtedness  provide that such Person is not
     liable therefor and such terms are enforceable under applicable law,

          (k)  every  obligation,   contingent  or  otherwise,  of  such  Person
     guaranteeing,  or having the  economic  effect of a guarantee  or otherwise
     acting as surety for, any  obligation of a type described in any of clauses
     (a) through (j) (the "PRIMARY  OBLIGATION") of another Person (the "PRIMARY
     OBLIGOR"),  in any manner,  whether directly or indirectly,  and including,
     without  limitation,  any  obligation of such Person (i) to purchase or pay
     (or  advance or supply  funds for the  purchase  of) any  security  for the
     payment of such primary obligation,  (ii) to purchase property,  securities
     or  services  for the  purpose of  assuring  the  payment  of such  primary
     obligation,  or (iii) to maintain working capital,  equity capital or other
     financial  statement condition or liquidity of the primary obligor so as to
     enable the primary obligor to pay such primary obligation.

     The  "AMOUNT"  or  "PRINCIPAL  AMOUNT" of any  Indebtedness  at any time of
determination  represented  by (t) any  Indebtedness,  issued at a price that is
less than the principal amount at maturity  thereof,  shall be the amount of the
liability  in respect  thereof  determined  in  accordance  with  GAAP,  (u) any
Capitalized  Lease shall be the  principal  component  of the  aggregate  of the

                                      -13-

rentals  obligation under such  Capitalized  Lease payable over the term thereof
that is not subject to  termination  by the lessee,  (v) any sale of receivables
shall be the  amount of  unrecovered  capital  or  principal  investment  of the
purchaser  (other than a Borrower  or any of their  wholly  owned  Subsidiaries)
thereof,  excluding  amounts  representative of yield or interest earned on such
investment,  (w)  any  Synthetic  Lease  shall  be the  stipulated  loss  value,
termination value or other equivalent amount, (x) any derivative  contract shall
be the maximum amount of any termination or loss payment  required to be paid by
such Person if such derivative  contract were, at the time of determination,  to
be  terminated  by reason of any event of  default  or early  termination  event
thereunder,  whether or not such event of default or early termination event has
in fact  occurred,  (y) any  equity  related  purchase  obligation  shall be the
maximum fixed redemption or purchase price thereof  inclusive of any accrued and
unpaid  dividends to be comprised in such  redemption or purchase  price and (z)
any guaranty or other contingent liability referred to in clause (k) shall be an
amount equal to the stated or determinable  amount of the primary  obligation in
respect of which such guaranty or other contingent obligation is made or, if not
stated or determinable,  the maximum reasonably anticipated liability in respect
thereof  (assuming such Person is required to perform  thereunder) as determined
by such Person in good faith.

     INDENTURE.  The Amended and Restated  Indenture among Cafeteria  Operators,
L.P. and the Trustee named therein  entered into in connection with the issuance
of $45,772,699.00 in 12% Senior Secured Notes due December 31, 2001, dated as of
November 15, 1995, as amended and in effect on the Closing  Date,  together with
all  amendments  and  supplemental  indentures  issued in connection  therewith,
including the First Supplemental Indenture dated as of January 24, 1996.

     INELIGIBLE SECURITIES. Securities which may not be underwritten or dealt in
by member banks of the Federal  Reserve  System under  Section 16 of the Banking
Act of 1933 (12 U.S.C.ss.24, Seventh), as amended.

     INTEREST  PAYMENT DATE.  (a) As to any Base Rate Loan,  the last day of the
fiscal  quarter with  respect to interest  accrued  during such fiscal  quarter,
including,  without  limitation,  the fiscal quarter which includes the Drawdown
Date of such Base Rate Loan; and (b) as to any  Eurodollar  Rate Loan in respect
of which  the  Interest  Period  is (i) 3 months  or less,  the last day of such
Interest Period and (ii) more than 3 months,  the date that is 3 months from the
first  day of such  Interest  Period  and,  in  addition,  the  last day of such
Interest Period.

     INTEREST  PERIOD.  With respect to each Revolving Credit Loan or all or any
relevant  portion of a Term Loan,  (a) initially,  the period  commencing on the
Drawdown  Date of such Loan and ending on the last day of one of the periods set
forth  below,  as selected by the  Borrowers  in a Loan  Request or as otherwise
required by the terms of this Credit  Agreement (i) for any Base Rate Loan,  the
last day of the calendar quarter; and (ii) for any Eurodollar Rate Loan, 1, 2, 3
or 6 months;  and (b) thereafter,  each period commencing on the last day of the
next preceding  Interest Period  applicable to such Revolving Credit Loan or all

                                      -14-

or such  portion of a Term Loan and ending on the last day of one of the periods
set forth above, as selected by the Borrowers in a Conversion Request;  PROVIDED
that all of the foregoing provisions relating to Interest Periods are subject to
the following:

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

          (B) if any Interest  Period with respect to a Base Rate Loan would end
     on a day that is not a Business Day, that Interest  Period shall end on the
     next succeeding Business Day;

          (C) if the Borrowers  shall fail to give notice as provided in ss.2.7,
     the  Borrowers  shall be  deemed  to have  requested  a  conversion  of the
     affected  Eurodollar  Rate Loan to a Base Rate Loan and the  continuance of
     all Base Rate Loans as Base Rate Loans on the last day of the then  current
     Interest Period with respect thereto;

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

          (E) any  Interest  Period  that  would  otherwise  extend  beyond  the
     Revolving  Credit  Maturity  Date,  Term A Maturity Date or Term B Maturity
     Date, as applicable to such Loan shall end on such Maturity Date.

     INTEREST RATE AGREEMENT.  Any interest rate swap  agreement,  interest rate
cap agreement,  interest rate collar agreement,  interest rate futures contract,
interest rate option  agreement or other  similar  agreement or  arrangement  to
which any Borrower and any Lender is a party,  designed to protect such Borrower
against fluctuations in interest rates applicable to Permitted Indebtedness.

     INVESTMENTS.   All   expenditures   made  and  all   liabilities   incurred
(contingently  or otherwise) for the acquisition of stock or Indebtedness of, or
for loans,  advances,  capital  contributions or transfers of property to, or in
respect  of  any   guaranties   (or  other   commitments   as  described   under
Indebtedness),  or  obligations  of, any Person.  In  determining  the aggregate
amount of Investments  outstanding at any particular time: (a) the amount of any
Investment  represented  by a  guaranty  shall be  taken  at not  less  than the
principal amount of the obligations guaranteed and still outstanding;  (b) there

                                      -15-

shall be  included  as an  Investment  all  interest  accrued  with  respect  to
Indebtedness  constituting an Investment unless and until such interest is paid;
(c) there  shall be  deducted  in  respect  of each such  Investment  any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment,  liquidating dividend or liquidating  distribution);  (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such  Investment,  whether as  dividends,  interest  or  otherwise,  except that
accrued  interest  included  as  provided  in the  foregoing  clause  (b) may be
deducted  when paid;  and (e) there  shall not be  deducted  from the  aggregate
amount of Investments any decrease in the value thereof.

     LENDER AFFILIATE.  (a) With respect to any Lender, (i) an affiliate of such
Lender or (ii) any entity (whether a corporation, partnership, limited liability
company, trust or legal entity) that is engaged in making,  purchasing,  holding
or  otherwise  investing in bank loans and similar  extensions  of credit in the
ordinary course of its business and is administered or managed by such Lender or
an  affiliate  of such Lender and (b) with  respect to any Lender that is a fund
which invests in bank loans and similar  extensions of credit,  any other entity
(whether a corporation,  partnership,  limited liability company, trust or other
legal  entity) that is a fund that invests in bank loans and similar  extensions
of credit and is managed by the same investment  advisor as such Lender or by an
affiliate of such investment advisor.

     LENDERS.  Fleet and the other  lending  institutions  listed on  SCHEDULE 1
hereto  and  any  other  Person  who  becomes  an  assignee  of any  rights  and
obligations of a Lender pursuant to ss.16.

     LETTER OF CREDIT. See ss.5.1.1.

     LETTER OF CREDIT APPLICATION. See ss.5.1.1.

     LETTER OF CREDIT FEE. See ss.5.6.

     LETTER OF CREDIT PARTICIPATION. See ss.5.1.4.

     LEVERAGE  RATIO.  As at  any  date  of  determination,  the  ratio  of  (a)
Consolidated  Funded  Indebtedness  outstanding on such date to (b) Consolidated
EBITDA for the Reference Period ending on such date.

     LIEN.   Any   mortgage,   deed  of  trust,   security   interest,   pledge,
hypothecation,  assignment,  attachment, deposit arrangement,  encumbrance, lien
(statutory,  judgment or otherwise), or other security agreement or preferential
arrangement of any kind or nature whatsoever  (including any conditional sale or
other title retention agreement, any Capitalized Lease, any Synthetic Lease, any
financing lease involving  substantially  the same economic effect as any of the
foregoing and the filing of any financing  statement under the UCC or comparable
law of any jurisdiction).

                                      -16-

     LOAN  DOCUMENTS.  This Credit  Agreement,  the Notes,  the Letter of Credit
Applications, the Letters of Credit and the Security Documents.

     LOAN REQUEST. See ss.2.6.

     LOANS. Collectively, the Revolving Credit Loans and the Term Loans.

     MATERIAL  ADVERSE  EFFECT.  With  respect  to any  event or  occurrence  of
whatever  nature  (including  any  adverse   determination  in  any  litigation,
arbitration or governmental investigation or proceeding):

          (a) a material adverse effect on the business, properties,  prospects,
     condition (financial or otherwise),  assets, operations or income of Furr's
     or  Cafeteria   Operators,   individually   or  the   Borrowers  and  their
     Subsidiaries, taken as a whole;

          (b) an adverse effect on the ability of Furr's or Cafeteria Operators,
     individually, or the Borrowers and their Subsidiaries, taken as a whole, to
     perform in any material respect any of their respective  Obligations  under
     any of the Loan Documents to which it is a party; or

          (c) any impairment of the validity,  binding effect or  enforceability
     of this Credit Agreement or any of the other Loan Documents, any impairment
     of the rights,  remedies or benefits available to the Administrative  Agent
     or any Lender under any Loan Document or any impairment of the  attachment,
     perfection  or priority of any Lien of the  Administrative  Agent under the
     Security Documents.

     MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the beneficiaries
may at any time draw under  outstanding  Letters of  Credit,  as such  aggregate
amount may be reduced from time to time  pursuant to the terms of the Letters of
Credit.

     MOODY'S. Moody's Investors Services, Inc.

     MORTGAGED PROPERTY. Any Real Estate which is subject to any Mortgage.

     MORTGAGES.  The several mortgages and deeds of trust listed on SCHEDULE 1.1
hereto  and each of the  mortgages  and deeds of trusts  which may be  delivered
after the Closing  Date in  accordance  with  ss.9.13,  from any Borrower or its
Subsidiary  to the  Administrative  Agent with  respect to the  interests of the
Borrowers  and  their  Subsidiaries  in  certain  parcels  of  the  Real  Estate
consisting  of fee  properties  and  ground  leases  and in form  and  substance
satisfactory to the Lenders and the Administrative Agent.

     MULTIEMPLOYER  PLAN. Any multiemployer  plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by any Borrower or any ERISA Affiliate.

     NET CASH EQUITY ISSUANCE PROCEEDS. With respect to any Equity Issuance, the
excess of the gross  cash  proceeds  received  by such  Person  for such  Equity

                                      -17-

Issuance after  deduction of all reasonable and customary  transaction  expenses
(including, without limitation, underwriting discounts and commissions) actually
incurred in connection with such a sale or other issuance.

     NET CASH  SALE  PROCEEDS.  The net cash  proceeds  received  by a Person in
respect  of any Asset  Sale,  less the sum of (a) all  reasonable  out-of-pocket
fees,  commissions and other reasonable and customary  direct expenses  actually
incurred  in  connection  with such  Asset  Sale,  including  the  amount of any
transfer or  documentary  taxes required to be paid by such Person in connection
with such Asset Sale,  and (b) the aggregate  amount of cash so received by such
Person  which is  required  to be used to  retire  (in  whole  or in  part)  any
Indebtedness  (other than under the Loan Documents) of such Person  permitted by
this Credit Agreement that was secured by a lien or security interest  permitted
by this Credit Agreement  having priority over the liens and security  interests
(if any) of the  Administrative  Agent (for the  benefit  of the  Administrative
Agent and the  Lenders)  with  respect to such assets  transferred  and which is
required to be repaid in whole or in part (which  repayment,  in the case of any
other revolving credit arrangement or multiple advance arrangement,  reduces the
commitment thereunder) in connection with such Asset Sale.

     NOTES.  Collectively,  the Term Notes,  the Revolving  Credit Notes and the
Collateral Notes.

     OBLIGATIONS.  All  indebtedness,  obligations and liabilities of any of the
Borrowers and their  Subsidiaries  to any of the Lenders and the  Administrative
Agent,  individually  or  collectively,  existing  on the  date of  this  Credit
Agreement or arising thereafter,  direct or indirect, joint or several, absolute
or  contingent,  matured or unmatured,  liquidated or  unliquidated,  secured or
unsecured,  arising  by  contract,  operation  of law or  otherwise,  arising or
incurred  under this Credit  Agreement or any of the other Loan Documents or any
Interest Rate Agreement or in respect of any of the Loans made or  Reimbursement
Obligations  incurred or any of the Notes, Letter of Credit Application,  Letter
of Credit or other instruments at any time evidencing any thereof.

     OUTSTANDING.  With respect to the Loans,  the  aggregate  unpaid  principal
thereof as of any date of determination.

     PBGC. The Pension Benefit Guaranty  Corporation created by ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.

     PERFECTION  CERTIFICATES.  The  Perfection  Certificates  as defined in the
Security Agreements.

     PERMITTED ACQUISITIONS. See ss.10.5.3.

     PERMITTED INDEBTEDNESS. Indebtedness permitted under ss.10.1.

                                      -18-

     PERMITTED LIENS. Liens permitted by ss.10.2.

     PERMITTED SALE-LEASEBACK. See ss.10.6.

     PERSON. Any individual, corporation, limited liability company partnership,
limited  liability   partnership,   trust,  other  unincorporated   association,
business, or other legal entity, and any Governmental Authority.

     PRO FORMA BASIS. In connection with any proposed  Permitted  Acquisition or
acquisition  financed by  Indebtedness  permitted  under  ss.10.1(c)  (which for
purposes of the  definition  shall also be considered a Permitted  Acquisition),
the  calculation  of  compliance  with  the  financial  covenants  described  in
ss.10.5.3(v)  hereof by the  Borrowers  and their  Subsidiaries  (including  the
business,  business  division or Person to be acquired as though such  business,
business  division or Person were a Subsidiary of a Borrower)  with reference to
the audited  historical  financial results,  if available,  or if not available,
such other  management  reports or estimates  as approved by the  Administrative
Agent, of such business,  business  division or Person and the Borrowers and its
Subsidiaries  for the applicable  Test Period after giving effect on a PRO FORMA
basis to such Permitted  Acquisition with the adjustments  described in (a), (b)
and (c) below;  and,  following  a Permitted  Acquisition,  the  calculation  of
compliance with the covenants set forth in ss.11 for the fiscal quarter in which
such  Permitted  Acquisition  occurred  and each of the  three  fiscal  quarters
immediately  following such Permitted  Acquisition with reference to the audited
historical financial results, if available,  or such other management reports as
approved  by the  Administrative  Agent of the  business,  business  division or
Person so acquired and the Borrowers and their  Subsidiaries  for the applicable
Test  Period  after  giving  effect  on a PRO  FORMA  basis  to  such  Permitted
Acquisition with the adjustments described in (a), (b) and (c) below:

          (a)  all   Indebtedness   (whether  under  this  Credit  Agreement  or
     otherwise)  and any  other  balance  sheet  adjustments  incurred,  made or
     assumed in  connection  with the Permitted  Acquisition  shall be deemed to
     have been  incurred,  made or assumed on the first day of the Test  Period,
     and all  Indebtedness  of the Person  acquired  or to be  acquired  in such
     Permitted  Acquisition or which is attributable to the business or business
     division  acquired or to be acquired  which was or will have been repaid in
     connection  with the  consummation  of the Permitted  Acquisition  shall be
     deemed to have been repaid on the first day of the Test Period;

          (b) all  Indebtedness  deemed to have been  incurred  pursuant  to the
     preceding  clause (a) shall be deemed to have borne  interest at (i) if the
     Indebtedness  incurred in connection  with such  Permitted  Acquisition  is
     under this  Credit  Agreement  or bears  interest at a floating  rate,  the
     arithmetic mean of (A) the Eurodollar Rate for Eurodollar Rate Loans having
     an  Interest  Period  of one  month in  effect on the first day of the Test
     Period and (B) the  Eurodollar  Rate for  Eurodollar  Rate Loans  having an
     Interest  Period of one month in effect on the last day of the Test  Period
     PLUS (y) the Applicable  Margin with respect to Eurodollar  Rate Loans then

                                      -19-

     in effect (after giving effect to the Permitted  Acquisition on a PRO FORMA
     basis) or (ii) if the Indebtedness incurred,  made or assumed in connection
     with such Permitted  Acquisition bears interest at a fixed rate, such fixed
     rate; and

          (c) for purposes of calculating  Consolidated  EBITDA and Consolidated
     Cash Flow for the Test Period, other reasonable cost savings,  expenses and
     other  income  statement  or  operating  statement  adjustments  which  are
     attributable to the change in ownership  and/or  management  resulting from
     such Permitted  Acquisition as may be approved by the Administrative  Agent
     in writing  shall be deemed to have been  realized  on the first day of the
     Test Period.

     RCRA. See ss.8.18(a).

     REAL  ESTATE.  All real  property at any time owned or leased (as lessee or
sublessee) by any Borrowers or any of their Subsidiaries.

     REAL ESTATE  LEASES.  Leases,  including  ground  leases and space  leases,
pursuant to which any Borrower or any of their Subsidiaries leases Real Estate.

     RECORD.  The grid attached to a Note, or the  continuation of such grid, or
any other similar record,  including computer records,  maintained by any Lender
with respect to any Loan referred to in such Note.

     REFERENCE PERIOD.  As of any date of determination,  the period of four (4)
consecutive  fiscal quarters of the Borrowers and their  Subsidiaries  ending on
such date, or if such date is not a fiscal  quarter end date, the period of four
(4)  consecutive  fiscal quarters most recently ended (in each case treated as a
single accounting period); PROVIDED, that solely for purposes of determining the
Cash Flow  Ratio and the ratio of  Consolidated  EBITDAR to  Consolidated  Total
Interest  Expense plus  Consolidated  Rental  Expense under  ss.ss.11.2 and 11.3
hereof,  (a) for the fiscal quarter ending July 3, 2001,  Reference Period shall
mean the  fiscal  quarter  ending as of such date,  (b) for the  fiscal  quarter
ending  October  2,  2001,  Reference  Period  shall  mean  the  period  of  two
consecutive  fiscal  quarters  ending  as of such  date  and (c) for the  fiscal
quarter ending January 1, 2002,  Reference Period shall mean the period of three
consecutive fiscal quarters ending as of such date.

     REGISTER. See ss.16.3.

     REIMBURSEMENT  OBLIGATION.  The  Borrowers'  obligation  to  reimburse  the
Administrative  Agent and the Lenders on account of any drawing under any Letter
of Credit as provided in ss.5.2.

     REQUIRED  LENDERS.  As of any date,  any  combination of Lenders the sum of
whose aggregate  Revolving Credit Commitments and outstanding  principal amounts
under the Term Loans  constitute at least  sixty-six and two-thirds  percent (66
2/3%) of the sum of the Total  Revolving  Commitment  and the total  outstanding

                                      -20-

principal  amounts  under the Term  Loans,  or, if the  Total  Revolving  Credit
Commitment  has been  terminated  or if the Revolving  Credit  Maturity Date has
occurred,  any  combination of Lenders holding at least sixty-six and two-thirds
percent (66 2/3%) of the total outstanding principal amount of the Loans on such
date.

     RESTRICTED PAYMENTS.  Collectively,  Distributions,  payments in respect of
any  subordinated  debt,  payments of management,  consulting or similar fees to
affiliates  of any  Borrower  and  derivatives  or other  transactions  with any
financial  institution,  commodities  or  stock  exchange  or  clearinghouse  (a
"DERIVATIVES  COUNTERPARTY")  obligating  any Borrower or any Subsidiary to make
payments to such  Derivatives  Counterparty  as a result of any change in market
value of any Capital Stock of such Borrower or such Subsidiary.

     REVOLVING CREDIT  COMMITMENT.  With respect to each Lender,  the amount set
forth on  SCHEDULE 1 hereto as the amount of such  Lender's  commitment  to make
Revolving  Credit Loans to, and to  participate  in the issuance,  extension and
renewal of Letters of Credit for the account of, the Borrowers,  as the same may
be reduced from time to time; or if such  commitment  is terminated  pursuant to
the provisions hereof, zero.

     REVOLVING CREDIT COMMITMENT  PERCENTAGE.  With respect to each Lender,  the
percentage  set forth on SCHEDULE 1 hereto as such  Lender's  percentage  of the
aggregate Revolving Credit Commitments of all of the Lenders.

     REVOLVING  CREDIT LOANS.  Revolving  credit loans made or to be made by the
Lenders to the Borrowers pursuant to ss.2.

     REVOLVING CREDIT MATURITY DATE. April 10, 2006.

     REVOLVING  CREDIT NOTE RECORD.  A Record with respect to a Revolving Credit
Note.

     REVOLVING CREDIT NOTES. See ss.2.4.

     SARA. See ss.8.18(a).

     SECURITIES PLEDGE  AGREEMENTS.  The several  Securities Pledge  Agreements,
dated or to be dated on or prior to the  Closing  Date,  between  certain of the
Borrowers and the Administrative Agent and in form and substance satisfactory to
the Lenders and the Administrative  Agent.  "Securities Pledge Agreements" shall
also include any securities pledge  agreements  entered into as security for the
Obligations after the Closing Date in accordance with ss.9.17.

     SECURITY AGREEMENTS. The several Security Agreements,  dated or to be dated
on or prior to the Closing Date, among the Borrowers and their  Subsidiaries and
the Administrative  Agent and in form and substance  satisfactory to the Lenders
and the Administrative Agent.

                                      -21-

     SECURITY DOCUMENTS.  The Security Agreements,  the Mortgages, the Trademark
Assignments, the Agency Account Agreements, the Securities Pledge Agreements and
all other  instruments  and  documents,  including  without  limitation  Uniform
Commercial  Code  financing  statements,  required to be  executed or  delivered
pursuant to any Security Document.

     SENIOR SECURED  NOTES.  Collectively,  the 12% Senior  Secured  Notes,  due
December  31, 2001 in the  outstanding  principal  amount of  $45,700,000  as of
January 2, 2001.

     S&P. Standard & Poor's Ratings Group.

     SUBSIDIARY. Any corporation,  association,  trust, or other business entity
of which the  designated  parent  shall at any time own  directly or  indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the  outstanding  Voting Stock;  PROVIDED that the term  "Subsidiary"  shall not
include PBN Beverage, Inc., a Texas corporation.

     SURVEY.  In relation to each  Mortgaged  Property  owned by a Borrower,  an
instrument survey of such Mortgaged Property prepared for the Borrower and dated
as of a date subsequent to January 1, 2001, which shall show the location of all
buildings,  structures,  easements and utility lines on such Mortgaged Property,
shall be sufficient to remove the survey exception from the Title Policy,  shall
show  that  all  buildings  and  structures  are  within  the lot  lines of such
Mortgaged Property,  shall not show any encroachments by others,  shall show the
zoning  district or districts in which such  Mortgaged  Property is located in a
flood hazard district as established by the Federal Emergency  Management Agency
or any  successor  agency or is  located  in any flood  plain,  flood  hazard or
wetland protection district established under federal, state or local law.

     SURVEYOR  CERTIFICATE.  In relation to each Mortgaged  Property for which a
Survey has been conducted,  a certificate  executed by the surveyor who prepared
such Survey dated as of a recent date and containing such  information  relating
to such Mortgaged  Property as the  Administrative  Agent or the Title Insurance
Company may require,  such certificate to be satisfactory to the  Administrative
Agent in form and substance.

     SYNTHETIC  LEASE.  Any lease of goods or other  property,  whether  real or
personal,  which is treated as an  operating  lease  under GAAP and as a loan or
financing for U.S. income tax purposes.

     TERM A  COMMITMENT.  With respect to each  Lender,  the amount set forth on
SCHEDULE 1 hereto as the amount of such Lender's commitment to make a portion of
Term Loan A to the Borrowers.

     TERM A COMMITMENT  PERCENTAGE.  With respect to each Lender, the percentage
set forth on SCHEDULE 1 hereto as such Lender's percentage of the aggregate Term
A Commitments of all the Lenders.

                                      -22-

     TERM A MATURITY DATE. April 10, 2006.

     TERM A NOTE(S). See ss.4.2.1.

     TERM A NOTE RECORD. A Record with respect to a Term A Note.

     TERM B  COMMITMENT.  With respect to each  Lender,  the amount set forth on
SCHEDULE 1 hereto as the amount of such Lender's commitment to make a portion of
Term Loan B to the Borrowers.

     TERM B COMMITMENT  PERCENTAGE.  With respect to each Lender, the percentage
set forth on SCHEDULE 1 hereto as such Lender's percentage of the aggregate Term
B Commitments of all the Lenders.

     TERM B MATURITY DATE. April 10, 2007.

     TERM B NOTE(S). See ss.4.2.2.

     TERM B NOTE RECORD. A Record with respect to a Term B Note.

     TERM  LOAN A.  The  term  loan  made or to be  made by the  Lenders  to the
Borrowers on the Closing Date in the aggregate  principal  amount of $30,000,000
pursuant to ss.4.1.1.

     TERM  LOAN B.  The  term  loan  made or to be  made by the  Lenders  to the
Borrowers on the Closing Date in the  aggregate  principal  amount of $5,000,000
pursuant to ss.4.1.2.

     TERM LOAN(S). Term Loan A and/or Term Loan B, as the context may require.

     TERM NOTE(S).  The Term A Notes and/or the Term B Notes, as the context may
require.

     TEST PERIOD.  (a) In connection with the calculation of financial  covenant
compliance on a Pro Forma Basis as required by ss.10.5.3(v)  with respect to any
proposed Permitted Acquisition, the period of four fiscal quarters most recently
ended prior to such Permitted  Acquisition  for which  financial  information is
available, and (b) in connection with the calculation of the covenants set forth
in  ss.11  hereof  following  any  Permitted  Acquisition,  the  period  of four
consecutive  fiscal  quarters  ending  immediately  prior  to the  date  of such
Permitted Acquisition included in the calculation of such financial covenant.

     TITLE  INSURANCE   COMPANY.   Any  of  Chicago  Title  Insurance   Company,
Commonwealth Land Title Insurance Company,  Lawyers Title Insurance  Corporation
or  other  nationally  recognized  title  insurance  company  acceptable  to the
Administrative Agent.

     TITLE POLICY. In relation to each Mortgaged Property, an ALTA standard form
title  insurance  policy  issued  by the  Title  Insurance  Company  (with  such

                                      -23-

reinsurance or co-insurance as the  Administrative  Agent may require,  any such
reinsurance  to be with  direct  access  endorsements)  in such amount as may be
determined by the Administrative  Agent insuring the priority of the Mortgage of
such  Mortgaged  Property and that a Borrower or one of its  Subsidiaries  holds
marketable  fee simple or leasehold  title to such Mortgaged  Property,  subject
only to the encumbrances  permitted by such Mortgage and which shall not contain
exceptions for mechanics  liens,  persons in occupancy or matters which would be
shown by a survey  (except  as may be  permitted  by such  Mortgage),  shall not
insure over any matter except to the extent that any such affirmative  insurance
is  acceptable to the  Administrative  Agent in its sole  discretion,  and shall
contain such endorsements and affirmative  insurance as the Administrative Agent
in its  discretion may require,  including but not limited to (a)  comprehensive
endorsement,  (b) variable rate of interest endorsement,  (c) usury endorsement,
(d) revolving credit endorsement, (e) tie-in endorsement, and (f) doing business
endorsement.

     TOTAL REVOLVING COMMITMENT.  The sum of the Revolving Credit Commitments of
the Lenders,  as in effect from time to time. As of the Closing Date,  the Total
Revolving Commitment is $20,000,000.

     TRADEMARK ASSIGNMENTS. The several Trademark Collateral Security and Pledge
Agreements,  dated or to be dated on or prior to the Closing  Date,  made by the
Borrowers and their  Subsidiaries in favor of the  Administrative  Agent and the
Assignments of Trademarks and Trademarks executed in connection  therewith,  all
in form and substance satisfactory to the Lenders and the Administrative Agent.

     TYPE. As to any Revolving Credit Loan or all or any portion of a Term Loan,
its nature as a Base Rate Loan or a Eurodollar Rate Loan.

     UNITS.  A particular  restaurant at a particular  location that is owned or
operated by a Borrower or a Subsidiary of a Borrower.

     UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which the
Borrowers do not reimburse the Administrative  Agent and the Lenders on the date
specified in, and in accordance with,ss.5.2.

     UNPROFITABLE UNIT. At any time, a Unit whose gross revenues attributable to
the  operations  at such  Unit  less the cash  operating  expenses  of such Unit
(exclusive  of rental  expenses,  taxes,  interest  and  corporate  and regional
overhead but  inclusive of all employees  (including  in-store  managers)  whose
duties relate  primarily to the  operations of such unit) on an individual  Unit
basis for the period  consisting of the twelve most recently ended fiscal months
is less than $1, PROVIDED that,  solely for the purposes of determining  whether
any Unit is an  Unprofitable  Unit,  it shall be assumed  that the net income of
each  Unit  shall  be  greater  than $1 for  each of its  first  six  months  of
operation.

     UNSECURED  NOTES.  Collectively,  the 10.5% Notes, due December 31, 2001 in
the original principal amount of $2,551,000.

                                      -24-

     VOTING STOCK. Stock or similar interests,  of any class or classes (however
designated),  the holders of which are at the time entitled, as such holders, to
vote for the  election of a majority  of the  directors  (or persons  performing
similar  functions) of the  corporation,  association,  trust or other  business
entity  involved,  whether  or not the right so to vote  exists by reason of the
happening of a contingency. 1.2. RULES OF INTERPRETATION.

          (a) A  reference  to any  document or  agreement  shall  include  such
     document or agreement  as amended,  modified or  supplemented  from time to
     time in accordance with its terms and the terms of this Credit Agreement.

          (b) The  singular  includes  the plural and the  plural  includes  the
     singular.

          (c) A reference to any law includes any amendment or  modification  to
     such law.

          (d) A reference to any Person  includes its permitted  successors  and
     permitted assigns.

          (e)  Accounting  terms not otherwise  defined herein have the meanings
     assigned to them by GAAP  applied on a consistent  basis by the  accounting
     entity to which they refer.

          (f) The words "include", "includes" and "including" are not limiting.

          (g) All terms not specifically  defined herein or by GAAP, which terms
     are defined in the Uniform Commercial Code as in effect in the Commonwealth
     of Massachusetts, have the meanings assigned to them therein, with the term
     "INSTRUMENT"  being that defined under Article 9 of the Uniform  Commercial
     Code.

          (h)  Reference  to a  particular  "ss." refers to that section of this
     Credit Agreement unless otherwise indicated.

          (i) The words "herein", "hereof", "hereunder" and words of like import
     shall refer to this Credit  Agreement as a whole and not to any  particular
     section or subdivision of this Credit Agreement.

          (j)  Unless  otherwise  expressly  indicated,  in the  computation  of
     periods of time from a specified date to a later  specified  date, the word
     "from" means "from and including," the words "to" and "until" each mean "to
     but excluding," and the word "through" means "to and including."

          (k) This Credit Agreement and the other Loan Documents may use several
     different  limitations,  tests  or  measurements  to  regulate  the same or

                                      -25-

    similar matters. All such limitations, tests and measurements are, however,
     cumulative and are to be performed in accordance with the terms thereof.

          (l) This Credit  Agreement and the other Loan Documents are the result
     of negotiation  among,  and have been reviewed by counsel to, among others,
     the  Administrative  Agent  and  the  Borrowers  and  are  the  product  of
     discussions and negotiations  among all parties.  Accordingly,  this Credit
     Agreement  and the other Loan  Documents  are not  intended to be construed
     against the Administrative Agent or any of the Lenders merely on account of
     the Administrative  Agent's or any Lender's  involvement in the preparation
     of such documents.

2. THE REVOLVING CREDIT FACILITY.

     2.1.  COMMITMENT TO LEND.  Subject to the terms and conditions set forth in
this  Credit  Agreement,  each of the  Lenders  severally  agrees to lend to the
Borrowers  and the  Borrowers  may borrow,  repay,  and  reborrow on a joint and
several  basis from time to time from the Closing  Date up to but not  including
the  Revolving  Credit  Maturity  Date  upon  notice  by  the  Borrowers  to the
Administrative Agent given in accordance with ss.2.6, such sums as are requested
by the  Borrowers up to a maximum  aggregate  amount  outstanding  (after giving
effect  to all  amounts  requested)  at any one  time  equal  to  such  Lender's
Revolving  Credit  Commitment MINUS such Lender's  Revolving  Credit  Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations  which have not been repaid with the  proceeds of  Revolving  Credit
Loans,  PROVIDED that the sum of the outstanding  amount of the Revolving Credit
Loans (after giving effect to all amounts  requested)  PLUS the Maximum  Drawing
Amount and all Unpaid Reimbursement  Obligations which have not been repaid with
the proceeds of Revolving  Credit Loans,  shall not at any time exceed the Total
Revolving  Commitment at such time. The Revolving Credit Loans shall be made PRO
RATA in accordance with each Lender's  Revolving Credit  Commitment  Percentage.
Each  request  for  a  Revolving   Credit  Loan  hereunder  shall  constitute  a
representation  and warranty by the Borrowers  that the  conditions set forth in
ss.12 and ss.13, in the case of the initial Revolving Credit Loans to be made on
the Closing Date, and ss.13,  in the case of all other  Revolving  Credit Loans,
have  been  satisfied  on the  date of such  request.  Notwithstanding  anything
contained herein to the contrary,  (a) for the period  commencing on the Closing
Date  through  the date  that is seven  (7) days  from  the  Closing  Date,  the
aggregate amount of Revolving Credit Loans  outstanding plus the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations as of the Closing Date shall not
exceed  $9,000,000  and (b) for the period  commencing on the date that is seven
(7) days from the Closing  Date  through the date that is ten (10) days from the
Closing Date, the aggregate amount of Revolving Credit Loans  outstanding  shall
not exceed $6,000,000.

     2.2.  COMMITMENT  FEE. The Borrowers  jointly and severally agree to pay to
the  Administrative  Agent for the  accounts of the Lenders in  accordance  with

                                      -26-

their respective  Revolving Credit Commitment  Percentages a commitment fee (the
"COMMITMENT  FEE")  calculated at the rate of one-half of one percent (1/2%) per
annum on the  average  daily  amount  during  each  calendar  quarter or portion
thereof from the Closing Date to the Revolving Credit Maturity Date by which the
Total Revolving  Commitment  MINUS the sum of the Maximum Drawing Amount and all
Unpaid  Reimbursement  Obligations  exceeds the outstanding  amount of Revolving
Credit Loans during such calendar  quarter.  The Commitment Fee shall be payable
quarterly  in  arrears  on the  first  day of  each  calendar  quarter  for  the
immediately  preceding  calendar  quarter  commencing  on the  first  such  date
following the date hereof, with a final payment on the Revolving Credit Maturity
Date or any  earlier  date on  which  the  Revolving  Credit  Commitments  shall
terminate.

     2.3. REDUCTION OF TOTAL REVOLVING COMMITMENT.  The Borrowers shall have the
right at any time  and from  time to time  upon  five (5)  Business  Days  prior
written notice to the Administrative  Agent to reduce by an integral multiple of
$1,000,000 or to terminate  entirely the Total Revolving  Commitment,  whereupon
the  Revolving  Credit  Commitments  of the Lenders shall be reduced PRO RATA in
accordance with their respective Revolving Credit Commitment  Percentages of the
amount  specified  in such notice or, as the case may be,  terminated.  Promptly
after receiving any notice of the Borrowers  delivered  pursuant to this ss.2.3,
the Administrative Agent will notify the Lenders of the substance thereof.  Upon
the effective date of any such reduction or termination, the Borrowers shall pay
to the Administrative  Agent for the respective accounts of the Lenders the full
amount of any  Commitment  Fee then accrued on the amount of the  reduction.  No
reduction or termination of the Revolving Credit  Commitments may be reinstated.
In addition,  the Total Revolving Commitment shall be reduced in accordance with
ss.4.4.2.4.

     2.4.  THE  REVOLVING  CREDIT  NOTES.  The  Revolving  Credit Loans shall be
evidenced by separate  promissory  notes of the Borrowers in  substantially  the
form of  EXHIBIT A hereto  (each a  "REVOLVING  CREDIT  NOTE"),  dated as of the
Closing  Date (or such other date on which a Lender may become a party hereto in
accordance  with ss.16 hereof) and completed with  appropriate  insertions.  One
Revolving  Credit  Note  shall  be  payable  to the  order of each  Lender  in a
principal amount equal to such Lender's Revolving Credit Commitment or, if less,
the outstanding  amount of all Revolving Credit Loans made by such Lender,  plus
interest accrued thereon, as set forth below. Each of the Borrowers  irrevocably
authorizes  each Lender to make or cause to be made, at or about the time of the
Drawdown  Date of any  Revolving  Credit  Loan or at the time of  receipt of any
payment of principal on such  Lender's  Revolving  Credit Note,  an  appropriate
notation on such Lender's  Revolving Credit Note Record reflecting the making of
such Revolving  Credit Loan or (as the case may be) the receipt of such payment.
The outstanding  amount of the Revolving Credit Loans set forth on such Lender's
Revolving  Credit Note Record  shall be PRIMA  FACIE  evidence of the  principal
amount  thereof owing and unpaid to such Lender,  but the failure to record,  or
any error in so  recording,  any such amount on such Lender's  Revolving  Credit
Note Record shall not limit or otherwise affect the obligations of the Borrowers

                                      -27-

hereunder or under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.

     2.5. INTEREST ON REVOLVING CREDIT LOANS.

     Except as otherwise provided in ss.6.10,

                  (a) Each Revolving Credit Loan which is a Base Rate Loan shall
         bear interest for the period commencing with the Drawdown Date thereof
         and ending on the last day of the Interest Period with respect thereto
         at the rate per annum equal to the Base Rate PLUS the Applicable Margin
         with respect to Base Rate Loans as in effect from time to time.

                  (b) Each Revolving Credit Loan which is a Eurodollar Rate Loan
         shall bear interest for the period commencing with the Drawdown Date
         thereof and ending on the last day of the Interest Period with respect
         thereto at the rate per annum equal to the Eurodollar Rate determined
         for such Interest Period PLUS the Applicable Margin with respect to
         Eurodollar Rate Loans as in effect from time to time.

The Borrowers  jointly and severally  promise to pay interest on each  Revolving
Credit Loan in arrears on each Interest Payment Date with respect thereto.

     2.6.  REQUESTS FOR REVOLVING  CREDIT LOANS. The Borrowers shall give to the
Administrative  Agent  written  notice  in the  form of  EXHIBIT  B  hereto  (or
telephonic  notice  confirmed  in a writing  in the form of EXHIBIT B hereto) of
each Revolving  Credit Loan requested  hereunder (a "LOAN REQUEST") no less than
(a) one (1) Business Day prior to the  proposed  Drawdown  Date of any Base Rate
Loan and (b) three (3) Eurodollar  Business Days prior to the proposed  Drawdown
Date of any  Eurodollar  Rate  Loan.  Each such  notice  shall  specify  (i) the
principal  amount of the  Revolving  Credit Loan  requested,  (ii) the  proposed
Drawdown Date of such Revolving  Credit Loan, (iii) the Interest Period for such
Revolving Credit Loan and (iv) the Type of such Revolving Credit Loan.  Promptly
upon receipt of any such notice, the  Administrative  Agent shall notify each of
the Lenders  thereof.  Each Loan Request shall be irrevocable and binding on the
Borrowers and shall  obligate the Borrowers to accept the Revolving  Credit Loan
requested  from the Lenders on the  proposed  Drawdown  Date.  Each Loan Request
shall be in a minimum aggregate amount of $500,000 or an integral of $100,000 in
excess thereof.

     2.7. CONVERSION OPTIONS.

          2.7.1.  CONVERSION  TO DIFFERENT  TYPE OF REVOLVING  CREDIT LOAN.  The
     Borrowers may elect from time to time to convert any outstanding  Revolving
     Credit Loan to a Revolving  Credit Loan of another Type,  PROVIDED that (a)
     with respect to any such  conversion  of a  Eurodollar  Rate Loan to a Base
     Rate Loan, the Borrowers shall give the  Administrative  Agent at least one
     (1) Business Day prior written notice of such election; (b) with respect to
     any such  conversion  of a Base Rate Loan to a  Eurodollar  Rate Loan,  the
     Borrowers shall give the Administrative Agent at least three (3) Eurodollar

                                      -28-

     Business Days prior written  notice of such  election;  (c) with respect to
     any such  conversion of a Eurodollar  Rate Loan into a Base Rate Loan, such
     conversion  shall only be made on the last day of the Interest  Period with
     respect  thereto;  and (d) no Revolving Credit Loan may be converted into a
     Eurodollar  Rate Loan when any Default or Event of Default has occurred and
     is  continuing.  On the date on which  such  conversion  is being made each
     Lender shall take such action as is  necessary  to transfer  its  Revolving
     Credit Commitment Percentage of such Revolving Credit Loans to its Domestic
     Lending Office or its Eurodollar Lending Office, as the case may be. All or
     any part of outstanding Revolving Credit Loans of any Type may be converted
     into a Revolving Credit Loan of another Type as provided  herein,  PROVIDED
     that any partial  conversion  shall be in an aggregate  principal amount of
     $500,000 or an integral of  $100,000  in excess  thereof.  Each  Conversion
     Request  relating  to  the  conversion  of a  Revolving  Credit  Loan  to a
     Eurodollar Rate Loan shall be irrevocable by the Borrowers.

          2.7.2.  CONTINUATION  OF TYPE OF REVOLVING  CREDIT LOAN. Any Revolving
     Credit Loan of any Type may be continued as a Revolving  Credit Loan of the
     same Type upon the expiration of an Interest Period with respect thereto by
     compliance  by the  Borrowers  with  the  notice  provisions  contained  in
     ss.2.7.1;  PROVIDED that no  Eurodollar  Rate Loan may be continued as such
     when any Default or Event of Default has  occurred and is  continuing,  but
     shall be automatically converted to a Base Rate Loan on the last day of the
     first Interest Period relating thereto ending during the continuance of any
     Default or Event of Default of which officers of the  Administrative  Agent
     active upon the Borrowers' account have actual knowledge. In the event that
     the  Borrowers  fail  to  provide  any  such  notice  with  respect  to the
     continuation of any Eurodollar Rate Loan as such, then such Eurodollar Rate
     Loan shall be  automatically  converted to a Base Rate Loan on the last day
     of the first Interest Period relating  thereto.  The  Administrative  Agent
     shall  notify  the  Lenders  promptly  when any such  automatic  conversion
     contemplated by this ss.2.7 is scheduled to occur.

          2.7.3 . EURODOLLAR  RATE LOANS.  Any conversion to or from  Eurodollar
     Rate Loans shall be in such amounts and be made pursuant to such  elections
     so that, after giving effect thereto, the aggregate principal amount of all
     Eurodollar  Rate Loans  having the same  Interest  Period shall not be less
     than $500,000 or a whole  multiple of $100,000 in excess  thereof.  No more
     than six (6) Eurodollar Rate Loans having different Interest Periods may be
     outstanding at any time.

     2.8. FUNDS FOR REVOLVING CREDIT LOAN.

          2.8.1. FUNDING PROCEDURES.  Not later than 11:00 a.m. (Boston time) on
     the proposed  Drawdown  Date of any  Revolving  Credit  Loans,  each of the
     Lenders  will  make  available  to  the   Administrative   Agent,   at  the

                                      -29-

     Administrative  Agent's Office, in immediately  available funds, the amount
     of such Lender's  Revolving Credit  Commitment  Percentage of the amount of
     the requested Revolving Credit Loans. Upon receipt from each Lender of such
     amount,  and upon receipt of the documents  required by ss.ss.12 and 13 and
     the satisfaction of the other  conditions set forth therein,  to the extent
     applicable,  the Administrative  Agent will make available to the Borrowers
     the aggregate  amount of such Revolving  Credit Loans made available to the
     Administrative  Agent by the Lenders.  The failure or refusal of any Lender
     to make  available to the  Administrative  Agent at the aforesaid  time and
     place on any Drawdown  Date the amount of its Revolving  Credit  Commitment
     Percentage  of the requested  Revolving  Credit Loans shall not relieve any
     other Lender from its several obligation hereunder to make available to the
     Administrative  Agent the amount of such other  Lender's  Revolving  Credit
     Commitment Percentage of any requested Revolving Credit Loans.

          2.8.2. ADVANCES BY ADMINISTRATIVE AGENT. The Administrative Agent may,
     unless  notified to the  contrary by any Lender  prior to a Drawdown  Date,
     assume that such Lender has made available to the  Administrative  Agent on
     such Drawdown Date the amount of such Lender's  Revolving Credit Commitment
     Percentage of the Revolving  Credit Loans to be made on such Drawdown Date,
     and the  Administrative  Agent may (but it shall not be  required  to),  in
     reliance  upon  such   assumption,   make  available  to  the  Borrowers  a
     corresponding  amount. If any Lender makes available to the  Administrative
     Agent such amount on a date after such Drawdown Date, such Lender shall pay
     to the Administrative Agent on demand an amount equal to the product of (a)
     the average computed for the period referred to in clause (c) below, of the
     weighted average interest rate paid by the Administrative Agent for federal
     funds acquired by the Administrative Agent during each day included in such
     period,  TIMES (b) the amount of such Lender's  Revolving Credit Commitment
     Percentage  of such  Revolving  Credit  Loans,  TIMES (c) a  fraction,  the
     numerator  of which is the number of days that  elapse  from and  including
     such  Drawdown  Date to the  date on  which  the  amount  of such  Lender's
     Revolving Credit Commitment Percentage of such Revolving Credit Loans shall
     become  immediately   available  to  the  Administrative   Agent,  and  the
     denominator  of which  is 360.  A  statement  of the  Administrative  Agent
     submitted  to such  Lender  with  respect to any  amounts  owing under this
     paragraph  shall be PRIMA FACIE evidence of the amount due and owing to the
     Administrative  Agent  by such  Lender.  If the  amount  of  such  Lender's
     Revolving  Credit  Commitment  Percentage of such Revolving Credit Loans is
     not made available to the Administrative  Agent by such Lender within three
     (3) Business Days following such Drawdown  Date, the  Administrative  Agent
     shall be entitled to recover such amount from the Borrowers on demand, with
     interest  thereon at the rate per annum  applicable to the Revolving Credit
     Loans made on such  Drawdown  Date.

                                      -30-

3.  REPAYMENT OF THE  REVOLVING  CREDIT  LOANS.

     3.1.  MATURITY.  The Borrowers  jointly and severally promise to pay on the
Revolving  Credit  Maturity  Date,  and there shall  become  absolutely  due and
payable on the Revolving Credit Maturity Date, all of the Revolving Credit Loans
outstanding on such date,  together with any and all accrued and unpaid interest
thereon.

     3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the sum
of the  outstanding  amount of the Revolving  Credit Loans,  the Maximum Drawing
Amount and all Unpaid Reimbursement  Obligations which have not been repaid with
the proceeds of Revolving Credit Loans,  exceeds the Total Revolving  Commitment
at such time, then the Borrowers shall immediately pay the amount of such excess
to the  Administrative  Agent for the  respective  accounts  of the  Lenders for
application:  first, to any Unpaid Reimbursement Obligations which have not been
repaid with the proceeds of Revolving  Credit  Loans;  second,  to the Revolving
Credit Loans; and third, to provide to the Administrative  Agent cash collateral
for Reimbursement Obligations as contemplated by ss.5.2(b) and (c). Each payment
of any Unpaid Reimbursement  Obligations or prepayment of Revolving Credit Loans
shall be allocated among the Lenders,  in proportion,  as nearly as practicable,
to each  Reimbursement  Obligation or (as the case may be) the respective unpaid
principal amount of each Lender's Revolving Credit Note, with adjustments to the
extent  practicable  to equalize any prior payments or repayments not exactly in
proportion. In addition, the Borrowers shall repay the Revolving Credit Loans in
accordance with ss.4.4.2.4.

     3.3.  OPTIONAL  REPAYMENTS OF REVOLVING  CREDIT LOANS.  The Borrowers shall
have the  right,  at their  election,  to repay  the  outstanding  amount of the
Revolving  Credit Loans,  as a whole or in part, at any time without  penalty or
premium,  PROVIDED that any full or partial prepayment of the outstanding amount
of any  Eurodollar  Rate Loans  pursuant  to this ss.3.3 may be made only on the
last day of the Interest Period relating  thereto.  The Borrowers shall give the
Administrative  Agent,  no later than 10:00 a.m.,  Boston time, at least one (1)
Business Day prior written  notice of any proposed  prepayment  pursuant to this
ss.3.3 of Base Rate Loans, and three (3) Eurodollar  Business Days notice of any
proposed  prepayment  pursuant to this ss.3.3 of Eurodollar  Rate Loans, in each
case  specifying  the proposed date of prepayment of Revolving  Credit Loans and
the  principal  amount  to be  prepaid.  Each  such  partial  prepayment  of the
Revolving  Credit Loans shall be in an integral  multiple of $100,000,  shall be
accompanied by the payment of accrued  interest on the principal  prepaid to the
date of prepayment  and shall be applied,  in the absence of  instruction by the
Borrowers,  first to the  principal of Base Rate Loans and then to the principal
of Eurodollar Rate Loans.  Each partial  prepayment shall be allocated among the
Lenders,  in proportion,  as nearly as  practicable,  to the  respective  unpaid
principal amount of each Lender's Revolving Credit Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.

                                      -31-

4. THE TERM LOANS.

     4.1. COMMITMENT TO LEND.

          4.1.1 . TERM LOAN A. Subject to the terms and  conditions set forth in
     this Credit  Agreement,  each Lender agrees to lend to the Borrowers on the
     Closing  Date  the  amount  of its  Term  A  Commitment  Percentage  of the
     principal amount of $30,000,000.

          4.1.2 . TERM LOAN B. Subject to the terms and  conditions set forth in
     this Credit  Agreement,  each Lender agrees to lend to the Borrowers on the
     Closing  Date  the  amount  of its  Term  B  Commitment  Percentage  of the
     principal amount of $5,000,000.

     4.2. THE TERM NOTES.

          4.2.1.  TERM  LOAN A.  Term  Loan A shall  be  evidenced  by  separate
     promissory  notes of the Borrowers in  substantially  the form of EXHIBIT C
     hereto  (each a "TERM A NOTE"),  dated the Closing Date (or such other date
     on which a Lender  may  become a party  hereto  in  accordance  with  ss.16
     hereof) and completed with appropriate insertions. One Term A Note shall be
     payable to the order of each Lender with a Term A Commitment  Percentage in
     a principal  amount equal to such Lender's Term A Commitment  Percentage of
     the Term Loan A and  representing the obligation of the Borrowers to pay to
     such Lender such principal  amount or, if less, the  outstanding  amount of
     such  Lender's  Term A  Commitment  Percentage  of the  Term  Loan A,  plus
     interest  accrued  thereon,  as set  forth  below.  Each  of the  Borrowers
     irrevocably  authorizes  each Lender to make or cause to be made a notation
     on such  Lender's  Term A Note Record  reflecting  the  original  principal
     amount of such  Lender's  Term A Commitment  Percentage  of the Term Loan A
     and, at or about the time of such Lender's receipt of any principal payment
     on such Lender's Term A Note, an appropriate notation on such Lender's Term
     A Note Record  reflecting  such payment.  The  aggregate  unpaid amount set
     forth on such Lender's Term A Note Record shall be PRIMA FACIE  evidence of
     the  principal  amount  thereof  owing and unpaid to such  Lender,  but the
     failure to record,  or any error in so  recording,  any such amount on such
     Lender's  Term A Note  Record  shall  not  affect  the  obligations  of the
     Borrowers  hereunder or under any Term A Note to make payments of principal
     of and interest on any Term A Note when due.

          4.2.2.  TERM  LOAN B.  Term  Loan B shall  be  evidenced  by  separate
     promissory  notes of the Borrowers in  substantially  the form of EXHIBIT C
     hereto  (each a "TERM B NOTE"),  dated the Closing Date (or such other date
     on which a Lender  may  become a party  hereto  in  accordance  with  ss.16
     hereof) and completed with appropriate insertions. One Term B Note shall be
     payable to the order of each Lender with a Term B Commitment  Percentage in
     a principal  amount equal to such Lender's Term B Commitment  Percentage of
     the Term Loan B and  representing the obligation of the Borrowers to pay to

                                      -32-

     such Lender such principal  amount or, if less, the  outstanding  amount of
     such  Lender's  Term B  Commitment  Percentage  of the  Term  Loan B,  plus
     interest  accrued  thereon,  as set  forth  below.  Each  of the  Borrowers
     irrevocably  authorizes  each Lender to make or cause to be made a notation
     on such  Lender's  Term B Note Record  reflecting  the  original  principal
     amount of such  Lender's  Term B Commitment  Percentage  of the Term Loan B
     and, at or about the time of such Lender's receipt of any principal payment
     on such Lender's Term B Note, an appropriate notation on such Lender's Term
     B Note Record  reflecting  such payment.  The  aggregate  unpaid amount set
     forth on such Lender's Term B Note Record shall be PRIMA FACIE  evidence of
     the  principal  amount  thereof  owing and unpaid to such  Lender,  but the
     failure to record,  or any error in so  recording,  any such amount on such
     Lender's  Term B Note  Record  shall  not  affect  the  obligations  of the
     Borrowers  hereunder or under any Term B Note to make payments of principal
     of and interest on any Term B Note when due.

     4.3. SCHEDULED REPAYMENT OF TERM LOANS.

          4.3.1 . TERM LOAN A. The Borrowers  jointly and  severally  promise to
     pay to the  Administrative  Agent  for  the  account  of  the  Lenders  the
     principal  amount of the Term Loan A in twenty (20)  consecutive  quarterly
     payments in such  amounts  equal to the amount set forth in the table below
     opposite the date of such  payment,  such payments to be due and payable on
     the last day of each fiscal quarter of each Fiscal Year  commencing on July
     3, 2001,  with a final  payment  on the Term A  Maturity  Date in an amount
     equal to the unpaid balance of the Term Loan A.


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

          Payment Date Amount of Payment
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      July 3, 2001                                       $1,000,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      October 2, 2001                                    $1,000,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      January 1, 2002                                    $1,000,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      April 2, 2002                                      $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      July 2, 2002                                       $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      October 1, 2002                                    $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      December 31, 2002                                  $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      April 1, 2003                                      $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      July 1, 2003                                       $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      September 30, 2003                                 $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      December 30, 2003                                  $1,250,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

                                      -33-


      March 31, 2004                                     $1,375,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      June 29, 2004                                      $1,375,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      September 28, 2004                                 $1,375,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      December 28, 2004                                  $1,375,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      March 29, 2005                                     $1,625,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      June 28, 2005                                      $1,625,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      September 27, 2005                                 $1,625,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      January 3, 2006                                    $1,625,000
      -------------------------------------- -----------------------------------
      -------------------------------------- -----------------------------------

      Term A Maturity Date                     $5,000,000 or balance of Term
                                                     Loan A outstanding
      -------------------------------------- -----------------------------------

          4.3.2 . TERM LOAN B. The Borrowers  jointly and  severally  promise to
     pay to the  Administrative  Agent  for  the  account  of  the  Lenders  the
     principal  amount  of  the  Term  Loan  B in  twenty-one  (21)  consecutive
     quarterly  payments  in such  amounts  equal to the amount set forth in the
     table below opposite the date of such payment,  such payments to be due and
     payable  on the  last  day of  each  fiscal  quarter  of each  Fiscal  Year
     commencing  on April 2, 2002,  with a final  payment on the Term B Maturity
     Date in an amount equal to the unpaid balance of the Term Loan B.


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

        Payment Date Amount of Payment
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    April 2, 2002                                        $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    July 2, 2002                                         $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    October 1, 2002                                      $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    December 31, 2002                                    $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    April 1, 2003                                        $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    July 1, 2003                                         $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    September 30, 2003                                   $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    December 30, 2003                                    $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    March 31, 2004                                       $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    June 29, 2004                                        $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    September 28, 2004                                   $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    December 28, 2004                                    $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    March 29, 2005                                       $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    June 28, 2005                                        $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------


                                      -34-

    September 27, 2005                                   $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    January 3, 2006                                      $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    April 4, 2006                                        $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    July 4, 2006                                         $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    October 3, 2006                                      $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    January 2, 2007                                      $25,000
    --------------------------------------- -----------------------------------
    --------------------------------------- -----------------------------------

    Term B Maturity Date                      $4,500,000 or balance of Term
                                                    Loan B outstanding
    --------------------------------------- -----------------------------------

     4.4. PREPAYMENT OF TERM LOANS.

          4.4.1 . OPTIONAL  PREPAYMENTS.  The Borrowers  shall have the right at
     any time to prepay the Term Notes on or before the Term A Maturity  Date or
     Term B Maturity Date, as applicable,  as a whole, or in part, upon not less
     than five (5)  Business  Days prior  written  notice to the  Administrative
     Agent,  without  premium  or  penalty,   PROVIDED  that  (a)  each  partial
     prepayment  shall be in the  principal  amount of  $100,000  or an integral
     multiple  thereof,  (b) any portion of a Term Loan bearing  interest at the
     Eurodollar Rate that is prepaid pursuant to this ss.4.4 on a day other than
     on  the  last  day  of  the  Interest  Period  relating  thereto  shall  be
     accompanied  by any amounts due under  ss.6.9,  (c) each  prepayment of the
     Term  Loans  shall be  applied  ratably  to Term  Loan A and Term Loan B in
     accordance with the outstanding  principal amount thereof, (d) each partial
     prepayment  of  Term  Loan A shall  be  allocated  among  the  Lenders,  in
     proportion, as nearly as practicable,  to the respective outstanding amount
     of each Lender's Term A Note, with adjustments to the extent practicable to
     equalize  any prior  prepayments  not  exactly in  proportion  and (e) each
     partial prepayment of Term Loan B shall be allocated among the Lenders,  in
     proportion, as nearly as practicable,  to the respective outstanding amount
     of each Lender's Term B Note, with adjustments to the extent practicable to
     equalize any prior prepayments not exactly in proportion. Any prepayment of
     principal of a Term Loan shall include all interest  accrued to the date of
     prepayment  and shall be applied  against  the  scheduled  installments  of
     principal due on such Term Loan in the inverse order of maturity. No amount
     repaid with respect to a Term Loan may be reborrowed.

          4.4.2 . MANDATORY PREPAYMENTS.

               4.4.2.1.  ........EXCESS  OPERATING CASH FLOW RECAPTURE. For each
          Fiscal Year of the  Borrowers,  commencing  with Fiscal Year 2001, the
          Borrowers  shall make a prepayment  of the Loans in an amount equal to
          the  Applicable   Excess  Cash  Flow   Percentage  of  the  amount  of
          Consolidated  Excess  Operating  Cash Flow for such Fiscal Year,  such
          mandatory  prepayment to be due one hundred and thirty-five (135) days
          after the end of each applicable  Fiscal Year and to be applied in the
          manner set forth in ss.4.4.2.4.

                                      -35-

               4.4.2.2. ........NET CASH EQUITY ISSUANCE PROCEEDS.  Concurrently
          with the receipt by any Borrower or any  Subsidiary of Net Cash Equity
          Issuance  Proceeds,  the  Borrowers  shall  pay to the  Administrative
          Agent, to be applied to the respective  accounts of the Lenders in the
          manner set forth in ss.4.4.2.4,  an amount equal to that percentage of
          such  proceeds  set forth below  opposite  the  Leverage  Ratio of the
          Borrowers and their Subsidiaries  determined as of the last day of the
          most recent fiscal quarter ending prior to the date of receipt of such
          Net Cash Equity Issuance Proceeds for which financial  statements have
          been delivered pursuant to ss.9.4:


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

                  Leverage Ratio Percentage
    -------------------------------------------- -----------------------------
    -------------------------------------------- -----------------------------

    < 1.50 to 1.00                                         0%
    -
    -------------------------------------------- -----------------------------
    -------------------------------------------- -----------------------------

    > 1.50 to 1.00 but < 2.00 to 1.00                     50%
    -                  -
    -------------------------------------------- -----------------------------
    -------------------------------------------- -----------------------------

    > 2.00 to 1.00                                        75%
    -------------------------------------------- -----------------------------

               4.4.2.3. ........  PROCEEDS OF CERTAIN EVENTS.  Concurrently with
          the receipt by any Borrower or any Subsidiary of:

               (a) Net Cash Sale  Proceeds in excess of $500,000  per annum from
          Asset Sales (other than in connection with Permitted  Sale-Leasebacks)
          where such Asset Sale is either  permitted  pursuant to  ss.10.5.2  or
          consented to in writing by the Required Lenders;

               (b)  Net  Cash  Sale  Proceeds  in  connection  with a  Permitted
          Sale-Leaseback  which are not  reinvested in the  Borrowers'  business
          within two hundred  seventy  (270) days of receipt of such proceeds by
          such Person  (provided,  however,  if an Event of Default has occurred
          and is  continuing,  such proceeds  shall be  immediately  paid to the
          Administrative  Agent  and Net Cash Sale  Proceeds  from the sale of a
          Unit  acquired by a Borrower  within one hundred and eighty (180) days
          prior to the date of such Permitted Sale-Leaseback shall be applied as
          provided  in  ss.10.6  if  the   Borrower   did  not  deduct   Capital
          Expenditures  associated  with  such  Unit  from  the  calculation  of
          Consolidated  Excess  Operating Cash Flow in the current fiscal period
          or in any prior period);

               (c) proceeds received from Casualty Events or any tax refund with
          respect  to any  taxable  year,  by  the  Borrowers  or  any of  their
          Subsidiaries,  in each  case  which  have not been  reinvested  in the
          Borrowers'  business  within two hundred seventy (270) days of receipt
          of such  proceeds by such Person  (PROVIDED,  HOWEVER,  if an Event of
          Default  has  occurred  and is  continuing,  such  proceeds  shall  be
          immediately paid to the Administrative Agent); or

               (d) cash proceeds  received by a Borrower from the  incurrence of
          additional Consolidated Funded Indebtedness, other than purchase money

                                      -36-

          Indebtedness, intercompany Indebtedness and Indebtedness consisting of
          Obligations;

          the Borrowers shall pay to the Administrative Agent for the respective
          accounts of the Lenders an amount equal to one hundred  percent (100%)
          of such proceeds, to be applied in the manner set forth in ss.4.4.2.4.

               4.4.2.4.  ........  APPLICATION OF PAYMENTS.  Except as otherwise
          provided  in  ss.10.6,  all  payments  made  pursuant  to  ss.4.4.2.1,
          ss.4.4.2.2 or ss.4.4.2.3  shall be applied first against the remaining
          scheduled  installments  of  principal on each of Term Loan A and Term
          Loan B on a  ratable  basis  based  upon  the  respective  outstanding
          amounts  thereof and against the remaining  scheduled  installments of
          each of such Term Loans in the inverse order of maturity and, if there
          are no outstanding  amounts owed on the Term Loans, then to reduce the
          outstanding  amount of the Revolving  Credit Loans and to  permanently
          reduce the Total Revolving  Commitment by such amount.  Each mandatory
          prepayment of Term Loan A, Term Loan B or the Revolving  Credit Loans,
          respectively,  shall be allocated among the Lenders in proportion,  as
          nearly as practicable,  to the respective  outstanding amounts of each
          Lender's Term A Note, Term B Note or Revolving Credit  Commitment,  as
          applicable, with adjustments to the extent practicable to equalize any
          prior  prepayments  not  exactly  in  proportion.  No  amounts  repaid
          pursuant to this ss.4.4.2 may be reborrowed.  The provisions of ss.6.9
          shall apply to each prepayment pursuant to this ss.4.4.2.4.

     4.5. INTEREST ON THE TERM LOANS.

          4.5.1 . TERM LOAN A INTEREST  RATES.  Except as otherwise  provided in
     ss.6.10,  Term Loan A shall  bear  interest  during  each  Interest  Period
     relating to all or any portion of Term Loan A at the following rates:

               (a) To the  extent  that all or any  portion of Term Loan A bears
          interest  during such Interest Period at the Base Rate, Term Loan A or
          such portion  shall bear interest  during such Interest  Period at the
          rate per annum equal to the Base Rate PLUS the Applicable  Margin with
          respect to Base Rate Loans as in effect from time to time.

               (b) To the  extent  that all or any  portion of Term Loan A bears
          interest during such Interest Period at the Eurodollar Rate, Term Loan
          A or such portion shall bear interest  during such Interest  Period at
          the rate per annum equal to the  Eurodollar  Rate  determined for such
          Interest Period PLUS the Applicable  Margin with respect to Eurodollar
          Rate Loans as in effect from time to time.

                                      -37-

     The Borrowers  jointly and severally promise to pay interest on Term Loan A
     or any portion thereof  outstanding  during each Interest Period in arrears
     on each Interest Payment Date applicable to such Interest Period.

          4.5.2 . TERM LOAN B INTEREST  RATES.  Except as otherwise  provided in
     ss.6.10,  Term Loan B shall  bear  interest  during  each  Interest  Period
     relating to all or any portion of Term Loan B at the following rates:

               (a) To the  extent  that all or any  portion of Term Loan B bears
          interest  during such Interest Period at the Base Rate, Term Loan B or
          such portion  shall bear interest  during such Interest  Period at the
          rate per annum  equal to the Base Rate as in effect  from time to time
          PLUS two and one-half percent (2.5%).

               (b) To the  extent  that all or any  portion of Term Loan B bears
          interest during such Interest Period at the Eurodollar Rate, Term Loan
          B or such portion shall bear interest  during such Interest  Period at
          the rate per annum equal to the  Eurodollar  Rate  determined for such
          Interest Period PLUS four percent (4%).

     The Borrowers  jointly and severally promise to pay interest on Term Loan B
     or any portion thereof  outstanding  during each Interest Period in arrears
     on each Interest Payment Date applicable to such Interest Period.

          4.5.3  NOTIFICATION  BY  BORROWERS.  The  Borrowers  shall  notify the
     Administrative  Agent,  such notice to be  irrevocable,  at least three (3)
     Eurodollar  Business  Days prior to the Drawdown Date of a Term Loan if all
     or any  portion  of such Term Loan is to bear  interest  at the  Eurodollar
     Rate. After a Term Loan has been made, the provisions of ss.2.7 shall apply
     MUTATIS  MUTANDIS  with  respect to all or any portion of such Term Loan so
     that the  Borrowers may have the same interest rate options with respect to
     all or any  portion  of such  Term  Loan as it  would be  entitled  to with
     respect to the Revolving Credit Loans.

          4.5.4.  AMOUNTS,  ETC. Any portion of a Term Loan bearing  interest at
     the Eurodollar  Rate relating to any Interest Period shall be in the amount
     of $500,000 or an  integral  of  $100,000  in excess  thereof.  No Interest
     Period relating to a Term Loan or any portion  thereof bearing  interest at
     the  Eurodollar  Rate shall  extend  beyond  the date on which a  regularly
     scheduled  installment  payment of the principal of such Term Loan is to be
     made unless a portion of such Term Loan at least equal to such  installment
     payment  has an  Interest  Period  ending on such  date or is then  bearing
     interest  at the Base Rate.  At no time  shall  there be more than four (4)
     portions  of Term  Loan A or more  than  four (4)  portions  of Term Loan B
     bearing interest at the Eurodollar Rate having different Interest Periods.

                                      -38-

5.  LETTERS OF CREDIT.

     5.1. LETTER OF CREDIT COMMITMENTS.

          5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the terms and
     conditions  hereof and the  execution  and  delivery by the  Borrowers of a
     letter of credit application on the  Administrative  Agent's customary form
     (a "LETTER OF CREDIT  APPLICATION"),  the Administrative Agent on behalf of
     the Lenders that have a Revolving  Credit  Commitment  and in reliance upon
     the   agreement  of  the  Lenders  set  forth  in  ss.5.1.4  and  upon  the
     representations and warranties of the Borrowers  contained herein,  agrees,
     in its individual  capacity,  to issue, extend and renew for the account of
     the  Borrowers  one or more  standby  letters  of credit  (individually,  a
     "LETTER OF CREDIT"),  in such form as may be requested from time to time by
     the Borrowers and agreed to by the Administrative Agent; PROVIDED, HOWEVER,
     that,  after giving  effect to such  request,  (a) the sum of the aggregate
     Maximum Drawing Amount and all Unpaid Reimbursement  Obligations which have
     not been repaid with the  proceeds of  Revolving  Credit  Loans,  shall not
     exceed $5,000,000 (or such greater amount as the  Administrative  Agent may
     approve in writing from time to time so long as such amount does not exceed
     the Total Revolving  Commitment) at any one time and (b) the sum of (i) the
     Maximum  Drawing  Amount  on  all  Letters  of  Credit,   (ii)  all  Unpaid
     Reimbursement  Obligations  which have not been repaid with the proceeds of
     Revolving  Credit Loans, and (iii) the amount of all Revolving Credit Loans
     outstanding  shall not exceed the Total Revolving  Commitment at such time.
     Notwithstanding  the  foregoing,  the  Administrative  Agent  shall have no
     obligation  to issue  any  Letter  of  Credit  to  support  or  secure  any
     Indebtedness of any Borrower or any of its  Subsidiaries to the extent that
     such  Indebtedness was incurred prior to the proposed issuance date of such
     Letter of Credit,  unless in any such case the Borrowers demonstrate to the
     satisfaction  of the  Administrative  Agent  that (x) such  prior  incurred
     Indebtedness  were then fully secured by a prior  perfected and unavoidable
     security  interest  in  collateral   provided  by  such  Borrower  or  such
     Subsidiary to the proposed beneficiary of such Letter of Credit or (y) such
     prior incurred  Indebtedness  were then secured or supported by a letter of
     credit issued for the account of such Borrower or such  Subsidiary  and the
     reimbursement  obligation  with  respect to such letter of credit was fully
     secured  by  a  prior  perfected  and  unavoidable   security  interest  in
     collateral provided to the issuer of such letter of credit by such Borrower
     or such Subsidiary or (z) such prior incurred  Indebtedness  was secured by
     cash  collateral  in an amount  equal to the face  amount of the  Letter of
     Credit to be issued  hereunder  to  support or secure  such prior  incurred
     Indebtedness.

          5.1.2  .  LETTER  OF  CREDIT  APPLICATIONS.   Each  Letter  of  Credit
     Application  shall be completed to the  satisfaction of the  Administrative
     Agent. In the event that any provision of any Letter of Credit  Application
     shall be inconsistent with any provision of this Credit Agreement, then the

                                      -39-

     provisions  of this  Credit  Agreement  shall,  to the  extent  of any such
     inconsistency, govern.

          5.1.3.  TERMS OF  LETTERS  OF CREDIT.  Each  Letter of Credit  issued,
     extended or renewed  hereunder shall,  among other things,  (a) provide for
     the  payment  of sight  drafts  for  honor  thereunder  when  presented  in
     accordance  with the terms  thereof and when  accompanied  by the documents
     described therein, and (b) have an expiry date no later than the date which
     is  fourteen  (14) days (or,  if the  Letter  of Credit is  confirmed  by a
     confirmer  or  otherwise  provides  for  one  or  more  nominated  persons,
     forty-five  (45) days) prior to the Revolving  Credit  Maturity Date.  Each
     Letter of Credit so issued,  extended  or  renewed  shall be subject to the
     Uniform  Customs and  Practice for  Documentary  Credits  (1993  Revision),
     International  Chamber of  Commerce  Publication  No. 500 or any  successor
     version thereto adopted by the Administrative  Agent in the ordinary course
     of its  business as a letter of credit  issuer and in effect at the time of
     issuance of such Letter of Credit (the  "UNIFORM  CUSTOMS") or, in the case
     of  a  standby  Letter  of  Credit,  either  the  Uniform  Customs  or  the
     International Standby Practices (ISP98),  International Chamber of Commerce
     Publication  No. 590,  or any  successor  code of standby  letter of credit
     practices among banks adopted by the  Administrative  Agent in the ordinary
     course of its business as a standby  letter of credit  issuer and in effect
     at the time of issuance of such Letter of Credit.

          5.1.4 .  REIMBURSEMENT  OBLIGATIONS OF LENDERS.  Each Lender severally
     agrees that it shall be absolutely liable, without regard to the occurrence
     of any  Default  or Event  of  Default  or any  other  condition  precedent
     whatsoever,  to the extent of such  Lender's  Revolving  Credit  Commitment
     Percentage,  to reimburse the Administrative Agent on demand for the amount
     of each draft paid by the Administrative  Agent under each Letter of Credit
     to the extent that such amount is not reimbursed by the Borrowers  pursuant
     to ss.5.2 or with the proceeds of Revolving Credit Loans advanced  pursuant
     to ss.5.3 (such  agreement  for a Lender being called herein the "LETTER OF
     CREDIT PARTICIPATION" of such Lender).

          5.1.5 . PARTICIPATIONS OF LENDERS.  Each such payment made by a Lender
     shall be treated as the purchase by such Lender of a participating interest
     in the Borrowers'  Reimbursement Obligation under ss.5.2 in an amount equal
     to  sucH  payment.   Each  Lender  shall  share  in  accordance   with  its
     participating interest in any interest which accrues pursuant to ss.5.2.

     5.2.  REIMBURSEMENT  OBLIGATION  OF THE  BORROWERS.  In order to induce the
Administrative  Agent to issue,  extend and renew each  Letter of Credit and the
Lenders to participate therein, the Borrowers hereby jointly and severally agree
to  reimburse  or  pay to the  Administrative  Agent,  for  the  account  of the
Administrative  Agent or (as the case may be) the Lenders,  with respect to each

                                      -40-

Letter of  Credit  issued,  extended  or  renewed  by the  Administrative  Agent
hereunder,

          (a) except as otherwise  expressly  provided in  ss.5.2(b)  and (c) or
     ss.5.3,  on each date that any drAft  presented under such Letter of Credit
     is  honored  by  the  Administrative  Agent,  or the  Administrative  Agent
     otherwise makes a payment with respect thereto,  (i) the amount paid by the
     Administrative  Agent under or with  respect to such Letter of Credit,  and
     (ii) the amount of any taxes,  fees,  charges or other  costs and  expenses
     whatsoever incurred by the Administrative Agent or any Lender in connection
     with any payment made by the  Administrative  Agent or any Lender under, or
     with respect to, such Letter of Credit,

          (b) upon the reduction (but not  termination)  of the Total  Revolving
     Commitment  to an amount less than the Maximum  Drawing  Amount,  an amount
     equal to such difference,  which amount shall be held by the Administrative
     Agent for the benefit of the Lenders and the  Administrative  Agent as cash
     collateral for all Reimbursement Obligations, and

          (c) upon the  termination of the Total  Revolving  Commitment,  or the
     acceleration of the  Reimbursement  Obligations with respect to all Letters
     of Credit in  accordance  with ss.14,  an amount  equal to thE then Maximum
     Drawing Amount on all Letters of Credit,  which amount shall be held by the
     Administrative  Agent for the benefit of the Lenders and the Administrative
     Agent as cash collateral for all Reimbursement Obligations.

Each  such  payment   shall  be  made  to  the   Administrative   Agent  at  the
Administrative   Agent's  Office  in  immediately  available  funds.  Except  as
otherwise  provided in ss.5.3 with respect to Unpaid  Reimbursement  Obligations
which are converted tO Revolving  Credit Loans,  interest on any and all amounts
remaining  unpaid by the  Borrowers  under this ss.5.2 at any time froM the date
such  amounts  become due and  payable  (whether  as stated in this  ss.5.2,  by
acceleration  or  otherwise)  until  paymenT  in full  (whether  before or after
judgment)  shall be  payable to the  Administrative  Agent on demand at the rate
specified in ss.6.10 for overdue principal on the Revolving Credit Loans.

     5.3.  LETTER OF CREDIT  PAYMENTS.  If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit,  the Administrative
Agent shall notify the  Borrowers of the date and amount of the draft  presented
or demand for payment and of the date and time when it expects to pay such draft
or honor  such  demand for  payment.  If the  Borrowers  fail to  reimburse  the
Administrative Agent as provided in ss.5.2 on or before the date that such draft
is paid oR other payment is made by the Administrative Agent, the Administrative
Agent shall at any time thereafter  notify the Lenders of the amount of any such
Unpaid Reimbursement Obligation. If no Event of Default is then continuing,  the
Borrower shall be deemed to have  requested a Revolving  Credit Loan which shall
be a Base  Rate  Loan in an amount  equal to the  amount of such  draft or other

                                      -41-

payment and the notice  from the  Administrative  Agent to the Lenders  shall be
deemed to be a notice of Loan Request made by the Administrative Agent. No later
than 3:00 p.m.  (Boston time) on the Business Day next  following the receipt of
such notice,  each Lender shall make available to the  Administrative  Agent, at
the Administrative Agent's Office, in immediately available funds, such Lender's
Revolving Credit Commitment Percentage of such Unpaid Reimbursement  Obligation,
together  with an amount equal to the product of (a) the  average,  computed for
the period  referred to in clause (c) below,  of the weighted  average  interest
rate  paid  by the  Administrative  Agent  for  federal  funds  acquired  by the
Administrative  Agent  during each day  included in such  period,  TIMES (b) the
amount equal to such Lender's  Revolving  Credit  Commitment  Percentage of such
Unpaid Reimbursement Obligation, TIMES (c) a fraction, the numerator of which is
the number of days that elapse from and  including  the date the  Administrative
Agent paid the draft  presented for honor or otherwise  made payment to the date
on which such Lender's  Revolving  Credit  Commitment  Percentage of such Unpaid
Reimbursement   Obligation   shall   become   immediately   available   to   the
Administrative  Agent,  and the  denominator  of  which  is 360.  If no Event of
Default is continuing at the time the Administrative  Agent notified the Lenders
of the  amount  of  such  Unpaid  Reimbursement  Obligation,  the  amounts  made
available to the Administrative  Agent by the Lenders hereunder shall be treated
as Revolving  Credit Loans in all respects  which bear interest at the Base Rate
with a Drawdown Date as of the date on which the  Administrative  Agent paid the
draft presented for honor or otherwise made such payment. If an Event of Default
is  continuing  at the time of such  notice,  the  amount of such draft or other
payment made by the Administrative  Agent in respect of the applicable Letter of
Credit shall be treated in all respects as an Unpaid  Reimbursement  Obligation.
The responsibility of the Administrative  Agent to the Borrowers and the Lenders
shall be only to determine that the documents  (including each draft)  delivered
under each  Letter of Credit in  connection  with such  presentment  shall be in
conformity in all material respects with such Letter of Credit.

     5.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this ss.5 shall
be absolute and  unconditional  under anY and all circumstances and irrespective
of the occurrence of any Default or Event of Default or any condition  precedent
whatsoever or any setoff,  counterclaim or defense to payment which any Borrower
may have or have  had  against  the  Administrative  Agent,  any  Lender  or any
beneficiary  of a Letter  of  Credit.  Each  Borrower  further  agrees  with the
Administrative  Agent  and the  Lenders  that the  Administrative  Agent and the
Lenders  shall  not  be  responsible  for,  and  the  Borrowers'   Reimbursement
Obligations  under  ss.5.2 shall not be affected  by,  among other  things,  the
validity or genuinenesS  of documents or of any  endorsements  thereon,  even if
such  documents  should  in fact  prove  to be in any or all  respects  invalid,
fraudulent  or  forged,  or any  dispute  between  or among  any  Borrower,  the
beneficiary of any Letter of Credit or any financing  institution or other party
to which any  Letter of Credit  may be  transferred  or any  claims or  defenses
whatsoever of any Borrower  against the  beneficiary  of any Letter of Credit or

                                      -42-

any such  transferee.  The  Administrative  Agent and the  Lenders  shall not be
liable for any error, omission, interruption or delay in transmission,  dispatch
or delivery of any message or advice,  however  transmitted,  in connection with
any Letter of Credit.  Each Borrower  agrees that any action taken or omitted by
the  Administrative  Agent or any Lender under or in connection with each Letter
of Credit and the related drafts and documents,  if done in good faith, shall be
binding upon the  Borrowers and shall not result in any liability on the part of
the Administrative Agent or any Lender to the Borrowers.

     5.5. RELIANCE BY ISSUER.  To the extent not inconsistent  with ss.5.4,  the
Administrative  Agent shall be entitled tO rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message,  statement,  order or other  document  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,  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
Credit  Agreement unless it shall first have received such advice or concurrence
of the Required Lenders as it reasonably deems  appropriate or it shall first be
indemnified to its reasonable  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 Credit
Agreement in accordance with a request of the Required Lenders, and such request
and any action  taken or failure to act pursuant  thereto  shall be binding upon
the Lenders and all future holders of the Revolving  Credit Notes or of a Letter
of Credit Participation.

     5.6.  LETTER OF CREDIT FEE.  With  respect to each Letter of Credit  issued
hereunder,  the  Borrowers  shall  pay to the  Administrative  Agent a fee  (the
"LETTER  OF CREDIT  FEE") for each  Letter of Credit  issued or  renewed  by the
Administrative  Agent at a rate per annum  equal to the  Applicable  Margin with
respect to Letters of Credit in effect from time to time, on the Maximum Drawing
Amount  of such  Letter  of  Credit  for the  period  such  Letter  of Credit is
outstanding.  The  Administrative  Agent  shall,  in turn,  remit to each Lender
(including Fleet) such Lender's  Revolving Credit  Commitment  Percentage of the
Letter of Credit Fee. In addition,  the  Borrowers  will pay the  Administrative
Agent,  for its own  account,  a  Fronting  Fee (the  "FRONTING  FEE")  equal to
one-quarter  of one percent  (0.25%) per annum on the Maximum  Drawing Amount of
such Letter of Credit for the period such Letter of Credit is  outstanding.  The
Letter of Credit Fee and the Fronting Fee shall be payable  quarterly in arrears
on the last day of each calendar  quarter for the calendar  quarter then ending.
In  respect  of each  Letter of  Credit,  the  Borrowers  shall  also pay to the
Administrative Agent, for its own account, at such time or times as such charges
are customarily made by the  Administrative  Agent, the  Administrative  Agent's
customary  issuance,  amendment,  negotiation or document  examination and other
administrative fees as in effect from time to time.

                                      -43-

6.   CERTAIN GENERAL PROVISIONS.

     6.1.  FEES.  The  Borrowers  jointly  and  severally  agree  to  pay to the
Administrative Agent all fees described in the Fee Letter in accordance with the
terms thereof.

     6.2. FUNDS FOR PAYMENTS.

          6.2.1 . PAYMENTS TO  ADMINISTRATIVE  AGENT. All payments of principal,
     interest,  Reimbursement  Obligations,  Fees  and  any  other  amounts  due
     hereunder or under any of the other Loan Documents shall be made on the due
     date thereof to the  Administrative  Agent in Dollars,  for the  respective
     accounts of the Lenders and the Administrative Agent, at the Administrative
     Agent's  Office or at such other  place that the  Administrative  Agent may
     from time to time designate,  in each case at or about 11:00 a.m.  (Boston,
     Massachusetts,  time or other  local time at the place of  payment)  and in
     immediately available funds.

          6.2.2.  NO OFFSET,  ETC. All payments by the  Borrowers  hereunder and
     under any of the other Loan  Documents  shall be made  without  recoupment,
     setoff or counterclaim and free and clear of and without  deduction for any
     taxes, levies, imposts,  duties,  charges, fees, deductions,  withholdings,
     compulsory loans, restrictions or conditions of any nature now or hereafter
     imposed or levied by any jurisdiction or any political  subdivision thereof
     or taxing or other authority  therein unless the Borrowers are compelled by
     law to make  such  deduction  or  withholding.  If any such  obligation  is
     imposed  upon the  Borrowers  with  respect  to any  amount  payable  by it
     hereunder or under any of the other Loan Documents,  the Borrowers will pay
     to the Administrative Agent, for the account of the Lenders or (as the case
     may be) the  Administrative  Agent, on the date on which such amount is due
     and payable  hereunder or under such other Loan Document,  such  additional
     amount in  Dollars  as shall be  necessary  to enable  the  Lenders  or the
     Administrative  Agent to receive  the same net amount  which the Lenders or
     the  Administrative  Agent would have received on such due date had no such
     obligation  been imposed upon the  Borrowers.  The  Borrowers  will deliver
     promptly to the  Administrative  Agent certificates or other valid vouchers
     for all  taxes or other  charges  deducted  from or paid  with  respect  to
     payments made by the Borrowers hereunder or under such other Loan Document.

     6.3.  COMPUTATIONS.  All  computations of interest on the Loans and of Fees
shall be based on a 360-day year and paid for the actual number of days elapsed.
Except as otherwise  provided in the  definition of the term  "INTEREST  PERIOD"
with respect to Eurodollar Rate Loans, whenever a payment hereunder or under any
of the other Loan Documents becomes due on a day that is not a Business Day, the
due date for such payment shall be extended to the next succeeding Business Day,
and interest shall accrue during such extension.  The outstanding  amount of the
Loans as  reflected  on the  Revolving  Credit  Note  Records  and the Term Note

                                      -44-

Records  from  time to time  shall be  considered  correct  and  binding  on the
Borrowers  unless  within five (5) Business  Days after receipt of any notice by
the Administrative  Agent or any of the Lenders of such outstanding  amount, the
Administrative Agent or such Lender shall notify the Borrowers to the contrary.

     6.4.  INABILITY TO DETERMINE  EURODOLLAR  RATE. In the event,  prior to the
commencement  of any Interest  Period  relating to any Eurodollar Rate Loan, the
Administrative Agent shall determine or be notified by the Required Lenders that
(a) adequate and reasonable methods do not exist for ascertaining the Eurodollar
Rate that would otherwise determine the rate of interest to be applicable to any
Eurodollar  Rate Loan  during any  Interest  Period or (b) the  Eurodollar  Rate
determined or to be determined for such Interest  Period will not adequately and
fairly reflect the cost to the Lenders of making or maintaining their Eurodollar
Rate Loans during such period,  the  Administrative  Agent shall  forthwith give
notice of such  determination  (which  shall be  conclusive  and  binding on the
Borrowers and the Lenders) to the  Borrowers and the Lenders.  In such event (i)
any Loan Request or  Conversion  Request with respect to  Eurodollar  Rate Loans
shall be  automatically  withdrawn  and shall be deemed a request  for Base Rate
Loans, (ii) each Eurodollar Rate Loan will automatically, on the last day of the
then current  Interest  Period  relating  thereto,  become a Base Rate Loan, and
(iii) the  obligations  of the  Lenders to make  Eurodollar  Rate Loans shall be
suspended until the Administrative  Agent or the Required Lenders determine that
the circumstances giving rise to such suspension no longer exist,  whereupon the
Administrative  Agent or, as the case may be, the Administrative  Agent upon the
instruction  of the  Required  Lenders,  shall so notify the  Borrowers  and the
Lenders.

     6.5.  ILLEGALITY.  Notwithstanding  any  other  provisions  herein,  if any
present or future law, regulation,  treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar  Rate  Loans,  such  Lender  shall  forthwith  give  notice  of  such
circumstances  to the  Borrowers  and the other  Lenders and  thereupon  (a) the
commitment  of such Lender to make  Eurodollar  Rate Loans or convert  Base Rate
Loans to  Eurodollar  Rate  Loans  shall  forthwith  be  suspended  and (b) such
Lender's  Loans then  outstanding  as Eurodollar  Rate Loans,  if any,  shall be
converted  automatically  to Base  Rate  Loans on the last day of each  Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be  required  by  law.  Each  Borrower  hereby  agrees  promptly  to pay the
Administrative Agent for the account of such Lender, upon demand by such Lender,
any  additional  amounts  necessary  to  compensate  such  Lender  for any costs
incurred by such Lender in making any conversion in accordance with this ss.6.5,
including  any  interest  or fees  payable  by such  Lender to  lenders of funds
obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.

     6.6.  ADDITIONAL COSTS, ETC. If any present or future applicable law, which
expression,  as used herein, includes statutes, rules and regulations thereunder
and  interpretations  thereof by any competent  court or by any  governmental or
other  regulatory  body or  official  charged  with  the  administration  or the

                                      -45-

interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise  issued to any Lender
or the  Administrative  Agent by any central bank or other  fiscal,  monetary or
other authority (whether or not having the force of law), shall:

          (a) subject any Lender or the  Administrative  Agent to any tax, levy,
     impost,  duty,  charge,  fee,  deduction or  withholding of any nature with
     respect to this Credit Agreement,  the other Loan Documents, any Letters of
     Credit,  such Lender's Revolving Credit Commitment or the Loans (other than
     taxes based upon or measured by the income or profits of such Lender or the
     Administrative Agent), or

          (b)  materially  change the basis of  taxation  (except for changes in
     taxes on income or profits) of payments to any Lender of the  principal  of
     or the interest on any Loans or any other amounts  payable to any Lender or
     the  Administrative  Agent under this Credit  Agreement or any of the other
     Loan Documents, or

          (c) impose or increase or render  applicable (other than to the extent
     specifically  provided for elsewhere in this Credit  Agreement) any special
     deposit, reserve, assessment,  liquidity, capital adequacy or other similar
     requirements  (whether or not having the force of law) against  assets held
     by, or deposits in or for the account of, or loans by, or letters of credit
     issued by, or commitments of an office of any Lender, or

          (d)  impose  on any  Lender  or the  Administrative  Agent  any  other
     conditions or requirements with respect to this Credit Agreement, the other
     Loan Documents,  any Letters of Credit,  the Loans, such Lender's Revolving
     Credit Commitment,  or any class of loans, letters of credit or commitments
     of which  any of the Loans or such  Lender's  Revolving  Credit  Commitment
     forms a part, and the result of any of the foregoing is

               (i) to  increase  the  cost to any  Lender  of  making,  funding,
          issuing,  renewing,  extending or maintaining any of the Loans or such
          Lender's Revolving Credit Commitment or any Letter of Credit, or

               (ii) to reduce the amount of principal,  interest,  Reimbursement
          Obligation   or  other   amount   payable   to  such   Lender  or  the
          Administrative  Agent hereunder on account of such Lender's  Revolving
          Credit Commitment, any Letter of Credit or any of the Loans, or

               (iii) to require such Lender or the Administrative  Agent to make
          any payment or to forego any interest or  Reimbursement  Obligation or
          other sum payable  hereunder,  the amount of which payment or foregone

                                      -46-

          interest or  Reimbursement  Obligation  or other sum is  calculated by
          reference to the gross amount of any sum receivable or deemed received
          by  such  Lender  or  the  Administrative  Agent  from  the  Borrowers
          hereunder,

then, and in each such case, the Borrowers will, upon demand made by such Lender
or (as the case may be) the  Administrative  Agent at any time and from  time to
time and as often as the occasion  therefor may arise, pay to such Lender or the
Administrative Agent such additional amounts as will be sufficient to compensate
such Lender or the  Administrative  Agent for such additional  cost,  reduction,
payment or foregone interest or Reimbursement Obligation or other sum.

     6.7.CAPITAL   ADEQUACY.  If  after  the  date  hereof  any  Lender  or  the
Administrative  Agent  determines that (a) the adoption of or change in any law,
governmental rule,  regulation,  policy,  guideline or directive (whether or not
having the force of law) regarding  capital  requirements  for Lenders or Lender
holding companies or any change in the interpretation or application  thereof by
a Governmental  Authority with  appropriate  jurisdiction,  or (b) compliance by
such Lender or the  Administrative  Agent or any  corporation  controlling  such
Lender or the Administrative Agent with any law, governmental rule,  regulation,
policy,  guideline or directive  (whether or not having the force of law) of any
such entity regarding capital adequacy, has the effect of reducing the return on
such Lender's or the Administrative Agent's commitment with respect to any Loans
to a level below that which such Lender or the  Administrative  Agent could have
achieved but for such adoption,  change or compliance (taking into consideration
such Lender's or the Administrative  Agent's then existing policies with respect
to capital adequacy and assuming full  utilization of such entity's  capital) by
any  amount  deemed by such  Lender  or (as the case may be) the  Administrative
Agent to be material,  then such Lender or the  Administrative  Agent may notify
the Borrowers of such fact.  To the extent that the amount of such  reduction in
the return on capital is not reflected in the Base Rate, the Borrowers  agree to
pay such Lender or (as the case may be) the Administrative  Agent for the amount
of such  reduction  in the  return  on  capital  as and when such  reduction  is
determined  upon  presentation  by  such  Lender  or (as  the  case  may be) the
Administrative  Agent of a certificate in accordance  with ss.6.8  hereof.  Each
LendeR shall allocate such cost increases  among its customers in good faith and
on an equitable basis.

     6.8.  CERTIFICATE.  A  certificate  setting  forth any  additional  amounts
payable  pursuant to  ss.ss.6.6 or 6.7 and a brIef  explanation  of such amounts
which  are due,  submitted  by any  Lender  or the  Administrative  Agent to the
Borrowers, shall be conclusive, absent manifest error, that such amounts are due
and owing.

     6.9. INDEMNITY. The Borrowers jointly and severally agree to indemnify each
Lender and to hold each  Lender  harmless  from and  against  any loss,  cost or
expense (including loss of anticipated  profits) that such Lender may sustain or
incur as a  consequence  of (a)  default  by the  Borrowers  in  payment  of the
principal amount of or any interest on any Eurodollar Rate Loans as and when due

                                      -47-

and payable,  including  any such loss or expense  arising from interest or fees
payable by such Lender to banks of funds obtained by it in order to maintain its
Eurodollar  Rate Loans,  (b) default by the  Borrowers  in making a borrowing or
conversion  after the Borrowers  have given (or are deemed to have given) a Loan
Request, notice (in the case of all or any portion of the Term Loans pursuant to
ss.4.5.3) or a Conversion  Request relating thereto iN accordance with ss.2.6 or
ss.2.7 or ss.4.5 or (c) the making of any payment of a  Eurodollar  Rate Loan or
the making oF any  conversion of any such Loan to a Base Rate Loan on a day that
is not the last day of the  applicable  Interest  Period with  respect  thereto,
including  interest or fees payable by such Lender to lenders of funds  obtained
by it in order to maintain any such Loans.

     6.10. INTEREST AFTER DEFAULT.

          6.10.1  .  OVERDUE  AMOUNTS.  Overdue  principal  and (to  the  extent
     permitted by  applicable  law)  interest on the Loans and all other overdue
     amounts  payable  hereunder or under any of the other Loan Documents  shall
     bear interest  compounded monthly and payable on demand at a rate per annum
     equal to (a) in the case of any  Revolving  Credit Loans or Term Loan A the
     Base Rate PLUS the  Applicable  Margin  for Base Rate  Loans then in effect
     PLUS three  percent  (3%) per annum and (b) in the case of Term Loan B, the
     Base Rate PLUS two and one-half  percent (2.5%) plus three percent (3%) per
     annum,  in each case until such amount shall be paid in full (after as well
     as before judgment).

          6.10.2 . AMOUNTS NOT OVERDUE.  During the  continuance  of an Event of
     Default the principal of the Loans not overdue  shall,  until such Event of
     Default has been cured, remedied or waived by the Required Lenders pursuant
     to  ss.17.12,  bear  interest  at a rate  per  annum  equal  to the rate of
     interest applicable to overdue principal pursuant to ss.6.10.1.

     6.11. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.

               (a)  Each  of  the  Borrowers  is  accepting  joint  and  several
          liability   hereunder   and  under  the  other   Loan   Documents   in
          consideration  of the financial  accommodations  to be provided by the
          Lenders and the Administrative Agent under this Credit Agreement,  for
          the mutual benefit,  directly and indirectly, of each of the Borrowers
          and in  consideration  of the  undertakings  of each other Borrower to
          accept joint and several liability for the Obligations.

               (b)  Each  of  the  Borrowers,   jointly  and  severally,  hereby
          irrevocably and  unconditionally  accepts,  not merely as a surety but
          also as a  co-debtor,  joint  and  several  liability  with the  other
          Borrowers,  with respect to the payment and  performance of all of the
          Obligations  (including,  without limitation,  any Obligations arising
          under this ss.6.11), it being the intention of the parties hereto that
          all the Obligations shall be thE joint and several obligations of each
          of the Borrowers without preferences or distinction among them.

                                      -48-

               (c) If and to the extent that any of the Borrowers  shall fail to
          make any payment  with respect to any of the  Obligations  as and when
          due or to perform any of the  Obligations in accordance with the terms
          thereof,  then in each such event the other  Borrowers  will make such
          payment with respect to, or perform, such Obligation.

               (d) The Obligations of each of the Borrowers under the provisions
          of this ss.6.11  constitute  the fulL recourse  Obligations of each of
          the Borrowers  enforceable against each such Person to the full extent
          of its properties and assets, irrespective of the validity, regularity
          or enforceability of this Credit Agreement or the other Loan Documents
          or any other circumstance whatsoever as to any other Borrower.

               (e) Except as otherwise  expressly provided herein, each Borrower
          hereby waives promptness,  diligence,  presentment,  demand,  protest,
          notice of acceptance of its joint and several liability, notice of any
          and all advances of the Loans made under this Credit Agreement and the
          Notes, notice of occurrence of any Default or Event of Default (except
          to the extent notice is expressly required to be given pursuant to the
          terms of this Credit Agreement or any of the other Loan Documents), or
          of any demand for any payment under this Credit  Agreement,  notice of
          any action at any time taken or omitted by the Administrative Agent or
          the Lenders under or in respect of any of the  Obligations  hereunder,
          any requirement of diligence and, generally,  all demands, notices and
          other  formalities  of  every  kind in  connection  with  this  Credit
          Agreement and the other Loan  Documents.  Each Borrower  hereby waives
          all defenses which may be available by virtue of any valuation,  stay,
          moratorium  law or other  similar law now or hereafter in effect,  any
          right to require the  marshaling  of assets of the  Borrowers  and any
          other entity or Person primarily or secondarily liable with respect to
          any of the Obligations,  and all suretyship defenses  generally.  Each
          Borrower  hereby  assents to, and waives  notice of, any  extension or
          postponement  of the time for the  payment,  or  place or  manner  for
          payment, compromise, refinancing,  consolidation or renewals of any of
          the  Obligations  hereunder,  the  acceptance  of any partial  payment
          thereon,  any waiver,  consent or other action or  acquiescence by the
          Administrative  Agent and the  Lenders at any time or times in respect
          of any default by any Borrower in the  performance or  satisfaction of
          any term,  covenant,  condition or provision of this Credit  Agreement
          and the other Loan Documents, any and all other indulgences whatsoever
          by the  Administrative  Agent and the Lenders in respect of any of the
          Obligations  hereunder,  and the  taking,  addition,  substitution  or
          release,  in whole or in part,  at any time or times,  of any security
          for any of such Obligations or the addition,  substitution or release,
          in whole or in part,  of any  Borrower  or any other  entity or Person
          primarily or  secondarily  liable for any  Obligation.  Such  Borrower
          further  agrees  that  its  Obligations   shall  not  be  released  or
          discharged, in whole or in part, or otherwise affected by the adequacy
          of any rights  which the  Administrative  Agent or any Lender may have
          against any collateral  security or other means of obtaining repayment

                                      -49-

          of any of the Obligations,  the impairment of any collateral  security
          securing the Obligations,  including,  without limitation, the failure
          to protect or preserve  any rights which the  Administrative  Agent or
          any Lender may have in such collateral  security or the  substitution,
          exchange,   surrender,  release,  loss  or  destruction  of  any  such
          collateral  security,  any other act or  omission  which  might in any
          manner or to any extent vary the risk of such  Borrower,  or otherwise
          operate as a release or discharge of such  Borrower,  all of which may
          be done without notice to such Borrower;  PROVIDED,  HOWEVER, that the
          foregoing   shall  in  no  way  be  deemed   to  create   commercially
          unreasonable  standards  as to the  Administrative  Agent's  duties as
          secured party under the Loan  Documents (as such rights and duties are
          set forth  therein).  If for any reason any of the other Borrowers has
          no legal existence or is under no legal obligation to discharge any of
          the   Obligations,   or  if  any  of  the   Obligations   have  become
          irrecoverable  from any of the other Borrowers by reason of such other
          Borrower's  insolvency,  bankruptcy  or  reorganization  or  by  other
          operation  of law or for any  reason,  this Credit  Agreement  and the
          other Loan  Documents  to which it is a party  shall  nevertheless  be
          binding on such Borrower to the same extent as if such Borrower at all
          times had been the sole obligor on such Obligations.  Without limiting
          the  generality of the foregoing,  each Borrower  assents to any other
          action  or  delay  in  acting  or  failure  to act on the  part of the
          Administrative Agent and the Lenders,  including,  without limitation,
          any failure  strictly or  diligently  to assert any right or to pursue
          any remedy or to comply  fully  with  applicable  laws or  regulations
          thereunder which might, but for the provisions of this ss.6.11, afford
          grounds for  terminating,  discharging or relieving such Borrower,  in
          whole or iN part, from any of its obligations  under this ss.6.11,  it
          being  the  intention  of each  Borrower  that,  so long as anY of the
          Obligations  hereunder  remain  unsatisfied,  the  obligations of such
          Borrower  under  this  ss.6.11  shall  not  bE  discharged  except  by
          performance  and then  only to the  extent  of such  performance.  The
          Obligations   of  each  Borrower  under  this  ss.6.11  shall  not  be
          diminished   or   rendered    unenforceable   by   any   winding   up,
          reorganization,  arrangement,  liquidation,  reconstruction or similar
          proceeding with respect to any  reconstruction  or similar  proceeding
          with respect to any other Borrower,  or any of the Lenders.  The joint
          and several  liability of the Borrowers  hereunder  shall  continue in
          full  force  and  effect   notwithstanding  any  absorption,   merger,
          amalgamation  or any other change  whatsoever in the name,  ownership,
          membership,  constitution or place of formation of any Borrower or the
          Lenders.  Each of the Borrowers  acknowledges and confirms that it has
          itself  established  its own adequate  means of obtaining from each of
          the other Borrowers on a continuing  basis all information  desired by
          such Borrower  concerning the financial condition of each of the other
          Borrowers  and that each such  Borrower will look to each of the other
          Borrowers and not to the  Administrative  Agent or any Lender in order
          for such  Borrower to keep  adequately  informed of changes in each of
          the other Borrowers' respective financial conditions.

                                      -50-

               (f) The  provisions  of this  ss.6.11 are made for the benefit of
          the  Lenders  and  the  AdministrativE   Agent  and  their  respective
          permitted  successors  and assigns,  and may be enforced by it or them
          from  time to time  against  any or all of the  Borrowers  as often as
          occasion therefor may arise and without requirement on the part of the
          Lenders or the Administrative  Agent or such successor or assign first
          to marshall  any of its or their  claims or to exercise  any of its or
          their  rights  against  any of the other  Borrowers  or to exhaust any
          remedies available to it or them against any of the other Borrowers or
          to resort to any other source or means of obtaining  payment of any of
          the Obligations hereunder or to elect any other remedy. The provisions
          of this ss.6.11  shalL  remain in effect until all of the  Obligations
          shall have been paid in full or otherwise fully  satisfied.  If at any
          time, any payment, or any part thereof,  made in respect of any of the
          Obligations, is rescinded or must otherwise be restored or returned by
          any Lender or the Administrative Agent upon the insolvency, bankruptcy
          or  reorganization  of  any  of  the  Borrowers,  or  otherwise,   the
          provisions of this ss.6.11 will forthwith be reinstateD in effect,  as
          though such payment had not been made.

               (g) Each of the Borrowers  hereby agrees that it will not enforce
          any of its rights of reimbursement,  contribution,  subrogation or the
          like  against  the  other  Borrowers  with  respect  to any  liability
          incurred by it hereunder or under any of the other Loan Documents, any
          payments made by it to any of the Lenders or the Administrative  Agent
          with  respect to any of the  Obligations  or any  collateral  security
          therefor  until  such  time  as  all  of  the  Obligations  have  been
          irrevocably  paid in full in cash.  Any claim which any  Borrower  may
          have  against any other  Borrower  with respect to any payments to the
          Lenders or the Administrative  Agent hereunder or under any other Loan
          Documents are hereby expressly made subordinate and junior in right of
          payment,  without  limitation as to any  increases in the  Obligations
          arising  hereunder or thereunder,  to the prior payment in full of the
          Obligations   and,  in  the  event  of  any  insolvency,   bankruptcy,
          receivership,  liquidation, reorganization or other similar proceeding
          under the laws of any jurisdiction relating to any Borrower, its debts
          or its assets, whether voluntary or involuntary,  all such Obligations
          shall  be paid in full  before  any  payment  or  distribution  of any
          character,  whether in cash,  securities or other  property,  shall be
          made to any other Borrower therefor.

               (h) Each of the  Borrowers  hereby agrees that the payment of any
          amounts due with respect to the indebtedness  owing by any Borrower to
          any other Borrower is hereby subordinated to the prior payment in full
          in cash of the Obligations. Each Borrower hereby agrees that after the
          occurrence and during the  continuance  of any Event of Default,  such
          Borrower will not demand,  sue for or otherwise attempt to collect any
          indebtedness  of any other  Borrower  owing to such Borrower until the
          Obligations shall have been paid in full in cash. If,  notwithstanding
          the  foregoing  sentence,  such  Borrower  shall  collect,  enforce or
          receive  any  amounts in respect of such  indebtedness,  such  amounts

                                      -51-

          shall be collected,  enforced and received by such Borrower as trustee
          for the  Administrative  Agent and be paid over to the  Administrative
          Agent for the PRO RATA  accounts of the Lenders to be applied to repay
          the Obligations.

     6.12.  FURR'S AS AGENT FOR OTHER BORROWERS.  Each of the Borrowers,  by its
execution of this Credit  Agreement,  irrevocably  authorizes Furr's to give and
receive  all  notices  and  instructions,  to take all  actions  and  make  such
agreements  expressed to be capable of being given,  received or taken by Furr's
or any other Borrower under this Credit  Agreement and the other Loan Documents,
including, without limitation, the making of any Loan Requests on behalf of such
other Borrower,  and notwithstanding  that such notice,  instruction,  action or
agreement may affect such other  Borrower,  and each Borrower  shall, as regards
the  Administrative  Agent and the  Lenders,  be bound  thereby  as  though  the
Borrowers,  as  applicable,   itself  had  given  or  received  such  notice  or
instruction, taken such action or made such agreement.

7.   COLLATERAL SECURITY.

     7.1. SECURITY OF BORROWERS. The Obligations shall be secured by a perfected
first priority  security  interest  (subject only to Permitted Liens entitled to
priority  under  applicable  law) in all of the assets of each of the Borrowers,
including accounts and notes receivable,  inventory,  equipment,  real property,
licenses,  stock  of each  of the  Borrowers  (other  than  Furr's),  intangible
property and  intellectual  property,  whether now owned or hereafter  acquired,
pursuant to the terms of the Security Documents to which each such Borrower is a
party.

     7.2.  COLLATERAL  NOTES.  In addition  to the Term Notes and the  Revolving
Credit Notes,  each of the Borrowers agrees that with respect to any of the Real
Estate  to be  mortgaged  by it or any of its  Subsidiaries  hereunder,  it will
execute  and  deliver or cause such  Subsidiary  to execute  and  deliver to the
Administrative Agent such collateral notes (the "COLLATERAL NOTES") in such form
as the  Administrative  Agent and the Borrowers may from time to time agree. The
parties  hereto  hereby agree that (a) the aggregate  amount of the  outstanding
Obligations  shall not be increased by the issuance of the Collateral  Notes and
(b) any  payment or  recovery  on the  Collateral  Notes shall be applied to the
Obligations  pursuant to ss.14.4.  All Collateral  Notes shall be payable to the
order of the Administrative  Agent, on demand;  PROVIDED that thE Administrative
Agent hereby agrees that it shall not demand payment on any  Collateral  Note or
negotiate  such  Collateral  Note  unless  the  Obligations  shall  have  become
immediately due and payable pursuant to ss.14.1.

8.    REPRESENTATIONS AND WARRANTIES.

     Each of the  Borrowers  represents  and  warrants  to the  Lenders  and the
Administrative Agent as follows:

     8.1. CORPORATE AUTHORITY.


                                      -52-

          8.1.1 . INCORPORATION;  GOOD STANDING.  Each of the Borrowers and each
     of their  Subsidiaries  (a) is a corporation (or similar  business  entity)
     duly organized, validly existing and in good standing under the laws of its
     jurisdiction of incorporation or formation, (b) has all requisite corporate
     or partnership  (or the  equivalent  company) power to own its property and
     conduct its business as now  conducted and as presently  contemplated,  and
     (c) is in good  standing  as a foreign  corporation  (or  similar  business
     entity) and is duly  authorized to do business in each  jurisdiction  where
     such  qualification  is necessary except where a failure to be so qualified
     would not have a Material Adverse Effect.

          8.1.2. AUTHORIZATION.  The execution, delivery and performance of this
     Credit Agreement and the other Loan Documents to which any of the Borrowers
     or  any  of  their  Subsidiaries  is  or is  to  become  a  party  and  the
     transactions  contemplated  hereby and thereby (a) are within the corporate
     or partnership (or the equivalent  company)  authority of such Person,  (b)
     have been duly  authorized  by all necessary  corporate (or the  equivalent
     company)  proceedings,  (c) do not and will not conflict  with or result in
     any breach or  contravention  of any  provision  of law,  statute,  rule or
     regulation  to which any of the Borrowers or any of their  Subsidiaries  is
     subject  or any  judgment,  order,  writ,  injunction,  license  or  permit
     applicable to any of the Borrowers or any of their  Subsidiaries and (d) do
     not conflict  with any  provision  of the  Governing  Documents  of, or any
     agreement or other instrument  binding upon, any of the Borrowers or any of
     their Subsidiaries.

          8.1.3 .  ENFORCEABILITY.  The  execution  and  delivery of this Credit
     Agreement and the other Loan Documents to which any of the Borrowers or any
     of their  Subsidiaries  is or is to become a party will result in valid and
     legally  binding  obligations  of such  Person  enforceable  against  it in
     accordance  with the respective  terms and  provisions  hereof and thereof,
     except  as   enforceability   is   limited   by   bankruptcy,   insolvency,
     reorganization, moratorium or other laws relating to or affecting generally
     the  enforcement  of  creditors'  rights  and  except  to the  extent  that
     availability of the remedy of specific  performance or injunctive relief is
     subject to the discretion of the court before which any proceeding therefor
     may be brought.

     8.2.  GOVERNMENTAL  APPROVALS.  The execution,  delivery and performance by
each Borrower and their Subsidiaries of this Credit Agreement and the other Loan
Documents to which any of the Borrowers or any of their Subsidiaries is or is to
become a party and the  transactions  contemplated  hereby  and  thereby  do not
require the approval or consent of, or filing with, any  governmental  agency or
authority other than those already obtained.

     8.3.  TITLE TO  PROPERTIES;  LEASES.  Attached  hereto as SCHEDULE 8.3 is a
complete list of Real Estate owned or leased by the Borrowers. The Borrowers and
their  Subsidiaries own all of the assets reflected in the consolidated  balance
sheet of the  Borrowers and their  Subsidiaries  as at the Balance Sheet Date or

                                      -53-

acquired since that date (except property and assets sold or otherwise  disposed
of in the ordinary  course of business since that date),  subject to no Liens or
other rights of others, except Permitted Liens.

     8.4. FINANCIAL STATEMENTS AND PROJECTIONS.

          8.4.1 . FISCAL YEAR. The Borrowers and each of their Subsidiaries have
     a fiscal year  consisting of twelve  accounting  periods each consisting of
     four or five  weeks and  ending on the  dates set forth on  SCHEDULE  8.4.1
     hereto (with  quarter-end  dates in bold-face  type). The term "Fiscal Year
     XXXX",  where "XXXX" is a calendar year,  shall refer to the fiscal year of
     the Borrowers and their Subsidiaries ending during or within seven (7) days
     following the last day of such calendar year.

          8.4.2.  FINANCIAL STATEMENTS.  There has been furnished to each of the
     Lenders  (a) a  consolidated  balance  sheet  of the  Borrowers  and  their
     Subsidiaries  as at December  28,  1999,  and a  consolidated  statement of
     income of the  Borrowers  and their  Subsidiaries  for the fiscal year then
     ended, certified by KPMG LLP, (b) a draft of the consolidated balance sheet
     of the Borrowers and their Subsidiaries as at the Balance Sheet Date, and a
     draft  consolidated   statement  of  income  of  the  Borrowers  and  their
     Subsidiaries  for the fiscal year then ended,  to be  certified by KPMG LLP
     and (c) an  unaudited  monthly  consolidated  financial  statements  of the
     Borrowers  and their  Subsidiaries  as at  February 6, 2001.  Such  balance
     sheets and statements of income have been prepared in accordance  with GAAP
     (other  than the  omission  of  footnotes  as to the  financial  statements
     referred to in clause (c) above and fairly present the financial  condition
     of the  Borrowers  as at the close of business on the date  thereof and the
     results  of  operations  for the  fiscal  year  then  ended.  There  are no
     contingent liabilities of any of the Borrowers or any of their Subsidiaries
     as of such date involving  material  amounts,  known to the officers of the
     Borrowers,  which were not  disclosed in such  balance  sheet and the notes
     related thereto.

          8.4.3.  PRO FORMA BALANCE SHEET AND  PROJECTIONS.  The Borrowers  have
     delivered to the  Administrative  Agent a  consolidated  PRO FORMA  balance
     sheet as of the Closing Date  reflecting  the  borrowing  hereunder on such
     date,  which PRO FORMA balance sheet has been prepared in good faith on the
     basis of the  assumptions  stated  therein.  The  projections of the annual
     operating budgets of the Borrowers and their Subsidiaries on a consolidated
     basis,  balance sheets and cash flow statements for the 2001 to 2005 fiscal
     years,  copies of which have been  delivered to each  Lender,  disclose all
     material  assumptions made with respect to general economic,  financial and
     market conditions used in formulating such projections. To the knowledge of
     any of the  Borrowers  or any of their  Subsidiaries,  no facts  exist that
     (individually  or in the  aggregate)  would result in any material  adverse
     change  in  any  of  such  projections.  The  projections  are  based  upon
     reasonable  estimates and  assumptions,  have been prepared on the basis of

                                      -54-

     the assumptions stated therein and reflect the reasonable  estimates of the
     Borrowers and their  Subsidiaries  of the results of  operations  and other
     information projected therein.

     8.5. NO MATERIAL ADVERSE  CHANGES,  ETC. Since the Balance Sheet Date there
has been no event or occurrence which has had a Material  Adverse Effect.  Since
the Balance Sheet Date, the Borrowers have not made any Distribution.

     8.6. LAWS, LICENSES; FRANCHISES, PATENTS, COPYRIGHTS, ETC.

          8.6.1 . LAWS, LICENSES. None of the Borrowers or their Subsidiaries is
     in  violation  of or  delinquent  with  respect to, any decree,  order,  or
     arbitration award of any court or governmental  authority, or any agreement
     with, or any license or permit from,  any  governmental  authority,  or any
     statute, law, license,  rule or regulation  including,  without limitation,
     laws and regulations  relating to food or liquor,  occupational  health and
     safety, equal employment opportunities, fair employment practices, and sex,
     race,  religious or age discrimination,  in any of the foregoing cases in a
     manner that could  reasonably  be expected to result in the  imposition  of
     substantial  penalties or  materially  and  adversely  affect the financial
     condition,  properties or business of the Borrowers and their  Subsidiaries
     taken as a whole.  Any and all  approvals  by any  federal,  state or local
     liquor  authority  necessary for the continued  operation of any restaurant
     operated by any of the  Borrowers  or their  Subsidiaries  with full liquor
     service have been  received and remain in full force and effect.  As of the
     Closing Date, none of the Borrowers nor any of their  Subsidiaries have any
     liquor licenses.

          8.6.2 . FRANCHISES,  PATENTS,  COPYRIGHTS,  ETC. Each of the Borrowers
     and their  Subsidiaries  possesses  all  franchises,  patents,  copyrights,
     trademarks, trade names, licenses and permits, and rights in respect of the
     foregoing,  adequate for the conduct of the business of the  Borrowers  and
     their Subsidiaries, substantially as such business is now conducted without
     known conflict with any rights of others.

     8.7.  LITIGATION.  Except as set forth in SCHEDULE 8.7 hereto, there are no
actions,  suits,  proceedings or  investigations  of any kind pending or, to the
best knowledge of the Borrowers,  threatened against any of the Borrowers or any
of their Subsidiaries before any Governmental Authority,  that, (a) if adversely
determined,  might, either in any case or in the aggregate,  (i) have a Material
Adverse  Effect or (ii)  materially  impair the right of the Borrowers and their
Subsidiaries,  considered as a whole, to carry on business  substantially as now
conducted by them, or result in any substantial liability not adequately covered
by  insurance,  or  for  which  adequate  reserves  are  not  maintained  on the
consolidated balance sheet of the Borrowers and their Subsidiaries, or (b) which
question  the  validity  of  this  Credit  Agreement  or any of the  other  Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.

                                      -55-

     8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers nor any of
their  Subsidiaries  is  subject  to  any  Governing  Document  or  other  legal
restriction,  or any judgment,  decree,  order, law, statute, rule or regulation
that has or is expected in the future to have a Material Adverse Effect. None of
the  Borrowers  nor any of  their  Subsidiaries  is a party to any  contract  or
agreement that has or is expected,  in the judgment of the Borrowers'  officers,
to have any Material Adverse Effect.

     8.9.  COMPLIANCE WITH OTHER  INSTRUMENTS,  LAWS, ETC. None of the Borrowers
nor any of their  Subsidiaries is in violation of any provision of its Governing
Documents, or any agreement or instrument to which it may be subject or by which
it or  any of its  properties  may be  bound  or any  decree,  order,  judgment,
statute,  license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial  penalties or have a Material
Adverse Effect.

     8.10.  TAX STATUS.  Each of the Borrowers and their  Subsidiaries  (a) have
made or filed all federal,  state and foreign  income and all other tax returns,
reports and  declarations  required by any  jurisdiction to which any of them is
subject, (b) have paid all taxes and other governmental  assessments and charges
shown or determined to be due on such returns, reports and declarations,  except
those being contested in good faith and by appropriate  proceedings and (c) have
set aside on their books provisions  reasonably  adequate for the payment of all
taxes for periods  subsequent to the periods to which such  returns,  reports or
declarations  apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction,  and none of the officers of
the Borrowers know of any basis for any such claim.

     8.11. NO EVENT OF DEFAULT.  No Default or Event of Default has occurred and
is continuing.

     8.12.  HOLDING  COMPANY AND INVESTMENT  COMPANY ACTS. None of the Borrowers
nor any of their Subsidiaries is a "HOLDING COMPANY",  or a "SUBSIDIARY COMPANY"
of a "HOLDING COMPANY",  or an "AFFILIATE" of a "HOLDING COMPANY", as such terms
are defined in the Public  Utility  Holding  Company  Act of 1935;  nor is it an
"INVESTMENT COMPANY", or an "AFFILIATED COMPANY" or a "PRINCIPAL UNDERWRITER" of
an "INVESTMENT COMPANY", as such terms are defined in the Investment Company Act
of 1940.

     8.13.  ABSENCE  OF  FINANCING  STATEMENTS,  ETC.  Except  with  respect  to
Permitted Liens and Liens which will be released simultaneously with the funding
of the Term Loans  contemplated by this Credit Agreement,  there is no financing
statement,  security agreement,  chattel mortgage, real estate mortgage or other
document  filed or recorded  with any filing  records,  registry or other public
office, that purports to cover, affect or give notice of any present or possible
future Lien on any assets or property  of any of the  Borrowers  or any of their
Subsidiaries or any rights relating thereto.

                                      -56-

     8.14. PERFECTION OF SECURITY INTEREST.  All filings,  assignments,  pledges
and deposits of documents or  instruments  have been made and all other  actions
have been taken that are  necessary  or  advisable,  under  applicable  law,  to
establish  and  perfect  the  Administrative  Agent's  security  interest in the
Collateral. The Collateral and the Administrative Agent's rights with respect to
the  Collateral  are not subject to any setoff,  claims,  withholdings  or other
defenses.  A Borrower or a Subsidiary of a Borrower party to one of the Security
Agreements  is the  owner of the  Collateral  free  from any  Lien,  except  for
Permitted Liens.

     8.15. CERTAIN  TRANSACTIONS.  Except for arm's length transactions pursuant
to which any of the Borrowers or any of their Subsidiaries makes payments in the
ordinary  course of business upon terms no less  favorable than such Borrower or
such  Subsidiary  could  obtain  from  third  parties,  none  of  the  officers,
directors,  or employees of any of the Borrowers or any of their Subsidiaries is
presently a party to any  transaction  with any of the Borrowers or any of their
Subsidiaries  (other than for services as  employees,  officers and  directors),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property to or from,  or  otherwise  requiring  payments to or from any officer,
director  or  such  employee  or,  to  the  knowledge  of  the  Borrowers,   any
corporation,  partnership, trust or other entity in which any officer, director,
or any such  employee  has a  substantial  interest or is an officer,  director,
trustee or partner.

     8.16. EMPLOYEE BENEFIT PLANS.

          8.16.1 . IN GENERAL.  Each Employee  Benefit Plan and each  Guaranteed
     Pension Plan has been maintained and operated in compliance in all material
     respects  with  the  provisions  of  ERISA  and  all   Applicable   Pension
     Legislation  and, to the extent  applicable,  the Code,  including  but not
     limited to the provisions thereunder respecting prohibited transactions and
     the  bonding  of  fiduciaries  and other  persons  handling  plan  funds as
     required by ss.412 of ERISA. The Borrowers have heretofore delivered to the
     Administrative  Agent (a) the most recently  completed annual report,  Form
     5500, with all required attachments, and actuarial statement required to be
     submitted under ss.103(d) of ERISA, with respect to each Guaranteed Pension
     Plan and (b) a copy of the Cavalcade Pension Plan.

          8.16.2 .  TERMINABILITY  OF WELFARE PLANS.  No Employee  Benefit Plan,
     which is an employee  welfare benefit plan within the meaning of ss.3(1) or
     ss.3(2)(B) of ERISA, provides benefit coverage subsequent to termination of
     employmeNt,  except  as  required  by  Title  I,  Part  6 of  ERISA  or the
     applicable state insurance laws. The Borrowers may terminate each such Plan
     at any time (or at any time  subsequent to the expiration of any applicable
     bargaining  agreement) in the discretion of the Borrowers without liability
     to any Person other than for claims arising prior to termination.

                                      -57-

          8.16.3 . GUARANTEED  PENSION PLANS. Each  contribution  required to be
     made to a Guaranteed Pension Plan, whether required to be made to avoid the
     incurrence  of an  accumulated  funding  deficiency,  the  notice  or  lien
     provisions of ss.302(f) of ERISA,  or  otherwise,  has been timely made. No
     waiver of an accumulated  funding  deficiency or extension of  amortization
     periods has been received with respect to any Guaranteed  Pension Plan, and
     none of the Borrowers nor any ERISA Affiliate is obligated to or has posted
     security in  connection  with an  amendment  to a  Guaranteed  Pension Plan
     pursuant to ss.307 of ERISA or ss.401(a)(29)of the Code.No liability to the
     PBGC (other than required insurance premiums,  all of which have been paid)
     has been  incurred by any Borrower or any ERISA  Affiliate  with respect to
     any  Guaranteed  Pension  Plan and there has not been any ERISA  Reportable
     Event (other than an ERISA  Reportable Event as to which the requirement of
     30 days  notice has been  waived),  or any other event or  condition  which
     presents a material risk of termination  of any Guaranteed  Pension Plan by
     the PBGC.  Based on the most recent  valuation of each  Guaranteed  Pension
     Plan  occurring  prior to the Closing Date (as reported in the footnotes to
     the draft  financial  statements of the Borrowers for the Fiscal Year ended
     January 2, 2001) and on the actuarial methods and assumptions  employed for
     that valuation, on January 2, 2001 the aggregate benefit liabilities of all
     such  Guaranteed  Pension  Plans within the meaning of ss.4001 of ERISA did
     not exceed the aggregate value of the assets of all such Guaranteed Pension
     Plans by an amount in excess of $6,428,000,  disregarding  for this purpose
     the benefit  liabilities  and assets of any  Guaranteed  Pension  Plan with
     assets in excess of benefit liabilities.

          8.16.4 .  MULTIEMPLOYER  PLANS.  None of the  Borrowers  nor any ERISA
     Affiliate  has  incurred  any  material  liability   (including   secondary
     liability) to any  Multiemployer  Plan as a result of a complete or partial
     withdrawal  from such  Multiemployer  Plan  under  ss.4201 of ERISA or as a
     result of a sale of  assets  described  in  ss.4204  of ERISA.  None of the
     Borrowers nor any ERISA Affiliate has been notified that any  Multiemployer
     Plan is in  reorganization  or  insolvent  under and within the  meaning of
     ss.4241  or ss.4245 of ERISA or is at risk of  entering  reorganization  or
     becoming insolvent,  or that any Multiemployer Plan intends to terminate or
     has been terminated under ss.4041A oF ERISA.

     8.17. USE OF PROCEEDS.

          8.17.1 . GENERAL. The proceeds of the Loans shall be used to refinance
     the  Existing  Debt,  to  pay  fees  and  expenses   associated  with  such
     refinancing,  the  acquisition,  construction  and upgrade of Units and for
     working capital and general corporate  purposes.  The Borrowers will obtain
     Letters  of  Credit  solely  for  working  capital  and  general  corporate
     purposes.

          8.17.2 .  REGULATIONS  U AND X. No  portion of any Loan is to be used,
     and no portion of any Letter of Credit is to be  obtained,  for the purpose

                                      -58-

     of purchasing or carrying any "MARGIN  SECURITY" or "MARGIN  STOCK" as such
     terms  are used in  Regulations  U and X of the Board of  Governors  of the
     Federal Reserve System, 12 C.F.R. Parts 221 and 224.

          8.17.3 .  INELIGIBLE  SECURITIES.  No portion of the  proceeds  of any
     Loans is to be used,  and no  portion  of any  Letter  of  Credit  is to be
     obtained,  for the purpose of knowingly  purchasing,  or  providing  credit
     support for the purchase of, during the underwriting or placement period or
     within thirty (30) days thereafter,  any Ineligible Securities underwritten
     or privately placed by a Financial Affiliate.

     8.18. ENVIRONMENTAL COMPLIANCE.  The Borrowers have taken all necessary and
reasonable  steps to investigate  the condition and usage of the Real Estate and
the  operations  conducted  thereon  and,  based  upon such  investigation,  has
determined that:

          (a) except as set forth on SCHEDULE 8.18, none of the Borrowers, their
     Subsidiaries  or to the knowledge of the Borrowers any operator of the Real
     Estate or any operations thereon is in violation,  or alleged violation, of
     any judgment, decree, order, law, license, rule or regulation pertaining to
     environmental  matters,  including without limitation,  those arising under
     the Resource  Conservation  and Recovery Act  ("RCRA"),  the  Comprehensive
     Environmental  Response,  Compensation and Liability Act of 1980 as amended
     ("CERCLA"),  the  Superfund  Amendments  and  Reauthorization  Act of  1986
     ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
     Substances  Control  Act,  or any  state,  local or foreign  law,  statute,
     regulation,  ordinance,  order or decree relating to health,  safety or the
     environment (hereinafter  "ENVIRONMENTAL LAWS"), which violation would have
     a Material Adverse Effect;

          (b) except as set forth on SCHEDULE  8.18,  none of the  Borrowers nor
     any of  their  Subsidiaries  has  received  notice  from  any  third  party
     including, without limitation, any Governmental Authority, (i) that any one
     of them has been identified by the United States  Environmental  Protection
     Agency ("EPA") as a potentially responsible party under CERCLA with respect
     to a site  listed on the  National  Priorities  List,  40  C.F.R.  Part 300
     Appendix  B;  (ii)  that any  hazardous  waste,  as  defined  by 42  U.S.C.
     ss.6903(5),  any hazardous substances as defineD by 42 U.S.C.  ss.9601(14),
     any pollutant or  contaminant as defined by 42 U.S.C.  ss.9601(33)  and any
     toxic  substancEs,  oil  or  hazardous  materials  or  other  chemicals  or
     substances  regulated by any  Environmental  Laws ("HAZARDOUS  SUBSTANCES")
     which any one of them has  generated,  transported  or disposed of has been
     found at any site at which a  Governmental  Authority  has conducted or has
     ordered that any Borrower or any of their  Subsidiaries  conduct a remedial
     investigation,   removal  or  other   response   action   pursuant  to  any
     Environmental  Law;  or (iii)  that it is or shall be a named  party to any
     claim,  action,  cause of  action,  complaint,  or legal or  administrative

                                      -59-

     proceeding (in each case, contingent or otherwise) arising out of any third
     party's  incurrence  of  costs,  expenses,  losses or  damages  of any kind
     whatsoever in connection with the release of Hazardous Substances;

          (c) except as set forth on SCHEDULE 8.18 attached hereto:  (i) none of
     the Borrowers,  their Subsidiaries,  their Operators or, to the best of the
     Borrowers'  knowledge,  any past owner or operator  has used any portion of
     the Real  Estate  for the  handling,  processing,  storage or  disposal  of
     Hazardous  Substances  except in accordance with  applicable  Environmental
     Laws; and no underground tank or other underground  storage  receptacle for
     Hazardous  Substances is located on any portion of the Real Estate; (ii) in
     the course of any activities conducted by the Borrowers, their Subsidiaries
     or operators of its properties, no Hazardous Substances have been generated
     or are being used on the Real Estate except in accordance  with  applicable
     Environmental  Laws; (iii) during the ownership or lease of any Real Estate
     by any of the  Borrowers  or  their  Subsidiaries,  or to the  best  of the
     Borrowers' knowledge, prior to such time, there have been no releases (i.e.
     any  past  or  present  releasing,  spilling,  leaking,  pumping,  pouring,
     emitting, emptying, discharging, injecting, escaping, disposing or dumping)
     or,  to  the  best  knowledge  of the  Borrowers,  threatened  releases  of
     Hazardous Substances on, upon, into or from the properties of the Borrowers
     or their Subsidiaries,  which releases would have a material adverse effect
     on the value of any of the Mortgaged Property or adjacent properties or the
     environment; (iv) to the best of each Borrower's knowledge, there have been
     no releases on, upon, from or into any real property in the vicinity of any
     of the Real Estate which,  through soil or groundwater  contamination,  may
     have come to be located on, and which would have a material  adverse effect
     on the value of, the Real Estate; and (v) in addition, during the ownership
     or lease of any Real Estate by any of the Borrowers or their  Subsidiaries,
     or to the  best  of the  Borrowers'  knowledge,  prior  to such  time,  any
     Hazardous  Substances that have been generated on any such Real Estate have
     been transported  offsite only by carriers having an identification  number
     issued by the EPA (or the equivalent thereof in any foreign  jurisdiction),
     treated or disposed of only by treatment or disposal facilities maintaining
     valid  permits as  required  under  applicable  Environmental  Laws,  which
     transporters  and  facilities  have  been  and  are,  to the  best  of each
     Borrower's  knowledge,  operating  in  compliance  with  such  permits  and
     applicable Environmental Laws; and

          (d) none of the Borrowers, their Subsidiaries,  any Mortgaged Property
     or any of the other Real Estate is subject to any applicable  Environmental
     Law requiring the performance of Hazardous Substances site assessments,  or
     the removal or remediation of Hazardous Substances, or the giving of notice
     to any Governmental Authority or the recording or delivery to other Persons
     of an  environmental  disclosure  document  or  statement  by virtue of the
     transactions set forth herein and contemplated hereby, or as a condition to
     the  recording  of any  Mortgage  or to  the  effectiveness  of  any  other
     transactions contemplated hereby.

                                      -60-

     8.19.  SUBSIDIARIES,  ETC.  SCHEDULE  8.19,  as such  SCHEDULE  8.19 may be
updated from time to time in accordance  with the  provisions of ss.9.17,  lists
all Subsidiaries of each Borrower.  Except as set forth on SCHEDULE 8.19 hereto,
none oF the Borrowers or their  Subsidiaries  is engaged in any joint venture or
partnership with any other Person.

     8.20.  BANK  ACCOUNTS.  SCHEDULE  8.20 sets forth the  account  numbers and
location of all bank accounts of each Borrower and their Subsidiaries.

     8.21.  DISCLOSURE.  Neither this Credit Agreement nor any of the other Loan
Documents  nor any other  written  information  provided  to the  Lenders by any
Borrower  or any of  their  Subsidiaries  contains  any  untrue  statement  of a
material  fact or omits to state a material  fact (known to any of the Borrowers
or any of their  Subsidiaries  in the case of any  document or  information  not
furnished  by it or any of its  Subsidiaries)  necessary  in  order  to make the
statements  herein or therein not  misleading.  There is no fact known to any of
the Borrowers or any of their  Subsidiaries which has a Material Adverse Effect,
or which is reasonably  likely in the future to have a Material  Adverse Effect,
exclusive  of effects  resulting  from changes in general  economic  conditions,
legal standards or regulatory conditions.

     8.22.  LEASES.  The  execution,  delivery  and  performance  of this Credit
Agreement  and the other Loan  Documents to which the  Borrowers or any of their
Subsidiaries   is  a  party   (including  a  pledge  by  the  Borrowers  to  the
Administrative  Agent of all the  Capital  Stock of the  Borrowers  (other  than
Furr's) and the realization by the  Administrative  Agent on such pledge),  will
not create a default  under any Real Estate  Lease under which the  Borrowers or
any of their  Subsidiaries  is presently a lessee or sublessee  which default is
likely to have a Material Adverse Effect.

     8.23.  SOLVENCY.  Both  before  and  after  giving  effect  to this  Credit
Agreement  and  the  other  Loan  Documents,  all of  the  Borrowers  and  their
Subsidiaries  on a  consolidated  basis are Solvent.  As used herein,  "SOLVENT"
shall mean that the Borrowers and their Subsidiaries on a consolidated basis (a)
will be able to pay their Debts (as defined  below) as they become due, (b) will
have  property  which will have a present  "fair  saleable  value" (as described
below) greater on a going-concern  basis than their probable  liability on their
Debts  as they  become  absolute  and  matured,  (c)  will  have  property  on a
going-concern  basis that will have a "fair saleable value" greater than the sum
of all  their  Debts,  and (d)  both  before  and  after  giving  effect  to the
execution,   delivery  and  effectiveness  of  this  Credit  Agreement  and  the
transactions contemplated hereby, shall not, have not nor will have unreasonably
small capital,  or be engaged in any businesses or  transactions or intend to be
engaged in any businesses or transactions  for which they have on a consolidated
basis unreasonably small capital. For purposes hereof, the "fair saleable value"
of the Borrowers' and their  Subsidiaries'  property has been  determined on the
basis of the amount  which may be  realized  within a  reasonable  time,  either
through  collection  or  sale of  such  property  at the  regular  market  value
(determined  as the amount  which could be obtained for the property in question

                                      -61-

within such period by a capable and diligent  business Person from an interested
buyer who is willing to purchase under ordinary selling conditions); and "Debts"
means all  liabilities,  obligations,  commitments  and  indebtedness of any and
every kind and nature  (including all obligations to trade  creditors),  whether
heretofore,  now,  or  hereafter  owing,  arising,  due or payable by any of the
Borrowers or their Subsidiaries to any Person and howsoever evidenced,  created,
incurred,  acquired or owing, whether primary,  secondary,  direct,  contingent,
fixed or otherwise.

     8.24.  UNITS.  SCHEDULE 8.25 sets forth,  as of the Closing Date, the names
and addresses of each Unit and identifies,  as of the Closing Date, and which of
those Units are in operation.

     8.25.  FRANCHISE  AGREEMENTS.  None  of  the  Borrowers  or  any  of  their
Subsidiaries are party to any franchise agreements.

9. AFFIRMATIVE  COVENANTS.

     Each of the  Borrowers  covenants  and  agrees  that,  so long as any Loan,
Unpaid Reimbursement Obligation,  Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Administrative  Agent has any
obligation to issue, extend or renew any Letters of Credit:

     9.1. PUNCTUAL PAYMENT.  The Borrowers will duly and punctually pay or cause
to be paid the  principal  and  interest  on the  Loans,  all Fees and all other
amounts  provided for in this Credit  Agreement and the other Loan  Documents to
which  any of the  Borrowers  or any of their  Subsidiaries  is a party,  all in
accordance  with  the  terms  of this  Credit  Agreement  and  such  other  Loan
Documents.

     9.2.  MAINTENANCE OF OFFICE.  Each of the Borrowers will maintain its chief
executive  office in  Richardson,  Texas,  or at such other  place in the United
States of America as such Borrower  shall  designate  upon written notice to the
Administrative  Agent, where notices,  presentations and demands to or upon such
Borrower in respect of the Loan  Documents to which such Borrower is a party may
be given or made.

     9.3.  RECORDS AND ACCOUNTS.  Each of the Borrowers will (a) keep, and cause
each of their  Subsidiaries  to keep,  true and  accurate  records  and books of
account in which full,  true and correct entries will be made in accordance with
GAAP,  (b) maintain  adequate  accounts  and  reserves for all taxes  (including
income taxes),  depreciation,  depletion,  obsolescence  and amortization of its
properties  and the  properties of its  Subsidiaries,  contingencies,  and other
reserves,  and (c) at all times engage KPMG LLP or other  independent  certified
public accountants  reasonably  satisfactory to the Administrative  Agent as the
independent certified public accountants of the Borrowers and their Subsidiaries
and will not permit more than thirty (30) days to elapse  between the  cessation
of such firm's (or any successor firm's) engagement as the independent certified
public  accountants of the Borrowers and their  Subsidiaries and the appointment

                                      -62-

in such capacity of a successor firm as shall be reasonably  satisfactory to the
Administrative Agent.

     9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrowers will
deliver to each of the Lenders:

          (a) as soon as practicable,  but in any event not later than April 17,
     2001 in the case of Fiscal  Year 2000 and not later than  ninety  (90) days
     after  the  end of  each  subsequent  Fiscal  Year  of the  Borrowers,  the
     consolidated  balance sheet of the Borrowers and their  Subsidiaries  as at
     the end of such year, and the related consolidated  statement of income and
     consolidated  statement of cash flow for such year,  each setting  forth in
     comparative  form the  figures  for the  previous  Fiscal Year and all such
     consolidated  statements to be in reasonable detail, prepared in accordance
     with GAAP, and certified,  without  qualification and without an expression
     of  uncertainty  as to the ability of any of the  Borrowers or any of their
     Subsidiaries  to  continue  as  going  concerns,  by KPMG  LLP or by  other
     independent  certified public  accountants  reasonably  satisfactory to the
     Administrative   Agent,   together  with  a  written  statement  from  such
     accountants  to the  effect  that  they  have  read a copy of  this  Credit
     Agreement,   and  that,  in  making  the  examination   necessary  to  said
     certification,  they have  obtained no knowledge of any Default or Event of
     Default,  or, if such accountants shall have obtained knowledge of any then
     existing  Default or Event of Default they shall disclose in such statement
     any such Default or Event of Default;  PROVIDED that such accountants shall
     not be liable to the Lenders for failure to obtain knowledge of any Default
     or Event of Default;

          (b) as soon as practicable, but in any event not later than forty-five
     (45) days after the end of each of the fiscal  quarters  of the  Borrowers,
     copies of the  unaudited  consolidated  balance  sheet of the Borrowers and
     their  Subsidiaries  as at  the  end  of  such  quarter,  and  the  related
     consolidated  statement of income and  consolidated  statement of cash flow
     for  the  portion  of the  Borrowers'  Fiscal  Year  then  elapsed,  all in
     reasonable  detail and prepared in  accordance  with GAAP,  together with a
     certification  by the  principal  financial  or  accounting  officer of the
     Borrowers  that the  information  contained  in such  financial  statements
     fairly  presents  the  financial   position  of  the  Borrowers  and  their
     Subsidiaries  on the date  thereof  (subject  to year-end  adjustments  and
     footnotes);

          (c) as soon as  practicable,  but in any event within thirty (30) days
     after the end of each month in each fiscal year of the Borrowers, unaudited
     monthly  consolidated  financial  statements  of the  Borrowers  and  their
     Subsidiaries for such month prepared in accordance with GAAP, together with
     a  certification  by the principal  financial or accounting  officer of the
     Borrowers  that the  information  contained  in such  financial  statements
     fairly  presents  the  financial  condition  of  the  Borrowers  and  their

                                      -63-

     Subsidiaries  on the date  thereof  (subject  to year-end  adjustments  and
     footnotes);

          (d) as soon as practicable, but in any event not later than (i) thirty
     (30) days after the end of each of the fiscal  months of the  Borrowers and
     their Subsidiaries,  (ii) forty five (45) days after the end of each of the
     fiscal  quarters of the Borrowers and their  Subsidiaries  and (iii) ninety
     (90) days  after the end of each  Fiscal  Year of the  Borrowers  and their
     Subsidiaries,  detailed  income  statements  with  respect  to such  month,
     quarter or year, as  applicable,  on an individual  Unit-by-Unit  basis for
     each Unit  operated by any  Borrower or a  Subsidiary  of a Borrower,  such
     income statements to include the  corresponding  figures for each Unit from
     the  corresponding  period  during the previous  fiscal year,  Unit-by-Unit
     income to be determined  without any  deduction or adjustment  for expenses
     related to interest,  income taxes,  depreciation  or amortization or other
     non-cash  charges,  gains  or  losses  on the  sale of  Capital  Assets  or
     corporate  overhead that may be  attributable  to such Unit, and to be in a
     form reasonably satisfactory to the Administrative Agent;

          (e)  simultaneously  with the  delivery  of the  financial  statements
     referred to in subsections (a) and (b) above, a statement  certified by the
     principal financial or accounting officer of the Borrowers in substantially
     the form of EXHIBIT E hereto (a "COMPLIANCE CERTIFICATE") and setting forth
     in reasonable detail computations  evidencing compliance with the covenants
     contained in ss.11 and (if applicable)  reconciliations  tO reflect changes
     in GAAP since the Balance Sheet Date;

          (f)  contemporaneously  with the filing or mailing thereof,  copies of
     all material of a financial  nature filed with the  Securities and Exchange
     Commission or sent to the stockholders of the Borrowers;

          (g) as soon as  practicable  , but in any event not later than  thirty
     (30)  days  following  the end of each  Fiscal  Year of the  Borrowers  and
     otherwise  from  time to time upon  request  of the  Administrative  Agent,
     one-year  budgets of the  Borrowers and their  Subsidiaries,  and, upon the
     request of the Administrative Agent, projections of the Borrowers and their
     Subsidiaries  updating  those  projections  delivered  to the  Lenders  and
     referred  to in  ss.8.4.2  or,  if  applicable,  updating  any  later  such
     projections  delivered in response to a requesT pursuant to this ss.9.4(g);
     and

          (h) from  time to time  such  other  financial  data  and  information
     (including accountants,  management letters) as the Administrative Agent or
     any Lender may reasonably request.

     9.5. NOTICES.

          9.5.1.  DEFAULTS.  Each of the  Borrowers  will  promptly  notify  the
     Administrative  Agent and each of the Lenders in writing of the  occurrence

                                      -64-

     of any Default or Event of Default,  together  with a  reasonably  detailed
     description  thereof,  and the actions the  Borrowers  propose to take with
     respect  thereto.  If any  Person  shall  give any notice or take any other
     action in respect of a claimed  default  (whether  or not  constituting  an
     Event of Default) under this Credit  Agreement or any other note,  evidence
     of indebtedness,  indenture or other obligation to which or with respect to
     which  any of the  Borrowers  or any of  their  Subsidiaries  is a party or
     obligor,  whether  as  principal,   guarantor,  surety  or  otherwise,  the
     Borrowers shall forthwith give written notice thereof to the Administrative
     Agent and each of the  Lenders,  describing  the  notice or action  and the
     nature of the claimed default.

          9.5.2 . ENVIRONMENTAL EVENTS. Each of the Borrowers will promptly give
     notice  to the  Administrative  Agent  and each of the  Lenders  (a) of any
     violation  of any  Environmental  Law that any of the  Borrowers  or any of
     their  Subsidiaries  reports in writing or is  reportable by such Person in
     writing (or for which any written report supplemental to any oral report is
     made) to any Governmental Authority and (b) upon becoming aware thereof, of
     any inquiry, proceeding, investigation, or other action, including a notice
     from any agency of potential  environmental  liability, of any Governmental
     Authority that could have a Material Adverse Effect.

          9.5.3  .  NOTIFICATION  OF  CLAIM  AGAINST  COLLATERAL.  Each  of  the
     Borrowers  will,  immediately  upon  becoming  aware  thereof,  notify  the
     Administrative  Agent and each of the  Lenders in  writing  of any  setoff,
     claims (including, with respect to the Real Estate,  environmental claims),
     withholdings  or other  defenses  to which  any of the  Collateral,  or the
     Administrative Agent's rights with respect to the Collateral, are subject.

          9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. Each of the Borrowers will,
     and  will  cause  each  of  its   Subsidiaries   to,  give  notice  to  the
     Administrative Agent and each of the Lenders in writing within fifteen (15)
     days of becoming  aware of any  litigation  or  proceedings  threatened  in
     writing or any pending  litigation  and  proceedings  affecting  any of the
     Borrowers or any of their  Subsidiaries or to which any of the Borrowers or
     any of their  Subsidiaries  is or becomes a party  involving  an  uninsured
     claim against any of the Borrowers or any of their  Subsidiaries that could
     reasonably  be  expected  to have a Material  Adverse  Effect on any of the
     Borrowers or any of their Subsidiaries and stating the nature and status of
     such litigation or proceedings. Each of Borrowers will, and will cause each
     of their Subsidiaries to, give notice to the Administrative  Agent and each
     of the  Lenders,  in  writing,  in  form  and  detail  satisfactory  to the
     Administrative  Agent,  within ten (10) days of any judgment not covered by
     insurance, final or otherwise, against any of the Borrowers or any of their
     Subsidiaries in an amount in excess of $250,000.

          9.5.5 . NOTICE AND  DELIVERY OF  FRANCHISE  AGREEMENTS  AND NEW UNITS.
     Each of the  Borrowers  will  give  notice to the  Administrative  Agent in

                                      -65-

     writing within thirty (30) days of it or any of their Subsidiaries entering
     into or modifying any material provisions relating to compensation, term or
     advertising  requirements under any franchise agreement with any franchisee
     and will deliver to the  Administrative  Agent any  franchise  agreement to
     which it or any of its  Subsidiaries  is party  within  thirty (30) days of
     such Person  entering  into such  agreement.  Each of the  Borrowers  shall
     inform the  Administrative  Agent of any new Unit  locations  within thirty
     (30) Business Days of it or any of their Subsidiaries entering into a lease
     for, or otherwise acquiring, the premises of such Unit.

     9.6. LEGAL EXISTENCE; MAINTENANCE OF PROPERTIES. Each of the Borrowers will
do or cause to be done all things  necessary  to preserve and keep in full force
and  effect  its  legal  existence,  rights  and  franchises  and those of their
Subsidiaries  and  will  not,  and  will  not  cause  or  permit  any  of  their
Subsidiaries to, convert to a limited  liability  company or a limited liability
partnership.  Each of the  Borrowers  (a) will cause all of its  properties  and
those of its  Subsidiaries  used or useful in the conduct of its business or the
business of its Subsidiaries to be maintained and kept in good condition, repair
and working order and supplied with all necessary  equipment,  (b) will cause to
be  made  all  necessary  repairs,  renewals,   replacements,   betterments  and
improvements  thereof,  all as in the judgment of such Borrower may be necessary
so that the  business  carried on in  connection  therewith  may be properly and
advantageously  conducted at all times, and (c) will, and will cause each of its
Subsidiaries to, continue to engage primarily in the businesses now conducted by
them and in related  businesses;  PROVIDED  that  nothing in this  ss.9.6  shall
prevent  any  of  the  Borrowers  froM  (i)   discontinuing  the  operation  and
maintenance of any of their properties or any of those of their  Subsidiaries if
such  discontinuance  is, in the  judgment of the  Borrowers,  desirable  in the
conduct  of its or  their  business  and  that  do not in the  aggregate  have a
Material  Adverse  Effect and (ii) allowing the federal  trademark  registration
referred to in the Trademark Assignments as the "Lapsing Trademarks" to lapse.

     9.7. INSURANCE.

          9.7.1. REQUIRED INSURANCE.  Each of the Borrowers will, and will cause
     each of its Subsidiaries to, maintain with financially  sound and reputable
     insurers insurance with respect to its properties and business against such
     casualties  and  contingencies  as shall be in accordance  with the general
     practices of businesses engaged in similar activities in similar geographic
     areas and in amounts,  containing  such  terms,  in such forms and for such
     periods as may be reasonable and prudent.  Without  limiting the foregoing,
     (a) such insurance  shall be in such minimum  amounts that such Person will
     not be deemed a co-insurer under applicable insurance laws, regulations and
     policies and otherwise shall be in such amounts,  contain such terms, be in
     such forms and be for such periods as may be reasonably satisfactory to the
     Administrative  Agent,  (b) all  such  insurance  shall be  payable  to the
     Administrative  Agent as loss payee under a  "standard"  or "New York" loss
     payee clause for the benefit of the Lenders and the  Administrative  Agent,
     (c) each such Person  will (i) keep all of its  physical  property  insured
     with casualty or physical  hazard  insurance on an "all risks" basis,  with

                                      -66-

     broad form flood coverage if such property is in a "Flood Zone" under FEMA,
     earthquake  coverage in accordance with the general practices of businesses
     engaged in similar activities in similar geographic areas,  electronic data
     processing  coverage,  with  a full  replacement  cost  endorsement  and an
     "agreed  amount" clause in an amount equal to 100% of the full  replacement
     cost of such  property,  subject  to  aggregate  sublimits  for  flood  and
     earthquake  equal to those  generally  maintained by businesses  engaged in
     similar  activities  in similar  geographic  areas,  (ii) maintain all such
     workers'  compensation  or similar  insurance as may be required by law and
     (iii) maintain,  in amounts and with  deductibles  equal to those generally
     maintained  by  businesses   engaged  in  similar   activities  in  similar
     geographic  areas,  general public  liability  insurance  against claims of
     bodily  injury,  death or property  damage  occurring,  on, in or about the
     properties of such Person;  business  interruption  insurance;  and product
     liability insurance. Each of the Borrowers will, and will cause each of its
     Subsidiaries  to,  maintain  insurance  on  the  Mortgaged   Properties  in
     accordance with the terms of the Mortgages.

          9.7.2.  INSURANCE PROCEEDS.  The proceeds of any casualty insurance in
     respect of any  Casualty  Event  shall,  subject to the rights,  if any, of
     other parties with a prior interest in the property covered thereby, (i) so
     long as no Event of  Default  has  occurred  and is  continuing  and to the
     extent that the amount of such proceeds is less than $500,000, be disbursed
     to the applicable Borrower for reinvestment in such Borrower's business or,
     if not so  reinvested  within  two  hundred  and  seventy  (270) days after
     receipt  thereof,  for  application to the  Obligations in accordance  with
     ss.4.4.2.4   and  (ii)  in  all  other   circumstances,   be  held  by  the
     Administrative  Agent as cash  collateral  for the  Obligations  until  the
     earlier  of  (A) so  long  as no  Event  of  Default  has  occurred  and is
     continuing,   the  Administrative  Agent  releases  such  proceeds  to  the
     Borrowers  for the  reinvestment  in the  Borrowers'  business  in a manner
     reasonably satisfactory to the Administrative Agent or (B) the date that is
     two hundred  and seventy  (270) days from  disbursement  of such  insurance
     proceeds by the  applicable  insurer,  at which time such proceeds shall be
     applied  to  the   Obligations   in   accordance   with   ss.4.4.2.4.   The
     Administrative  Agent may,  so long as no  Default or Event of Default  has
     occurred and is continuing and the Borrowers are not required to apply such
     proceeds to prepay the  Obligations  pursuant to ss.4.4.2.3,  disburse from
     time to time all or any part of such  proceeds so held as cash  collateral,
     upon such terms and conditions as the  Administrative  Agent may reasonably
     prescribe,  for direct application by such Borrower solely to the repair or
     replacement  of such  Borrower's  property so damaged or destroyed or other
     reinvestment  in the Borrowers'  business.  In the event that such proceeds
     have not been reinvested in the Borrowers'  business within two hundred and
     seventy  (270)  days after the  earlier to occur of receipt  thereof by the
     Borrowers   or  receipt   thereof   by  the   Administrative   Agent,   the

                                      -67-

     Administrative  Agent shall  apply all or any part of such  proceeds to the
     Obligations as provided in ss.4.4.2.3.

          9.7.3 .  NOTICE OF  CANCELLATION.  All  policies  of  insurance  shall
     provide for at least thirty (30) days prior written notice of cancellation,
     modification  or nonrenewal to the  Administrative  Agent.  In the event of
     failure  by any  Borrower  to  provide  and  maintain  insurance  as herein
     provided,  the  Administrative  Agent  may,  at its  option,  provide  such
     insurance  and charge the amount  thereof to the  Borrowers.  The Borrowers
     shall furnish the  Administrative  Agent with certificates of insurance and
     policies evidencing compliance with the foregoing insurance provision.

     9.8.  TAXES.  Each of the  Borrowers  will,  and will  cause  each of their
Subsidiaries  to, duly pay and  discharge,  or cause to be paid and  discharged,
before  the  same  shall  become  overdue,  all  taxes,  assessments  and  other
governmental  charges imposed upon it and its Real Estate, sales and activities,
or any part  thereof,  or upon the income or profits  therefrom,  as well as all
claims for labor,  materials,  or supplies  that if unpaid might by law become a
Lien or charge upon any of its property; PROVIDED that any such tax, assessment,
charge,  levy or claim need not be paid if the validity or amount  thereof shall
currently  be  contested in good faith by  appropriate  proceedings  and if such
Borrower or such Subsidiary shall have set aside on its books adequate  reserves
with respect thereto; PROVIDED FURTHER that each Borrower and each Subsidiary of
the Borrowers will pay all such taxes,  assessments,  charges,  levies or claims
forthwith  upon the  commencement  of proceedings to foreclose any Lien that may
have attached as security  therefor;  and PROVIDED FURTHER that, with respect to
any contested tax,  assessment,  charge,  levy or claim, the Borrowers and their
Subsidiaries  shall furnish a good and  sufficient  bond or surety to the extent
requested by and as reasonably satisfactory to the Administrative Agent.

     9.9. INSPECTION OF PROPERTIES AND BOOKS, ENVIRONMENTAL AUDITS, ETC.

          9.9.1 .  GENERAL.  Each of the  Borrowers  shall  permit the  Lenders,
     through the  Administrative  Agent or any of the Lenders' other  designated
     representatives,  to visit and inspect any of the  properties of any of the
     Borrowers or any of their Subsidiaries,  to examine the books of account of
     the  Borrowers  and their  Subsidiaries  (and to make  copies  thereof  and
     extracts therefrom),  and to discuss the affairs,  finances and accounts of
     the Borrowers and their Subsidiaries with, and to be advised as to the same
     by, its and their officers,  all at such reasonable  times and intervals as
     the Administrative  Agent or any Lender may reasonably request and, so long
     as no Event of Default is then continuing, upon reasonable advance notice.

          9.9.2. ENVIRONMENTAL  ASSESSMENTS.  During the continuance of an Event
     of Default, or if the Administrative  Agent reasonably  determines that any

                                      -68-

     material adverse developments have occurred on any Mortgaged Property which
     might  violate or result in a condition  which  violates any  Environmental
     Laws,  the  Administrative  Agent may, in its discretion for the purpose of
     assessing and ensuring the value of any Mortgaged  Property,  obtain one or
     more  environmental  assessments  or  audits  of  such  Mortgaged  Property
     prepared by a  hydrogeologist,  an independent  engineer or other qualified
     consultant or expert  approved by the  Administrative  Agent to evaluate or
     confirm  (a)  whether any  Hazardous  Materials  are present in the soil or
     water at such  Mortgaged  Property and (b) whether the use and operation of
     such Mortgaged Property complies with all Environmental Laws. Environmental
     assessments may include without  limitation  detailed visual inspections of
     such Mortgaged Property including any and all storage areas, storage tanks,
     drains,  dry wells and  leaching  areas,  and the  taking of soil  samples,
     surface  water  samples  and ground  water  samples,  as well as such other
     investigations or analyses as the  Administrative  Agent deems appropriate.
     All  such  environmental  assessments  shall be  conducted  and made at the
     expense of the Borrowers.  No more than one such assessment with respect to
     each Mortgaged Property shall be made in any twelve month period unless the
     Administrative  Agent  reasonably   determines  that  significant  material
     changes  have  occurred  on such  Mortgaged  Property  since  the  previous
     assessment  thereof  and will be  conducted  in such a  manner  as will not
     unnecessarily  interfere with a Borrower's  operations.  The Administrative
     Agent  shall  deliver  a  copy  of  all  such  environmental   reports  and
     assessments to Borrowers.

          9.9.3  .  COMMUNICATIONS  WITH  ACCOUNTANTS.  Each  of  the  Borrowers
     authorizes   the   Administrative   Agent  and,  if   accompanied   by  the
     Administrative   Agent,  the  Lenders  to  communicate  directly  with  the
     Borrowers'  independent  certified  public  accountants and authorizes such
     accountants to disclose to the Administrative Agent and the Lenders any and
     all  financial  statements  and other  supporting  financial  documents and
     schedules  including  copies of any  management  letter with respect to the
     business,  financial condition and other affairs of any of the Borrowers or
     any of their Subsidiaries.  At the request of the Administrative Agent, the
     Borrowers shall deliver a letter addressed to such accountants  instructing
     them to comply with the provisions of this ss.9.9.3.

          9.9.4 . ENVIRONMENTAL  MONITORING.  The Borrowers will comply with the
     requirements outlined in that certain letter from MFG Consulting Scientists
     and Engineers  dated April 3, 2001 and attached hereto as EXHIBIT H for the
     site  referenced in such letter and shall promptly  deliver all reports and
     test results in connection therewith to the Administrative Agent.

     9.10. COMPLIANCE WITH LAWS, CONTRACTS,  LICENSES,  AND PERMITS. Each of the
Borrowers  will, and will cause each of their  Subsidiaries  to, comply with (a)

                                      -69-

the  applicable  laws  and  regulations  wherever  its  business  is  conducted,
including all Environmental Laws, except to the extent that the failure to do so
would not have a Material  Adverse  Effect,  (b) the provisions of its Governing
Documents,  (c)  all  agreements  and  instruments  by  which  it or  any of its
properties  may be bound,  except to the extent  that the failure to do so would
not have a Material Adverse Effect, and (d) all applicable decrees,  orders, and
judgments,  except  to the  extent  that the  failure  to do so would not have a
Material Adverse Effect.  If any  authorization,  consent,  approval,  permit or
license from any officer,  agency or  instrumentality  of any  government  shall
become  necessary or required in order that any of the Borrowers or any of their
Subsidiaries  may fulfill any of its  obligations  hereunder or any of the other
Loan  Documents  to which such  Borrower  or such  Subsidiary  is a party,  such
Borrower  will,  or (as  the  case  may  be)  will  cause  such  Subsidiary  to,
immediately  take or cause to be taken all reasonable  steps within the power of
such  Borrower  or  such  Subsidiary  to  obtain  such  authorization,  consent,
approval, permit or license and furnish the Administrative Agent and the Lenders
with evidence  thereof.  Without  limiting the foregoing,  each of the Borrowers
will, and will cause each of its  Subsidiaries  to, obtain any and all approvals
by any federal,  state or local liquor  authority  necessary  for the  continued
operation  at all times of any Unit  operated by any of the  Borrowers  or their
Subsidiaries with full liquor service.

     9.11.  EMPLOYEE BENEFIT PLANS. Each of the Borrowers will (a) promptly upon
filing the same with the  Department of Labor or Internal  Revenue  Service upon
request of the Administrative  Agent, furnish to the Administrative Agent a copy
of the most recent actuarial  statement required to be submitted under ss.103(d)
of ERISA and Annual Report, Form 5500, with alL required attachments, in respect
of each  Guaranteed  Pension  Plan,  and (b) promptly  upon receipt or dispatch,
furnish  to the  Administrative  Agent any  notice,  report  or  demand  sent or
received in respect of a Guaranteed  Pension Plan under  ss.ss.302,  4041, 4042,
4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.

     9.12. USE OF PROCEEDS. The Borrowers will use the proceeds of the Loans and
obtain Letters of Credit solely for the purposes set forth in ss.8.17.1.

     9.13.ADDITIONAL  MORTGAGED  PROPERTY;  NOTICE OF LEASES;  SURVEYS AND TITLE
INSURANCE.   If,  after  the  Closing  Date,  any  of  the  Borrowers  or  their
Subsidiaries  acquires  or leases  for a term in excess of ten (10)  years  real
estate,  and if such  acquired  property is not subject to a binding  commitment
pursuant to which such  property  will be subject to a Permitted  Sale-Leaseback
(or a Permitted Lien under  ss.10.2(viii) to secure purchase money  indebtedness
which by its  terms  prohibitS  additional  Liens on such  property  of the type
contemplated hereby), upon the request of the Administrative Agent such Borrower
shall,  or  shall  cause  such  Subsidiary  to  (a)  forthwith  deliver  to  the
Administrative Agent for the benefit of the Lenders and the Administrative Agent
a fully executed valid and enforceable first priority (except for purchase money
Liens  permitted  under  ss.10.2(viii))  mortgage  or deed of  trust  over  such
acquired real estate free and clear of all defectS and  encumbrances  except for

                                      -70-

Permitted Liens or (b) use its commercially reasonable best efforts forthwith to
deliver  to the  Administrative  Agent for the  benefit of the  Lenders  and the
Administrative  Agent a fully  executed  valid and  enforceable  first  priority
(except  for  purchase  money Liens  permitted  under  ss.10.2(viii))  leasehold
mortgage  over  sucH  leased  real  estate  free and  clear of all  defects  and
encumbrances  except for Permitted  Liens,  as  applicable,  each such mortgage,
leasehold mortgage or deed of trust to be in form and substance  satisfactory to
the  Administrative  Agent,  together with title  insurance  policies,  surveys,
evidences of insurances  with the  Administrative  Agent named as loss payee and
additional insured,  legal opinions,  required landlord waivers and consents and
other  documents  and  certificates  with  respect  to such  real  estate  (such
policies,  surveys,  evidence of  insurance,  opinions and other  documents  and
certificates  referred to in this ss.9.13 as "REAL ESTATE  DOCUMENTATION") as is
comparable to what was received in respect of thE  Mortgaged  Property as of the
Closing Date or as otherwise required by the Administrative Agent. If, after the
Closing Date, any of the Borrowers or their  Subsidiaries  leases real estate or
any lease of Real Estate is extended or otherwise  modified in any respect,  the
applicable Borrower shall, or shall cause the applicable  Subsidiary to, use its
commercially reasonable best efforts to cause the relevant lessor to execute and
deliver  (a) a notice  of lease  (to the  extent  that a notice  of lease is not
already  recorded in respect of such lease) in form  meeting all  statutory  and
recording  requirements of the  jurisdiction in which the relevant real property
is located and (b) a landlord  waiver and consent with respect to such leasehold
in form and substance reasonably satisfactory to the Administrative Agent.

     9.14. BANK ACCOUNTS. On or prior to the Closing Date, each of the Borrowers
will,  and will cause  each of their  Subsidiaries  to cause all cash  receipts,
checks and cash  proceeds of accounts  receivable  and other  Collateral  of the
Borrowers and their  Subsidiaries to be deposited only into depository  accounts
with financial  institutions that have entered into agency account agreements in
substantially  the  form  of  EXHIBIT  G  hereto  or in such  other  form as the
Administrative  Agent may approve (such agency  account  agreements  referred to
herein  as  "AGENCY  ACCOUNT  AGREEMENTS"  and  such  depository  accounts  with
financial  institutions  that have entered into such Agency  Account  Agreements
referred to herein as "AGENCY  ACCOUNTS").  The Agency Account  Agreements shall
provide  that at any time before the  occurrence  of an Event of  Default,  such
Borrower or such Subsidiary,  as applicable,  shall be entitled,  subject to the
terms and conditions of such Agency Account Agreements,  to direct the financial
institutions  party  thereto  to cause  all  funds of the  Borrowers  and  their
Subsidiaries  held in the Agency  Accounts at such financial  institutions to be
transferred  in  accordance  with  the  instructions  of such  Borrower  or such
Subsidiary,  as applicable.  The Agency Account Agreements shall provide that at
any time  following the  occurrence of an Event of Default,  the  Administrative
Agent shall be entitled to direct the  financial  institutions  party thereto to
cause  all funds of the  Borrowers  and their  Subsidiaries  held in the  Agency
Accounts at such financial institutions to be transferred immediately and at any
time thereafter to the Administrative  Agent to be applied to the Obligations or
held as Collateral, as the Administrative Agent deems appropriate. The Borrowers
shall cause all cash  receipts and checks in excess of $5,000 at each Unit to be
deposited into an Agency  Account on at least two separate  Business Days during

                                      -71-

each week (a "week," for the purposes of this ss.9.14,  being deemed to begin at
the  beginning  of eacH  Monday  and end at the  end of the  following  Friday).
Notwithstanding the foregoing, the Borrowers may maintain deposits in non-Agency
Accounts  provided that the aggregate amount of funds in any one such non-Agency
Account  shall  not  exceed  $10,000  and the  aggregate  amount of funds in all
non-Agency Accounts shall not exceed $50,000.

     9.15. INTEREST RATE PROTECTION. The Borrowers will, not later than July 31,
2001,  purchase an interest cap or swap or effect other interest rate protection
arrangements in a minimum  aggregate  amount of not less than  $20,000,000 for a
period  of not  less  than  two (2)  years  and on other  terms  and  conditions
satisfactory to the Administrative Agent.

     9.16. CONDUCT OF BUSINESS; STORES. The Borrowers will, and will cause their
Subsidiaries to, continue to engage only in the business of owning and operating
cafeteria and buffet style restaurants and in businesses and activities  closely
related thereto.

     9.17.  NEW  SUBSIDIARIES.  Any new  Subsidiary of any Borrower  acquired in
connection  with  any  Permitted  Acquisition  to  the  extent  permitted  under
ss.10.5.3 or otherwise  created  shall become a Borrower  hereunder and become a
party to thE Security Documents by (a) signing a joinder agreement,  (b) signing
allonges to the Revolving  Credit Notes and the Term Notes in form and substance
satisfactory  to  the  Administrative   Agent,  and  (c)  providing  such  other
documentation as the  Administrative  Agent may reasonably  request,  including,
without limitation,  amendments to the Securities Pledge Agreement or new pledge
agreements in substantially the same form,  mortgages or deeds of trust required
by ss.9.13  above,  UCC searcheS and filings,  legal  opinions and  corporate or
other authorization  documentation with respect to such new Subsidiary and other
documentation with respect to the conditions specified in ss.12 hereof, and 100%
of the equity  interests and assets oF each such new Subsidiary shall be pledged
to  the   Administrative   Agent  for  the   benefit  of  the  Lenders  and  the
Administrative  Agent.  In  such  event,  the  Administrative  Agent  is  hereby
authorized by the parties hereto to amend SCHEDULE 8.19 to include each such new
Subsidiary.

     9.18. FURTHER  ASSURANCES.  Each of the Borrowers will, and will cause each
of their  Subsidiaries  to,  cooperate  with the Lenders and the  Administrative
Agent and execute such further  instruments  and documents as the Lenders or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the  transactions  contemplated  by this  Credit  Agreement  and the other  Loan
Documents.

10. CERTAIN NEGATIVE COVENANTS.

     Each of the  Borrowers  covenants  and  agrees  that,  so long as any Loan,
Unpaid Reimbursement Obligation,  Letter of Credit or Note is outstanding or any

                                      -72-

Lender has any obligation to make any Loans or the Administrative  Agent has any
obligations to issue, extend or renew any Letters of Credit:

     10.1.  RESTRICTIONS ON  INDEBTEDNESS.  None of the Borrowers will, and none
will permit any of its Subsidiaries to, create,  incur, assume,  guarantee or be
or remain liable,  contingently or otherwise,  with respect to any  Indebtedness
other  than  (each  of  the   following   being   referred   to  as   "PERMITTED
INDEBTEDNESS"):

          (a) Indebtedness to the Lenders and the  Administrative  Agent arising
     under any of the Loan Documents;

          (b) endorsements for collection, deposit or negotiation and warranties
     of products or services,  in each case  incurred in the ordinary  course of
     business;

          (c) Indebtedness incurred in connection with the acquisition after the
     date  hereof of any real or  personal  property  by such  Borrower  or such
     Subsidiary or under any Capitalized Lease,  PROVIDED that (i) the aggregate
     principal   amount  of  such   Indebtedness  of  the  Borrowers  and  their
     Subsidiaries shall not exceed the aggregate amount of $2,000,000 at any one
     time,  and (ii) no Event of Default  shall have  occurred and be continuing
     (A) prior to the incurrence of such  Indebtedness or (B) as a result of the
     incurrence of such Indebtedness on a Pro Forma Basis;

          (d) Indebtedness in respect of Interest Rate Agreements;

          (e) Indebtedness  existing on the date hereof and listed and described
     on SCHEDULE 10.1 hereto; and

          (f)  Indebtedness  of one Borrower to another then existing  Borrower;
     PROVIDED  that  all  such  intercompany   Indebtedness  permitted  by  this
     ss.10.1(f),  and all instruments  evidencing any thereof,  shall bE pledged
     and delivered to the  Administrative  Agent, for the benefit of the Lenders
     and the Administrative  Agent, as security for the Obligations  pursuant to
     the provisions of the applicable Security Documents, and the Administrative
     Agent shall have a first  priority  perfected  lien and  security  interest
     therein;  PROVIDED FURTHER that all such intercompany Indebtedness shall be
     subordinated to the Obligations on terms satisfactory to the Administrative
     Agent.

     10.2. RESTRICTIONS ON LIENS.

          10.2.1 . PERMITTED  LIENS.  None of the Borrowers  will, and none will
     permit  any of its  Subsidiaries  to,  (a)  create or incur or suffer to be
     created or incurred or to exist any Lien upon any of its property or assets
     of any  character  whether  now owned or  hereafter  acquired,  or upon the
     income or profits therefrom; (b) transfer any of such property or assets or
     the income or profits  therefrom for the purpose of subjecting  the same to
     the payment of  Indebtedness  or  performance  of any other  obligation  in

                                      -73-

     priority to payment of its general creditors; (c) acquire, or agree or have
     an option to acquire, any property or assets upon conditional sale or other
     title   retention  or  purchase   money  security   agreement,   device  or
     arrangement; (d) suffer to exist for a period of more than thirty (30) days
     after the same shall have been incurred any Indebtedness or claim or demand
     against it that if unpaid might by law or upon bankruptcy or insolvency, or
     otherwise,  be given any priority whatsoever over its general creditors; or
     (e) sell, assign, pledge or otherwise transfer any "RECEIVABLES" as defined
     in clause (g) of the definition of the term "INDEBTEDNESS," with or without
     recourse;  PROVIDED that any of the Borrowers or any of their  Subsidiaries
     may create or incur or suffer to be created or incurred or to exist:

               (i) Liens in favor of any  Borrower  on all or part of the assets
          of  Subsidiaries  of such  Borrower  securing  Indebtedness  owing  by
          Subsidiaries of such Borrower to such Borrower;

               (ii)  Liens to secure  taxes,  assessments  and other  government
          charges in respect of  obligations  not overdue or Liens on properties
          to secure  claims  for  labor,  material  or  supplies  in  respect of
          obligations not overdue more than thirty (30) days;

               (iii)  deposits or pledges made in connection  with, or to secure
          payment of, workmen's compensation,  unemployment  insurance,  old age
          pensions or other social security obligations;

               (iv) Liens on  properties  (including  Mortgaged  Properties)  in
          respect of  judgments  or awards that have been in force for less than
          the applicable period for taking an appeal so long as (x) execution is
          not levied  thereunder  or in respect of which such  Borrower  or such
          Subsidiary shall at the time in good faith be prosecuting an appeal or
          proceedings  for review  and in  respect of which a stay of  execution
          shall have been obtained pending such appeal or review and (y) if such
          property is a Mortgaged Property, such Lien is subordinate to the Lien
          created by the applicable Mortgage;

               (v) Liens of carriers,  warehousemen,  mechanics and materialmen,
          and other like Liens on  properties,  in existence  less than 120 days
          from the date of  creation  thereof  in  respect  of  obligations  not
          overdue;

               (vi) encumbrances on Real Estate consisting of easements,  rights
          of way, zoning restrictions,  restrictions on the use of real property
          and defects and  irregularities  in the title  thereto,  landlord's or
          lessor's liens and other minor Liens, PROVIDED that none of such Liens
          (A) interferes materially with the use of the property affected in the
          ordinary   conduct  of  the  business  of  the   Borrowers  and  their
          Subsidiaries, and (B) individually or in the aggregate have a Material
          Adverse Effect;

                                      -74-

               (vii)  Liens  existing  on the date hereof and listed on SCHEDULE
          10.2 hereto and in the event such Liens secure  Indebtedness  which is
          refinanced or extended, Liens securing such refinanced Indebtedness so
          long   as   such   refinanced   Indebtedness   constitutes   Permitted
          Indebtedness  and the Liens  cover only the assets  which  secured the
          original Indebtedness as specified on SCHEDULE 10.2 hereto;

               (viii)  purchase  money  security  interests in or purchase money
          mortgages on real or personal  property acquired after the date hereof
          to secure  either  (x)  purchase  money  Indebtedness  of the type and
          amount  permitted  by  ss.10.1(c),  incurred  in  connection  with the
          acquisition of such property or (y) trade payables for the purchasE of
          inventory and supplies incurred in the ordinary course of business and
          not overdue more than thirty (30) days,  which  security  interests or
          mortgages  in any case cover  only the real or  personal  property  so
          acquired,  and Liens in  respect of  Capitalized  Leases to the extent
          such Capitalized  Leases are permitted by ss.10.1(c) and to thE extent
          such Liens cover only the property subject to such Capitalized Leases;

               (ix)  Liens  on  each  Mortgaged  Property  as and to the  extent
          permitted by the Mortgage applicable thereto; and

               (x) Liens in favor of the Administrative Agent for the benefit of
          the Lenders and the Administrative  Agent under the Loan Documents and
          any Interest Rate Agreements.

          10.2.2 .  RESTRICTIONS ON NEGATIVE  PLEDGES AND UPSTREAM  LIMITATIONS.
     None of the Borrowers will, and none will permit any of its Subsidiaries to
     (a) enter into or permit to exist any  arrangement or agreement  (excluding
     the  Credit  Agreement  and the other Loan  Documents)  which  directly  or
     indirectly prohibits any of the Borrowers or any of their Subsidiaries from
     creating,  assuming or incurring any Lien upon its properties,  revenues or
     assets or those of any of its  Subsidiaries  whether now owned or hereafter
     acquired,  or  (b)  enter  into  any  agreement,  contract  or  arrangement
     (excluding the Credit  Agreement and the other Loan Documents)  restricting
     the ability of any  Subsidiary  of a Borrower to pay or make  dividends  or
     distributions in cash or kind to such Borrower,  to make loans, advances or
     other payments of whatsoever nature to such Borrower,  or to make transfers
     or distributions of all or any part of its assets to such Borrower; in each
     case other than (i)  restrictions  on specific  assets which assets are the
     subject of purchase money security  interests to the extent permitted under
     ss.10.2.1,  and (ii)  customary  anti-assignment  provisions  contained  in
     leases and  licensing  agreements  entered  into by such  Borrower  or such
     Subsidiary in the ordinary course of its business.

     10.3.  RESTRICTIONS  ON  INVESTMENTS.  None of the Borrowers will, and none
will  permit  any of its  Subsidiaries  to make or  permit to exist or to remain
outstanding any Investment except Investments in:

                                      -75-

          (a) marketable  direct or guaranteed  obligations of the United States
     of America  that  mature  within one (1) year from the date of  purchase by
     such Borrower;

          (b) demand  deposits,  certificates of deposit,  bank  acceptances and
     time  deposits of United  States  banks  having  total  assets in excess of
     $1,000,000,000;

          (c)  securities  commonly  known as  "COMMERCIAL  PAPER"  issued  by a
     corporation  organized and existing  under the laws of the United States of
     America or any state  thereof that at the time of purchase  have been rated
     and the ratings for which are not less than "P 1" if rated by Moody's,  and
     not less than "A 1" if rated by S&P;

          (d)  Investments  existing  on the date  hereof and listed on SCHEDULE
     10.3 hereto;

          (e) Loan,  Investments  and  advances by any Borrower in or to another
     Borrower to the extent permitted by ss.10.1(f);

          (f) Investments consisting of Permitted Acquisitions;

          (g) Investments consisting of promissory notes received as proceeds of
     asset  dispositions  permitted by  ss.10.5.2,  PROVIDED  that the aggregate
     value of such  promissory  notes received in connection with any such asseT
     disposition  shall not exceed five percent (5%) of the  aggregate  value of
     the proceeds of such asset disposition; and

          (h)  Investments  consisting  of loans and advances to  employees  for
     moving,  entertainment,  travel and other similar  expenses in the ordinary
     course of  business  not to exceed  $500,000 in the  aggregate  at any time
     outstanding;

PROVIDED,  HOWEVER,  that, with the exception of demand deposits  referred to in
ss.10.3(b) and loans and advances  referred tO in ss.10.3(h),  such  Investments
will be  considered  Investments  permitted  by this ss.10.3 only if all actions
have been taKen to the  satisfaction of the  Administrative  Agent to provide to
the Administrative  Agent, for the benefit of the Lenders and the Administrative
Agent, a first priority  perfected  security interest in all of such Investments
free of all Liens other than Permitted Liens.

     10.4.  RESTRICTED PAYMENTS.  None of the Borrowers will make any Restricted
Payments except for Distributions  payable by a Subsidiary of a Borrower to such
Borrower.

     10.5. MERGER, CONSOLIDATION, DISPOSITION OF ASSETS AND ACQUISITIONS.

          10.5.1 . MERGERS AND CONSOLIDATIONS. Subject to ss.10.5.3, none of the
     Borrowers will, and none will permit any of its  Subsidiaries  to, become a

                                      -76-

     party to any merger,  amalgamation or  consolidation,  except the merger or
     consolidation  of one or more of the  Subsidiaries of any Borrower with and
     into a Borrower, or the merger or consolidation of two or more Subsidiaries
     of the Borrowers.

          10.5.2 . DISPOSITION OF ASSETS.  None of the Borrowers  will, and none
     will permit any of its  Subsidiaries  to,  become a party to or agree to or
     effect any disposition of assets,  other than (a) the sale of inventory and
     the disposition of obsolete assets,  in each case in the ordinary course of
     business consistent with past practices, (b) Permitted Sale-Leasebacks, (c)
     the sale of Unprofitable  Units in any year,  provided that the proceeds of
     such sales are  reinvested  in new or  existing  Units  within two  hundred
     seventy  (270)  days  thereafter  or are  used to  prepay  the  Obligations
     pursuant to ss.4.4.2.3,  (d) the  non-exclusive  licensing of  intellectual
     property in connection with franchise  agreements,  and (e) the transfer of
     the shares of PBN Beverage,  Inc. to certain individuals in connection with
     the issuance of certain  liquor  licenses to PBN Beverage.  Nothing in this
     ss.10.5.2  is intended to prohibit  any  Borrower or any of the  Borrowers'
     Subsidiaries from  conditionally  agreeing to dispose of any assets subject
     to the prior approval of the Required Lenders (or all of the Lenders in the
     case of the sale of a material  portion of the Collateral) if such Borrower
     or Subsidiary  will not be subject to any penalties in connection with such
     agreement  in the event that the  Required  Lenders do not  consent to such
     disposition. The Administrative Agent shall release any Collateral disposed
     of by any Borrower or any Subsidiary of any Borrower if such disposition is
     in compliance  with this  ss.10.5.2  and  otherwise in accordance  with the
     terms of this Credit Agreement.

          10.5.3 .  ACQUISITIONS.  None of the  Borrowers  will,  and none  will
     permit any of its Subsidiaries to, agree to or effect any asset acquisition
     or stock  acquisition  except (a) the acquisition of assets in the ordinary
     course of business consistent with past practices,  and (b) the acquisition
     in a single  transaction  or series of related  transactions  (a "PERMITTED
     ACQUISITION")  by a Borrower  of (i) a 100%  interest  in any other  person
     (whether  of stock or of  substantially  all of the assets of a business or
     business  division  as  a  going  concern  or  by  means  of  a  merger  or
     consolidation)  or (ii) two or more  restaurants  that will  become  Units,
     PROVIDED that all of the following  conditions  shall have been  satisfied:
     (i) such  other  Person  shall  operate a similar  business  to that of the
     Borrowers,  (ii) no Default or Event of Default  shall have occurred and be
     continuing and none shall exist or could reasonably be expected to exist on
     a Pro Forma Basis after giving effect  thereto,  (iii) if a Borrower  shall
     merge with such other Person, such Borrower shall be the surviving party of
     such merger, (iv) if such Person shall become a Subsidiary of any Borrower,
     such new Subsidiary shall become a Borrower pursuant to, and take all other
     actions required  by,ss.9.17 hereof, (v) such Borrower shall have delivered
     to  the  Administrative  Agent  Compliance  Certificates  (such  Compliance
     Certificates to be distributed to the Lenders by the Administrative  Agent)

                                      -77-

     demonstrating,  both  immediately  prior  to  and  immediately  after  such
     acquisition,  compliance  on a Pro Forma Basis with the covenants set forth
     in ss.11 of this  Credit  Agreement,  (vi) the  aggregate  amount  expended
     (either in cash or through the issuance of  Indebtedness)  by the Borrowers
     and their  Subsidiaries  for any  single  Permitted  Acquisition  shall not
     exceed  $2,500,000,  (vii) the aggregate amount expended (either in cash or
     through  the  issuance  of   Indebtedness)   by  the  Borrowers  and  their
     Subsidiaries for all Permitted  Acquisitions  shall not exceed  $5,000,000,
     and (viii) the aggregate  value of capital stock issued by the Borrowers in
     payment for any Permitted  Acquisitions  shall not exceed $7,500,000 during
     the term of this Credit Agreement. Nothing in this ss.10.5.3 is intended to
     prohibit  any  Borrower  or  any  of  the  Borrowers'   Subsidiaries   from
     conditionally  agreeing  to any asset or stock  acquisition  subject to the
     prior approval of the Required  Lenders if such Borrower or Subsidiary will
     not be subject to any  penalties in connection  with such  agreement in the
     event that the Required Lenders do not consent to such acquisition.

     10.6. SALE AND LEASEBACK.  None of the Borrowers will, and none will permit
any of its Subsidiaries to, enter into any arrangement,  directly or indirectly,
whereby any Borrower or any  Subsidiary  of any Borrower  shall sell or transfer
any property  owned by it in order then or  thereafter to lease such property or
lease other property that any Borrower or any Subsidiary of any Borrower intends
to use  for  substantially  the  same  purpose  as the  property  being  sold or
transferred (a "SALE-LEASEBACK");  PROVIDED that, so long as no Event of Default
has occurred and is continuing,  a Borrower or a Borrower's Subsidiary may enter
into a  Sale-Leaseback  with  respect to Units or a leasehold or fee interest in
Real Estate if (a) the terms of the sale as such are  comparable  to terms which
could  be  obtained  in an arms  length  sale  among  unaffiliated  parties  not
involving a  Sale-Leaseback  transaction  and (b) the terms of the lease as such
are  comparable  to terms which  could be obtained in an arms length  commercial
operating lease among unaffiliated  parties and, PROVIDED FURTHER that, assuming
that such  Sale-Leaseback  (and any  repayment of  Indebtedness  in  conjunction
therewith)  had  occurred  immediately  prior to the period of four  consecutive
fiscal  quarters  most recently  ended,  no Event of Default would have occurred
under ss.11 after  giving  effect to such  Sale-Leaseback  (such  Sale-Leaseback
referred to herein as a "PERMITTED SALE-LEASEBACK"). Notwithstanding anything to
the contrary  set forth in  ss.4.4.2.3  and  ss.4.4.2.4 , (x) if a Unit which is
sold in connectIon with a Permitted Sale-Leaseback was acquired by a Borrower or
a Subsidiary of a Borrower within the 180-day period  immediately  preceding the
date of such Permitted Sale-Leaseback, and the Borrowers did not deduct from the
calculation  of  Consolidated  Excess  Operating Cash Flow in the current fiscal
period or any prior  period any Capital  Expenditures  associated  with the Unit
sold in connection with such Permitted Sale-Leaseback, the Borrowers shall apply
the Net Cash Proceeds from such sale to repay any outstanding  Revolving  Credit
Loans (but the Total Revolving  Commitment shall not be reduced by the amount of
such payment) and so long as no Event of Default is then continuing,  any excess
Net Cash Proceeds remaining after the Revolving Credit Loans have been repaid in
full may be retained by the Borrowers.  The  Administrative  Agent shall release
any  Collateral  disposed of by such Borrower or any Subsidiary of such Borrower

                                      -78-

if such disposition is in compliance with ss.10.5.2 and otherwise with the terms
hereof.

     10.7.  COMPLIANCE WITH  ENVIRONMENTAL  LAWS. Except to the extent permitted
under applicable  Environmental Laws and in connection with the primary business
of the Borrowers or their  Subsidiaries,  none of the Borrowers  will,  and none
will  permit any of its  Subsidiaries  to, (a) use any of the Real Estate or any
portion thereof for the handling,  processing,  storage or disposal of Hazardous
Substances,  (b) cause or permit to be  located  on any of the Real  Estate  any
underground  tank  or  other  underground   storage   receptacle  for  Hazardous
Substances,  or (c) generate any Hazardous Substances on any of the Real Estate.
None of the Borrowers will, and none will permit any of its  Subsidiaries to (i)
conduct any  activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e.  releasing,  spilling,  leaking,  pumping,  pouring,
emitting,  emptying,  discharging,  injecting,  escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (ii) otherwise conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental Law or bring such Real
Estate in violation of any Environmental Law.

     10.8.  EMPLOYEE BENEFIT PLANS.None of the Borrowers nor any ERISA Affiliate
will:

          (a)  engage in any  "PROHIBITED  TRANSACTION"  within  the  meaning of
     ss.406 of ERISA or  ss.4975 of the COde  which  could  result in a material
     liability for any of the Borrowers or any of their Subsidiaries; or

          (b)  permit  any  Guaranteed  Pension  Plan to incur  an  "ACCUMULATED
     FUNDING DEFICIENCY", as such term is defined in ss.302 of ERISA, whether or
     not such deficiency is or may be waived; oR

          (c) fail to  contribute  to any  Guaranteed  Pension Plan to an extent
     which,  or terminate any Guaranteed  Pension Plan in a manner which,  could
     result in the  imposition of a lien or  encumbrance on the assets of any of
     the Borrowers or any of their Subsidiaries pursuant to ss.302(f) or ss.4068
     of ERISA; or

          (d) amend any Guaranteed  Pension Plan in circumstances  requiring the
     posting of  security  pursuant to ss.307 of ERISA or  ss.401(a)(29)  of the
     Code; or

          (e)  permit or take any action  which  would  result in the  aggregate
     projected  benefit  obligations  as  determined  for  financial  accounting
     purposes  of all  Guaranteed  Pension  Plans  exceeding  the  value  of the
     aggregate  assets of such Plans by an amount which at the relevant  time of
     reference thereto is in excess of $6,428,000, disregarding for this purpose
     the benefit  liabilities  and assets of any such Plan with assets in excess
     of benefit liabilities.

                                      -79-

     10.9.  FISCAL YEAR. None of the Borrowers will, and none will permit any of
its Subsidiaries to, change the date of the end of its Fiscal Year from that set
forth in ss.8.4.1.

     10.10.  TRANSACTIONS WITH AFFILIATES.  None of the Borrowers will, and none
will  permit any of its  Subsidiaries  to,  engage in any  transaction  with any
Affiliate  (other  than for  services as  employees,  officers  and  directors),
including  any  contract,  agreement  or  other  arrangement  providing  for the
furnishing  of  services  to or by,  providing  for  rental of real or  personal
property  to or  from,  or  otherwise  requiring  payments  to or from  any such
Affiliate or, to the knowledge of any Borrower,  any  corporation,  partnership,
trust or other entity in which any such Affiliate has a substantial  interest or
is an officer,  director,  trustee or partner,  on terms more  favorable to such
Person than would have been obtainable on an arm's-length  basis in the ordinary
course of business.

     10.11. BANK ACCOUNTS.  None of the Borrowers will, and none will permit any
of its  Subsidiaries to, (a) establish any bank accounts other than those listed
on SCHEDULE 8.20, without the Administrative  Agent's prior written consent (not
to be unreasonably  withheld in the case of accounts that will contain less than
ten  thousand  dollars  ($10,000)  at any one  time),  unless an Agency  Account
Agreement is executed with respect to such account (and such account  becomes an
Agency  Account)  concurrently  with the  opening of such  account,  (b) violate
directly or indirectly any Agency Account Agreement or other bank agency or lock
box  agreement  in favor of the  Administrative  Agent  for the  benefit  of the
Lenders  and the  Administrative  Agent  with  respect to such  account,  or (c)
deposit into any of the payroll  accounts listed on SCHEDULE 8.20 any amounts in
excess  of  amounts  necessary  to pay  current  payroll  obligations  from such
accounts.

     10.12.  MAXIMUM NUMBER OF UNPROFITABLE  UNITS.  None of the Borrowers will,
and none will  permit any of its  Subsidiaries  to,  permit the ratio of (a) the
aggregate  number of Unprofitable  Units to (b) the aggregate number of Units to
be at any time more than seven and one-half  percent  (7.5%),  PROVIDED that the
Administrative  Agent may in its sole discretion  exclude any Unprofitable  Unit
from the  calculation  of the ratio  described in this ss.10.13 if the Borrowers
notify thE Administrative  Agent that the Borrowers or one of their Subsidiaries
intends  to  sell  or  shut  down  such   Unprofitable   Unit  and  informs  the
Administrative Agent of all steps it has taken to sell or shut down such Unit.

11.   FINANCIAL COVENANTS.

     Each of the  Borrowers  covenants  and  agrees  that,  so long as any Loan,
Unpaid Reimbursement Obligation,  Letter of Credit or Note is outstanding or any
Lender has any obligation to make any Loans or the Administrative  Agent has any
obligation to issue, extend or renew any Letters of Credit:

     11.1.  LEVERAGE  RATIO.  The Borrowers  will not permit the Leverage  Ratio
determined at the end of and for any  Reference  Period ending during any period

                                      -80-

described  in the table below,  to be greater than the ratio set forth  opposite
such period in such table:

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

                       PERIOD                                RATIO
                       ------                                -----
              (inclusive of end dates)

----------------------------------------------- -------------------------------
Closing Date - end of Fiscal Year 2001                     2.75:1.00
----------------------------------------------- -------------------------------
----------------------------------------------- -------------------------------
Fiscal Year 2002                                           2.00:1.00
----------------------------------------------- -------------------------------
----------------------------------------------- -------------------------------
Fiscal Year 2003 and thereafter                            1.50:1.00
----------------------------------------------- -------------------------------

     11.2.  CASH  FLOW.  The  Borrowers  will not  permit  the Cash Flow  Ratio,
determined for any Reference Period ending on the last day of any fiscal quarter
of the Borrowers, to be less than 1.10:1.00.

     11.3.  EBITDAR TO INTEREST AND RENTAL.  The  Borrowers  will not permit the
ratio of (a)  Consolidated  EBITDAR for any  Reference  Period ending during any
period  described  in the table below to (b) the sum of (i)  Consolidated  Total
Interest Expense for such period PLUS (ii) Consolidated  Rental Expense for such
period to be less than the ratio set forth opposite such period in such table:

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

                       PERIOD                              RATIO
                       ------                              -----
              (inclusive of end dates)

---------------------------------------------- -------------------------------
---------------------------------------------- -------------------------------
Closing Date - end of Fiscal Year 2001                   1.50:1.00
---------------------------------------------- -------------------------------
---------------------------------------------- -------------------------------
Fiscal Year 2002                                         1.75:1.00
---------------------------------------------- -------------------------------
---------------------------------------------- -------------------------------
Fiscal Year 2003                                         2.00:1.00
---------------------------------------------- -------------------------------
---------------------------------------------- -------------------------------
Fiscal Year 2004 and thereafter                          2.25:1.00
---------------------------------------------- -------------------------------

     11.4. MINIMUM EBITDA. The Borrowers will not permit Consolidated EBITDA for
any  period of  twelve  consecutive  fiscal  months  ending  during  any  period
described in the table below to be less than the amount set forth  opposite such
period in such table:

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

                             PERIOD                             AMOUNT
                             ------                             ------
                    (inclusive of end dates)
------------------------------------------------------- ---------------------
------------------------------------------------------- ---------------------
February 2001 - end of Fiscal Year 2001                      $17,250,000
------------------------------------------------------- ---------------------
------------------------------------------------------- ---------------------
Fiscal Year 2002                                             $16,300,000
------------------------------------------------------- ---------------------
------------------------------------------------------- ---------------------
Fiscal Year 2003                                             $16,500,000
------------------------------------------------------- ---------------------
------------------------------------------------------- ---------------------
Fiscal Year 2004 and thereafter                              $16,000,000
------------------------------------------------------- ---------------------


                                      -81-

     11.5.  CAPITAL  EXPENDITURES.  The Borrowers  will not make,  nor will they
permit any of their Subsidiaries to make aggregate Capital  Expenditures  during
any  fiscal  year that  exceed the  amounts  (exclusive  of any  portion of such
Capital  Expenditures  financed  through the  issuance  of Capital  Stock of the
Borrowers) set forth in the table below opposite such fiscal year, PROVIDED that
(i) for purposes of calculating compliance with this ss.11.5 only, the Borrowers
may  excludE  Capital  Expenditures  made in  connection  with the  acquisition,
construction  or  refurbishment  of a  restaurant  if  the  Borrowers  give  the
Administrative  Agent  written  notice  within  three (3) months of such Capital
Expenditure that the Borrowers intend to sell such restaurant within one hundred
and eighty  (180) days from the date of such  Capital  Expenditure  as part of a
Permitted  Sale-Leaseback  transaction and the Administrative Agent has approved
the  terms  of  such   transaction  and  (ii)  the  maximum  amount  of  Capital
Expenditures  permitted  in any  Fiscal  Year shall be  increased  by 75% of the
unused Capital  Expenditures  from the previous Fiscal Year (calculated  without
reference  to any amounts  carried  forward  from prior  years  pursuant to this
provision):

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

             PERIOD                          MAXIMUM CAPITAL EXPENDITURES
----------------------------------------- -------------------------------------
----------------------------------------- -------------------------------------
Fiscal Year 2001                                        $3,550,000
----------------------------------------- -------------------------------------
----------------------------------------- -------------------------------------
Fiscal Year 2002                                        $5,650,000
----------------------------------------- -------------------------------------
----------------------------------------- -------------------------------------
Fiscal Year 2003                                        $7,950,000
----------------------------------------- -------------------------------------
----------------------------------------- -------------------------------------
Fiscal Year 2004                                        $8,050,000
----------------------------------------- -------------------------------------
----------------------------------------- -------------------------------------
Fiscal Year 2005 and thereafter                         $8,150,000
----------------------------------------- -------------------------------------

Notwithstanding the foregoing, the Borrowers will not make, nor will they permit
any of  their  Subsidiaries  to make or  commit  to  make,  any  Growth  Capital
Expenditures  (including  the  signing  of any new  leases) at any time that the
Leverage  Ratio as at the end of the most recently  ended  Reference  Period for
which  the  Borrowers  have  delivered  a  Compliance  Certificate  exceeds  the
Incurrence Ratio.

12.   CLOSING CONDITIONS.

     The obligations of the Lenders to make the initial  Revolving  Credit Loans
and the Term Loans and of the Administrative  Agent to issue any initial Letters
of Credit  shall be  subject to the  satisfaction  of the  following  conditions
precedent:

     12.1.  LOAN  DOCUMENTS.  Each of the Loan  Documents  shall  have been duly
executed and delivered by the respective parties thereto, shall be in full force
and  effect  and  shall be in form  and  substance  satisfactory  to each of the
Lenders.  Each Lender or the Administrative Agent on behalf of each Lender shall
have received a fully executed copy of each such document.

     12.2.  CERTIFIED COPIES OF GOVERNING  DOCUMENTS AND INDENTURE.  Each of the
Lenders  shall  have  received  from  each of the  Borrower  and  each of  their

                                      -82-

Subsidiaries a copy, certified by a duly authorized officer of such Person to be
true and complete on the Closing Date,  of each of its  Governing  Documents and
the Indenture as in effect on such date of certification.

     12.3.  CORPORATE OR OTHER ACTION. All corporate (or other) action necessary
for the valid  execution,  delivery and performance by each of the Borrowers and
each of their Subsidiaries of this Credit Agreement and the other Loan Documents
to which it is or is to become a party  shall  have  been  duly and  effectively
taken, and evidence thereof satisfactory to the Lenders shall have been provided
to each of the Lenders.

     12.4. INCUMBENCY CERTIFICATE.  Each of the Lenders shall have received from
each of the Borrower and each of its  Subsidiaries  an  incumbency  certificate,
dated as of the  Closing  Date,  signed  by a duly  authorized  officer  of such
Person,  and giving the name and bearing a specimen signature of each individual
who  shall be  authorized:  (a) to sign,  in the name and on behalf of each such
Person,  each of the Loan  Documents  to which such  Person is or is to become a
party;  (b) in the case of the  Borrowers,  to make Loan Requests and Conversion
Requests and to apply for Letters of Credit; and (c) to give notices and to take
other action on its behalf under the Loan Documents.

     12.5.  VALIDITY OF LIENS.  Except to the extent  specified in and permitted
pursuant to a letter from the  Administrative  Agent to the Borrowers  detailing
exceptions,  the Security Documents shall be effective to create in favor of the
Administrative Agent for the benefit of the Lenders and the Administrative Agent
a legal,  valid and  enforceable  first (except for Permitted  Liens entitled to
priority  under  applicable  law)  security   interest  in  and  Lien  upon  the
Collateral. All filings, recordings, deliveries of instruments and other actions
necessary or desirable in the opinion of the Administrative Agent to protect and
preserve  such  security   interests   shall  have  been  duly   effected.   The
Administrative  Agent shall have received evidence thereof in form and substance
satisfactory to the Administrative Agent.

     12.6.  PERFECTION  CERTIFICATES AND UCC SEARCH RESULTS.  The Administrative
Agent shall have received from each of the  Borrowers and their  Subsidiaries  a
completed  and fully  executed  Perfection  Certificate  and the  results of UCC
searches (and the equivalent  thereof in all applicable  foreign  jurisdictions)
with respect to the  Collateral,  indicating no Liens other than Permitted Liens
and otherwise in form and substance satisfactory to the Administrative Agent.

     12.7. SURVEY AND TAXES. The Administrative Agent shall have received (a) an
updated Survey of each Mortgaged  Property together with a Surveyor  Certificate
relating  thereto and (b) evidence of payment of real estate taxes and municipal
charges on all Real Estate not delinquent on or before the Closing Date.

                                      -83-

     12.8. TITLE INSURANCE. The Administrative Agent shall have received a Title
Policy covering each Mortgaged  Property (or commitments to issue such policies,
with all  conditions  to issuance of the Title Policy  deleted by an  authorized
agent of the Title Insurance Company) together with proof of payment of all fees
and premiums for such policies,  from the Title Insurance Company and in amounts
satisfactory  to  the  Administrative   Agent,  insuring  the  interest  of  the
Administrative Agent and each of the Lenders as mortgagee under the Mortgages.

     12.9.  LANDLORD  CONSENTS.  The Borrowers and their Subsidiaries shall have
delivered  to  the   Administrative   Agent  all   consents   required  for  the
Administrative Agent to receive, as part of the Security Documents, a collateral
assignment  of each  leasehold  of  personal  property,  and a mortgage  of each
leasehold of real property listed on SCHEDULE 12.9 hereto, together in each case
with such estoppel certificates as the Administrative Agent may request.

     12.10.  ENVIRONMENTAL  ASSESSMENTS.  The  Administrative  Agent  shall have
received environmental  assessments from environmental engineers and in form and
substance  satisfactory  to the  Administrative  Agent,  covering all  Mortgaged
Property and all other real property in respect of which any of the Borrowers or
any of their  Subsidiaries may have material  liability,  whether  contingent or
otherwise, for dumping or disposal of Hazardous Substances.

     12.11.  CERTIFICATES  OF  INSURANCE.  The  Administrative  Agent shall have
received (a) a certificate  of insurance from an  independent  insurance  broker
dated  as of  the  Closing  Date,  identifying  insurers,  types  of  insurance,
insurance  limits,  and policy  terms,  and otherwise  describing  the insurance
obtained in accordance  with the  provisions of the Security  Agreements and (b)
certified  copies of all policies  evidencing  such  insurance (or  certificates
therefore signed by the insurer or an agent authorized to bind the insurer).

     12.12.  AGENCY  ACCOUNT  AGREEMENTS.  The  Administrative  Agent shall have
received an Agency Account  Agreement  executed by each  depository  institution
with a bank account listed on SCHEDULE 8.20 hereto.

     12.13.  SOLVENCY  CERTIFICATE.  Each of the Lenders  shall have received an
officer's  certificate  of the Borrowers  dated as of the Closing Date as to the
solvency of the Borrowers and their  Subsidiaries  following the consummation of
the transactions  contemplated herein and in form and substance  satisfactory to
the Lenders.

     12.14. OPINION OF COUNSEL. Each of the Lenders and the Administrative Agent
shall have received a favorable  legal opinion  addressed to the Lenders and the
Administrative  Agent,  dated as of the  Closing  Date,  in form  and  substance
satisfactory  to the  Lenders and the  Administrative  Agent,  from  Bracewell &
Patterson LLP, counsel to the Borrowers and their Subsidiaries.

     12.15. PAYMENT OF FEES. The Borrowers shall have paid to the Lenders or the
Administrative  Agent, as appropriate,  all Fees due hereunder and under the Fee

                                      -84-

Letter.  The Borrowers  shall have reimbursed the  Administrative  Agent for, or
paid  directly,  all fees,  costs and  expenses  incurred by the  Administrative
Agent's  Special  Counsel and local counsel to the  Administrative  Agent in all
relevant  jurisdictions  in  connection  with the  closing  of the  transactions
contemplated hereby.

     12.16. PAYOFF LETTERS.

          (a)  UNSECURED  NOTES.  The  Administrative  Agent shall have received
     payoff  letters from the holders of the  Unsecured  Notes,  indicating  the
     amount of the loan  obligations  of the  Borrowers  to the  holders  of the
     Unsecured Notes to be discharged on the Closing Date and an  acknowledgment
     by the holders of the  Unsecured  Notes that upon receipt of such funds the
     Unsecured  Notes  shall  be paid in full  and  the  holders  thereof  shall
     forthwith  execute and deliver to the  Administrative  Agent for filing all
     termination  statements  and take such other actions as may be necessary to
     discharge all mortgages,  deeds of trust and security  interests granted by
     any of the Borrowers or any of their  Subsidiaries  in favor of the holders
     of the Unsecured Notes.

          (b) SENIOR SECURED NOTES. The Administrative Agent shall have received
     (i) a payoff letter from the Trustee under the  Indenture  (the  "TRUSTEE")
     indicating the amount that must be deposited  with the Trustee  pursuant to
     the Indenture in order to effect the defeasance of the Senior Secured Notes
     pursuant to Article  Eleven of the  Indenture and  acknowledging  that upon
     receipt of such funds, the liens securing the Senior Secured Notes shall be
     terminated and released and the Trustee shall forthwith execute and deliver
     to the Administrative Agent for filing the termination  statements and take
     such other actions as may be necessary to discharge all mortgages, deeds of
     trust and  security  interests  granted by any of the  Borrowers  or any of
     their  Subsidiaries to the Trustee to secure the Senior Secured Notes, (ii)
     evidence that Cafeteria Operators shall have paid all other amounts payable
     under the Indenture,  (iii) a copy of the Officer's Certificate and Opinion
     of Counsel for Cafeteria  Operations  required to be delivered by Cafeteria
     Operators in connection  with the  defeasance of the Senior  Secured Notes,
     together  with a letter from such counsel for  Cafeteria  Operators in form
     and substance  satisfactory  to the  Administrative  Agent stating that the
     Administrative  Agent and the Lenders may rely on such  opinion of counsel,
     and (iv) a copy of the form of notice of redemption to be sent by Cafeteria
     Operators  to the  Trustee  and the  holders of the Senior  Secured  Notes,
     together with evidence  satisfactory to the Administrative  Agent that such
     notice  is  satisfactory  to  the  Trustee  and  otherwise   satisfies  the
     requirements  under the  Indenture  for  redemption  and  defeasance of the
     Senior Secured Notes.

     12.17.  DISBURSEMENT  INSTRUCTIONS.  The  Administrative  Agent  shall have
received disbursement instructions from the Borrowers, indicating that a portion
of the  proceeds  of  the  Loans  in an  amount  equal  to  the  aggregate  loan
obligations  of the Borrowers to the holders of the Unsecured  Notes are paid to
the holders of the Unsecured Notes, and that the amount required to be deposited
with the Trustee in connection  with the  defeasance of the Senior Secured Notes
is to be paid to the Trustee.

                                      -85-

     12.18.  NO  MATERIAL  ADVERSE  CHANGE.  The  Administrative  Agent shall be
satisfied  that there  shall have  occurred no  material  adverse  change in the
business,  operations,  assets,  management,  properties,  financial  condition,
income or prospects of the  Borrowers  and their  Subsidiaries  taken as a whole
since the Balance Sheet Date.

     12.19. FINANCIAL STATEMENTS AND PROJECTIONS; SOURCES AND USES OF FUNDS. The
Administrative  Agent shall have received copies of the financial statements and
projections  described in ss.8.4 and a Statement of Sources and Uses of Funds as
oF the Closing Date, and the  Administrative  Agent shall be satisfied with such
Statement of Sources and Uses of Funds and that such financial statements fairly
present the financial condition, income and prospects of the Borrowers and their
Subsidiaries  as at the close of business on the date thereof and the results of
operations  for the fiscal  period  then ended and showing  compliance  on a Pro
Forma  Basis  with the  covenants  contained  in ss.11 and all  other  terms and
conditionS hereof.

     12.20.  NO LITIGATION.  No litigation,  inquiry,  injunction or restraining
order shall be pending, entered or threatened that, in the reasonable opinion of
the  Administrative  Agent,  could  reasonably  be  expected  to have a Material
Adverse Effect.

     12.21. REAL ESTATE APPRAISALS. The Administrative Agent shall have received
copies  of  the  appraisals   conducted  by  an  appraiser   acceptable  to  the
Administrative  Agent with respect to the Borrowers'  owned Real Estate and such
appraisals   shall  show  the  fair  market  value  of  the  owned  Real  Estate
constituting  Collateral to be not less than  $15,000,000 and shall otherwise be
in form and substance satisfactory to the Administrative Agent.

     12.22. LEVERAGE RATIO. The Borrowers shall provide evidence satisfactory to
the  Administrative  Agent that the  Leverage  Ratio of the  Borrowers as of the
Closing Date (after giving effect to the borrowings  hereunder as of the Closing
Date other than Letters of Credit issued hereunder), shall not exceed 2.50:1.00.

     12.23. PRO FORMA EBITDA. The Borrowers shall provide evidence  satisfactory
to the Administrative  Agent that (a) the pro forma  Consolidated  EBITDA of the
Borrowers and their  Subsidiaries  for the period of twelve  consecutive  fiscal
months  ending  February 6, 2001 (with such  adjustments  as the  Administrative
Agent and the Arranger have approved) is not less than  $18,266,000  and (b) the
trends of the  Consolidated  EBITDA of the Borrowers and their  Subsidiaries for
the previous twelve consecutive fiscal months are either stable or positive.

     12.24. ABSENCE OF DEFAULT UNDER OTHER AGREEMENTS. No default shall exist in
respect of any  material  contract or  agreement to which any Borrower or any of
their Subsidiaries is party.

                                      -86-

     12.25.  MAXIMUM  REVOLVING CREDIT LOANS. The aggregate  principal amount of
the  Revolving  Credit  Loans  outstanding  on the Closing Date shall not exceed
$9,000,000.

     12.26. OTHER  DOCUMENTATION.  All other  documentation  shall be reasonably
satisfactory in form and substance to the Administrative Agent.

13.   CONDITIONS TO ALL BORROWINGS.

     The  obligations  of the Lenders to make any Loan,  including the Revolving
Credit Loan and the Term Loans, and of the Administrative Agent to issue, extend
or renew any Letter of  Credit,  in each case  whether  on or after the  Closing
Date,  shall also be subject to the  satisfaction  of the  following  conditions
precedent:

     13.1.   REPRESENTATIONS   TRUE;   NO   EVENT  OF   DEFAULT.   Each  of  the
representations  and  warranties of any of the Borrowers and their  Subsidiaries
contained in this Credit Agreement,  the other Loan Documents or in any document
or instrument  delivered pursuant to or in connection with this Credit Agreement
shall be true in all material respects as of the date as of which they were made
and shall  also be true in all  material  respects  at and as of the time of the
making of such Loan or the  issuance,  extension  or renewal  of such  Letter of
Credit,  with the same  effect as if made at and as of that time  (except to the
extent of changes resulting from transactions  contemplated or permitted by this
Credit  Agreement  and the other Loan  Documents  and changes  occurring  in the
ordinary  course of business that singly or in the aggregate are not  materially
adverse,  and to the extent  that such  representations  and  warranties  relate
expressly  to an earlier  date) and no  Default  or Event of Default  shall have
occurred and be continuing.

     13.2.  NO LEGAL  IMPEDIMENT.  No change  shall have  occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any  Lender  would make it  illegal  for such  Lender to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Administrative Agent would make it illegal for the
Administrative Agent to issue, extend or renew such Letter of Credit.

     13.3.  PROCEEDINGS  AND DOCUMENTS.  All  proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents  incident  thereto shall be satisfactory in substance and in
form to the  Lenders  and to the  Administrative  Agent  and the  Administrative
Agent's Special  Counsel,  and the Lenders,  the  Administrative  Agent and such
counsel shall have received all  information and such  counterpart  originals or
certified or other  copies of such  documents  as the  Administrative  Agent may
reasonably request.

     13.4.  GOVERNMENTAL  REGULATION.  Each  Lender  shall  have  received  such
statements in substance and form reasonably  satisfactory to such Lender as such
Lender  shall  require  for  the  purpose  of  compliance  with  any  applicable

                                      -87-

regulations of the  Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.

14.  EVENTS OF DEFAULT; ACCELERATION; ETC.

     14.1.  EVENTS OF DEFAULT AND  ACCELERATION.  If any of the following events
("EVENTS OF DEFAULT" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "DEFAULTS") shall occur:

          (a) the Borrowers  shall fail to pay any principal of the Loans or any
     Reimbursement  Obligation  when  the same  shall  become  due and  payable,
     whether at the stated date of maturity or any accelerated  date of maturity
     or at any other date fixed for payment;

          (b) any of the  Borrowers or any of their  Subsidiaries  shall fail to
     pay any  interest on the Loans,  any Fees,  or other sums due  hereunder or
     under any of the other Loan  Documents,  within three (3) Business  Days of
     when the same shall become due and  payable,  whether at the stated date of
     maturity or any accelerated date of maturity or at any other date fixed for
     payment;

          (c)  any of  the  Borrowers  shall  fail  to  comply  with  any of its
     covenants  contained in ss.ss.9.4,  9.5, 9.7, 9.9, 9.12, 10 or 11 or any of
     the covenants contained in any of the Mortgages;

          (d) any of the  Borrowers or any of their  Subsidiaries  shall fail to
     perform any term,  covenant or agreement  contained herein or in any of the
     other Loan Documents (other than those specified elsewhere in this ss.14.1)
     for thirty (30) days after written notice of such failure has been given to
     the Borrowers by thE Administrative Agent;

          (e) any  representation  or warranty of any of the Borrowers or any of
     their  Subsidiaries  in this  Credit  Agreement  or any of the  other  Loan
     Documents or in any other document or instrument  delivered  pursuant to or
     in connection with this Credit  Agreement shall prove to have been false in
     any material respect upon the date when made or deemed to have been made or
     repeated;

          (f) any of the  Borrowers or any of their  Subsidiaries  shall fail to
     pay at maturity,  or within any applicable  period of grace, any obligation
     for  borrowed  money or credit  received  or in respect of any  Capitalized
     Leases,  in each case in an amount in excess of $500,000 or fail to observe
     or perform any  material  term,  covenant  or  agreement  contained  in any
     agreement by which it is bound,  evidencing or securing  borrowed  money or
     credit received or in respect of any Capitalized Leases, in each case in an
     amount in  excess  of  $500,000  for such  period  of time as would  permit
     (assuming  the  giving of  appropriate  notice if  required)  the holder or
     holders thereof or of any obligations  issued  thereunder to accelerate the

                                      -88-

    maturity thereof, or any such holder or holders shall rescind or shall have
     a right to rescind the purchase of any such obligations;

          (g) any of the  Borrowers or any of their  Subsidiaries  shall make an
     assignment for the benefit of creditors,  or admit in writing its inability
     to pay or generally  fail to pay its debts as they mature or become due, or
     shall  petition  or  apply  for  the  appointment  of a  trustee  or  other
     custodian,  liquidator  or receiver of any of the Borrowers or any of their
     Subsidiaries  or of  any  substantial  part  of  the  assets  of any of the
     Borrowers or any of their  Subsidiaries or shall commence any case or other
     proceeding  relating to any of the  Borrowers or any of their  Subsidiaries
     under any bankruptcy, reorganization, arrangement, insolvency, readjustment
     of debt, dissolution or liquidation or similar law of any jurisdiction, now
     or  hereafter  in  effect,  or shall  take any  action to  authorize  or in
     furtherance of any of the foregoing, or if any such petition or application
     shall  be filed or any such  case or other  proceeding  shall be  commenced
     against any of the  Borrowers or any of their  Subsidiaries  and any of the
     Borrowers or any of their Subsidiaries shall indicate its approval thereof,
     consent  thereto or  acquiescence  therein or such petition or  application
     shall not have been  dismissed  within  forty-five  (45) days following the
     filing thereof;

          (h) a  decree  or  order  is  entered  appointing  any  such  trustee,
     custodian,  liquidator or receiver or adjudicating  any of the Borrowers or
     any of their Subsidiaries bankrupt or insolvent, or approving a petition in
     any such  case or other  proceeding,  or a decree  or order  for  relief is
     entered in respect of any Borrower or any  Subsidiary of any Borrower in an
     involuntary  case  under  federal  bankruptcy  laws  as  now  or  hereafter
     constituted;

          (i)  there  shall  remain  in  force,  undischarged,  unsatisfied  and
     unstayed, for more than thirty days, whether or not consecutive,  any final
     judgment  against any of the Borrowers or any of their  Subsidiaries  that,
     with other  outstanding final judgments,  undischarged,  against any of the
     Borrowers or any of their Subsidiaries exceeds in the aggregate $500,000;

          (j) if any of the  Loan  Documents  shall  be  cancelled,  terminated,
     revoked or  rescinded or the  Administrative  Agent's  security  interests,
     mortgages or liens in a substantial  portion of the Collateral  shall cease
     to be perfected,  or shall cease to have the priority  contemplated  by the
     Security  Documents,  in each case  otherwise  than in accordance  with the
     terms  thereof or with the  express  prior  written  agreement,  consent or
     approval of the Lenders,  or any action at law,  suit or in equity or other
     legal  proceeding  to cancel,  revoke or rescind any of the Loan  Documents
     shall be commenced by or on behalf of any of the  Borrowers or any of their
     Subsidiaries party thereto or any of their respective stockholders,  or any
     court or any  other  governmental  or  regulatory  authority  or  agency of
     competent  jurisdiction  shall  make  a  determination  that,  or  issue  a

                                      -89-

     judgment,  order,  decree or ruling to the effect that,  any one or more of
     the Loan Documents is illegal,  invalid or unenforceable in accordance with
     the terms thereof;

          (k) any Borrower or any ERISA  Affiliate  incurs any  liability to the
     PBGC or a  Guaranteed  Pension  Plan  pursuant  to  Title IV of ERISA in an
     aggregate amount exceeding $250,000, or any Borrower or any ERISA Affiliate
     is  assessed  withdrawal  liability  pursuant  to  Title  IV of  ERISA by a
     Multiemployer Plan requiring  aggregate annual payments exceeding $250,000,
     or any of the following  occurs with respect to a Guaranteed  Pension Plan:
     (i) an ERISA Reportable Event, or a failure to make a required  installment
     or other payment (within the meaning of  ss.302(f)(1)  of ERISA),  PROVIDED
     that the Administrative Agent determines in its reasonable  discretioN that
     such  event (A) could be  expected  to  result in  liability  of any of the
     Borrowers  or any of  their  Subsidiaries  to the  PBGC or such  Guaranteed
     Pension  Plan in an  aggregate  amount  exceeding  $250,000  and (B)  could
     constitute  grounds for the termination of such Guaranteed  Pension Plan by
     the PBGC, for the  appointment by the  appropriate  United States  District
     Court of a trustee to administer  such  Guaranteed  Pension Plan or for the
     imposition of a lien in favor of such Guaranteed  Pension Plan; or (ii) the
     appointment  by a United States  District  Court of a trustee to administer
     such  Guaranteed  Pension  Plan;  or (iii) the  institution  by the PBGC of
     proceedings to terminate such Guaranteed Pension Plan;

          (l)  any  of the  Borrowers  or any of  their  Subsidiaries  shall  be
     enjoined,  restrained  or  in  any  way  prevented  by  the  order  of  any
     Governmental  Authority  from  conducting any material part of its business
     and such order shall continue in effect for more than thirty (30) days;

          (m)  there  shall  occur any  material  damage  to, or loss,  theft or
     destruction  of, any  Collateral,  whether or not  insured,  or any strike,
     lockout, labor dispute, embargo,  condemnation, act of God or public enemy,
     or other casualty, which in any such case causes, for more than thirty (30)
     consecutive  days,  the  cessation or  substantial  curtailment  of revenue
     producing  activities  at any  facility of any of the  Borrowers  or any of
     their Subsidiaries if such event or circumstance is not covered by business
     interruption insurance and would have a Material Adverse Effect;

          (n) there  shall  occur  the loss,  suspension  or  revocation  of, or
     failure to renew,  any license or permit now held or hereafter  acquired by
     any of the Borrowers or any of their Subsidiaries if such loss, suspension,
     revocation or failure to renew would have a Material Adverse Effect;

          (o)  any  of the  Borrowers  or any of  their  Subsidiaries  shall  be
     indicted  for a state or federal  crime,  or any civil or  criminal  action

                                      -90-

     shall  otherwise  have been brought  against any of the Borrowers or any of
     their  Subsidiaries,  a punishment for which in any such case could include
     the forfeiture of any assets of such Borrower or such  Subsidiary  having a
     fair market value in excess of $500,000;

          (p) a Change of Control shall occur; or

          (q) (i) either the Chief Executive  Officer or Chief Financial Officer
     shall cease,  for any reason,  to be employed in such  capacity with Furr's
     and there shall not be a  replacement  Person  employed in such  management
     position  with  similar  duties  and  responsibilities,  who is  reasonably
     acceptable  to the Required  Lenders  within one hundred  twenty (120) days
     after the occurrence of such event;

then,  and in any  such  event,  so  long as the  same  may be  continuing,  the
Administrative Agent may, and upon the request of the Required Lenders shall, by
notice in writing to the  Borrowers  declare all amounts  owing with  respect to
this  Credit  Agreement,  the  Notes  and  the  other  Loan  Documents  and  all
Reimbursement  Obligations  to be, and they shall  thereupon  forthwith  become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrowers; PROVIDED
that in the event of any Event of Default specified in ss.ss.14.1(g) or 14.1(h),
all such amounts  shall become  immediately  due and payable  automatically  and
without any requiremEnt of notice from the Administrative Agent or any Lender.

     14.2.  TERMINATION  OF  COMMITMENTS.  If any one or more of the  Events  of
Default specified in ss.14.1(g) or ss.14.1(h) shall occur, any unused portion of
the credit hereunder shall forthwith  terminate and each of the Lenders shall be
relieved  of all  further  obligations  to make Loans to the  Borrowers  and the
Administrative  Agent shall be relieved  of all  further  obligations  to issue,
extend or renew  Letters of  Credit.  If any other  Event of Default  shall have
occurred  and be  continuing,  or if on any  Drawdown  Date or  other  date  for
issuing,  extending or renewing any Letter of Credit the conditions precedent to
the making of the Loans to be made on such Drawdown Date or (as the case may be)
to issuing,  extending or renewing  such Letter of Credit on such other date are
not  satisfied,  the  Administrative  Agent  may and,  upon the  request  of the
Required  Lenders,  shall,  by notice to the  Borrowers,  terminate  the  unused
portion of the credit  hereunder,  and upon such notice  being given such unused
portion of the credit  hereunder  shall  terminate  immediately  and each of the
Lenders  shall be  relieved  of all  further  obligations  to make Loans and the
Administrative  Agent shall be relieved  of all  further  obligations  to issue,
extend or renew Letters of Credit.  No termination of the credit hereunder shall
relieve  any  of  the  Borrowers  or any  of  their  Subsidiaries  of any of the
Obligations.

     14.3. REMEDIES. In case any one or more of the Events of Default shall have
occurred  and  be  continuing,  and  whether  or  not  the  Lenders  shall  have
accelerated the maturity of the Loans pursuant to ss.14.1,  each Lender, if owed
any amounT  with  respect  to the Loans or the  Reimbursement  Obligations,  may

                                      -91-

proceed to protect and  enforce  its rights by suit in equity,  action at law or
other  appropriate  proceeding,  whether  for the  specific  performance  of any
covenant or  agreement  contained  in this Credit  Agreement  and the other Loan
Documents or any instrument pursuant to which the Obligations to such Lender are
evidenced,  including  as permitted by  applicable  law the  obtaining of the EX
PARTE  appointment of a receiver,  and, if such amount shall have become due, by
declaration  or otherwise,  proceed to enforce the payment  thereof or any other
legal or  equitable  right of such  Lender;  provided  that  unless  an Event of
Default  is then  continuing  under  ss.14.1(a)  or (b) with  respect to amounts
payable to such  Lender,  such  Lender  may not  exercise  its rights  hereunder
withouT the prior consent of the Required  Lenders.  No remedy herein  conferred
upon  any  Lender  or the  Administrative  Agent  or the  holder  of any Note or
purchaser of any Letter of Credit  Participation  is intended to be exclusive of
any other remedy and each and every remedy shall be  cumulative  and shall be in
addition to every other remedy given  hereunder or now or hereafter  existing at
law or in equity or by statute or any other provision of law.


     14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following the
occurrence   and  during  the   continuance   of  any  Event  of  Default,   the
Administrative  Agent or any Lender,  as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise with
respect to the  realization  upon any of the  Collateral,  such monies  shall be
distributed for application as follows:

          (a)  First,   to  the  payment  of,  or  (as  the  case  may  be)  the
     reimbursement  of  the  Administrative  Agent  for  or in  respect  of  all
     reasonable costs, expenses,  disbursements and losses which shall have been
     incurred or sustained by the  Administrative  Agent in connection  with the
     collection of such monies by the  Administrative  Agent,  for the exercise,
     protection or enforcement by the Administrative  Agent of all or any of the
     rights,  remedies,  powers and privileges of the Administrative Agent under
     this Credit  Agreement or any of the other Loan  Documents or in respect of
     the Collateral or in support of any provision of adequate  indemnity to the
     Administrative Agent against any taxes or liens which by law shall have, or
     may have,  priority  over the  rights of the  Administrative  Agent to such
     monies;

          (b) Second,  to all other  Obligations  in such order or preference as
     the  Required   Lenders  may  determine;   PROVIDED,   HOWEVER,   that  (i)
     distributions  shall be made (A) PARI PASSU among  Obligations with respect
     to the  Administrative  Agent's fee and all other  Obligations and (B) with
     respect to each type of Obligation owing to the Lenders,  such as interest,
     principal,  fees and  expenses,  among the Lenders  PRO RATA,  and (ii) the
     Administrative  Agent may in its discretion  make proper  allowance to take
     into account any Obligations not then due and payable;

          (c) Third,  upon payment and  satisfaction in full or other provisions
     for payment in full  satisfactory  to the  Lenders  and the  Administrative
     Agent of all of the Obligations, to the payment of any obligations required

                                      -92-

     to be paid pursuant to ss.9-504(1)(c) of the Uniform Commercial Code of the
     Commonwealth oF Massachusetts; and

          (d) Fourth,  the excess, if any, shall be returned to the Borrowers or
     to such other Persons as are entitled thereto.

15. THE ADMINISTRATIVE AGENT.

     15.1. AUTHORIZATION.

          (a) The  Administrative  Agent is  authorized  to take such  action on
     behalf  of each of the  Lenders  and to  exercise  all such  powers  as are
     hereunder  and  under  any of the  other  Loan  Documents  and any  related
     documents delegated to the Administrative  Agent, together with such powers
     as are reasonably  incident thereto,  including the authority,  without the
     necessity of any notice to or further consent of the Lenders,  from time to
     time to take any action  with  respect to any  Collateral  or the  Security
     Documents which may be necessary to perfect,  maintain  perfected or insure
     the  priority of the  security  interest  in and liens upon the  Collateral
     granted  pursuant to the  Security  Documents,  PROVIDED  that no duties or
     responsibilities  not expressly  assumed herein or therein shall be implied
     to have been assumed by the Administrative Agent.

          (b) The relationship  between the Administrative Agent and each of the
     Lenders  is  that  of an  independent  contractor.  The  use  of  the  term
     "ADMINISTRATIVE  AGENT" is for convenience only and is used to describe, as
     a form of convention,  the independent contractual relationship between the
     Administrative  Agent and each of the  Lenders.  Nothing  contained in this
     Credit  Agreement nor the other Loan Documents shall be construed to create
     an agency, trust or other fiduciary relationship between the Administrative
     Agent and any of the Lenders.

          (c) As an independent  contractor empowered by the Lenders to exercise
     certain rights and perform  certain duties and  responsibilities  hereunder
     and  under  the  other  Loan  Documents,   the   Administrative   Agent  is
     nevertheless a "REPRESENTATIVE"  of the Lenders, as that term is defined in
     Article 1 of the Uniform  Commercial  Code, for purposes of actions for the
     benefit of the Lenders  and the  Administrative  Agent with  respect to all
     collateral security and guaranties contemplated by the Loan Documents. Such
     actions  include the  designation of the  Administrative  Agent as "SECURED
     PARTY",  "MORTGAGEE"  or the like on all  financing  statements  and  other
     documents and instruments,  whether recorded or otherwise,  relating to the
     attachment,  perfection, priority or enforcement of any security interests,
     mortgages or deeds of trust in collateral  security  intended to secure the
     payment or  performance of any of the  Obligations,  all for the benefit of
     the Lenders and the Administrative Agent.

                                      -93-

     15.2.  EMPLOYEES AND ADMINISTRATIVE  AGENTS.  The Administrative  Agent may
exercise its powers and execute its duties by or through employees or agents and
shall be  entitled to take,  and to rely on,  advice of counsel  concerning  all
matters  pertaining to its rights and duties under this Credit Agreement and the
other Loan Documents.  The Administrative Agent may utilize the services of such
Persons  as the  Administrative  Agent in its  sole  discretion  may  reasonably
determine,  and all  reasonable  fees and expenses of any such Persons  shall be
paid by the Borrowers.

     15.3.  NO  LIABILITY.  Neither  the  Administrative  Agent  nor  any of its
shareholders,  directors,  officers or employees nor any other Person  assisting
them in their duties nor any agent or employee thereof,  shall be liable for any
waiver,  consent or approval given or any action taken,  or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan  Documents,
or in connection  herewith or therewith,  or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Administrative
Agent or such other Person,  as the case may be, may be liable for losses due to
its willful misconduct or gross negligence.

     15.4. NO REPRESENTATIONS.

          15.4.1 GENERAL.  The Administrative Agent shall not be responsible for
     the execution or validity or enforceability  of this Credit Agreement,  the
     Notes,  the  Letters of  Credit,  any of the other  Loan  Documents  or any
     instrument at any time constituting, or intended to constitute,  collateral
     security for the Notes, or for the value of any such collateral security or
     for the  validity,  enforceability  or  collectability  of any such amounts
     owing  with  respect  to the  Notes,  or for any  recitals  or  statements,
     warranties  or  representations  made  herein or in any of the  other  Loan
     Documents or in any certificate or instrument  hereafter furnished to it by
     or on behalf of any of the  Borrowers or any of their  Subsidiaries,  or be
     bound to ascertain or inquire as to the performance or observance of any of
     the terms, conditions,  covenants or agreements herein or in any instrument
     at any time constituting,  or intended to constitute,  collateral  security
     for the Notes or to inspect any of the properties,  books or records of any
     of the Borrowers or any of their  Subsidiaries.  The  Administrative  Agent
     shall not be bound to  ascertain  whether  any notice,  consent,  waiver or
     request  delivered to it by the Borrowers or any holder of any of the Notes
     shall have been duly  authorized  or is true,  accurate and  complete.  The
     Administrative  Agent has not made nor does it now make any representations
     or warranties,  express or implied, nor does it assume any liability to the
     Lenders,  with respect to the credit worthiness or financial  conditions of
     any of the Borrowers or any of their Subsidiaries. Each Lender acknowledges
     that it has,  independently  and without  reliance upon the  Administrative
     Agent or any other Lender, and based upon such information and documents as
     it has deemed  appropriate,  made its own credit  analysis  and decision to
     enter into this Credit Agreement.

                                      -94-

          15.4.2 . CLOSING  DOCUMENTATION,  ETC.  For  purposes  of  determining
     compliance  with the  conditions  set forth in  ss.12,each  Lender that has
     executed  this  Credit  Agreement  shall be  deemed to have  consented  to,
     approved or accepted,  or to be satisfied  with,  each  document and matter
     either sent, or made available, by the Administrative Agent or the Arranger
     to such  Lender for  consent,  approval,  acceptance  or  satisfaction,  or
     required  thereunder to be to be consent to or approved by or acceptable or
     satisfactory to such Lender,  unless an officer of the Administrative Agent
     or the Arranger  active upon the  Borrower's  account  shall have  received
     notice from such Lender prior to the Closing Date  specifying such Lender's
     objection  thereto  and such  objection  shall not have been  withdrawn  by
     notice to the  Administrative  Agent or the  Arranger  to such effect on or
     prior to the Closing Date.

     15.5. PAYMENTS.

          15.5.1 . PAYMENTS TO ADMINISTRATIVE  AGENT. A payment by the Borrowers
     to the  Administrative  Agent  hereunder or any of the other Loan Documents
     for the account of any Lender  shall  constitute  a payment to such Lender.
     The Administrative  Agent agrees promptly to distribute to each Lender such
     Lender's PRO RATA share of payments  received by the  Administrative  Agent
     for the  account of the  Lenders  except as  otherwise  expressly  provided
     herein or in any of the other Loan Documents.

          15.5.2 .  DISTRIBUTION BY  ADMINISTRATIVE  AGENT. If in the opinion of
     the  Administrative  Agent the distribution of any amount received by it in
     such  capacity  hereunder,  under the Notes or under any of the other  Loan
     Documents  might  involve  it in  liability,  it may  refrain  from  making
     distribution   until  its  right  to  make  distribution  shall  have  been
     adjudicated by a court of competent  jurisdiction.  If a court of competent
     jurisdiction  shall adjudge that any amount received and distributed by the
     Administrative  Agent  is to be  repaid,  each  Person  to  whom  any  such
     distribution  shall have been made shall either repay to the Administrative
     Agent its  proportionate  share of the amount so  adjudged  to be repaid or
     shall  pay over the same in such  manner  and to such  Persons  as shall be
     determined by such court.

          15.5.3 . DELINQUENT LENDERS.  Notwithstanding anything to the contrary
     contained in this Credit Agreement or any of the other Loan Documents,  any
     Lender that fails (a) to make available to the Administrative Agent its PRO
     RATA share of any Loan or to purchase any Letter of Credit Participation or
     (b) to  comply  with the  provisions  of  ss.17.1  with  respect  to making
     dispositions and arrangements  with the other Lenders,  where such Lender's
     share of any payment received, whether by setoff or otherwise, is in excess
     of its PRO  RATA  share  of such  payments  due and  payable  to all of the
     Lenders,  in each  case as,  when and to the full  extent  required  by the
     provisions  of  this  Credit  Agreement,  shall  be  deemed  delinquent  (a
     "DELINQUENT  LENDER")  and shall be deemed a  Delinquent  Lender until such

                                      -95-

     time as such delinquency is satisfied.  A Delinquent Lender shall be deemed
     to have assigned any and all payments due to it from the Borrower,  whether
     on  account  of  outstanding  Loans,  Unpaid   Reimbursement   Obligations,
     interest,  fees or otherwise,  to the remaining  nondelinquent  Lenders for
     application  to, and reduction of, their  respective PRO RATA shares of all
     outstanding  Loans and Unpaid  Reimbursement  Obligations.  The  Delinquent
     Lender  hereby  authorizes  the  Administrative  Agent to  distribute  such
     payments to the nondelinquent Lenders in proportion to their respective PRO
     RATA shares of all outstanding Loans and Unpaid Reimbursement  Obligations.
     A Delinquent Lender shall be deemed to have satisfied in full a delinquency
     when and if, as a result of  application  of the  assigned  payments to all
     outstanding Loans and Unpaid Reimbursement Obligations of the nondelinquent
     Lenders,  the Lenders'  respective PRO RATA shares of all outstanding Loans
     and  Unpaid  Reimbursement  Obligations  have  returned  to those in effect
     immediately  prior to such  delinquency  and without  giving  effect to the
     nonpayment causing such delinquency.

     15.6.  HOLDERS OF NOTES.  The  Administrative  Agent may deem and treat the
payee of any Note or the purchaser of any Letter of Credit  Participation as the
absolute owner or purchaser  thereof for all purposes hereof until it shall have
been furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.

     15.7.  INDEMNITY.  The Lenders  ratably  agree hereby to indemnify and hold
harmless the  Administrative  Agent and its affiliates  from and against any and
all  claims,  actions  and suits  (whether  groundless  or  otherwise),  losses,
damages,  costs,  expenses  (including any expenses for which the Administrative
Agent or such affiliate has not been  reimbursed by the Borrowers as required by
ss.17.2),  and  liabilities  of every  nature and  character  arising  out of or
related to thiS Credit Agreement,  the Notes, or any of the other Loan Documents
or  the  transactions  contemplated  or  evidenced  hereby  or  thereby,  or the
Administrative  Agent's  actions taken  hereunder or  thereunder,  except to the
extent  that any of the same  shall be  directly  caused  by the  Administrative
Agent's willful misconduct or gross negligence.

     15.8.  ADMINISTRATIVE  AGENT AS LENDER. In its individual  capacity,  Fleet
shall have the same  obligations  and the same rights,  powers and privileges in
respect to its Revolving  Commitment and the Loans made by it, and as the holder
of any of the Notes and as the purchaser of any Letter of Credit Participations,
as it would have were it not also the Administrative Agent.

     15.9.  RESIGNATION.  The  Administrative  Agent  may  resign at any time by
giving  sixty (60) days prior  written  notice  thereof to the  Lenders  and the
Borrowers. Upon any such resignation,  the Required Lenders shall have the right
to appoint a successor  Administrative  Agent.  Unless an Event of Default shall
have occurred and be continuing,  such successor  Administrative  Agent shall be
reasonably  acceptable to the Borrowers.  If no successor  Administrative  Agent

                                      -96-

shall have been so  appointed by the  Required  Lenders and shall have  accepted
such  appointment  within  thirty  (30) days after the  retiring  Administrative
Agent's giving of notice of resignation,  then the retiring Administrative Agent
may, on behalf of the Lenders,  appoint a successor  Administrative Agent, which
shall be a  financial  institution  having a  rating  of not less  than A or its
equivalent by S&P.  Upon the  acceptance of any  appointment  as  Administrative
Agent   hereunder  by  a  successor   Administrative   Agent,   such   successor
Administrative  Agent shall thereupon  succeed to and become vested with all the
rights, powers,  privileges and duties of the retiring Administrative Agent, and
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations  hereunder.  After any retiring  Administrative Agent's resignation,
the  provisions  of this Credit  Agreement  and the other Loan  Documents  shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

     15.10.  NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT.  Each Lender hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the  Administrative  Agent thereof.  The Administrative
Agent hereby agrees that upon receipt of any notice under this ss.15.10 it shall
promptly  notify the other  Lenders of thE existence of such Default or Event of
Default.

     15.11.  DUTIES IN THE CASE OF  ENFORCEMENT.  In case one of more  Events of
Default have occurred and shall be continuing,  and whether or not  acceleration
of the Obligations shall have occurred,  the Administrative  Agent shall, if (a)
so requested by the  Required  Lenders and (b) the Lenders have  provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative  Agent may reasonably request,  proceed to
enforce the provisions of the Security  Documents  authorizing the sale or other
disposition  of all or any part of the  Collateral  and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such Collateral.  The Required Lenders may direct the Administrative Agent in
writing as to the  method and the extent of any such sale or other  disposition,
the Lenders  hereby  agreeing to indemnify  and hold the  Administrative  Agent,
harmless  from all  liabilities  incurred  in  respect of all  actions  taken or
omitted in accordance  with such  directions,  PROVIDED that the  Administrative
Agent  need  not  comply  with  any  such  direction  to  the  extent  that  the
Administrative  Agent reasonably believes the Administrative  Agent's compliance
with  such  direction  to  be  unlawful  or  commercially  unreasonable  in  any
applicable jurisdiction.

16. ASSIGNMENT AND PARTICIPATION.

     16.1. CONDITIONS TO ASSIGNMENT BY LENDERS.  Except as provided herein, each
Lender may assign to one or more commercial banks, other financial  institutions
or other  Persons,  all or a portion of its  interests,  rights and  obligations
under this Credit  Agreement  (including  all or a portion of (i) its  Revolving
Credit Commitment  Percentage,  Revolving Credit Commitment and the same portion
of the  Revolving  Credit  Loans at the time owing to it, the  Revolving  Credit

                                      -97-

Notes held by it and its  participating  interest  in the risk  relating  to any
Letters of Credit (ii) its Term A Commitment  Percentage and the same portion of
Term Loan A at the time  owing to it and the Term A Note held by it or (iii) its
Term B  Commitment  Percentage  and the same  portion of Term Loan B at the time
owing  to it and the  Term B Note  held by it);  provided  that  (a) each of the
Administrative  Agent and, unless an Event of Default shall have occurred and be
continuing,  the Borrowers  shall have given its prior  written  consent to such
assignment,  which consent will not be  unreasonably  withheld;  except that the
consent of the  Borrowers or the  Administrative  Agent shall not be required in
connection  with any assignment by a Lender to (i) an existing  Lender or (ii) a
Lender  Affiliate  of such  Lender,  (b)  each  such  assignment  shall  be of a
constant, and not a varying, percentage of all the assigning Lender's rights and
obligations in respect of each of the following considered  separately:  (i) its
Revolving  Credit  Commitment  Percentage and Revolving Credit  Commitment,  the
Revolving Credit Loans at the time owing to it, and its  participating  interest
in the risk  relating to any Letters of Credit,  (ii) its Term A Commitment  and
the  portion of Term Loan A at the time owing to it, or, as the case may be, and
(iii) its Term B Commitment  and the portion of Term Loan B at the time owing to
it,  (c) each  assignment  (or,  in the case of  assignments  by a Lender to its
Lender  Affiliates,  the  aggregate  holdings  of such  Lender  and  its  Lender
Affiliates after giving effect to such assignments),  shall be in an amount that
is a whole multiple of $2,500,000 and (d) the parties to such  assignment  shall
execute and deliver to the  Administrative  Agent, for recording in the Register
(as hereinafter  defined),  an Assignment and Acceptance,  substantially  in the
form of EXHIBIT F hereto (an  "ASSIGNMENT  AND  ACCEPTANCE"),  together with any
Notes subject to such assignment. Upon such execution,  delivery, acceptance and
recording,  from and after the effective date  specified in each  Assignment and
Acceptance,  which effective date shall be at least five (5) Business Days after
the execution thereof,  (y) the assignee thereunder shall be a party hereto and,
to the extent provided in such  Assignment and  Acceptance,  have the rights and
obligations of a Lender  hereunder,  and (z) the assigning  Lender shall, to the
extent provided in such assignment and upon payment to the Administrative  Agent
of the registration fee referred to in ss.16.3, be released from its obligations
under this Credit Agreement.

     16.2. CERTAIN  REPRESENTATIONS AND WARRANTIES;  LIMITATIONS;  COVENANTS. By
executing  and  delivering  an  Assignment  and  Acceptance,  the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:

          (a) other than the  representation  and warranty  that it is the legal
     and beneficial  owner of the interest being assigned thereby free and clear
     of any adverse  claim,  the  assigning  Lender makes no  representation  or
     warranty, express or implied, and assumes no responsibility with respect to
     any statements, warranties or representations made in or in connection with
     this Credit Agreement or the execution, legality, validity, enforceability,
     genuineness,  sufficiency or value of this Credit Agreement, the other Loan
     Documents or any other instrument or document  furnished pursuant hereto or

                                      -98-

     the  attachment,  perfection  or  priority  of  any  security  interest  or
     mortgage,

          (b) the  assigning  Lender  makes no  representation  or warranty  and
     assumes no  responsibility  with respect to the financial  condition of the
     Borrowers  and  their   Subsidiaries  or  any  other  Person  primarily  or
     secondarily liable in respect of any of the Obligations, or the performance
     or observance by the Borrowers and their  Subsidiaries  or any other Person
     primarily or secondarily liable in respect of any of the Obligations of any
     of their  obligations  under this Credit Agreement or any of the other Loan
     Documents or any other instrument or document  furnished pursuant hereto or
     thereto;

          (c) such assignee  confirms that it has received a copy of this Credit
     Agreement,  together  with copies of the most recent  financial  statements
     referred to in ss.8.4 and ss.9.4 and such other  documents And  information
     as it has deemed  appropriate to make its own credit  analysis and decision
     to enter into such Assignment and Acceptance;

          (d) such assignee will,  independently  and without  reliance upon the
     assigning Lender, the Administrative Agent or any other Lender and based on
     such documents and  information  as it shall deem  appropriate at the time,
     continue to make its own credit  decisions  in taking or not taking  action
     under this Credit Agreement;

          (e) such assignee appoints and authorizes the Administrative  Agent to
     take such action as agent on its behalf and to exercise  such powers  under
     this Credit  Agreement and the other Loan Documents as are delegated to the
     Administrative  Agent by the terms  hereof or thereof,  together  with such
     powers as are reasonably incidental thereto;

          (f) such assignee agrees that it will perform in accordance with their
     terms all of the obligations that by the terms of this Credit Agreement are
     required to be performed by it as a Lender;

          (g)  such  assignee   represents  and  warrants  that  it  is  legally
     authorized to enter into such Assignment and Acceptance; and

          (h) if such assignee is acquiring a Revolving Credit Commitment,  such
     assignee  acknowledges  that it has made  arrangements  with the  assigning
     Lender  satisfactory to such assignee with respect to its PRO RATA share of
     Letter of Credit Fees in respect of outstanding Letters of Credit.

     16.3.  REGISTER.  The  Administrative  Agent shall  maintain a copy of each
Assignment  and  Acceptance  delivered to it and a register or similar list (the
"REGISTER")  for the  recordation  of the names and addresses of the Lenders and
the Revolving Credit  Commitment  Percentage,  Term A Commitment  Percentage and
Term B Commitment  Percentage of, and principal amount of the Loans owing to and

                                      -99-

Letter of Credit Participations purchased by, the Lenders from time to time. The
entries in the Register shall be conclusive,  in the absence of manifest  error,
and the  Borrowers,  the  Administrative  Agent and the  Lenders  may treat each
Person  whose name is recorded in the  Register  as a Lender  hereunder  for all
purposes  of  this  Credit  Agreement.  The  Register  shall  be  available  for
inspection by the Borrowers and the Lenders at any reasonable time and from time
to time upon reasonable prior notice. Upon each such recordation,  the assigning
Lender agrees to pay to the  Administrative  Agent a registration fee in the sum
of $3,500.

     16.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance  executed
by the  parties  to such  assignment,  together  with each Note  subject to such
assignment,  the Administrative Agent shall (a) record the information contained
therein in the Register, and (b) give prompt notice thereof to the Borrowers and
the Lenders  (other than the  assigning  Lender).  Within five (5) Business Days
after receipt of such notice, the Borrowers, at their own expense, shall execute
and deliver to the Administrative  Agent, in exchange for each surrendered Note,
a new Note to the  order  of such  Assignee  in an  amount  equal to the  amount
assumed by such Assignee  pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained some portion of its obligations  hereunder,  a new
Note to the  order of the  assigning  Lender in an  amount  equal to the  amount
retained  by  it  hereunder.   Such  new  Notes  shall  provide  that  they  are
replacements  for the  surrendered  Notes,  shall be in an  aggregate  principal
amount equal to the aggregate  principal amount of the surrendered  Notes, shall
be  dated  the  effective  date of such  Assignment  and  Acceptance  and  shall
otherwise be in  substantially  the form of the assigned Notes.  Within five (5)
days of issuance of any new Notes pursuant to this ss.16.4,  the Borrowers shalL
deliver upon the request of the assignee Lender an opinion of counsel, addressed
to the Lenders and the Administrative  Agent, relating to the due authorization,
execution and delivery of such new Notes and the legality,  validity and binding
effect  thereof,  in  form  and  substance  satisfactory  to  the  Lenders.  The
surrendered Notes shall be cancelled and returned to the Borrowers.

     16.5.  PARTICIPATIONS.  Each Lender may sell  participations to one or more
Lenders  or other  entities  in all or a portion  of such  Lender's  rights  and
obligations  under this Credit Agreement and the other Loan Documents;  PROVIDED
that  (a)  each  such  participation  shall be in an  amount  of not  less  than
$2,500,000,  (b) any such sale or participation  shall not affect the rights and
duties of the selling Lender  hereunder to the Borrowers and (c) the only rights
granted to the  participant  pursuant to such  participation  arrangements  with
respect to waivers,  amendments or  modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Loans,  extend the term or increase the
amount of the Revolving  Credit  Commitment of such Lender as it relates to such
participant, reduce the amount of any Commitment Fee or Letter of Credit Fees to
which such  participant  is entitled or extend any regularly  scheduled  payment
date for principal or interest.

                                     -100-

     16.6.  ASSIGNEE  OR  PARTICIPANT  AFFILIATED  WITH  THE  BORROWERS.  If any
assignee  Lender is an Affiliate of any Borrower,  then any such assignee Lender
shall have no right to vote as a Lender hereunder or under any of the other Loan
Documents  for  purposes  of  granting  consents  or waivers or for  purposes of
agreeing to amendments or other  modifications  to any of the Loan  Documents or
for purposes of making requests to the Administrative  Agent pursuant to ss.14.1
or ss.14.2, and The determination of the Required Lenders shall for all purposes
of this Credit  Agreement and the other Loan Documents be made without regard to
such  assignee   Lender's   interest  in  any  of  the  Loans  or  Reimbursement
Obligations. If any Lender sells a participating interest in any of the Loans or
Reimbursement  Obligations to a participant,  and such participant is a Borrower
or an Affiliate of a Borrower, then such transferor Lender shall promptly notify
the Administrative Agent of the sale of such participation.  A transferor Lender
shall have no right to vote as a Lender hereunder or under any of the other Loan
Documents  for  purposes  of  granting  consents  or waivers or for  purposes of
agreeing to  amendments  or  modifications  to any of the Loan  Documents or for
purposes of making requests to the  Administrative  Agent pursuant to ss.14.1 or
ss.14.2  to the  extent  that  such  participation  is  beneficially  owned by a
Borrower or any Affiliate of a BorrowEr,  and the  determination of the Required
Lenders  shall for all  purposes  of this  Credit  Agreement  and the other Loan
Documents be made without  regard to the interest of such  transferor  Lender in
the Loans or Reimbursement Obligations to the extent of such participation.  The
provisions of this ss.16.6 shall not apply to an assignee  Lender or participant
which  is  also A  Lender  on the  Closing  Date  or to an  assignee  Lender  or
participant  which has disclosed to the other Lenders that it is an Affiliate of
any Borrower and which,  following such  disclosure,  has been excepted from the
provisions  of  this  ss.16.6  in A  writing  signed  by  the  Required  Lenders
determined  without regard to the interest of such assignee Lender or transferor
Lender,  to  the  extent  of  such  participation,  in  Loans  or  Reimbursement
Obligations.

     16.7.  MISCELLANEOUS  ASSIGNMENT  PROVISIONS.  Any  assigning  Lender shall
retain its rights to be  indemnified  pursuant  to ss.17.3  with  respect to any
claims  or  actions  arising  prior  to the  date of such  assignment.  Anything
contained in thiS ss.16 to the contrary  notwithstanding,  any Lender may at any
time pledge or assign a security  interest in all or any portioN of its interest
and rights  under this  Credit  Agreement  (including  all or any portion of its
Notes) to secure obligations of such Lender,  including any pledge or assignment
to secure  obligations to (a) any of the twelve Federal  Reserve Banks organized
under ss.4 of the Federal Reserve Act, 12 U.S.C.  ss.341 and (b) with respect to
any  Lender  that is a fund tHat  invests  in bank  loans,  to any lender or any
trustee for, or any other  representative  of,  holders of  obligations  owed or
securities issued by such fund as security for such obligations or securities or
any institutional custodian for such fund or for such lender. Any foreclosure or
similar  action by any Person in respect of such pledge or  assignment  shall be
subject to the other provisions of this ss.16. No such pledge or the enforcement
thereof shall release the pledgor LendeR from its obligations hereunder or under
any of the other Loan  Documents,  provide any voting  rights  hereunder  to the

                                     -101-

pledgee  thereof,  or  affect  any  rights or  obligations  of the  Borrower  or
Administrative Agent hereunder.

     16.8.  ASSIGNMENT  BY  BORROWER.  None of the  Borrowers  shall  assign  or
transfer  any of its  rights  or  obligations  under  any of the Loan  Documents
without the prior written consent of each of the Lenders.

     16.9.  SYNDICATION.  Each of the  Borrowers  hereby  agrees to  assist  and
cooperate  with the Arranger in its efforts to complete the  syndication  of the
commitments  and  Loans  hereunder,  including,  but not  limited  to,  promptly
preparing and providing materials and information reasonably deemed necessary by
the Arranger to successfully complete and otherwise facilitate such syndication,
including,  without limitation,  all projections prepared by or on behalf of the
Borrowers  relating  to  the  transactions  contemplated  hereby.  Each  of  the
Borrowers  and its  directors,  officers,  employees  and agents  shall,  at the
reasonable request of the Arranger, meet with potential lenders and provide such
additional information as such Persons may reasonably request.

17. PROVISIONS OF GENERAL APPLICATIONS.

     17.1.  SETOFF.  Each of the Borrowers  hereby grants to the  Administrative
Agent and each of the Lenders a continuing lien,  security interest and right of
setoff as security for all  liabilities  and  obligations to the  Administrative
Agent and each  Lender,  whether now  existing or  hereafter  arising,  upon and
against all deposits,  credits, collateral and property, now or hereafter in the
possession,  custody, safekeeping or control of the Administrative Agent or such
Lender or any Lender Affiliate and their successors and assigns or in transit to
any of  them.  Regardless  of the  adequacy  of  any  collateral,  if any of the
Obligations  are due and  payable and have not been paid or any Event of Default
shall have  occurred,  any deposits or other sums credited by or due from any of
the Lenders to any Borrower and any securities or other property of any Borrower
in the  possession  of such  Lender may be applied to or set off by such  Lender
against the payment of Obligations and any and all other liabilities, direct, or
indirect,  absolute  or  contingent,  due or to  become  due,  now  existing  or
hereafter arising, of any Borrower to such Lender. ANY AND ALL RIGHTS TO REQUIRE
ANY  LENDER  TO  EXERCISE  ITS  RIGHTS OR  REMEDIES  WITH  RESPECT  TO ANY OTHER
COLLATERAL  WHICH  SECURES THE  OBLIGATIONS,  PRIOR TO  EXERCISING  ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERS
ARE HEREBY KNOWINGLY,  VOLUNTARILY AND IRREVOCABLY  WAIVED.  Each of the Lenders
agree  with  each  other  Lender  that (a) if an  amount  to be set off is to be
applied to Indebtedness of any Borrower to such Lender,  other than Indebtedness
evidenced  by the  Notes  held  by such  Lender  or  constituting  Reimbursement
Obligations  owed to such Lender,  such amount shall be applied  ratably to such
other  Indebtedness and to the Indebtedness  evidenced by all such Notes held by
such Lender or constituting  Reimbursement  Obligations owed to such Lender, and

                                     -102-

(b) if such  Lender  shall  receive  from any  Borrower,  whether  by  voluntary
payment,  exercise  of  the  right  of  setoff,   counterclaim,   cross  action,
enforcement  of the  claim  evidenced  by the  Notes  held by,  or  constituting
Reimbursement  Obligations  owed to,  such  Lender by  proceedings  against  any
Borrower at law or in equity or by proof thereof in bankruptcy,  reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and  apply  to the  payment  of the  Note or Notes  held  by,  or  Reimbursement
Obligations  owed to, such Lender any amount in excess of its ratable portion of
the  payments  received by all of the Lenders with respect to the Notes held by,
and Reimbursement Obligations owed to, all of the Lenders, such Lender will make
such  disposition and  arrangements  with the other Lenders with respect to such
excess,  either  by  way  of  distribution,  pro  tanto  assignment  of  claims,
subrogation or otherwise as shall result in each Lender  receiving in respect of
the Notes held by it or  Reimbursement  Obligations  owed it, its  proportionate
payment as  contemplated by this Credit  Agreement;  provided that if all or any
part of such excess  payment is  thereafter  recovered  from such  Lender,  such
disposition and  arrangements  shall be rescinded and the amount restored to the
extent of such recovery, but without interest.

     17.2.  EXPENSES.  The Borrowers  jointly and severally agree to pay (a) the
reasonable costs of producing and reproducing this Credit  Agreement,  the other
Loan Documents and the other agreements and instruments  mentioned  herein,  (b)
any taxes  (including any interest and penalties in respect  thereto) payable by
the Administrative  Agent or any of the Lenders (other than taxes based upon the
Administrative  Agent's or any  Lender's  net income) on or with  respect to the
transactions  contemplated  by  this  Credit  Agreement  (the  Borrowers  hereby
agreeing to  indemnify  the  Administrative  Agent and each Lender with  respect
thereto),   (c)  the  reasonable  fees,   expenses  and   disbursements  of  the
Administrative   Agent's   Special   Counsel   or  any  local   counsel  to  the
Administrative  Agent incurred in connection with the preparation,  syndication,
administration  or  interpretation  of the Loan Documents and other  instruments
mentioned  herein,  each  closing  hereunder,  any  amendments,   modifications,
approvals,  consents or waivers hereto or hereunder,  or the cancellation of any
Loan Document upon payment in full in cash of all of the Obligations or pursuant
to any terms of such Loan Document for providing for such cancellation,  (d) the
reasonable fees,  expenses and disbursements of the Administrative  Agent or any
of its  affiliates  incurred by the  Administrative  Agent or such  affiliate in
connection with the preparation,  syndication,  administration or interpretation
of the Loan  Documents and other  instruments  mentioned  herein,  including all
title insurance  premiums and surveyor,  engineering,  appraisal and examination
charges, (e) any fees, costs, expenses and bank charges,  including bank charges
for  returned  checks,  incurred by the  Administrative  Agent in  establishing,
maintaining or handling  agency  accounts,  lock box accounts and other accounts
for the collection of any of the  Collateral,  (f) all reasonable  out-of-pocket
expenses  (including  without limitation  reasonable  attorneys' fees and costs,
which attorneys may be employees of any Lender or the Administrative  Agent, and
reasonable consulting,  accounting, appraisal, investment bankruptcy and similar
professional  fees and  charges)  incurred  by any Lender or the  Administrative

                                     -103-

Agent in connection  with (i) the enforcement of or preservation of rights under
any  of  the  Loan  Documents  against  any of  the  Borrowers  or any of  their
Subsidiaries or the  administration  thereof after the occurrence of an Event of
Default and (ii) any litigation, proceeding or dispute whether arising hereunder
or otherwise,  in any way related to any Lender's or the Administrative  Agent's
relationship with any of the Borrowers or any of their  Subsidiaries and (g) all
reasonable fees,  expenses and disbursements of any Lender or the Administrative
Agent  incurred in  connection  with UCC  searches,  UCC  filings,  intellectual
property searches,  intellectual  property filings or mortgage  recordings.  The
covenants  contained in this ss.17.2 shall survive  payment or  satisfaction  in
full of all other obligations.

     17.3.  INDEMNIFICATION.  The  Borrowers  jointly  and  severally  agree  to
indemnify and hold harmless the  Administrative  Agent,  its  affiliates and the
Lenders  from  and  against  any and  all  claims,  actions  and  suits  whether
groundless or otherwise,  and from and against any and all liabilities,  losses,
damages and  expenses of every nature and  character  arising out of this Credit
Agreement or any of the other Loan  Documents or the  transactions  contemplated
hereby including,  without limitation,  (a) any actual or proposed use by any of
the Borrowers or any of their  Subsidiaries  of the proceeds of any of the Loans
or Letters of Credit, (b) the reversal or withdrawal of any provisional  credits
granted by the  Administrative  Agent upon the  transfer of funds from lock box,
bank  agency,  concentration  accounts or  otherwise  under any cash  management
arrangements  with the  Borrower or any  Subsidiary  or in  connection  with the
provisional  honoring of funds transfers,  checks or other items, (c) any actual
or alleged  infringement of any patent,  copyright,  trademark,  service mark or
similar  right of any  Borrower or any of their  Subsidiaries  comprised  in the
Collateral,  (d) any of the Borrowers or any of their Subsidiaries entering into
or performing  this Credit  Agreement or any of the other Loan  Documents or (e)
with  respect  to the  Borrowers  and their  Subsidiaries  and their  respective
properties  and assets,  the violation of any  Environmental  Law, the presence,
disposal,  escape, seepage, leakage, spillage,  discharge,  emission, release or
threatened release of any Hazardous Substances or any action,  suit,  proceeding
or investigation  brought or threatened with respect to any Hazardous Substances
(including,  but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including,  without limitation,  the
reasonable  fees and  disbursements  of counsel and allocated  costs of internal
counsel incurred in connection with any such investigation,  litigation or other
proceeding.  In litigation,  or the  preparation  therefor,  the Lenders and the
Administrative  Agent and its  affiliates  shall be entitled to select their own
counsel and, in addition to the foregoing indemnity, each Borrower,  jointly and
severally,  agrees to pay  promptly  the  reasonable  fees and  expenses of such
counsel.  If, and to the extent that the obligations of the Borrowers under this
ss.17.3 are  unenforceable  for any reason,  each Borrower hereby agrees to make
the maximum  contribution  to thE payment in  satisfaction  of such  obligations
which is  permissible  under  applicable  law. The  covenants  contained in this
ss.17.3 shall survive payment or satisfaction in full of all other Obligations.

                                     -104-

     17.4. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.

          17.4.1 .  CONFIDENTIALITY.  Each of the Lenders and the Administrative
     Agent  agrees  with the  Borrowers,  on behalf  of  itself  and each of its
     affiliates,  directors,  officers,  employees and  representatives,  to use
     reasonable  precautions  to keep  confidential,  in  accordance  with their
     customary  procedures  for handling  confidential  information  of the same
     nature  and in  accordance  with  safe and  sound  banking  practices,  any
     non-public  information  supplied to it by any of the  Borrowers  or any of
     their Subsidiaries  pursuant to this Credit Agreement that is identified by
     such Person as being  confidential at the time the same is delivered to the
     Lenders or the  Administrative  Agent,  PROVIDED that nothing  herein shall
     limit the  disclosure of any such  information  (a) after such  information
     shall have become public other than through a violation of this ss.17.4, or
     becomes  available to any of the Lenders or the  Administrative  Agent on a
     nonconfidential  basis from a source other than the  Borrowers,  (b) to the
     extent required by statute,  rule,  regulation or judicial process,  (c) to
     counsel for any of the  Lenders or the  Administrative  Agent,  (d) to bank
     examiners or any other regulatory  authority having  jurisdiction  over any
     Lender or the Administrative  Agent, or to auditors or accountants,  (e) to
     the  Administrative  Agent, any Lender or any Financial  Affiliate,  (f) in
     connection with any litigation to which any one or more of the Lenders, the
     Administrative  Agent  or  any  Financial  Affiliate  is  a  party,  or  in
     connection  with the  enforcement of rights or remedies  hereunder or under
     any other Loan  Document,  (g) to a Lender  Affiliate  or a  Subsidiary  or
     affiliate of the  Administrative  Agent,  (h) to any actual or  prospective
     assignee or participant or any actual or prospective  counterparty  (or its
     advisors) to any swap or  derivative  transactions  referenced to credit or
     other risks or events arising under this Credit Agreement or any other Loan
     Document so long as such assignee, participant or counterparty, as the case
     may be,  agrees to be bound by the  provisions  of  ss.17.4 or (i) with the
     consent of the Borrowers.  Moreover,  each of the Administrative Agent, the
     Lenders and any Financial  Affiliate is hereby  expressly  permitted by the
     Borrower  to  refer  to any of the  Borrowers  and  their  Subsidiaries  in
     connection with any advertising,  promotion or marketing  undertaken by the
     Administrative  Agent, such Lender or such Financial  Affiliate relating to
     the  transactions  contemplated  in this  Credit  Agreement  and,  for such
     purpose, the Administrative  Agent, such Lender or such Financial Affiliate
     may utilize any trade name,  trademark,  logo or other  distinctive  symbol
     associated with any of the Borrowers or any of their Subsidiaries or any of
     their businesses.

          17.4.2  .  PRIOR  NOTIFICATION.   Unless  specifically  prohibited  by
     applicable law or court order,  each of the Lenders and the  Administrative
     Agent  shall,  upon receipt of a request for  disclosure  and prior to such
     disclosure,  notify the Borrowers of any request for disclosure of any such
     non-public information by any governmental agency or representative thereof
     (other  than any such  request in  connection  with an  examination  of the

                                     -105-

     financial condition of such Lender by such governmental agency) or pursuant
     to legal process.

          17.4.3 . OTHER.  In no event  shall any  Lender or the  Administrative
     Agent be obligated or required to return any  materials  furnished to it or
     any  Financial   Affiliate  by  any  of  the  Borrowers  or  any  of  their
     Subsidiaries.  The  obligations  of each Lender  under this  ss.17.4  shall
     supersede   and  replace  the   obligations   of  such  Lender   under  anY
     confidentiality letter in respect of this financing signed and delivered by
     such Lender to the Borrowers  prior to the date hereof and shall be binding
     upon any assignee of, or purchaser of any participation in, any interest in
     any of the Loans or Reimbursement Obligations from any Lender.

     17.5.   SURVIVAL   OF   COVENANTS,   ETC.   All   covenants,    agreements,
representations  and warranties  made herein,  in the Notes, in any of the other
Loan Documents or in any documents or other papers  delivered by or on behalf of
any of the  Borrowers  or any of their  Subsidiaries  pursuant  hereto  shall be
deemed to have been relied upon by the  Lenders  and the  Administrative  Agent,
notwithstanding  any investigation  heretofore or hereafter made by any of them,
and  shall  survive  the  making  by the  Lenders  of any of the  Loans  and the
issuance, extension or renewal of any Letters of Credit, as herein contemplated,
and shall  continue  in full force and effect so long as any Letter of Credit or
any amount due under this Credit Agreement or the Notes or any of the other Loan
Documents remains outstanding or any Lender has any obligation to make any Loans
or the  Administrative  Agent has any  obligation to issue,  extend or renew any
Letter  of  Credit,  and for such  further  time as may be  otherwise  expressly
specified in this Credit Agreement.  All statements contained in any certificate
or other paper delivered to any Lender or the  Administrative  Agent at any time
by or on behalf of any of the  Borrowers or any of their  Subsidiaries  pursuant
hereto  or  in  connection  with  the  transactions  contemplated  hereby  shall
constitute  representations  and warranties by such Borrower or such  Subsidiary
hereunder.

     17.6.  NOTICES.  Except as  otherwise  expressly  provided  in this  Credit
Agreement,  all  notices and other  communications  made or required to be given
pursuant  to  this  Credit  Agreement  or the  Notes  or any  Letter  of  Credit
Applications  shall be in  writing  and shall be  delivered  in hand,  mailed by
United States registered or certified first class mail, postage prepaid, sent by
overnight  courier,  or sent by  telegraph,  telecopy,  facsimile  or telex  and
confirmed by delivery via courier or postal service, addressed as follows:

          (a) if to the  Borrowers,  at 3001 E.  President  George Bush Highway,
     Suite 200, Richardson,  Texas 75082, Attention: Chief Financial Officer, or
     at such other address for notice as the Borrower  shall last have furnished
     in  writing  to the Person  giving  the  notice,  with a copy to Michael W.
     Tankersley,  Esq. at Bracewell & Patterson LLP,  Lincoln  Plaza,  500 North
     Akard Street, Suite 4000, Dallas, Texas 75201-3387;

                                     -106-

          (b) if to the  Administrative  Agent, at 100 Federal  Street,  Boston,
     Massachusetts 02110, USA, Attention:  J. Nicholas Cole,  Director,  or such
     other  address  for  notice as the  Administrative  Agent  shall  last have
     furnished in writing to the Person giving the notice with a copy to Sula R.
     Fiszman,  Esq. at Bingham Dana LLP, 150 Federal Street,  Boston,  MA 02110;
     and

          (c) if to any Lender, at such Lender's address set forth on SCHEDULE 1
     hereto,  or such other  address for notice as such  Lender  shall have last
     furnished in writing to the Person giving the notice.

Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand,  overnight  courier or facsimile
to a  responsible  officer of the party to which it is directed,  at the time of
the receipt thereof by such officer or the sending of such facsimile and (ii) if
sent by registered or certified  first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.

     17.7.  GOVERNING  LAW.  THIS  CREDIT  AGREEMENT  AND,  EXCEPT AS  OTHERWISE
SPECIFICALLY  PROVIDED  THEREIN,  EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF  MASSACHUSETTS  AND SHALL FOR ALL PURPOSES
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF
MASSACHUSETTS  (EXCLUDING  THE LAWS  APPLICABLE  TO CONFLICTS OR CHOICE OF LAW).
EACH OF THE BORROWERS  AGREES THAT ANY SUIT FOR THE  ENFORCEMENT  OF THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF  MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS
TO THE  NONEXCLUSIVE  JURISDICTION  OF SUCH COURT AND  SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON THE  BORROWERS  BY MAIL AT THE  ADDRESS  SPECIFIED  IN
ss.17.6.  EACH OF THE BORROWERS  HEREBY WAIVES ANY OBJECTION  THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT
IS BROUGHT IN AN INCONVENIENT COURT.

     17.8.  HEADINGS.  The captions in this Credit Agreement are for convenience
of reference only and shall not define or limit the provisions hereof.

     17.9.  COUNTERPARTS.  This Credit Agreement and any amendment hereof may be
executed in several  counterparts  and by each party on a separate  counterpart,
each of which when executed and delivered shall be an original, and all of which
together shall  constitute one instrument.  In proving this Credit  Agreement it
shall not be necessary to produce or account for more than one such  counterpart
signed by the party against whom enforcement is sought. Delivery by facsimile by
any of the parties hereto of an executed  counterpart hereof or of any amendment
or waiver  hereto  shall be as  effective  as an original  executed  counterpart

                                     -107-

hereof or of such  amendment or waiver and shall be considered a  representation
that an original executed counterpart hereof or such amendment or waiver, as the
case may be, will be delivered.

     17.10.  ENTIRE  AGREEMENT,  ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions  contemplated hereby.  Neither this
Credit  Agreement  nor any term hereof may be  changed,  waived,  discharged  or
terminated, except as provided in ss.17.12.

     17.11.  WAIVER OF JURY TRIAL. EACH OF THE BORROWERS HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH  RESPECT TO ANY ACTION OR CLAIM  ARISING OUT OF ANY DISPUTE
IN  CONNECTION  WITH THIS CREDIT  AGREEMENT,  THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS,  ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND  OBLIGATIONS  OR ANY COURSE OF CONDUCT,  COURSE OF  DEALINGS,
STATEMENTS  (WHETHER  VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,  INCLUDING ANY
COURSE  OF  CONDUCT,   COURSE  OF  DEALINGS,   STATEMENTS   OR  ACTIONS  OF  THE
ADMINISTRATIVE  AGENT OR ANY LENDER RELATING TO THE  ADMINISTRATION OF THE LOANS
OR  ENFORCEMENT  OF THE  LOAN  DOCUMENTS  AND  AGREES  THAT IT WILL  NOT SEEK TO
CONSOLIDATE  ANY SUCH ACTION WITH ANY OTHER  ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED.  Except as prohibited  by law,  each Borrower  hereby
waives any right it may have to claim or recover in any  litigation  referred to
in the  preceding  sentence any special,  exemplary,  punitive or  consequential
damages or any damages  other than,  or in addition  to,  actual  damages.  Each
Borrower (a) certifies that no  representative,  agent or attorney of any Lender
or the Administrative Agent has represented,  expressly or otherwise,  that such
Lender or the Administrative  Agent would not, in the event of litigation,  seek
to enforce the foregoing  waivers and (b) acknowledges  that the  Administrative
Agent and the Lenders have been induced to enter into this Credit Agreement, the
other Loan Documents to which it is a party by, among other things,  the waivers
and certifications contained herein.

     17.12. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval required
or permitted  by this Credit  Agreement to be given by the Lenders may be given,
and any term of this Credit  Agreement,  the other Loan  Documents  or any other
instrument  related  hereto  or  mentioned  herein  may  be  amended,   and  the
performance  or observance by any of the Borrowers or any of their  Subsidiaries
of any terms of this Credit  Agreement,  the other Loan  Documents or such other
instrument or the  continuance  of any Default or Event of Default may be waived
(either  generally  or in a  particular  instance  and either  retroactively  or
prospectively)  with, but only with, the written consent of the Borrower and the
written  consent of the Required  Lenders.  Notwithstanding  the  foregoing,  no
amendment, modification or waiver shall:

          (a)  without  the  written  consent of the  Borrowers  and each Lender
     directly affected thereby:

                                     -108-

               (i)  reduce  or  forgive  the  principal  amount  of any Loans or
          Reimbursement Obligations, or reduce the rate of interest on the Notes
          (other than  interest  accruing  pursuant to ss.6.10.2  following  thE
          effective date of any waiver by the Required Lenders of the Default or
          Event of Default relating thereto) or the amount of the Commitment Fee
          or Letter of Credit Fees or increase  the rate of interest on any Note
          if the rate of interest  is not  increased  proportionally  on all the
          Notes  or  amend  the  definition  of  Leverage  Ratio  or  any of the
          components  thereof or the method of calculation  thereof for purposes
          of calculating the Applicable Margin;

               (ii)  increase  the  amount  of  any  Lender's  Revolving  Credit
          Commitment,  Term A  Commitment,  or Term B  Commitment  or extend the
          expiration date of such Lender's Revolving Credit Commitment;

               (iii) postpone or extend the Revolving  Credit Maturity Date, the
          Term  A  Maturity  Date  or the  Term B  Maturity  Date  or any  other
          regularly  scheduled  dates for payments of principal  of, or interest
          on,  the  Loans  or  Reimbursement  Obligations  or any  Fees or other
          amounts payable to such Lender (it being  understood that (A) a waiver
          of the  application  of the  default  rate  of  interest  pursuant  to
          ss.6.10.2,  anD (B) any vote to rescind any acceleration made pursuant
          to  ss.14.1  of  amounts  owing  with  respect  to thE Loans and other
          Obligations and (C) any  modifications  of the provisions  relating to
          amounts,  timing  or  application  of  prepayments  of Loans and other
          Obligations, including under ss.ss.4.4.2.1,  4.4.2.2 And 4.4.2.3 shall
          require only the approval of the Required Lenders); and

               (iv) other than pursuant to a transaction  permitted by the terms
          of this Credit Agreement, release a material portion of the Collateral
          (excluding,  if any Borrower or any Subsidiary of a Borrower becomes a
          debtor  under  the  federal  Bankruptcy  Code,  the  release  of "cash
          collateral",  as defined in Section  363(a) of the federal  Bankruptcy
          Code  pursuant  to a  cash  collateral  stipulation  with  the  debtor
          approved by the Required Lenders);

          (b) without the written consent of all of the Lenders,  amend or waive
     this ss.17.12 or the definition of Required Lenders; or

          (c) without the written consent of the Administrative  Agent, amend or
     waive ss.15,  the amount or time oF payment of the  Administrative  Agent's
     Fee or any Letter of Credit  Fees  payable for the  Administrative  Agent's
     account or any other provision applicable to the Administrative Agent.

                                     -109-

No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of the Administrative Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice
to or demand upon the Borrowers shall entitle the Borrowers to other or further
notice or demand in similar or other circumstances.

     17.13. SEVERABILITY.  The provisions of this Credit Agreement are severable
and if any one clause or provision hereof shall be held invalid or unenforceable
in  whole  or  in  part  in  any   jurisdiction,   then   such   invalidity   or
unenforceability shall affect only such clause or provision, or part thereof, in
such  jurisdiction,  and shall not in any manner affect such clause or provision
in any other  jurisdiction,  or any other  clause or  provision  of this  Credit
Agreement in any jurisdiction.

     17.14.  USURY.  All agreements  between the Borrowers,  the  Administrative
Agent and the Lenders are hereby expressly  limited so that in no contingency or
event whatsoever,  whether by reason of acceleration of the maturity of any Note
or otherwise,  shall the amount paid or agreed to be paid to the Lenders and the
Administrative  Agent  for  the  use or  the  forbearance  of  the  Indebtedness
represented by the Notes exceed the maximum permissible under applicable law. In
this regard, it is expressly agreed that it is the intent of the Borrowers,  the
Administrative Agent and the Lenders, in the execution,  delivery and acceptance
of the Notes, to contract in strict compliance with the laws of the Commonwealth
of  Massachusetts.  If,  under  any  circumstances  whatsoever,  performance  or
fulfillment  of any provision of the Notes or any of the other Loan Documents at
the time such provision is to be performed or fulfilled shall involve  exceeding
the limit of validity prescribed by applicable law, then the obligation so to be
performed  or  fulfilled  shall be reduced  automatically  to the limits of such
validity,  and if  under  any  circumstances  whatsoever  the  Lenders  and  the
Administrative  Agent  should ever  receive as  interest  an amount  which would
exceed the highest  lawful rate,  such amount which would be excessive  interest
shall be applied to the  reduction  of the  principal  balance  evidenced by the
Notes and not to the payment of interest.  The provisions of this ss.17.14 shall
control every other provision of this Credit Agreement and the Notes.





<PAGE>

                                     -110-


     IN  WITNESS  WHEREOF,  the  undersigned  have  duly  executed  this  Credit
Agreement as a sealed instrument as of the date first set forth above.

                             FURR'S RESTAURANT GROUP, INC.



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Executive Vice President

                             CAFETERIA OPERATORS, L.P.

                             By:      Furr's Restaurant Group, Inc.,
                                      its General Partner



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Executive Vice President

                             CAVALCADE HOLDINGS, INC.



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Vice President

                             CAVALCADE FOODS, INC.



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Vice President



<PAGE>


                             FURR'S/BISHOP'S CAFETERIAS, L.P

                             By:      Furr's Restaurant Group, Inc.,
                                      its General Partner



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Executive Vice President

                             CAVALCADE DEVELOPMENT, L.P.

                             By:      Furr's Restaurant Group, Inc.,
                                      its General Partner



                             By: _______________________________________________
                             Name: Paul Hargett
                             Title: Executive Vice President


<PAGE>





                             FLEET NATIONAL BANK, individually and as
                               Administrative Agent



                             By: _______________________________________________
                             Name: J. Nicholas Cole
                             Title: Director


<PAGE>




                             HELLER FINANCIAL LEASING, INC.



                             By: _______________________________________________
                             Name:
                             Title:



<PAGE>




                             WASHINGTON MUTUAL BANK



                             By: _______________________________________________
                             Name:
                             Title:



<PAGE>




                             ORIX FINANCIAL SERVICES, INC.



                             By: _______________________________________________
                             Name:
                             Title:



<PAGE>




                             THE PROVIDENT BANK



                             By: _______________________________________________
                             Name:
                             Title:



<PAGE>




                             TEXTRON FINANCIAL CORPORATION



                             By: _______________________________________________
                             Name:
                             Title:




</TEXT>
</DOCUMENT>
