Credit Agreement

Credit Agreement

by Furniture Brands International
January 24th, 1995






                                                           Exhibit 10(a)


                                   CREDIT AGREEMENT


                                        among


                                INTERCO INCORPORATED,

                         BROYHILL FURNITURE INDUSTRIES, INC.,

                           THE LANE COMPANY, INCORPORATED,




                                    VARIOUS BANKS,


                                         and


                                BANKERS TRUST COMPANY,
                                       as AGENT


                          __________________________________


                            Dated as of November 17 , 1994

                          __________________________________

                                                                        







                                  TABLE OF CONTENTS


                                                                    Page


             SECTION 1.   Amount and Terms of Credit . . . . . . . .   1
                  1.01    The Commitments  . . . . . . . . . . . . .   1
                  1.02    Minimum Amount of Each Borrowing . . . . .   4
                  1.03    Notice of Borrowing  . . . . . . . . . . .   5
                  1.04    Disbursement of Funds  . . . . . . . . . .   6
                  1.05    Notes  . . . . . . . . . . . . . . . . . .   7
                  1.06    Conversions  . . . . . . . . . . . . . . .   8
                  1.07    Pro Rata Borrowings  . . . . . . . . . . .   9
                  1.08    Interest . . . . . . . . . . . . . . . . .   9
                  1.09    Interest Periods . . . . . . . . . . . . .  10
                  1.10    Increased Costs, Illegality, etc.  . . . .  12
                  1.11    Compensation . . . . . . . . . . . . . . .  15
                  1.12    Change of Lending Office . . . . . . . . .  15
                  1.13    Replacement of Banks . . . . . . . . . . .  15

             SECTION 2.   Letters of Credit  . . . . . . . . . . . .  17
                  2.01    Letters of Credit  . . . . . . . . . . . .  17
                  2.02    Minimum Stated Amount  . . . . . . . . . .  19
                  2.03    Letter of Credit Requests  . . . . . . . .  20
                  2.04    Letter of Credit Participations  . . . . .  21
                  2.05    Agreement to Repay Letter of Credit
                            Drawings and Acceptance Payments . . . .  23
                  2.06    Increased Costs  . . . . . . . . . . . . .  24

             SECTION 3.   Commitment Commission; Fees; 
                            Reductions of Commitment . . . . . . . .  25
                  3.01    Fees . . . . . . . . . . . . . . . . . . .  25
                  3.02    Voluntary Termination of Unutilized
                            Commitments  . . . . . . . . . . . . . .  27
                  3.03    Mandatory Reduction of Commitments . . . .  28

             SECTION 4.   Prepayments; Payments; Taxes . . . . . . .  29
                  4.01    Voluntary Prepayments  . . . . . . . . . .  29
                  4.02    Mandatory Repayments, Cash
                            Collateralizations and Commitment 
                          Reductions . . . . . . . . . . . . . . . .  30
                  4.03    Method and Place of Payment  . . . . . . .  38
                  4.04    Net Payments . . . . . . . . . . . . . . .  38







                                         (i)






                                                                    Page

             SECTION 5.   Conditions Precedent to Initial 
                            Credit Events  . . . . . . . . . . . . .  41
                  5.01    Execution of Agreement; Notes  . . . . . .  41
                  5.02    Fees, etc. . . . . . . . . . . . . . . . .  41
                  5.03    Opinions of Counsel  . . . . . . . . . . .  41
                  5.04    Corporate Documents; Proceedings; etc. . .  42
                  5.05    Shareholders' Agreements; Collective
                            Bargaining Agreements; Permitted Debt
                            Agreements; Tax Sharing Agreements;
                            Services Agreements  . . . . . . . . . .  42
                  5.06    Solvency Letter; Environmental Analyses;
                            Insurance Matters  . . . . . . . . . . .  43
                  5.07    Consummation of the Florsheim
                            Recapitalization . . . . . . . . . . . .  44
                  5.08    Consummation of the Converse 
                          Recapitalization . . . . . . . . . . . . .  44
                  5.09    Receivables Facility . . . . . . . . . . .  44
                  5.10    Refinancing  . . . . . . . . . . . . . . .  45
                  5.11    Consummation of the Transaction  . . . . .  46
                  5.12    Subsidiary Guaranty  . . . . . . . . . . .  46
                  5.13    Pledge Agreement . . . . . . . . . . . . .  46
                  5.14    Security Agreement . . . . . . . . . . . .  47
                  5.15    Mortgages; Title Insurance; Surveys;
                            etc. . . . . . . . . . . . . . . . . . .  48
                  5.16    Consent Letter . . . . . . . . . . . . . .  49
                  5.17    Adverse Change; Governmental Approvals;
                            etc. . . . . . . . . . . . . . . . . . .  49
                  5.18    Litigation . . . . . . . . . . . . . . . .  50
                  5.19    Pro Forma Balance Sheet; Financial 
                            Statements; Projections  . . . . . . . .  50
                  5.20    Cash Management System . . . . . . . . . .  51
                  5.21    Closing Officer's Certificate Regarding
                            Estimated Converse Tax Liability and
                            INTERCO Tax Basis  . . . . . . . . . . .  51

             SECTION 6.   Conditions Precedent to All Credit
                            Events . . . . . . . . . . . . . . . . .  52
                  6.01    No Default; Representations and
                            Warranties . . . . . . . . . . . . . . .  52
                  6.02    Notice of Borrowing; Letter of Credit 
                            Request  . . . . . . . . . . . . . . . .  52









                                         (ii)






                                                                    Page

             SECTION 7.   Representations, Warranties and 
                            Agreements . . . . . . . . . . . . . . .  53
                  7.01    Corporate Status . . . . . . . . . . . . .  53
                  7.02    Corporate Power and Authority  . . . . . .  53
                  7.03    No Violation . . . . . . . . . . . . . . .  54
                  7.04    Governmental Approvals . . . . . . . . . .  54
                  7.05    Financial Statements; Financial
                            Condition; Undisclosed Liabilities;
                            Projections; etc.  . . . . . . . . . . .  55
                  7.06    Litigation . . . . . . . . . . . . . . . .  57
                  7.07    True and Complete Disclosure . . . . . . .  57
                  7.08    Use of Proceeds; Margin Regulations  . . .  57
                  7.09    Tax Returns and Payments . . . . . . . . .  58
                  7.10    Compliance with ERISA  . . . . . . . . . .  59
                  7.11    The Security Documents . . . . . . . . . .  60
                  7.12    Representations and Warranties in Other
                            Documents  . . . . . . . . . . . . . . .  62
                  7.13    Properties . . . . . . . . . . . . . . . .  62
                  7.14    Capitalization . . . . . . . . . . . . . .  62
                  7.15    Subsidiaries . . . . . . . . . . . . . . .  63
                  7.16    Compliance with Statutes, etc. . . . . . .  63
                  7.17    Investment Company Act . . . . . . . . . .  64
                  7.18    Public Utility Holding Company Act . . . .  64
                  7.19    Environmental Matters  . . . . . . . . . .  64
                  7.20    Labor Relations  . . . . . . . . . . . . .  65
                  7.21    Patents, Licenses, Franchises and
                            Formulas . . . . . . . . . . . . . . . .  65
                  7.22    Indebtedness . . . . . . . . . . . . . . .  66
                  7.23    Transaction  . . . . . . . . . . . . . . .  66
                  7.24    Special Purpose Corporation  . . . . . . .  66

             SECTION 8.   Affirmative Covenants  . . . . . . . . . .  67
                  8.01    Information Covenants  . . . . . . . . . .  67
                  8.02    Books, Records and Inspections . . . . . .  71
                  8.03    Maintenance of Property; Insurance . . . .  72
                  8.04    Corporate Franchises . . . . . . . . . . .  73
                  8.05    Compliance with Statutes, etc. . . . . . .  74
                  8.06    Compliance with Environmental Laws . . . .  74
                  8.07    ERISA  . . . . . . . . . . . . . . . . . .  75
                  8.08    End of Fiscal Years; Fiscal Quarters . . .  76
                  8.09    Performance of Obligations . . . . . . . .  76
                  8.10    Payment of Taxes; Post-Closing Tax
                            Certificate  . . . . . . . . . . . . . .  77
                  8.11    Additional Security; Further Assurances;
                            Required Appraisals  . . . . . . . . . .  77
                  8.12    Interest Rate Protection . . . . . . . . .  80




                                        (iii)






                                                                    Page

                  8.13    Ownership of Subsidiaries  . . . . . . . .  80
                  8.14    Permitted Acquisitions . . . . . . . . . .  80
                  8.15    Maintenance of Corporate Separateness  . .  81
                  8.16    Cash Management System . . . . . . . . . .  82

             SECTION 9.   Negative Covenants . . . . . . . . . . . .  82
                  9.01    Liens  . . . . . . . . . . . . . . . . . .  82
                  9.02    Consolidation, Merger, Purchase or Sale
                            of Assets, etc.  . . . . . . . . . . . .  85
                  9.03    Dividends  . . . . . . . . . . . . . . . .  88
                  9.04    Indebtedness . . . . . . . . . . . . . . .  88
                  9.05    Investments; etc.  . . . . . . . . . . . .  90
                  9.07    Capital Expenditures . . . . . . . . . . .  94
                  9.08    Consolidated Net Interest Coverage Ratio .  95
                  9.09    Adjusted Consolidated EBITDA . . . . . . .  95
                  9.10    Maximum Leverage Ratio . . . . . . . . . .  96
                  9.11    Limitation on Modifications of and
                            Payments on Indebtedness and Qualified
                            Preferred Stock; Modifications of
                            Certificate of Incorporation, By-Laws
                            and Certain Other Agreements; Surviving
                            Guaranty Payments, etc.  . . . . . . . .  96
                  9.12    Limitation on Creation or Acquisition of
                            Subsidiaries and Restricted
                            Subsidiaries . . . . . . . . . . . . . .  98
                  9.13    Limitation on Issuance of Capital Stock  .  99
                  9.14    Business . . . . . . . . . . . . . . . . . 100
                  9.15    Limitation on Certain Restrictions on 
                          Subsidiaries . . . . . . . . . . . . . . . 100
                  9.16    Limitation on Receivables and 
                            Receivables Facility . . . . . . . . . . 101

             SECTION 10.  Events of Default  . . . . . . . . . . . . 101
                  10.01   Payments . . . . . . . . . . . . . . . . . 101
                  10.02   Representations, etc.  . . . . . . . . . . 102
                  10.03   Covenants  . . . . . . . . . . . . . . . . 102
                  10.04   Default Under Other Agreements . . . . . . 102
                  10.05   Bankruptcy, etc. . . . . . . . . . . . . . 102
                  10.06   ERISA  . . . . . . . . . . . . . . . . . . 103
                  10.07   Security Documents . . . . . . . . . . . . 104
                  10.08   Subsidiary Guaranty  . . . . . . . . . . . 104
                  10.09   Judgments  . . . . . . . . . . . . . . . . 104
                  10.10   Change of Control  . . . . . . . . . . . . 105
                  10.11   Tax Sharing Agreement; Services
                            Agreement  . . . . . . . . . . . . . . . 105
                  10.12   Residual Converse Tax Liability  . . . . . 105




                                         (iv)






                                                                    Page

                  10.13   Receivables Repurchases. . . . . . . . . . 105

             SECTION 11.  Definitions and Accounting Terms . . . . . 106
                  11.01   Defined Terms  . . . . . . . . . . . . . . 106

             SECTION 12.  The Agent  . . . . . . . . . . . . . . . . 151
                  12.01   Appointment  . . . . . . . . . . . . . . . 151
                  12.02   Nature of Duties . . . . . . . . . . . . . 152
                  12.03   Lack of Reliance on the Agent  . . . . . . 152
                  12.04   Certain Rights of the Agent  . . . . . . . 153
                  12.05   Reliance . . . . . . . . . . . . . . . . . 153
                  12.06   Indemnification  . . . . . . . . . . . . . 153
                  12.07   The Agent in its Individual Capacity . . . 154
                  12.08   Holders  . . . . . . . . . . . . . . . . . 154
                  12.09   Resignation by the Agent . . . . . . . . . 154

             SECTION 13.  Miscellaneous  . . . . . . . . . . . . . . 155
                  13.01   Payment of Expenses, etc.  . . . . . . . . 155
                  13.02   Right of Setoff  . . . . . . . . . . . . . 156
                  13.03   Notices  . . . . . . . . . . . . . . . . . 157
                  13.04   Benefit of Agreement . . . . . . . . . . . 157
                  13.05   No Waiver; Remedies Cumulative . . . . . . 159
                  13.06   Payments Pro Rata  . . . . . . . . . . . . 160
                  13.07   Calculations; Computations . . . . . . . . 161
                  13.08   GOVERNING LAW; SUBMISSION TO
                            JURISDICTION; VENUE; WAIVER OF 
                            JURY TRIAL . . . . . . . . . . . . . . . 162
                  13.09   Counterparts . . . . . . . . . . . . . . . 163
                  13.10   Effectiveness  . . . . . . . . . . . . . . 163
                  13.11   Headings Descriptive . . . . . . . . . . . 163
                  13.12   Amendment or Waiver; etc.  . . . . . . . . 163
                  13.13   Survival . . . . . . . . . . . . . . . . . 165
                  13.14   Domicile of Loans  . . . . . . . . . . . . 165
                  13.15   Limitation on Additional Amounts, etc. . . 166
                  13.16   Confidentiality  . . . . . . . . . . . . . 166
                  13.17   Register . . . . . . . . . . . . . . . . . 167

             SCHEDULE I     Commitments
             SCHEDULE II    Bank Addresses
             SCHEDULE III   Mortgaged Properties
             SCHEDULE IV    Undisclosed Liabilities
             SCHEDULE V     Tax Matters
             SCHEDULE VI    Subsidiaries
             SCHEDULE VII   Existing Indebtedness
             SCHEDULE VIII  Insurance
             SCHEDULE IX    Existing Liens




                                         (v)






             

             SCHEDULE X     Existing Investments
             SCHEDULE XI    Existing Transactions
             SCHEDULE XII   Existing Letters of Credit
             SCHEDULE XIII  Certain Restrictions on Subsidiaries
             SCHEDULE XIV   Excluded Assets
             SCHEDULE XV    Leases Guarantied Under Surviving Guaranties

             EXHIBIT A      Notice of Borrowing
             EXHIBIT B-1    Term Note
             EXHIBIT B-2    Revolving Note
             EXHIBIT B-3    Swingline Note
             EXHIBIT C-1    Letter of Credit Service Agreement
             EXHIBIT C-2    Trade Letter of Credit Request
             EXHIBIT C-3    Standby Letter of Credit Request
             EXHIBIT D      Section 4.04(b)(ii) Certificate
             EXHIBIT E-1    Opinion of General Counsel of Credit Parties
             EXHIBIT E-2    Opinion of Bryan Cave, Special
                              Counsel to Credit Parties
             EXHIBIT F      Officers' Certificate
             EXHIBIT G      Subsidiary Guaranty
             EXHIBIT H      Pledge Agreement
             EXHIBIT I      Security Agreement
             EXHIBIT J      Consent Letter
             EXHIBIT K      Assignment and Assumption Agreement


























                                         (vi)


             


              

                       CREDIT AGREEMENT, dated as  of November 17, 1994,
             among   INTERCO   INCORPORATED,   a  Delaware   corporation
             ("INTERCO"), BROYHILL FURNITURE INDUSTRIES, INC., a North 
             Carolina  corporation  ("Broyhill"),   THE  LANE   COMPANY,
             INCORPORATED, a Virginia  corporation ("Lane" and  together
             with INTERCO  and Broyhill, each a  "Borrower," and collec-
             tively, the "Borrowers"), the  Banks party hereto from time
             to  time,   and  BANKERS  TRUST  COMPANY,   as  Agent  (all
             capitalized terms used herein and defined in Section 11 are
             used herein as therein defined).


                                W I T N E S S E T H :


                       WHEREAS, subject to and upon the terms and condi-
             tions  herein  set forth,  the  Banks are  willing  to make
             available to the Borrowers,  on a joint and several  basis,
             the respective credit facilities provided for herein;


                       NOW, THEREFORE, IT IS AGREED:

                       SECTION 1.  Amount and Terms of Credit.

                       1.01   The Commitments.  (a)  Subject to and upon
             the terms and conditions set forth herein, each Bank with a
             Term  Loan  Commitment severally  agrees  to  make, on  the
             Initial Borrowing Date,  a term loan  (each, a "Term  Loan"
             and,  collectively,  the "Term  Loans")  to the  Borrowers,
             which Term Loans (i) shall, at the option of the Borrowers,
             be  Base Rate Loans or  Eurodollar Loans, provided that (A)
             except  as  otherwise   specifically  provided  in  Section
             1.10(b), all Term Loans comprising the same Borrowing shall
             at all times be of  the same Type and (B) no more  than two
             Borrowings  of Term  Loans to  be maintained  as Eurodollar
             Loans  may  be incurred  prior to  the  60th day  after the
             Initial  Borrowing Date  (which  Borrowings  of  Eurodollar
             Loans  may only have an  Interest Period of  one month, and
             the  first  of which  Borrowings may  only  be made  on the
             Initial Borrowing  Date and the second  of which Borrowings
             may only be made on the  last day of the Interest Period of
             the first Borrowings), (ii)  shall be made by each  Bank in
             that initial aggregate principal amount as is equal to  the
             Term Loan  Commitment of such Bank on the Initial Borrowing
             Date  (before giving  effect to  any reductions  thereto on
             such date  pursuant to Section 3.03(b)(i)  but after giving
             effect to any reductions  thereto on or prior to  such date

             


             


             pursuant to  Section 3.03(b)(ii)) and (iii)  shall be joint
             and  several obligations  of each  of the Borrowers.   Once
             repaid,   Term  Loans   incurred  hereunder   may  not   be
             reborrowed.

                       (b)  Subject to and upon the terms and conditions
             set  forth herein, each Bank  with a Revolving Loan Commit-
             ment severally agrees, at any time and from time to time on
             and after the Initial Borrowing Date and prior to the Final
             Maturity Date, to make a revolving loan or revolving  loans
             (each, a "Revolving Loan" and, collectively, the "Revolving
             Loans") to the Borrowers,  which Revolving Loans (i) shall,
             at the option of the Borrowers, be Base Rate Loans or Euro-
             dollar  Loans,  provided  that  (A)  except   as  otherwise
             specifically provided  in  Section 1.10(b),  all  Revolving
             Loans  comprising the same Borrowing  shall at all times be
             of the same  Type and (B)  no more than  two Borrowings  of
             Revolving Loans to be maintained as Eurodollar Loans may be
             incurred prior to the 60th day after the Initial  Borrowing
             Date (which Borrowings of Eurodollar Loans may only have an
             Interest  Period  of one  month,  and  the first  of  which
             Borrowings may only be  made on the Initial  Borrowing Date
             and the second of which Borrowings may only be made on  the
             last   day  of  the  Interest  Period  of  the  first  such
             Borrowing), (ii) may be repaid and reborrowed in accordance
             with the provisions hereof, (iii)  shall not exceed for any
             Bank  at any  time  outstanding  that  aggregate  principal
             amount  which, when added to the product of (x) such Bank's
             Adjusted Percentage  and (y) the  sum of (I)  the aggregate
             amount of  all Letter of Credit  Outstandings (exclusive of
             Unpaid Drawings which are repaid with  the proceeds of, and
             simultaneously  with  the  incurrence  of,  the  respective
             incurrence  of Revolving Loans)  at such time  and (II) the
             aggregate   principal   amount  of   all   Swingline  Loans
             (exclusive  of Swingline  Loans which  are repaid  with the
             proceeds of, and simultaneously with the incurrence of, the
             respective incurrence of Revolving Loans) then outstanding,
             equals the Revolving Loan  Commitment of such Bank at  such
             time, (iv) shall not exceed for all Banks at any  time out-
             standing that aggregate principal amount  which, when added
             to  (x) the  aggregate  amount  of  all  Letter  of  Credit
             Outstandings (exclusive of Unpaid Drawings which are repaid
             with  the   proceeds  of,   and  simultaneously   with  the
             incurrence  of,  the  respective  incurrence  of  Revolving
             Loans) at such time and (y) the  aggregate principal amount
             of all Swingline Loans  (exclusive of Swingline Loans which
             are repaid  with the  proceeds of, and  simultaneously with
             the incurrence of, the  respective incurrence of  Revolving
             Loans)  then  outstanding,   equals  the  Total   Available
             Revolving  Loan  Commitment at  such  time,  (v) shall  not



                                         -2-


             


             exceed  in  aggregate  principal   amount  on  the  Initial
             Borrowing  Date,  when  added  to  the  aggregate principal
             amount of Swingline Loans incurred  on such date, an amount
             equal  to  $20,000,000  and (vi)  shall  be  the joint  and
             several obligations of each of the Borrowers.

                       (c)  Subject to and upon the terms and conditions
             herein set forth, BTCo in its individual capacity agrees to
             make  at any time  and from time  to time on  and after the
             Initial Borrowing  Date and  prior to the  Swingline Expiry
             Date,  a  revolving  loan   or  revolving  loans  (each,  a
             "Swingline Loan" and, collectively, the  "Swingline Loans")
             to the  Borrowers, unless BTCo shall  have received written
             notice from  the  Borrowers  that  a Default  or  Event  of
             Default has  occurred, which  Swingline Loans (i)  shall be
             made  and maintained as Base Rate Loans, (ii) may be repaid
             and reborrowed  in accordance  with the  provisions hereof,
             (iii) shall not exceed in aggregate principal amount at any
             time   outstanding,  when   combined  with   the  aggregate
             principal  amount  of  all  Revolving Loans  made  by  Non-
             Defaulting Banks then outstanding  and the Letter of Credit
             Outstandings at such time, an amount  equal to the Adjusted
             Total  Available Revolving  Loan  Commitment at  such  time
             (after  giving effect  to  any reductions  to the  Adjusted
             Total  Available Revolving  Loan Commitment on  such date),
             (iv) shall not  exceed at any time  outstanding the Maximum
             Swingline  Amount,   (v)  shall  not  exceed  an  aggregate
             principal amount on the  Initial Borrowing Date, when added
             to  the  aggregate  principal  amount  of  Revolving  Loans
             incurred on such date, an  amount equal to $20,000,000, and
             (vi)  shall be the joint and several obligations of each of
             the Borrowers.

                       (d)  On any  Business Day, BTCo may,  in its sole
             discretion, give  notice to the Banks  that its outstanding
             Swingline  Loans  shall  be  funded  with  a  Borrowing  of
             Revolving Loans (provided that  such notice shall be deemed
             to have been automatically  given upon the occurrence of  a
             Default  or an Event of Default under Section 10.05 or upon
             the  exercise of any of  the remedies provided  in the last
             paragraph  of Section  10),  in which  case a  Borrowing of
             Revolving Loans  constituting  Base Rate  Loans (each  such
             Borrowing, a  "Mandatory Borrowing")  shall be made  on the
             immediately  succeeding Business  Day by  all Banks  with a
             Revolving  Loan Commitment  (without giving  effect to  any
             reductions  thereto  pursuant  to  the  last  paragraph  of
             Section  10)  pro  rata   based  on  each  Bank's  Adjusted
             Percentage   (determined  before   giving  effect   to  any
             termination  of the Revolving  Loan Commitments pursuant to
             the last paragraph of Section 10) and the  proceeds thereof



                                         -3-


             


             shall  be applied directly to  BTCo to repay  BTCo for such
             outstanding Swingline  Loans.  Each such  Bank hereby irre-
             vocably agrees  to make  Revolving Loans upon  one Business
             Day's notice  pursuant to  each Mandatory Borrowing  in the
             amount  and  in  the  manner  specified  in  the  preceding
             sentence and  on  the date  specified  in writing  by  BTCo
             notwithstanding  that (i) the amount  of the Mandatory Bor-
             rowing  may   not  comply  with  the   minimum  amount  for
             Borrowings  otherwise required hereunder,  (ii) whether any
             conditions specified in Section 6 are then satisfied, (iii)
             whether  a Default or an Event of Default then exists, (iv)
             the  date of such Mandatory Borrowing and (v) the amount of
             the   Total  Revolving  Loan  Commitment,  Total  Available
             Revolving  Loan Commitment,  the  Adjusted Total  Revolving
             Loan Commitment  or the Adjusted Total  Available Revolving
             Loan Commitment at  such time provided,  that, in no  event
             shall  such Bank  be required  to make  Revolving Loans  in
             excess  of such Bank's  Revolving Loan Commitment.   In the
             event that any Mandatory Borrowing cannot for any reason be
             made  on the  date  otherwise  required  above  (including,
             without limitation,  as a result  of the commencement  of a
             proceeding under  the Bankruptcy  Code with respect  to the
             Borrowers), then each such Bank hereby agrees that it shall
             forthwith purchase (as of  the date the Mandatory Borrowing
             would   otherwise  have  occurred,  but  adjusted  for  any
             payments received from the Borrowers  on or after such date
             and prior  to such purchase) from  BTCo such participations
             in the outstanding Swingline Loans as shall be necessary to
             cause such Banks to  share in such Swingline Loans  ratably
             based   upon   their   respective    Adjusted   Percentages
             (determined before giving effect  to any termination of the
             Revolving Loan Commitments  pursuant to the  last paragraph
             of Section  10), provided that (x) all  interest payable on
             the  Swingline Loans shall be for the account of BTCo until
             the  date  as  of  which the  respective  participation  is
             required to be purchased and, to the extent attributable to
             the purchased  participation, shall be payable  to the par-
             ticipant from and after such  date and (y) at the time  any
             purchase of  participations pursuant  to  this sentence  is
             actually made, the purchasing Bank shall be required to pay
             BTCo interest on the principal amount of participation pur-
             chased for each day  from and including the day  upon which
             the Mandatory  Borrowing would  otherwise have  occurred to
             but excluding  the date of payment  for such participation,
             at  the overnight Federal  Funds Rate  for the  first three
             days  and at  the  rate otherwise  applicable to  Revolving
             Loans maintained  as Base Rate Loans hereunder for each day
             thereafter.





                                         -4-


             


                       1.02 Minimum  Amount  of  Each  Borrowing.    The
             aggregate principal  amount of  each Borrowing of  any Term
             Loans shall  not be less  than $5,000,000 and,  if greater,
             shall  be  in  an integral  multiple  of  $1,000,000.   The
             aggregate principal amount  of each Borrowing of  Revolving
             Loans  shall be not  less than $1,000,000  and, if greater,
             shall be in an integral multiple of $500,000, provided that
             Mandatory Borrowings shall be  made in the amounts required
             by Section 1.01(d).  The aggregate principal amount of each
             Borrowing  of  Swingline  Loans  shall  not  be  less  than
             $500,000 and,  if greater, shall be in an integral multiple
             of $100,000.  More than one Borrowing may occur on the same
             date, but at no  time shall there be outstanding  more than
             eight Borrowings of Eurodollar Loans.

                       1.03 Notice of Borrowing.  (a)  Whenever the Bor-
             rowers desire to make a Borrowing hereunder (excluding Bor-
             rowings  of Swingline  Loans and Mandatory  Borrowings), an
             Authorized Representative of  the Borrowers shall give  the
             Agent at  its Notice  Office at  least  one Business  Day's
             prior  written (or telephonic  notice promptly confirmed in
             writing) notice of each  Base Rate Loan and at  least three
             Business Days' prior written (or telephonic notice promptly
             confirmed  in writing) notice of each Eurodollar Loan to be
             made  hereunder, provided  that  any such  notice shall  be
             deemed to  have been given on  a certain day only  if given
             before  11:00 A.M. (New York  time) (12:00  Noon  (New York
             time) in the  case of a  Borrowing of Base  Rate Loans)  on
             such day.  Each such written notice or written confirmation
             of telephonic notice (each a "Notice of Borrowing"), except
             as otherwise  expressly provided in Section  1.10, shall be
             irrevocable and shall be given by the Borrowers in the form
             of Exhibit A, appropriately completed to specify the aggre-
             gate principal amount of  the Loans to be made  pursuant to
             such Borrowing, the date of  such Borrowing (which shall be
             a Business Day), whether the  Loans being made pursuant  to
             such  Borrowing shall  constitute  Term Loans  or Revolving
             Loans  and whether  the Loans  being made pursuant  to such
             Borrowing are to be initially maintained as Base Rate Loans
             or Eurodollar  Loans and, if Eurodollar  Loans, the initial
             Interest Period to be applicable thereto.  The  Agent shall
             promptly  give each Bank which is required to make Loans of
             the Tranche  specified in the respective  Notice of Borrow-
             ing, notice of such proposed Borrowing, of such Bank's pro-
             portionate share thereof and  of the other matters required
             by the  immediately preceding  sentence to be  specified in
             the Notice of Borrowing.

                       (b) (i)   Whenever the Borrowers desire to make a
             Borrowing  of  Swingline  Loans  hereunder,  an  Authorized



                                         -5-


             


             Representative of  the Borrowers shall give  BTCo not later
             than  12:00 Noon  (New  York  time)  on  the  date  that  a
             Swingline Loan is to be  made, written notice or telephonic
             notice promptly confirmed in writing of each Swingline Loan
             to  be made  hereunder.   Each such  notice shall  be irre-
             vocable  and specify in each case (A) the date of Borrowing
             (which shall be a Business Day) and (B) the aggregate prin-
             cipal  amount of the Swingline Loans to be made pursuant to
             such Borrowing.

                      (ii)  Mandatory Borrowings shall  be made upon the
             notice  specified  in Section  1.01(d), with  each Borrower
             irrevocably agreeing,  by its  incurrence of any  Swingline
             Loan,  to the  making  of the  Mandatory Borrowings  as set
             forth in Section 1.01(d).

                       (c)  Without in  any way limiting  the obligation
             of  the  Borrowers to  confirm  in  writing any  telephonic
             notice of any Borrowing of Loans, the Agent may act without
             liability upon  the basis of telephonic notice of such Bor-
             rowing, believed by the  Agent in good faith to be  from an
             Authorized Representative of any  Borrower prior to receipt
             of written confirmation.  In each such case,  each Borrower
             hereby  waives the right  to dispute the  Agent's record of
             the terms of  such telephonic notice  of such Borrowing  of
             Loans.

                       1.04  Disbursement of Funds.  Except as otherwise
             specifically provided  in the immediately  succeeding sent-
             ence,  no later than 12:00 Noon (New York time) on the date
             specified in each Notice  of Borrowing (or (x) in  the case
             of  Swingline Loans,  not  later than  2:00 P.M.  (New York
             time) on the date  specified pursuant to Section 1.03(b)(i)
             or  (y) in the case of Mandatory Borrowings, not later than
             12:00 Noon (New York time) on the date specified in Section
             1.01(d)),  each Bank  with a  Commitment of  the respective
             Tranche will make  available its pro  rata portion of  each
             such Borrowing requested to be made on such date (or in the
             case of Swingline Loans, BTCo shall make available the full
             amount thereof).  All such amounts  shall be made available
             in  Dollars and in immediately available  funds at the Pay-
             ment Office of the Agent, and the Agent will make available
             to the Borrowers at the Payment Office the aggregate of the
             amounts  so made available by the Banks (prior to 1:00 P.M.
             (New  York time))  on  such day,  to  the extent  of  funds
             actually  received by  the Agent prior  to 12:00  Noon (New
             York time) on such  day).  Unless the Agent shall have been
             notified  by any Bank prior  to the date  of Borrowing that
             such  Bank does not intend  to make available  to the Agent
             such Bank's portion  of any  Borrowing to be  made on  such



                                         -6-


             


             date, the Agent  may assume  that such Bank  has made  such
             amount available to the Agent on such date of Borrowing and
             the  Agent  may, in  reliance  upon  such assumption,  make
             available to the Borrowers a corresponding amount.  If such
             corresponding  amount is not in fact  made available to the
             Agent  by such Bank, the Agent shall be entitled to recover
             such corresponding  amount on  demand from  such Bank.   If
             such Bank does not  pay such corresponding amount forthwith
             upon the Agent's demand  therefor, the Agent shall promptly
             notify the Borrowers to  immediately pay such corresponding
             amount  to the Agent.  The  Agent shall also be entitled to
             recover on demand from  such Bank or the Borrowers,  as the
             case  may  be, interest  on  such  corresponding amount  in
             respect of each day from the date such corresponding amount
             was  made available by the Agent to the Borrowers until the
             date such  corresponding amount is recovered  by the Agent,
             at a rate  per annum equal  to (i) if  recovered from  such
             Bank,  the  overnight   Federal  Funds  Rate   and  (ii) if
             recovered from  the Borrowers, the rate  of interest appli-
             cable to the respective  Borrowing, as determined  pursuant
             to Section 1.08.   Nothing  in this Section  1.04 shall  be
             deemed  to  relieve any  Bank from  its obligation  to make
             Loans  hereunder  or  to  prejudice any  rights  which  the
             Borrowers  may have  against any  Bank as  a result  of any
             failure by such Bank to make Loans hereunder.

                       1.05  Notes.  (a)  The  Borrowers' obligation  to
             pay  the principal of, and  interest on, the  Loans made by
             each  Bank  shall  be evidenced  (i) if  Term  Loans,  by a
             promissory  note   duly  executed  and   delivered  by  the
             Borrowers  substantially in  the form  of Exhibit  B-1 with
             blanks  appropriately  completed  in   conformity  herewith
             (each, a "Term Note"  and, collectively, the "Term Notes"),
             (ii) if Revolving Loans, by a promissory note duly executed
             and delivered by the Borrowers substantially in the form of
             Exhibit   B-2,  with  blanks   appropriately  completed  in
             conformity herewith (each, a "Revolving Note" and,  collec-
             tively,  the  "Revolving  Notes") and  (iii)  if  Swingline
             Loans, by a promissory note  duly executed and delivered by
             the  Borrowers substantially  in the  form of  Exhibit B-3,
             with blanks appropriately  completed in conformity herewith
             (the "Swingline Note").

                       (b)  The Term Note issued  to each Bank shall (i)
             be  executed by the Borrowers, (ii) be payable to the order
             of such Bank  or its  registered assigns and  be dated  the
             Initial  Borrowing Date,  (iii)  be in  a stated  principal
             amount  equal to the Term  Loan Commitment of  such Bank on
             the Initial Borrowing Date and be  payable in the principal
             amount of Term Loans evidenced thereby, (iv) mature  on the



                                         -7-


             


             Final Maturity  Date, (v) bear interest as  provided in the
             appropriate clause of Section  1.08 in respect of the  Base
             Rate  Loans and Eurodollar Loans, as the case may be, evid-
             enced thereby,  (vi) be  subject to mandatory  repayment as
             provided in Section 4.02 and (vii) be entitled to the bene-
             fits of this Agreement and the other Credit Documents.

                       (c)  The Revolving Note issued to each Bank shall
             (i)  be executed by the  Borrowers, (ii) be  payable to the
             order of such Bank  or its registered assigns and  be dated
             the Initial  Borrowing Date, (iii) be in a stated principal
             amount equal to the Revolving  Loan Commitment of such Bank
             and be payable  in the  principal amount  of the  Revolving
             Loans evidenced thereby, (iv)  mature on the Final Maturity
             Date,  (v) bear  interest  as provided  in the  appropriate
             clause  of Section 1.08 in  respect of the  Base Rate Loans
             and Eurodollar Loans, as the  case may be, evidenced there-
             by, (vi) be subject to  mandatory repayment as provided  in
             Section  4.02 and (vii) be entitled to the benefits of this
             Agreement and the other Credit Documents.

                       (d)  The Swingline Note issued  to BTCo shall (i)
             be  executed by the Borrowers, (ii) be payable to the order
             of  BTCo or its registered assigns and be dated the Initial
             Borrowing Date, (iii) be in a stated principal amount equal
             to the Maximum Swingline Amount and be payable in the prin-
             cipal amount of the  outstanding Swingline Loans  evidenced
             thereby  from time  to time, (iv)  mature on  the Swingline
             Expiry  Date,   (v)  bear  interest  as   provided  in  the
             appropriate clause of  Section 1.08 in respect  of the Base
             Rate Loans evidenced  thereby and (vi)  be entitled to  the
             benefits of this Agreement and the other Credit Documents.

                       (e)  Each Bank  will note on its internal records
             the amount of each Loan made  by it and each payment in re-
             spect thereof and will  prior to any transfer of any of its
             Notes endorse  on the reverse side  thereof the outstanding
             principal amount  of Loans  evidenced thereby.   Failure to
             make any such notation or any error in any such notation or
             endorsement shall not affect the  Borrowers' obligations in
             respect of such Loans.

                       1.06  Conversions.   The Borrowers shall have the
             option to convert, on any  Business Day occurring after the
             Initial  Borrowing Date, all or a portion equal to at least
             (1) in the case  of a conversion of Term  Loans, $5,000,000
             (and, if  greater, in  an integral multiple  of $1,000,000)
             and (2) in  the case  of a conversion  of Revolving  Loans,
             $1,000,000  (and, if  greater, in  an integral  multiple of
             $500,000),  of the  outstanding principal  amount of  Loans



                                         -8-


             


             made pursuant to one or more Borrowings (so long as of  the
             same  Tranche) of  one  or  more  Types  of  Loans  into  a
             Borrowing (of  the same Tranche)  of another Type  of Loan,
             provided that  (i) except as otherwise  provided in Section
             1.10(b), Eurodollar  Loans may be converted  into Base Rate
             Loans only on the last day of an Interest Period applicable
             to the Loans being converted and no such partial conversion
             of Eurodollar Loans shall  reduce the outstanding principal
             amount of such Eurodollar Loans  made pursuant to a  single
             Borrowing  to  less than  (x) in  the  case of  Term Loans,
             $5,000,000  and  (y)  in   the  case  of  Revolving  Loans,
             $1,000,000, (ii) Base Rate Loans may only be converted into
             Eurodollar  Loans if no Default  or Event of  Default is in
             existence on the date of the conversion, (iii) prior to the
             60th day  after the Initial Borrowing  Date, conversions of
             Base Rate Loans into  Eurodollar Loans may only be  made if
             the  conversion is effective on the first day of the second
             Interest Period referred to in clause (B) of the proviso to
             Section  1.01(a)(i) and  referred to in  clause (B)  of the
             proviso  to   Section  1.01(b)(i)  and  so   long  as  such
             conversion  does   not  result  in  a   greater  number  of
             Borrowings of Eurodollar Loans prior to  the 60th day after
             the Initial Borrowing Date  as are permitted under Sections
             1.01(a) or (b), (iv) no conversion pursuant to this Section
             1.06  shall result  in a  greater number  of  Borrowings of
             Eurodollar Loans  than is permitted under  Section 1.02 and
             (v) Swingline Loans may not  be converted pursuant to  this
             Section 1.06.   Each such conversion  shall be effected  by
             the Borrowers  by giving  the Agent  at  its Notice  Office
             prior to 12:00 Noon (New York time) at least three Business
             Days'  prior   notice  (each  a  "Notice   of  Conversion")
             specifying  the Loans to be so  converted, the Borrowing or
             Borrowings pursuant to  which such Loans were made  and, if
             to be converted into  Eurodollar Loans, the Interest Period
             to be initially  applicable thereto.  The  Agent shall give
             each  Bank prompt  notice of  any such  proposed conversion
             affecting any of its Loans.  

                       1.07   Pro  Rata Borrowings.   All  Borrowings of
             Term Loans  and Revolving Loans under  this Agreement shall
             be incurred from the Banks pro  rata on the basis of  their
             Term Loan Commitments or Revolving Loan Commitments, as the
             case  may be,  provided  that all  Borrowings of  Revolving
             Loans  made  pursuant to  a  Mandatory  Borrowing shall  be
             incurred  from the  Banks pro  rata on  the basis  of their
             Adjusted Percentages.  It is understood that no Bank  shall
             be responsible for  any default  by any other  Bank of  its
             obligation to make Loans hereunder and that each Bank shall
             be  obligated to make  the Loans provided to  be made by it




                                         -9-


             


             hereunder, regardless  of the failure of any  other Bank to
             make its Loans hereunder.

                       1.08  Interest.   (a)  The Borrowers  jointly and
             severally agree  to pay interest  in respect of  the unpaid
             principal amount of each  Base Rate Loan from the  date the
             proceeds thereof are made  available to the Borrowers until
             the earlier of (i) the maturity (whether by acceleration or
             otherwise) of such Base Rate  Loan and (ii) the  conversion
             of such Base  Rate Loan  to a Eurodollar  Loan pursuant  to
             Section 1.06, at a rate  per annum which shall be  equal to
             the  sum of  the Applicable  Margin plus  the Base  Rate in
             effect from time to time.

                       (b)  The Borrowers jointly and severally agree to
             pay  interest in respect of  the unpaid principal amount of
             each Eurodollar Loan from the date the proceeds thereof are
             made  available to the  Borrowers until the  earlier of (i)
             the maturity (whether by acceleration or otherwise) of such
             Eurodollar Loan and (ii)  the conversion of such Eurodollar
             Loan to a Base Rate Loan pursuant  to Section 1.06 or 1.10,
             as applicable, at a rate per annum which shall, during each
             Interest Period applicable thereto, be equal to the  sum of
             the  Applicable Margin  plus the  Eurodollar Rate  for such
             Interest Period.

                       (c)  Overdue principal and, to the extent permit-
             ted  by law, overdue interest  in respect of  each Loan and
             any other  overdue amount payable hereunder  shall, in each
             case, bear interest at a rate per annum equal to the great-
             er of  (x) 2%  per annum  in excess  of the  rate otherwise
             applicable to Base Rate Loans from time to time and (y) the
             rate which is 2% in  excess of the rate then borne  by such
             Loans, in each  case with such interest to  be payable on a
             joint and several basis by the Borrowers on demand.

                       (d)  Accrued  (and  theretofore unpaid)  interest
             shall be payable  (i) in  respect of each  Base Rate  Loan,
             quarterly in  arrears on each Quarterly  Payment Date, (ii)
             in respect of each Eurodollar Loan, on the last day of each
             Interest  Period applicable thereto and, in  the case of an
             Interest Period  in excess  of three months,  on each  date
             occurring  at three month intervals  after the first day of
             such  Interest Period  and (iii)  in respect  of each  Loan
             other than  Swingline Loans  and Revolving Loans  which are
             Base  Rate Loans,  on any repayment  or prepayment  (on the
             amount  repaid or prepaid), and in respect of each Loan, at
             maturity (whether  by acceleration or otherwise) and, after
             such maturity, on demand.




                                         -10-


             


                       (e)  Upon each Interest  Determination Date,  the
             Agent  shall   determine  the  Eurodollar   Rate  for   the
             respective Interest  Period or  Interest Periods  and shall
             promptly notify the Borrowers and the  Banks thereof.  Each
             such determination shall,  absent manifest error, be  final
             and conclusive and binding on all parties hereto.

                       1.09    Interest  Periods.     At  the  time  the
             Borrowers  give  any  Notice  of  Borrowing  or  Notice  of
             Conversion in respect of the making of, or conversion into,
             any Eurodollar  Loan (in the  case of the  initial Interest
             Period  applicable thereto)  or on  the third  Business Day
             prior to the expiration of an Interest Period applicable to
             such  Eurodollar  Loan  (in  the  case  of  any  subsequent
             Interest  Period), the  Borrowers shall  have the  right to
             elect,  by  having  an  Authorized  Representative  of  the
             Borrowers  give  the  Agent notice  thereof,  the  interest
             period (each  an  "Interest  Period")  applicable  to  such
             Eurodollar Loan, which Interest Period shall, at the option
             of the Borrowers, be a one, two, three or six-month period,
             provided that:

                       (i)  all Eurodollar Loans comprising  a Borrowing
                  shall at all times have the same Interest Period;

                      (ii)  the   initial   Interest   Period  for   any
                  Eurodollar  Loan shall  commence on  the date  of Bor-
                  rowing of such Eurodollar  Loan (including the date of
                  any  conversion thereto  from  a Loan  of a  different
                  Type) and each Interest Period occurring thereafter in
                  respect of such Eurodollar  Loan shall commence on the
                  day  on  which  the  next  preceding  Interest  Period
                  applicable thereto expires;

                     (iii)  if  any Interest Period  relating to a Euro-
                  dollar  Loan begins  on a  day for  which there  is no
                  numerically corresponding day in the calendar month at
                  the end of such  Interest Period, such Interest Period
                  shall end  on the last  Business Day of  such calendar
                  month;

                      (iv)  if  any  Interest  Period   would  otherwise
                  expire  on a  day which  is not  a Business  Day, such
                  Interest Period  shall expire on  the next  succeeding
                  Business Day; provided, however,  that if any Interest
                  Period for a Eurodollar Loan would otherwise expire on
                  a day which is not a Business Day but is a day of  the
                  month after  which no  further Business Day  occurs in
                  such month,  such Interest Period shall  expire on the
                  next preceding Business Day;



                                         -11-


             


                       (v)  no Interest  Period may  be selected  at any
                  time when a  Default or  Event of Default  is then  in
                  existence;
              
                      (vi)  no  Interest   Period  in  respect   of  any
                  Borrowing shall be selected  which extends beyond  the
                  Final Maturity Date; and 

                     (vii)  no Interest Period in respect of any Borrow-
                  ing  of Term  Loans  shall be  selected which  extends
                  beyond any  date upon  which a mandatory  repayment of
                  Term Loans will  be required to be  made under Section
                  4.02(b)  if  the  aggregate principal  amount  of Term
                  Loans  which have Interest  Periods which  will expire
                  after such  date will  be in excess  of the  aggregate
                  principal amount  of Term Loans  then outstanding less
                  the aggregate amount of such required prepayment.

                       If  upon  the expiration  of any  Interest Period
             applicable  to  a  Borrowing   of  Eurodollar  Loans,   the
             Borrowers have  failed to  elect, or  are not  permitted to
             elect,  a  new Interest  Period  to be  applicable  to such
             Eurodollar Loans as provided  above, the Borrowers shall be
             deemed  to have  elected to  convert such  Eurodollar Loans
             into Base Rate Loans effective as of the expiration date of
             such current Interest Period.

                       1.10  Increased Costs, Illegality, etc.  (a)   In
             the event that any Bank shall have determined (which deter-
             mination shall, absent manifest error, be final and conclu-
             sive and binding upon all parties  hereto but, with respect
             to clause (i) below, may be made only by the Agent):

                       (i)  on  any Interest Determination Date that, by
                  reason of any  changes arising after the  date of this
                  Agreement affecting the  interbank Eurodollar  market,
                  adequate and fair means  do not exist for ascertaining
                  the applicable interest rate on the basis provided for
                  in the definition of Eurodollar Rate; or

                      (ii)  at any time, that  such Bank shall incur in-
                  creased costs or reductions in the amounts received or
                  receivable  hereunder with  respect to  any Eurodollar
                  Loan  because of (x) any change since the date of this
                  Agreement in any applicable  law or governmental rule,
                  regulation,  order, guideline  or request  (whether or
                  not having  the force of law) or in the interpretation
                  or administration thereof and including  the introduc-
                  tion of any new  law or governmental rule, regulation,
                  order, guideline or request, such as, for example, but



                                         -12-


             


                  not limited to:  (A) a change in the basis of taxation
                  of payment to any Bank of the principal of or interest
                  on such  Eurodollar Loan or any  other amounts payable
                  hereunder (except for changes  in the rate of  tax on,
                  or  determined by reference to, the  net income or net
                  profits  of such Bank,  or any franchise  tax based on
                  the  net income or net profits of such Bank, in either
                  case  pursuant to  the laws  of the  United States  of
                  America, the jurisdiction in  which it is organized or
                  in which  its principal  office or  applicable lending
                  office  is  located  or  any  subdivision  thereof  or
                  therein),  but  without  duplication  of  any  amounts
                  payable  in  respect  of  Taxes  pursuant  to  Section
                  4.04(a), or (B) a  change in official reserve require-
                  ments, but, in all events, excluding reserves required
                  under Regulation D  to the extent included in the com-
                  putation  of  the  Eurodollar Rate  and/or  (y)  other
                  circumstances   since  the  date   of  this  Agreement
                  affecting such Bank or the interbank Eurodollar market
                  or the position of such Bank in such market; or

                     (iii)  at any time, that  the making or continuance
                  of  any Eurodollar Loan has been  made (x) unlawful by
                  any law or governmental rule, regulation or order, (y)
                  impossible  by compliance  by any  Bank in  good faith
                  with any governmental  request (whether or not  having
                  force  of law) or (z)  impracticable as a  result of a
                  contingency occurring after the date of this Agreement
                  which materially  and adversely affects  the interbank
                  Eurodollar market;

             then, and in  any such event, such  Bank (or the Agent,  in
             the  case of clause  (i) above) shall  promptly give notice
             (by telephone  confirmed in writing) to  the Borrowers and,
             except  in the  case of clause  (i) above, to  the Agent of
             such determination  (which notice the Agent  shall promptly
             transmit  to each of the  other Banks).   Thereafter (x) in
             the  case of  clause (i)  above, Eurodollar Loans  shall no
             longer be available  until such time as  the Agent notifies
             the Borrowers  and the Banks that  the circumstances giving
             rise to such notice by the  Agent no longer exist, and  any
             Notice  of Borrowing or  Notice of Conversion  given by the
             Borrowers with  respect to Eurodollar Loans  which have not
             yet been incurred (including by way of conversion) shall be
             deemed rescinded  by  the Borrowers,  (y)  in the  case  of
             clause  (ii)  above, the  Borrowers  jointly and  severally
             agree to,  subject to the  provisions of Section  13.15 (to
             the  extent applicable),  pay  to such  Bank, upon  written
             demand therefor, such additional amounts (in the form of an
             increased rate  of, or  a different method  of calculating,



                                         -13-


             


             interest or  otherwise as such Bank in  its sole discretion
             shall determine)  as shall  be required to  compensate such
             Bank for such increased costs  or reductions in amounts re-
             ceived or receivable hereunder (a written  notice as to the
             additional amounts owed to such Bank, showing the basis for
             the calculation thereof, submitted to the Borrowers by such
             Bank  in good faith shall,  absent manifest error, be final
             and conclusive and  binding on all the  parties hereto) and
             (z)  in the case of clause (iii) above, the Borrowers shall
             take  one of  the actions specified  in Section  1.10(b) as
             promptly  as possible  and, in  any event, within  the time
             period required by law.   Each of  the Agent and each  Bank
             agrees that if it gives  notice to the Borrowers of  any of
             the events described in clause (i) or (iii) above, it shall
             promptly  notify the Borrowers and, in the case of any such
             Bank,  the Agent, if  such event ceases  to exist.   If any
             such event described in clause  (iii) above ceases to exist
             as  to a  Bank,  the  obligations  of  such  Bank  to  make
             Eurodollar  Loans  and  to  convert Base  Rate  Loans  into
             Eurodollar  Loans  on  the terms  and  conditions contained
             herein shall be reinstated.

                       (b)  At  any time  that  any Eurodollar  Loan  is
             affected   by  the   circumstances  described   in  Section
             1.10(a)(ii) or (iii), the Borrowers may (and in the case of
             a Eurodollar Loan  affected by the circumstances  described
             in Section  1.10(a)(iii) shall) either (x)  if the affected
             Eurodollar Loan is then being made initially or pursuant to
             a conversion, cancel the respective Borrowing by giving the
             Agent telephonic notice (confirmed  in writing) on the same
             date that the Borrowers were notified  by the affected Bank
             or the  Agent pursuant to  Section 1.10(a)(ii) or  (iii) or
             (y) if  the affected  Eurodollar Loan is  then outstanding,
             upon at least  three Business Days'  written notice to  the
             Agent, require the affected Bank to convert such Eurodollar
             Loan into a Base Rate Loan, provided that, if more than one
             Bank  is affected at any time, then all affected Banks must
             be treated the same pursuant to this Section 1.10(b). 

                       (c)  If at any time after the date of this Agree-
             ment any  Bank determines that  the introduction of  or any
             change in any applicable  law or governmental rule, regula-
             tion, order,  guideline, directive  or request  (whether or
             not having  the force of law)  concerning capital adequacy,
             or any  change in interpretation or  administration thereof
             by any governmental  authority, central bank  or comparable
             agency, will  have the effect  of increasing the  amount of
             capital required or expected to  be maintained by such Bank
             or  any  corporation controlling  such  Bank  based on  the
             existence  of  such  Bank's Commitments  hereunder  or  its



                                         -14-


             


             obligations  hereunder,  then  the  Borrowers  jointly  and
             severally agree, subject to the provisions of Section 13.15
             (to the extent applicable),  to pay to such Bank,  upon its
             written demand therefor,  such additional amounts  as shall
             be  required   to  compensate  such  Bank   or  such  other
             corporation for  the increased  cost to such  Bank or  such
             other corporation or the reduction in the rate of return to
             such Bank or  such other  corporation as a  result of  such
             increase  of  capital.    In  determining  such  additional
             amounts, each Bank  will act reasonably  and in good  faith
             and will  use averaging  and attribution methods  which are
             reasonable, provided that such Bank's reasonable good faith
             determination  of compensation  owing  under  this  Section
             1.10(c)   shall,  absent  manifest   error,  be  final  and
             conclusive and  binding on  all the parties  hereto.   Each
             Bank, upon determining that  any additional amounts will be
             payable pursuant to this Section 1.10(c), will give written
             notice thereof  to the  Borrowers, which notice  shall show
             the basis for calculation of such additional amounts.

                       1.11   Compensation.   The Borrowers  jointly and
             severally agree, subject to the provisions of Section 13.15
             (to the  extent applicable), to compensate  each Bank, upon
             its  written request  (which  request shall  set forth  the
             basis for requesting such compensation), for all reasonable
             losses,  expenses  and   liabilities  (including,   without
             limitation,  any  loss,  expense or  liability  incurred by
             reason of  the liquidation  or reemployment of  deposits or
             other funds  required by such  Bank to fund  its Eurodollar
             Loans but  excluding any loss of  anticipated profit) which
             such Bank may sustain:  (i) if for any reason (other than a
             default  by  such Bank  or the  Agent)  a Borrowing  of, or
             conversion from or into, Eurodollar Loans does not occur on
             a  date  specified therefor  in  a Notice  of  Borrowing or
             Notice  of  Conversion (whether  or  not  withdrawn by  the
             Borrowers or deemed withdrawn pursuant to Section 1.10(a));
             (ii)  if  any  repayment  (including  any  repayment   made
             pursuant  to Section 4.02 or as a result of an acceleration
             of the Loans pursuant  to Section 10) or conversion  of any
             of its Eurodollar Loans  occurs on a date which  is not the
             last day of an Interest Period with respect  thereto; (iii)
             if any prepayment  of any  of its Eurodollar  Loans is  not
             made  on any date specified in a notice of prepayment given
             by the Borrowers; or (iv) as a consequence of (x) any other
             default by the Borrowers to  repay its Loans when  required
             by  the terms  of this Agreement  or any Note  held by such
             Bank or (y) any election made pursuant to Section 1.10(b).

                       1.12  Change of Lending Office.  Each Bank agrees
             that  upon the occurrence of  any event giving  rise to the



                                         -15-


             


             operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
             Section 2.06 or Section 4.04 with  respect to such Bank, it
             will, if requested by the Borrowers, use reasonable efforts
             (subject to overall policy  considerations of such Bank) to
             designate another  lending office for any  Loans or Letters
             of  Credit  affected  by  such event,  provided  that  such
             designation  is made on such  terms that such  Bank and its
             lending  office suffer  no  economic,  legal or  regulatory
             disadvantage, with  the object of  avoiding the consequence
             of  the event giving rise to the operation of such Section.
             Nothing in  this Section 1.12 shall affect  or postpone any
             of  the obligations of the  Borrowers or the  rights of any
             Bank provided in Sections 1.10, 2.06 and 4.04.

                       1.13   Replacement  of Banks.    (x) If  any Bank
             becomes  a Defaulting  Bank  or otherwise  defaults in  its
             obligations to make Loans or fund Unpaid Drawings, (y) upon
             the occurrence of any event giving rise to the operation of
             Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06
             or Section 4.04 with  respect to any Bank which  results in
             such  Bank charging  to  the Borrowers  increased costs  in
             excess of those being generally charged  by the other Banks
             or  (z)  as provided  in Section  13.12(b)  in the  case of
             certain refusals by  a Bank to consent to  certain proposed
             changes, waivers, discharges  or terminations with  respect
             to this Agreement which have  been approved by the Required
             Banks, the Borrowers shall have the right, if no Default or
             Event of Default will exist immediately after giving effect
             to the respective replacement,  to either replace such Bank
             (the  "Replaced  Bank") with  one  or  more other  Eligible
             Transferee or Transferees, none  of whom shall constitute a
             Defaulting Bank  at the  time of such  replacement (collec-
             tively,  the "Replacement  Bank") reasonably  acceptable to
             the  Agent or, at the  option of the  Borrowers, to replace
             only  (a) the Revolving  Loan Commitment  (and outstandings
             pursuant thereto)  of the  Replaced Bank with  an identical
             Revolving Loan Commitment provided by the Replacement  Bank
             or  (b) in  the  case  of  a  replacement  as  provided  in
             Section 13.12(b) where the  consent of the  respective Bank
             is required with respect  to less than all Tranches  of its
             Loans  or Commitments,  the Commitments  and/or outstanding
             Term  Loans of such Bank  in respect of  each Tranche where
             the consent  of such  Bank would otherwise  be individually
             required, with  identical Commitments and/or  Loans of  the
             respective  Tranche  provided  by  the   Replacement  Bank,
             provided that  (i) at the time of  any replacement pursuant
             to this Section 1.13, the Replacement Bank shall enter into
             one or more Assignment  and Assumption Agreements  pursuant
             to Section 13.04(b) (and with all  fees payable pursuant to
             said  Section 13.04(b) to be paid  by the Replacement Bank)



                                         -16-


             


             pursuant to which the Replacement Bank shall acquire all of
             the   Commitments    and   outstanding   Loans    of,   and
             participations  in Letters of Credit by (or, in the case of
             the replacement of only  (a) the Revolving Loan Commitment,
             the  Revolving Loan  Commitment  and outstanding  Revolving
             Loans  and participations in  Letters of Credit  or (b) the
             Term Loans, the outstanding  Term Loans), the Replaced Bank
             and, in connection therewith, shall pay to (x) the Replaced
             Bank in respect  thereof an amount equal to the  sum of (A)
             an  amount equal  to  the  principal  of, and  all  accrued
             interest  on, all outstanding Loans (or, in the case of the
             replacement of only (I)  the Revolving Loan Commitment, the
             outstanding  Revolving Loans  or (II)  the Term  Loans, the
             outstanding Term Loans) of the Replaced Bank, (B) except in
             the  case of the  replacement of only  the outstanding Term
             Loans of a  Replaced Bank,  an amount equal  to all  Unpaid
             Drawings that have  been funded by (and  not reimbursed to)
             such Replaced Bank, together  with all then unpaid interest
             with respect thereto at  such time and (C) an  amount equal
             to all accrued, but  theretofore unpaid, Fees owing to  the
             Replaced  Bank  (but  only  with respect  to  the  relevant
             Tranche,  in the case of  the replacement of  less than all
             Tranches  of Loans  then  held by  the respective  Replaced
             Bank) pursuant to Section  3.01 and (y) except in  the case
             of  the replacement of only the outstanding Term Loans of a
             Replaced Bank, BTCo an amount equal to such Replaced Bank's
             Adjusted Percentage (for this purpose, determined as if the
             adjustment  described  in  clause  (y)  of the  immediately
             succeeding sentence  had been made with respect to such Re-
             placed  Bank) of (1) any Unpaid Drawing (which at such time
             remains  an  Unpaid Drawing)  and  (2) any  portion  of any
             Swingline  Loan  for which  BTCo has  given  a notice  of a
             Mandatory Borrowing pursuant  to Section  1.01(d) and  such
             Replaced Bank has  not provided a  Revolving Loan which  it
             was  obligated to provide to the extent such amount was not
             theretofore  funded by  such  Replaced Bank,  and (ii)  all
             obligations  of the  Borrowers owing  to the  Replaced Bank
             (other than those (a)  specifically described in clause (i)
             above in respect of which the assignment purchase price has
             been, or is concurrently being, paid or (b) relating to any
             Tranche  of Loans  and/or  Commitments  of  the  respective
             Replaced  Bank which will  remain outstanding  after giving
             effect to the respective replacement) shall be paid in full
             to such  Replaced Bank concurrently  with such replacement.
             Upon the execution of the respective Assignment and Assump-
             tion  Agreements, the  payment  of amounts  referred to  in
             clauses  (i) and  (ii) above  and, if  so requested  by the
             Replacement Bank,  delivery to the Replacement  Bank of the
             appropriate Note  or Notes  executed by the  Borrowers, (x)
             the  Replacement Bank  shall become  a Bank  hereunder and,



                                         -17-


             


             unless  the  respective  Replaced Bank  continues  to  have
             outstanding  Term  Loans  or  a  Revolving  Loan Commitment
             hereunder, the  Replaced Bank  shall cease to  constitute a
             Bank  hereunder, except  with  respect  to  indemnification
             provisions   under   this  Agreement   (including,  without
             limitation,  Sections  1.10,  1.11, 2.06,  4.04,  13.01 and
             13.06), which shall  survive as to  such Replaced Bank  and
             (y) in the  case of a replacement of a Defaulting Bank with
             a  Non-Defaulting Bank,  the  Adjusted Percentages  of  the
             Banks shall be automatically adjusted at such time to  give
             effect  to such  replacement  (and to  give  effect to  the
             replacement  of a  Defaulting Bank  with one  or more  Non-
             Defaulting Banks).

                       SECTION 2.  Letters of Credit.

                       2.01  Letters  of Credit.   (a)   Subject to  and
             upon  the terms and  conditions herein set  forth, the Bor-
             rowers may request that any Issuing Bank issue, at any time
             and  from time to time  on and after  the Initial Borrowing
             Date  and prior to the  Final Maturity Date,  for the joint
             and  several   account  of  the  Borrowers,   one  or  more
             irrevocable letters of credit denominated in Dollars or, in
             the case of  Trade Letters of Credit, through  the creation
             thereunder by the respective Issuing Bank of acceptances or
             any other  customary agreement or method  for providing for
             deferred  payment under letters  of credit ("Acceptances"),
             and otherwise in  a form customarily  used by such  Issuing
             Bank or  in such other  form as has  been approved by  such
             Issuing  Bank (each  such letter  of credit,  a "Letter  of
             Credit")  in  support  of   obligations  described  in  the
             definitions of Standby Letter of Credit or Trade  Letter of
             Credit and any other obligations of the Borrowers or any of
             their   Restricted   Subsidiaries   that   are   reasonably
             acceptable to  the Agent  and otherwise permitted  to exist
             pursuant to this Agreement.  On the Initial Borrowing Date,
             all Existing Letters of Credit shall be deemed to have been
             issued  under this  Agreement  and shall  for all  purposes
             constitute "Letters of Credit" hereunder.

                       (b)  Each  Issuing Bank  may agree,  in  its sole
             discretion,  and BTCo  hereby agrees  that  in the  event a
             requested  Letter of  Credit is  not issued  by one  of the
             other  Issuing Banks,  it will  (subject to  the terms  and
             conditions contained herein), at any time and  from time to
             time  on or after the  Initial Borrowing Date  and prior to
             the  Final  Maturity Date,  following  its  receipt of  the
             respective Letter of Credit  Request, issue for the account
             of the Borrowers one  or more Letters of Credit  in support
             of such obligations described in the definitions of Standby



                                         -18-


             


             Letter  of  Credit  and  Trade  Letter  of  Credit  of  the
             Borrowers  or any  of their  Restricted Subsidiaries  as is
             permitted to exist pursuant  to this Agreement without giv-
             ing  rise  to  a Default  or  Event  of Default  hereunder,
             provided that the respective Issuing Bank shall be under no
             obligation to  issue  any Letter  of  Credit of  the  types
             described above if at the time of such issuance:

                       (i)  any order, judgment or decree of any govern-
                  mental authority  or arbitrator  shall purport  by its
                  terms  to enjoin  or restrain  such Issuing  Bank from
                  issuing such  Letter of  Credit or any  requirement of
                  law applicable to such Issuing Bank  or any request or
                  directive  (whether or  not having  the force  of law)
                  from any governmental authority with jurisdiction over
                  such Issuing Bank shall prohibit, or request that such
                  Issuing Bank refrain from,  the issuance of letters of
                  credit generally  or such  Letter of Credit  in parti-
                  cular  or shall  impose  upon such  Issuing Bank  with
                  respect to  such Letter  of Credit any  restriction or
                  reserve or capital requirement (for which such Issuing
                  Bank is  not otherwise  compensated) not in  effect on
                  the  date hereof,  or any  unreimbursed loss,  cost or
                  expense which  was not applicable, in  effect or known
                  to such Issuing Bank  as of the date hereof  and which
                  such Issuing Bank in good  faith deems material to it;
                  or

                      (ii)  such Issuing Bank shall have received notice
                  from  any Bank prior to the issuance of such Letter of
                  Credit  of  the  type  described  in  the  penultimate
                  sentence of Section 2.03(b).

                       (c)  Notwithstanding the foregoing, (i) no Letter
             of  Credit shall be issued the Stated Amount of which, when
             added to  the Letter  of Credit Outstandings  (exclusive of
             Unpaid  Drawings which are repaid on the date of, and prior
             to  the issuance  of, the  respective Letter of  Credit) at
             such  time would exceed either  (x) (a) at  any time during
             the period from the Initial Borrowing  Date until the first
             anniversary of the Initial Borrowing Date, $35,000,000, (b)
             at any time during the period from the first anniversary of
             the Initial Borrowing Date  until the second anniversary of
             the Initial  Borrowing Date,  $40,000,000, (c) at  any time
             during  the  period  from  the second  anniversary  of  the
             Initial Borrowing  Date until the third  anniversary of the
             Initial  Borrowing Date,  $45,000,000 and  (d) at  any time
             thereafter, $50,000,000 or (y)  when added to the aggregate
             principal  amount  of  all  Revolving Loans  made  by  Non-
             Defaulting Banks  and then outstanding and  Swingline Loans



                                         -19-


             


             then outstanding, an  amount equal to   the Adjusted  Total
             Available Revolving  Loan Commitment at such  time, (ii) no
             Acceptance  shall be  created the  Stated Amount  of which,
             when added to the amount of  all Acceptances outstanding at
             such time,  would exceed $15,000,000 and  (iii) each Letter
             of  Credit shall by its terms terminate or be terminable by
             the  Issuing Bank  on such  date that  would result  in all
             drawings thereunder, or any Acceptances created thereunder,
             being funded pursuant to the terms thereof prior to (x) (A)
             in  the case of Standby  Letters of Credit,  the date which
             occurs  12 months  after the  date of the  issuance thereof
             (although any such  Letter of Credit may  be extendable for
             successive periods of up  to 12 months, but not  beyond the
             Final  Maturity Date,  on terms  acceptable to  the Issuing
             Bank  thereof)  and (B)  in the  case  of Trade  Letters of
             Credit,  the date which occurs six months after the date of
             the  issuance thereof  or (y)  (A) in  the case  of Standby
             Letters  of Credit, the  date which  is five  Business Days
             prior to  the Final  Maturity Date and  (B) in the  case of
             Trade Letters  of Credit, the date which is thirty Business
             Days prior to the Final Maturity Date.

                       2.02   Minimum Stated Amount.   The Stated Amount
             of each  Letter of Credit shall be not less than $10,000 or
             such  lesser  amount as  is  acceptable  to the  respective
             Issuing Bank.

                       2.03  Letter of Credit Requests.  (a)  Whenever
             any Borrower desires that  a Letter of Credit be  issued by
             the  Agent as Issuing Bank  for its account,  it shall have
             (i)  executed and  delivered the  Letter of  Credit Service
             Agreement in  the form of  Exhibit C-1 attached  hereto (as
             amended, modified  or supplemented  from time to  time, the
             "Letter  of  Credit  Service Agreement"),  which  Letter of
             Credit Service Agreement shall be  in full force and effect
             and (ii) made a  request for the issuance of such Letter of
             Credit in accordance with the terms of the Letter of Credit
             Service Agreement.   Whenever  any Borrower desires  that a
             Trade Letter of Credit  be issued by an Issuing  Bank other
             than  the Agent for its account, it shall have (x) executed
             and delivered  to the respective Issuing  Bank (with copies
             having  been sent to the Agent) at least five Business Days
             prior to  the issuance  thereof, a  Trade Letter of  Credit
             Request  in the form of Exhibit C-2 attached hereto (each a
             "Trade  Letter of  Credit Request")  and (y)  completed and
             executed  a  letter  of  credit  application  in  the  form
             customarily used  by such Issuing Bank for Trade Letters of
             Credit or in  such other form as the Agent  and the Issuing
             Bank shall request.   Whenever any Borrower desires  that a
             Standby Letter of Credit be issued by an Issuing Bank other



                                         -20-


             


             than the Agent for  its account it shall have  executed and
             delivered  to  the  respective  Issuing  Bank  (with copies
             having  been sent to the Agent) at least five Business Days
             prior to the issuance  thereof, a Standby Letter  of Credit
             Request  in the form of Exhibit C-3 attached hereto (each a
             "Standby  Letter of  Credit  Request").   Letter of  Credit
             Requests  shall  be given  in writing,  or  in the  case of
             requests  of  Trade Letters  of  Credit,  by telephone,  if
             promptly confirmed  in  writing, or,  if the  Agent is  the
             Issuing Bank, as otherwise provided in the Letter of Credit
             Service  Agreement, provided that (I) if the express provi-
             sions of any letter of credit application conflict with the
             express  provisions of  this Agreement,  the  provisions of
             this Agreement shall control to the extent of such conflict
             and  (II) no event  (other  than the  failure to  reimburse
             Letter of Credit  Drawings as provided for in Section 2.05)
             which  constitutes a  default under  any application  shall
             constitute an  Event of Default hereunder  solely by reason
             of any default provisions contained in such application.

                       (b)  The making of each Letter of  Credit Request
             shall  be deemed to be a representation and warranty by the
             Borrowers  that such  Letter  of Credit  may  be issued  in
             accordance with, and will  not violate the requirements of,
             Section 2.01(c).   Unless  the respective Issuing  Bank has
             received  notice from any Bank before it issues a Letter of
             Credit that  one  or more  of the  conditions specified  in
             Section 6 are not  then satisfied, or that the  issuance of
             such Letter  of Credit would violate  Section 2.01(c), then
             such Issuing Bank may issue  the requested Letter of Credit
             for the account  of the Borrowers  in accordance with  such
             Issuing  Bank's usual  and customary  practices.   Upon its
             issuance of any  Letter of Credit, such Issuing  Bank shall
             promptly notify each Bank of such issuance.

                       2.04  Letter     of    Credit     Participations.
             (a)  Immediately upon  the issuance by any  Issuing Bank of
             any  Letter of Credit, such Issuing Bank shall be deemed to
             have sold  and transferred  to each  Bank with  a Revolving
             Loan Commitment,  other than  such Issuing Bank  (each such
             Bank, in  its capacity under  this Section 2.04,  a "Parti-
             cipant"), and each such Participant shall be deemed irrevo-
             cably and  unconditionally to  have purchased  and received
             from such  Issuing Bank,  without recourse or  warranty, an
             undivided interest and participation, to the extent of such
             Participant's Adjusted Percentage in such Letter of Credit,
             each  drawing  made   thereunder  and  Acceptances  created
             thereunder and the obligations  of the Borrowers under this
             Agreement  with respect thereto,  and any security therefor
             or guaranty  pertaining thereto.   Upon any  change in  the



                                         -21-


             


             Revolving Loan  Commitments or Adjusted Percentages  of the
             Banks pursuant to Section 1.13 or 13.04 or as a result of a
             Bank Default, it is hereby agreed that, with respect to all
             outstanding Letters of Credit, Acceptances and Unpaid Draw-
             ings, there shall be an automatic adjustment to  the parti-
             cipations  pursuant to this Section 2.04 to reflect the new
             Adjusted Percentages  of the assignor and  assignee Bank or
             of all Banks  with Revolving Loan Commitments,  as the case
             may be.

                       (b)  In determining whether  to pay or  create an
             Acceptance under  any Letter  of Credit, such  Issuing Bank
             shall have no obligation relative to  the other Banks other
             than to confirm that any documents required to be delivered
             under such Letter  of Credit appear to have  been delivered
             and that they  appear to substantially comply on their face
             with the requirements of such Letter of Credit.  Any action
             taken or omitted to  be taken by any Issuing  Bank under or
             in connection with any Letter of Credit if taken or omitted
             in the  absence of gross negligence  or willful misconduct,
             shall  not  create  for  such Issuing  Bank  any  resulting
             liability to the Borrowers or any Bank.

                       (c)  In the event that any Issuing Bank makes any
             payment  under any  Letter of  Credit issued  by it  or any
             Acceptance created thereunder  and the Borrowers shall  not
             have  reimbursed such amount  in full to  such Issuing Bank
             pursuant  to  Section  2.05(a),  such  Issuing  Bank  shall
             promptly notify the Agent, which shall promptly notify each
             Participant  of such  failure,  and each  Participant shall
             promptly and  unconditionally pay to such  Issuing Bank the
             amount  of such  Participant's Adjusted Percentage  of such
             unreimbursed  payment in Dollars and in same day funds.  If
             the Agent so  notifies, prior to 11:00 A.M. (New York time)
             on any  Business Day,  any Participant  required to  fund a
             payment under  a Letter  of Credit, such  Participant shall
             make  available  to  such  Issuing  Bank  in  Dollars  such
             Participant's  Adjusted Percentage  of the  amount of  such
             payment on  such Business Day in same day funds.  If and to
             the  extent  such Participant  shall not  have so  made its
             Adjusted Percentage of the amount of such payment available
             to such  Issuing Bank,  such Participant agrees  to pay  to
             such  Issuing  Bank,  forthwith  on  demand,  such  amount,
             together with interest thereon, for each day from such date
             until the date such amount is paid to such Issuing Bank  at
             the  overnight  Federal Funds  Rate.   The  failure  of any
             Participant  to make  available  to such  Issuing Bank  its
             Adjusted  Percentage of  any  payment under  any Letter  of
             Credit  shall  not relieve  any  other  Participant of  its
             obligation hereunder to make available to such Issuing Bank



                                         -22-


             


             its  Adjusted  Percentage  of   any  Letter  of  Credit  or
             Acceptance  created thereunder  on  the date  required,  as
             specified above,  but no  Participant shall  be responsible
             for the failure of any other  Participant to make available
             to  such  Issuing Bank  such  other  Participant's Adjusted
             Percentage of any such payment.

                       (d)  Whenever any Issuing Bank receives a payment
             of a reimbursement obligation as  to which it has  received
             any  payments  from  the Participants  pursuant  to  clause
             (c) above, such Issuing Bank  shall pay to each Participant
             which has paid its  Adjusted Percentage thereof, in Dollars
             and  in  same   day  funds,   an  amount   equal  to   such
             Participant's share (based upon the proportionate aggregate
             amount  originally  funded  by   such  Participant  to  the
             aggregate amount funded by all Participants) of the princi-
             pal amount  of such  reimbursement obligation  and interest
             thereon accruing  after  the  purchase  of  the  respective
             participations.

                       (e)  Upon  the request  of any  Participant, each
             Issuing Bank  shall furnish  to such Participant  copies of
             any   Letter  of  Credit  issued  by   it  and  such  other
             documentation  as  may  reasonably  be  requested  by  such
             Participant.

                       (f)  The obligations of the Participants  to make
             payments to each  Issuing Bank with  respect to Letters  of
             Credit   and  Acceptances   issued   thereunder  shall   be
             irrevocable  and  not  subject  to  any  qualification   or
             exception whatsoever  and shall be made  in accordance with
             the  terms  and  conditions  of this  Agreement  under  all
             circumstances,  including, without  limitation, any  of the
             following circumstances:

                       (i)  any  lack of  validity or  enforceability of
                  this Agreement or any of the other Credit Documents;

                      (ii)  the existence of any claim,  setoff, defense
                  or other right  which the  Borrowers or  any of  their
                  Subsidiaries   may  have   at  any   time   against  a
                  beneficiary   named  in  a   Letter  of   Credit,  any
                  transferee of any  Letter of Credit (or any Person for
                  whom any such transferee may be acting), any holder of
                  an  Acceptance, the  Agent,  any  Participant, or  any
                  other   Person,  whether   in  connection   with  this
                  Agreement, any Letter  of Credit, any Acceptance,  the
                  transactions  contemplated  herein  or  any  unrelated
                  transactions  (including  any  underlying  transaction




                                         -23-


             


                  between any Borrower and  the beneficiary named in any
                  such Letter of Credit);

                     (iii)  any draft, certificate or any other document
                  presented  under any  Letter of  Credit proving  to be
                  forged, fraudulent,  invalid  or insufficient  in  any
                  respect  or  any  statement  therein  being untrue  or
                  inaccurate in any respect;

                      (iv)  the  surrender or impairment of any security
                  for the  performance or observance of any of the terms
                  of any of the Credit Documents; or

                       (v)  the  occurrence of any  Default or  Event of
                  Default.

                       2.05    Agreement  to   Repay  Letter  of  Credit
             Drawings  and  Acceptance  Payments.    (a)  The  Borrowers
             hereby  jointly  and  severally  agree   to  reimburse  the
             respective Issuing  Bank, by making payment to the Agent in
             immediately available funds at  the Payment Office, for any
             payment or disbursement made by such Issuing Bank under any
             Letter  of Credit  or  Acceptance created  thereunder (each
             such  amount,   so  paid   until  reimbursed,   an  "Unpaid
             Drawing"), immediately after,  and in any event on the date
             of  such  payment or  disbursement,  with  interest on  the
             amount  so paid or disbursed  by such Issuing  Bank, to the
             extent not  reimbursed prior to 12:00  Noon (New York time)
             on  the date  of  such payment  or  disbursement, from  and
             including the date  paid or disbursed to  but excluding the
             date  such Issuing  Bank  was reimbursed  by the  Borrowers
             therefor at a rate  per annum which shall be the  Base Rate
             in  effect from time to time plus the Applicable Margin for
             Base  Rate Loans,  provided,  however, to  the extent  such
             amounts are  not reimbursed  prior to 12:00  Noon (New York
             time) on the second Business Day following  such payment or
             disbursement,  interest  shall  thereafter  accrue  on  the
             amounts so  paid or  disbursed by  such  Issuing Bank  (and
             until  reimbursed by  the Borrowers)  at a  rate per  annum
             which  shall be the Base  Rate in effect  from time to time
             plus  the Applicable Margin for Base Rate Loans plus 2%, in
             each  such  case,  with  interest  to  be  payable  by  the
             Borrowers  on demand.   The  respective Issuing  Bank shall
             give the Borrowers prompt notice  of each Drawing under any
             Letter of  Credit or  payment under any  Acceptance created
             thereunder,  provided that  the  failure to  give any  such
             notice  shall in  no  way affect,  impair  or diminish  the
             Borrowers' obligations hereunder. 





                                         -24-


             


                       (b)  The  obligations of the Borrowers under this
             Section 2.05 to reimburse  the respective Issuing Bank with
             respect to drawings on Letters of Credit and payments under
             any  Acceptance  created  thereunder  (each,  a  "Drawing")
             (including interest thereon) shall be joint and several and
             shall  be  absolute and  unconditional  under  any and  all
             circumstances  and irrespective of any setoff, counterclaim
             or defense to payment  which any Borrower may have  or have
             had against any Bank (including  in its capacity as  issuer
             of  the  Letter  of  Credit  or  as  Participant),  or  any
             nonapplication  or misapplication by the beneficiary of the
             proceeds  of  such Drawing,  the respective  Issuing Bank's
             only obligation to the Borrowers being  to confirm that any
             documents  required to  be delivered  under such  Letter of
             Credit appear to  have been delivered and that  they appear
             to substantially comply on their face with the requirements
             of such  Letter of Credit.  Any  action taken or omitted to
             be  taken by any Issuing  Bank under or  in connection with
             any Letter  of Credit or any  Acceptance created thereunder
             if taken or omitted  in the absence of gross  negligence or
             willful misconduct, shall not  create for such Issuing Bank
             any resulting liability to the Borrowers.

                       2.06   Increased Costs.  If at any time after the
             date  of this Agreement, the  introduction of or any change
             in any applicable  law, rule, regulation, order,  guideline
             or  request or  in  the  interpretation  or  administration
             thereof by  any  governmental authority  charged  with  the
             interpretation or administration  thereof, or compliance by
             any Issuing  Bank or  any Participant  with any  request or
             directive by any such authority (whether  or not having the
             force  of  law),  or  any change  in  generally  acceptable
             accounting  principles, shall either  (i) impose, modify or
             make applicable any reserve,  deposit, capital adequacy  or
             similar  requirement against Letters  of Credit  issued, or
             Acceptances created, by any Issuing Bank or participated in
             by any Participant, or  (ii) impose on any Issuing  Bank or
             any Participant any other  conditions relating, directly or
             indirectly, to this Agreement, any  Letter of Credit or any
             Acceptance created thereunder; and the result of any of the
             foregoing  is to increase the  cost to any  Issuing Bank or
             any Participant of issuing, maintaining or participating in
             any Letter of Credit  or any Acceptance created thereunder,
             or reduce the amount  of any sum received or  receivable by
             any Issuing Bank or any Participant hereunder or reduce the
             rate  of return on its  capital with respect  to Letters of
             Credit  and  Acceptances  created  thereunder  (except  for
             changes in the rate  of tax on, or determined  by reference
             to, the net income or  net profits of such Issuing Bank  or
             such Participant,  or any franchise  tax based  on the  net



                                         -25-


             


             income  or  net profits  of  such Bank  or  Participant, in
             either  case pursuant to the  laws of the  United States of
             America, the  jurisdiction in which  it is organized  or in
             which its principal office  or applicable lending office is
             located or any subdivision thereof or therein), but without
             duplication of any amounts payable in respect of Taxes pur-
             suant  to  Section  4.04(a),   then,  upon  demand  to  the
             Borrowers by such  Issuing Bank or any  Participant (a copy
             of which demand shall be sent  by such Issuing Bank or such
             Participant to the Agent) and subject to the provisions  of
             Section 13.15  (to the  extent  applicable), the  Borrowers
             jointly  and severally agree to pay to such Issuing Bank or
             such Participant such additional  amount or amounts as will
             compensate such  Bank for such increased  cost or reduction
             in the amount receivable or reduction on the rate of return
             on  its capital.  Any Issuing Bank or any Participant, upon
             determining  that any  additional amounts  will be  payable
             pursuant  to this  Section 2.06,  will give  prompt written
             notice thereof to the Borrowers, which notice shall include
             a certificate  submitted to  the Borrowers by  such Issuing
             Bank or such Participant (a copy of which certificate shall
             be sent by  such Issuing  Bank or such  Participant to  the
             Agent), setting  forth in  reasonable detail the  basis for
             the  calculation  of  such  additional  amount  or  amounts
             necessary to compensate such  Issuing Bank or such Partici-
             pant.  The certificate required to be delivered pursuant to
             this  Section 2.06 shall,  if delivered  in good  faith and
             absent manifest error, be  final and conclusive and binding
             on the Borrowers.

                       SECTION 3.   Commitment Commission; Fees;  Reduc-
             tions of Commitment.

                       3.01  Fees.   (a)    The  Borrowers  jointly  and
             severally agree  to pay  to the  Agent for  distribution to
             each Non-Defaulting Bank with a Revolving Loan Commitment a
             commitment commission (the "Commitment Commission") for the
             period from the Initial Borrowing Date to but excluding the
             Final  Maturity Date  (or such  earlier date  as the  Total
             Revolving Loan Commitment shall have been terminated), com-
             puted at a rate for  each day equal to 1/2 of 1% (3/8 of 1%
             at  any time that the Reduction Percentage equals an amount
             other than zero)  per annum on the daily average Unutilized
             Revolving  Loan  Commitment  of such  Non-Defaulting  Bank.
             Accrued  Commitment Commission  shall  be  due and  payable
             quarterly in arrears on each Quarterly Payment Date and  on
             the Final Maturity Date or such earlier date upon which the
             Total Revolving Loan Commitment is terminated.





                                         -26-


             


                       (b)  The Borrowers jointly and severally agree to
             pay to the  Agent for  pro rata distribution  to each  Non-
             Defaulting Bank with a  Revolving Loan Commitment (based on
             their respective Adjusted Percentages)  a fee in respect of
             (x) each Letter of Credit issued hereunder (the  "Letter of
             Credit Fee"), for the period from and including the date of
             issuance of  such Letter  of Credit  to the termination  of
             such Letter of Credit,  computed at a rate per  annum equal
             to the Applicable Margin for Eurodollar Loans  as in effect
             from time to  time on  the daily average  Stated Amount  of
             such  Letter  of  Credit   and  (y)  each  Acceptance  (the
             "Acceptance  Fee") for  the period  from and  including the
             date of creation  of such Acceptance  to and including  the
             maturity  of such Acceptance, computed at  a rate per annum
             equal to the  Applicable Margin for Eurodollar Loans  as in
             effect from time to time on the daily average Stated Amount
             of  such Acceptance.   Accrued  Letter of  Credit Fees  and
             Acceptance  Fees  shall be  due  and  payable quarterly  in
             arrears on  each Quarterly Payment Date and  upon the first
             day on or after the termination of the Total Revolving Loan
             Commitment upon  which no Letters of  Credit or Acceptances
             remain outstanding. 

                       (c)  The Borrowers jointly and severally agree to
             pay  to the respective Issuing Bank, for its own account, a
             facing  fee in respect of (x) each Standby Letter of Credit
             issued  for its  account hereunder  (the "Letter  of Credit
             Facing  Fee") for the period from and including the date of
             issuance of  such Standby Letter of Credit to and including
             the termination of such  Standby Letter of Credit, computed
             at a rate equal to 1/4 of 1% per annum of the daily average
             Stated Amount  of such  Standby Letter of  Credit, provided
             that  in  any event  the minimum  amount  of the  Letter of
             Credit  Facing Fee payable in  any 12 month  period for any
             Standby Letter  of Credit  shall be  $500 (it  being agreed
             that,  on each anniversary  of the issuance  of any Standby
             Letter  of  Credit  or  upon  any  earlier  termination  or
             expiration of a Standby  Letter of Credit, if $500  exceeds
             the amount of Letter of Credit Facing Fees theretofore paid
             or  then  accrued with  respect to  such Standby  Letter of
             Credit,  in either  case  after the  date  of the  issuance
             thereof or, if later,  after the date of the  last anniver-
             sary  of the  issuance thereof  (but excluding  any amounts
             paid after such anniversary  with respect to periods ending
             on or prior to such anniversary, including, without limita-
             tion, as a result of the operation of this  parenthetical),
             the amount of such excess shall be payable on the next date
             upon  which  accrued  Letter  of  Credit  Facing  Fees  are
             otherwise payable with respect to Standby Letters of Credit
             as  provided  in  the  following  sentence)  and  (y)  each



                                         -27-


             


             Acceptance created by it  (the "Acceptance Facing Fee", and
             together with the Letter of Credit Facing Fees, the "Facing
             Fees")  for  the period  from  and  including the  date  of
             creation of  such Acceptance to and  including the maturity
             of such Acceptance, computed at  a rate equal to 1/4 of  1%
             per  annum  of the  daily  average  Stated  Amount of  such
             Acceptance.   Accrued Facing Fees  shall be due and payable
             quarterly in arrears on each  Quarterly Payment Date and on
             the date upon which the Total Revolving Loan Commitment has
             been terminated  and all Letters of  Credit and Acceptances
             have been terminated in accordance with their terms. 

                       (d)  The Borrowers jointly and severally agree to
             pay, upon each drawing under, issuance of, or  amendment to
             any Letter of  Credit, such amount as shall at  the time of
             such event  be the administrative  charge and out-of-pocket
             expenses  which the  respective Issuing  Bank is  generally
             imposing in connection with such occurrence with respect to
             letters of credit. 

                       (e)  The Borrowers jointly and severally agree to
             pay  to the Agent, for its  own account, such other fees as
             have been agreed  to in  writing by the  Borrowers and  the
             Agent.

                       3.02  Voluntary Termination of Unutilized Commit-
             ments.  (a)  Upon at least two  Business Days' prior notice
             from an  Authorized Representative of the  Borrowers to the
             Agent at  its Notice Office  (which notice the  Agent shall
             promptly  transmit to  each  of the  Banks), the  Borrowers
             shall have  the right, at  any time  or from time  to time,
             without  premium  or   penalty,  to  terminate   the  Total
             Unutilized Revolving Loan Commitment,  in whole or in part,
             in integral multiples of $1,000,000, provided that (i) each
             such reduction  shall apply proportionately  to permanently
             reduce the Revolving Loan Commitment of each Bank with such
             a Commitment and (ii) the reduction to the Total Unutilized
             Revolving  Loan Commitment shall in no case be in an amount
             which would cause the Revolving Loan Commitment of any Bank
             to be reduced (as  required by preceding clause (i))  by an
             amount which  exceeds the  remainder of (x)  the Unutilized
             Revolving Loan Commitment of such Bank as in effect immedi-
             ately before giving effect to such reduction minus (y) such
             Bank's  Adjusted  Percentage  of  the  aggregate  principal
             amount of Swingline Loans then outstanding.

                       (b)  In the  event of certain refusals  by a Bank
             as  provided  in Section  13.12(b)  to  consent to  certain
             proposed  changes, waivers, discharges or terminations with
             respect  to this Agreement which have  been approved by the



                                         -28-


             


             Required  Banks,  the  Borrowers   may,  subject  to  their
             compliance with the requirements of said Section  13.12(b),
             upon five Business Days' written notice to the Agent at its
             Notice  Office  (which  notice  the  Agent  shall  promptly
             transmit  to  each  of  the  Banks)  terminate  all of  the
             Revolving Loan  Commitment  of such  Bank  so long  as  all
             Revolving Loans, together with accrued and unpaid interest,
             Fees  and all other amounts, owing to such Bank (other than
             amounts owing  in  respect of  the  Tranche of  Term  Loans
             maintained by such Bank,  if such Term Loans are  not being
             repaid  pursuant to  Section 13.12(b))  are repaid  concur-
             rently with the effectiveness of such termination (at which
             time Schedule I  shall be deemed  modified to reflect  such
             changed amounts),  and at such time,  unless the respective
             Bank continues  to have  outstanding Term  Loans hereunder,
             such Bank shall  no longer constitute a "Bank" for purposes
             of this Agreement, except  with respect to indemnifications
             under  this  Agreement   (including,  without   limitation,
             Sections 1.10,  1.11, 2.06,  4.04, 13.01 and  13.06), which
             shall survive as to such repaid Bank.

                       3.03   Mandatory Reduction  of Commitments.   (a)
             The Total Commitment (and the Term Loan Commitment  and the
             Revolving Loan Commitment of  each Bank) shall terminate in
             its  entirety  on  November  30, 1994  unless  the  Initial
             Borrowing  Date shall  have occurred  on or  prior to  such
             date.

                       (b)  In addition  to any other  mandatory commit-
             ment reductions  pursuant to  this Section 3.03,  the Total
             Term Loan Commitment (and the Term  Loan Commitment of each
             Bank) shall  (i) terminate in  its entirety on  the Initial
             Borrowing  Date (after giving  effect to the  making of the
             Term  Loans on such date) and (ii) prior to the termination
             of  the Term  Loan  Commitment as  provided  in clause  (i)
             above,  be reduced from time to time to the extent required
             by Section 4.02.  

                       (c)  In  addition to any  other mandatory commit-
             ment reductions  pursuant to  this Section 3.03,  the Total
             Revolving Loan Commitment (and  the Revolving Loan  Commit-
             ment of each Bank)  shall terminate in its entirety  on the
             Final Maturity Date.

                       (d)     In  addition   to  any   other  mandatory
             commitment reductions  pursuant to  this  Section 3.03,  on
             each  date after  the Initial  Borrowing Date upon  which a
             mandatory  prepayment  of Term  Loans  pursuant  to any  of
             Sections 4.02(c), (d),  (e), (f), (g)  and (h) is  required
             (and exceeds  in amount  the aggregate principal  amount of



                                         -29-


             


             Term Loans  then outstanding) or would be  required if Term
             Loans  were  then  outstanding,  the  Total  Revolving Loan
             Commitment shall  be permanently reduced by  the amount, if
             any, by which the amount required to be applied pursuant to
             said Section (determined as if an unlimited amount  of Term
             Loans  were  actually  outstanding)  exceeds  the aggregate
             principal amount of Term Loans then outstanding.

                       (e)  Each  reduction  to  the  Total   Term  Loan
             Commitment and the Total Revolving Loan Commitment pursuant
             to this Section 3.03 (or pursuant to Section 4.02) shall be
             applied proportionately to reduce the  Term Loan Commitment
             or  the Revolving Loan Commitment,  as the case  may be, of
             each Bank with such a Commitment.

                       SECTION 4.  Prepayments; Payments; Taxes.

                       4.01  Voluntary Prepayments.  The Borrowers shall
             have the right to prepay the Loans, without premium or pen-
             alty, in whole or in part at any time and from time to time
             on the following  terms and conditions:   (i) an Authorized
             Representative of the Borrowers  shall give the Agent prior
             to 12:00 Noon  (New York time) at its  Notice Office (x) at
             least  one   Business  Day's   prior  written   notice  (or
             telephonic notice  promptly confirmed  in  writing) of  the
             Borrowers' intent  to prepay Base  Rate Loans (or  same day
             notice in the case of Swingline Loans  provided such notice
             is given prior  to 11:00 A.M.  (New York time)) and  (y) at
             least  three  Business  Days'   prior  written  notice  (or
             telephonic  notice promptly  confirmed  in writing)  of its
             intent  to prepay  Eurodollar  Loans,  whether Term  Loans,
             Revolving Loans  or Swingline  Loans shall be  prepaid, the
             amount of such prepayment and the Types of Loans to be pre-
             paid and,  in the  case of  Eurodollar Loans, the  specific
             Borrowing  or  Borrowings  pursuant  to  which made,  which
             notice  the Agent shall  promptly transmit  to each  of the
             Banks;  (ii)  each  prepayment  shall be  in  an  aggregate
             principal amount of at least $1,000,000 (or $500,000 in the
             case  of Swingline  Loans),  provided that  if any  partial
             prepayment  of  Eurodollar  Loans  made   pursuant  to  any
             Borrowing  shall reduce  the  outstanding Eurodollar  Loans
             made  pursuant to such Borrowing to an amount less than (1)
             in the case of  Term Loans, $5,000,000 and (2) in  the case
             of Revolving Loans, $1,000,000, then such Borrowing may not
             be  continued as a  Borrowing of  Eurodollar Loans  and any
             election of  an Interest Period with  respect thereto given
             by  the Borrowers shall have  no force or  effect; (iii) at
             the time of any prepayment  of Eurodollar Loans pursuant to
             this  Section 4.01 on  any date other than  the last day of
             the Interest Period applicable thereto, the Borrowers shall



                                         -30-


             


             pay  the amounts  required pursuant  to Section  1.11, (iv)
             each  prepayment in respect of any Loans made pursuant to a
             Borrowing shall, except as provided in clauses (v) and (vi)
             below, be applied  pro rata  among such Loans;  (v) in  the
             event  of  certain  refusals  by  a  Bank  as  provided  in
             Section 13.12(b)  to consent  to certain  proposed changes,
             waivers,  discharges or terminations  with respect  to this
             Agreement which  have been approved by  the Required Banks,
             the Borrowers may, upon  five Business Days' written notice
             by  an Authorized  Representative of  the Borrowers  to the
             Agent at  its Notice Office  (which notice the  Agent shall
             promptly transmit  to each of  the Banks) repay  all Loans,
             together with accrued and  unpaid interest, Fees, and other
             amounts  owing to  such Bank  (or owing  to such  Bank with
             respect  to each  Tranche which  gave rise  to the  need to
             obtain such Bank's individual consent) in accordance  with,
             and subject  to the requirements of,  said Section 13.12(b)
             so  long as (A) in  the case of  the repayment of Revolving
             Loans of any Bank pursuant to this clause (v) the Revolving
             Loan  Commitment of  such Bank  is  terminated concurrently
             with  such repayment  (at which  time Schedule  I shall  be
             deemed  modified  to  reflect the  changed  Revolving  Loan
             Commitments)  and   (B)  the  consents   required  by  Sec-
             tion 13.12(b) in connection with  the repayment pursuant to
             this clause (v)  have been obtained; (vi) at the Borrowers'
             election  in  connection with  any prepayment  of Revolving
             Loans,  such  prepayment  shall   not  be  applied  to  the
             prepayment  of Revolving  Loans  of a  Defaulting Bank  and
             (vii) an amount equal  to 50% of each voluntary  prepayment
             of Term  Loans pursuant  to this  Section 4.01  (other than
             pursuant to clause (v)  hereof) shall be applied  to reduce
             any then remaining Scheduled Repayments of Term Loans which
             will be  due and payable  within one year from  the date of
             such voluntary prepayment, with any remainder to be applied
             pro rata based upon the  then remaining amount of Scheduled
             Repayments of Term Loans after  giving effect to all  prior
             reductions thereto.

                       4.02           Mandatory     Repayments,     Cash
             Collateralizations  and Commitment  Reductions.   (a)(i) On
             any  day on  which  the sum  of  the aggregate  outstanding
             principal  amount  of  the  Revolving Loans  made  by  Non-
             Defaulting Banks, Swingline Loans  and the Letter of Credit
             Outstandings exceeds the Adjusted Total Available Revolving
             Loan Commitment  as then  in effect, the  Borrowers jointly
             and severally agree to  prepay principal of Swingline Loans
             and, after  the Swingline Loans  have been repaid  in full,
             Revolving Loans of Non-Defaulting  Banks in an amount equal
             to  such excess.  If, after giving effect to the prepayment
             of all  outstanding Swingline Loans and  Revolving Loans of



                                         -31-


             


             Non-Defaulting Banks, the aggregate amount of the Letter of
             Credit  Outstandings exceeds  the Adjusted  Total Available
             Revolving Loan Commitment as  then in effect, the Borrowers
             jointly  and severally  agree to  pay to  the Agent  at the
             Payment  Office  on such  date an  amount  of cash  or Cash
             Equivalents equal to  the amount  of such excess  (up to  a
             maximum amount  equal to the Letter  of Credit Outstandings
             at such time),  such cash or Cash Equivalents to be held as
             security  for  all obligations  of  the  Borrowers to  Non-
             Defaulting Banks hereunder in  a cash collateral account to
             be established by the Agent.

                      (ii)     On  any   day  on  which   the  aggregate
             outstanding principal amount of the Revolving Loans made by
             any Defaulting  Bank exceeds the Revolving  Loan Commitment
             of  such   Defaulting  Bank,  the   Borrowers  jointly  and
             severally shall prepay principal of Revolving Loans of such
             Defaulting Bank in an amount equal to such excess.

                       (b)     In  addition   to  any  other   mandatory
             repayments  or  commitment  reductions  pursuant   to  this
             Section 4.02, on each  date set forth below,  the Borrowers
             jointly  and  severally shall  be  required  to repay  that
             principal  amount  of  Term   Loans,  to  the  extent  then
             outstanding, as is  set forth opposite such date (each such
             repayment,  as  the same  may  be  reduced as  provided  in
             Sections   4.01   and   4.02(i)  and   (j),   a  "Scheduled
             Repayment"):

                  Scheduled Repayment Date                    Amount

             Last Business Day in March, 1995             $ 7,500,000
             Last Business Day in September, 1995         $ 7,500,000
             Last Business Day in March, 1996             $10,000,000
             Last Business Day in September, 1996         $10,000,000
             Last Business Day in March, 1997             $15,000,000
             Last Business Day in September, 1997         $15,000,000
             Last Business Day in March, 1998             $20,000,000
             Last Business Day in September, 1998         $20,000,000
             Last Business Day in March, 1999             $25,000,000
             Last Business Day in September, 1999         $25,000,000
             Last Business Day in March, 2000             $32,500,000
             Last Business Day in September, 2000         $32,500,000
             Last Business Day in March, 2001             $32,500,000
             Final Maturity Date                          $32,500,000

                       (c)  In  addition to  any other  mandatory repay-
             ments  or commitment  reductions pursuant  to  this Section
             4.02,  on  each date  after the  Effective Date  upon which
             INTERCO or any of  its Restricted Subsidiaries receives any



                                         -32-


             


             proceeds  from   any  sale   or  issuance  of   its  equity
             (including,  without  limitation,  proceeds  received  from
             Preferred Stock  but excluding  (i) proceeds  received from
             the  issuance of shares of INTERCO Common Stock as a result
             of the exercise of options issued pursuant to  the Employee
             Stock  Option  Plan,  to  the  extent  that  the  aggregate
             proceeds excluded do not exceed the Excluded Option Amount,
             (ii)  proceeds  received  from   any  exercise  of  INTERCO
             Warrants,  (iii) proceeds  received  from the  issuance  of
             shares of INTERCO Common Stock or Qualified Preferred Stock
             as   payment  of  consideration  pursuant  to  a  Permitted
             Acquisition  or  as consideration  in  connection  with the
             creation,  acquisition or  Investment  in  an  Unrestricted
             Subsidiary (to the extent INTERCO does not receive any cash
             proceeds  from the  issuance thereof),  (iv) any  amount of
             equity  proceeds actually used, at  the time of the receipt
             thereof,  to make  Guaranty  Payments  pursuant to  Section
             9.11(b)(ii)(y)(C),  (v)  any  amount  of   equity  proceeds
             actually used as described in the second paragraph of  this
             Section 4.02(c) and (vi) so long  as no Default or Event of
             Default then exists (x) proceeds of  Disqualified Preferred
             Stock  issued pursuant  to Section  9.13(b)(iii) which  are
             used to repay or otherwise replace the Receivables Facility
             on or after the date which is four and one-half years after
             the  Initial  Borrowing  Date,  (y) up  to  $50,000,000  of
             proceeds  received   from  the  issuance   of  Disqualified
             Preferred Stock pursuant to  Section 9.13(b)(i), minus  the
             aggregate  principal  amount   of  Permitted   Subordinated
             Indebtedness  incurred  on  or prior  to  the  date  of the
             issuance of  such Disqualified Preferred  Stock pursuant to
             Section 9.04(ii)(x) and  not required to  be used to  repay
             Term  Loans  as a  result of  clause  (x)(ii) of  the first
             parenthetical of  Section 4.02(e),  to the extent  all such
             proceeds from  the issuance of Disqualified Preferred Stock
             and incurrence  of Permitted Subordinated  Indebtedness are
             or were used to effect Permitted Acquisitions so long as an
             Authorized Representative of the Borrowers has delivered  a
             certificate to the Agent  on or prior to such  date stating
             that  such proceeds shall be  committed to be  used to make
             Permitted Acquisitions within six months following the date
             of such  issuance of  Disqualified Preferred Stock,  and so
             long as  such proceeds are so  used in such time  frame, it
             being understood and agreed that any amount of proceeds not
             so used within such time frame shall at the end of such six
             month  period  be  required  to  be  applied  as  otherwise
             provided  in this clause (c)  and (z) up  to $25,000,000 of
             proceeds of Disqualified Preferred Stock issued pursuant to
             Section  9.13(b)(ii), minus the  aggregate principal amount
             of Permitted Unsecured Indebtedness incurred on or prior to
             such  date of  issuance pursuant  to Section  9.04(iii)) an



                                         -33-


             


             amount equal to 50%  (or 100% (x) with respect  to proceeds
             of  Disqualified  Preferred  Stock not  otherwise  excluded
             above and (y)  for any  period from and  after any  Trigger
             Date to and including the Trigger Termination Date relating
             thereto) of the Net Cash Proceeds of the respective sale or
             issuance  shall  be applied  as  a  mandatory repayment  of
             principal  of outstanding  Term Loans  (or, if  the Initial
             Borrowing Date has not yet  occurred, such amounts shall be
             applied  as a mandatory  reduction to  the Total  Term Loan
             Commitment) in accordance with  the requirements of Section
             4.02(i) and (j).

                       Notwithstanding the foregoing  paragraph, on  any
             date on which INTERCO or any of its Restricted Subsidiaries
             receives  proceeds from any sale or issuance of equity, and
             INTERCO, either (i)  pays amounts then  due and payable  in
             respect of  the Converse  Tax Liability  or (ii)  elects (a
             "Deferred Payment Election") to  pay amounts due in respect
             of  the  Converse Tax  Liability  as  same become  payable,
             INTERCO may  retain such proceeds subject  to the remaining
             provisions of this paragraph,  provided, that to the extent
             the  proceeds  from any  such sale  or issuance  exceed the
             Anticipated  Deferred Payment  Amount  as specified  in the
             respective Deferred Payment Notice,  then such excess shall
             be treated as proceeds of the issuance or sale of equity of
             INTERCO  and/or  its  Restricted  Subsidiaries  immediately
             subject  to  the  repayment   requirements  of  the   first
             paragraph of  this Section  4.02(c) without regard  to this
             second  paragraph.    INTERCO  may  exercise  its  Deferred
             Payment Election  (within the parameters  specified in this
             paragraph) with respect to an issuance or sale of equity of
             INTERCO  and/or  its  Restricted  Subsidiaries  if  (x)  no
             Default  or Event of Default exists on the date of delivery
             of the Deferred  Payment Notice referred  to in clause  (z)
             below, (y)  INTERCO  effects any  prepayment  of  Revolving
             Loans  (and  cash  collateralization of  Letter  of  Credit
             Outstandings) that  may be required after  giving effect to
             such Deferred Payment Notice and the resultant increase, if
             any,  in the  Blocked  Amount and  (z)  INTERCO delivers  a
             Deferred Payment Notice  to the Agent  on the Business  Day
             following the  date of  the consummation of  the respective
             issuance  or sale  of  equity, with  such Deferred  Payment
             Election being  effective with  respect to the  proceeds of
             such  issuance or  sale  of equity  to  the extent  of  the
             Anticipated  Deferred  Payment  Amount  specified  in  such
             Deferred   Payment  Notice.     On  the   Deferred  Payment
             Prepayment  Date  with   respect  to  a  Deferred   Payment
             Election, an amount equal to any remaining Deferred Payment
             Prepayment Amount which  gave rise  to an  increase in  the
             Blocked Amount, if any,  for such Deferred Payment Election



                                         -34-


             


             shall  be  applied to  the  prepayment  of the  outstanding
             principal  of  the  Term Loans  as  required  by  the first
             paragraph of this Section 4.02(c).  

                       (d)    In   addition  to   any  other   mandatory
             repayments  or  commitment  reductions  pursuant   to  this
             Section 4.02, on  each date  after the Effective  Date upon
             which INTERCO  receives any  proceeds from the  exercise of
             the INTERCO Warrants, an  amount equal to 25% (or  100% for
             any period from and after any Trigger Date to and including
             the Trigger  Termination Date relating thereto)  of the Net
             Cash Proceeds of such exercise shall be applied as a manda-
             tory repayment of principal  of outstanding Term Loans (or,
             if the  Initial Borrowing Date  has not yet  occurred, such
             amount shall  be applied  as a mandatory  reduction to  the
             Total  Term   Loan  Commitment)  in   accordance  with  the
             requirements of Section 4.02(i) and (j).

                       (e)   In addition  to any other  mandatory repay-
             ments  or commitment  reductions pursuant  to  this Section
             4.02,  on each  date after  the Effective  Date upon  which
             INTERCO or any of  its Restricted Subsidiaries receives any
             proceeds  from any  incurrence  by INTERCO  or  any of  its
             Restricted Subsidiaries of Indebtedness for  borrowed money
             ((x)  including  Permitted  Subordinated Indebtedness,  but
             excluding, so long as  no Default or Event of  Default then
             exists (i) an amount of Permitted Subordinated Indebtedness
             incurred and  simultaneously  used to  repay, refinance  or
             otherwise replace the Receivables  Facility on or after the
             date which  is four  and one-half  years after  the Initial
             Borrowing  Date and  (ii)  up to  $50,000,000 of  Permitted
             Subordinated  Indebtedness  issued   pursuant  to   Section
             9.04(ii)(x),  less  the  aggregate  amount  of Disqualified
             Preferred  Stock  issued on  or prior  to  the date  of the
             incurrence  of  such  Permitted  Subordinated  Indebtedness
             pursuant to  Section 9.13(b)(i)  and not required  to repay
             Term  Loans  as  a  result  of  clause  (vi)(y)  of Section
             4.02(c), to the extent  such proceeds of the incurrence  of
             Permitted   Subordinated   Indebtedness  and   issuance  of
             Disqualified  Preferred Stock  are or  were used  to effect
             Permitted   Acquisitions   so   long   as   an   Authorized
             Representative of the Borrowers has delivered a certificate
             to the Agent  on or prior  to such  date stating that  such
             proceeds  shall  be  committed  to be  used  to  make  such
             Permitted Acquisitions within six months following the date
             of  such incurrence of Permitted Subordinated Indebtedness,
             and  so long as such proceeds are  so used within such time
             frame, it  being understood and  agreed that any  amount of
             proceeds  not so used within  such time frame  shall at the
             end of  such six month period be  required to be applied as



                                         -35-


             


             otherwise  provided  in  this  clause  (e),  (y)  including
             Attributed   Receivables  Facility   Indebtedness  incurred
             pursuant  to the  Receivables Facility  which in  aggregate
             principal  amount exceeds  $150,000,000 outstanding  at any
             time (but  excluding other Attributed  Receivables Facility
             Indebtedness) and  (z) excluding any other Indebtedness for
             borrowed money permitted to be incurred pursuant to Section
             9.04 (excluding, however, clauses (ii) and (xi) thereof) as
             such Section  is  in effect  on  the Effective  Date)),  an
             amount  equal to  100%  of the  Net  Cash Proceeds  of  the
             respective incurrence of Indebtedness shall be applied as a
             mandatory repayment of principal of  outstanding Term Loans
             (or, if the  Initial Borrowing Date  has not yet  occurred,
             such  amounts shall be applied as  a mandatory reduction to
             the  Total Term  Loan  Commitment) in  accordance with  the
             requirements of Section 4.02(i) and (j).

                       (f)  In  addition to  any other  mandatory repay-
             ments  or  commitment reductions  pursuant to  this Section
             4.02, on  each date  after the  Effective  Date upon  which
             INTERCO or  any of its Restricted  Subsidiaries (other than
             the Receivables Subsidiary) receives proceeds from any sale
             or other disposition of assets (including capital stock and
             securities  held  thereby,  but   excluding  (i)  sales  or
             transfers of inventory in  the ordinary course of business,
             (ii)  sales or transfers of assets with a fair market value
             less  than (A) $100,000 per such sale or disposition (or in
             a  series of  related sales or  dispositions) and  (B) with
             respect to any sale  or transfer in an amount  in excess of
             the amount referred  to in clause (A)  above, $1,000,000 in
             the aggregate for  all such transfers  in any Fiscal  Year,
             (iii) sales  or transfers  of assets permitted  pursuant to
             Sections 9.02  (v)  and (vi)  and  (iv) sales  of  Excluded
             Assets,  the  Net Sales  Proceeds  of which  do  not exceed
             $15,000,000),  an amount  equal  to 80%  (or  100% for  any
             period from and after any Trigger Date to and including any
             Trigger Termination  Date related thereto) of  the Net Sale
             Proceeds  therefrom   shall  be  applied  as   a  mandatory
             repayment of  principal of  outstanding Term Loans  (or, if
             the  Initial  Borrowing Date  has  not  yet occurred,  such
             amounts shall  be applied as  a mandatory reduction  to the
             Total Term Loan Commitment) in accordance with the require-
             ments of Sections 4.02(i) and (j).

                       (g)  In  addition to  any other  mandatory repay-
             ments pursuant to  this Section 4.02,  on each Excess  Cash
             Flow Payment Date, an  amount equal to 50% (or 100% for any
             period from and after any Trigger Date to and including the
             Trigger Termination  Date  related thereto)  of the  Excess
             Cash Flow for the relevant Excess Cash Flow  Payment Period



                                         -36-


             


             shall be  applied as a mandatory repayment  of principal of
             outstanding Term Loans in accordance with the  requirements
             of Sections 4.02(i) and (j).

                       (h)    In   addition  to   any  other   mandatory
             repayments  or  commitment  reductions  pursuant   to  this
             Section 4.02, within  10 days following each date after the
             Effective Date  on which INTERCO  or any of  its Restricted
             Subsidiaries receives any proceeds from any Recovery  Event
             (other than proceeds from Recovery Events in an amount less
             than (A)  $100,000 per  each Recovery  Event  and (B)  with
             respect to  any Recovery Event  with proceeds in  excess of
             the amount referred to  in clause (A) above,  $1,000,000 in
             the aggregate  for all such  Recovery Events in  any Fiscal
             Year),  an amount  equal to  100% of  the proceeds  of such
             Recovery Event (net of reasonable costs including,  without
             limitation, legal costs and expenses, and taxes incurred in
             connection with such Recovery Event) shall be  applied as a
             mandatory repayment of principal of  outstanding Term Loans
             (or, if  the Initial Borrowing  Date has not  yet occurred,
             such amounts shall  be applied as a  mandatory reduction to
             the  Total  Term Loan  Commitment  in  accordance with  the
             requirements of  Sections 4.02(i) and  (j)), provided  that
             (x) so long as no  Default or Event of Default  then exists
             and such  proceeds do not exceed  $5,000,000, such proceeds
             shall not be required to be  so applied on such date to the
             extent that an Authorized  Representative of the  Borrowers
             has delivered a  certificate to  the Agent on  or prior  to
             such date stating that such proceeds shall be used or shall
             be  committed  to  be  used   to  replace  or  restore  any
             properties or assets in respect of which such proceeds were
             paid within  one year following  the date of  such Recovery
             Event (which  certificate shall set forth  the estimates of
             the  proceeds to  be so  expended)  and (y)  so long  as no
             Default or Event of  Default then exists and to  the extent
             that (a)  the amount  of such proceeds  exceeds $5,000,000,
             (b) the  amount of such proceeds, together  with other cash
             available  to the  Borrowers and  permitted to be  spent by
             them   or   their   Restricted   Subsidiaries   on  Capital
             Expenditures  during  the   relevant  period  pursuant   to
             Section 9.07, equals at least 100% of the cost  of replace-
             ment  or restoration of the properties or assets in respect
             of  which  such proceeds  were  paid as  determined  by the
             Borrowers and as  supported by such estimates  or bids from
             contractors  or  subcontractors  or  such  other supporting
             information  as the  Agent may  reasonably request,  (c) an
             Authorized Representative of the Borrower  has delivered to
             the  Agent  a  certificate on  or  prior  to  the date  the
             application  would otherwise be  required pursuant  to this
             Section  4.02(h) in the form described  in clause (x) above



                                         -37-


             


             and  also  certifying  its  determination  as  required  by
             preceding  clause (b)  and  certifying the  sufficiency  of
             business  interruption insurance as  required by succeeding
             clause  (d), and  (d) an  Authorized Representative  of the
             Borrower has  delivered to the  Agent such evidence  as the
             Agent may reasonably request  in form and substance reason-
             ably satisfactory  to the Agent establishing  that the Bor-
             rowers have sufficient  business interruption insurance and
             that the Borrowers will  receive payment thereunder in such
             amounts and at such  times as are necessary to  satisfy all
             obligations  and  expenses  of  the  Borrowers  (including,
             without   limitation,   all   debt  service   requirements,
             including pursuant to this  Agreement) without any delay or
             extension  thereof, for  the  period from  the date  of the
             respective casualty,  condemnation  or other  event  giving
             rise  to  the Recovery  Event  and  continuing through  the
             completion of the replacement  or restoration of respective
             properties  or  assets,  then  the  entire  amount  of  the
             proceeds of such Recovery Event and not just the portion in
             excess  of $5,000,000  shall  be deposited  with the  Agent
             pursuant  to  a  cash  collateral   arrangement  reasonably
             satisfactory to  the Agent  whereby such proceeds  shall be
             disbursed to the Borrowers  from time to time as  needed to
             pay  actual costs incurred  by them in  connection with the
             replacement  or restoration of the respective properties or
             assets (pursuant to such certification  requirements as may
             be established by the Agent), provided further  that at any
             time  while an Event of Default has occurred and is contin-
             uing,  the Required  Banks may  direct the Agent  (in which
             case  the Agent shall, and is hereby authorized by the Bor-
             rowers to, follow said directions) to apply any or all pro-
             ceeds then on deposit in such collateral account to the re-
             payment of Obligations hereunder in the same manner as pro-
             ceeds would be applied  pursuant to the Security Agreement,
             and  provided further, that if  all or any  portion of such
             proceeds  not required to  be applied  to the  repayment of
             Term  Loans  pursuant  to  the  second  preceding   proviso
             (whether pursuant  to clause (x) or (y) thereof) are either
             (A) not  so used or committed to be so used within one year
             after the date of  the respective Recovery Event or  (B) if
             committed  to be  used within  one year  after the  date of
             receipt of such Net Sale Proceeds and not so used within 18
             months after the date of respective Recovery Event then, in
             either such case,  such remaining portion not  used or com-
             mitted to be  used in the case of  preceding clause (A) and
             not  used  in the  case of  preceding  clause (B)  shall be
             applied on the date  which is the first anniversary  of the
             date of the respective Recovery Event in the case of clause
             (A) above or the date occurring 18 months after the date of
             the respective  Recovery Event in  the case  of clause  (B)



                                         -38-


             


             above as a mandatory  repayment of principal of outstanding
             Term Loans in accordance  with the requirements of Sections
             4.02(i) and (j).

                       (i)   Any amount required  to be applied  to Term
             Loans pursuant  to this  Section 4.02 shall  be applied  to
             reduce the  then  remaining Scheduled  Repayments pro  rata
             based  upon   the  then   remaining  amount   of  Scheduled
             Repayments  after giving  effect  to all  prior  reductions
             thereto.

                       (j)  With respect to each repayment  of Loans re-
             quired by  this Section  4.02, the Borrowers  may designate
             the Types of Loans  of the respective Tranche which  are to
             be repaid and, in  the case of Eurodollar Loans,  the spec-
             ific Borrowing or Borrowings of the respective Tranche pur-
             suant  to which  made, provided  that:   (i) repayments  of
             Eurodollar Loans pursuant to this Section 4.02  may only be
             made  on  the last  day  of an  Interest  Period applicable
             thereto  unless all  Eurodollar  Loans  of  the  respective
             Tranche with  Interest Periods ending  on such date  of re-
             quired repayment and all Base Rate  Loans of the respective
             Tranche  have been paid in  full; (ii) if  any repayment of
             Eurodollar Loans made pursuant  to a single Borrowing shall
             reduce  the outstanding  Eurodollar Loans made  pursuant to
             such Borrowing  to an amount less  than (x) in the  case of
             Term  Loans, $5,000,000 and  (y) in  the case  of Revolving
             Loans, $1,000,000, such Borrowing shall be converted at the
             end of the then current Interest Period into a Borrowing of
             Base Rate Loans; and (iii) each repayment of any Loans made
             pursuant  to  a Borrowing  shall,  except as  set  forth in
             Section  4.02(a), be applied pro rata among such Loans.  In
             the  absence of a designation by the Borrowers as described
             in the preceding  sentence, the Agent shall, subject to the
             above, make such designation in  its sole discretion with a
             view, but  no obligation, to minimize  breakage costs owing
             under Section 1.11.

                       (k)  Notwithstanding  anything  to  the  contrary
             contained elsewhere  in this  Agreement, (i) all  then out-
             standing Swingline  Loans shall be  repaid in  full on  the
             Swingline Expiry  Date and (ii) all  other then outstanding
             Loans shall be repaid in full on the Final Maturity Date.

                       4.03   Method and  Place of  Payment.   Except as
             otherwise  specifically provided herein, all payments under
             this  Agreement or any Note shall be  made to the Agent for
             the account of the Bank or Banks entitled thereto not later
             than  12:00 Noon (New  York time) on the  date when due and
             shall be made in Dollars in immediately available  funds at



                                         -39-


             


             the  Payment Office of the Agent.  Any payments received by
             the  Agent after  such time  shall be  deemed to  have been
             received on the next Business Day.  Whenever any payment to
             be made hereunder  or under any Note shall be  stated to be
             due on  a day  which is  not a Business  Day, the  due date
             thereof shall  be extended to the  next succeeding Business
             Day and,  with respect  to payments of  principal, interest
             shall be payable at the  applicable rate during such exten-
             sion.

                       4.04   Net Payments.   (a)  All  payments made by
             the  Borrowers hereunder  or under  any Note  will be  made
             without setoff,  counterclaim or other defense.   Except as
             provided in Section 4.04(b), all such payments will be made
             free  and clear  of, and  without deduction  or withholding
             for, any present or  future taxes, levies, imposts, duties,
             fees, assessments  or other charges of  whatever nature now
             or  hereafter imposed by  any jurisdiction or  by any poli-
             tical subdivision or  taxing authority  thereof or  therein
             with  respect to  such payments  (but excluding,  except as
             provided in the second succeeding sentence, any tax imposed
             on  or measured by the net income  or net profits of a Bank
             pursuant to the  laws of  the jurisdiction in  which it  is
             organized or the jurisdiction in which the principal office
             or applicable lending office of such Bank is located or any
             subdivision thereof or therein) and all interest, penalties
             or similar liabilities with  respect thereto (all such non-
             excluded  taxes, levies, imports, duties, fees, assessments
             or  other   charges  being  referred  to   collectively  as
             "Taxes").    If any  Taxes are  so  levied or  imposed, the
             Borrowers  jointly  and severally  agree  to  pay the  full
             amount of such Taxes, and such additional amounts as may be
             necessary  so that every  payment of all  amounts due under
             this  Agreement or  under  any Note,  after withholding  or
             deduction for  or on account of any Taxes, will not be less
             than the amount provided  for herein or in  such Note.   If
             any amounts are payable in respect of Taxes pursuant to the
             preceding sentence,  the Borrowers agree to  reimburse each
             Bank,  upon the  written request  of such  Bank, for  taxes
             imposed  on or measured by the net income or net profits of
             such Bank pursuant to the laws of the jurisdiction in which
             the principal  office or applicable lending  office of such
             Bank is located or under the laws of any political subdivi-
             sion or taxing authority of  any such jurisdiction in which
             the principal  office or applicable lending  office of such
             Bank  is located  and  for  any  withholding of  income  or
             similar taxes  imposed by the  United States of  America as
             such Bank shall determine are payable by, or withheld from,
             such Bank  in  respect of  such amounts  so paid  to or  on
             behalf of such Bank pursuant to the preceding  sentence and



                                         -40-


             


             in respect of any amounts paid to or on behalf of such Bank
             pursuant to this sentence.   The Borrowers will furnish  to
             the Agent within 45  days after the date the payment of any
             Taxes is due pursuant to applicable law certified copies of
             tax receipts evidencing such payment by the Borrowers.  The
             Borrowers jointly and severally agree to indemnify and hold
             harmless  each  Bank,  and  reimburse such  Bank  upon  its
             written request, for the  amount of any Taxes so  levied or
             imposed and paid by such Bank.

                       (b)  Each Bank that is not a United States person
             (as  such term  is defined  in Section  7701(a)(30) of  the
             Code) agrees to deliver  to the Borrowers and the  Agent on
             or prior  to the Effective Date,  or in the case  of a Bank
             that is an assignee or transferee of an interest under this
             Agreement  pursuant to  Section 1.13  or 13.04  (unless the
             respective Bank  was already  a Bank  hereunder immediately
             prior  to such assignment or transfer), on the date of such
             assignment or  transfer to such Bank,  (i) two accurate and
             complete original signed copies of Internal Revenue Service
             Form 4224 or  1001 (or successor forms)  certifying to such
             Bank's  entitlement to  a  complete  exemption from  United
             States withholding tax with respect to payments to  be made
             under this  Agreement and  under any Note,  or (ii) if  the
             Bank  is  not  a  "bank"  within  the  meaning  of  Section
             881(c)(3)(A) of the Code and cannot deliver either Internal
             Revenue  Service Form 1001  or 4224 pursuant  to clause (i)
             above,  (x) a  certificate  substantially  in  the form  of
             Exhibit  D (any  such certificate,  a "Section  4.04(b)(ii)
             Certificate")  and (y) two  accurate and  complete original
             signed  copies of  Internal  Revenue Service  Form W-8  (or
             successor form) certifying to  such Bank's entitlement to a
             complete exemption from United States  withholding tax with
             respect  to  payments of  interest  to be  made  under this
             Agreement  and under  any  Note.   In  addition, each  Bank
             agrees  that from time  to time  after the  Effective Date,
             when a lapse in time or change in circumstances renders the
             previous  certification  obsolete   or  inaccurate  in  any
             material respect, it will deliver  to the Borrowers and the
             Agent two new accurate  and complete original signed copies
             of  Internal Revenue Service Form 4224 or 1001, or Form W-8
             and  a Section 4.04(b)(ii) Certificate, as the case may be,
             and such other forms as may be required in order to confirm
             or establish  the entitlement of  such Bank to  a continued
             exemption from  or reduction  in United  States withholding
             tax with  respect to payments under this  Agreement and any
             Note, or  it shall immediately notify the Borrowers and the
             Agent  of  its  inability  to  deliver  any  such  Form  or
             Certificate.  Notwithstanding  anything  to   the  contrary
             contained  in  Section  4.04(a),  but  subject  to  Section



                                         -41-


             


             13.04(b) and the  immediately succeeding sentence,  (x) the
             Borrowers  shall  be  entitled,  to  the  extent  they  are
             required  to do so by law, to  deduct or withhold income or
             similar  taxes  imposed  by   the  United  States  (or  any
             political  subdivision  or   taxing  authority  thereof  or
             therein)  from interest,  fees  or  other  amounts  payable
             hereunder for the account of any Bank which is not a United
             States  person   (as  such  term  is   defined  in  Section
             7701(a)(30)  of  the  Code)  for U.S.  Federal  income  tax
             purposes to the extent  that such Bank has not  provided to
             the  Borrowers  U.S. Internal  Revenue  Service Forms  that
             establish  a  complete  exemption  from such  deduction  or
             withholding and  (y) the Borrowers  shall not be  obligated
             pursuant to Section 4.04(a)  hereof to gross-up payments to
             be made  to a Bank  in respect  of income or  similar taxes
             imposed  by  the United  States if  (I)  such Bank  has not
             provided  to the  Borrowers  the  Internal Revenue  Service
             Forms required to be provided to the  Borrowers pursuant to
             this  Section 4.04(b)  or (II)  in the  case of  a payment,
             other  than interest,  to a  Bank described in  clause (ii)
             above, to the  extent that  such forms do  not establish  a
             complete   exemption  from   withholding  of   such  taxes.
             Notwithstanding anything  to the contrary  contained in the
             preceding sentence  or elsewhere  in this Section  4.04 and
             except  as set  forth  in Section  13.04(b), the  Borrowers
             agree to pay additional amounts  and to indemnify each Bank
             in the manner set forth in Section  4.04(a) (without regard
             to the identity of the jurisdiction requiring the deduction
             or withholding) in respect of any amounts deducted or with-
             held by it  as described in the  immediately preceding sen-
             tence as a result  of any changes after the  Effective Date
             in   any  applicable   law,   treaty,  governmental   rule,
             regulation, guideline or  order, or  in the  interpretation
             thereof, relating to the deducting or withholding of income
             or similar Taxes.

                       (c)   The  provisions  of this  Section 4.04  are
             subject to the provisions  of Section 13.15 (to the  extent
             applicable).

                       SECTION  5.    Conditions  Precedent  to  Initial
             Credit  Events.  The obligation of each Bank to make Loans,
             and the obligation of each Issuing Bank to issue Letters of
             Credit, on  the Initial Borrowing  Date, is subject  at the
             time of the making  of such Loans  or the issuance of  such
             Letters  of Credit  to  the satisfaction  of the  following
             conditions:

                       5.01  Execution of Agreement; Notes.  On or prior
             to the Initial Borrowing Date (i) the Effective  Date shall



                                         -42-


             


             have occurred  and (ii) there shall have  been delivered to
             the Agent for the account  of each of the Banks  the appro-
             priate  Term Note  and/or  Revolving Note  executed by  the
             Borrowers, and to BTCo  the Swingline Note executed  by the
             Borrowers,  in each  case  in the  amount, maturity  and as
             otherwise provided herein.

                       5.02  Fees, etc.   On the Initial Borrowing Date,
             the  Borrowers shall have paid  to the Agent  and the Banks
             all   costs,  fees   and   expenses   (including,   without
             limitation, legal  fees and expenses) payable  to the Agent
             and the Banks to the extent then due.

                       5.03  Opinions  of Counsel.   On the Initial Bor-
             rowing  Date, the Agent  shall have received  (i) from Lynn
             Chipperfield,  Esq., General  Counsel  to INTERCO  and  its
             Restricted Subsidiaries, an opinion  addressed to the Agent
             and  each of the Banks and dated the Initial Borrowing Date
             covering the matters  set forth in  Exhibit E-1, (ii)  from
             Bryan Cave,  special counsel to INTERCO  and its Restricted
             Subsidiaries, an opinion addressed to the Agent and each of
             the Banks and dated the Initial Borrowing Date covering the
             matters  set forth  in  Exhibit E-2  and  (iii) from  local
             counsel satisfactory  to the Agent, opinions  each of which
             shall be  in form and substance  reasonably satisfactory to
             the Agent and the  Required Banks and shall cover  the per-
             fection of  the security interests granted  pursuant to the
             Security Agreement and the Mortgages and such other matters
             incident  to the  transactions contemplated  herein as  the
             Agent may reasonably request.

                       5.04  Corporate Documents; Proceedings; etc.  (a)
             On  the  Initial  Borrowing  Date,  the  Agent  shall  have
             received a certificate, dated  the Initial Borrowing  Date,
             signed by  the Chairman or an  Authorized Representative of
             each  Credit Party, and attested to by the Secretary or any
             Assistant Secretary of  such Credit Party,  in the form  of
             Exhibit  F with  appropriate  modifications, together  with
             copies of  the Certificate of Incorporation  and By-Laws of
             such Credit Party and the resolutions  of such Credit Party
             referred to in such certificate, and the foregoing shall be
             reasonably acceptable to the Agent.

                       (b)  All corporate and  legal proceedings and all
             instruments and agreements in  connection with the transac-
             tions contemplated  by this  Agreement and the  other Docu-
             ments  shall  be   reasonably  satisfactory  in  form   and
             substance  to the  Agent and  the Required  Banks, and  the
             Agent shall have received all information and copies of all
             documents  and  papers,   including  records  of  corporate



                                         -43-


             


             proceedings,   governmental    approvals,   good   standing
             certificates  and bring-down  telegrams  or facsimiles,  if
             any, which the Agent reasonably  may have requested in con-
             nection therewith, such  documents and papers  where appro-
             priate to be certified  by proper corporate or governmental
             authorities.

                       5.05  Shareholders'     Agreements;    Collective
             Bargaining  Agreements;  Permitted  Debt   Agreements;  Tax
             Sharing  Agreements;  Services Agreements.    (a)   On  the
             Initial Borrowing Date, there  shall have been delivered to
             the Agent  true and correct  copies, certified as  true and
             complete by an appropriate officer of  INTERCO or the other
             Borrowers, as  the  case  may  be, of  (i)  all  agreements
             entered into by  INTERCO or any of its  Restricted Subsidi-
             aries  governing  the  terms  and relative  rights  of  its
             capital   stock  and   any  agreements   entered  into   by
             shareholders relating  to any  such entity with  respect to
             its  capital stock (collectively, the "Shareholders' Agree-
             ments"), (ii) all collective bargaining agreements applying
             or  relating to  any  employee of  INTERCO  or any  of  its
             Restricted Subsidiaries (collectively, the "Collective Bar-
             gaining  Agreements"),  (iii) all agreements  evidencing or
             relating  to  Existing  Indebtedness,   (collectively,  the
             "Permitted  Debt Agreements") and (iv) all information with
             respect to  the Surviving Guaranties, to  the extent copies
             thereof were requested by the Agent prior  to the Effective
             Date;  all  of which  Shareholders'  Agreements, Collective
             Bargaining Agreements  and Permitted Debt  Agreements shall
             be  in form  and substance  reasonably satisfactory  to the
             Agent and the Required Banks and shall be in full force and
             effect on the Initial Borrowing Date.

                       (b)  On or before the Initial Borrowing Date, (x)
             each   of   (i)   the   Borrowers   and  their   Restricted
             Subsidiaries, (ii) INTERCO and Florsheim, and (iii) INTERCO
             and Converse  shall have entered into  separate Tax Sharing
             Agreements and  (y) each of  (i) INTERCO and  Florsheim and
             (ii) INTERCO and Converse  shall have entered into separate
             Services Agreements, all  of which  Tax Sharing  Agreements
             and  Services Agreements shall be in  full force and effect
             and shall  be  the only  such  agreements relating  to  the
             subject matter covered thereby in existence, and all of the
             foregoing shall  be in  form and substance  satisfactory to
             the Agent and the Required Banks.

                       5.06  Solvency  Letter;  Environmental  Analyses;
             Insurance  Matters.   On  or before  the Initial  Borrowing
             Date,  the  Borrowers shall  cause to  be delivered  to the
             Agent  (i)   a  solvency  letter  in   form  and  substance



                                         -44-


             


             satisfactory  to the  Agent  from Houlihan  Lokey Howard  &
             Zukin or any other independent valuation firm acceptable to
             the Agent, setting forth its conclusions that, after giving
             effect to the  Transaction and  the incurrence  of all  the
             financings contemplated herein, each of Florsheim, Converse
             and  the Borrowers  (on a  stand-alone  basis) and  each of
             Florsheim, Converse and the Borrowers and  their respective
             Subsidiaries (on  a consolidated  basis) is  not insolvent,
             and  has not  been rendered  insolvent by  the Indebtedness
             incurred  in  connection   therewith  (assuming  the   full
             utilization of  the Commitments), and will not be left with
             unreasonably  small capital  with  which to  engage in  its
             and/or their  businesses and  will not have  incurred debts
             beyond its and/or their  ability to pay such debts  as they
             mature, (ii)  environmental review and reports  prepared by
             an  engineering  consultant  selected  by  the  Agent,  the
             results  of which  will  be in  scope,  form and  substance
             acceptable to the Agent and  the Required Banks, and  (iii)
             evidence of insurance  complying with  the requirements  of
             Section 8.03 for the business and properties of INTERCO and
             its  Restricted Subsidiaries, in  scope, form and substance
             reasonably satisfactory to the Agent and the Required Banks
             and naming  the Collateral  Agent as an  additional insured
             and/or loss  payee, and  stating that such  insurance shall
             not  be cancelled or revised  without 30 days prior written
             notice by the insurer to the Agent.

                       5.07  Consummation of the Florsheim Recapitaliza-
             tion.    On or  prior to  the  Initial Borrowing  Date, (i)
             Florsheim shall have obtained  gross cash proceeds from in-
             ternally generated funds and/or proceeds of Indebtedness or
             other  financings  to  be  incurred  by  Florsheim  without
             recourse  to  INTERCO   or  its  other  Subsidiaries   (the
             "Florsheim Financing") in an  aggregate amount, when  added
             to  the  amount  of  the Converse  Financing  described  in
             Section 5.08(i) below, equal to at least $180,000,000, (ii)
             Florsheim  shall  have  used  such  proceeds  to  repay  or
             otherwise satisfy  its outstanding Indebtedness  and/or its
             allocated  share  of  joint  and  several  Indebtedness  of
             INTERCO and its Subsidiaries  and pay fees and  expenses in
             connection  with the  Florsheim  Disposition and  Florsheim
             Financing  (the  "Florsheim Application"),  (iii) following
             the  consummation  of  the   Florsheim  Financing  and  the
             Florsheim Application, Florsheim shall be spun-off or  dis-
             tributed   to  shareholders  of   INTERCO  (the  "Florsheim
             Disposition") and  (iv) there shall have  been delivered to
             the Agent  true and correct  copies of all  Florsheim Docu-
             ments, which shall be in form and substance satisfactory to
             the Agent.




                                         -45-


             


                       5.08   Consummation of the Converse Recapitaliza-
             tion.   On  or  prior to  the  Initial Borrowing  Date  (i)
             Converse  shall  have  obtained gross  cash  proceeds  from
             internally  generated funds and/or proceeds of Indebtedness
             or  other financings  to  be incurred  by Converse  without
             recourse  to  INTERCO  or   its  other  Subsidiaries   (the
             "Converse Financing") in an aggregate amount, when added to
             the amount of the  Florsheim Financing described in Section
             5.07(i)  above,  equal  to  at  least  $180,000,000,   (ii)
             Converse  shall  have  used   such  proceeds  to  repay  or
             otherwise satisfy  its outstanding Indebtedness  and/or its
             allocated   share   of   outstanding   joint   and  several
             Indebtedness of  INTERCO and its Subsidiaries  and pay fees
             and  expenses in connection  with the  Converse Disposition
             and Converse Financing (the "Converse  Application"), (iii)
             following the  consummation of the  Converse Financing  and
             the  Converse Application,  Converse shall  be spun-off  or
             distributed  to shareholders of INTERCO (the "Converse Dis-
             position") and (iv) there shall have been delivered to  the
             Agent true  and correct  copies of all  Converse Documents,
             which shall  be in form  and substance satisfactory  to the
             Agent.

                       5.09  Receivables  Facility.  On or prior  to the
             Initial Borrowing Date, (i) the initial sale of receivables
             shall  have  been  effected  pursuant  to  the  Receivables
             Facility,  (ii) such  sale  shall have  generated net  cash
             proceeds  to   Lane,  Broyhill  and  Action   of  at  least
             $125,000,000, (iii)  Lane, Broyhill  and Action  shall have
             used  such proceeds  to  repay or  otherwise satisfy  their
             outstanding  Indebtedness and/or their allocated portion of
             outstanding joint and  several Indebtedness of  INTERCO and
             its Subsidiaries and to pay fees and expenses in connection
             with  the Receivables  Facility and  (iv) there  shall have
             been  delivered to the Agent true and correct copies of all
             Receivables  Documents, which  shall be  in full  force and
             effect and  shall be in form and  substance satisfactory to
             the Agent,  and all conditions set forth in the Receivables
             Documents shall have been  satisfied and not waived (unless
             waived with the consent of the Agent).

                       5.10  Refinancing.    (a)   On  or  prior to  the
             Initial  Borrowing Date  or  concurrently  with the  Credit
             Events then occurring, all commitments under the Terminated
             Debt Agreements  shall have been terminated,  and all loans
             and other  obligations and  notes  issued thereunder  shall
             have been repaid in full, permanently defeased or satisfied
             and discharged, together with interest thereon, all letters
             of credit issued under  any Terminated Debt Agreement shall
             have been assumed as Existing Letters of Credit, terminated



                                         -46-


             


             or  supported by  one  or  more  Letters of  Credit  issued
             hereunder (in which case all obligations of INTERCO and its
             Restricted  Subsidiaries  in  respect  of   such  supported
             letters of credit shall be terminated and released) and all
             other amounts owing pursuant  to the Terminated Debt Agree-
             ments shall have been  repaid in full, permanently defeased
             or  otherwise  satisfied  and  discharged  in   the  manner
             provided  in the  Terminated  Debt Agreements.   The  Agent
             shall have  received evidence in form,  scope and substance
             reasonably satisfactory to it that the matters set forth in
             this Section 5.10(a) have been satisfied on such date.

                       (b)  On or prior to the Initial Borrowing Date or
             concurrently with  the  Credit Events  then occurring,  the
             creditors under  the Terminated Debt Agreements  shall have
             terminated and released all security interests and Liens on
             the capital stock  of INTERCO and any  of its Subsidiaries,
             or  any other  assets  owned  by  INTERCO  or  any  of  its
             Restricted  Subsidiaries granted  in  connection  with  the
             Terminated Debt Agreements.   The Agent shall have received
             such releases  of security  interests in  and Liens  on the
             capital stock of  INTERCO and any  of its Subsidiaries,  or
             any  other  assets  owned  by INTERCO  and  its  Restricted
             Subsidiaries, as may have  been reasonably requested by the
             Agent,  which  releases  shall  be in  form  and  substance
             reasonably satisfactory to the Agent.  Without limiting the
             foregoing,  there shall  have  been  delivered  (i)  proper
             termination  statements  (Form  UCC-3  or  the  appropriate
             equivalent) for  filing under the UCC  of each jurisdiction
             where a financing statement  (Form UCC-1 or the appropriate
             equivalent) was filed with respect to INTERCO or any of its
             Subsidiaries  in  connection  with the  security  interests
             created with respect to  the Terminated Debt Agreements and
             the  documentation  related thereto,  (ii)  terminations or
             assignments of  any security interest  in, or Lien  on, any
             patents,  trademarks, copyrights,  or similar  interests of
             INTERCO  or any  of  its Restricted  Subsidiaries on  which
             filings have  been made and (iii) terminations of all mort-
             gages, leasehold mortgages and  deeds of trust created with
             respect to property  of INTERCO  or any  of its  Restricted
             Subsidiaries, in each case  to secure the obligations under
             the  Terminated Debt Agreements,  all of which  shall be in
             form and substance reasonably satisfactory to the Agent.

                       5.11   Consummation of  the Transaction.   At the
             time of  the  initial  Credit  Event,  INTERCO,  Florsheim,
             Converse, and their  respective Subsidiaries shall use  all
             proceeds received  by them pursuant to  Sections 5.07, 5.08
             and  5.09  to  effectuate  the  Refinancing  and  otherwise
             consummate the Transaction prior  to, or concurrently with,



                                         -47-


             


             the initial Credit  Event hereunder.   At the  time of  the
             initial  Credit Events,  the  Transaction shall  have  been
             consummated (or  shall concurrently with the  Credit Events
             then  occurring  be consummated),  in  compliance with  the
             Transaction  Documents  and with  applicable laws,  and all
             conditions set forth in any Transaction Document shall have
             been  satisfied  and not  waived  (unless  waived with  the
             consent of the Agent).

                       5.12    Subsidiary  Guaranty.    On  the  Initial
             Borrowing Date, each  Subsidiary Guarantor shall  have duly
             authorized, executed and delivered the  Subsidiary Guaranty
             in the form of Exhibit G  hereto (as modified, supplemented
             or amended from time to time, the "Subsidiary Guaranty").

                       5.13  Pledge Agreement.  On the Initial Borrowing
             Date, each Credit Party  shall have duly authorized, execu-
             ted and delivered a Pledge Agreement in the form of Exhibit
             H (as modified, supplemented or amended from time to  time,
             the  "Pledge Agreement")  and shall  have delivered  to the
             Collateral  Agent, as Pledgee,  all the  Pledged Securities
             referred to therein  then owned by  such Credit Party,  (x)
             endorsed  in   blank  in  the  case   of  promissory  notes
             constituting  Pledged  Securities  and  (y)  together  with
             executed  and undated stock powers,  in the case of capital
             stock constituting Pledged Securities. 

                       5.14  Security  Agreement.   On the  Initial Bor-
             rowing Date, each Credit  Party shall have duly authorized,
             executed and delivered a Security  Agreement in the form of
             Exhibit I  (as modified, supplemented or  amended from time
             to  time, the  "Security Agreement")  covering all  of such
             Credit Party's present  and future Security Agreement  Col-
             lateral, together with:

                       (a)  proper  Financing  Statements  (Form  UCC-1)
                  fully  executed  for filing  under  the  UCC or  other
                  appropriate filing offices of each jurisdiction as may
                  be  necessary or,  in  the reasonable  opinion of  the
                  Collateral  Agent, desirable  to perfect  the security
                  interests  purported  to  be created  by  the Security
                  Agreement and evidence satisfactory to  the Collateral
                  Agent that  such Financing  Statements shall  be filed
                  prior to  any Financing Statements  filed pursuant  to
                  the Receivables Facility;

                       (b)  certified copies of Requests for Information
                  or  Copies  (Form  UCC-11),  or   equivalent  reports,
                  listing all effective  financing statements that  name
                  any Credit Party as  debtor and that are filed  in the



                                         -48-


             


                  jurisdictions  referred  to   in  clause  (a)   above,
                  together with  copies of such  other financing  state-
                  ments (none of which shall cover the Collateral except
                  to the extent evidencing Permitted Liens or in respect
                  of  which  the Collateral  Agent  shall  have received
                  termination  statements  (Form  UCC-3)  or  such other
                  termination  statements as shall  be required by local
                  law) fully executed for filing;

                       (c)  evidence of the completion  of all other re-
                  cordings and filings of, or with respect to, the Secu-
                  rity  Agreement  as  may   be  necessary  or,  in  the
                  reasonable  opinion of the Collateral Agent, desirable
                  to  perfect  the  security  interests  intended to  be
                  created by the Security Agreement;

                       (d)  lockbox agreements and other agreements from
                  deposit banks utilized pursuant to the Cash Management
                  System,  recognizing  the  security interests  granted
                  pursuant thereto  and directing payments  from deposit
                  accounts to be made to the Concentration Account; and

                       (e)  evidence  that  all other  actions necessary
                  or, in the reasonable opinion of the Collateral Agent,
                  desirable   to  perfect   and  protect   the  security
                  interests  purported  to be  created  by  the Security
                  Agreement have been taken.

                       5.15  Mortgages;  Title Insurance;  Surveys; etc.
             On the  Initial Borrowing Date, the  Collateral Agent shall
             have received:

                       (a)  fully executed counterparts of  mortgages or
                  deeds  to  secure  debt  in  each  case  in  form  and
                  substance reasonably satisfactory  to the Agent (each,
                  a  "Mortgage"  and,  collectively,  the  "Mortgages"),
                  which Mortgages shall cover  such of the Real Property
                  owned  or leased  by  the Borrowers  or  any of  their
                  respective Restricted Subsidiaries as shall  be desig-
                  nated  as such  on  Schedule III  (each, a  "Mortgaged
                  Property"  and,  collectively, the  "Mortgaged Proper-
                  ties"),  together with  evidence that  counterparts of
                  the Mortgages have been  delivered to the title insur-
                  ance company  insuring the  Lien of the  Mortgages for
                  recording in all places to the extent necessary or, in
                  the reasonable opinion of the Collateral Agent, desir-
                  able  to  effectively create  a valid  and enforceable
                  first priority  mortgage  lien (subject  to  Permitted
                  Liens)  on each  Mortgaged  Property in  favor of  the
                  Collateral  Agent (or  such  other trustee  as may  be



                                         -49-


             


                  required or  desired under local law)  for the benefit
                  of the Secured Creditors;

                       (b)  mortgagee title insurance  policies on  each
                  Mortgaged Property issued  by Lawyers' Title Insurance
                  Company or such other title insurers reasonably satis-
                  factory  to  the   Collateral  Agent  (the   "Mortgage
                  Policies") in  amounts satisfactory  to the  Agent and
                  the Required Banks assuring the Collateral Agent  that
                  the Mortgages  on such Mortgaged Properties  are valid
                  and enforceable first  priority mortgage liens  on the
                  respective Mortgaged Properties, free and clear of all
                  defects and encumbrances except Permitted Encumbrances
                  and such Mortgage Policies  shall otherwise be in form
                  and substance reasonably satisfactory to the Agent and
                  the Required Banks and shall include, as  appropriate,
                  an endorsement  for future advances under  this Agree-
                  ment and the Notes  and for any other matter  that the
                  Collateral  Agent in  its  reasonable  discretion  may
                  reasonably request, shall not include an exception for
                  mechanics'  liens, and  shall provide  for affirmative
                  insurance and such reinsurance as the Collateral Agent
                  in its discretion may reasonably request; and

                       (c)  a   perimeter  survey   (including,  without
                  limitation, notations identifying any encroachments or
                  overlaps), in form and  substance satisfactory to  the
                  Collateral   Agent,   of   each  Mortgaged   Property,
                  certified   by   a   licensed  professional   surveyor
                  satisfactory to the Collateral Agent.

                       5.16  Consent Letter.   On the  Initial Borrowing
             Date,  the  Agent shall  have  received  a  letter from  CT
             Corporation System, presently located at 1633 Broadway, New
             York, New York 10019, substantially  in the form of Exhibit
             J, indicating its consent to its appointment by each Credit
             Party as its agent  to receive service of process  as spec-
             ified  in  Section  13.08  or in  the  respective  Security
             Document.

                       5.17  Adverse  Change;   Governmental  Approvals;
             etc.  (a)   On  the Initial Borrowing  Date, nothing  shall
             have  occurred (and the Banks shall have become aware of no
             facts,  conditions  or  other  information  not  previously
             known)  which the  Agent or  the Required  Banks reasonably
             believe could have a material adverse effect on the  rights
             or remedies of the Agent or the Banks, or on the ability of
             the Credit  Parties to perform their respective obligations
             to the  Agent  and the  Banks  or which  the Agent  or  the
             Required  Banks reasonably  believe would  have a  material



                                         -50-


             


             adverse  effect  on   the  operations,  property,   assets,
             liabilities,   condition   (financial   or  otherwise)   or
             prospects  of  the  Borrowers  taken  as  a  whole  or  the
             Borrowers  and  their Restricted  Subsidiaries  taken as  a
             whole.

                       (b)   On the Initial Borrowing  Date, there shall
             have been  no material  adverse change after  the Effective
             Date  to  the  syndication  market  for  credit  facilities
             similar  in nature  to this Agreement  and there  shall not
             have occurred and be continuing a material disruption of or
             a material adverse change  in financial, banking or capital
             markets that would  have a material  adverse effect on  the
             syndication, in each case as determined by the Agent in its
             sole discretion.

                       (c) On  or prior  to the Initial  Borrowing Date,
             all  necessary  and  material  governmental  (domestic  and
             foreign) and  third party approvals in  connection with the
             Transaction shall have been  obtained and remain in effect,
             and  all  applicable  waiting  periods  shall have  expired
             without any  action being taken by  any competent authority
             which  restrains, prevents  or  imposes materially  adverse
             conditions  upon  the  consummation  of   the  Transaction.
             Additionally,  there shall  not exist any  judgment, order,
             injunction or other restraint issued  or filed or a hearing
             seeking  injunctive relief  or other  restraint  pending or
             notified  prohibiting or imposing materially adverse condi-
             tions upon the making  of any Loan, issuance of  any Letter
             of Credit or the consummation of the Transaction.

                       5.18  Litigation.  On the Initial Borrowing Date,
             no litigation by any entity (private or governmental) shall
             be pending or threatened with respect to the Transaction or
             any   documentation   executed   in  connection   therewith
             (including any Credit Document), or which the  Agent or the
             Required  Banks  shall  reasonably  believe  could  have  a
             materially adverse  effect on the Transaction  or the busi-
             ness, property, assets, nature of assets, liabilities, con-
             dition  (financial  or  otherwise)  or   prospects  of  the
             Borrowers  taken as  a  whole or  the  Borrowers and  their
             Restricted Subsidiaries taken as a whole.

                       5.19  Pro Forma Balance  Sheet; Financial  State-
             ments;  Projections.    (a)  On  or  prior to  the  Initial
             Borrowing  Date, there  shall  have been  delivered to  the
             Agent an unaudited pro forma consolidated and consolidating
             balance  sheet  of  INTERCO  and  its  Subsidiaries  and  a
             combined  balance  sheet  of  INTERCO  and  its  Restricted
             Subsidiaries  as of  September  30, 1994  and after  giving



                                         -51-


             


             effect to  the Transaction and prepared  in accordance with
             generally accepted accounting principles, together with (x)
             historical   consolidated   and   consolidating   financial
             statements of  INTERCO and  its  Subsidiaries and  combined
             financial   statements  of   INTERCO  and   its  Restricted
             Subsidiaries,  in each  case, for  the last  fiscal quarter
             ending before the Initial Borrowing Date and (y) historical
             consolidated  and  consolidating  financial  statements  of
             INTERCO   and  its  Subsidiaries   and  combined  financial
             statements of  INTERCO and its Restricted  Subsidiaries, in
             each case for the  five Fiscal Years preceding such  fiscal
             quarter referred to in the foregoing clause (x), which his-
             torical statements shall  (i) be  audited, in  the case  of
             combined income and cash flow statements for the three most
             recent Fiscal Years and  in the case of the  balance sheets
             for  the two most recent Fiscal Years and (ii) be certified
             by  an officer of either INTERCO or the other Borrowers, as
             the case may be, in the case of the five most recent Fiscal
             Years.

                       (b)  On  or prior to the  Initial Borrowing Date,
             there shall have been delivered to the Agent:

                       (i)  the  consolidated and  consolidating balance
                  sheet of INTERCO and its Subsidiaries as of the end of
                  each calendar month  of INTERCO  ended after  June 30,
                  1994  and the  related consolidated  and consolidating
                  statement of  income and  statement of cash  flows for
                  each such  month, and for  the elapsed portion  of the
                  calendar year  ended with  the last  day of  each such
                  month, in each case  setting forth comparative figures
                  for the corresponding month in the prior calendar year
                  and  compared to the budget delivered to the Banks for
                  the   then  current  calendar  year,  which  financial
                  statements  shall be prepared  in accordance with GAAP
                  and shall be in form and substance satisfactory to the
                  Agent; and

                      (ii)  the  consolidated and  consolidating balance
                  sheet of INTERCO and its Subsidiaries as of the end of
                  each fiscal  quarter of  INTERCO ended after  December
                  31,   1993,   and   the   related   consolidated   and
                  consolidating  statements  of earnings,  shareholder's
                  equity and  cash flows for such  quarterly periods and
                  the elapsed portion of the Fiscal Year  ended with the
                  last day of  each such quarter,  in each case  setting
                  forth comparative figures  for the related periods  in
                  the  prior  Fiscal Year  and  compared  to the  budget
                  delivered  to the  Banks for  the then  current Fiscal




                                         -52-


             


                  Year,  all of  which shall be  certified by  the chief
                  financial officer of INTERCO.  

                       (c)  On or  prior to  the Initial  Borrowing Date
             there shall  have been  delivered to the  Agent "management
             case"  projected combined  financial statements  of INTERCO
             and   its  Restricted  Subsidiaries,   set  forth   in  the
             Confidential  Memorandum  dated  September, 1994,  for  the
             period  from December 31,  1994 to  December 31,  1998 (the
             "Projections"),  which  Projections (x)  shall  reflect the
             forecasted  combined financial  conditions  and income  and
             expenses of INTERCO  and its Restricted Subsidiaries  after
             giving affect to the  Transaction and the related financing
             thereof and the other transactions contemplated  hereby and
             (y)  shall be  satisfactory in  form  and substance  to the
             Agent.

                       5.20  Cash Management System.  On or prior to the
             Initial Borrowing Date,  INTERCO and its Restricted  Subsi-
             diaries shall  create a  cash management system  (the "Cash
             Management System")  satisfactory  to the  Agent (it  being
             understood that  the cash management system  provided by an
             Affiliate  of the  Agent  prior to  the Effective  Date, as
             modified to  permit separate  accounts for  the Receivables
             Facility,  shall be  satisfactory  to the  Agent), and  all
             agreements related thereto shall have been delivered to the
             Agent and shall be satisfactory to the Agent.

                       5.21    Closing  Officer's Certificate  Regarding
             Estimated Converse Tax Liability and INTERCO Tax Basis.  On
             the Initial Borrowing Date, the Agent shall have received a
             certificate of  the  chief  financial  officer  of  INTERCO
             certifying as  to  (x)  the  amount  of  the  Converse  Tax
             Liability  (determined as  described in  clause (x)  of the
             definition   thereof,  it   being   understood  that   such
             calculation  of the  amount of  the Converse  Tax Liability
             shall  be  determined based  on  the  anticipated range  of
             values for the capital  stock of Converse immediately after
             the Converse Disposition) and (y)  the amounts set forth in
             Section  7.09(b),  which certificate  shall  set  forth the
             calculations  of the  matters  described  therein  and  the
             timing of any estimated payments in respect of the Converse
             Tax Liability,  all in  form and substance  satisfactory to
             the Agent and the Required Banks.

                       SECTION  6.   Conditions Precedent to  All Credit
             Events.  The obligation of each Bank to make Loans (includ-
             ing Loans made on the  Initial Borrowing Date but excluding
             Mandatory  Borrowings made thereafter,  which shall be made
             as  provided in Section 1.01(d)), and  the obligation of an



                                         -53-


             


             Issuing  Bank to issue any Letter of Credit, is subject, at
             the time of each  such Credit Event (except as  hereinafter
             indicated),   to   the   satisfaction   of   the  following
             conditions:

                       6.01  No Default; Representations and Warranties.
             At the time of each such Credit Event and also after giving
             effect thereto (i) there shall exist no Default or Event of
             Default and  (ii) all representations  and warranties  con-
             tained herein or in any other Credit Document shall be true
             and correct in all  material respects with the same  effect
             as though such representations and warranties had been made
             on the  date of the making  of such Credit  Event (it being
             understood  and agreed that  any representation or warranty
             which by  its terms is made as of a specified date shall be
             required to be  true and correct  in all material  respects
             only as of such specified date).

                       6.02  Notice of Borrowing;  Letter of Credit  Re-
             quest.   (a)  Prior to  the making of each  Loan (excluding
             Swingline Loans), the Agent  shall have received the notice
             required  by Section 1.03(a).   Prior to the  making of any
             Swingline  Loan,  BTCo  shall  have  received  the   notice
             required by Section 1.03(b)(i).

                       (b)  Prior  to  the issuance  of  each  Letter of
             Credit,  the Agent  and the  respective Issuing  Bank shall
             have  received  a  Letter  of Credit  Request  meeting  the
             requirements of Section 2.03.

                       The  acceptance of  the  benefit  of each  Credit
             Event shall constitute a representation and warranty by the
             Borrowers  to the Agent and each  of the Banks that all the
             conditions specified in Section 5 and in this Section 6 and
             applicable  to such  Credit  Event exist  as  of that  time
             (except to the extent that any of  the conditions specified
             in  Section  5  are  required  to  be  satisfactory  to  or
             determined  by  any Bank,  the  Required  Banks and/or  the
             Agent).  All of the Notes, certificates, legal opinions and
             other  documents and papers referred to in Section 5 and in
             this  Section 6,  unless   otherwise  specified,  shall  be
             delivered to the Agent at the Notice Office for the account
             of  each of  the  Banks  and,  except  for  the  Notes,  in
             sufficient counterparts or copies for each of the Banks and
             shall be  in form and substance  reasonably satisfactory to
             the Banks.

                       SECTION  7.    Representations,   Warranties  and
             Agreements.  In  order to  induce the Banks  to enter  into
             this Agreement and to make the Loans, and issue (or partic-



                                         -54-


             


             ipate in) the Letters of Credit as provided herein, each of
             the   Borrowers   makes   the  following   representations,
             warranties and agreements, in each case after giving effect
             to the  Transaction consummated  on  the Initial  Borrowing
             Date, all of which shall survive the execution and delivery
             of this Agreement and the Notes and the making of the Loans
             and issuance of  the Letters of Credit, with the occurrence
             of each Credit Event on or after the Initial Borrowing Date
             being deemed  to constitute a  representation and  warranty
             that the matters specified  in this Section 7 are  true and
             correct in all material  respects on and as of  the Initial
             Borrowing  Date and on the  date of each  such Credit Event
             (it being understood and  agreed that any representation or
             warranty which by its  terms is made as of a specified date
             shall  be required to be  true and correct  in all material
             respects only as of such specified date).

                       7.01  Corporate Status.  INTERCO and  each of its
             Restricted Subsidiaries (i) is a duly organized and validly
             existing corporation in good standing under the laws of the
             jurisdiction  of its incorporation,  (ii) has the corporate
             power and authority to  own its property and assets  and to
             transact the business in which it is engaged  and presently
             proposes to  engage  and (iii)  is  duly qualified  and  is
             authorized to do business  and is in good standing  in each
             jurisdiction  where  the conduct  of its  business requires
             such qualifications except for  failures to be so qualified
             which,   individually  or  in   the  aggregate,  could  not
             reasonably be expected to have a material adverse effect on
             the  business,  operations, property,  assets, liabilities,
             condition  (financial or  otherwise)  or  prospects of  the
             Borrowers  taken as a whole  or of the  Borrowers and their
             Restricted Subsidiaries taken as a whole.

                       7.02  Corporate Power and Authority.  Each Credit
             Party  has the  corporate power  and authority  to execute,
             deliver and perform the terms and provisions of each of the
             Documents  to which it is party and has taken all necessary
             corporate action to  authorize the execution,  delivery and
             performance by it of  each of such Documents.   Each Credit
             Party has duly executed and delivered each of the Documents
             to  which  it   is  party,  and  each  of   such  Documents
             constitutes the legal, valid and binding obligation of such
             Credit  Party enforceable  in  accordance with  its  terms,
             except to the extent that the enforceability thereof may be
             limited     by    applicable     bankruptcy,    insolvency,
             reorganization, moratorium or  other similar laws generally
             affecting creditors'  rights  and by  equitable  principles
             (regardless of  whether enforcement is sought  in equity or
             at law).



                                         -55-


             


                       7.03    No  Violation.   Neither  the  execution,
             delivery  or  performance  by   any  Credit  Party  of  the
             Documents to which it is a party, nor compliance by it with
             the terms  and provisions thereof, (i)  will contravene any
             provision  of  any   applicable  law,   statute,  rule   or
             regulation  or any  applicable order,  writ,  injunction or
             decree  of any court  or governmental instrumentality, (ii)
             will conflict with  or result in any  breach of any  of the
             terms, covenants,  conditions or provisions  of, or consti-
             tute a default under,  or result in the creation  or impos-
             ition of (or the  obligation to create or impose)  any Lien
             (except pursuant to the Security Documents) upon any of the
             material  properties  or assets  of INTERCO  or any  of its
             Restricted  Subsidiaries  pursuant  to  the  terms  of  any
             indenture,  mortgage, deed  of trust,  credit agreement  or
             loan agreement,  or any other  material agreement, contract
             or instrument,  to which INTERCO  or any of  its Restricted
             Subsidiaries is  a party or by which it or any of its prop-
             erty or  assets is bound or  to which it may  be subject or
             (iii)  will violate  any  provision of  the Certificate  of
             Incorporation  or   By-Laws  of  INTERCO  or   any  of  its
             Restricted Subsidiaries.

                       7.04  Governmental Approvals.  No order, consent,
             approval,  license, authorization or validation of, or fil-
             ing,  recording or  registration with  (except (i)  as have
             been obtained or made prior  to the Initial Borrowing  Date
             and  (ii) other  than UCC-1  filings performed  pursuant to
             Section  5.14, which  filings,  if  this representation  is
             being made  on a date which is more than ten days after the
             Initial Borrowing  Date, have been made),  or exemption by,
             any governmental or public body or authority, or any subdi-
             vision thereof, is required to authorize, or is required in
             connection with, (i) the  execution, delivery and  perform-
             ance of any Document or  (ii) the legality, validity, bind-
             ing effect  or enforceability of any  such Document except,
             with  respect  to  the  Transaction  Documents,  where  the
             failure to  so obtain  would not  have  a material  adverse
             effect  on  the  business,  operations,  property,  assets,
             liabilities,   conditions   (financial  or   otherwise)  or
             prospects of the  Borrowers taken as a whole or of the Bor-
             rowers and their Restricted Subsidiaries taken as a whole.

                       7.05  Financial Statements;  Financial Condition;
             Undisclosed Liabilities;  Projections;  etc.   (a)  (i) The
             consolidated  and  consolidating  statements  of  financial
             condition of INTERCO and its Subsidiaries, and the combined
             statements of  financial condition  of INTERCO and  its Re-
             stricted Subsidiaries,  in each  case at December  31, 1993
             and  September 30,  1994 and  the related  consolidated and



                                         -56-


             


             consolidating  statements  of  income  and  cash  flow  and
             changes  in   shareholders'  equity  of   INTERCO  and  its
             Subsidiaries  and combined  statements of  income and  cash
             flow and changes in shareholders' equity of INTERCO and its
             Restricted Subsidiaries,  in each case for  the Fiscal Year
             and  nine-month period ended on such dates, as the case may
             be, and furnished to the Banks prior to the Effective Date,
             (ii) the  consolidated and  consolidating balance  sheet of
             INTERCO and its Subsidiaries as of the end of each calendar
             month  of INTERCO ended after June 30, 1994 and the related
             consolidated  and  consolidating  statement of  income  and
             statement of cash flows of INTERCO and its Subsidiaries for
             each  such month, and furnished  to the Banks  prior to the
             Effective Date and (iii) the consolidated and consolidating
             balance sheet of INTERCO and its Subsidiaries as of the end
             of each fiscal  quarter of INTERCO ended after December 31,
             1993,  and  the   related  consolidated  and  consolidating
             statements of earnings, shareholder's equity and cash flows
             of INTERCO and its Subsidiaries for such quarterly periods,
             and  furnished to the Banks prior to the Effective Date, in
             each  case,  present  fairly  the  financial  condition  of
             INTERCO and its Subsidiaries (or INTERCO and its Restricted
             Subsidiaries,  as  the case  may be)  at  the date  of such
             statements of  financial condition  and the results  of the
             operations of INTERCO and  its Subsidiaries (or INTERCO and
             its Restricted  Subsidiaries as  the case  may be)  for the
             respective  Fiscal Year, nine-month  period, fiscal quarter
             or calendar month, as the case may be (subject, in the case
             of  unaudited  financial  statements,  to  normal  year-end
             adjustments).  All such financial statements have been pre-
             pared  in accordance  with  generally  accepted  accounting
             principles and  practices consistently applied,  except, in
             the  case of  nine-month  and monthly  statements, for  the
             omission  of footnotes,  and certain  reclassifications and
             ordinary  end of  period adjustments  and accruals  (all of
             which  are  of  a  recurring  nature  and   none  of  which
             individually,  or in  the  aggregate, would  be  material).
             After giving effect to  the Transaction, since December 31,
             1993,  there has  been no  material adverse  change in  the
             business, operations, property, assets, liabilities, condi-
             tion (financial or otherwise) or prospects of the Borrowers
             taken as a whole  or of the Borrowers and  their Restricted
             Subsidiaries taken as a whole.

                       (b)   (i)   On  and as  of the  Initial Borrowing
             Date,  after giving  effect to the  Transaction and  to all
             Indebtedness  (including  the   Loans)  being  incurred  or
             assumed and Liens created by  the Credit Parties in connec-
             tion  therewith  (assuming  the  full  utilization  of  all
             Commitments on the Initial Borrowing Date), (a) the  sum of



                                         -57-


             


             the  assets,  at  a   fair  valuation,  of  each  Borrower,
             individually,     Converse,    individually,     Florsheim,
             individually, each Borrower and its  Subsidiaries, Converse
             and its  Subsidiaries and  Florsheim  and its  Subsidiaries
             (each of the foregoing, as to itself, as  to itself and its
             Subsidiaries, as to Converse or as to Florsheim, a "Solvent
             Entity")  will exceed its or  their debts; (b) each Solvent
             Entity has not incurred  and does not intend to  incur, and
             does not  believe  that it  will  incur, debts  beyond  its
             ability to pay  such debts  as such debts  mature; and  (c)
             each Solvent Entity will have sufficient capital with which
             to conduct  its businesses.   For purposes of  this Section
             7.05(b), "debt" means any liability on a claim, and "claim"
             means (i) right to  payment, whether or not such a right is
             reduced  to  judgment,  liquidated,   unliquidated,  fixed,
             contingent,   matured,  unmatured,   disputed,  undisputed,
             legal, equitable, secured, or unsecured or (ii) right to an
             equitable remedy  for breach of performance  if such breach
             gives rise to a right to payment, whether or not such right
             to  an  equitable remedy  is  reduced  to judgment,  fixed,
             contingent,   matured,  unmatured,   disputed,  undisputed,
             secured or unsecured.

                       (c)  Except  as fully disclosed  in the financial
             statements  delivered  pursuant to  Section  7.05(a) or  in
             Schedule IV, there were as of the Initial Borrowing Date no
             liabilities or  obligations with respect to  INTERCO or any
             of  its  Subsidiaries  of  any  nature whatsoever  (whether
             absolute, accrued,  contingent or otherwise and  whether or
             not  due) which,  either individually  or in  aggregate, is
             reasonably likely to  be material  to any  Borrower or  any
             Borrower and its Subsidiaries taken as a  whole.  As of the
             Initial  Borrowing Date, none of the Borrowers knows of any
             basis  for the  assertion against  it of  any  liability or
             obligation  of  any nature  whatsoever  that  is not  fully
             disclosed in the financial statements delivered pursuant to
             Section  7.05(a)  or as  disclosed  in  Schedule IV  hereto
             which, either  individually or  in the aggregate,  could be
             material  to   any  Borrower   or  any  Borrower   and  its
             Subsidiaries taken as a whole.

                       (d)  On and as of the Initial Borrowing Date, the
             Projections previously delivered to the Agent and the Banks
             have been prepared on a basis consistent with the financial
             statements referred  to in  Section 7.05(a) (other  than as
             set forth or presented in such Projections), and there  are
             no  statements or  conclusions  in any  of the  Projections
             which are  based upon or  include information known  to the
             Borrowers to be misleading in any material respect or which
             fail to  take into  account material  information regarding



                                         -58-


             


             the  matters reported  therein.   On the  Initial Borrowing
             Date,  the Borrowers  believed  that the  Projections  were
             reasonable and attainable.

                       7.06  Litigation.  There are no actions, suits or
             proceedings pending or,  to the best knowledge of  the Bor-
             rowers, threatened  (i) on  the Initial Borrowing  Date, in
             respect of  any material  Transaction Document  (other than
             any  Credit  Document), (ii)  with  respect  to any  Credit
             Document  or (iii)  that  could reasonably  be expected  to
             materially and  adversely affect the  business, operations,
             property,  assets,  liabilities,  condition  (financial  or
             otherwise) or prospects of  the Borrowers taken as  a whole
             or of the Borrowers and their Restricted Subsidiaries taken
             as a whole.

                       7.07  True and  Complete Disclosure.  All factual
             information (taken as a whole) furnished by or on behalf of
             INTERCO  or any of its Subsidiaries in writing to the Agent
             or any Bank (including, without limitation, all factual in-
             formation contained in the Documents) for purposes of or in
             connection with this Agreement,  the other Credit Documents
             or any  transaction contemplated herein or  therein is, and
             all  other  such factual  information  (taken  as a  whole)
             hereafter  furnished by or on  behalf of INTERCO  or any of
             its Subsidiaries in writing  to the Agent or any  Bank will
             be,  true and accurate in all material respects on the date
             as  of which such information is dated or certified and not
             incomplete by  omitting to state any fact necessary to make
             such information (taken  as a whole) not  misleading in any
             material respect at such time in light of the circumstances
             under which such information was provided.

                       7.08   Use of Proceeds; Margin  Regulations.  (a)
             All proceeds  of the Term Loans  shall be used  by the Bor-
             rowers (i) to effect  the Refinancing and (ii) to  pay fees
             and expenses related to the Refinancing.

                       (b)   All  proceeds  of the  Revolving Loans  and
             Swingline Loans shall be used for  the Borrowers' and their
             Subsidiaries' general corporate  purposes; provided,  that,
             not more than $20,000,000  in aggregate principal amount of
             Revolving Loans  and Swingline  Loans may  be used to  make
             payments  (including  payments  of  fees  and  expenses) in
             connection  with the Transaction;  provided, that Revolving
             Loans and Swingline Loans may be incurred without regard to
             the foregoing $20,000,000  limitation to pay amounts  owing
             in respect  of taxes, if  any, payable  as a result  of the
             Florsheim Disposition and the Converse Disposition.




                                         -59-


             


                       (c)  No part of the proceeds of any Loan will  be
             used to purchase  or carry  any Margin Stock  or to  extend
             credit for the purpose of purchasing or carrying any Margin
             Stock.   Neither the making of any  Loan nor the use of the
             proceeds  thereof nor  the occurrence  of any  other Credit
             Event will  violate or be inconsistent  with the provisions
             of Regulation G, T, U or X of the Board of Governors of the
             Federal Reserve System.

                       7.09   Tax Returns  and  Payments.   (a) Each  of
             INTERCO and its  Restricted Subsidiaries have  timely filed
             or caused to  be timely filed, on the  due dates thereof or
             within applicable grace periods (inclusive of any permitted
             extensions),  with the  appropriate  taxing authority,  all
             Federal,  state  and  other  material  returns, statements,
             forms and reports  for taxes (the "Returns") required to be
             filed  by or  with  respect to  the  income, properties  or
             operations of INTERCO and its Restricted Subsidiaries.  The
             Returns  accurately  reflect in  all material  respects all
             liability for  taxes of  INTERCO and its  Restricted Subsi-
             diaries for the  periods covered thereby.   Each of INTERCO
             and  its Restricted  Subsidiaries  have  paid all  material
             taxes payable  by  them  other  than taxes  which  are  not
             delinquent, and  other than  those contested in  good faith
             and for  which adequate  reserves have been  established in
             accordance with generally  accepted accounting  principles.
             Except as disclosed in the financial statements referred to
             in Section 7.05(a)  and except as disclosed  on Schedule V,
             there  is, as  of the  Initial Borrowing Date,  no material
             action,  suit, proceeding,  investigation, audit,  or claim
             now pending or,  to the  best knowledge  of the  Borrowers,
             threatened by any authority regarding any taxes relating to
             INTERCO  or its Restricted Subsidiaries.  As of the Initial
             Borrowing  Date,   none  of   INTERCO  or  its   Restricted
             Subsidiaries  has entered  into an  agreement or  waiver or
             been  requested  to  enter  into  an  agreement  or  waiver
             extending  any  statute  of  limitations  relating  to  the
             payment or collection of taxes of INTERCO or its Restricted
             Subsidiaries, or  is aware of any  circumstances that would
             cause the taxable years or other taxable periods of INTERCO
             or its  Restricted Subsidiaries not  to be  subject to  the
             normally  applicable statute  of  limitations.   As of  the
             Initial Borrowing  Date, none of INTERCO  or its Restricted
             Subsidiaries has  provided, with respect  to themselves  or
             property held by them, any consent under Section 341 of the
             Code.  Except as set  forth in Schedule V, none  of INTERCO
             or its Restricted Subsidiaries has incurred, or will incur,
             any  material   tax  liability   in  connection  with   the
             Transaction and the other transactions contemplated hereby.
             Additionally, all of the foregoing representations are true



                                         -60-


             


             and correct as to  all Unrestricted Subsidiaries of INTERCO
             (to  the same  extent  they were  Restricted  Subsidiaries)
             except to the extent  any and all failures  to be true  and
             correct could not reasonably  be expected to materially and
             adversely  affect  the   business,  operations,   property,
             assets, liabilities, condition (financial or  otherwise) or
             prospects  of  the  Borrowers  taken  as  a  whole  or  the
             Borrowers  and their  Restricted  Subsidiaries  taken as  a
             whole.

                       (b)  INTERCO'S tax basis in the shares of capital
             stock  of  (x) Converse  spun-off  in  connection with  the
             Converse  Disposition  shall be  an  amount  not less  than
             $165,000,000 at  the time  of the consummation  thereof and
             (y)  Florsheim spun-off  in connection  with the  Florsheim
             Disposition shall  be an  amount not less  than $50,000,000
             (it  being   understood  that  such  tax   bases  shall  be
             calculated  based on identified assumptions with respect to
             earnings  and cash  positions at the  time of  the Converse
             Disposition and the Florsheim Disposition, respectively).

                       7.10   Compliance with ERISA.   (a)  Each Plan is
             in  substantial  compliance with  ERISA  and  the Code;  no
             Reportable  Event has occurred  with respect to  a Plan; no
             Plan  is insolvent  or in  reorganization; no  Plan  has an
             Unfunded Current  Liability; no Plan has  an accumulated or
             waived funding deficiency, or  has applied for an extension
             of any  amortization period  within the meaning  of Section
             412 of the Code;  all contributions required to be  made by
             the  Borrowers,   any   of  their   respective   Restricted
             Subsidiaries or any ERISA Affiliate with  respect to a Plan
             and a Foreign Pension  Plan have been timely made;  none of
             the  Borrowers  or  any  of   their  respective  Restricted
             Subsidiaries  nor any  ERISA  Affiliate  has  incurred  any
             liability  to or on account  of a Plan  pursuant to Section
             409,  502(i), 502(1),  515, 4062,  4063, 4064,  4069, 4201,
             4204  or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
             4980  of the  Code  or  reasonably  expects  to  incur  any
             liability (including any indirect, contingent  or secondary
             liability) under any of the foregoing sections with respect
             to  any  Plan;  no  proceedings  have  been  instituted  to
             terminate or appoint  a trustee to administer any  Plan; no
             condition exists which  presents a risk to the Borrowers or
             any  of their  respective  Restricted Subsidiaries  or  any
             ERISA Affiliate of incurring a  liability to or on  account
             of a Plan pursuant to the foregoing provisions of ERISA and
             the  Code;  using  actuarial  assumptions  and  computation
             methods consistent with Part 1 of subtitle E of Title IV of
             ERISA,  the aggregate liabilities  of the  Borrowers, their
             respective Restricted Subsidiaries  and their ERISA Affili-



                                         -61-


             


             ates to all Plans which are multiemployer plans (as defined
             in  Section 4001(a)(3) of ERISA) in the event of a complete
             withdrawal therefrom,  as of the  close of the  most recent
             fiscal year  of each such Plan  ended prior to the  date of
             the most recent Credit Event, would not exceed  $50,000; no
             lien imposed  under the Code or ERISA  on the assets of the
             Borrowers   or   any   of   their   respective   Restricted
             Subsidiaries or any ERISA Affiliate  exists or is likely to
             arise on account of  any Plan; and the Borrowers  and their
             respective  Restricted  Subsidiaries  do  not  maintain  or
             contribute to any employee welfare benefit plan (as defined
             in  Section  3(1)  of  ERISA) which  provides  benefits  to
             retired employees or other  former employees (other than as
             required  by Section 601 of ERISA)  or any employee pension
             benefit plan (as defined in Section 3(2) of ERISA).

                       (b)  Each   Foreign   Pension   Plan   has   been
             maintained in  substantial compliance  with  its terms  and
             with  the  requirements of  any  and  all applicable  laws,
             statutes,  rules,  regulations  and  orders  and  has  been
             maintained,  where   required,   in  good   standing   with
             applicable regulatory  authorities.  None of  the Borrowers
             nor  any of  their  respective Restricted  Subsidiaries has
             incurred any obligation in  connection with the termination
             of or  withdrawal  from  any Foreign  Pension  Plan.    The
             present value of  the accrued benefit liabilities  (whether
             or not vested) under  each Foreign Pension Plan, determined
             as of the end of the Borrower's most recently  ended fiscal
             year on the basis  of actuarial assumptions, each of  which
             is  reasonable, did  not exceed  the current  value of  the
             assets  of  such Foreign  Pension  Plan  allocable to  such
             benefit liabilities.

                       (c)  Notwithstanding anything to the  contrary in
             this Section 7.10, the representations made in this Section
             7.10  shall only be untrue  if the aggregate  effect of all
             failures and  noncompliances of the  types described  above
             could  reasonably be  expected to  have a  material adverse
             effect  on  the  business,  operations,  property,  assets,
             liabilities,   condition   (financial   or  otherwise)   or
             prospects  of  the Borrowers  taken as  a  whole or  of the
             Borrowers and  their  Restricted Subsidiaries  taken  as  a
             whole.

                       7.11     The  Security  Documents.     (a)    The
             provisions of  the  Security  Agreement  are  effective  to
             create  in favor of the Collateral Agent for the benefit of
             the  Secured  Creditors  a  legal,  valid  and  enforceable
             security interest in all  right, title and interest  of the
             Credit  Parties   in  the  Security   Agreement  Collateral



                                         -62-


             


             described  therein, and  the Security  Agreement, upon  the
             filing   of  Form   UCC-1   financing  statements   or  the
             appropriate equivalent (which filings, if  this representa-
             tion  is being  made more  than 10  days after  the Initial
             Borrowing Date,  have been made), create  a fully perfected
             first lien on,  and security interest in, all  right, title
             and interest  in all  of the Security  Agreement Collateral
             described therein,  to the extent that  a security interest
             may be  perfected therein  by filing a  financing statement
             under  the  UCC,  subject  to  no  other  Liens  other than
             Permitted  Liens.   The  recordation of  the Assignment  of
             Security  Interest in  U.S. Patents  and Trademarks  in the
             form  attached  to the  Security  Agreement  in the  United
             States Patent and Trademark Office together with filings on
             Form  UCC-1 made pursuant to the Security Agreement will be
             effective, under  applicable law, to  perfect the  security
             interest granted to the  Collateral Agent in the trademarks
             and patents covered by the Security Agreement.  Each of the
             Credit Parties party to the Security Agreement has good and
             valid title  to all Security Agreement  Collateral owned by
             such Credit Party described therein,  free and clear of all
             Liens except those described above in this clause (a).

                       (b)  The  security interests created  in favor of
             the Collateral Agent,  as Pledgee, for  the benefit of  the
             Secured  Creditors under  the  Pledge Agreement  constitute
             first priority  perfected security interests in the Pledged
             Securities described in the Pledge Agreement, subject to no
             security interests  of any  other Person.    No filings  or
             recordings are  required in  order to perfect  (or maintain
             the  perfection  or  priority of)  the  security  interests
             created in the Pledged  Securities and the proceeds thereof
             under the Pledge Agreement.

                       (c)  The  Mortgages create,  as security  for the
             obligations purported  to be  secured thereby, a  valid and
             enforceable  perfected  security interest  in  and mortgage
             lien on all  of the  Mortgaged Properties in  favor of  the
             Collateral Agent (or such other  trustee as may be required
             or  desired under local law) for the benefit of the Secured
             Creditors, superior to and prior to the rights of all third
             persons (except  that  the security  interest and  mortgage
             lien created in  the Mortgaged Properties may be subject to
             the Permitted Encumbrances related thereto) and subject  to
             no other Liens (other than Permitted Liens).   Schedule III
             contains  a true and complete  list of each  parcel of Real
             Property  owned or  leased  by INTERCO  and its  Restricted
             Subsidiaries  on  the  Effective  Date,  and  the  type  of
             interest  therein  held  by  INTERCO  or   such  Restricted
             Subsidiary.   INTERCO and  each of its  Restricted Subsidi-



                                         -63-


             


             aries  have good  and indefeasible  title to  all fee-owned
             Mortgaged  Properties  and  valid  leasehold  title  to all
             Leaseholds material to its business,  in each case free and
             clear  of  all Liens  except those  described in  the first
             sentence of this subsection (c).

                       7.12  Representations  and  Warranties  in  Other
             Documents. All representations and  warranties set forth in
             the other Documents were true  and correct in all  material
             respects at  the time as of which  such representations and
             warranties were made (or deemed made) and shall be true and
             correct  in  all  material   respects  as  of  the  Initial
             Borrowing Date  as if  such representations and  warranties
             were  made on and as of such  date, unless stated to relate
             to   a  specific   earlier   date,  in   which  case   such
             representations and warranties shall be true and correct in
             all material respects as of such earlier date.

                       7.13  Properties.   INTERCO and  each of its  Re-
             stricted  Subsidiaries have  good  and valid  title to  all
             material  properties owned by  them, including all property
             reflected  in   the  balance  sheet  of   INTERCO  and  its
             Restricted Subsidiaries referred to in Section 7.05(a)  and
             in  the pro forma balance sheet referred to in Section 5.19
             (except  as sold or otherwise disposed of since the date of
             such balance  sheet in the  ordinary course of  business or
             otherwise as  permitted hereunder),  free and clear  of all
             Liens, other than (i)  as referred to in the  balance sheet
             or in the notes  thereto or in the pro  forma balance sheet
             or  (ii) Permitted  Liens  otherwise permitted  by  Section
             9.01.

                       7.14  Capitalization.   (a)  On the  Business Day
             before the  Initial Borrowing Date and  after giving effect
             to the Transaction, the authorized capital stock of INTERCO
             consisted  of  (i)  100,000,000 shares  of  INTERCO  Common
             Stock, $1.00  stated value  per share, of  which 50,064,515
             shares were issued and outstanding as of November 11, 1994,
             and  at least 60% of such outstanding shares shall be owned
             by the  Apollo Group or  a Controlled Account.   As of  the
             Initial Borrowing Date, INTERCO  does not have  outstanding
             any securities  convertible  into or  exchangeable for  its
             capital stock or outstanding any rights to subscribe for or
             to purchase, or  any options  for the purchase  of, or  any
             agreement providing for the  issuance (contingent or other-
             wise)  of, or  any  calls,  commitments  or claims  of  any
             character  relating to,  its  capital stock,  in each  case
             other than the options outstanding pursuant to the Employee
             Stock Option Plan and the INTERCO Warrants.




                                         -64-


             


                       (b)   On  the  Initial Borrowing  Date and  after
             giving effect  to the Transaction,  the authorized  capital
             stock of  Broyhill shall  consist of  100 shares  of common
             stock, no par value per share, all of which shall be issued
             and outstanding  and delivered  for pledge pursuant  to the
             Pledge Agreement.   All  such outstanding shares  of common
             stock have been duly and validly issued, are fully paid and
             nonassessable.  As of  the Initial Borrowing Date, Broyhill
             does not  have outstanding any  securities convertible into
             or exchangeable  for its  capital stock or  outstanding any
             rights  to subscribe for or to purchase, or any options for
             the  purchase  of,  or  any agreements  providing  for  the
             issuance  (contingent  or  otherwise)  of,  or  any  calls,
             commitments  or claims  of any  character relating  to, its
             capital stock.

                       (c)  On  the  Initial  Borrowing Date  and  after
             giving  effect to  the Transaction, the  authorized capital
             stock  of  Lane shall  consist  of 1,000  shares  of common
             stock, no par value per share, all of which shall be issued
             and outstanding  and delivered  for pledge pursuant  to the
             Pledge Agreement.   All  such outstanding shares  of common
             stock have been duly and validly issued, are fully paid and
             nonassessable.  As of the Initial Borrowing Date, Lane does
             not have  outstanding any  securities  convertible into  or
             exchangeable  for  its  capital  stock or  outstanding  any
             rights  to subscribe for or to purchase, or any options for
             the  purchase  of,  or  any agreements  providing  for  the
             issuance  (contingent  or  otherwise)  of,  or  any  calls,
             commitments  or claims  of any  character relating  to, its
             capital stock.

                       7.15  Subsidiaries.  (a)       On   the   Initial
             Borrowing Date and after  giving effect to the Transaction,
             INTERCO has no Subsidiaries other than the other Borrowers,
             their respective Subsidiaries and Interfashions Industries,
             S.A. and its Subsidiaries.

                       (b)    After giving  effect  to the  Transaction,
             INTERCO  will have  no  Subsidiaries other  than (i)  those
             Subsidiaries   listed   on   Schedule  VI   and   (ii)  new
             Subsidiaries created in compliance with this Agreement.

                       7.16  Compliance with Statutes, etc.  INTERCO and
             each of its Subsidiaries are in compliance with all applic-
             able statutes,  regulations and orders of,  and all applic-
             able  restrictions  imposed  by, all  governmental  bodies,
             domestic or  foreign, in  respect of  the conduct  of their
             business and  the  ownership of  their property  (including
             applicable statutes, regulations,  orders and  restrictions



                                         -65-


             


             relating to environmental  standards and controls),  except
             such noncompliances  as could  not, individually or  in the
             aggregate,  reasonably  be  expected  to  have  a  material
             adverse  effect  on  the  business,  operations,  property,
             assets, liabilities, condition  (financial or otherwise) or
             prospects  of  the Borrowers  taken as  a  whole or  of the
             Borrowers and  their  Restricted Subsidiaries  taken  as  a
             whole.

                       7.17  Investment  Company Act.   None  of INTERCO
             nor any of its Subsidiaries is an "investment company" or a
             company "controlled" by an "investment company," within the
             meaning of the Investment Company Act of 1940, as amended.

                       7.18  Public  Utility Holding Company  Act.  None
             of INTERCO nor any  of its Subsidiaries is a  "holding com-
             pany," or a "subsidiary company" of a "holding company," or
             an "affiliate" of a "holding  company" or of a  "subsidiary
             company" of  a "holding company" within the  meaning of the
             Public Utility Holding Company Act of 1935, as amended.

                       7.19  Environmental  Matters.  (a)   INTERCO  and
             each of  its Subsidiaries have  complied with,  and on  the
             date of each Credit  Event will be in compliance  with, all
             applicable Environmental Laws  and the requirements  of any
             permits issued under such Environmental Laws.  There are no
             pending  or, to the  best knowledge of  the Borrowers after
             due  inquiry,  threatened   Environmental  Claims   against
             INTERCO, or  any of its  Subsidiaries or any  Real Property
             owned or  operated by INTERCO  or any of  its Subsidiaries.
             There   are  no   facts,   circumstances,   conditions   or
             occurrences  on  any Real  Property  owned  or operated  by
             INTERCO  or  any  of  its  Subsidiaries  or,  to  the  best
             knowledge of INTERCO or the Borrowers after due inquiry, on
             any  property adjoining or in the vicinity of any such Real
             Property that, to the best knowledge of the Borrowers after
             due inquiry,  could reasonably be expected (i)  to form the
             basis of an Environmental  Claim against INTERCO or any  of
             its  Subsidiaries or  any such  Real Property,  or (ii)  to
             cause  any such Real Property to be subject to any restric-
             tions on the ownership,  occupancy, use or  transferability
             of such Real Property by INTERCO or any of its Subsidiaries
             under any applicable Environmental Law.

                       (b)  Hazardous Materials  have  not at  any  time
             been generated, used, treated  or stored on, or transported
             to  or from, any Real Property owned or operated by INTERCO
             or any  of its Subsidiaries  except in compliance  with all
             applicable Environmental Laws and so as not to give rise to
             an Environmental  Claim.   Hazardous Materials have  not at



                                         -66-


             


             any time been Released  on or from any Real  Property owned
             or operated by INTERCO or any of its Subsidiaries except in
             compliance with all applicable Environmental Laws and so as
             not to give rise to an Environmental Claim.

                       (c)  Notwithstanding anything to the  contrary in
             this Section 7.19, the representations made in this Section
             7.19  shall only be untrue  if the aggregate  effect of all
             failures and  noncompliances of the  types described  above
             could  reasonably be  expected to  have a  material adverse
             effect  on the business, operations, property, assets, lia-
             bilities,  condition (financial or  otherwise) or prospects
             of the Borrowers taken as  a whole or of the  Borrowers and
             their Restricted Subsidiaries taken as a whole.

                       7.20  Labor Relations.   None of  INTERCO nor any
             of its Subsidiaries is engaged in any unfair labor practice
             that  could  reasonably  be  expected to  have  a  material
             adverse effect on  the Borrowers  taken as a  whole or  the
             Borrowers  and  their  Restricted Subsidiaries  taken  as a
             whole.   There is  (i) no  unfair labor  practice complaint
             pending against INTERCO or  any of its Subsidiaries  or, to
             the best knowledge of the Borrowers, threatened against any
             of  them, before the National Labor Relations Board, and no
             material  grievance  or  material   arbitration  proceeding
             arising out of or under any collective bargaining agreement
             is  so pending against  INTERCO or any  of its Subsidiaries
             or,  to the  best  knowledge of  the Borrowers,  threatened
             against  any  of  them,  (ii)  no  strike,  labor  dispute,
             slowdown or stoppage pending against  INTERCO or any of its
             Subsidiaries or,  to the  best knowledge of  the Borrowers,
             threatened against  INTERCO or any of  its Subsidiaries and
             (iii)  to the  best knowledge  of  the Borrowers,  no union
             representation  proceeding  pending  with  respect  to  the
             employees  of INTERCO  or any  of its  Subsidiaries, except
             (with respect to any matter  specified in clause (i),  (ii)
             or (iii)  above, either  individually or in  the aggregate)
             such as could not reasonably be expected to have a material
             adverse  effect  on  the  business,  operations,  property,
             assets,  liabilities, condition (financial or otherwise) or
             prospects  of  the Borrowers  taken as  a  whole or  of the
             Borrowers and  their  Restricted Subsidiaries  taken  as  a
             whole.

                       7.21  Patents, Licenses, Franchises and Formulas.
             INTERCO  and  its Subsidiaries  own  all material  patents,
             trademarks,  permits,  service  marks, trade  names,  copy-
             rights, licenses, franchises and  formulas, or rights  with
             respect to the foregoing,  and have obtained assignments of
             all leases and other  rights of whatever nature, reasonably



                                         -67-


             


             necessary  for  the  present  conduct  of  their  business,
             without any known conflict with the rights of others which,
             or  the failure to obtain which, as  the case may be, could
             reasonably  be expected  to  result in  a material  adverse
             effect  on  the  business,  operations,  property,  assets,
             liabilities,   condition   (financial   or  otherwise)   or
             prospects  of  the Borrowers  taken as  a  whole or  of the
             Borrowers  and their  Restricted  Subsidiaries  taken as  a
             whole.

                       7.22  Indebtedness.    Schedule VII sets  forth a
             true  and complete  list of  all Indebtedness  for borrowed
             money of INTERCO and its Restricted  Subsidiaries as of the
             Initial Borrowing  Date and which is  to remain outstanding
             after giving effect to the Transaction (excluding the Loans
             and the  Letters of  Credit and the  Attributed Receivables
             Facility  Indebtedness,  the  "Existing Indebtedness"),  in
             each  case showing  the aggregate principal  amount thereof
             and  the  name of  the  respective borrower  and  any other
             entity which  directly or  indirectly guaranteed such  debt
             all of which Existing Indebtedness is or shall be evidenced
             by the Permitted Debt Agreements.

                       7.23  Transaction.  At  the time  of consummation
             thereof, the Transaction shall have been consummated in all
             respects in  accordance with  the terms of  the Transaction
             Documents  and all applicable laws.  At the time of consum-
             mation of  the Transaction, all consents  and approvals of,
             and filings  and registrations with, and  all other actions
             in respect  of, all governmental  agencies, authorities  or
             instrumentalities required  in order to make  or consummate
             the Transaction  will have  been obtained, given,  filed or
             taken and  are or will be in full force and effect (or eff-
             ective judicial  relief with  respect thereto has  been ob-
             tained), except where the failure  to so obtain, give, file
             or take would  not have  a material adverse  effect on  the
             business, operations, property, assets, liabilities, condi-
             tion (financial or otherwise) or prospects of the Borrowers
             taken as a whole  or of the Borrowers and  their Restricted
             Subsidiaries  taken as  a  whole.   All applicable  waiting
             periods with  respect thereto have  or, prior  to the  time
             when  required, will  have,  expired without,  in all  such
             cases, any  action being  taken by any  competent authority
             which  restrains,  prevents,  or imposes  material  adverse
             conditions upon the Transaction.   Additionally, there does
             not exist any judgment,  order or injunction prohibiting or
             imposing material  adverse conditions upon  the Transaction
             or the occurrence of any Credit Event or the performance by
             the   Credit  Parties  of   their  obligations   under  the
             respective  Documents.   All  actions taken  by the  Credit



                                         -68-


             


             Parties pursuant  to or  in furtherance of  the Transaction
             have been taken in  material compliance with the respective
             Documents and all applicable laws.

                       7.24  Special Purpose Corporation.   The  Receiv-
             ables Subsidiary was formed  for the purpose of purchasing,
             and  receiving contributions of,  receivables from  each of
             the Borrowers (other than INTERCO) and their respective Re-
             stricted Subsidiaries, and selling such receivables to  the
             Receivables   Purchasers,   pursuant  to   the  Receivables
             Facility and  except in connection with  the foregoing (and
             activities reasonably incidental thereto),  the Receivables
             Subsidiary  engages in  no business  activities and  has no
             significant  assets or  liabilities and  shall in  no event
             purchase receivables from any Unrestricted Subsidiary.

                       SECTION 8.   Affirmative Covenants.   Each of the
             Borrowers hereby covenants and agrees that on and after the
             Effective  Date  and until  the  Total  Commitment and  all
             Letters of  Credit and Acceptances have  terminated and the
             Loans,  Notes and Unpaid  Drawings, together with interest,
             Fees  and  all  other Obligations  incurred  hereunder  and
             thereunder, are paid in full:

                       8.01   Information Covenants.  The Borrowers will
             furnish to the  Agent, and the Agent  will promptly forward
             to each Bank:

                       (a)  Monthly Reports.   Within 30 days  after the
                  end of each calendar month  of INTERCO (within 45 days
                  after  the end of the last month of each Fiscal Year),
                  (i) the   combined balance  sheets of INTERCO  and its
                  Restricted Subsidiaries and (ii) the  consolidated and
                  consolidating   balance  sheets  of  INTERCO  and  its
                  Subsidiaries,  in each  case, as  at the  end of  such
                  month  and  the  related  combined,  consolidated  and
                  consolidating  statements  of   income  and   retained
                  earnings and  statement of  cash flows for  such month
                  and for the elapsed portion of the calendar year ended
                  with  the last day of such month, in each case setting
                  forth comparative figures  for the corresponding month
                  in the  prior calendar  year and the  budgeted figures
                  for  such month as set  forth in the respective budget
                  delivered pursuant to Section 8.01(e).

                       (b)  Quarterly Financial  Statements.  As soon as
                  available and  in any event  within 45 days  after the
                  close  of each  of the  first three  quarterly account
                  periods in each Fiscal  Year, (i) the combined balance
                  sheets of INTERCO and  its Restricted Subsidiaries and



                                         -69-


             


                  (ii) the consolidated and consolidating balance sheets
                  of INTERCO and its  Subsidiaries, in each case, as  at
                  the  end  of such  quarterly  period  and the  related
                  combined, consolidated and consolidating statements of
                  income and  retained earnings and cash  flows for such
                  quarterly period  and for  the elapsed portion  of the
                  Fiscal Year ended  with the last day of such quarterly
                  period and  setting forth comparative figures  for the
                  related  periods  in the  prior  Fiscal  Year and  the
                  budgeted  figures for  such  quarterly  period as  set
                  forth in the  respective budget delivered  pursuant to
                  Section 8.01(e) and (iii) management's  discussion and
                  analysis  of the  important operational  and financial
                  developments during such quarterly period.

                       (c)  Annual Financial Statements.  Within 95 days
                  after the close of each  Fiscal Year, (i) the combined
                  balance  sheets of INTERCO and its Restricted Subsidi-
                  aries; (ii) the consolidated and consolidating balance
                  sheets of INTERCO and  its Subsidiaries, in each case,
                  as  at the  end of  such Fiscal  Year and  the related
                  combined, consolidated and consolidating statements of
                  income  and retained  earnings and  of cash  flows for
                  such Fiscal Year setting forth comparative figures for
                  the preceding  Fiscal Year  and (A) certified,  in the
                  case of such consolidated financial statements and (B)
                  confirmed by a letter, in the case of the combined and
                  consolidating  statements, delivered  in substantially
                  the form of the  auditor's letter delivered to INTERCO
                  on February 8, 1994,  in each case by Peat  Marwick or
                  such other independent certified public accountants of
                  recognized national standing reasonably  acceptable to
                  the Agent,  together with a report  of such accounting
                  firm  stating that in the  course of its regular audit
                  of  the  financial  statements  of  INTERCO   and  its
                  Subsidiaries, which audit was conducted  in accordance
                  with  generally  accepted  auditing   standards,  such
                  accounting firm  obtained no knowledge of  any Default
                  or  Event  of  Default   which  has  occurred  and  is
                  continuing or,  if in  the opinion of  such accounting
                  firm  such a Default or Event  of Default with respect
                  to the  covenants set  forth in Sections  9.02 through
                  9.16,  inclusive, has  occurred and  is continuing,  a
                  statement as  to the nature thereof  and (iii) manage-
                  ment's discussion and analysis of the important opera-
                  tional and financial  developments during such  Fiscal
                  Year.

                       (d)  Management  Letters.  Promptly after the re-
                  ceipt thereof by INTERCO or any of its Restricted Sub-



                                         -70-


             


                  sidiaries, a copy of  any "management letter" received
                  by such Person from their certified public accountants
                  and the management's responses thereto.

                       (e)  Budgets.  No  later than  30 days  following
                  the commencement of the first day of each Fiscal Year,
                  a budget in form  satisfactory to the Agent (including
                  budgeted statements of income  and sources and uses of
                  cash and  balance sheets) prepared by  INTERCO for (x)
                  each of the twelve months of such Fiscal Year prepared
                  in  detail  and  (y) each  of  the  four  Fiscal Years
                  immediately following  such  Fiscal Year  prepared  in
                  summary  form,  in  each  case,  of  INTERCO  and  its
                  Restricted Subsidiaries, accompanied by  the statement
                  of  an Authorized  Representative  of  INTERCO to  the
                  effect that, to  the best of his knowledge, the budget
                  is a reasonable estimate for the period covered there-
                  by.

                       (f)  Officer's Certificates.   At the time of the
                  delivery  of the financial  statements provided for in
                  Section  8.01(a), (b)  and  (c), a  certificate of  an
                  Authorized  Representative of  INTERCO  to the  effect
                  that, to the best  of such Authorized Representative's
                  knowledge, no Default or Event of Default has occurred
                  and  is continuing  or,  if any  Default  or Event  of
                  Default has occurred and is continuing, specifying the
                  nature and extent thereof, which certificate shall, in
                  the case of any such financial statements delivered in
                  respect of a period ending on the last day of a fiscal
                  quarter  or  year  of   INTERCO,  (x)  set  forth  the
                  calculations   required   to  establish   whether  the
                  Borrowers were in  compliance with  the provisions  of
                  Section  4.02 (excluding Section 4.02(g)), 9.02, 9.03,
                  9.04, 9.05 and 9.07  through 9.10, inclusive, and 9.16
                  at the end of such fiscal quarter or year, as the case
                  may be, (y) if delivered with the financial statements
                  required by  Section 8.01(c), set forth  the amount of
                  Excess Cash  Flow for the respective  Excess Cash Flow
                  Payment Period and  (z) set  forth the  amount of  the
                  Available  $10 million  Basket Amount,  Available CapX
                  Amount,  Available Retained  Excess Cash  Flow Amount,
                  Available Unrestricted Proceeds Amount,  Available Net
                  Income  Amount  and  Available  Permitted  Acquisition
                  Amount  at  the  end  of the  period  covered  by such
                  financial  statements,  and all  sources  and uses  of
                  proceeds relating to  the calculation thereof changing
                  during the period covered by such statements.





                                         -71-


             


                       (g)  Notice  of Default or Litigation.  Promptly,
                  and in any event  within three Business Days after  an
                  executive  officer of  any Borrower  obtains knowledge
                  thereof,  notice of  (i) the  occurrence of  any event
                  which constitutes  a Default  or Event of  Default and
                  (ii)  any litigation or  governmental investigation or
                  proceeding pending  (x) against INTERCO or  any of its
                  Subsidiaries  which could  reasonably  be expected  to
                  materially   and   adversely   affect  the   business,
                  operations,  property, assets,  liabilities, condition
                  (financial or otherwise) or prospects of the Borrowers
                  taken as a whole or the Borrowers and their Restricted
                  Subsidiaries taken as a whole, (y) with respect to any
                  material  Indebtedness of  INTERCO and  its Restricted
                  Subsidiaries taken as  a whole or (z) with  respect to
                  any Document.

                       (h)  Other Reports and Filings.  Promptly, copies
                  of  all financial  information,  proxy  materials  and
                  other information and reports,  if any, which  INTERCO
                  or any of its  Restricted Subsidiaries shall file with
                  the Securities and Exchange  Commission or any succes-
                  sor  thereto (the "SEC") or deliver  to holders of its
                  Indebtedness pursuant  to the terms of  the documenta-
                  tion  governing such  Indebtedness  (or  any  trustee,
                  agent or other representative therefor).

                       (i)  Environmental  Matters.  Promptly  upon, and
                  in  any  event  within  ten Business  Days  after,  an
                  executive officer of INTERCO  or any of its Restricted
                  Subsidiaries  obtains knowledge thereof, notice of one
                  or more of the following environmental matters, unless
                  such environmental matters could not,  individually or
                  when  aggregated with  all  other  such  environmental
                  matters,  be  reasonably  expected to  materially  and
                  adversely affect the  business, operations,  property,
                  assets,    liabilities,   condition    (financial   or
                  otherwise) or  prospects of  the Borrowers taken  as a
                  whole or of the Borrowers and their Restricted Subsid-
                  iaries taken as a whole:

                            (i)  any pending or threatened Environmental
                       Claim against INTERCO or  any of its Subsidiaries
                       or any Real Property owned or operated by INTERCO
                       or any of its Subsidiaries; 

                           (ii)  any condition or occurrence on or aris-
                       ing from  any Real Property owned  or operated by
                       INTERCO or  any of its Subsidiaries  that (a) re-
                       sults in  noncompliance by INTERCO or  any of its



                                         -72-


             


                       Subsidiaries  with  any applicable  Environmental
                       Law or  (b) could reasonably be  expected to form
                       the  basis  of  an  Environmental  Claim  against
                       INTERCO or  any of  its Subsidiaries or  any such
                       Real Property;

                          (iii)  any condition or occurrence on any Real
                       Property owned  or operated by INTERCO  or any of
                       its   Subsidiaries   that  could   reasonably  be
                       expected to  cause such Real Property  to be sub-
                       ject  to any restrictions on the ownership, occu-
                       pancy, use or  transferability by INTERCO or  any
                       of its Subsidiaries of  such Real Property  under
                       any Environmental Law; and 

                           (iv)   the taking of any  removal or remedial
                       action in response to the actual or alleged pres-
                       ence  of  any  Hazardous  Material  on  any  Real
                       Property owned  or operated by INTERCO  or any of
                       its Subsidiaries as required by any Environmental
                       Law  or any governmental  or other administrative
                       agency; provided that in  any event the Borrowers
                       shall deliver  to each Bank  all notices received
                       by them  or any of their  respective Subsidiaries
                       from any government or governmental agency under,
                       or pursuant to, CERCLA.

                  All  such notices shall  describe in reasonable detail
                  the  nature of  the  claim, investigation,  condition,
                  occurrence  or removal  or  remedial action,  and  the
                  Borrowers' or such Subsidiary's  response thereto.  In
                  addition,  the Borrowers  will provide the  Banks with
                  copies   of  all  material   communications  with  any
                  government or governmental agency relating to Environ-
                  mental Laws, all communications with any Person (other
                  than  its  attorneys)  relating  to  any Environmental
                  Claim of which notice is required to be given pursuant
                  to this Section 8.01(i), and  such detailed reports of
                  any  such  Environmental Claim  as  may reasonably  be
                  requested by the Banks.

                       (j)  Annual Meetings with Banks.  At  the request
                  of the Agent,  INTERCO shall within 120 days after the
                  close of each Fiscal Year hold a meeting at a time and
                  place selected by INTERCO  and acceptable to the Agent
                  with  all of the Banks  at which meeting  shall be re-
                  viewed the financial  results of  the previous  Fiscal
                  Year and  the financial  condition of INTERCO  and the
                  budgets presented for the current Fiscal Year. 




                                         -73-


             


                       (k)  Other Information.  From time to time,  such
                  other   information   or   documents   (financial   or
                  otherwise)  with  respect to  INTERCO  or  any of  its
                  Subsidiaries as  any Bank  may  reasonably request  in
                  writing.

                       8.02   Books, Records and Inspections.   The Bor-
             rowers will,  and will cause  each of their  respective Re-
             stricted Subsidiaries  to, keep proper books  of record and
             account  in  which  full,   true  and  correct  entries  in
             conformity  with  generally accepted  accounting principles
             and all requirements of  law shall be made of  all dealings
             and   transactions  in   relation  to   its   business  and
             activities.   The Borrowers will,  and will  cause each  of
             their   respective   Restricted  Subsidiaries   to,  permit
             officers and designated representatives of the Agent or the
             Required  Banks  to  visit and  inspect,  after  reasonable
             notice during regular business  hours and under guidance of
             officers of the  Borrowers or  such Restricted  Subsidiary,
             any of the properties  of the Borrowers or such  Restricted
             Subsidiary, and to examine the books of account of the Bor-
             rowers  or  such  Restricted  Subsidiary  and  discuss  the
             affairs,  finances and  accounts of  the Borrowers  or such
             Restricted Subsidiary with,  and be advised as to  the same
             by, its and their officers and independent accountants, all
             at such reasonable times and  intervals and to such reason-
             able extent as the Agent or such Bank may request.

                       8.03   Maintenance of  Property; Insurance.   (a)
             Schedule VIII sets forth a true and complete listing of all
             insurance (including self-insurance programs) maintained by
             INTERCO and its Restricted Subsidiaries as of the Effective
             Date.  The  Borrowers will,  and will cause  each of  their
             respective  Restricted  Subsidiaries   to,  (i)  keep   all
             property necessary  in its  business in good  working order
             and  condition  (ordinary  wear and  tear  excepted),  (ii)
             maintain  insurance on  all its property  in at  least such
             amounts and  against at least  such risks as  is consistent
             and in accordance with  industry practice and (iii) furnish
             to the Agent, upon written request,  full information as to
             the insurance carried.  In addition to the  requirements of
             the  immediately preceding sentence,  the Borrowers will at
             all  times  cause  insurance  of  the  types  described  in
             Schedule  VIII to  be maintained  (with the  same scope  of
             coverage  as that  described  in Schedule  VIII) at  levels
             which  are at  least  as  great  as the  respective  amount
             described  opposite  the respective  type  of  insurance on
             Schedule  VIII under  the  column  headed  "Minimum  Amount
             Required to be Maintained."




                                         -74-


             


                       (b)  Except   with   respect  to   self-insurance
             programs listed  on Schedule VIII, the  Borrowers will, and
             will cause their respective  Restricted Subsidiaries to, at
             all times  keep their respective property  insured in favor
             of  the  Collateral  Agent,  and  all  policies  (including
             Mortgage Policies)  or  certificates (or  certified  copies
             thereof)  with respect  to  such insurance  (and any  other
             insurance  maintained  by the  Borrowers  or  any of  their
             respective  Restricted Subsidiaries) (i)  shall be endorsed
             to the  Collateral Agent's satisfaction for  the benefit of
             the  Collateral Agent  (including,  without limitation,  by
             naming  the Collateral Agent as  loss payee or  as an addi-
             tional insured (provided, that  INTERCO and its  Restricted
             Subsidiaries  shall be  permitted  to settle  claims in  an
             amount  less than  $10,000,000 per  claim,  so long  as the
             proceeds from  such claims  are applied in  accordance with
             Section  4.02(h))), (ii)  shall state  that such  insurance
             policies  shall not  be  cancelled without  30 days'  prior
             written  notice thereof  by the  respective insurer  to the
             Collateral Agent, (iii) shall  provide that the  respective
             insurers  irrevocably   waive   any  and   all  rights   of
             subrogation with  respect to  the Collateral Agent  and the
             Secured  Creditors, (iv)  shall  contain the  standard non-
             contributory mortgagee  clause endorsement in favor  of the
             Collateral Agent with respect to hazard insurance coverage,
             (v) shall, except in the case of public liability insurance
             and  workers'  compensation  insurance,  provide  that  any
             losses  shall be  payable  notwithstanding (A)  any act  or
             neglect  of  the  Borrowers  or  any  of  their  respective
             Restricted Subsidiaries,  (B) the occupation or  use of the
             properties for purposes more hazardous than those permitted
             by the terms of  the respective policy if such  coverage is
             obtainable at  commercially reasonable rates and  is of the
             kind  from  time to  time  customarily  insured against  by
             Persons  owning  or  using  similar property  and  in  such
             amounts  as are  customary,  (C) any  foreclosure or  other
             proceeding  relating  to  the  insured  properties  if such
             coverage is  available at commercially reasonable  rates or
             (D) any change in  the title to or ownership  or possession
             of the insured properties and (vi)  shall be deposited with
             the  Collateral  Agent if  such  coverage  is available  at
             commercially reasonable rates.

                       (c)  If the Borrowers or any of their  respective
             Restricted   Subsidiaries  shall   fail  to   maintain  all
             insurance in  accordance with this Section 8.03,  or if the
             Borrowers or any  of their  respective Restricted  Subsidi-
             aries  shall fail to so endorse and deposit all policies or
             certificates with  respect  thereto, the  Agent and/or  the
             Collateral  Agent shall have the right  (but shall be under



                                         -75-


             


             no  obligation) after  giving  notice to  INTERCO (but  not
             requiring  any  consent  from  INTERCO)  to  procure   such
             insurance and the Borrowers  agree to jointly and severally
             reimburse the Agent  or the Collateral  Agent, as the  case
             may be,  for  all  costs  and expenses  of  procuring  such
             insurance.

                       8.04  Corporate Franchises.   The Borrowers will,
             and will cause each of their respective Restricted Subsidi-
             aries (other  than Interfashions  Industries, S.A.  and its
             Subsidiaries)  to,  do  or cause  to  be  done,  all things
             necessary to preserve and keep in full force and effect its
             existence and its material rights, franchises, licenses and
             patents;  provided, however, that  nothing in  this Section
             8.04   shall  prevent   (i)  sales   of  assets   or  other
             transactions   by  INTERCO   or   any  of   its  Restricted
             Subsidiaries in  accordance with  Section 9.02 or  (ii) the
             withdrawal by INTERCO or  any of Restricted Subsidiaries of
             its qualification  as a  foreign corporation in  any juris-
             diction where  such withdrawal could not  reasonably be ex-
             pected to have  a material adverse effect  on the business,
             operations,   property,   assets,  liabilities,   condition
             (financial  or otherwise)  or  prospects of  the  Borrowers
             taken as a  whole or   the Borrowers  and their  Restricted
             Subsidiaries taken as a whole.

                       8.05   Compliance with  Statutes, etc.   The Bor-
             rowers  will,  and  will  cause each  of  their  respective
             Subsidiaries  to,  comply  with  all  applicable  statutes,
             regulations and orders of, and all applicable  restrictions
             imposed by,  all governmental bodies, domestic  or foreign,
             in respect of the conduct of its business and the ownership
             of its  property, except such noncompliances  as could not,
             individually or in the aggregate, reasonably be expected to
             have a material adverse effect on the business, operations,
             property,  assets,  liabilities,  condition  (financial  or
             otherwise) or  prospects of the Borrowers taken  as a whole
             or of the Borrowers and their Restricted Subsidiaries taken
             as a whole.

                       8.06  Compliance  with  Environmental  Laws.  (a)
             The Borrowers  will comply,  and will cause  each of  their
             respective Subsidiaries to comply, in all material respects
             with all Environmental Laws  applicable to the ownership or
             use of its Real Property now or hereafter owned or operated
             by  INTERCO or  any  of  its  Subsidiaries, will  within  a
             reasonable  time period pay or  cause to be  paid all costs
             and expenses incurred in  connection with such  compliance,
             and  will keep or  cause to be kept  all such Real Property
             free and clear of  any Liens on such Real  Property imposed



                                         -76-


             


             pursuant to  such Environmental Laws; provided,  that, none
             of INTERCO nor any of its Subsidiaries shall be required to
             remove any such Liens,  so long as the aggregate  amount of
             obligations purported to be secured by  such Liens does not
             exceed $1,000,000,  and such  Liens are being  contested in
             good faith and  by proper proceedings if it  has maintained
             adequate  reserves with respect  thereto in accordance with
             generally accepted accounting principles.   None of INTERCO
             nor  any of  its  Subsidiaries will  generate, use,  treat,
             store,  release or  dispose of,  or permit  the generation,
             use, treatment, storage,  release or disposal  of Hazardous
             Materials on  any Real Property  now or hereafter  owned or
             operated  by  INTERCO  or   any  of  its  Subsidiaries,  or
             transport  or   permit  the  transportation   of  Hazardous
             Materials  to or  from any  such  Real Property  except for
             Hazardous  Materials used or stored  at any such Real Prop-
             erties in material compliance  with all applicable Environ-
             mental Laws and reasonably  required in connection with the
             operation, use and maintenance of any such Real Property.

                       (b)  At the  written request of the  Agent or the
             Required Banks,  which request shall specify  in reasonable
             detail the basis  therefor, at  any time and  from time  to
             time, the  Borrowers will provide, at  the Borrowers' joint
             and   several  cost  and  expense,  an  environmental  site
             assessment  report  concerning  any  Real Property  now  or
             hereafter  owned  or  operated  by INTERCO  or  any  of its
             Subsidiaries,  prepared by an environmental consulting firm
             approved by  the Agent, indicating the  presence or absence
             of  Hazardous  Materials  and  the potential  cost  of  any
             removal or remedial action in connection with any Hazardous
             Materials  on  such  Real  Property;  provided,  that  such
             request  may be made only if  (i) there has occurred and is
             continuing an  Event of Default, (ii)  the Agent reasonably
             believes that INTERCO, any of  its Subsidiaries or any such
             Real   Property  is   not  in   material  compliance   with
             Environmental   Law,  or  (iii)  circumstances  exist  that
             reasonably  could be  expected  to  form  the  basis  of  a
             material  Environmental Claim  against INTERCO, any  of its
             Subsidiaries or any such  Real Property.  If  the Borrowers
             fail  to provide the same within 90 days after such request
             was made, the Agent  may order the same, and  the Borrowers
             shall grant and hereby grant to the Agent and the Banks and
             their agents access to  such Real Property and specifically
             grant the Agent and  the Banks an irrevocable non-exclusive
             license,  subject to  the rights  of tenants,  to undertake
             such an assessment, all at the Borrowers' joint and several
             expense.





                                         -77-


             


                       8.07   ERISA.  As  soon as  possible and,  in any
             event, within  10 days after the Borrowers or any of  their
             respective  Restricted Subsidiaries or  any ERISA Affiliate
             knows or has reason to know of the occurrence of any of the
             following, the Borrowers will deliver to the Agent, and the
             Agent  shall promptly forward to each Bank a certificate of
             an Authorized Representative of the Borrowers setting forth
             details  as to such occurrence and the action, if any, that
             the  Borrowers, such  Restricted  Subsidiary or  such ERISA
             Affiliate is  required or  proposes to take,  together with
             any  notices required or proposed  to be given  to or filed
             with or  by the Borrowers, such  Restricted Subsidiary, the
             ERISA Affiliate, the  PBGC, or  a Plan  participant or  the
             Plan administrator with respect thereto:  that a Reportable
             Event has occurred; that  an accumulated funding deficiency
             has been incurred or an application is likely  to be or has
             been made to the Secretary of the Treasury for a  waiver or
             modification of the minimum funding standard (including any
             required  installment  payments)  or  an extension  of  any
             amortization  period under  Section  412 of  the Code  with
             respect  to a Plan; that a contribution required to be made
             to a Plan or Foreign Pension Plan has not been timely made;
             that  a Plan  has  been or  is  reasonably expected  to  be
             terminated, reorganized, partitioned or  declared insolvent
             under  Title IV  of  ERISA; that  a  Plan has  an  Unfunded
             Current  Liability giving rise to a lien under ERISA or the
             Code;  that  proceedings  are  likely to  be  or  have been
             instituted or notice has been given to terminate or appoint
             a  trustee to administer a Plan, that a proceeding has been
             instituted pursuant  to Section 515  of ERISA to  collect a
             delinquent contribution  to a  Plan if material  in amount;
             that  the  Borrowers, any  of  their respective  Restricted
             Subsidiaries or  any ERISA Affiliate will  or is reasonably
             expected  to incur  any material  liability  (including any
             indirect,  contingent  or  secondary  liability)  to or  on
             account  of the termination  of or  withdrawal from  a Plan
             under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
             ERISA or with respect  to a Plan under Section  401(a)(29),
             4971, 4975  or 4980 of the Code or Section 409 or 502(i) or
             502(l) of ERISA;  or that the  Borrowers or any  Restricted
             Subsidiary is  reasonably expected  to incur any  liability
             pursuant to  any employee welfare benefit  plan (as defined
             in Section 3(1) of ERISA) that provides benefits to retired
             employees or other former employees (other than as required
             by Section  601 of ERISA) which  liability could reasonably
             be  expected to  have  a  material  adverse effect  on  the
             business,   operations,   property,  assets,   liabilities,
             condition  (financial  or  otherwise) or  prospects  of the
             Borrowers  taken  as  a  whole  or the  Borrowers  and  the
             Restricted Subsidiaries  taken as a whole,  or any employee



                                         -78-


             


             pension benefit plan (as defined in Section 3(2) of ERISA).
             Upon  request, the  Borrowers will  deliver to each  of the
             Banks a complete copy  of the annual report (Form  5500) of
             each Plan required  to be filed  with the Internal  Revenue
             Service.  In addition to any certificates or notices deliv-
             ered  to the Banks  pursuant to the  first sentence hereof,
             copies  of such  annual  reports and  any material  notices
             received  by  the  Borrowers  or any  of  their  respective
             Restricted Subsidiaries or any ERISA Affiliate with respect
             to any Plan or  Foreign Pension Plan shall be  delivered to
             the Banks no later than 20 days after the  date such report
             has  been requested or such notice has been received by the
             Borrowers,   the   Restricted  Subsidiary   or   the  ERISA
             Affiliate, as applicable.

                       8.08    End  of  Fiscal  Years;  Fiscal Quarters.
             INTERCO shall cause (i) each of its Fiscal Years to  end on
             December  31, and each of its fiscal quarters to end on the
             last day of  each March, June,  September and December  and
             (ii) each of its  Restricted Subsidiaries' (x) fiscal years
             to  end  on the  closest Saturday  to  December 31  and (y)
             fiscal  quarters to end on the closest Saturday to the last
             day of each March, June, September and December.

                       8.09   Performance of  Obligations.  Each  of the
             Borrowers will, and will cause each of its Subsidiaries to,
             perform all  of  its obligations  under the  terms of  each
             mortgage,  indenture, security  agreement  and  other  debt
             instrument by  which it  is bound, except  such non-perfor-
             mances  as could  not,  individually or  in the  aggregate,
             reasonably be expected to have a material adverse effect on
             the  business,  operations, property,  assets, liabilities,
             condition  (financial  or otherwise)  or  prospects  of the
             Borrowers  taken as  a whole  or of  the Borrowers  and the
             Restricted Subsidiaries taken as a whole.

                       8.10  Payment of Taxes; Post-Closing Tax Certifi-
             cate.  (a) Each of the Borrowers will  pay and discharge or
             cause to be  paid and  discharged, and will  cause each  of
             their  respective  Subsidiaries to  pay and  discharge, all
             material  taxes, assessments  and  governmental charges  or
             levies  imposed upon it or  upon its income  or profits, or
             upon any material  properties belonging to it, in each case
             on  a timely basis, and all lawful claims which, if unpaid,
             might  become  a  lien  or charge  upon  any  properties of
             INTERCO or  any of  its  Restricted Subsidiaries;  provided
             that none of INTERCO  nor any of its Subsidiaries  shall be
             required to pay  any such tax, assessment,  charge, levy or
             claim  which is being contested in good faith and by proper
             proceedings  if it  has maintained  adequate reserves  with



                                         -79-


             


             respect  thereto  in  accordance  with  generally  accepted
             accounting principles.

                       (b)  On or  before the date which  is thirty days
             after  the  Initial  Borrowing  Date, the  chief  financial
             officer  of INTERCO  shall have  delivered  to the  Agent a
             certificate (i)  as  to  the amount  of  the  Converse  Tax
             Liability  (determined as  described in  clause (x)  of the
             definition thereof)  as of the Initial  Borrowing Date, and
             (ii) indicating  that INTERCO's basis in  the capital stock
             of (x)  Converse spun-off  in connection with  the Converse
             Disposition was an amount not less than $165,000,000 at the
             time of the consummation thereof and (y) Florsheim spun-off
             in connection with the  Florsheim Disposition was an amount
             not less than  $50,000,000 at the time of  the consummation
             thereof, which certificate shall set forth the calculations
             for the  matters described  therein and  the timing  of any
             estimated payment in respect of the Converse Tax Liability,
             all in form and substance satisfactory to the Agent.

                       8.11  Additional  Security;  Further  Assurances;
             Required  Appraisals.   (a)  The Borrowers  will, and  will
             cause each of their respective Restricted Subsidiaries  to,
             grant  to  the  Collateral  Agent  security  interests  and
             mortgages  (an "Additional Mortgage") in such Real Property
             (other than Real Property  encumbered by (i) liens incurred
             by  a  Restricted  Subsidiary at  a  time  when  it was  an
             Unrestricted  Subsidiary,  to  the  extent  such Liens  are
             otherwise  permitted  by  this  Agreement  and  (ii)  Liens
             securing  Indebtedness permitted  pursuant to  Section 9.04
             (vii), but only  until such  time as  such Indebtedness  is
             repaid)  of  the  Borrowers  or  any  of  their  respective
             Restricted Subsidiaries as are  not covered by the original
             Mortgages,  to the  extent such  Real Property  is acquired
             after the Effective Date and either (x) the cost (including
             assumed Indebtedness) of such Real Property is in excess of
             $2,500,000 or  (y) the respective  Additional Mortgage  has
             been  requested  by  the  Required Banks  (each  such  Real
             Property,  an "Additional  Mortgaged Property").   All such
             Additional Mortgages shall be granted  pursuant to documen-
             tation substantially in the form of the Mortgages delivered
             to the Agent on the Effective Date or in such other form as
             is  reasonably   satisfactory  to   the  Agent   and  shall
             constitute valid  and enforceable perfected  Liens superior
             to and prior to the rights of all third Persons and subject
             to no other Liens  except as are permitted by  Section 9.01
             at the  time of perfection  thereof.  The  Additional Mort-
             gages or  instruments related thereto shall  have been duly
             recorded or filed in such manner and in  such places as are
             required by law to establish, perfect, preserve and protect



                                         -80-


             


             the Liens in favor  of the Collateral Agent required  to be
             granted pursuant to the Additional Mortgages and all taxes,
             fees  and other  charges  payable  in connection  therewith
             shall have been paid in full. 

                       (b)  The Borrowers will, and  will cause each  of
             their  respective Restricted Subsidiaries  to, at the joint
             and  several  expense  of  the  Borrowers,  make,  execute,
             endorse, acknowledge, file and/or deliver to the Collateral
             Agent from time to time such vouchers, invoices, schedules,
             confirmatory     assignments,    conveyances,     financing
             statements,  transfer  endorsements,  powers  of  attorney,
             certificates,  real property  surveys,  reports  and  other
             assurances  or  instruments  and  take  such further  steps
             relating to the  Collateral covered by any of  the Security
             Documents as  the Collateral Agent  may reasonably  require
             pursuant to this Section  8.11.  Furthermore, the Borrowers
             shall  cause to be  delivered to the  Collateral Agent such
             opinions  of  counsel, title  insurance  and  other related
             documents as  may be requested  by the Collateral  Agent to
             assure  itself that  this  Section 8.11  has been  complied
             with.

                       (c)     Each  Borrower   agrees  to   cause  each
             Restricted  Subsidiary established or created in accordance
             with  Section 9.12 to execute and deliver a guaranty of all
             Obligations   and  all  obligations   under  Interest  Rate
             Protection Agreements  in  substantially the  form  of  the
             Subsidiary  Guaranty,  or  by   becoming  a  party  to  the
             Subsidiary Guaranty.

                       (d)   Each Borrower agrees  to pledge all  of the
             capital stock of each new Subsidiary (other than any Subsi-
             diary of  an Unrestricted Subsidiary) created in accordance
             with Section 9.12  to the Collateral Agent  for the benefit
             of the Secured Creditors pursuant to the Pledge Agreement.

                       (e)   Each  Borrower will  cause each  Restricted
             Subsidiary  established  or  created  in   accordance  with
             Section  9.12  to grant  to  the Collateral  Agent  a first
             priority Lien on all  property (tangible and intangible) of
             such  Subsidiary upon terms  similar to those  set forth in
             the Security Documents as  appropriate, and satisfactory in
             form and substance to  the Agent and Required Banks.   Each
             Borrower  shall cause  each  of  its respective  Restricted
             Subsidiaries, at its  own expense, to  execute, acknowledge
             and deliver, or  cause the  execution, acknowledgement  and
             delivery of, and thereafter register, file or record in any
             appropriate governmental office, any document or instrument
             reasonably deemed  by the Collateral Agent  to be necessary



                                         -81-


             


             or  desirable  for  the  creation  and  perfection  of  the
             foregoing Liens.   Each  Borrower will  cause  each of  its
             respective  Restricted  Subsidiaries  to  take  all actions
             requested  by the Agent (including, without limitation, the
             filing of UCC-1's) in connection with the granting  of such
             security interests.

                       (f)    The  security  interests  required  to  be
             granted  pursuant to  this  Section 8.11  shall be  granted
             pursuant   to  security   documentation  (which   shall  be
             substantially  similar to  the  Security Documents  already
             executed  and  delivered  by  INTERCO  and  its  Restricted
             Subsidiaries, as applicable)  or otherwise satisfactory  in
             form and substance to the Agent  and shall constitute valid
             and enforceable  perfected security interests prior  to the
             rights of all third  Persons and subject to no  other Liens
             except  such Liens as are  permitted by Section  9.01.  The
             Additional Security Documents and other instruments related
             thereto  shall be duly recorded or filed in such manner and
             in such places and at such  times as are required by law to
             establish, perfect,  preserve  and protect  the  Liens,  in
             favor  of  the  Collateral Agent  for  the  benefit of  the
             respective  Secured  Creditors,   required  to  be  granted
             pursuant  to  the  Additional Security  Documents  and  all
             taxes,   fees  and  other  charges  payable  in  connection
             therewith shall be paid, jointly  and severally, in full by
             the Borrowers.  At  the time of the execution  and delivery
             of  the Additional Security  Documents, the Borrowers shall
             cause to be delivered to the Collateral Agent such opinions
             of counsel,  Mortgage Policies, title  surveys, real estate
             appraisals and other related documents as may be reasonably
             requested  by the  Agent  or the  Required Banks  to assure
             themselves that this Section 8.11 has been complied with.

                       (g)   In the event that the Agent or the Required
             Banks at any time after the Effective Date determine in its
             or their good faith  discretion that real estate appraisals
             satisfying the requirements of FIRREA (any such appraisal a
             "Required Appraisal") are or  were required to be obtained,
             or  should be  obtained, in  connection with  any Mortgaged
             Property  or Mortgaged  Properties, then,  within  120 days
             after receiving  written notice  thereof from the  Agent or
             the  Required  Banks, as  the  case may  be,  such Required
             Appraisal  shall  be  delivered,  at  the  expense  of  the
             Borrowers, to  the Agent which Required  Appraisal, and the
             respective appraiser, shall be satisfactory to the Agent.

                       (h)  Each  of  the  Borrowers  agrees  that  each
             action required above by  Section 8.11 (a) or (b)  shall be
             completed as soon as  possible, but in no event  later than



                                         -82-


             


             60 days after  such action is requested to  be taken by the
             Agent or the Required Banks.  Each of the Borrowers further
             agrees that  each action required by  Section 8.11(c), (d),
             (e) and (f) with respect to the Additional Collateral shall
             be completed contemporaneously  with the  creation of  such
             new Subsidiary.

                       8.12  Interest  Rate Protection.   No  later than
             the  90th  day  after   the  Initial  Borrowing  Date,  the
             Borrowers shall enter into, and shall maintain for a period
             of  three   years  thereafter,  Interest   Rate  Protection
             Agreements acceptable to the  Agent establishing a fixed or
             maximum interest rate acceptable to the Agent in respect of
             at least $170,000,000 of outstanding Term Loans.

                       8.13  Ownership of Subsidiaries.   INTERCO  shall
             at all times own  100% of the outstanding capital  stock of
             the  other  Borrowers.    Except to  the  extent  otherwise
             expressly consented  in writing  by the Required  Banks and
             except  as set  forth in  Schedule VI, the  Borrowers shall
             directly or  indirectly own  100% of  the capital  stock of
             each  of  their  Subsidiaries   (other  than  as  permitted
             pursuant to the definition of Permitted Acquisition).

                       8.14  Permitted  Acquisitions.    Subject to  the
             provisions of this Section  8.14, Section 9.02(vii) and the
             requirements  contained  in  the  definition  of  Permitted
             Acquisition,   the   Borrowers    and   their    Restricted
             Subsidiaries  may  from  time  to time  after  the  Initial
             Borrowing Date  effect Permitted Acquisitions,  so long  as
             (i)  the Borrowers shall have given the Agent and the Banks
             at  least 10  Business  Days' prior  written notice  of any
             Permitted Acquisition, (ii)  based on calculations made  by
             the Borrowers on a  Pro Forma Basis after giving  effect to
             the  respective Permitted Acquisition,  no Default or Event
             of Default will exist under,  or would have existed  during
             the periods  covered by, the  financial covenants contained
             in  Sections   9.08  through   9.10,  inclusive,   of  this
             Agreement, (iii) based  on good faith  projections prepared
             by  the Borrowers  for  the period  from  the date  of  the
             consummation of the Permitted Acquisition to the date which
             is one year thereafter,  the level of financial performance
             measured  by  the  covenants  set forth  in  Sections  9.08
             through 9.10  inclusive shall  be better  than or  equal to
             such  level as would be required to provide that no Default
             or  Event  of  Default  would  exist  under  the  financial
             covenants   contained  in   Sections  9.08   through  9.10,
             inclusive,  of  this  Agreement  as  compliance  with  such
             covenants would be required  through the date which  is one
             year from  the date of  the consummation of  the respective



                                         -83-


             


             Permitted  Acquisition,  (iv)  the Agent  shall  have  been
             satisfied in  its reasonable discretion  that the  proposed
             Permitted Acquisition  could not reasonably be  expected to
             result  in materially increased tax, ERISA or environmental
             liabilities  with   respect  to  INTERCO  or   any  of  its
             Restricted Subsidiaries  and (v)  the Borrowers shall  have
             delivered to the Agent an officer's certificate executed by
             an Authorized  Representative of the  Borrowers, certifying
             (A) to  the  best of  his  knowledge, compliance  with  the
             requirements of  preceding clauses (i), (ii)  and (iii) and
             containing  the  calculations  required  by  the  preceding
             clauses  (ii)  and  (iii)   and  (B)  compliance  with  the
             requirements of Section 9.02(vii).

                       8.15  Maintenance   of  Corporate   Separateness.
             INTERCO  will, and will cause  each of its Subsidiaries to,
             satisfy  customary  corporate  formalities,  including  the
             holding  of regular  board of directors'  and shareholders'
             meetings or  action by directors or  shareholders without a
             meeting  and  the  maintenance  of  corporate  offices  and
             records.  None of the Borrowers nor any of their respective
             Restricted  Subsidiaries  shall  make   any  payment  to  a
             creditor of any Unrestricted Subsidiaries in respect of any
             liability  of any  Unrestricted Subsidiaries,  and no  bank
             account  of any Unrestricted Subsidiary shall be commingled
             with any  bank account of  any of  the Borrowers or  any of
             their  respective Restricted  Subsidiaries.   Any financial
             statements distributed to any creditors of any Unrestricted
             Subsidiaries  shall  clearly   establish  or  indicate  the
             corporate separateness of such Unrestricted Subsidiary from
             the Borrowers and their respective Restricted Subsidiaries.
             Finally, neither INTERCO nor  any of its Subsidiaries shall
             take  any action, or conduct its affairs in a manner, which
             is  likely to result in  the corporate existence of INTERCO
             or  any of its Subsidiaries being ignored, or in the assets
             and liabilities of the Borrowers or any of their respective
             Restricted  Subsidiaries  being substantively  consolidated
             with  those of  any  Unrestricted Subsidiaries  in a  bank-
             ruptcy, reorganization or other insolvency proceeding.

                       8.16    Cash  Management System.    The Borrowers
             will, and  will cause  each of their  respective Restricted
             Subsidiaries to,  utilize and maintain the  Cash Management
             System  for all deposits made by any of them (including the
             concentration  of all  such deposits  in the  Concentration
             Account).   The  Cash Management  System shall  be operated
             solely  for  the  business   of  the  Borrowers  and  their
             respective Restricted Subsidiaries.





                                         -84-


             


                       SECTION  9.  Negative  Covenants.   The Borrowers
             covenant and agree that on and after the Effective Date and
             until the Total  Commitments and all Letters  of Credit and
             Acceptances have terminated and the Loans, Notes and Unpaid
             Drawings, together with interest,  Fees and all other Obli-
             gations  incurred  hereunder  and thereunder,  are  paid in
             full:

                       9.01  Liens.   The Borrowers will  not, and  will
             not permit any of  their respective Restricted Subsidiaries
             to,  create, incur, assume or suffer to exist any Lien upon
             or  with  respect  to  any  property  or  assets  (real  or
             personal, tangible or intangible) of INTERCO  or any of its
             Restricted  Subsidiaries, whether  now  owned or  hereafter
             acquired, or sell any such property or assets subject to an
             understanding  or  agreement, contingent  or  otherwise, to
             repurchase  such property  or  assets  (including sales  of
             accounts receivable with recourse to INTERCO or  any of its
             Restricted Subsidiaries), or  assign any  right to  receive
             income  or permit  the  filing of  any financing  statement
             under the UCC or any other similar notice of Lien under any
             similar  recording or  notice  statute;  provided that  the
             provisions  of  this Section  9.01  shall  not prevent  the
             creation,  incurrence, filing,  assumption or  existence of
             the following (Liens described below are herein referred to
             as "Permitted Liens"): 

                      (i)  incipient  Liens  for  taxes, assessments  or
                  governmental charges or levies not yet due and payable
                  or  Liens  for  taxes,  assessments   or  governmental
                  charges or levies being contested in good faith and by
                  appropriate  proceedings  for which  adequate reserves
                  have been  established  in accordance  with  generally
                  accepted  accounting principles  in the  United States
                  (or the equivalent  thereof in any country  in which a
                  Foreign Sales  Corporation or a Foreign  Subsidiary is
                  doing business, as applicable);

                     (ii)  Liens in respect of property or assets of the
                  Borrowers  or any  of  their  Restricted  Subsidiaries
                  imposed by  law, which  were incurred in  the ordinary
                  course of business and  do not secure Indebtedness for
                  borrowed  money,  such  as carriers',  warehousemen's,
                  materialmen's and  mechanics' liens and  other similar
                  Liens arising in the  ordinary course of business, and
                  (x) which do not  in the aggregate  materially detract
                  from the  value of  the Borrowers' or  such Restricted
                  Subsidiary's  property or assets  or materially impair
                  the use thereof  in the operation  of the business  of
                  the  Borrowers   or  such  Restricted   Subsidiary  or



                                         -85-


             


                  (y) which are being contested  in good faith by appro-
                  priate proceedings, which  proceedings have the effect
                  of preventing  the forfeiture or sale  of the property
                  or assets subject to any such Lien;

                    (iii)  Liens  in  existence  on  the  Effective Date
                  which are  listed,  and the  property subject  thereto
                  described, in Schedule IX,  but only to the respective
                  date,  if any, set forth  in such Schedule  IX for the
                  removal  and  termination  of  any  such  Liens,  plus
                  renewals and  extensions of  such Liens to  the extent
                  set  forth  on  Schedule  IX, provided  that  (x)  the
                  aggregate  principal  amount of  the  Indebtedness, if
                  any, secured by such Liens does not increase from that
                  amount  outstanding at the time of any such renewal or
                  extension and  (y) any such renewal  or extension does
                  not encumber  any additional  assets or  properties of
                  INTERCO or any of its Restricted Subsidiaries;

                     (iv)  Permitted Encumbrances;

                      (v)  Liens  created pursuant to the Security Docu-
                  ments;

                     (vi)  licenses,  leases  or  subleases  granted  to
                  other Persons  in the ordinary course  of business not
                  materially interfering with the  conduct of the  busi-
                  ness of INTERCO and its Restricted  Subsidiaries taken
                  as a whole;

                    (vii)  Liens  upon  assets  subject  to  Capitalized
                  Lease   Obligations  of   the   Borrowers  and   their
                  Restricted Subsidiaries  to  the extent  permitted  by
                  Section 9.04(vii), provided that  (x) such Liens  only
                  serve  to secure the  payment of  Indebtedness arising
                  under such  Capitalized Lease  Obligation and  (y) the
                  Lien  encumbering   the  asset  giving   rise  to  the
                  Capitalized  Lease Obligation  does  not encumber  any
                  other asset  of the  Borrowers or any  Restricted Sub-
                  sidiary of the Borrowers;

                   (viii)  Liens placed upon assets used in the ordinary
                  course of business  of the Borrowers  or any of  their
                  Restricted  Subsidiaries at  the  time of  acquisition
                  thereof by the Borrowers or any such Restricted Subsi-
                  diary  or  within   180  days  thereafter   to  secure
                  Indebtedness incurred to pay  all or a portion of  the
                  purchase  price thereof,  or Liens  securing Permitted
                  Acquired  Debt,  provided   that  (x)  the   aggregate
                  outstanding  principal  amount  of   all  Indebtedness



                                         -86-


             


                  secured by Liens permitted by this clause (viii) shall
                  not at any time exceed the amount permitted by Section
                  9.04(vii) and (y) in  all events, the Lien encumbering
                  the  assets so  acquired does  not encumber  any other
                  asset of the Borrowers or such Restricted Subsidiary;

                     (ix)  easements,     rights-of-way,    restrictions
                  (including   zoning    restrictions),   encroachments,
                  protrusions and other similar charges or encumbrances,
                  and minor title deficiencies, in each case whether now
                  or hereafter  in existence, not  securing Indebtedness
                  and not materially interfering with the conduct of the
                  business of  the Borrowers or any  of their respective
                  Restricted Subsidiaries;

                      (x)  Liens arising from precautionary  UCC financ-
                  ing  statement  filings  regarding   operating  leases
                  entered  into  by  the   Borrowers  or  any  of  their
                  Restricted  Subsidiaries in  the  ordinary  course  of
                  business;

                     (xi)  Liens  arising  out   of  the  existence   of
                  judgments  or  awards  not  constituting  an  Event of
                  Default under Section 10.09,  provided that no cash or
                  property is  deposited  or  delivered  to  secure  the
                  respective judgment  or award  (or any appeal  bond in
                  respect  thereof,  except  as  permitted  by following
                  clause (xiv));

                    (xii)  Liens, and the filing of financing statements
                  in connection therewith, created  by, and as set forth
                  in, the Receivables Documents;

                   (xiii)  statutory  and  contractual landlords'  liens
                  under leases  to which the  Borrowers or any  of their
                  Restricted Subsidiaries are a party;

                    (xiv)  Liens (other than any  Lien imposed by ERISA)
                  (x) incurred  or deposits made in  the ordinary course
                  of business of the  Borrowers and their respective Re-
                  stricted Subsidiaries in connection with workers' com-
                  pensation,  unemployment insurance and  other types of
                  social security, (y) to  secure the performance by the
                  Borrowers and their respective Restricted Subsidiaries
                  of  tenders, statutory obligations  (other than excise
                  taxes), surety, stay, customs and appeal bonds, statu-
                  tory bonds, bids,  leases, government contracts, trade
                  contracts, performance and return  of money bonds  and
                  other  similar  obligations (exclusive  of obligations
                  for the  payment of borrowed  money) or (z)  to secure



                                         -87-


             


                  the performance by the  Borrowers and their respective
                  Restricted Subsidiaries of leases of Real Property, to
                  the extent incurred or made  in the ordinary course of
                  business consistent with past practices, provided that
                  the aggregate amount of  deposits at any time pursuant
                  to sub-clause (y) and  sub-clause (z) shall not exceed
                  $5,000,000 in the aggregate;

                     (xv)  any interest or title of a lessor, sublessor,
                  licensee  or  licensor  under  any  lease  or  license
                  agreement permitted by this Agreement;

                    (xvi)  Liens  in  favor   of  customs  and   revenue
                  authorities  arising as a matter of  law to secure the
                  payment  of  customs  duties in  connection  with  the
                  importation  of  goods  and  deposits  made  to secure
                  statutory obligations in the form of excise taxes;

                   (xvii)  Liens  arising out of conditional sale, title
                  retention, consignment or similar arrangements for the
                  sale  of goods entered into by the Borrowers or any of
                  their Restricted Subsidiaries  in the ordinary  course
                  of business  in accordance with the  past practices of
                  the Borrowers and their Restricted  Subsidiaries prior
                  to the Effective Date; and

                  (xviii)  Liens   not   otherwise   permitted  by   the
                  foregoing clauses  (i)  through (xvii)  to the  extent
                  attaching to  properties and assets with  an aggregate
                  fair value not in  excess of, and securing liabilities
                  not in excess of, $10,000,000 in  the aggregate at any
                  time outstanding.

                           9.02  Consolidation, Merger, Purchase or Sale
             of  Assets,  etc.   The Borrowers  will  not, and  will not
             permit any of their  respective Restricted Subsidiaries to,
             wind up, liquidate or dissolve its affairs (other than with
             respect   to  Interfashions   Industries,   S.A.  and   its
             Subsidiaries) or  enter into  any transaction of  merger or
             consolidation, or convey, sell, lease  or otherwise dispose
             of (or agree to do any of the foregoing at any future time)
             all or any  part of its property or assets  (other than the
             liquidation of  Cash Equivalents in the  ordinary course of
             business), or  enter into any  sale-leaseback transactions,
             or purchase or otherwise acquire (in one or a series of re-
             lated  transactions) any  part  of the  property or  assets
             (other than purchases  or other acquisitions of  inventory,
             materials, equipment, furniture,  fixtures, and  intangible
             assets in the ordinary  course of business) of  any Person,
             except that:



                                         -88-


             


                       (i)  Capital  Expenditures  by the  Borrowers and
                  their  Restricted Subsidiaries  shall be  permitted to
                  the extent not in violation of Section 9.07;

                      (ii)  each of  the Borrowers and  their Restricted
                  Subsidiaries  may   (x)  in  the  ordinary  course  of
                  business, sell,  lease  or otherwise  dispose  of  any
                  assets  which,  in  the reasonable  judgment  of  such
                  Person, are obsolete, worn  out or otherwise no longer
                  useful in  the conduct of such  Person's business, (y)
                  sell, lease or otherwise  dispose of any other assets,
                  provided  that  each such  sale, lease  or disposition
                  shall  be  for  fair  market value  (other  than  with
                  respect  to  sales,  leases  or  dispositions   in  an
                  aggregate amount  not to exceed $100,000  per calendar
                  year) and  at least 75% of  the consideration therefor
                  shall be  in the form  of cash, and  provided further,
                  that  the aggregate  Net Sale  Proceeds of  all assets
                  subject  to  sales or  other dispositions  pursuant to
                  clauses (x)  and (y)  shall not exceed  $15,000,000 in
                  the aggregate  in any Fiscal  Year and (z)  enter into
                  transactions permitted under Section 9.01(vi);

                     (iii)  Investments may  be made to the  extent per-
                  mitted by Section 9.05;

                      (iv)  each  of the Borrowers  and their Restricted
                  Subsidiaries  may lease (as  lessee) real  or personal
                  property  (so long as any such lease does not create a
                  Capitalized  Lease  Obligation  except  to  the extent
                  permitted by Section 9.04); 

                       (v)  each  of the Borrowers  and their Restricted
                  Subsidiaries may  make sales or transfers of inventory
                  in the ordinary course of business;

                      (vi)  sales   and    contributions   of   accounts
                  receivable to the Receivables  Subsidiary and sales of
                  accounts  receivable by the  Receivables Subsidiary to
                  the   Receivables   Purchasers,   and  purchases   and
                  acquisitions of accounts receivable by the Receivables
                  Subsidiary,  in each case  pursuant to the Receivables
                  Facility shall be permitted;

                     (vii)  the    Borrowers   and    their   respective
                  Restricted  Subsidiaries  shall be  permitted  to make
                  Permitted Acquisitions so  long as (i) such  Permitted
                  Acquisitions  are  effected  in  accordance  with  the
                  requirements of Section 8.14, (ii) after giving effect
                  to  any Permitted  Acquisition,  the aggregate  amount



                                         -89-


             


                  paid (including  for the purpose of  this clause (vii)
                  all cash  consideration paid,  the face amount  of all
                  Permitted Acquired Debt incurred,  and the fair market
                  value of any  merger consideration, but  excluding the
                  fair market  value of all INTERCO  Common Stock and/or
                  Qualified  Preferred  Stock  issued  as  consideration
                  therefor,  in  each  case  in  connection   with  such
                  Permitted  Acquisition)  by  the Borrowers  and  their
                  Restricted  Subsidiaries  in   connection  with   such
                  Permitted Acquisition shall  not exceed the  Available
                  Permitted  Acquisition  Amount  at  such  time  (after
                  giving   effect  to   all  prior   or  contemporaneous
                  adjustments thereto),  provided that in no event shall
                  such   aggregate  amount   paid  in   connection  with
                  Permitted Acquisitions,  when added  to the  amount of
                  Investments  in  Unrestricted Subsidiaries  by INTERCO
                  pursuant to Section 9.05(viii), exceed $50,000,000 and
                  (iii) with respect  to each Permitted  Acquisition, no
                  Default  or Event  of Default is  in existence  at the
                  time of the consummation of such Permitted Acquisition
                  or would exist after giving effect thereto;

                    (viii)  INTERCO may sell or otherwise dispose of any
                  shares   of   capital   stock   of   any  Unrestricted
                  Subsidiaries owned by it;

                      (ix)  so long  as no  Default or Event  of Default
                  then  exists or would  result therefrom, the Borrowers
                  or any  Wholly-Owned Subsidiary which is  a Restricted
                  Subsidiary (other than the Receivables  Subsidiary) of
                  INTERCO may be  merged into any  Borrower (so long  as
                  such Borrower  is the  surviving  corporation of  such
                  merger) or any other Wholly-Owned  Subsidiary which is
                  a  Restricted Subsidiary  (other than  the Receivables
                  Subsidiary) of the Borrowers; 

                       (x)  the    Borrowers   and    their   respective
                  Restricted  Subsidiaries  (other than  the Receivables
                  Subsidiary) shall be  permitted to merge  with another
                  Person  (so  long  as  such   Borrower  or  Restricted
                  Subsidiary is the surviving  corporation), so long  as
                  such merger is used  to effect a Permitted Acquisition
                  in compliance with Section 9.02(vii); and

                      (xi)  the Borrowers may sell or  otherwise dispose
                  of Excluded Assets. 

             To the  extent the Required  Banks waive the  provisions of
             this  Section 9.02  with respect  to the  sale of  any Col-
             lateral, or  any Collateral is  sold as  permitted by  this



                                         -90-


             


             Section 9.02, such Collateral (unless sold to INTERCO or  a
             Subsidiary  of INTERCO) shall be sold free and clear of the
             Liens created by the Security  Documents, and the Agent and
             Collateral Agent  shall be  authorized to take  any actions
             deemed appropriate in order to effect the foregoing.

                       9.03  Dividends.   INTERCO  shall not,  and shall
             not permit  any of  its Restricted Subsidiaries  to, autho-
             rize, declare or pay any Dividends with  respect to INTERCO
             or any of its Restricted Subsidiaries, except that:

                       (i)  any  Restricted  Subsidiary of  any Borrower
                  may pay Dividends to such Borrower or any Wholly-Owned
                  Subsidiary which  is  a Restricted  Subsidiary of  the
                  Borrowers; 

                      (ii)  so long  as no  Default or Event  of Default
                  exists or  would result  therefrom,  INTERCO shall  be
                  permitted to pay Dividends (including, without limita-
                  tion, Dividends  on Qualified  Preferred Stock) in  an
                  amount  not  to exceed  (A)  $5,000,000  plus (to  the
                  extent  a positive number) (B) the sum of (a) the then
                  Available Unrestricted Proceeds  Amount (after  giving
                  effect to  all  prior or  contemporaneous  adjustments
                  thereto) plus (b) the then Available Net Income Amount
                  (after giving effect  to all prior or  contemporaneous
                  adjustments  thereto)  minus  (C)  all  Dividends made
                  pursuant to clause (A) above and all Guaranty Payments
                  made by INTERCO  pursuant to Section 9.11(b)(ii)(y)(A)
                  and (B); and

                     (iii)  so long  as no  Default or Event  of Default
                  exists  or  would result  therefrom,  INTERCO  may pay
                  regularly  accruing  cash  Dividends  on  Disqualified
                  Preferred Stock  in accordance  with the terms  of the
                  certificate of designation therefor.

                       9.04  Indebtedness.   INTERCO will not,  and will
             not permit any of its Restricted Subsidiaries to, contract,
             create, incur, assume or  suffer to exist any Indebtedness,
             except:

                       (i)  Indebtedness   incurred  pursuant   to  this
                  Agreement and the other Credit Documents;

                      (ii)  Permitted  Subordinated Indebtedness  not to
                  exceed (x) in aggregate principal amount $150,000,000,
                  minus  the aggregate liquidation  preference or amount
                  of all Disqualified Preferred Stock issued on or prior
                  to  the  date  of  the incurrence  of  such  Permitted



                                         -91-


             


                  Subordinated   Indebtedness    pursuant   to   Section
                  9.13(b)(i),   plus   (y)   an  amount   of   Permitted
                  Subordinated Indebtedness  incurred and simultaneously
                  used  to  repay, refinance  or  otherwise replace  the
                  Receivables  Facility on  or after  the date  which is
                  four and  one-half years  after the Initial  Borrowing
                  Date, in  each case  shall be  permitted on terms  and
                  conditions set  forth in  the definition  of Permitted
                  Subordinated  Indebtedness  and  on  other  terms  and
                  conditions  reasonably satisfactory  to the  Agent and
                  the Required Banks (provided that such other terms and
                  conditions   shall  be  deemed   satisfactory  to  the
                  Required  Banks  unless  objected to  by  the Required
                  Banks  in writing  on or  prior to  the date  which is
                  twenty Business Days after the  documentation therefor
                  is delivered to the Banks); 

                     (iii)  Permitted  Unsecured  Indebtedness  (whether
                  directly  incurred or  incurred as  Permitted Acquired
                  Debt)  not  to  exceed in  aggregate  principal amount
                  $25,000,000 minus the aggregate liquidation preference
                  or amount  of all Disqualified Preferred  Stock issued
                  on  or prior  to the  date of  the incurrence  of such
                  Permitted Unsecured Indebtedness  pursuant to  Section
                  9.13(b)(ii),   shall   be  permitted   on   terms  and
                  conditions set forth  in the  definition of  Permitted
                  Unsecured   Indebtedness  and   on  other   terms  and
                  conditions reasonably satisfactory to the Agent;

                      (iv)  Existing Indebtedness shall be  permitted to
                  the  extent the same is listed on Schedule VII, but no
                  refinancings or renewals  thereof, except as expressly
                  permitted on such Schedule VII;

                       (v)  accrued expenses and current  trade accounts
                  payable incurred in the ordinary course of business;

                      (vi)  Indebtedness under  Interest Rate Protection
                  Agreements entered  into  in compliance  with  Section
                  8.12;

                     (vii)  Indebtedness  of  the  Borrowers  and  their
                  Restricted Subsidiaries evidenced by Capitalized Lease
                  Obligations to  the extent permitted  pursuant to Sec-
                  tion  9.01(vii),  and  Indebtedness  secured  by Liens
                  permitted under Section  9.01(viii), provided that  in
                  no  event  shall  the  aggregate principal  amount  of
                  Capitalized  Lease  Obligations and  Indebtedness per-
                  mitted by this clause (vii) exceed $20,000,000;




                                         -92-


             


                     (viii) Indebtedness    under    Currency    Hedging
                  Agreementsentered intoincompliance withSection9.05(x).

                      (ix)  Contingent Obligations of  the Borrowers  or
                  any Restricted Subsidiary as a guarantor of the lessee
                  under any lease  pursuant to which the Borrowers  or a
                  Restricted Subsidiary  is the  lessee so long  as such
                  lease is otherwise permitted hereunder; 

                       (x)  Contingent  Obligations of  INTERCO pursuant
                  to (x)  the Surviving  Guaranties,  provided that  the
                  making of any payments thereunder, and any renewals or
                  extensions  of such  Surviving  Guaranties,  shall  be
                  subject  to restrictions set  forth in Section 9.11(b)
                  and (y) the Tax Sharing Agreements;

                      (xi)  Indebtedness  (a)  consisting of  Attributed
                  Receivables Facility Indebtedness  of the  Receivables
                  Subsidiary  so  long  as  the  Net  Cash  Proceeds  of
                  Attributed Receivables Facility Indebtedness in excess
                  of $150,000,000  shall be applied to  repay Term Loans
                  in accordance with Section  4.02(e) and (b) consisting
                  of the Contingent Obligations of INTERCO in respect of
                  certain of its Restricted Subsidiaries (other than the
                  Receivables  Subsidiary)  with   respect  to   certain
                  limited obligations under  the Receivables Facility as
                  set forth in the Receivables Documents; and

                     (xii)  Indebtedness among the  Borrowers and  their
                  Restricted  Subsidiaries  to   the  extent   permitted
                  pursuant to Section 9.05(v).
                    
                       In  furtherance of the foregoing and in no way in
             limitation   thereof,  INTERCO   shall   not   permit   any
             Unrestricted  Subsidiary to  incur any  Indebtedness having
             any  element  of  recourse  to INTERCO  or  its  Restricted
             Subsidiaries or to any of their assets or property.

                       9.05  Investments; etc.  The Borrowers  will not,
             and  will not  permit  any of  their respective  Restricted
             Subsidiaries  to,  directly  or indirectly,  lend  money or
             credit or  make  advances to  any  Person, or  purchase  or
             acquire  any stock,  obligations or  securities of,  or any
             other interest in, or make any capital contribution to, any
             other Person  (any of  the foregoing, an  "Investment"), or
             purchase  or own  a  futures contract  or otherwise  become
             liable for the purchase  or sale of currency or  other com-
             modities at a  future date in the nature of  a futures con-
             tract, or hold  any cash or  Cash Equivalents, except  that
             the following shall be permitted:



                                         -93-


             


                       (i)  the  Borrowers  and their  Restricted Subsi-
                  diaries  may  acquire  and hold  accounts  receivables
                  owing  to any of them,  if created or  acquired in the
                  ordinary  course of business and payable or discharge-
                  able in accordance with customary terms;

                      (ii)  the  Borrowers  and their  Restricted Subsi-
                  diaries may acquire and hold cash and Cash Equivalents
                  (including cash  and Cash Equivalents  held by INTERCO
                  on behalf  of its Restricted Subsidiaries  pursuant to
                  the  Cash Management System), provided that during any
                  time that Revolving  Loans of Non-Defaulting Banks  or
                  Swingline  Loans are outstanding, the aggregate amount
                  of  cash and Cash Equivalents permitted  to be held by
                  the  Borrowers  and   their  Restricted   Subsidiaries
                  (including cash  and Cash Equivalents  held by INTERCO
                  on behalf  of its Restricted Subsidiaries  pursuant to
                  the  Cash   Management   System)  shall   not   exceed
                  $20,000,000 for any period of five consecutive days;

                     (iii)  INTERCO and its Restricted  Subsidiaries may
                  make  loans and  advances  in the  ordinary course  of
                  business to their respective  employees so long as the
                  aggregate principal  amount thereof  at any  time out-
                  standing (determined without regard to any write-downs
                  or write-offs  of such  loans and advances)  shall not
                  exceed $1,000,000;

                      (iv)  the Borrowers  may enter into  Interest Rate
                  Protection  Agreements  to  the  extent  permitted  in
                  Section 9.04(vi);

                       (v)   any   Credit   Party  or   the  Receivables
                  Subsidiary may make intercompany loans and advances to
                  any other Credit Party;

                      (vi)  the Borrowers may (x) establish Subsidiaries
                  in  compliance   with  Section   9.12  and   (y)  make
                  Investments  therein  as  otherwise  provided  in this
                  Section 9.05;

                     (vii)  so long  as no  Default or Event  of Default
                  exists, or  would result therefrom, the  Borrowers and
                  their Restricted Subsidiaries  may make Investments in
                  an aggregate amount not  to exceed the sum of  (A) the
                  then Available $10 Million Basket Amount (after giving
                  effect  to all  prior  or contemporaneous  adjustments
                  thereto)  plus  (B)  the  then  Available Unrestricted
                  Proceeds Amount  (after giving effect to  all prior or
                  contemporaneous  adjustments  thereto)  plus  (C)  the



                                         -94-


             


                  Available Net  Income Amount  (after giving  effect to
                  all  prior  or  contemporaneous adjustments  thereto);
                  provided that at no time shall the aggregate amount of
                  Investments   permitted   pursuant  to   this  Section
                  9.05(vii) exceed $25,000,000;

                    (viii)  so long  as no  Default or Event  of Default
                  exists or  would result therefrom, INTERCO  and any of
                  its  Unrestricted  Subsidiaries  may   acquire  and/or
                  establish  (in compliance  with Section  9.12 and  the
                  definition  of  Unrestricted  Subsidiary) and/or  make
                  Investments  in  any  Unrestricted  Subsidiary  in  an
                  aggregate amount (including the  fair market value  of
                  any  INTERCO  Common  Stock  issued  as  consideration
                  therefor)   not   to   exceed   the   then   Available
                  Unrestricted Proceeds Amount  (after giving effect  to
                  all  prior  or  contemporaneous adjustments  thereto);
                  provided, that  at no time shall  the aggregate amount
                  of  Investments permitted  pursuant  to  this  Section
                  9.05(viii), when  added to the amount of consideration
                  paid or  deemed paid in connection  with all Permitted
                  Acquisitions  made  pursuant  to   Section  9.02(vii),
                  exceed $50,000,000;

                      (ix)  the  Borrowers  and their  Restricted Subsi-
                  diaries  may retain  cash consideration  plus purchase
                  money   notes  derived  from   asset  sales  permitted
                  pursuant to Section 9.02(ii);

                       (x)  the Borrowers  may  enter into  and  perform
                  their  obligations  under Currency  Hedging Agreements
                  entered into  in the  ordinary course of  business and
                  consistent with past practices so long as (i) any such
                  Currency   Hedging  Agreement  is  related  to  income
                  derived  from foreign operations  of the  Borrowers or
                  any  Restricted  Subsidiary  (or  any   Foreign  Sales
                  Corporation  which  is  a  Restricted  Subsidiary)  or
                  otherwise  related  to  purchases permitted  hereunder
                  from  foreign suppliers and (ii) such Currency Hedging
                  Agreements do  not exceed  a notional amount  equal to
                  $15,000,000 in the aggregate at any one time;

                      (xi)  the  Borrowers  and their  Restricted Subsi-
                  diaries  may acquire  and  own investments  (including
                  debt  obligations)  received  in  connection  with the
                  bankruptcy  or reorganization  of their  suppliers and
                  customers and in  settlement of delinquent obligations
                  of,  and other  disputes  with,  their  customers  and
                  suppliers in the ordinary course of business; 




                                         -95-


             


                     (xii)  existing  Investments  by the  Borrowers and
                  their  Restricted Subsidiaries  shall be  permitted to
                  the extent listed on Schedule X;

                    (xiii)  the Restricted Subsidiaries  of INTERCO  may
                  contribute  accounts  receivable  to  the  Receivables
                  Subsidiary  in accordance with  the provisions  of the
                  Receivables Documents;

                     (xiv)  INTERCO shall be  permitted to make  capital
                  contributions  to  Foreign  Sales Corporations  in  an
                  amount not to exceed $100,000 in the aggregate; and

                      (xv)  Permitted Acquisitions shall be permitted in
                  compliance with Sections 8.14 and 9.02(vii).

                       9.06  Transactions     with    Affiliates     and
             Unrestricted Subsidiaries.   The  Borrowers  will not,  and
             will  not permit  any of  their respective  Restricted Sub-
             sidiaries to, enter into  any transaction or series of  re-
             lated transactions with any Affiliate  of INTERCO or any of
             its Subsidiaries  or any of its  Unrestricted Subsidiaries,
             other  than in the ordinary course of business and on terms
             and conditions substantially as  favorable to the Borrowers
             or  such  Restricted  Subsidiary  as  would  reasonably  be
             obtained by the Borrowers  or such Restricted Subsidiary at
             that time  in a comparable arm's-length  transaction with a
             Person other than an Affiliate, except that: 

                       (i)  Dividends may be paid to the extent provided
                  in Section 9.03;

                      (ii)  Investments  may  be  made  to   the  extent
                  permitted by Section 9.05;

                     (iii)  the  transactions  entered into  between the
                  Borrowers and their Subsidiaries shall be permitted to
                  the extent expressly permitted by Section 9.02;

                      (iv)  customary  fees may  be paid  to non-officer
                  directors of the Borrowers and their Restricted Subsi-
                  diaries;

                       (v)  INTERCO and its Restricted  Subsidiaries may
                  enter into employment arrangements with respect to the
                  procurement of services with their respective officers
                  and employees in the ordinary course of business;

                      (vi)  the    Borrowers   and    their   respective
                  Restricted   Subsidiaries   may   make   (x)   capital



                                         -96-


             


                  contributions  to any  of their  respective Restricted
                  Subsidiaries which  is a  Credit Party or  (y) capital
                  contributions   of   accounts   receivable    to   the
                  Receivables   Subsidiary   in   accordance  with   the
                  Receivables Documents; 

                     (vii)  Florsheim, Converse, INTERCO and  its Subsi-
                  diaries shall enter into and  perform the terms of the
                  respective Tax  Sharing  Agreements and  the  Services
                  Agreements;

                    (viii)  so long  as no  Default or Event  of Default
                  exists, or  would result  therefrom, INTERCO shall  be
                  permitted  to pay management  fees to Apollo Advisors,
                  L.P.  pursuant  to  the  Apollo  Management Agreement,
                  provided, that, such fees shall not exceed $650,000 in
                  any Fiscal Year and no amendment adverse to the inter-
                  ests  of  the  Banks  shall  be  made  to  the  Apollo
                  Management Agreement without the consent of the Agent;


                      (ix)  existing  transactions  between INTERCO  and
                  its  Subsidiaries   and  their  Affiliates   shall  be
                  permitted to the extent listed on Schedule XI; and

                       (x)  INTERCO  may sell  or  issue INTERCO  Common
                  Stock and  Qualified Preferred Stock to its Affiliates
                  (other than its Subsidiaries).

                       Except as specifically provided above, no manage-
             ment or similar fees shall be paid or payable by INTERCO or
             any of its Restricted  Subsidiaries to any Affiliate (other
             than INTERCO).

                       Notwithstanding   anything   contained   in   the
             foregoing  to the  contrary, any  transactions between  and
             among  INTERCO and/or  Restricted  Subsidiaries on  the one
             hand  and any  of  their  respective Affiliates  (excluding
             INTERCO and its Restricted Subsidiaries) on the other hand,
             shall  be  arm's  length  transactions  and  on  terms  and
             conditions  at least  as favorable  to INTERCO  and/or such
             Restricted  Subsidiaries as the  terms and conditions which
             would apply  to a  similar transaction  on an arm's  length
             basis with  a Person  that is  not an  Affiliate; provided,
             that, any  transaction (other than as  described in clauses
             (i), (ii),  (iii) and  (vi)  above) between  and among  the
             aforementioned  parties  with  a  value in  excess  of  (A)
             $1,000,000 shall  only be  permitted if  a majority  of the
             disinterested directors of  INTERCO and/or such  Restricted
             Subsidiaries approve the transaction and (B) (other than as



                                         -97-


             


             described in  clause (x)  above) $10,000,000 shall  only be
             permitted if the parties thereto provide a fairness opinion
             from persons,  and in  form and substance,  satisfactory to
             the Agent.

                       9.07  Capital  Expenditures.  (a)   The Borrowers
             will  not,  and will  not  permit any  of  their respective
             Restricted Subsidiaries to,  make any Capital Expenditures,
             except that the Borrowers and their Restricted Subsidiaries
             shall  be permitted  to  make Capital  Expenditures in  any
             Fiscal Year in an  amount not to exceed the  Available CapX
             Amount as in effect on the date that the respective Capital
             Expenditure is made. 

                       (b)   Notwithstanding  anything to  the  contrary
             contained in clause  (a) above, the Borrowers and their Re-
             stricted Subsidiaries  shall be  permitted to  make Capital
             Expenditures (i) consisting of Permitted  Acquisitions made
             otherwise  in  compliance  with  this  Agreement  (but  not
             pursuant to clause (B)  (v) of the definition of  Available
             Permitted Acquisition Amount), (ii) otherwise in  an amount
             equal to the sum of (x) the Available Unrestricted Proceeds
             Amount   (after   giving   effect   to   all   prior    and
             contemporaneous adjustments thereto), (y) the Available Net
             Income  Amount  (after  giving  effect  to  all  prior  and
             contemporaneous adjustments  thereto) and (z)  the proceeds
             of  Recovery Events which  are not  required to  repay Term
             Loans pursuant to Section 4.02(h) and (iii) in the  amount,
             if any,  by which the Leverage  Improvement Amount exceeded
             the Converse Tax Liability on the Initial Borrowing Date.

                       9.08  Consolidated  Net Interest  Coverage Ratio.
             The Borrowers will not permit the Consolidated Net Interest
             Coverage Ratio  for any  period of four  consecutive fiscal
             quarters,  in each  case  taken as  one accounting  period,
             ended  during a period set forth below  to be less than the
             amount set forth opposite such period below:

                            Period                        Ratio

               January 1, 1995 through 
               September 30, 1995                         2.40:1.0

               October 1, 1995 through
               September 30, 1996                         2.70:1.0

               October 1, 1996 through
               September 30, 1997                         3.05:1.0

               Thereafter                                 3.55:1.0



                                         -98-


             



                       9.09     Adjusted   Consolidated  EBITDA.     The
             Borrowers will not permit  Adjusted Consolidated EBITDA for
             any  period of  four consecutive  fiscal quarters,  in each
             case taken as one accounting period, ended during  a period
             (with  any calculation for any such period which includes a
             period occurring prior  to the Initial Borrowing Date to be
             adjusted,  on  a Pro  Forma Basis,  to  give effect  to the
             Transaction) set forth below to be less than the amount set
             forth opposite such period below:

                            Period                   Amount

                  January 1, 1995 through
                  September 30, 1995                 $ 95,000,000

                  October 1, 1995 through
                  September 30, 1996                 $100,000,000

                  October 1, 1996 through
                  September 30, 1997                 $108,000,000

                  Thereafter                         $115,000,000


                       9.10  Maximum Leverage Ratio.  The Borrowers will
             not permit the Leverage Ratio at any time during any fiscal
             quarter ending  during a  period (with any  calculation for
             any such  period which  includes a period  occurring before
             the Initial Borrowing Date  to be adjusted, on a  Pro Forma
             Basis, to give effect  to the Transaction) set  forth below
             to be greater than the ratio set forth opposite such period
             below:

                           Period                           Ratio

                  Initial Borrowing Date through
                  September 30, 1995                      5.0:1.0

                  October 1, 1995 through
                  September 30, 1996                      4.5:1.0

                  October 1, 1996 through
                  September 30, 1997                      4.0:1.0

                  Thereafter                              3.55:1.0

                       9.11  Limitation on Modifications of and Payments
             on    Indebtedness    and   Qualified    Preferred   Stock;
             Modifications of Certificate  of Incorporation, By-Laws and

             

                                         -99-


             


             Certain Other Agreements; Surviving Guaranty Payments, etc.
             (a)   The  Borrowers will not,  and will not  permit any of
             their respective  Restricted Subsidiaries to, (i)  make (or
             give any notice  in respect of)  any voluntary or  optional
             payment  or  prepayment  on  or redemption,  repurchase  or
             acquisition for value of  any of the Existing Indebtedness,
             or  after the incurrence  thereof, any  Permitted Unsecured
             Indebtedness,   Permitted  Subordinated   Indebtedness,  or
             Disqualified Preferred Stock (any such payment, prepayment,
             redemption  or acquisition, a "Restricted Junior Payment"),
             if at  such time (x)  a Default  or Event  of Default  then
             exists or  arises therefrom and (y)  such Restricted Junior
             Payment shall  exceed an amount equal to the sum of (A) the
             then Available  Unrestricted Proceeds Amount  (after giving
             effect to all prior or contemporaneous adjustments thereto)
             and (B) the  then Available Net Income Amount (after giving
             effect  to   all  prior  and   contemporaneous  adjustments
             thereto), (ii) amend or modify, or permit  the amendment or
             modification of, any provision of the Existing Indebtedness
             or the  Receivables Documents,  or after the  incurrence or
             issuance  thereof,  any  Permitted Unsecured  Indebtedness,
             Permitted  Subordinated  Indebtedness, Qualified  Preferred
             Stock or  Disqualified Preferred Stock or  of any agreement
             (including,  without  limitation,  any purchase  agreement,
             indenture,   loan   agreement,   security    agreement   or
             certificate  of designation)  relating thereto,  other than
             any   amendments   or   modifications   to   the   Existing
             Indebtedness,  the  Receivables  Documents,  any  Permitted
             Unsecured   Indebtedness,    any   Permitted   Subordinated
             Indebtedness,   any  Qualified  Preferred   Stock  and  any
             Disqualified Preferred Stock which (A) do not make any term
             or condition thereof  more restrictive than  the previously
             existing terms and conditions  with respect thereto, (B) do
             not in any way materially adversely affect the interests of
             the  Banks and (C) do not increase the interest or dividend
             rates  applicable  thereunder,  reduce  the  maturity  date
             thereunder   or   change  any   pay-in-kind   mechanics  or
             requirements  or any  subordination provision  thereof from
             those in effect  on the  Effective Date or  (iii) amend  or
             modify its Certificate of Incorporation (including, without
             limitation, by  the filing or modification  of any certifi-
             cate   of  designation,  other   than  any  certificate  of
             designation   relating  to  Qualified  Preferred  Stock  or
             Disqualified Preferred Stock) or By-Laws, or any  agreement
             entered into  by  it, with  respect  to its  capital  stock
             (including  any Shareholders' Agreement), or enter into any
             new agreement  with respect  to its  capital  stock if  the
             foregoing would in any  way materially and adversely affect
             the Banks.




                                        -100-


             


                       (b)  INTERCO will not (i) amend, extend, renew or
             modify,  or permit  the  amendment, extension,  renewal  or
             modification of, any provision  of the Surviving Guaranties
             (or   any  lease  obligation  guarantied  thereby)  or  any
             agreement  relating  thereto,  other  than any  renewal  or
             extension of a lease obligation guarantied by any Surviving
             Guaranty   pursuant   to  the   renewal   and/or  extension
             provisions contained therein as  in effect on the Effective
             Date  which (a)  creates  a continuing  guaranty obligation
             with respect to such existing lease (without any amendments
             thereto  which  would  increase  the  lessee's  obligations
             thereunder) that INTERCO is  required to permit pursuant to
             the terms of its Services Agreement  with Florsheim, (b) is
             exercised  (x) not more than 30 days  prior to the last day
             on  which such  extension or  renewal  may be  exercised in
             accordance with the terms of the lease relating thereto and
             (y)  at a  time when no  Default or  Event of  Default then
             exists  or arises  therefrom and  (c) creates  future fixed
             payment   obligations  with  respect  thereto  which,  when
             combined with  all future  fixed payment obligations  under
             renewals and/or  extensions  made in  compliance with  this
             Section 9.11(b)(i),  would not  exceed $10,000,000  or (ii)
             make any  payment whatsoever, whether  voluntary, mandatory
             or otherwise,  in respect of the  Surviving Guaranties (any
             such payment, a "Guaranty  Payment") if at such time  (x) a
             Default or Event of Default then exists or arises therefrom
             or (y) such payment shall exceed an  aggregate amount equal
             to the sum  of (A) $5,000,000,  plus (B) at  any time,  the
             aggregate amount of Dividends  which could be made pursuant
             to (1) Section 9.03(ii)(A), (2) Section 9.03(ii)(B)(a)  and
             (3)  Section  9.03(ii)(B)(b), in  each  case  at such  time
             (without  including  the amount  of  such Guaranty  Payment
             contemplated  to  be made  in  the  calculation of  Section
             9.03(ii)(B) at such  time), plus (C) the amount of Guaranty
             Payments made with the cash proceeds of issuances of equity
             by  INTERCO  permitted  to  be so  used  for  such purposes
             pursuant  to  clause (iv)  of  the  first parenthetical  of
             Section 4.02(c).

                       (c)  The Borrowers will not, and  will not permit
             any of  their respective Restricted Subsidiaries to, amend,
             modify or change any provision of any Tax Sharing Agreement
             or  any  Services  Agreement,  other  than  any  amendment,
             modification or change deemed immaterial by the Agent or as
             otherwise consented to by the Required Banks.

                       9.12  Limitation  on Creation  or Acquisition  of
             Subsidiaries  and Restricted  Subsidiaries.   The Borrowers
             will  not,  and will  not  permit any  of  their respective
             Restricted  Subsidiaries to,  establish, create  or acquire



                                        -101-


             


             after the Effective Date any Subsidiary, unless (x) if such
             Subsidiary  is an  Unrestricted  Subsidiary (other  than  a
             Foreign Sales Corporation), (i)  it is established, created
             or  acquired by INTERCO or another Unrestricted Subsidiary,
             (ii) if owned by INTERCO, 100% of the capital stock of such
             new  Unrestricted Subsidiary  owned  by  INTERCO  shall  be
             pledged  pursuant   to   the  Pledge   Agreement  and   the
             certificates representing  such stock, together  with stock
             powers  duly executed in  blank, shall be  delivered to the
             Collateral  Agent  and (iii)  such  Unrestricted Subsidiary
             shall, at the request of the Agent, become a party to a Tax
             Sharing Agreement and/or  Services Agreement,  (y) if  such
             Subsidiary is a Restricted Subsidiary (other than a Foreign
             Sales Corporation),  (i) at  least 10 Business  Days' prior
             written notice thereof is given to the Agent and the Banks,
             (ii)  100% of the capital  stock of such  new Subsidiary is
             pledged   pursuant  to   the  Pledge   Agreement  and   the
             certificates  representing such stock,  together with stock
             powers  duly  executed  in  blank,  are  delivered  to  the
             Collateral Agent and (iii)  such new Restricted  Subsidiary
             executes a  counterpart  of the  Subsidiary  Guaranty,  the
             Security Agreement and the Pledge Agreement  or (z) if such
             Subsidiary is  a Foreign Sales  Corporation, any Investment
             therein is made  in accordance with Section 9.05(xiv).   In
             addition,  each new Restricted Subsidiary shall execute and
             deliver, or cause  to be executed and  delivered, all other
             relevant documentation  of the type described  in Section 5
             as such new Restricted Subsidiary would have had to deliver
             if  such  new  Restricted   Subsidiary  were  a  Restricted
             Subsidiary  and/or a  Subsidiary  Guarantor on  the Initial
             Borrowing Date.

                       9.13  Limitation  on Issuance  of Capital  Stock.
             (a) INTERCO shall not issue  (i) any Preferred Stock (other
             than Qualified  Preferred Stock and  Disqualified Preferred
             Stock issued pursuant to clause (b) below,  the proceeds of
             which are applied as  required pursuant to Section 4.02(c))
             or (ii) any redeemable common stock unless, in either case,
             all terms thereof are satisfactory to the Required Banks in
             their sole discretion.

                       (b)  INTERCO  may  issue  Disqualified  Preferred
             Stock not to exceed  in aggregate liquidation preference or
             amount  (i)  $150,000,000  minus  the  aggregate  principal
             amount  of all  Permitted Subordinated  Indebtedness issued
             pursuant  to Section  9.04(ii)(x),  plus  (ii)  $25,000,000
             minus  the  aggregate  principal  amount of  all  Permitted
             Unsecured   Indebtedness   issued   pursuant   to   Section
             9.04(iii), plus (iii) any amount of  Disqualified Preferred
             Stock the proceeds of which are used to repay, refinance or



                                        -102-


             


             otherwise replace the Receivables  Facility on or after the
             date  which is  four and  one-half years after  the Initial
             Borrowing Date  on terms  and conditions  set forth  in the
             definition of  Disqualified Preferred  Stock  and on  other
             terms and conditions reasonably satisfactory to the Agent. 

                       (c)  No  Restricted  Subsidiary of  INTERCO shall
             issue, or  permit any  of their Restricted  Subsidiaries to
             issue, any  capital  stock (including  by way  of sales  of
             treasury stock) or any options or warrants to purchase,  or
             securities  convertible into, capital stock, except (i) for
             transfers and replacements  of then  outstanding shares  of
             capital stock,  (ii) for stock splits,  stock dividends and
             additional  issuances which do  not decrease the percentage
             ownership of INTERCO or  any of its Restricted Subsidiaries
             in any  class  of  the capital  stock  of  such  Restricted
             Subsidiaries,  (iii) to  qualify  directors  to the  extent
             required   by   applicable   law,   and   (iv)   Restricted
             Subsidiaries formed after  the Effective  Date pursuant  to
             Section 9.12  may issue capital  stock to the  Borrowers or
             the respective Restricted Subsidiary of the Borrowers which
             is to own such stock in accordance with the requirements of
             Section 9.12.  All capital stock issued in  accordance with
             this Section 9.13(c)  shall, to the extent required  by the
             Pledge Agreement, be delivered  to the Collateral Agent for
             pledge pursuant to the Pledge Agreement.

                       9.14  Business.  The Borrowers will not, and will
             not permit any of  their Restricted Subsidiaries to, engage
             (directly  or  indirectly)  in  any  business  other   than
             substantially the same lines of business  in which they are
             engaged on  the Effective  Date  and reasonable  extensions
             thereof.  No Restricted Subsidiary of INTERCO will, or will
             permit any  of their Restricted Subsidiaries  to, create or
             own  any  Unrestricted  Subsidiaries.    The Foreign  Sales
             Corporation will not engage in any business  other than the
             sale of goods and/or services outside of the United  States
             and any business reasonably incidental to the foregoing.

                       9.15  Limitation on Certain  Restrictions on Sub-
             sidiaries.  (a) The Borrowers will not, and will not permit
             any   of  their  respective   Restricted  Subsidiaries  to,
             directly or indirectly, create or otherwise cause or suffer
             to  exist  or become  effective,  except  as set  forth  on
             Schedule  XIII,  any  encumbrance  or  restriction  on  the
             ability  of  any  such  Restricted Subsidiary  to  (x)  pay
             dividends or  make any  other distributions on  its capital
             stock or any other interest or participation in its profits
             owned by  INTERCO or any Restricted  Subsidiary of INTERCO,
             or pay  any Indebtedness owed  to INTERCO  or a  Restricted



                                        -103-


             


             Subsidiary  of  INTERCO,  (y)  make loans  or  advances  to
             INTERCO or any of  INTERCO's Restricted Subsidiaries or (z)
             transfer any of its properties or assets to INTERCO, except
             for such encumbrances or  restrictions existing under or by
             reason  of (i) applicable law, (ii)  this Agreement and the
             other   Credit   Documents,   (iii)  customary   provisions
             restricting subletting or assignment of any lease governing
             a  leasehold  interest of  the  Borrowers  or a  Restricted
             Subsidiary  of  the  Borrowers,  (iv)  customary provisions
             restricting assignment of  any licensing agreement  entered
             into by the Borrowers  or any Restricted Subsidiary of  the
             Borrowers  in  the  ordinary  course of  business  and  (v)
             restrictions on the Receivables Subsidiary set forth in the
             Receivables Documents. 

                       (b)  INTERCO  will not  permit  any of  its Unre-
             stricted Subsidiaries to, directly or indirectly, create or
             otherwise cause or suffer to exist or  become effective any
             restriction whatsoever on the operations  of INTERCO and/or
             its Restricted Subsidiaries.

                       9.16  Limitation  on Receivables and  Receivables
             Facility.   (a) The Receivables Subsidiary  shall engage in
             no   business   activities   other   than   the   purchase,
             acquisition,  sale and  pledge of receivables (or interests
             therein)  pursuant  to  the  Receivables Facility  and  any
             business  activities reasonably incidental  thereto, all in
             accordance with the Receivables Facility, and shall have no
             assets  or liabilities,  other  than receivables  purchased
             from   each  of   the   Borrowers  and   their   Restricted
             Subsidiaries, cash collections  therefrom, any  investments
             of such  cash collections and other  assets and liabilities
             reasonably  incidental  to  the  foregoing  activities, and
             shall  in  no  event   purchase  any  receivables  from  an
             Unrestricted Subsidiary.

                       (b) INTERCO and its Restricted Subsidiaries shall
             not  cause, permit,  or  suffer to  exist  (including as  a
             result of actions taken  by the Receivables Purchasers) (i)
             unless   the  Receivables  Facility  has  been  terminated,
             refinanced  or replaced  as otherwise  permitted  under the
             provisions of this Agreement, the Receivables Subsidiary to
             cease  selling  receivables  pursuant  to  the  Receivables
             Facility  for  a  period  in  excess  of  five  consecutive
             Business Days (excluding any Business Day on which (x) none
             of Broyhill, Lane or Action generate any receivables or (y)
             no Swingline Loans and no Revolving Loans of Non-Defaulting
             Banks  are outstanding), (ii)  the  Receivables Facility to
             be  terminated on any  date prior to the  date which is (x)
             five years after the Initial Borrowing Date or (y) four and



                                        -104-


             


             one-half  years after  the Initial  Borrowing Date,  in the
             event  the Receivables  Facility  is repaid,  refinanced or
             otherwise replaced by  Permitted Subordinated  Indebtedness
             and/or  Disqualified  Preferred Stock,  (iii)  an Event  of
             Termination  (as  defined  in either  Receivables  Purchase
             Agreement)  to have  occurred and  be continuing  and which
             shall  not have been cured or waived for a period in excess
             of  five consecutive Business Days  or (iv) the  sum of the
             Yield Reserve,  the Loss  Reserve, the Service  Fee Reserve
             and  the   Dilution  Reserve   (each  as  defined   in  the
             Receivables Documents) to exceed 30% at any time.

                       SECTION 10.  Events of Default.   Upon the occur-
             rence of  any of the  following specified  events (each  an
             "Event of Default"):

                       10.01  Payments.  The Borrowers shall (i) default
             in the payment when due of any principal of any Loan or any
             Note  or  (ii) default,  and  such  default shall  continue
             unremedied for  three or more Business Days, in the payment
             when due of any Unpaid Drawings or  interest on any Loan or
             Note, or any Fees  or any other amounts owing  hereunder or
             thereunder; or

                       10.02  Representations, etc.  Any representation,
             warranty or statement made by any Credit Party herein or in
             any other Credit Document or in any certificate (including,
             without  limitation, the certificates delivered pursuant to
             Sections  5.21 and  8.10(b)) delivered  pursuant hereto  or
             thereto shall prove to be untrue in any material respect on
             the date as of which made or deemed made; or

                       10.03    Covenants.    The  Borrowers  shall  (i)
             default in the due  performance or observance by it  of any
             term,   covenant   or   agreement  contained   in   Section
             8.01(g)(i),  8.08, 8.11, 8.15,  8.16 or  Section 9  or (ii)
             default in the due  performance or observance by it  of any
             other  term,  covenant  or   agreement  contained  in  this
             Agreement and such default  shall continue unremedied for a
             period  of 30 days after written notice to the Borrowers by
             the Agent or any Bank; or

                       10.04  Default  Under Other Agreements.  The Bor-
             rowers or  any of their  respective Restricted Subsidiaries
             shall (i) default in any payment of any Indebtedness (other
             than the  Obligations) beyond the period of  grace, if any,
             provided in  the instrument  or agreement under  which such
             Indebtedness was created or  (ii) default in the observance
             or performance  of any  agreement or condition  relating to
             any Indebtedness (other than  the Obligations) or contained



                                        -105-


             


             in  any instrument  or  agreement  evidencing, securing  or
             relating  thereto,  or  any  other  event  shall  occur  or
             condition exist, the effect of which default or other event
             or  condition is  to  cause, or  to  permit the  holder  or
             holders  of such  Indebtedness  (or a  trustee or  agent on
             behalf  of such  holder  or holders)  to cause  (determined
             without regard to whether any notice is required), any such
             Indebtedness to become due prior to its stated maturity, or
             (iii) any Indebtedness (other  than the Obligations) of the
             Borrowers   or   any   of   their   respective   Restricted
             Subsidiaries shall  be declared to  be due and  payable, or
             required to be prepaid other  than by a regularly scheduled
             required prepayment,  prior to the stated maturity thereof,
             provided that (x)  it shall  not be a  Default or Event  of
             Default under this Section 10.04 unless the aggregate prin-
             cipal amount of all  Indebtedness as described in preceding
             clauses  (i)   through  (iii),   inclusive,  is   at  least
             $5,000,000; or

                       10.05  Bankruptcy, etc.   The Borrowers or any of
             their  respective Subsidiaries  shall commence  a voluntary
             case concerning itself under Title 11  of the United States
             Code entitled "Bankruptcy," as  now or hereafter in effect,
             or  any successor  thereto (the  "Bankruptcy Code");  or an
             involuntary case is commenced  against the Borrowers or any
             of their  respective Subsidiaries  and the petition  is not
             controverted within 30 days, or is not  dismissed within 60
             days, after commencement  of the case;  or a custodian  (as
             defined in  the Bankruptcy Code) is appointed for, or takes
             charge  of, all or substantially all of the property of the
             Borrowers or  any of their respective  Subsidiaries, or the
             Borrowers or any of their respective Subsidiaries commences
             any other proceeding under any reorganization, arrangement,
             adjustment of  debt, relief of debtors, dissolution, insol-
             vency  or liquidation  or similar  law of  any jurisdiction
             whether  now  or  hereafter   in  effect  relating  to  the
             Borrowers or any of their respective Subsidiaries, or there
             is  commenced  against  the   Borrowers  or  any  of  their
             respective  Subsidiaries any such  proceeding which remains
             undismissed  for a period of  60 days, or  the Borrowers or
             any of  their respective Subsidiaries is adjudicated insol-
             vent or bankrupt;  or any  order of relief  or other  order
             approving any such  case or proceeding  is entered; or  the
             Borrowers or  any of their  respective Subsidiaries suffers
             any appointment of any custodian or the like for it or  any
             substantial part of  its property to  continue undischarged
             or unstayed for a  period of 60 days;  or the Borrowers  or
             any  of  their  respective  Subsidiaries  makes  a  general
             assignment for  the benefit of creditors;  or any corporate
             action is taken by the Borrowers or any of their respective



                                        -106-


             


             Subsidiaries for the purpose of effecting any of the  fore-
             going; or

                       10.06    ERISA.    (a)  Any Plan  shall  fail  to
             satisfy the minimum funding  standard required for any plan
             year  or part  thereof  or a  waiver  of such  standard  or
             extension of  any amortization period is  sought or granted
             under Section 412 of the Code,  any Plan shall have had  or
             is  likely to have  a trustee appointed  to administer such
             Plan  pursuant to Section 4042 of ERISA, any Plan is, shall
             have  been or is reasonably expected to be terminated or to
             be  the  subject of  termination proceedings  under Section
             4042  of  ERISA, any  Plan shall  have an  Unfunded Current
             Liability,  a contribution required to be made to a Plan or
             Foreign  Pension  Plan  has   not  been  timely  made,  the
             Borrowers or any  their respective Restricted  Subsidiaries
             or  any  ERISA  Affiliate  has incurred  or  is  reasonably
             expected  to incur a liability  to or on  account of a Plan
             under Section  409, 502(i), 502(l), 515,  4062, 4063, 4064,
             4069, 4201,  4204 or 4212  of ERISA or  Section 401(a)(29),
             4971, 4975  or 4980 of the Code, or the Borrowers or any of
             their respective Restricted Subsidiaries has incurred or is
             reasonably expected to incur liabilities pursuant to one or
             more employee welfare benefit  plans (as defined in Section
             3(1) of ERISA) which  provide benefits to retired employees
             or  other  former  employees  (other than  as  required  by
             Section 601 of ERISA) or employee pension benefit plans (as
             defined in  Section 3(2) of ERISA); (b)  there shall result
             from any such event or events the imposition of a lien, the
             granting  of  a security  interest,  or  a liability  or  a
             material risk of  incurring a  liability; (c)  and in  each
             case  in clauses  (a)  and (b)  above, such  lien, security
             interest   or  liability,   individually,  and/or   in  the
             aggregate, in the  opinion of the Required Banks, will have
             a  material adverse effect  upon the  business, operations,
             property,  assets,  liabilities,  condition  (financial  or
             otherwise) or  prospects of the Borrowers taken  as a whole
             or of the Borrowers and their Restricted Subsidiaries taken
             as a whole; or

                       10.07  Security Documents.  At any time after the
             execution and  delivery thereof, any of  the Security Docu-
             ments shall cease to be in full  force and effect, or shall
             cease in any material respect  to give the Collateral Agent
             for the benefit of the Secured Creditors the Liens, rights,
             powers and  privileges  purported  to  be  created  thereby
             (including,  without  limitation,   a  perfected   security
             interest  in, and Lien on, all of the Collateral), in favor
             of  the  Collateral Agent,  superior  to and  prior  to the
             rights of all third Persons (except as permitted by Section



                                        -107-


             


             9.01), and  subject to no other Liens  (except as permitted
             by  Section 9.01), or any Credit Party shall default in the
             due  performance or  observance  of any  term, covenant  or
             agreement on its part to be  performed or observed pursuant
             to any  of the Security  Documents and  such default  shall
             continue  beyond any  grace period  specifically applicable
             thereto pursuant to the terms of such Security Document; or

                       10.08    Subsidiary  Guaranty.    The  Subsidiary
             Guaranty or any provision thereof shall cease to be in full
             force or  effect as  to any  Subsidiary  Guarantor, or  any
             Subsidiary Guarantor  or Person acting  by or on  behalf of
             such  Subsidiary  Guarantor  shall deny  or  disaffirm such
             Subsidiary  Guarantor's  obligations  under the  Subsidiary
             Guaranty, or any Subsidiary  Guarantor shall default in the
             due  performance or  observance  of any  term, covenant  or
             agreement on its part to  be performed or observed pursuant
             to the Subsidiary Guaranty; or

                       10.09  Judgments.  One or  more judgments or  de-
             crees  shall be  entered against  the Borrowers  or any  of
             their respective Restricted  Subsidiaries involving in  the
             aggregate for the Borrowers and their respective Restricted
             Subsidiaries  a liability (not  paid or fully  covered by a
             reputable and solvent insurance company) and such judgments
             and  decrees either  shall be  final and  non-appealable or
             shall not be vacated, discharged or stayed  or bonded pend-
             ing appeal for any  period of 60 consecutive days,  and the
             aggregate amount of all  such judgments exceeds $5,000,000;
             or

                       10.10   Change of Control.   A Change  of Control
             shall occur; or

                       10.11  Tax Sharing Agreement; Services Agreement.
             One  or  more  parties to  a  Tax  Sharing  Agreement or  a
             Services Agreement  (other than  Borrowers or any  of their
             respective Restricted Subsidiaries) shall have defaulted in
             its  or their payment obligations (other than reimbursement
             obligations in respect of payments made under the Surviving
             Guaranties) in an aggregate amount equal to or greater than
             $2,500,000  thereunder and such  default or  defaults shall
             remain unremedied for a period in excess of ten consecutive
             Business Days; or

                       10.12   Residual Converse Tax Liability.   At any
             time on or after  (x) June 30, 1995, the  Residual Converse
             Tax Liability shall exceed $10  million or (y) December 31,
             1995, the  Residual  Converse Tax  Liability  shall  exceed
             zero; or



                                        -108-


             


                       10.13   Receivables  Repurchases.   The Borrowers
             and/or their respective  Restricted Subsidiaries shall have
             repurchased  accounts  receivables  (pursuant to  indemnity
             provisions  or otherwise)  from the  Receivables Subsidiary
             and/or the Receivables  Purchasers in  an aggregate  amount
             exceeding $15,000,000 in any Fiscal Year;

             then, and in any such event, and at any time thereafter, if
             any Event of Default shall  then be continuing, the  Agent,
             upon the written  request of the  Required Banks, shall  by
             written notice to  the Borrowers,  take any or  all of  the
             following actions,  without prejudice to the  rights of the
             Agent, any  Bank or the holder  of any Note  to enforce its
             claims against any Credit Party (provided that, if an Event
             of  Default specified in Section 10.05 shall occur with re-
             spect to  the Borrowers,  the result  of which would  occur
             upon  the  giving of  written notice  by  the Agent  to the
             Borrowers as specified in clauses (i) and  (ii) below shall
             occur automatically without the giving of any such notice):
             (i) declare  the Total Commitment terminated, whereupon all
             Commitments of each Bank shall forthwith  terminate immedi-
             ately and  any Commitment  Commission and other  Fees shall
             forthwith become  due and payable without  any other notice
             of  any kind; (ii) declare the principal of and any accrued
             interest  in respect  of all  Loans and  the Notes  and all
             Obligations owing hereunder and thereunder to be, whereupon
             the same  shall become,  forthwith due and  payable without
             presentment, demand,  protest or other notice  of any kind,
             all  of which are hereby waived by each Credit Party; (iii)
             terminate any Letter  of Credit which may  be terminated in
             accordance with its terms; (iv) direct the Borrowers to pay
             (and the Borrowers agree that upon receipt of  such notice,
             or  upon the occurrence of an Event of Default specified in
             Section 10.05 with respect to the Borrowers, they will pay)
             to the  Collateral Agent at  the Payment Office  such addi-
             tional  amount of  cash,  to be  held  as security  by  the
             Collateral  Agent,  as is  equal  to  the aggregate  Stated
             Amount of all Letters  of Credit issued for the  account of
             the Borrowers  and all  Acceptances  then outstanding;  (v)
             enforce, as Collateral Agent, all of the Liens and security
             interests created pursuant to  the Security Documents;  and
             (vi)  apply any cash collateral held for the benefit of the
             Banks  pursuant  to  Section   4.02  to  repay  outstanding
             Obligations.









                                        -109-


             


                       SECTION 11.  Definitions and Accounting Terms.

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

                       "Acceptance" shall  have the meaning  provided in
             Section 2.01(a).

                       "Acceptance Facing Fee"  shall having the meaning
             provided in Section 3.01(c)(y).

                       "Acceptance Fee" shall  have the meaning provided
             in Section 3.01(b).

                       "Action"  shall mean  Action Industries,  Inc., a
             Virginia corporation.

                       "Additional Collateral" shall  mean all  property
             (whether real or personal)  in which security interests are
             granted  (or  have  been  purported  to  be  granted)  (and
             continue  to be  in  effect at  the time  of determination)
             pursuant to Section 8.11.

                       "Additional Mortgage" shall have the meaning pro-
             vided in Section 8.11(a).

                       "Additional  Mortgaged  Property" shall  have the
             meaning provided in Section 8.11(a).

                       "Additional  Security  Documents" shall  mean all
             mortgages, pledge agreements, security agreements and other
             security documents  entered into  pursuant to Section  8.11
             with respect to Additional Collateral.

                       "Adjusted  Certificate  of  Deposit  Rate"  shall
             mean, on any day, the sum (rounded to  the nearest 1/100 of
             1%)  of  (1) the  rate obtained  by  dividing (x)  the most
             recent weekly average  dealer offering rate for  negotiable
             certificates of deposit with  a three-month maturity in the
             secondary market  as published  in the most  recent Federal
             Reserve  System  publication   entitled  "Select   Interest
             Rates,"  published  weekly on  Form  H.15  as of  the  date
             hereof, or  if such publication or  a substitute containing
             the foregoing  rate information  shall not be  published by
             the Federal Reserve System for any week, the weekly average
             offering  rate determined  by  the Agent  on  the basis  of
             quotations for such certificates  received by it from three
             certificate of  deposit dealers  in New York  of recognized



                                        -110-


             


             standing or,  if such  quotations are unavailable,  then on
             the  basis  of other  sources  reasonably  selected by  the
             Agent, by (y) a  percentage equal to 100% minus  the stated
             maximum rate  of all  reserve requirements as  specified in
             Regulation D applicable on such day to a three-month certi-
             ficate of deposit of  a member bank of the  Federal Reserve
             System   in  excess   of   $100,000   (including,   without
             limitation, any marginal, emergency,  supplemental, special
             or other  reserves),  plus (2)  the then  daily net  annual
             assessment rate  as estimated by the  Agent for determining
             the current annual assessment  payable by the Agent to  the
             Federal  Deposit Insurance Corporation  for insuring three-
             month certificates of deposit.

                       "Adjusted  Consolidated  EBITDA" shall  mean, for
             any  period   of  determination,  the   remainder  of   (i)
             Consolidated EBITDA  for such  period minus (or  plus) (ii)
             the   increase   (or  decrease),   if   any,  in   Adjusted
             Consolidated Working Capital from the first day to the last
             day of such period.

                       "Adjusted Consolidated Net Income" for any period
             shall mean  Consolidated Net  Income for such  period plus,
             without  duplication, the sum of the amount of all net non-
             cash charges (including, without  limitation, depreciation,
             amortization,  deferred tax  expense and  non-cash interest
             expense, but excluding any  net non-cash charges  reflected
             in Adjusted Consolidated Working Capital) and  net non-cash
             losses which were included  in arriving at Consolidated Net
             Income for such  period less the sum  of the amount  of all
             net non-cash income or  gains (exclusive of items reflected
             in  Adjusted  Consolidated  Working  Capital)  included  in
             arriving at Consolidated Net Income for such period.

                       "Adjusted  Consolidated  Working Capital"  at any
             time shall mean Consolidated  Current Assets (but excluding
             therefrom all cash and Cash Equivalents) less  Consolidated
             Current Liabilities. 

                       "Adjusted Percentage" shall  mean (x)  at a  time
             when no  Bank Default exists,  for each  Bank, such  Bank's
             Percentage and (y) at a time when a Bank Default exists (i)
             for each Bank that is a Defaulting  Bank, zero and (ii) for
             each  Bank that  is a  Non-Defaulting Bank,  the percentage
             determined  by   dividing   such  Bank's   Revolving   Loan
             Commitment  at such  time by  the Adjusted  Total Revolving
             Loan Commitment  at such time, it being understood that all
             references  herein to  Revolving Loan  Commitments  and the
             Adjusted Total Revolving Loan Commitment at a time when the
             Total Revolving Loan Commitment or Adjusted Total Revolving



                                        -111-


             


             Loan Commitment, as  the case may  be, has been  terminated
             shall be  references to  the Revolving Loan  Commitments or
             Adjusted Total  Revolving Loan Commitment, as  the case may
             be,  in  effect  immediately  prior  to  such  termination,
             provided  that  (A)  no  Bank's Adjusted  Percentage  shall
             change upon the occurrence  of a Bank Default from  that in
             effect  immediately  prior to  such  Bank  Default, to  the
             extent  such  change  after  giving  effect  to  such  Bank
             Default, and any repayment of Revolving Loans and Swingline
             Loans  at   such  time  pursuant  to   Section  4.02(a)  or
             otherwise,  would  cause  the  sum  of  (i)  the  aggregate
             outstanding principal amount of Revolving Loans of all Non-
             Defaulting Banks  plus (ii) the aggregate outstanding prin-
             cipal amount  of Swingline Loans  plus (iii) the  Letter of
             Credit Outstandings, to exceed the Adjusted Total Revolving
             Loan Commitment; (B) any changes to the Adjusted Percentage
             that would have  become effective upon the  occurrence of a
             Bank  Default but that did not become effective as a result
             of the  preceding clause (A) shall become  effective on the
             first  date  after  the  occurrence of  the  relevant  Bank
             Default on which  the sum of (i)  the aggregate outstanding
             principal  amount  of  the  Revolving  Loans  of  all  Non-
             Defaulting  Banks  plus   (ii)  the  aggregate  outstanding
             principal amount  of Swingline Loans plus  (iii) the Letter
             of  Credit  Outstandings is  equal  to  or  less  than  the
             Adjusted Total Revolving Loan Commitment;  and (C) if (i) a
             Non-Defaulting  Bank's  Adjusted   Percentage  is   changed
             pursuant to the preceding clause (B) and (ii) any repayment
             of such  Bank's Revolving Loans, or of Unpaid Drawings with
             respect to  Letters of Credit  or of Swingline  Loans, that
             were made during  the period commencing  after the date  of
             the  relevant Bank Default and  ending on the  date of such
             change to its  Adjusted Percentage must be returned  to the
             Borrowers  as  a preferential  or  similar  payment in  any
             bankruptcy or similar proceeding of the Borrowers, then the
             change  to such  Non-Defaulting Bank's  Adjusted Percentage
             effected pursuant to  said clause (B)  shall be reduced  to
             that  positive change, if any,  as would have  been made to
             its Adjusted Percentage if (x) such repayments had not been
             made and (y) the maximum change  to its Adjusted Percentage
             would have resulted in the sum of the outstanding principal
             of Revolving Loans made  by such Bank plus such  Bank's new
             Adjusted Percentage of the  outstanding principal amount of
             Swingline  Loans  and  of  Letter  of  Credit  Outstandings
             equalling  such Bank's  Revolving Loan  Commitment at  such
             time.

                       "Adjusted Total Available Revolving  Loan Commit-
             ment" shall mean at  any time the Adjusted  Total Revolving
             Loan Commitment less the Blocked Amount at such time.



                                        -112-


             


                       "Adjusted Total Revolving Loan  Commitment" shall
             mean at any time  the Total Revolving Loan Commitment  less
             the aggregate Revolving Loan  Commitments of all Defaulting
             Banks.

                       "Affiliate" shall  mean, with respect to any Per-
             son, any  other Person (including, for  purposes of Section
             9.06  only, all  directors, officers  and partners  of such
             Person) directly or indirectly controlling,  controlled by,
             or  under  direct or  indirect  common  control with,  such
             Person; provided,  however, that  for  purposes of  Section
             9.06, an Affiliate of INTERCO shall include any Person that
             directly  or indirectly owns more  than 5% of  any class of
             the capital stock of INTERCO and any officer or director of
             INTERCO or  any such Person.   A Person shall be  deemed to
             control another  Person if such  Person possesses, directly
             or indirectly, the  power to direct or  cause the direction
             of  the  management  and  policies of  such  other  Person,
             whether  through  the ownership  of  voting  securities, by
             contract or otherwise.

                       "Agent" shall mean Bankers  Trust Company, in its
             capacity  as  Agent  for  the Banks  hereunder,  and  shall
             include any  successor to  the Agent appointed  pursuant to
             Section 12.09.

                       "Agreement" shall mean this Credit  Agreement, as
             modified,   supplemented,   amended,  restated,   extended,
             renewed or replaced from time to time.

                       "Alternate Receivables  Purchase Agreement" shall
             mean that  Receivables  Purchase  Agreement,  dated  as  of
             November  15,  1994, among  the Receivables  Subsidiary, as
             Seller, and  Credit Lyonnais, New York  Branch as Purchaser
             and Agent, as same may be amended, modified or supplemented
             from  time to time in  compliance with Section  9.11, or as
             replaced in  compliance with the  definition of Receivables
             Facility.

                       "Anticipated Deferred Payment Amount" shall mean,
             with respect  to any Deferred Payment  Election, the amount
             specified  in  the  Deferred  Payment  Notice delivered  by
             INTERCO  in  connection  therewith  as the  amount  of  the
             proceeds from  the issuance  or sale  of equity  of INTERCO
             and/or its Restricted Subsidiaries  that INTERCO intends to
             use to pay all or any portion of the Converse Tax Liability
             when same becomes payable.






                                        -113-


             


                       "Apollo Group" shall  mean Apollo Advisors,  L.P.
             and   Lion   Advisors,    L.P.,   both   Delaware   limited
             partnerships.

                       "Apollo  Management  Agreement"  shall  mean  the
             consulting agreement,  dated  September 23,  1992,  between
             Apollo Advisors, L.P. and INTERCO.

                       "Applicable Margin"  shall mean, (i)  in the case
             of Base Rate Loans, .75% and (ii) in the case of Eurodollar
             Loans,  1.75%, in each case reduced (but not below zero) by
             the Reduction Percentage, if any.

                       "Assignment and Assumption Agreement"  shall mean
             the  Assignment and  Assumption Agreement  substantially in
             the form of Exhibit K (appropriately completed).

                       "Atlantic"    shall     mean    Atlantic    Asset
             Securitization Corp., a Delaware corporation.

                       "Atlantic  Receivables Purchase  Agreement" shall
             mean  the  Receivables  Purchase  Agreement,  dated  as  of
             November  15,  1994,   among  the  Receivables  Subsidiary,
             Atlantic,  as  Purchaser,  and Credit  Lyonnais,  New  York
             Branch,  as  Agent, as  same  may be  amended,  modified or
             supplemented from  time to time in  compliance with Section
             9.11, or as replaced in  compliance with the definition  of
             Receivables Facility.

                       "Attributed Receivables Facility Indebtedness" at
             any  time  shall  mean  the aggregate  Invested  Amount  of
             Receivables  Interests  (as   defined  in  the  Receivables
             Documents)  under the  Receivables Purchase  Agreements (it
             being  the  intent  of  the  parties  that  the  amount  of
             Attributed  Receivables Facility  Indebtedness at  any time
             outstanding   approximate  as   closely  as   possible  the
             principal amount of indebtedness which would be outstanding
             at such  time under the  Receivables Facility if  same were
             structured  as a  secured lending  agreement rather  than a
             purchase agreement).

                       "Authorized  Representative"   shall  mean,  with
             respect to (i) delivering  Notices of Borrowing, Notices of
             Conversion, Letter of Credit Requests and similar  notices,
             any person or persons  that has or have been  authorized by
             the  respective boards  of  the Borrowers  to deliver  such
             notices  pursuant to  this Agreement  and that has  or have
             appropriate signature  cards on  file with the  Agent, BTCo
             and   each  Issuing   Bank;   (ii)   delivering   financial
             information  and officer's  certificates  pursuant to  this



                                        -114-


             


             Agreement, any  financial officer of INTERCO  and (iii) any
             other matter in connection with this Agreement or any other
             Credit Document,  any officer  (or a  person or  persons so
             designated by any two officers) of INTERCO.

                       "Available CapX Amount" shall  mean for any  date
             of  determination occurring  in  any Fiscal  Year, (i)  the
             amounts  set forth  below opposite  such Fiscal  Year, plus
             (ii) during any Fiscal Year (other than  Fiscal Year 1994),
             an amount equal  to the lesser of  (x) $15 million and  (y)
             the  amount by  which  the amount  set  forth opposite  the
             Fiscal Year  preceding such Fiscal Year  below exceeded the
             sum of (a) the  amount of Capital Expenditures made  by the
             Borrowers  and their  Restricted  Subsidiaries pursuant  to
             Section 9.07(a) during such  preceding Fiscal Year plus (b)
             the  amount  of  Permitted  Acquisitions  made  pursuant to
             clause  (v)  of  the   definition  of  Available  Permitted
             Acquisition Amount during such preceding Fiscal Year, minus
             (iii)  the  amount  of  Capital Expenditures  made  by  the
             Borrowers  and their  Restricted  Subsidiaries pursuant  to
             Section  9.07(a) during  such Fiscal  Year, minus  (iv) the
             amount of  Permitted Acquisitions  made pursuant  to clause
             (v) of  the definition of  Available Permitted  Acquisition
             Amount during such Fiscal Year:

                            Fiscal Year                 Amount
                            1994                     $ 5,000,000
                            1995                     $35,000,000
                            1996                     $35,000,000
                            1997                     $35,000,000
                            1998 and
                              thereafter             $40,000,000

                       "Available Net Income Amount"  shall mean on  any
             date  of determination  an amount  equal to  zero, plus  or
             minus (i)  an amount  equal to the  Consolidated Cumulative
             Net  Income Amount  on such date,  minus (ii)  any Dividend
             payments made by INTERCO pursuant to Section 9.03(ii)(B)(b)
             on  or prior to such date, minus (iii) any Investments made
             by the Borrowers or their  Restricted Subsidiaries pursuant
             to   Section   9.05(vii)(C),   minus   (iv)   any   Capital
             Expenditures made  by  the Borrowers  or  their  Restricted
             Subsidiaries pursuant to Section 9.07(b)(ii)(y) on or prior
             to such date, minus (v) any Restricted Junior Payments made
             by  INTERCO  or  its Restricted  Subsidiaries  pursuant  to
             Section  9.11 (a)(i)(y)(B), minus (vi) any Guaranty Payment
             made by INTERCO pursuant to Section 9.11(b)(ii)(y)(B)(3) on
             or  prior to  such date;  provided that  in any  event, the
             amount  of  the Available  Net  Income  Amount shall  never
             exceed the then Available  Retained Excess Cash Flow Amount



                                        -115-


             


             (after  giving  effect  to all  prior  and  contemporaneous
             reductions thereto).

                       "Available  Permitted  Acquisition Amount"  shall
             mean, at the time of determination thereof, an amount equal
             to the sum of  (A) the Available $10 Million  Basket Amount
             on  such  date  (after  giving  effect  to  all  prior  and
             contemporaneous  reductions  thereto),  plus  (B)  (i)  the
             Available Unrestricted Proceeds Amount on such date  (after
             giving effect  to all prior and  contemporaneous reductions
             thereto), plus (ii) the Net Cash Proceeds received from (x)
             the   issuance   of  Permitted   Subordinated  Indebtedness
             retained by any of the  Borrowers on or prior to  such date
             and not required to be used to repay Term Loans pursuant to
             Section  4.02(e) as a result of clause (x)(ii) of the first
             parenthetical of such Section  4.02(e) and (y) the issuance
             of Disqualified  Preferred Stock retained by  the Borrowers
             on  or prior to  such date and  not required to  be used to
             repay Term Loans pursuant to Section 4.02(c) as a result of
             the operation of clause  (vi)(y) of the first parenthetical
             of such Section 4.02(c),  plus (iii) the Available Retained
             Excess Cash Flow Amount  on such date (after  giving effect
             to all prior and contemporaneous reductions thereto),  plus
             (iv)  the aggregate  amount of  Net Cash  Proceeds received
             from  (x) issuances of Permitted Unsecured Indebtedness and
             the face amount of any  Permitted Acquired Debt acquired by
             the Borrowers and their Restricted Subsidiaries and (y) the
             amount  of Disqualified Preferred  Stock issued pursuant to
             Section 9.13(b)(ii), in each  case after the Effective Date
             and on or prior to such  date, plus (v) the Available  CapX
             Amount on such date  (after giving effect to all  prior and
             contemporaneous reductions thereto).

                       "Available  Retained  Excess  Cash  Flow  Amount"
             shall  be on any date  of determination an  amount equal to
             zero, (i) plus or  minus an amount equal  to the amount  of
             Excess Cash Flow permitted to be retained by the  Borrowers
             on or prior to such  date with respect to any prior  Excess
             Cash Flow Payment Period (which shall be zero on any Excess
             Cash Flow Payment Date  occurring after a Trigger  Date but
             prior to the Trigger Termination Date relating thereto, and
             shall be determined on a cumulative basis, but including at
             the  time of  any determination  of the  Available Retained
             Excess  Cash  Flow  Amount,  only those  Excess  Cash  Flow
             Payment Periods  for which the respective  Excess Cash Flow
             Payment  Date  has  occurred  and  any  required  repayment
             pursuant to Section 4.02(g)  has been made; provided, that,
             if  Excess Cash Flow is  negative for any  Excess Cash Flow
             Payment  Period,  100% of  such  negative  amount shall  be
             included in determining  the Borrowers' cumulative retained



                                        -116-


             


             share  of all  Excess  Cash Flow  and  not required  to  be
             utilized to repay Term  Loans pursuant to Section 4.02(g)),
             minus   (ii)  any   amounts   used   to  effect   Permitted
             Acquisitions  pursuant to clause (B)(iii) in the definition
             of Available  Permitted Acquisition  Amount on or  prior to
             such  date, minus (iii) all deductions to the Available Net
             Income Amount  made pursuant to clauses  (ii), (iii), (iv),
             (v) and (vi) of the definition thereof.

                       "Available  $10 Million Basket Amount" shall mean
             on   any  date   of  determination   an  amount   equal  to
             (i) $10,000,000, minus  (ii) the amount (not  to exceed $10
             million) by  which the  Converse Tax Liability  exceeds the
             Leverage  Improvement Amount  (x) for  the period  from the
             Initial  Borrowing  Date  until   the  date  on  which  the
             officer's  certificate is  delivered  pursuant  to  Section
             8.10(b), on the Initial Borrowing  Date, (y) for the period
             from the date of the delivery of such officer's certificate
             until  the  Final   Determination  of   the  Converse   Tax
             Liability, on  the date of  the delivery of  such officer's
             certificate and (z) for any  period thereafter, on the date
             of the Final Determination thereof, minus (iii) any amounts
             used to  make Investments pursuant  to Section 9.05(vii)(A)
             on or  prior to such date,  minus (iv) any  amounts used to
             make Permitted  Acquisitions pursuant to clause  (A) of the
             definition of Available Permitted Acquisition  Amount on or
             prior to such date, plus (v) the amount  (not to exceed the
             amount subtracted  pursuant to clause (ii)  above) by which
             the Excess Recapture Amount has been increased after an ex-
             tension of the Trigger  Termination Date pursuant to clause
             (y) of the definition thereof.

                       "Available  Unrestricted  Proceeds Amount"  shall
             mean,  on any  date of  determination, an  amount  equal to
             zero,  plus  (i)  all  amounts  received  by  INTERCO  from
             issuances of  equity by INTERCO (including  pursuant to any
             exercise of the  INTERCO Warrants and  the issuance of  any
             Preferred Stock) after the  Effective Date and on or  prior
             to such date, and not required to be utilized to repay Term
             Loans pursuant to  Sections 4.02(c) and/or  (d) or used  to
             make    Guaranty    Payments     pursuant    to     Section
             9.11(b)(ii)(y)(C)   or  applied  pursuant   to  the  second
             paragraph of Section 4.02(c) minus (ii) any amounts used to
             effect  Permitted Acquisitions  pursuant to  clause (B)(i),
             (B)(ii)(y)  or (B)(iv)(y)  of the  definition of  Available
             Permitted  Acquisition Amount  on  or prior  to such  date,
             minus (iii) any Dividend  payments made by INTERCO pursuant
             to Section 9.03(ii)(B)(a), on or  prior to such date, minus
             (iv) any  Investments by the Borrowers  or their Restricted
             Subsidiaries  pursuant  to  Section  9.05(vii)(B),  and  by



                                        -117-


             


             INTERCO   in  any  Unrestricted  Subsidiaries  pursuant  to
             Section 9.05(viii), on or prior to such date, minus (v) any
             Capital  Expenditures  made  by  the  Borrowers  and  their
             Restricted Subsidiaries pursuant to  Section 9.07(b)(ii)(x)
             on  or prior to such date, minus (vi) any Restricted Junior
             Payments  made by  INTERCO or  its  Restricted Subsidiaries
             pursuant  to Section 9.11(a)(i)(y)(A), minus (vii) Guaranty
             Payments    made   by    INTERCO   pursuant    to   Section
             9.11(b)(ii)(y)(B)(2).

                       "Bank"  shall  mean  each  financial  institution
             listed on Schedule I, as well as any Person which becomes a
             "Bank" hereunder pursuant to 13.04(b).

                       "Bank Default" shall mean (i) the  refusal (which
             has not been  retracted) of  a Bank to  make available  its
             portion   of  any   Borrowing   (including  any   Mandatory
             Borrowing)  or  to fund  its  portion  of any  unreimbursed
             payment  under  Section  2.03(c)  or   (ii) a  Bank  having
             notified in  writing the Borrowers and/or the Agent that it
             does  not  intend  to  comply with  its  obligations  under
             Section 1.01(c) or Section  2 in the case of  either clause
             (i) or  (ii), as a result  of any takeover of  such bank by
             any regulatory authority or agency.

                       "Bankruptcy Code" shall have the meaning provided
             in Section 10.05.

                       "Base Rate" at any time shall mean the highest of
             (i)  1/2 of  1% in  excess of  the Adjusted  Certificate of
             Deposit Rate and (ii) the Prime Lending Rate. 

                       "Base Rate Loan"  shall mean  (i) each  Swingline
             Loan and (ii)  each Loan designated or deemed designated as
             such by the Borrowers at the time of the incurrence thereof
             or conversion thereto. 

                       "Blocked Amount" shall mean  an amount which ini-
             tially  shall be zero and  which shall be  (i) increased on
             the date of  each Deferred Payment  Election by the  amount
             specified  in the  Deferred  Payment  Notice  delivered  in
             connection  therewith as  the Anticipated  Deferred Payment
             Amount,  (ii)  decreased  with  respect  to  each  Deferred
             Payment Election (x)  on each date after  the occurrence of
             such Deferred  Payment Election  and prior to  the Deferred
             Payment Prepayment  Date  with  respect  thereto  on  which
             INTERCO delivers to the  Agent a certificate signed by  its
             chief financial  officer, stating  that all or  a specified
             portion  of the Anticipated  Deferred Payment  Amount which
             gave rise to an increase in the Blocked Amount and relating



                                        -118-


             


             to   such   Deferred   Payment  Election   has   been,   or
             contemporaneously with the delivery of such certificate  is
             being, used by INTERCO  to make payments in respect  of the
             Converse Tax Liability, by the amount so used or being used
             and (y) on the Deferred Payment Prepayment Date  in respect
             thereof,  by the  principal  amount of  the Loans  actually
             repaid  on such date pursuant  to the last  sentence of the
             second paragraph of Section 4.02(c).

                       "Borrowers"  shall have  the meaning  provided in
             the first paragraph of this Agreement.

                       "Borrowing" shall  mean the borrowing of one Type
             of Loan of a  single Tranche from all the Banks having Com-
             mitments of  the respective  Tranche (or from  BTCo in  the
             case of Swingline Loans) on a given date (or resulting from
             a conversion  or conversions  on such  date) having  in the
             case of Eurodollar Loans the same Interest Period, provided
             that Base  Rate Loans incurred pursuant  to Section 1.10(b)
             shall  be  considered  part  of the  related  Borrowing  of
             Eurodollar Loans.

                       "Broyhill" shall have the meaning provided in the
             first paragraph of this Agreement.

                       "BTCo" shall mean  Bankers Trust  Company in  its
             individual capacity.

                       "Business Day"  shall mean  (i) for  all purposes
             other  than as covered by clause (ii) below, any day except
             Saturday, Sunday and  any day  which shall be  in New  York
             City a legal holiday or a day on which banking institutions
             are  authorized  or required  by  law  or other  government
             action  to close and (ii)  with respect to  all notices and
             determinations   in  connection   with,  and   payments  of
             principal and interest on,  Eurodollar Loans, any day which
             is a Business Day  described in clause (i) above  and which
             is also a  day for trading by and between  banks in the New
             York interbank Eurodollar market.

                       "Capital Expenditures" shall  mean, with  respect
             to any Person, all expenditures by such Person which should
             be   capitalized  in  accordance  with  generally  accepted
             accounting principles, including all such expenditures with
             respect  to fixed  or  capital  assets (including,  without
             limitation,  expenditures for maintenance and repairs which
             should be capitalized in accordance with generally accepted
             accounting principles)  and the amount of Capitalized Lease
             Obligations incurred by such Person.




                                        -119-


             


                       "Capitalized  Lease  Obligations"  of any  Person
             shall mean  all rental obligations  which, under  generally
             accepted accounting principles, are  or will be required to
             be  capitalized on the books  of such Person,  in each case
             taken at  the amount thereof accounted  for as indebtedness
             in accordance with such principles.

                       "Cash Equivalents" shall mean,  as to any Person,
             (i) securities  issued or directly and  fully guaranteed or
             insured by the United States or any agency or instrumental-
             ity thereof (provided that the full faith and credit of the
             United States is pledged  in support thereof) having matur-
             ities of not more than  one year from the date  of acquisi-
             tion, (ii) time deposits and certificates of deposit of any
             commercial bank  having, or which is  the principal banking
             subsidiary of  a bank  holding company organized  under the
             laws of the United States,  any State thereof, the District
             of Columbia  or any  foreign  jurisdiction having  capital,
             surplus  and  undivided profits  aggregating  in  excess of
             $200,000,000,  with maturities  of not  more than  one year
             from the date  of acquisition by such  Person, (iii) repur-
             chase obligations with a term of not more than  90 days for
             underlying securities of the  types described in clause (i)
             above entered into with any bank meeting the qualifications
             specified in  clause  (ii)  above,  (iv)  commercial  paper
             issued  by any  Person  incorporated in  the United  States
             rated  at least A-1 or the equivalent thereof by Standard &
             Poor's  Corporation  or  at  least P-1  or  the  equivalent
             thereof by Moody's Investors Service, Inc. and in each case
             maturing  not  more  than  one   year  after  the  date  of
             acquisition by such Person, (v) investments in money market
             funds substantially  all of  whose assets are  comprised of
             securities of  the types  described in clauses  (i) through
             (iv) above  and (vi) demand deposit  accounts maintained in
             the ordinary course  of business not in  excess of $100,000
             in the aggregate.

                       "Cash Management  System" shall have  the meaning
             provided in Section 5.20.

                       "CERCLA"  shall  mean the  Comprehensive Environ-
             mental  Response, Compensation, and  Liability Act of 1980,
             as the same  may be amended  from time  to time, 42  U.S.C.
             Sec. 9601 et seq.

                       "Change  of Control" shall mean (i) INTERCO shall
             at  any time  cease to  own 100%  of the  capital  stock of
             either Broyhill  or Lane,  (ii) the  board of  directors of
             INTERCO shall cease to consist of  a majority of Continuing
             Directors and (iii) any Person, entity or "group"  (as such



                                        -120-


             


             term  is  defined in  Section  13(d)(3)  of the  Securities
             Exchange Act  of 1934, as  amended) (other than  the Apollo
             Group or a Controlled Account) is or becomes the beneficial
             owner of an amount  of outstanding Voting Stock  of INTERCO
             in  excess of  25%, and  the Apollo  Group or  a Controlled
             Account  own less  than such  Person,  entity or  group (as
             defined above), of the total amount of fully diluted shares
             of outstanding Voting Stock of INTERCO.

                       "Code" shall  mean the  Internal Revenue  Code of
             1986,  as amended  from time  to time, and  the regulations
             promulgated  and  the rulings  issued thereunder.   Section
             references to the Code are to the Code, as in effect at the
             date of this Agreement, and to any subsequent  provision of
             the Code, amendatory thereof,  supplemental thereto or sub-
             stituted therefor.

                       "Collateral"  shall  mean  all property  (whether
             real  or  personal)  with  respect to  which  any  security
             interests have  been granted  (or purported to  be granted)
             pursuant to any Security Document, including, without limi-
             tation,   all  Pledge  Agreement  Collateral  (which  shall
             include all  capital stock of, and  promissory notes issued
             by, the Receivables  Subsidiary, to the extent held  by any
             Credit  Party),  all Security  Agreement  Collateral (which
             shall exclude all  assets of  the Receivables  Subsidiary),
             all Mortgaged Properties, all cash and Cash Equivalents de-
             livered as collateral pursuant to Section 4.02 or 10 hereof
             and all Additional Collateral, if any.

                       "Collateral Agent" shall mean the Agent acting as
             collateral agent for the  Secured Creditors pursuant to the
             Security Documents.

                       "Collective Bargaining Agreements" shall have the
             meaning provided in Section 5.05.

                       "Commitment" shall mean any of the commitments of
             any Bank, i.e., whether the Term Loan Commitment or Revolv-
             ing Loan Commitment.

                       "Commitment  Commission"  shall have  the meaning
             provided in Section 3.01(a).

                       "Concentration  Account"  shall have  the meaning
             provided in the Security Agreement.

                       "Consolidated Cumulative Net Income Amount" shall
             mean,  at  any date  an amount  determined on  a cumulative
             basis  equal  to (i)  the sum  of  25% of  Consolidated Net



                                        -121-


             


             Income for  all Consolidated Cumulative Net  Income Periods
             ending  prior  to  such  date of  determination  for  which
             Cumulative  Net Income  was a  positive number,  minus (ii)
             100%  of  Consolidated  Net  Income  for  all  Consolidated
             Cumulative Net Income Periods ending prior to such  date of
             determination  for   which  Cumulative  Net  Income  was  a
             negative number.

                       "Consolidated Cumulative Net Income Period" shall
             mean each period consisting of a fiscal quarter of  INTERCO
             ending after January 1, 1995.

                       "Consolidated  Current Assets" shall mean, at any
             time,  the current  assets  of INTERCO  and its  Restricted
             Subsidiaries determined on a combined basis.

                       "Consolidated Current Liabilities" shall mean, at
             any  time, the current  liabilities of INTERCO  and its Re-
             stricted  Subsidiaries  determined on  a combined  basis at
             such  time, but  excluding (i)  the current portion  of any
             Indebtedness   under   this   Agreement,   any   Attributed
             Receivables  Facility  Indebtedness   of  the   Receivables
             Subsidiary and any other long-term Indebtedness which would
             otherwise  be included  therein,  (ii)  accrued but  unpaid
             interest  with  respect to  the  Indebtedness described  in
             clause   (i)   and  with   respect  to   Capitalized  Lease
             Obligations,  (iii)  the  current  portion  of Indebtedness
             constituting  Capitalized  Lease Obligations  and  (iv) any
             current portion of tax liabilities of such Persons.

                       "Consolidated Debt" shall  mean all  Indebtedness
             of  INTERCO  and  its Restricted  Subsidiaries  (including,
             without  limitation, the  amount of  Attributed Receivables
             Facility Indebtedness)  determined on a combined basis with
             respect  to borrowed  money  or other  obligations of  such
             Persons  which would appear  on the  balance sheet  of such
             Persons  as  indebtedness (including  unreimbursed drawings
             under  Letters of  Credit and  unreimbursed payments  under
             Acceptances, but excluding Consolidated Current Liabilities
             and deferred tax and pension liabilities) provided that for
             any date  of determination,  the amount of  Revolving Loans
             and  Swingline Loans included  in the foregoing calculation
             shall be  the daily average utilization  of Revolving Loans
             and  Swingline Loans for the period of (A) three months, if
             such  calculation is  made  within the  first three  months
             following the  Initial Borrowing  Date, (B) six  months, if
             such  calculation  is  made  within the  first  six  months
             following the  Initial Borrowing Date, (C)  nine months, if
             such  calculation  is made  within  the  first nine  months
             following the Initial Borrowing  Date and (D) twelve months



                                        -122-


             


             thereafter, in  each case, prior to  such calculation, plus
             (i)  all Contingent  Obligations  of such  Persons incurred
             after  the  Effective  Date (excluding  as  resulting  from
             extensions  or renewals  of  the leases  guaranteed by  the
             Surviving   Guarantees  made   in   compliance  with   this
             Agreement),  plus  (ii)  all  Contingent  Obligations  with
             respect  to any Surviving Guaranty on and after the date on
             which INTERCO made any payment in respect of such Surviving
             Guaranty,  plus  (iii)  the  amount,  if  any, of  all  tax
             liabilities  shown  as  indebtedness  on  the  consolidated
             balance sheet  of INTERCO and its  Subsidiaries or incurred
             by  INTERCO as a result of (x) the Florsheim Disposition or
             (y)  the Converse Disposition, in an amount, in the case of
             this  clause (y), equal to  the lesser of  the Converse Tax
             Liability and the Leverage Improvement Amount, in each case
             on the Initial Borrowing Date, plus (iv) an amount equal to
             the greater  of the liquidation preference  and the maximum
             fixed repurchase price (excluding accrued Dividends) of any
             outstanding Disqualified Preferred Stock.  

                       "Consolidated  EBIT" shall mean,  for any period,
             the Consolidated  Net Income of INTERCO  and its Restricted
             Subsidiaries,  determined  on   a  combined  basis,  before
             Consolidated Net  Interest Expense (to the  extent deducted
             in arriving  at Consolidated Net Income)  and provision for
             taxes  or gains or losses  from sales of  assets other than
             inventory sold in the ordinary course of  business, in each
             case  that were  included in  arriving at  Consolidated Net
             Income.

                       "Consolidated EBITDA" shall mean, for any period,
             Consolidated EBIT, adjusted by adding thereto the amount of
             all amortization of  intangibles and depreciation, in  each
             case that  were deducted  in arriving at  Consolidated EBIT
             for such period.

                       "Consolidated  Net  Income" shall  mean,  for any
             period,  the net  after  tax  income  of  INTERCO  and  its
             Restricted Subsidiaries  determined  on a  combined  basis,
             minus Dividends paid  in respect of Disqualified  Preferred
             Stock, without giving effect  to any extraordinary gains or
             losses, provided that  no amount should be included  in the
             Consolidated Net  Income of  INTERCO for amounts  under the
             Services Agreement unless such amounts  are paid in cash to
             INTERCO.

                       "Consolidated  Net  Interest Coverage  Ratio" for
             any period  shall mean  the ratio of  Adjusted Consolidated
             EBITDA  to  Consolidated  Net  Interest  Expense  for  such
             period;  provided  that for  any  period  which includes  a



                                        -123-


             


             period  occurring before  the Initial  Borrowing Date,  (x)
             with respect  to the calculation  of Adjusted  Consolidated
             EBITDA, such calculation shall be  adjusted, on a Pro Forma
             Basis,  to  give effect  to  the Transaction  and  (y) with
             respect  to  the calculation  of Consolidated  Net Interest
             Expense, the amount thereof shall be an amount equal to (i)
             Consolidated Net  Interest  Expense from  January  1,  1995
             through  the last day of such period multiplied by (ii) (A)
             4, in  the case of the period ending March 31, 1995, (B) 2,
             in the case  of the  period ending  June 30,  1995 and  (C)
             1.333, in the case of the period ending September 30, 1995.

                       "Consolidated Net Interest  Expense" shall  mean,
             for any period, the  total consolidated interest expense of
             INTERCO  and its  Restricted Subsidiaries  for such  period
             (calculated  without  regard  to  any  limitations  on  the
             payment thereof) plus, without duplication, that portion of
             Capitalized Lease Obligations of INTERCO and its Restricted
             Subsidiaries  representing the  interest  factor  for  such
             period,  and capitalized  interest expense,  plus,  (i) all
             cash  fees, service charges and other costs, as well as all
             collections or  other amounts  retained by  the Receivables
             Purchasers  which are in excess of  amounts paid to INTERCO
             and  its  Restricted  Subsidiaries  under  the  Receivables
             Facility by it  for the purchase of receivables pursuant to
             the Receivables  Facility and (ii)  the product of  (x) the
             amount of  all cash  Dividend requirements (whether  or not
             declared or  paid)  on Disqualified  Preferred Stock  paid,
             accrued or  scheduled to  be paid  or  accrued during  such
             period  times (y) a fraction, the numerator of which is one
             and  the denominator of which is one minus the then current
             effective  consolidated Federal,  state, local  and foreign
             tax rate  (expressed as  a decimal number  between one  and
             zero) of  INTERCO as reflected in  the audited consolidated
             financial  statements  of  INTERCO  for  its most  recently
             completed Fiscal Year, which  amounts described in the pre-
             ceding clauses (i)  and (ii) shall  be treated as  interest
             expense  of INTERCO  and  its  Restricted Subsidiaries  for
             purposes of this definition  regardless of the treatment of
             such  amounts under  generally accepted  accounting princi-
             ples,  in each  case  net of  the  total consolidated  cash
             interest income of INTERCO and its  Restricted Subsidiaries
             for  such period,  but  excluding the  amortization of  any
             deferred financing costs and all  amounts in respect of the
             Interest Rate  Protection Agreements,  all determined  on a
             combined basis.

                       "Contingent Obligation"  shall  mean, as  to  any
             Person, any  obligation of such Person  guaranteeing or in-
             tended to guarantee any  Indebtedness, leases, dividends or



                                        -124-


             


             other obligations ("primary obligations") of any other Per-
             son (the "primary obligor") in any manner, whether directly
             or  indirectly, including, without  limitation, any obliga-
             tion of such Person, whether or not contingent, (i) to pur-
             chase any  such primary obligation or  any property consti-
             tuting  direct  or  indirect  security  therefor,  (ii)  to
             advance  or supply funds (x) for the purchase or payment of
             any  such primary  obligation  or (y)  to maintain  working
             capital or equity capital of the primary  obligor or other-
             wise to maintain the  net worth or solvency of  the primary
             obligor, (iii) to purchase property, securities or services
             primarily for the purpose of assuring the owner of any such
             primary obligation of the ability of the primary obligor to
             make  payment of such  primary obligation or (iv) otherwise
             to assure or hold harmless the holder of such primary obli-
             gation against loss in respect thereof; provided,  however,
             that the  term Contingent Obligation shall  not include en-
             dorsements of instruments for  deposit or collection in the
             ordinary course of business.  The amount of any  Contingent
             Obligation shall be  deemed to  be an amount  equal to  the
             stated or determinable amount  of the primary obligation in
             respect of which such Contingent Obligation is made (or, if
             less,  the maximum  amount of  such primary  obligation for
             which  such Person may be  liable pursuant to  the terms of
             the instrument evidencing  such Contingent Obligation)  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.

                       "Continuing Directors" shall  mean the  Directors
             of INTERCO  on the Initial  Borrowing Date  and each  other
             Director if such Director's  nomination for election to the
             Board of Directors  of INTERCO is recommended by a majority
             of the then Continuing Directors.

                       "Controlled  Account"  shall  mean   any  account
             managed by the Apollo Group for so long as the Apollo Group
             exercises sole power of disposition and voting with respect
             thereto.

                       "Converse"  shall mean Converse  Inc., a Delaware
             corporation.

                       "Converse  Application"  shall  have the  meaning
             provided in Section 5.08.

                       "Converse  Disposition"  shall  have the  meaning
             provided in Section 5.08.




                                        -125-


             


                       "Converse Documents" shall mean all documents and
             agreements related to the Converse Recapitalization.

                       "Converse  Financing" has the meaning provided in
             Section 5.08.

                       "Converse Recapitalization"  shall mean, collect-
             ively,  (i)  the  Converse  Financing,  (ii)  the  Converse
             Application and (iii) the Converse Disposition.

                       "Converse Tax  Basket" shall mean the  sum of (A)
             the Leverage Improvement Amount plus (B) the amount (not to
             exceed  $10 million) by which  (x) for the  period from the
             Initial  Borrowing  Date  until   the  date  on  which  the
             officer's  certificate  is  delivered  pursuant  to Section
             8.10(b), the  Converse Tax Liability  exceeds the  Leverage
             Improvement Amount  on the Initial Borrowing  Date, (y) for
             the period after the delivery of such officer's certificate
             until  the  Final   Determination  of   the  Converse   Tax
             Liability, the  Converse Tax Liability exceeds the Leverage
             Improvement  Amount  on the  date  on  which the  officer's
             certificate is  delivered pursuant  to Section  8.10(b) and
             (z) for  any period thereafter, the  Converse Tax Liability
             exceeds  the Leverage  Improvement  Amount on  the date  of
             Final Determination thereof.

                       "Converse Tax  Liability" shall mean (x) prior to
             the  Final Determination  thereof, an  amount equal  to the
             maximum Federal,  state and local tax  liability that would
             be incurred  by INTERCO and/or  its Restricted Subsidiaries
             in connection with the Converse Disposition if the Converse
             Disposition  were a fully taxable transaction, as estimated
             by  the chief  financial officer  of  INTERCO (in  a manner
             satisfactory  to the  Agent) (i)  on the  Initial Borrowing
             Date and until the date  on which the officer's certificate
             is delivered pursuant to Section 8.10(b), on  the basis set
             forth in the certificate delivered pursuant to Section 5.21
             and (ii) from and after the date on  which  the certificate
             is  delivered pursuant  to  Section 8.10(b)  and until  the
             Final Determination thereof, on the basis set forth in such
             certificate, and (y) after the Final Determination thereof,
             an amount equal  to the aggregate tax liability  of INTERCO
             and/or  its Subsidiaries (including amounts previously paid
             in respect  thereof at  such time)  in connection  with the
             Converse Disposition.

                       "Credit Documents" shall mean this Agreement and,
             after the  execution and  delivery thereof pursuant  to the
             terms of this Agreement,  each Note, each Security Document
             and the  Subsidiary Guaranty  and, after the  execution and



                                        -126-


             


             delivery  thereof, each  additional  guaranty  or  security
             document executed pursuant to Section 8.11.

                       "Credit Event" shall mean  the making of any Loan
             or the issuance of any Letter of Credit.

                       "Credit Party" shall mean the Borrowers  and each
             Subsidiary Guarantor.

                       "Currency  Hedging  Agreements"  shall  mean  any
             foreign  exchange contracts,  currency  swap agreements  or
             other  similar  agreements  or  arrangements   designed  to
             protect against the fluctuations in currency values.

                       "Default" shall mean any  event, act or condition
             which  with notice or lapse of time, or both, would consti-
             tute an Event of Default.

                       "Defaulting   Bank"  shall  mean  any  Bank  with
             respect to which a Bank Default is in effect.

                       "Deferred  Payment  Election"   shall  have   the
             meaning  provided  in  the  second  paragraph  of   Section
             4.02(c).

                       "Deferred  Payment Notice"  shall mean  a written
             notice  signed by  the chief  financial officer  of INTERCO
             stating that INTERCO, in good faith, intends and expects to
             use  all  or a  specified portion  of  the proceeds  of the
             issuance or sale of equity of INTERCO and/or its Restricted
             Subsidiaries  to pay all or any portion of the Converse Tax
             Liability.

                       "Deferred Payment Prepayment Amount"  shall mean,
             with respect to any  Deferred Payment Election, the amount,
             if any,  on the  Deferred Payment Prepayment  Date relating
             thereto  by  which  (a)  the  Anticipated  Deferred Payment
             Amount in respect of such Deferred Payment Election exceeds
             (b) the  aggregate amount by  which the Blocked  Amount has
             been reduced  pursuant to clause (ii)(x)  of the definition
             thereof as a result of the expenditure of  such Anticipated
             Deferred Payment Amount.

                       "Deferred  Payment  Prepayment Date"  shall mean,
             with respect to any  Deferred Payment Election, the earlier
             of (i) the date, if any, upon which the Agent, on behalf of
             the  Required  Banks,   shall  have  delivered  a   written
             termination  notice to  INTERCO with  respect to  rights to
             make such payments, provided  that such notice may  only be
             given while an Event of Default exists and (ii) the date on



                                        -127-


             


             which INTERCO shall have determined not to make any payment
             on the Converse Tax  Liability with the related Anticipated
             Deferred Payment Amount. 

                       "Disqualified   Preferred    Stock"   means   any
             Preferred  Stock   of  INTERCO  which  would  be  Qualified
             Preferred  Stock except  that  regular  accruing  dividends
             thereon are required  to be paid in  cash, and so  long as,
             (i)  based on calculations made  by INTERCO on  a Pro Forma
             Basis  after   giving  effect  to  the   issuance  of  such
             Disqualified  Preferred  Stock,  no  Default  or  Event  of
             Default will exist  under, or would have  existed under the
             periods covered  by, the  financial covenants contained  in
             Sections  9.08 through 9.10,  inclusive, of this Agreement,
             (ii) based  on good  faith projections prepared  by INTERCO
             for  the period  from  the date  of  the issuance  of  such
             Disqualified Preferred Stock to the  date which is one year
             thereafter,  the level of financial performance measured by
             the covenants  set forth in Sections 9.08  through 9.10 in-
             clusive  shall be  better than  or equal  to such  level as
             would  be required to provide  that no Default  or Event of
             Default would exist under the financial covenants contained
             in Sections 9.08 through 9.10, inclusive, of this Agreement
             as compliance with such covenants would be required through
             the date which is one year from the date of the issuance of
             such  Disqualified  Preferred  Stock, (iii)  INTERCO  shall
             furnish  to the Agent for distribution to each of the Banks
             an officer's certificate by  the chief financial officer or
             treasurer  of  INTERCO  certifying   to  the  best  of  his
             knowledge  as to  compliance with  the requirements  of the
             preceding clauses (i) and (ii) and containing the pro forma
             calculations  and  projections  required by  the  preceding
             clauses (i) and (ii),  and (iv) such Disqualified Preferred
             Stock  shall not  contain  any provision  in the  documents
             governing or evidencing  the same which, in  the opinion of
             the Agent, are more restrictive than the  provisions in the
             Credit Documents.

                       "Dividend"  with respect to any Person shall mean
             that  such  Person  has  declared  or paid  a  dividend  or
             returned  any  equity  capital   to  its  stockholders   or
             authorized  or  made  any  other  distribution, payment  or
             delivery  of  property (other  than  common  stock of  such
             Person or  Qualified Preferred Stock  of INTERCO paid  as a
             pay-in-kind Dividend  on any  Qualified Preferred  Stock of
             INTERCO) or cash to its stockholders as such, or  redeemed,
             retired,  purchased  or  otherwise  acquired,  directly  or
             indirectly, for a consideration any  shares of any class of
             its  capital stock  outstanding on  or after  the Effective
             Date (or any options or warrants issued by such Person with



                                        -128-


             


             respect to its capital  stock), or set aside any  funds for
             any of  the foregoing purposes, or shall have permitted any
             of its Subsidiaries to purchase  or otherwise acquire for a
             consideration any shares of any class  of the capital stock
             of  such Person outstanding on or  after the Effective Date
             (or  any options or warrants issued by such Person with re-
             spect to its  capital stock).  Without limiting the forego-
             ing, "Dividends" with respect to  any Person shall also in-
             clude all payments made  or required to be made  during any
             period by  such Person with respect to  any stock apprecia-
             tion rights, plans,  equity incentive or  achievement plans
             or any similar plans or setting aside of any funds for  the
             foregoing purposes, except to the extent such payments have
             reduced Consolidated EBITDA during the respective period.

                       "Documents"  shall mean the Credit Documents, the
             Receivables Documents and the Recapitalization Documents.

                       "Dollars" and the sign "$" shall each mean freely
             transferable lawful money of the United States.

                       "Drawing"  shall have  the  meaning  provided  in
             Section 2.05(b).

                       "Effective  Date" shall have the meaning provided
             in Section 13.10.

                       "Eligible  Transferee" shall  mean and  include a
             commercial  bank,  mutual  fund, financial  institution  or
             other "accredited investor" (as  defined in Regulation D of
             the Securities Act).

                       "Employee  Stock  Option  Plan"  shall  mean  the
             INTERCO Incorporated 1992 Stock Option Plan.

                       "Environmental Claims" means any and all adminis-
             trative,  regulatory or  judicial actions,  suits, demands,
             demand letters, directives, claims,  liens, notices of non-
             compliance  or  violation,  investigations  or  proceedings
             relating  in any way to any Environmental Law or any permit
             issued, or any approval given, under any such Environmental
             Law (hereafter, "Claims"),  including, without  limitation,
             (a)  any  and  all  Claims by  governmental  or  regulatory
             authorities  for  enforcement, cleanup,  removal, response,
             remedial  or  other  actions  or damages  pursuant  to  any
             applicable Environmental Law, and (b) any and all Claims by
             any    third    party   seeking    damages,   contribution,
             indemnification, cost recovery, compensation  or injunctive
             relief  in  connection with  alleged  injury  or threat  of




                                        -129-


             


             injury to  health, safety  or  the environment  due to  the
             presence of Hazardous Materials.

                       "Environmental Law" means any applicable Federal,
             state,  foreign  or local  statute, law,  rule, regulation,
             ordinance, code, binding and enforceable guideline, binding
             and  enforceable written policy and  rule of common law now
             or hereafter in effect and in each case as amended, and any
             judicial or administrative interpretation  thereof, includ-
             ing any judicial or administrative order, consent decree or
             judgment,  to the extent binding on the Borrowers or any of
             their respective Subsidiaries, relating to the environment,
             employee   health  and   safety  or   Hazardous  Materials,
             including,  without limitation,  CERCLA; RCRA;  the Federal
             Water Pollution  Control Act, 33 U.S.C.  Sec. 1251 et seq.;
             the Toxic  Substances Control  Act, 15 U.S.C.  Sec. 2601 et
             seq.; the Clean Air  Act, 42 U.S.C. Sec. 7401 et  seq.; the
             Safe Drinking Water Act, 42  U.S.C. Sec. 3803 et seq.;  the
             Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the
             Emergency Planning and the  Community Right-to-Know Act  of
             1986, 42 U.S.C. Sec. 11001  et seq., the Hazardous Material
             Transportation Act, 49  U.S.C. Sec.  1801 et  seq. and  the
             Occupational  Safety and Health Act, 29  U.S.C. Sec. 651 et
             seq. (to  the extent it regulates  occupational exposure to
             Hazardous Materials);  and any  state and local  or foreign
             counterparts or  equivalents, in each case  as amended from
             time to time.

                       "ERISA" shall mean the Employee Retirement Income
             Security Act of 1974, as amended from time to time, and the
             regulations  promulgated  and  rulings  issued  thereunder.
             Section references to ERISA  are to ERISA, as in  effect at
             the date of this Agreement and any subsequent provisions of
             ERISA,  amendatory thereof, supplemental thereto or substi-
             tuted therefor.

                       "ERISA Affiliate" shall mean each person (as  de-
             fined  in Section  3(9) of  ERISA) which together  with the
             Borrowers  or  any Subsidiary  of  the  Borrowers would  be
             deemed  to be a "single employer" (i) within the meaning of
             Section 414(b),  (c), (m) or (o)  of the Code or  (ii) as a
             result  of the Borrowers or any Subsidiary of the Borrowers
             being or having been a general partner of such person.

                       "Eurodollar Loan" shall mean each Loan (excluding
             Swingline Loans) designated as such by the Borrowers at the
             time of the incurrence thereof or conversion thereto.

                       "Eurodollar  Rate" shall  mean  (a)  the  offered
             quotation to  first-class banks  in the New  York interbank



                                        -130-


             


             Eurodollar market by BTCo for Dollar deposits of amounts in
             immediately available  funds comparable to  the outstanding
             principal amount of the Eurodollar Loan of BTCo with matur-
             ities comparable to the  Interest Period applicable to such
             Eurodollar Loan commencing two Business  Days thereafter as
             of  10:00 A.M.  (New York time)  on the  date which  is two
             Business Days  prior to  the commencement of  such Interest
             Period, divided (and rounded off to the nearest 1/16 of 1%)
             by (b) a  percentage equal  to 100% minus  the then  stated
             maximum   rate  of  all  reserve  requirements  (including,
             without limitation, any marginal,  emergency, supplemental,
             special  or  other  reserves  required by  applicable  law)
             applicable to any member bank of the Federal Reserve System
             in  respect  of  Eurocurrency  funding  or  liabilities  as
             defined  in  Regulation D  (or  any  successor category  of
             liabilities under Regulation D).

                       "Event   of  Default"  shall   have  the  meaning
             provided in Section 10.

                       "Excess  Cash Flow" shall  mean, for  any period,
             the remainder of (a)  the sum of (i)  Adjusted Consolidated
             Net Income for such  period, (ii) the decrease, if  any, in
             Adjusted Consolidated Working Capital from the first day to
             the last day of such period and (iii) any net increases (or
             minus  any net  decreases)  in items  classified as  "Other
             Liabilities" (excluding long term Indebtedness) during such
             period as shown  on the combined  balance sheet of  INTERCO
             and its Restricted Subsidiaries covering such period, minus
             (b)  the sum of (i) the amount of Capital Expenditures made
             by  the  Borrowers and  its  Restricted  Subsidiaries on  a
             consolidated basis  during such  period pursuant to  and in
             accordance  with  Section 9.07(a)  and (b)(ii)(y),  and the
             amount of  Permitted Acquisitions  made pursuant to  clause
             (v)  of the definition  of Available  Permitted Acquisition
             Amount, except in either case  to the extent financed  with
             the  proceeds of  Indebtedness  or pursuant  to Capitalized
             Lease Obligations,  (ii) the aggregate amount  of permanent
             principal  payments of  Indebtedness for borrowed  money of
             the  Borrowers  and their  Restricted Subsidiaries  and the
             permanent   repayment  of   the   principal  component   of
             Capitalized Lease Obligations of the Borrowers and its Sub-
             sidiaries (excluding  (1) payments  with proceeds  of asset
             sales, (2) payments pursuant to the Refinancing or with the
             proceeds of  other Indebtedness or equity  and (3) payments
             of Loans or other  Obligations, provided that repayments of
             Loans shall  be deducted in determining Excess Cash Flow if
             such  repayments  were  (x)  required  as  a  result  of  a
             Scheduled Repayment under Section 4.02(b) or  (y) made as a
             voluntary   prepayment  pursuant   to  Section   4.01  with



                                        -131-


             


             internally generated funds (but in the case of a  voluntary
             prepayment  of   Revolving  Loans,  only   to  the   extent
             accompanied by a voluntary reduction to the Total Revolving
             Loan Commitment)) during  such period, (iii)  the increase,
             if any,  in Adjusted Consolidated Working  Capital from the
             first day to the last  day of such period and (iv)  any net
             increases (or minus any  net decreases) in items classified
             as "Other  Assets" (excluding  (i) any goodwill  created in
             connection  with  a  Permitted  Acquisition  and  (ii) debt
             issuance costs created in connection with any incurrence of
             Indebtedness  permitted hereunder  to the extent  paid with
             the proceeds  thereof) during such  period as shown  on the
             combined  balance  sheet  of  INTERCO  and  its  Restricted
             Subsidiaries covering such period.

                       "Excess Cash  Flow Payment Date"  shall mean  (i)
             with  respect  to  any  Excess  Cash  Flow  Payment  Period
             selected  by  INTERCO  pursuant   to  the  proviso  to  the
             definition thereof,  the last day of such  Excess Cash Flow
             Payment Period  and otherwise (ii) the date occurring on or
             before  95  days after  the last  day  of each  Fiscal Year
             (beginning with  the Fiscal Year ended  closest to December
             31, 1995).

                       "Excess  Cash Flow Payment Period" shall mean (i)
             with respect to the repayment  required on the first Excess
             Cash  Payment Date,  the  period beginning  on the  Initial
             Borrowing  Date and ending on December 31, 1995 and (ii) on
             each Excess  Cash Payment Date thereafter,  the immediately
             preceding Fiscal  Year; provided  that INTERCO may,  at its
             option during any  period after a  Trigger Date and  before
             the Trigger  Termination Date  relating  thereto, elect  to
             have Excess Cash Flow Payment Periods which end on the last
             day  of any fiscal quarter  of INTERCO ending  on or before
             December 31,  1995, which period  will consist of  a period
             beginning  on the  later  of  (x)  the  end  of  any  prior
             quarterly period selected pursuant  to this proviso and (y)
             the Initial Borrowing Date  and ending on such last  day of
             any fiscal quarter.

                       "Excess Recapture Amount" shall mean, at any time
             (i)  zero, plus (ii) (x) the aggregate amount of repayments
             of Term Loans made at or prior to such time  as required by
             Sections 4.02(c)  on or after  the occurrence of  a Trigger
             Date  and prior  to  any Trigger  Termination Date  related
             thereto and (y) the aggregate amount of repayments of  Term
             Loans made at or prior to such time as required by Sections
             4.02(d),(f)  or (g) on or after the occurrence of a Trigger
             Date  and prior  to  any Trigger  Termination Date  related
             thereto  (and  the  resulting  increase  in  the  recapture



                                        -132-


             


             percentages applicable  to such repayments) to  the extent,
             in respect of all  payments other than pursuant to  Section
             4.02(c), in  excess of the  proceeds which would  have been
             required  to be applied to repay Term Loans if such Trigger
             Date had not occurred.

                       "Exchange Act" shall mean the Securities Exchange
             Act of 1934, as amended.

                       "Excluded Assets"  shall mean each of  the assets
             listed on Schedule XIV.

                       "Excluded Option  Amount" shall mean, on the date
             of  determination  thereof,  (i)  $1,500,000  plus (ii)  an
             amount equal to (x) $1,500,000 multiplied by (y) the number
             of Fiscal Years completed after January 1, 1995 and through
             such date of  determination, minus (iii) the  amount of all
             proceeds received  from the  issuance of shares  of INTERCO
             Common  Stock as a result of the exercise of options issued
             pursuant to Employee Stock Option Plan and not applied as a
             mandatory  repayment  of  Term  Loans  pursuant to  Section
             4.02(c) from  the Initial  Borrowing Date and  through such
             date of determination.

                       "Existing  Indebtedness"  shall have  the meaning
             provided in Section 7.22.

                       "Existing  Letters  of  Credit"  shall  mean  the
             letters  of credit  listed on  Schedule XII  and previously
             issued under the Credit Agreement dated as of July 16, 1992
             among  INTERCO,   certain  of   its  subsidiaries   and  BT
             Commercial Corporation, as same  may be amended through the
             Effective Date.

                       "Facing  Fee" shall have  the meaning provided in
             Section 3.01(c).

                       "Federal Funds Rate" shall mean for any period, a
             fluctuating interest  rate equal  for each day  during such
             period 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 pub-
             lished 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  which is a Business Day, the average of the quota-
             tions  for such  day on  such transactions received  by the
             Agent  from  three  Federal  Funds  brokers  of  recognized
             standing selected by the Agent.




                                        -133-


             


                       "Fees" shall mean all amounts payable pursuant to
             or referred to in Section 3.01.

                       "Final Determination" shall mean, with respect to
             any  determination  of  the  amount  of  the  Converse  Tax
             Liability  (i)   a  decision   of  a  court   of  competent
             jurisdiction  which decision has  become final  (i.e., when
             all  appeals  allowable  have  been  exhausted),  (ii)  the
             expiration of the time for filing a claim for refund or, if
             a refund claim has been timely filed, the expiration of the
             time for instituting suit  in respect of such refund  claim
             if  no further  adjustment to  the items  of income,  gain,
             deduction, loss or credit for such period may thereafter be
             made,  (iii) the execution by  or on behalf  of INTERCO and
             the Internal  Revenue Service of a  closing agreement under
             Section 7121  of  the  Code, (iv)  the  acceptance  by  the
             Internal  Revenue  Service  or  its  counsel  of  a  tender
             pursuant  to  an offer  to  compromise  in accordance  with
             Section  7122  of the  Code, (v)  the  execution of  a Form
             870AD,   or  (vi)   any   other   final   and   irrevocable
             determination of Federal income tax liability.

                       "Final  Maturity Date"  shall  mean November  17,
             2001.

                       "FIRREA" shall mean Financial Institution Reform,
             Recovery and Enforcement Act of 1989.

                       "Fiscal  Year" shall  mean  each  fiscal year  of
             INTERCO ending on December 31 of each calendar year.

                       "Florsheim"   shall   mean  The   Florsheim  Shoe
             Company, a Delaware corporation.

                       "Florsheim  Application"  shall have  the meaning
             provided in Section 5.07.

                       "Florsheim  Disposition"  shall have  the meaning
             provided in Section 5.07.

                       "Florsheim  Documents"  shall mean  all documents
             and agreements related to the Florsheim Recapitalization.

                       "Florsheim  Financing"  shall  have  the  meaning
             provided in Section 5.07.

                       "Florsheim Recapitalization"  shall mean, collec-
             tively, (i) the Florsheim  Application, (ii) the  Florsheim
             Financing and (iii) the Florsheim Disposition.




                                        -134-


             


                       "Foreign  Pension  Plan"  means  any  plan,  fund
             (including, without limitation, any superannuation fund) or
             other similar program established or maintained outside the
             United States of America by any Borrower or any one or more
             of their respective Subsidiaries primarily  for the benefit
             of employees  of such Borrower or  such Subsidiary residing
             outside  the United States of  America, which plan, fund or
             other similar  program provides, or results  in, retirement
             income, a deferral of income in contemplation of retirement
             or payments to be made upon termination of employment,  and
             which plan is not subject to ERISA or the Code.

                       "Foreign  Sales Corporation" shall mean a Wholly-
             Owned  Foreign Subsidiary of  INTERCO and/or its Restricted
             Subsidiaries created for the  purpose of effecting sales of
             goods and/or services in foreign countries.

                       "Foreign Subsidiary" shall  mean each  Subsidiary
             of the Borrowers that is incorporated under the laws of any
             jurisdiction other  than the United States  of America, any
             State thereof,  the United States Virgin  Islands or Puerto
             Rico.

                       "Guaranty  Payments"  shall   have  the   meaning
             provided in Section 9.11(b)(ii).

                       "Hazardous Materials" means (a) any  petroleum or
             petroleum  products, radioactive materials, asbestos in any
             form  that is  or could  become friable,  urea formaldehyde
             foam insulation, transformers or other equipment that  con-
             tain   dielectric   fluid    containing   any   level    of
             polychlorinated   biphenyls,   and   radon   gas;   (b) any
             chemicals, materials or  substances defined as or  included
             in  the  definition of  "hazardous  substances," "hazardous
             waste,"   "hazardous   materials,"   "extremely   hazardous
             substances,"    "restricted   hazardous    waste,"   "toxic
             substances,"   "toxic   pollutants,"   "contaminants,"   or
             "pollutants,"  or  words  of   similar  import,  under  any
             applicable  Environmental Law; and  (c) any other chemical,
             material  or  substance, exposure  to which  is prohibited,
             limited or  regulated by  any governmental authority  under
             Environmental Laws.

                       "Indebtedness"  shall  mean,  as to  any  Person,
             without duplication, (i) all indebtedness  (including prin-
             cipal, interest, fees and charges) of such Person for  bor-
             rowed money  or for the deferred purchase price of property
             or services, (ii) the maximum  amount available to be drawn
             under  all letters of credit issued for the account of such
             Person  and all unpaid drawings in  respect of such letters



                                        -135-


             


             of credit, (iii) all Indebtedness of the types described in
             clause  (i),  (ii),  (iv),  (v),  (vi)  or  (vii)  of  this
             definition secured  by any  Lien on  any property  owned by
             such  Person, whether  or  not such  Indebtedness has  been
             assumed by such Person (to  the extent of the value of  the
             respective property), (iv) the aggregate amount required to
             be capitalized under  leases under which such Person is the
             lessee,  (v)  all  obligations  of such  person  to  pay  a
             specified purchase price for  goods or services, whether or
             not delivered  or accepted,  i.e., take-or-pay  and similar
             obligations, (vi) all Contingent Obligations of such Person
             and  (vii)  all   obligations  under   any  Interest   Rate
             Protection  Agreement   or  under   any  similar  type   of
             agreement.   In addition  to the foregoing,  all Attributed
             Receivables   Facility    Indebtedness   shall   constitute
             Indebtedness.

                       "Initial  Borrowing  Date"  shall  mean  the date
             occurring  on  or after  the  Effective Date  on  which the
             initial Borrowing of Term Loans hereunder occurs.

                       "INTERCO" shall have the  meaning provided in the
             first paragraph of this Agreement.

                       "INTERCO  Common Stock"  shall  mean  the  common
             stock of INTERCO.

                       "INTERCO   Warrants"   shall  mean   warrants  to
             purchase  shares of  INTERCO Common  Stock pursuant  to the
             Warrant Agreement,  dated August 3,  1992, between  INTERCO
             and Society National Bank, as Warrant Agent.

                       "Interest  Determination  Date" shall  mean, with
             respect  to any  Eurodollar Loan,  the second  Business Day
             prior to  the commencement of any  Interest Period relating
             to such Eurodollar Loan.

                       "Interest Period" shall have the meaning provided
             in Section 1.09.

                       "Interest Rate Protection  Agreement" shall  mean
             any  interest  rate  swap  agreement,  interest   rate  cap
             agreement, interest collar agreement, interest rate hedging
             agreement, interest  rate floor agreement  or other similar
             agreement or arrangement.

                       "Investments" shall have  the meaning provided in
             Section 9.05.





                                        -136-


             


                       "Issuing Bank" shall mean BTCo and any Bank which
             at the request of the Borrowers and with the consent of the
             Agent agrees, in such Bank's  sole discretion, to become an
             Issuing Bank for the  purpose of issuing Letters  of Credit
             pursuant  to Section  2.   The  sole  Issuing Bank  on  the
             Initial Borrowing Date is BTCo.

                       "Lane"  shall have  the meaning  provided in  the
             first paragraph of this Agreement.

                       "L/C Supportable Obligations" shall  mean obliga-
             tions of INTERCO or its Restricted Subsidiaries incurred in
             the ordinary  course of business with  respect to insurance
             obligations  and workers'  compensation,  surety bonds  and
             other  similar statutory  obligations, and  all obligations
             customarily  supported by  Standby  Letters of  Credit  and
             satisfactory to the Agent.

                       "Leaseholds" of any  Person means all the  right,
             title and interest of such Person as lessee or licensee in,
             to  and  under leases  or  licenses  of land,  improvements
             and/or fixtures.

                       "Letter   of  Credit"  shall   have  the  meaning
             provided in Section 2.01(a) and shall include Trade Letters
             of Credit and Standby Letters of Credit.

                       "Letter of  Credit  Facing Fee"  shall  have  the
             meaning provided in Section 3.01(c)(x).

                       "Letter  of Credit  Fee" shall  have the  meaning
             provided in Section 3.01(b).

                       "Letter  of Credit  Outstandings" shall  mean, at
             any time, the sum of (i) the aggregate Stated Amount of all
             outstanding Letters of Credit which have not terminated and
             Acceptances which have not matured or been prepaid and (ii)
             the amount of all Unpaid Drawings.

                       "Letter of Credit Request" shall mean any request
             for  the issuance  of  a  Letter  of  Credit  made  by  the
             Borrowers  pursuant  to  Section  2.03(a),  including Trade
             Letter  of Credit  Requests  and Standby  Letter of  Credit
             Requests.

                       "Letter of Credit  Service Agreement" shall  have
             the meaning provided in Section 2.03(a).

                       "Leverage  Improvement  Amount"  shall  mean  the
             amount  (not   to  exceed  $15,000,000),  on   the  Initial



                                        -137-


             


             Borrowing Date,  by which (x) $403,000,000  exceeds (y) the
             sum  of (i)  the  principal amount  of  all Loans  incurred
             hereunder  on  such  date,  plus (ii)  the  amount  of  all
             Attributed  Receivables Facility Indebtedness on such date,
             plus  (iii) to the extent not paid on the Initial Borrowing
             Date, the  amount of  fees and expenses  estimated in  good
             faith  by  INTERCO  to  be  paid  in  connection  with  the
             Transaction minus  (iv) the  amount of any  cash-on-hand of
             INTERCO and its Restricted  Subsidiaries on such date after
             giving effect to the Transaction.

                       "Leverage Ratio" shall mean on any date the ratio
             of  (i)  Consolidated Debt  on such  date to  (ii) Adjusted
             Consolidated EBITDA  for  the period  of  four  consecutive
             fiscal quarters  most recently  ended on or  prior to  such
             date, in each case taken as one accounting period.

                       "Lien" shall mean any mortgage,  pledge, hypothe-
             cation, assignment, deposit arrangement,  encumbrance, lien
             (statutory or other), preference, priority or other securi-
             ty agreement  of any kind or  nature whatsoever (including,
             without  limitation, any  conditional sale  or other  title
             retention agreement, any financing or similar statement  or
             notice filed under  the UCC or any other  similar recording
             or notice  statute, and any lease  having substantially the
             same effect as any of the foregoing).

                       "Loan" shall mean each Term Loan,  each Revolving
             Loan and each Swingline Loan.

                       "Mandatory Borrowing" shall have the meaning pro-
             vided in Section 1.01(d).

                       "Margin Stock" shall have the meaning provided in
             Regulation U.

                       "Maximum    Swingline    Amount"    shall    mean
             $15,000,000.

                       "Mortgage"  shall  have the  meaning  provided in
             Section 5.15 and, after the execution and delivery thereof,
             shall include each Additional Mortgage.

                       "Mortgage Policies"  shall have the  meaning pro-
             vided in Section 5.15.

                       "Mortgaged Property" shall  have the meaning pro-
             vided in Section 5.15 and, after the execution and delivery
             of  any Additional Mortgage,  shall include  the respective
             Additional Mortgaged Property.



                                        -138-


             


                       "Net  Cash Proceeds"  shall  mean  for any  event
             requiring a  repayment pursuant to Section  4.02, the gross
             cash  proceeds  (including  any  cash received  by  way  of
             deferred  payment pursuant to a promissory note, receivable
             or otherwise, but only as and when received)  received from
             such event, net of reasonable transaction costs (including,
             as  applicable,  any   underwriting,  brokerage  or   other
             customary  commissions and  reasonable legal,  advisory and
             other fees and expenses associated therewith) received from
             any such event.

                       "Net Sale  Proceeds" shall  mean for any  sale of
             assets,  the   gross  cash  proceeds  (including  any  cash
             received  by way of deferred payment  pursuant to a promis-
             sory  note, receivable or  otherwise, but only  as and when
             received) received from  any sale of assets, net of reason-
             able transaction costs  (including, without limitation, any
             underwriting,   brokerage   or   other  customary   selling
             commissions and reasonable  legal, advisory and other  fees
             and  expenses,  including  title  and  recording  expenses,
             associated therewith) and payments of unassumed liabilities
             relating to  the assets sold  at the time of,  or within 30
             days after, the date of such sale, the amount of such gross
             cash proceeds required to be used to repay any Indebtedness
             (other  than Indebtedness  of  the Banks  pursuant to  this
             Agreement) which is secured  by the respective assets which
             were sold,  and the  estimated marginal increase  in income
             taxes which will be payable by INTERCO's consolidated group
             with respect to the fiscal year in which the sale occurs as
             a result of  such sale;  but excluding any  portion of  any
             such gross  cash proceeds which INTERCO  determines in good
             faith should be  reserved for post-closing  adjustments (to
             the  extent INTERCO  delivers  to the  Banks a  certificate
             signed by its chief  financial officer, controller or chief
             accounting officer  as  to such  determination),  it  being
             understood and agreed that  on the day that all  such post-
             closing adjustments have been determined, (which shall  not
             be  later than six months following the date of the respec-
             tive asset sale), the amount (if any) by which the reserved
             amount in respect of  such sale or disposition  exceeds the
             actual post-closing adjustments payable  by INTERCO or  any
             of  its Restricted Subsidiaries  shall constitute  Net Sale
             Proceeds on such date received by INTERCO and/or any of its
             Restricted Subsidiaries from such sale, lease, transfer  or
             other disposition.

                       "Non-Defaulting Bank" shall mean and include each
             Bank other than a Defaulting Bank.





                                        -139-


             


                       "Note" shall mean each  Term Note, each Revolving
             Note and the Swingline Note.

                       "Notice of Borrowing" shall have the meaning pro-
             vided in Section 1.03.

                       "Notice  of  Conversion" shall  have  the meaning
             provided in Section 1.06.

                       "Notice  Office" shall  mean  the  office of  the
             Agent  located at  130 Liberty  Street, New York,  New York
             10006, Attention:  Mary  Kay Coyle or such other  office as
             the Agent may hereafter designate in writing as such to the
             other parties hereto.

                       "Obligations" shall mean all amounts owing to the
             Agent, the Collateral  Agent, any Issuing Bank  or any Bank
             pursuant to the terms of this Agreement or any other Credit
             Document.

                       "Participant" shall have the meaning  provided in
             Section 2.04(a).

                       "Pay-In-Kind Preferred Stock" means any Preferred
             Stock where all  dividends with respect thereto may, at the
             option of the issuer thereof,  be paid through the issuance
             of additional shares of preferred stock of the same series.

                       "Payment  Office" shall  mean the  office of  the
             Agent located  at One  Bankers Trust  Plaza, New  York, New
             York 10006, or such other office as the Agent may hereafter
             designate in writing as such to the other parties hereto.

                       "PBGC"  shall mean  the Pension  Benefit Guaranty
             Corporation established pursuant to Section 4002  of ERISA,
             or any successor thereto.

                       "Percentage" of any Bank at any time shall mean a
             fraction (expressed as a percentage) the numerator of which
             is  the Revolving Loan Commitment of such Bank at such time
             and the  denominator of which  is the Total  Revolving Loan
             Commitment at such time, provided that if the Percentage of
             any Bank is to be determined after the Total Revolving Loan
             Commitment has been terminated, then the Percentages of the
             Banks shall  be determined  immediately prior  (and without
             giving effect) to such termination.

                       "Permitted  Acquired  Debt" shall  mean Permitted
             Unsecured  Indebtedness assumed  or acquired  in connection
             with a Permitted Acquisition and other Indebtedness of such



                                        -140-


             


             entity  assumed or  acquired  after giving  effect to  such
             Permitted   Acquisition  and   as   permitted  under   this
             Agreement.

                       "Permitted    Acquisition"    shall   mean    the
             acquisition  by the  Borrowers or  any of  their Restricted
             Subsidiaries of  assets constituting  part of or  an entire
             business or division of any Person not already a Subsidiary
             of the  Borrowers or of  100% of  the capital stock  of any
             such  Person  which  Person  shall,  as  a  result  of such
             acquisition, become a  Restricted Subsidiary, provided that
             (A) the  consideration paid  by the Borrowers  and/or their
             Restricted Subsidiaries consists solely  of cash or  common
             stock   or  Qualified   Preferred  Stock   or  Disqualified
             Preferred Stock  permitted pursuant  to Section  9.13(b) of
             INTERCO, the issuance  of Indebtedness otherwise  permitted
             in  Section  9.04  and the  assumption/acquisition  of  any
             Permitted Acquired Debt (calculated at face value) relating
             to  such  business,  division  or Person,  (B)  the  assets
             acquired, or  the business  of the  Person  whose stock  is
             acquired,  shall be in the  same line of  business in which
             the Borrowers and their Restricted Subsidiaries are already
             engaged, and (C) in the case of the acquisition of 100%  of
             the capital stock of  any Person, such Person shall  own no
             capital stock of  any other Person  unless either (x)  such
             Person  owns 100% of the capital stock of such other Person
             or (y) (1) such Person and/or its Wholly-Owned Subsidiaries
             own 80% of the  consolidated assets of such Person  and its
             Subsidiaries  and (2)  any non-Wholly  Owned Subsidiary  of
             such  Person was non-Wholly Owned prior to the date of such
             Permitted Acquisition  of such Person (it  being understood
             and  agreed  that  investments  by  Subsidiaries  shall  be
             permitted  in  accordance with  the  provisions  of Section
             9.05).   Notwithstanding anything to the contrary contained
             in  the  immediately  preceding sentence,  any  acquisition
             shall be  a Permitted Acquisition only  if all requirements
             of  Sections 8.14  and  9.02(vii) applicable  to  Permitted
             Acquisitions are met with respect thereto.

                       "Permitted  Debt  Agreements"   shall  have   the
             meaning provided in Section 5.05.

                       "Permitted Encumbrance" shall mean,  with respect
             to any Mortgaged Property, such  exceptions to title as are
             set forth in the title insurance policy or title commitment
             delivered with  respect thereto,  all  of which  exceptions
             must  be   acceptable  to  the  Agent   in  its  reasonable
             discretion.





                                        -141-


             


                       "Permitted Liens" shall have the meaning provided
             in Section 9.01.

                       "Permitted Subordinated  Indebtedness" shall mean
             any  Indebtedness  (including,   without  limitation,   any
             Permitted Subordinated Indebtedness incurred  in connection
             with  the creation of  a replacement  Receivables Facility)
             which is subordinated to  all Obligations hereunder and any
             other   obligations  secured   pursuant  to   the  Security
             Documents  and incurred  by the Borrowers,  so long  as (i)
             based  on calculations made by the Borrowers on a Pro Forma
             Basis  after  giving  effect  to  the  incurrence  of  such
             Indebtedness,  no Default  or Event  of Default  will exist
             under, or would have existed under the periods  covered by,
             the financial covenants contained  in Sections 9.08 through
             9.10,  inclusive, of  this  Agreement, (ii)  based on  good
             faith projections prepared by  the Borrowers for the period
             from the date of the incurrence of such Indebtedness to the
             date which  is one year thereafter, the  level of financial
             performance measured by the covenants set forth in Sections
             9.08 through 9.10  inclusive shall be better  than or equal
             to  such  level as  would be  required  to provide  that no
             Default or Event of Default would exist under the financial
             covenants   contained  in   Sections  9.08   through  9.10,
             inclusive,  of  this  Agreement  as  compliance  with  such
             covenants would be  required through the date  which is one
             year from the date of the incurrence  of such Indebtedness,
             (iii) INTERCO  shall furnish to the  Agent for distribution
             to  each of the Banks an officer's certificate by the chief
             financial officer or treasurer of INTERCO certifying to the
             best of his  knowledge as to  compliance with the  require-
             ments of the preceding clauses (i) and (ii)  and containing
             the pro forma calculations  and projections required by the
             preceding  clauses  (i)  and (ii),  (iv)  such Indebtedness
             shall require no amortization,  sinking fund payment or any
             other scheduled maturity of the principal amount thereof on
             any  date which is earlier than the date occurring one year
             after  the Final  Maturity Date  and (v)  such Indebtedness
             shall   not  contain  any   provision  (including,  without
             limitation, covenants, defaults and remedies)  in the docu-
             ments  governing or evidencing the same  which, in the opi-
             nion of the Agent, are more restrictive than the provisions
             in the Credit Documents.

                       "Permitted Unsecured Indebtedness" shall mean any
             general unsecured Indebtedness  incurred by the  Borrowers,
             so  long as (i) based on calculations made by the Borrowers
             on  a Pro Forma Basis after giving effect to the incurrence
             of such Indebtedness, no  Default or Event of  Default will
             exist  under,  or  would  have existed  under  the  periods



                                        -142-


             


             covered by,  the financial covenants contained  in Sections
             9.08 through 9.10, inclusive, of this Agreement, (ii) based
             on good faith projections prepared by the Borrowers for the
             period from the date of the incurrence of such Indebtedness
             to  the date  which is  one year  thereafter, the  level of
             financial performance measured by  the covenants set  forth
             in  Sections 9.08  through 9.10  inclusive shall  be better
             than or equal to such level as would be required to provide
             that no Default or  Event of Default would exist  under the
             financial  covenants contained  in  Sections  9.08  through
             9.10, inclusive, of this  Agreement as compliance with such
             covenants would be  required through the date  which is one
             year from the date of the  incurrence of such Indebtedness,
             (iii) INTERCO  shall furnish to the  Agent for distribution
             to  each of the Banks an officer's certificate by the chief
             financial officer or treasurer of INTERCO certifying to the
             best   of  his   knowledge  as   to  compliance   with  the
             requirements  of the  preceding  clauses (i)  and (ii)  and
             containing  the  pro  forma  calculations required  by  the
             preceding clauses  (i) and (ii),  (iv) the average  life of
             such  Indebtedness at  the time  of the  incurrence thereof
             shall  be at least one year  beyond the average life of the
             Term  Loans  then  outstanding  and  the  Total   Revolving
             Commitments (assuming maximum utilization thereof)  and (v)
             such   Indebtedness   shall  not   contain   any  provision
             (including,  without  limitation,  covenants, defaults  and
             remedies) in the documents governing or evidencing the same
             which, in the  opinion of the  Agent, are more  restrictive
             than the provisions in the Credit Documents.

                       "Person" shall mean any  individual, partnership,
             joint  venture, firm,  corporation,  association, trust  or
             other enterprise or any government or political subdivision
             or any agency, department or instrumentality thereof.

                       "Plan"  shall mean  any multiemployer  or single-
             employer plan,  as defined in Section 4001  of ERISA, which
             is maintained or contributed to by (or to which there is an
             obligation to contribute of), the Borrowers or a Subsidiary
             of  the Borrowers or an ERISA Affiliate, and each such plan
             for the  five year period immediately  following the latest
             date  on which the Borrowers, a Subsidiary of the Borrowers
             or  an ERISA  Affiliate maintained,  contributed or  had an
             obligation to contribute to such plan.

                       "Pledge   Agreement"   shall  have   the  meaning
             provided in Section 5.13.

                       "Pledge  Agreement  Collateral"  shall  mean  all
             "Collateral" as defined in the Pledge Agreement.



                                        -143-


             


                       "Pledged Securities" shall mean  "Pledged Securi-
             ties" as defined in the Pledge Agreement.

                       "Preferred  Stock," as  applied  to  the  capital
             stock of  any Person, means  capital stock  of such  Person
             (other  than common stock of  such Person) of  any class or
             classes  (however designed)  that  ranks prior,  as to  the
             payment of  dividends or as  to the distribution  of assets
             upon any voluntary or involuntary  liquidation, dissolution
             or winding up of such Person, to shares of capital stock of
             any  other class  of  such Person,  and  shall include  any
             Qualified Preferred Stock and Disqualified Preferred Stock.

                       "Prime  Lending Rate" shall  mean the  rate which
             BTCo announces from time to time as its prime lending rate,
             the Prime Lending  Rate to  change when and  as such  prime
             lending rate changes.   The Prime Lending Rate is  a refer-
             ence rate and does not necessarily represent  the lowest or
             best  rate actually charged to any customer.  BTCo may make
             commercial loans  or other loans  at rates of  interest at,
             above or below the Prime Lending Rate.

                       "Pro Forma  Basis" shall mean, as  to any Person,
             for any of  the following events which occur  subsequent to
             the commencement of a period for which the financial effect
             of such event is being calculated, and giving effect to the
             event  for  which  such  calculation is  being  made,  such
             calculation  as will give pro forma effect to such event as
             if same had  occurred at  the beginning of  such period  of
             calculation, and 

                       (i)  for purposes of  the foregoing  calculation,
                  the transaction  giving rise to the  need to calculate
                  the pro forma  effect to any  of the following  events
                  shall  be assumed to have occurred on the first day of
                  the four  fiscal quarter period last  ended before the
                  occurrence of the respective  event for which such pro
                  forma  effect  is  being  determined  (the  "Reference
                  Period"), and

                      (ii)  in making any  determination with respect to
                  the  incurrence or assumption  of any  Indebtedness or
                  issuance  of any  Disqualified Preferred  Stock during
                  the Reference  Period or subsequent  to the  Reference
                  Period  and on or prior to the date of the transaction
                  referenced  in  clause  (i)  above  (the  "Transaction
                  Date"), (w) all Indebtedness or Disqualified Preferred
                  Stock  (including  the  Indebtedness  or  Disqualified
                  Preferred Stock incurred or  assumed and for which the
                  financial  effect  is  being calculated)  incurred  or



                                        -144-


             


                  permanently repaid during  the Reference Period  shall
                  be  deemed to  have  been incurred  or  repaid at  the
                  beginning   of   such  period,   (x) Consolidated  Net
                  Interest   Expense  of  such  Person  attributable  to
                  interest   or  dividends   on   any  Indebtedness   or
                  Disqualified  Preferred  Stock,  as the  case  may be,
                  bearing floating interest rates should be  computed on
                  a  pro forma  basis as  if the  rate in effect  on the
                  Transaction Date had been  the applicable rate for the
                  entire period, (y)  Consolidated Net Interest  Expense
                  of such Person attributable to interest on any Indebt-
                  edness under any  revolving credit facility which  was
                  in effect during the respective Reference Period shall
                  be computed  on  a  pro  forma basis  based  upon  the
                  average daily balance of such Indebtedness outstanding
                  during  the applicable  period  (or, if  shorter,  the
                  portion  of  the  period during  which  the  revolving
                  credit  facility was  in effect) and  (z) Consolidated
                  Net Interest  Expense will be increased  or reduced by
                  the net cost (including  amortization of discount)  or
                  benefit  (after  giving  effect  to   amortization  of
                  discount) associated with the Interest Rate Protection
                  Agreements,  which  will  remain  in  effect  for  the
                  twelve-month period  after  the Transaction  Date  and
                  which  shall have  the effect  of fixing  the interest
                  rate on the date of computation, and 

                       (iii)  in    making    any    determination    of
                  Consolidated EBITDA,  pro forma effect shall  be given
                  to   any   Permitted   Acquisition    or   Significant
                  Divestiture which occurred during the Reference Period
                  or subsequent to the Reference Period and prior to the
                  Transaction   Date,   Consolidated  EBITDA   shall  be
                  determined  as  if   such  Permitted  Acquisition   or
                  Significant  Divestiture occurred on  the first day of
                  the Reference Period, taking into account cost savings
                  and expenses which would otherwise be accounted for as
                  an adjustment pursuant to Article 11 of Regulation S-X
                  under the Securities  Act, as if such  cost savings or
                  expenses  were  realized  on  the  first  day  of  the
                  Reference Period.

                       "Projections"  shall have the meaning provided in
             Section 5.19(c).









                                        -145-


             


                       "Purchase and Contribution Agreement"  shall mean
             the  Purchase  and  Contribution  Agreement,  dated  as  of
             November 15, 1994, among Broyhill,  Lane and Action and the
             Receivables Subsidiary, as same may be amended, modified or
             supplemented from  time to time in  compliance with Section
             9.11, or as  replaced in compliance with the  definition of
             Receivables Facility.

                       "Qualified Preferred Stock" means any Pay-In-Kind
             Preferred Stock of INTERCO, or any other Preferred Stock of
             INTERCO,  the express  terms  of which  shall provide  that
             Dividends  thereon shall not be required to be paid in cash
             at any time that  such cash payment would be  prohibited by
             the   terms  of  this   Agreement  (and  any  refinancings,
             replacements  or  extensions  hereof) and  in  either  case
             which, by its terms (or  by the terms of any security  into
             which it is  convertible or for which  it is exchangeable),
             or upon  the  happening of  any event  (including an  event
             which would constitute a  Change of Control), cannot mature
             (excluding  any  maturity  as  the result  of  an  optional
             redemption by  the issuer  thereof) and is  not mandatorily
             redeemable,  pursuant  to  a  sinking  fund  obligation  or
             otherwise,  and  is  not  redeemable,  or  required  to  be
             repurchased,  at  the sole  option  of  the holder  thereof
             (including, without limitation,  upon the occurrence  of an
             event which would constitute a Change of Control), in whole
             or  in part, on  or prior to  the first  anniversary of the
             Final Maturity Date.

                       "Quarterly  Payment  Date"  shall  mean  the last
             Business Day  of each June, September,  December and March,
             occurring after the Initial Borrowing Date.

                       "RCRA" shall mean  the Resource Conservation  and
             Recovery Act, as the same may be amended from time to time,
             42 U.S.C. Sec. 6901 et seq.

                       "Real Property" of any  Person shall mean all the
             right,  title and interest of  such Person in  and to land,
             improvements and fixtures, including Leaseholds.

                       "Recapitalization Documents"  shall mean, collec-
             tively, (i)  the Florsheim Documents and  (ii) the Converse
             Documents and all other agreements and instruments  entered
             into in connection with the Recapitalizations.

                       "Recapitalizations" shall mean, collectively, (i)
             the  Florsheim  Recapitalization  and  (ii)   the  Converse
             Recapitalization.




                                        -146-


             


                       "Receivables    Documents"    shall   mean    the
             Receivables   Purchase   Agreements,   the   Purchase   and
             Contribution  Agreement  and   any  related   documentation
             entered  into  by   the  Borrowers  and   their  Restricted
             Subsidiaries,   the   Receivables  Subsidiary   and/or  the
             Receivables  Purchasers in connection  with the Receivables
             Facility.

                       "Receivables Facility" shall mean the arrangement
             pursuant to which (x) each of Broyhill, Lane and Action and
             its  respective Subsidiaries  will from  time to  time sell
             accounts receivable to  the Receivables Subsidiary and  (y)
             the  Receivables  Subsidiary  shall sell  interests  in the
             receivables to  the Receivables  Purchasers,  as more fully
             set forth in the  Receivables Documents; provided, that the
             Receivables Facility may be  replaced after the date hereof
             so  long as  the  Agent is  satisfied  that the  terms  and
             conditions of any replacement  facility are as favorable or
             more favorable to  INTERCO and its Restricted  Subsidiaries
             and  to the  Banks (and  in any  event contains  no greater
             degree  of   recourse   to  INTERCO   and  its   Restricted
             Subsidiaries  (other than the Receivables Subsidiary)) than
             the  terms  and  conditions  of  the  current   Receivables
             Facility (in which event such replacement facility shall be
             deemed to be the Receivables Facility hereunder).

                       "Receivables Purchase Agreements" shall  mean and
             include the Atlantic Receivables Purchase Agreement and the
             Alternate Receivables Purchase Agreement.

                       "Receivables  Purchaser"  shall mean  and include
             (i)  with  respect to  the  Alternate Receivables  Purchase
             Agreement,  Credit Lyonnais  New York  Branch, a  Branch of
             Credit Lyonnais, a French banking corporation and (ii) with
             respect  to the  Atlantic  Receivables Purchase  Agreement,
             Atlantic, and  their respective successors and  assigns (in
             the event  that the  Receivables Facility is  replaced, any
             replacement receivables  purchasers shall  be deemed  to be
             the Receivables Purchasers hereunder).

                       "Receivables   Subsidiary"  shall   mean  INTERCO
             Receivables  Corp., the  special purpose  subsidiary formed
             and  owned by  Broyhill, Lane  and Action  to  purchase and
             receive contributions of receivables from each of Broyhill,
             Lane,   Action  and   their  respective   other  Restricted
             Subsidiaries pursuant to the Receivables Facility.

                       "Recovery  Event"  shall  mean  the   receipt  by
             INTERCO or any of  its Restricted Subsidiaries of  any cash
             insurance  proceeds or  condemnation award  payable (i)  by



                                        -147-


             


             reason of  theft, loss,  physical destruction or  damage or
             any  other similar  event with  respect to any  property or
             assets of the Borrowers or any of its Subsidiaries and (ii)
             under  any policy  of insurance  required to  be maintained
             under Section 8.03.

                       "Reduction Percentage" shall  mean (i)  initially
             zero and (ii)  from and after each  day of delivery  of any
             certificate delivered in accordance with the following sen-
             tence indicating  an entitlement to a  Reduction Percentage
             other than zero (each, a "Start Date") to and including the
             applicable  End  Date described  below, the  percentage set
             forth below opposite the  Reduction Ratio indicated to have
             been  achieved in any  certificate delivered  in accordance
             with the following sentence:

                       Reduction              Interest
                        Ratio             Reduction Discount

                     Equal to or                  .25%
                     greater than
                     2.75:1 but less
                     than 3.0:1

                     Equal to or                  .375%
                     greater than 2.5:1
                     but less than 2.75:1

                     Equal to or                  .50%
                     greater than 2.25:1
                     but less than 2.5:1

                     Equal to or greater          .625%
                     than 2.0:1 but less than
                     2.25:1

                     Less than 2.0:1              .75%



             The  Reduction  Ratio  shall  be determined  based  on  the
             delivery of a certificate of the Borrowers by an Authorized
             Representative  of the Borrowers to  the Agent (with a copy
             to  be sent by the Borrowers  to each Bank), within 30 days
             of the last  day of  any fiscal quarter  of INTERCO,  which
             certificate  shall  set   forth  the  calculation   of  the
             Reduction Ratio for  the fiscal  quarter ended  immediately
             prior  to  the  relevant   Start  Date  and  the  Reduction
             Percentage which shall be thereafter applicable (until same
             is changed  or  ceases  to  apply in  accordance  with  the



                                        -148-


             


             following   sentences).     The  Reduction   Percentage  so
             determined  shall  apply,  except   as  set  forth  in  the
             succeeding sentence, from the Start  Date to the earlier of
             (x)  the date on which the next certificate is delivered to
             the Agent and (y) the  date which is 30 days following  the
             last  day of the fiscal quarter in which the previous Start
             Date occurred  (the  "End  Date"), at  which  time,  if  no
             certificate has  been delivered to the  Agent indicating an
             entitlement to a Reduction  Percentage other than zero (and
             thus commencing a new Start Date), the Reduction Percentage
             shall be  reduced to zero.  Notwithstanding anything to the
             contrary contained above in this  definition, the Reduction
             Percentage shall be  reduced to  zero at  all times  during
             which there shall exist a Default or an Event of Default. 

                       "Reduction  Ratio" shall  mean  on any  date  the
             ratio  of  (i)  Consolidated  Debt on  such  date  to  (ii)
             Consolidated  EBITDA for  the period (with  any calculation
             for  any  such period  which  includes  a period  occurring
             before  the Initial Borrowing Date to be adjusted, on a Pro
             Forma Basis,  to give  effect to  the Transaction)  of four
             consecutive fiscal quarters most recently ended on or prior
             to such date, in each case taken as one accounting period.

                       "Refinancing"  shall  mean  the   refinancing  of
             amounts outstanding and the termination  of all commitments
             under the Terminated Debt Agreements.

                       "Refinancing Documents" shall mean all documenta-
             tion entered into with respect to the Refinancing.

                       "Register"  shall have  the  meaning provided  in
             Section 13.17.

                       "Regulation D"  shall  mean Regulation  D of  the
             Board  of Governors of  the Federal Reserve  System as from
             time  to time in effect and any  successor to all or a por-
             tion thereof establishing reserve requirements.

                       "Regulation  G"  shall mean  Regulation G  of the
             Board of  Governors of the  Federal Reserve System  as from
             time to time in effect  and any successor to all or  a por-
             tion thereof.

                       "Regulation  T" shall  mean Regulation  T of  the
             Board of Governors  of the Federal  Reserve System as  from
             time to time  in effect and any successor to  all or a por-
             tion thereof.





                                        -149-


             


                       "Regulation  U" shall  mean Regulation  U of  the
             Board of  Governors of the  Federal Reserve System  as from
             time to time in effect  and any successor to all or  a por-
             tion thereof.

                       "Regulation  X" shall  mean Regulation  X  of the
             Board of Governors  of the Federal  Reserve System as  from
             time to time  in effect and any successor to  all or a por-
             tion thereof.

                       "Release" means any  spilling, leaking,  pumping,
             pouring, emitting, emptying, discharging, injecting, escap-
             ing,  leaching, dumping,  disposing or  migration  into the
             environment.

                       "Replaced Bank" shall  have the meaning  provided
             in Section 1.13.

                       "Replacement   Bank"   shall  have   the  meaning
             provided in Section 1.13.

                       "Reportable  Event" shall mean an event described
             in  Section 4043(b) of ERISA  with respect to  a Plan other
             than those events as  to which the 30-day notice  period is
             waived under subsection .13,  .14, .16, .18, .19 or  .20 of
             PBGC Regulation Section 2615.

                       "Required Banks" shall mean Non-Defaulting Banks,
             the  sum of whose outstanding  Term Loans (or,  if prior to
             the  Initial Borrowing  Date,  Term Loan  Commitments)  and
             Revolving   Loan  Commitments  (or  after  the  termination
             thereof,   outstanding   Revolving   Loans   and   Adjusted
             Percentage  of  Swingline   Loans  and  Letter  of   Credit
             Outstandings)  represent at least a  majority of the sum of
             all outstanding  Term Loans  (or, if  prior to  the Initial
             Borrowing  Date, Term  Loan Commitments)  of Non-Defaulting
             Banks and the Adjusted  Total Revolving Loan Commitment (or
             after the  termination thereof, the  sum of the  then total
             outstanding Revolving Loans of Non-Defaulting Banks and the
             aggregate  Adjusted Percentages of all Non-Defaulting Banks
             of  the total  outstanding  Swingline Loans  and Letter  of
             Credit Outstandings at such time).

                       "Residual Converse Tax  Liability" shall mean, at
             any time, an amount equal to (i) the Converse Tax Liability
             at  such time, minus (ii)  the Converse Tax  Basket at such
             time, minus  (iii) any proceeds  of issuances of  equity by
             INTERCO  and/or  its  Restricted  Subsidiaries  applied  as
             described in the second paragraph of Section 4.02(c), minus
             (iv) the Excess Recapture Amount then in effect.



                                        -150-


             


                       "Restricted  Junior  Payment"   shall  have   the
             meaning provided in Section 9.11 (a)(i).

                       "Restricted  Subsidiaries" shall mean, (x) all of
             the  Subsidiaries  of the  Borrowers  and  their respective
             Subsidiaries in existence on the Initial Borrowing Date and
             (y) any Subsidiary (other than an  Unrestricted Subsidiary)
             that  is   created,  established  or  acquired   after  the
             Effective Date.

                       "Returns"  shall  have  the meaning  provided  in
             Section 7.09.

                       "Revolving Loan" shall  have the meaning provided
             in Section 1.01(b).

                       "Revolving Loan Commitment"  shall mean, for each
             Bank,  the amount set  forth opposite  such Bank's  name in
             Schedule I   hereto  directly  below  the  column  entitled
             "Revolving  Loan Commitment,"  as same  may be  (x) reduced
             from time  to time  pursuant to  Sections 3.02,  3.03, 4.02
             and/or 10 or (y) adjusted from time to time as  a result of
             assignments  to or from such Bank  pursuant to Section 1.13
             or 13.04(b).

                       "Revolving Note" shall  have the meaning provided
             in Section 1.05(a).

                       "Scheduled  Repayments"  shall  have the  meaning
             provided in Section 4.02(b).

                       "SEC"  shall have the meaning provided in Section
             8.01(h).

                       "Section 4.04(b)(ii) Certificate" shall  have the
             meaning provided in Section 4.04(b)(ii).

                       "Secured  Creditors"  shall   have  the   meaning
             assigned that term in the Security Documents.

                       "Securities Act" shall mean the Securities Act of
             1933, as amended.

                       "Security  Agreement"  shall  have   the  meaning
             provided in Section 5.14.

                       "Security  Agreement  Collateral" shall  mean all
             "Collateral" as  defined in  the Security Agreement  (which
             shall exclude all assets of the Receivables Subsidiary).




                                        -151-


             


                       "Security  Document" shall mean the Pledge Agree-
             ment, the Security Agreement,  each Mortgage and, after the
             execution  and delivery  thereof, each  Additional Mortgage
             and each Additional Security Document.

                       "Services  Agreement"  shall  mean  each  of  the
             separate  services  agreements  entered  into  between  (i)
             INTERCO  and Florsheim  and (ii)  INTERCO and  Converse, in
             each case,  relating to  the continuance of  certain shared
             management services and the  allocation of expenses related
             thereto and each dated as of November 17, 1994.

                       "Shareholders' Agreements" shall have the meaning
             provided in Section 5.05.

                       "Significant  Divestiture" shall mean any sale or
             other  disposition   of  assets   by  INTERCO   and/or  its
             Restricted Subsidiaries,  the fair  market  value of  which
             exceeds $500,000 for any  transaction (or series of related
             transactions).

                       "Standby Letter of Credit" shall mean any Standby
             Letter  of Credit  or similar  instrument issued  or deemed
             issued  for the account of any Borrower pursuant to Section
             2.01  for  the   purpose  of  supporting   L/C  Supportable
             Obligations.

                       "Standby Letter of Credit Request" shall have the
             meaning provided in Section 2.03(a).

                       "Stated  Amount" of  (x)  each  Letter of  Credit
             shall, at any time, mean the maximum amount available to be
             drawn thereunder (in each case determined without regard to
             whether any conditions  to drawing could  then be met)  and
             (y)  each Acceptance  shall mean  the amount  of each  such
             Acceptance.

                       "Subsidiary" shall  mean, as  to any  Person, (i)
             any corporation more than  50% of whose stock of  any class
             or  classes having  by  the terms  thereof ordinary  voting
             power to elect a majority of the directors of such corpora-
             tion (irrespective of whether  or not at the time  stock of
             any  class or  classes of  such corporation  shall  have or
             might have voting power  by reason of the happening  of any
             contingency) is at the time owned by such Person and/or one
             or more  Subsidiaries of such Person and  (ii) any partner-
             ship, association,  joint venture or other  entity in which
             such Person and/or one or  more Subsidiaries of such Person
             has  more than a 50% equity interest  at the time.  As used
             in this  Agreement, the term "Subsidiary"  shall include or



                                        -152-


             


             apply  to any  Restricted Subsidiary  and any  Unrestricted
             Subsidiary.

                       "Subsidiary   Guarantor"   shall  mean   Broyhill
             Transport,  Inc.,   a  North  Carolina   corporation,  Lane
             Advertising,   Inc.,   a   Virginia   corporation,   Action
             Industries,  Inc.,  a   Virginia  corporation  and   Action
             Transport, Inc., a Delaware  corporation and any Restricted
             Subsidiary of any Borrower which executes a guarantee after
             the Initial  Borrowing Date  pursuant to Section  8.11, but
             shall in  any event exclude the  Receivables Subsidiary and
             Interfashions Industries, S.A. and its Subsidiaries.

                       "Subsidiary  Guaranty"  shall  have  the  meaning
             provided in Section 5.12.

                       "Supermajority Banks"  of any Tranche  shall mean
             those  Non-Defaulting  Banks  which  would  constitute  the
             Required Banks under, and as defined in, this Agreement  if
             (x) all outstanding Obligations of the other Tranches under
             this Agreement were repaid in full and all Commitments with
             respect  thereto were  terminated  and  (y) the  percentage
             "50%" contained therein were changed to "66-2/3%."

                       "Surviving Guaranties" shall  mean the  guarantee
             obligations of INTERCO with respect to the leases described
             in Schedule XV hereto.

                       "Swingline Expiry Date" shall mean the date which
             is two Business Days prior to the Final Maturity Date.

                       "Swingline Loan" shall  have the meaning provided
             in Section 1.01(c).

                       "Swingline Note" shall  have the meaning provided
             in Section 1.05(a).

                       "Tax  Sharing  Agreement"   shall  mean  any  tax
             sharing, disaffiliation or tax allocation agreement entered
             into among the Borrowers,  Converse and Florsheim and shall
             cover,  without limitation,  ongoing tax  matters including
             matters  arising related to  prior periods, including those
             arising as  a result  of the  Converse Disposition and  the
             Florsheim Disposition.

                       "Taxes"   shall  have  the  meaning  provided  in
             Section 4.04(a).






                                        -153-


             


                       "Terminated  Debt Agreements" shall mean all debt
             or  other  financing  agreements  or  documents  related to
             Indebtedness of INTERCO and its Subsidiaries which has been
             repaid, satisfied, discharged,  extinguished or  terminated
             pursuant to the Refinancing.

                       "Term  Loan" shall have  the meaning  provided in
             Section 1.01(a).

                       "Term Loan Commitment" shall mean, for each Bank,
             the amount  set forth opposite such Bank's name in Schedule
             I  hereto directly  below  the column  entitled "Term  Loan
             Commitment," as same may  be (x) reduced from time  to time
             pursuant  to Sections 3.03, 4.02 and/or  10 or (y) adjusted
             from time  to time as  a result  of assignments to  or from
             such Bank pursuant to Section 1.13 or 13.04.

                       "Term  Note" shall  have the meaning  provided in
             Section 1.05(a).

                       "Total Available Revolving Loan Commitment" shall
             mean at any  time an  amount equal to  the Total  Revolving
             Loan Commitment less the Blocked Amount at such time.

                       "Total Commitment" shall  mean, at any  time, the
             sum of the Commitments of each of the Banks.

                       "Total  Revolving Loan Commitment" shall mean, at
             any time, the sum of the Revolving Loan Commitments of each
             of the Banks.

                       "Total Term Loan  Commitment" shall mean,  at any
             time,  the sum of the Term  Loan Commitments of each of the
             Banks.

                       "Total  Unutilized   Revolving  Loan  Commitment"
             shall mean, at any  time, an amount equal to  the remainder
             of (x) the then  Total Revolving Loan Commitment, less  (y)
             the  sum of  the  aggregate principal  amount of  Revolving
             Loans  and  Swingline  Loans  outstanding   plus  the  then
             aggregate amount of Letter of Credit Outstandings.

                       "Trade Letter of Credit" shall mean any Letter of
             Credit or similar instrument issued  for the account of any
             Borrower  pursuant  to  Section  2.01 for  the  purpose  of
             providing  the primary payment mechanism in connection with
             the  purchase of  any materials,  goods or services  by the
             Borrowers or  their Restricted Subsidiaries in the ordinary
             course  of business  of the  Borrowers or  their Restricted
             Subsidiaries.



                                        -154-


             


                       "Trade Letter  of Credit Request" shall  have the
             meaning provided in Section 2.03(a).

                       "Tranche"  shall mean the respective facility and
             commitment utilized in making Loans, with there being three
             separate Tranches,  i.e., Term  Loans, Revolving Loans  and
             Swingline Loans.

                       "Transaction" shall mean,  collectively, (i)  the
             Recapitalizations,  (ii)  the  Refinancing  and  (iii)  the
             entering into of the Credit Documents and the incurrence of
             Loans hereunder on the Initial Borrowing Date.

                       "Transaction Documents" shall mean  all Documents
             (other  than  the  Credit  Documents)  and  agreements  and
             instruments   entered   into   in   connection   with   the
             Transaction.

                       "Trigger Date" shall mean any date on which it is
             determined (in a manner satisfactory to the Agent) that the
             Residual Converse Tax Liability exceeds zero.

                       "Trigger  Termination Date"  shall  mean (x)  the
             date on which it is determined (in a manner satisfactory to
             the  Agent) that  the Residual  Converse Tax  Liability has
             been reduced to an amount equal to or less than zero or (y)
             if the  event  described in  the foregoing  clause (x)  has
             occurred,  any  date designated  by  INTERCO  (at its  sole
             option); provided  that if the  amount of the  event giving
             rise  to the  occurrence  of the  Trigger Termination  Date
             pursuant to clause  (x) above  exceeds the  amount of  such
             event  needed  to  cause  the  occurrence  of  the  Trigger
             Termination  Date,  the Trigger  Termination Date  shall be
             deemed  to   have  occurred   only  for  purposes   of  the
             application of any such excess amount.

                       "Type"  shall mean  the  type of  Loan determined
             with  regard to  the  interest  option applicable  thereto,
             i.e., whether a Base Rate Loan or a Eurodollar Loan.

                       "UCC" shall mean the  Uniform Commercial Code  as
             from time to time in effect in the relevant jurisdiction.

                       "Unfunded  Current Liability"  of any  Plan means
             the amount, if any, by which the actuarial present value of
             the  accumulated benefits under the Plan as of the close of
             its most  recent plan  year each  exceeds  the fair  market
             value  of  the  assets  allocable  thereto,  determined  in
             accordance with Statement of Financial Accounting Standards
             No. 35,  based upon the  actuarial assumptions used  by the



                                        -155-


             


             Plan's actuary  in the most recent annual  valuation of the
             Plan.

                       "United  States" and  "U.S." shall each  mean the
             United States of America.

                       "Unpaid  Drawing" shall have the meaning provided
             for in Section 2.05(a).

                       "Unrestricted Subsidiary" shall mean  any Wholly-
             Owned  Subsidiary of  INTERCO that  is acquired  or created
             after the Initial Borrowing  Date and designated by INTERCO
             as an Unrestricted Subsidiary  hereunder by written  notice
             to the Agent; provided that INTERCO shall only be permitted
             to  so designate  a new  Unrestricted Subsidiary  after the
             Initial Borrowing Date  and so  long as (i)  no Default  or
             Event of Default exists or  would result therefrom and (ii)
             100%  of  the   capital  stock  of   such  newly-designated
             Unrestricted  Subsidiary  is owned  by  INTERCO  or another
             Unrestricted  Subsidiary  and  all  of  the  provisions  of
             Section 9.12  shall have been  complied with in  respect of
             such    newly-designated   Unrestricted    Subsidiary   and
             capitalized (to the extent capitalized by INTERCO or any of
             its   Restricted   Subsidiaries)  through   Investments  as
             permitted by, and  in compliance with,  Section 9.05(viii),
             with any  assets owned  by such Unrestricted  Subsidiary at
             the time of the initial  designation thereof to be  treated
             as  Investments  made   pursuant  to  Section   9.05(viii),
             provided  that at  the time  of the initial  Investments by
             INTERCO in such Subsidiary (x) INTERCO shall designate such
             entity as an Unrestricted Subsidiary in a written notice to
             the  Agent and (y) such entity and the Borrowers shall have
             entered into a Tax Sharing Agreement and Services Agreement
             on   a  basis   which   is  satisfactory   to  the   Agent.
             Additionally,  INTERCO may not  designate any Credit Party,
             the  Receivables Subsidiary  or any  Subsidiary created  or
             acquired  pursuant   to  a  Permitted   Acquisition  as  an
             Unrestricted Subsidiary.

                       "Unutilized   Revolving  Loan   Commitment"  with
             respect  to any Bank, at  any time, shall  mean such Bank's
             Revolving  Loan Commitment at such time less the sum of (i)
             the  aggregate  outstanding principal  amount  of Revolving
             Loans  made by  such  Bank and  (ii)  such Bank's  Adjusted
             Percentage  of the  Letter of  Credit Outstandings  at such
             time.

                       "Voting Stock" shall mean,  as to any Person, any
             class or classes of  capital stock of such  Person pursuant
             to which the holders thereof have the general  voting power



                                        -156-


             


             under ordinary  circumstances to elect at  least a majority
             of the Board of Directors of such Person.

                       "Wholly-Owned Subsidiary" shall  mean, as to  any
             Person,  (i) any  corporation 100%  of whose  capital stock
             (other than  director's qualifying  shares) is at  the time
             owned  by such Person and/or  one or more Wholly-Owned Sub-
             sidiaries of such Person and (ii) any partnership, associa-
             tion,  joint venture or  other entity in  which such Person
             and/or one or more Wholly-Owned Subsidiaries of such Person
             has a 100% equity interest at such time.

                            SECTION 12.  The Agent.

                       12.01  Appointment.  The  Banks hereby  designate
             BTCo  as Agent (for purposes  of this Section  12, the term
             "Agent" shall  include BTCo  in its capacity  as Collateral
             Agent  pursuant  to  the  Security  Documents)  to  act  as
             specified herein  and in the other Credit  Documents.  Each
             Bank hereby irrevocably authorizes,  and each holder of any
             Note  by  the  acceptance  of such  Note  shall  be  deemed
             irrevocably to authorize, the Agent to  take such action on
             its  behalf under  the  provisions of  this Agreement,  the
             other  Credit  Documents  and  any  other  instruments  and
             agreements referred  to herein  or therein and  to exercise
             such  powers  and  to  perform such  duties  hereunder  and
             thereunder as are specifically  delegated to or required of
             the  Agent by the terms  hereof and thereof  and such other
             powers as are reasonably incidental thereto.  The Agent may
             perform  any of  its  duties hereunder  by  or through  its
             respective  officers,  directors,   agents,  employees   or
             affiliates. 

                       12.02   Nature of  Duties.   The Agent shall  not
             have any duties or responsibilities except  those expressly
             set  forth in  this Agreement  and the  Security Documents.
             Neither  the  Agent nor  any  of  its respective  officers,
             directors, agents, employees or  affiliates shall be liable
             for any action taken or omitted by it or them  hereunder or
             under any  other Credit Document or  in connection herewith
             or  therewith,   unless  caused  by  its   or  their  gross
             negligence  or willful misconduct.  The duties of the Agent
             shall be mechanical and administrative in nature; the Agent
             shall not have  by reason  of this Agreement  or any  other
             Credit Document a fiduciary  relationship in respect of any
             Bank  or  the  holder of  any  Note;  and  nothing in  this
             Agreement or  any other  Credit Document, expressed  or im-
             plied, is intended to or shall be so construed as to impose
             upon the Agent any obligations in respect of this Agreement




                                        -157-


             


             or any other Credit Document except as expressly set  forth
             herein or therein.

                       12.03  Lack of Reliance on  the Agent.  Independ-
             ently and  without reliance upon  the Agent, each  Bank and
             the holder of each  Note, to the extent it  deems appropri-
             ate,  has made and shall continue to make (i) its own inde-
             pendent  investigation  of   the  financial  condition  and
             affairs of INTERCO and  its Subsidiaries in connection with
             the  making and the continuance of the Loans and the taking
             or not taking of any action in connection herewith and (ii)
             its own  appraisal of  the creditworthiness of  INTERCO and
             its Subsidiaries and, except  as expressly provided in this
             Agreement, the  Agent shall not  have any  duty or  respon-
             sibility,  either initially  or on  a continuing  basis, to
             provide any Bank or the holder of any  Note with any credit
             or other  information with respect thereto,  whether coming
             into  its possession before the  making of the  Loans or at
             any  time  or times  thereafter.   The  Agent shall  not be
             responsible to any  Bank or the holder of any  Note for any
             recitals,   statements,  information,   representations  or
             warranties herein or in  any document, certificate or other
             writing delivered in connection  herewith or for the execu-
             tion, effectiveness, genuineness, validity, enforceability,
             perfection, collectibility, priority or sufficiency of this
             Agreement  or any  other Credit  Document or  the financial
             condition of INTERCO and its Subsidiaries or be required to
             make  any  inquiry  concerning  either  the performance  or
             observance of any of the terms, provisions or conditions of
             this  Agreement  or  any  other  Credit  Document,  or  the
             financial condition of INTERCO  and its Subsidiaries or the
             existence or possible existence of any Default or  Event of
             Default.

                       12.04  Certain Rights of the Agent.  If the Agent
             shall  request  instructions  from the  Required  Banks  or
             Supermajority  Banks  with respect  to  any  act or  action
             (including  failure   to  act)  in  connection   with  this
             Agreement or any other Credit  Document, the Agent shall be
             entitled to refrain  from such  act or  taking such  action
             unless and until the Agent shall have received instructions
             from  the Required  Banks; and  the  Agent shall  not incur
             liability  to  any  Person  by  reason  of  so  refraining.
             Without limiting  the foregoing, no  Bank or holder  of any
             Note shall have any right of action  whatsoever against the
             Agent  as a result of  the Agent acting  or refraining from
             acting  hereunder or  under  any other  Credit Document  in
             accordance with the instructions of the Required Banks.





                                        -158-


             


                       12.05  Reliance.  The Agent shall be entitled  to
             rely,  and shall  be fully  protected in relying,  upon any
             note, writing, resolution, notice,  statement, certificate,
             telex,   teletype   or   telecopier   message,   cablegram,
             radiogram,  order  or other  document or  telephone message
             signed,  sent or made by any Person that the Agent believed
             to be the  proper Person,  and, with respect  to all  legal
             matters pertaining  to this Agreement and  any other Credit
             Document  and its  duties  hereunder and  thereunder,  upon
             advice  of  counsel selected  by  the Agent  (which  may be
             counsel for the Credit Parties).

                       12.06  Indemnification.   To the extent the Agent
             is  not reimbursed  and indemnified  by the  Borrowers, the
             Banks will reimburse and indemnify the Agent, in proportion
             to their  respective "percentages" as  used in  determining
             the   Required  Banks,   for  and   against  any   and  all
             liabilities,   obligations,  losses,   damages,  penalties,
             claims,  actions,  judgments,   costs,  expenses  or   dis-
             bursements  of  whatsoever  kind  or nature  which  may  be
             imposed on,  asserted against or  incurred by the  Agent in
             performing  its respective  duties hereunder  or under  any
             other Credit  Document, in any  way relating to  or arising
             out  of  this  Agreement  or  any  other  Credit  Document;
             provided  that no Bank shall  be liable for  any portion of
             such liabilities, obligations, losses,  damages, penalties,
             actions, judgments, suits, costs, expenses or disbursements
             resulting from  the  Agent's gross  negligence  or  willful
             misconduct.

                       12.07   The  Agent  in  its Individual  Capacity.
             With  respect   to  its   obligation  to  make   Loans  and
             participate in Letters of  Credit under this Agreement, the
             Agent shall have the rights and powers specified herein for
             a "Bank" and  may exercise  the same rights  and powers  as
             though it were not  performing the duties specified herein;
             and the term "Banks,"  "Required Banks," "holders of Notes"
             or  any similar  terms  shall, unless  the context  clearly
             otherwise  indicates, include  the Agent in  its individual
             capacity.  The Agent  may accept deposits from,  lend money
             to, and generally engage  in any kind of banking,  trust or
             other  business with any  Credit Party or  any Affiliate of
             any  Credit Party as if they were not performing the duties
             specified herein,  and may accept fees  and other consider-
             ation from the Borrowers or any other Credit Party for ser-
             vices in connection with this Agreement and otherwise with-
             out having to account for the same to the Banks.

                       12.08  Holders.  The Agent may deem and treat the
             payee of any  Note as  the owner thereof  for all  purposes



                                        -159-


             


             hereof unless and until a written notice of the assignment,
             transfer or  endorsement thereof, as the case may be, shall
             have  been filed with the Agent.  Any request, authority or
             consent of any  Person who, at the time of  making such re-
             quest or giving such authority or consent, is the holder of
             any  Note shall be conclusive and binding on any subsequent
             holder, transferee,  assignee or indorsee, as  the case may
             be, of such Note or of any Note or Notes issued in exchange
             therefor.

                       12.09   Resignation by the Agent.  (a)  The Agent
             may resign  from the performance  of all its  functions and
             duties hereunder and/or under the other Credit Documents at
             any  time by giving 15 Business  Days' prior written notice
             to the  Borrowers and  the Banks.   Such resignation  shall
             take  effect  upon the  appointment  of  a successor  Agent
             pursuant  to clauses  (b)  and (c)  below  or as  otherwise
             provided below.

                       (b)  Upon  any such  notice  of resignation,  the
             Required Banks shall appoint a successor Agent hereunder or
             thereunder who shall be a commercial  bank or trust company
             reasonably acceptable to the Borrowers.

                       (c)  If a successor Agent  shall not have been so
             appointed within  such 15  Business Day period,  the Agent,
             with  the consent of  the Borrowers,  shall then  appoint a
             commercial bank  or trust company with  capital and surplus
             of  not less than $500 million as successor Agent who shall
             serve as Agent hereunder or  thereunder until such time, if
             any, as the  Required Banks  appoint a  successor Agent  as
             provided above.

                       (d)  If  no  successor Agent  has  been appointed
             pursuant  to clause (b) or  (c) above by  the 20th Business
             Day  after the date such notice of resignation was given by
             the Agent,  the Agent's resignation  shall become effective
             and the  Banks shall thereafter  perform all the  duties of
             the Agent hereunder and/or  under any other Credit Document
             until  such time, if any,  as the Required  Banks appoint a
             successor Agent as provided above.

                       SECTION 13.  Miscellaneous.

                       13.01   Payment of Expenses, etc.   The Borrowers
             jointly  and  severally  shall:  (i)  whether  or  not  the
             transactions herein  contemplated are consummated,  pay all
             reasonable out-of-pocket  costs and  expenses of the  Agent
             (including,  without  limitation, the  reasonable  fees and
             disbursements of White & Case and local counsel) in connec-



                                        -160-


             


             tion with  the preparation, execution and  delivery of this
             Agreement and the other  Credit Documents and the documents
             and  instruments referred  to  herein and  therein and  any
             amendment, waiver or consent relating hereto or thereto, of
             the Agent  in connection with its  syndication efforts with
             respect to this  Agreement and of the Agent  and, following
             and during the continuation of an Event of Default, each of
             the  Banks  in  connection  with the  enforcement  of  this
             Agreement and the other  Credit Documents and the documents
             and instruments referred to  herein and therein (including,
             without limitation,  the reasonable fees  and disbursements
             of  counsel for  the Agent  and, following  and during  the
             continuation  of  an  Event of  Default,  for  each of  the
             Banks); (ii) pay and  hold each of the Banks  harmless from
             and  against any and  all present and  future stamp, excise
             and  other  similar taxes  with  respect  to the  foregoing
             matters  and  hold each  of  the  Banks harmless  from  and
             against  any  and  all   liabilities  with  respect  to  or
             resulting from any delay or omission (other than to the ex-
             tent attributable  to such  Bank) to  pay  such taxes;  and
             (iii) indemnify the  Agent and each Bank  (including in its
             capacity as an Issuing Bank), and  each of their respective
             officers, directors, employees, representatives, affiliates
             and  agents from and hold each of them harmless against any
             and  all liabilities,  obligations  (including  removal  or
             remedial  actions),  losses,  damages,  penalties,  claims,
             actions,   judgments,  suits,  costs,   expenses  and  dis-
             bursements  (including  reasonable attorneys'  and consult-
             ants' fees  and disbursements)  incurred by, imposed  on or
             assessed against any of them as a result of, or arising out
             of,  or in  any way related  to, or  by reason  of, (a) any
             investigation, litigation  or other proceeding  (whether or
             not the  Agent or any  Bank is a party  thereto) related to
             the entering  into and/or performance of  this Agreement or
             any  other  Credit Document  or the  use  of any  Letter of
             Credit  or  the  proceeds  of any  Loans  hereunder  or the
             consummation  of  any   transactions  contemplated   herein
             (including, without limitation, the  Transaction) or in any
             other  Credit Document  or  the exercise  of  any of  their
             rights or remedies provided  herein or in the  other Credit
             Documents,  or  (b)  the  actual  or  alleged  presence  of
             Hazardous  Materials   in   the  air,   surface  water   or
             groundwater or  on the  surface or  subsurface of any  Real
             Property owned or at any time operated by INTERCO or any of
             its Subsidiaries, the generation,  storage, transportation,
             handling or  disposal of  Hazardous Materials at  any loca-
             tion, whether or not owned or operated by INTERCO or any of
             its Subsidiaries, the non-compliance  of any Real  Property
             with  foreign, federal, state  and local laws, regulations,
             and  ordinances  (including applicable  permits thereunder)



                                        -161-


             


             applicable to any Real Property, or any Environmental Claim
             asserted against  INTERCO, any of its  Subsidiaries, or any
             Real Property owned or  at any time operated by  INTERCO or
             any of  its Subsidiaries, including, in  each case, without
             limitation,  the  reasonable   fees  and  disbursements  of
             counsel and other consultants  incurred in connection  with
             any such investigation, litigation or other proceeding (but
             excluding  any  losses,  liabilities,  claims,  damages  or
             expenses to  the  extent incurred  by reason  of the  gross
             negligence  or  willful  misconduct  of the  Person  to  be
             indemnified).  To the extent that the undertaking to indem-
             nify, pay or hold harmless the Agent or any Bank set  forth
             in the  preceding sentence may be  unenforceable because it
             is violative  of any law  or public  policy, the  Borrowers
             shall  make the  maximum  contribution to  the payment  and
             satisfaction of  each of the  indemnified liabilities which
             is permissible under applicable law.

                       13.02    Right of  Setoff.   In  addition  to any
             rights  now or  hereafter granted  under applicable  law or
             otherwise, and not by way of limitation of any such rights,
             upon  the occurrence of an  Event of Default,  each Bank is
             hereby authorized at any time or from time to time, without
             presentment, demand, protest or other notice of any kind to
             the Borrowers or to any other Person, any such notice being
             hereby expressly waived, to set  off and to appropriate and
             apply  any and all  deposits (general  or special)  and any
             other Indebtedness at any  time held or owing by  such Bank
             (including, without limitation, by branches and agencies of
             such Bank wherever  located) to  or for the  credit or  the
             account of any Credit  Party against and on account  of the
             Obligations and  liabilities of all Credit  Parties to such
             Bank  under this Agreement or under any of the other Credit
             Documents,  including, without limitation, all interests in
             Obligations purchased  by  such Bank  pursuant  to  Section
             13.06(b), and all other claims of any nature or description
             arising out  of or  connected  with this  Agreement or  any
             other Credit Document, irrespective  of whether or not such
             Bank shall have made any demand hereunder and although said
             Obligations, liabilities  or claims, or any  of them, shall
             be contingent or unmatured.

                       13.03   Notices.   Except as  otherwise expressly
             provided herein, all notices and other communications  pro-
             vided for  hereunder shall  be in writing  (including tele-
             graphic,  telex, telecopier  or  cable  communication)  and
             mailed, telegraphed, telexed,  telecopied, cabled or deliv-
             ered:   if  to  the Borrowers,  at  the Borrowers'  address
             specified  opposite its  signature below;  if to  any other
             Credit  Party, at such Credit Party's  address set forth in



                                        -162-


             


             any Credit Document; if  to any Bank, at its  address spec-
             ified opposite its name on Schedule II below; and if to the
             Agent, at its Notice  Office; or, as to any Credit Party or
             the  Agent, at such other address as shall be designated by
             such  party in a written notice to the other parties hereto
             and, as to  each Bank, at  such other address  as shall  be
             designated  by  such  Bank  in  a  written  notice  to  the
             Borrowers and  the Agent.   All  such notices  and communi-
             cations shall,  when  mailed, telegraphed,  telexed,  tele-
             copied, or  cabled or sent by overnight  courier, be effec-
             tive when  deposited in the  mails, delivered to  the tele-
             graph company,  cable company or overnight  courier, as the
             case  may be, or sent  by telex or  telecopier, except that
             notices and  communications to the Agent  and the Borrowers
             shall not be effective  until received by the Agent  or the
             Borrowers, as the case may be.

                       13.04  Benefit of Agreement.  (a)  This Agreement
             shall be binding  upon and inure to  the benefit of  and be
             enforceable by the respective successors and assigns of the
             parties  hereto; provided, however,  no Borrower may assign
             or  transfer any  of  its rights,  obligations or  interest
             hereunder or  under any  other Credit Document  without the
             prior written  consent of  all of the  Banks and,  provided
             further, that,  although any  Bank may transfer,  assign or
             grant  participations  in its  rights hereunder,  such Bank
             shall remain a "Bank" for  all purposes hereunder (and  may
             not  transfer or assign all  or any portion  of its Commit-
             ments hereunder except as provided in Section 13.04(b)) and
             the transferee,  assignee or  participant, as the  case may
             be, shall  not constitute a "Bank"  hereunder and, provided
             further, that no Bank shall transfer or grant  any partici-
             pation  under which  the participant  shall have  rights to
             approve any amendment to or waiver of this Agreement or any
             other Credit  Document except to the  extent such amendment
             or waiver would (i) extend the final  scheduled maturity of
             any Loan or Note or extend the expiry date of any Letter of
             Credit in  which such  participant is  participating beyond
             the Final Maturity Date,  or reduce the rate or  extend the
             time  of  payment of  interest or  Fees thereon  (except in
             connection  with a  waiver  of applicability  of any  post-
             default increase in interest rates) or reduce the principal
             amount thereof, or increase the amount of the participant's
             participation over  the amount  thereof then in  effect (it
             being  understood   that   waivers  or   modifications   of
             conditions  precedent, covenants,  Defaults  or  Events  of
             Default or of a mandatory reduction in the Total Commitment
             shall not constitute a change in the terms of such partici-
             pation,  and  that an  increase in  any Commitment  or Loan
             shall be  permitted without the consent  of any participant



                                        -163-


             


             if the  participant's participation  is not increased  as a
             result thereof), (ii) consent to the assignment or transfer
             by the  Borrowers of  any of  their rights  and obligations
             under this Agreement or  (iii) release all or substantially
             all  of the Collateral under all  of the Security Documents
             (except  as  expressly  provided in  the  Credit Documents)
             supporting the Loans and/or  Letters of Credit hereunder in
             which such  participant is participating.   In the  case of
             any such participation, the  participant shall not have any
             rights under  this Agreement  or  any of  the other  Credit
             Documents  (the participant's  rights against such  Bank in
             respect  of such participation to be those set forth in the
             agreement executed by such Bank in favor of the participant
             relating thereto) and all  amounts payable by the Borrowers
             hereunder  shall be determined as if such Bank had not sold
             such participation.

                       (b)  Notwithstanding the foregoing, any  Bank (or
             any Bank together  with one  or more other  Banks) may  (x)
             assign all  or a portion  of its Revolving  Loan Commitment
             (and related outstanding Obligations hereunder)  and/or its
             outstanding  Term  Loans  (or,  if  prior  to  the  Initial
             Borrowing Date, Term Loan Commitment) to its parent company
             and/or any affiliate  of such  Bank which is  at least  50%
             owned by such Bank or its parent company or to  one or more
             Banks  or  (y)  after  providing  notice  to  (but  without
             requiring the consent of) INTERCO,  assign all, or if  less
             than all, a  portion equal  to at least  $5,000,000 in  the
             aggregate  for the  assigning Bank  or assigning  Banks, of
             such  Revolving Loan Commitments  and outstanding principal
             amount of Term Loans (or, if prior to the Initial Borrowing
             Date,  Term  Loan  Commitment)  hereunder to  one  or  more
             Eligible Transferees, each of which  assignees shall become
             a party  to this  Agreement as a  Bank by  execution of  an
             Assignment and Assumption Agreement, provided that,  (i) at
             such  time Schedule I  shall be deemed  modified to reflect
             the Commitments (and/or outstanding Term Loans, as the case
             may  be) of such  new Bank and of  the existing Banks, (ii)
             upon  surrender of the old Notes, new Notes will be issued,
             at  the Borrowers'  expense, to  such new  Bank and  to the
             assigning Bank, such new Notes to be in conformity with the
             requirements  of  Section  1.05  (with  appropriate modifi-
             cations)  to  the  extent  needed to  reflect  the  revised
             Commitments (and/or outstanding Term Loans, as the case may
             be),  (iii) the consent of  the Agent and  any Issuing Bank
             shall be required in connection with any such assignment of
             a Bank's Revolving Loan Commitment (which consent shall not
             be  unreasonably withheld  or delayed)  and (iv)  the Agent
             shall receive at  the time of  each such assignment  (other
             than  in  connection with  an assignment  by  a Bank  to an



                                        -164-


             


             affiliate  of such  Bank), from  the assigning  or assignee
             Bank, the payment of  a non-refundable fee of $1,500  or in
             the case of  an assignment  to an assignee  which is not  a
             Bank,  the payment  of a  non-refundable assignment  fee of
             $3,500  and,  provided  further,  that   such  transfer  or
             assignment  will not  be  effective until  recorded by  the
             Agent on the Register pursuant to Section 13.17 hereof.  To
             the  extent  of any  assignment  pursuant  to this  Section
             13.04(b),  the  assigning Bank  shall  be  relieved of  its
             obligations   hereunder  with   respect  to   its  assigned
             Commitments.   At the time  of each assignment  pursuant to
             this  Section 13.04(b) to a  Person which is  not already a
             Bank  hereunder and which is not a United States person (as
             such term  is defined in  Section 7701(a)(30) of  the Code)
             for Federal  income tax  purposes, the  respective assignee
             Bank  shall  provide to  the  Borrowers and  the  Agent the
             appropriate Internal Revenue Service  Forms (and, if appli-
             cable  a  Section  4.04(b)(ii)  Certificate)  described  in
             Section 4.04(b).  To  the extent that an assignment  of all
             or  any  portion  of   a  Bank's  Commitments  and  related
             outstanding  Obligations pursuant to  Section 1.13  or this
             Section  13.04(b) would,  at the  time of  such assignment,
             result  in  increased  costs  under Section  1.10  or  1.11
             greater  than   those  being  charged  by   the  respective
             assigning Bank prior to such assignment, then the Borrowers
             shall not be obligated to  pay such greater increased costs
             (although the Borrowers shall be obligated to pay any other
             increased costs of the  type described above resulting from
             changes after the date of the respective assignment).

                       (c)  Nothing in this  Agreement shall prevent  or
             prohibit  any  Bank  from  pledging  its  Loans  and  Notes
             hereunder  to   a  Federal  Reserve  Bank   in  support  of
             borrowings  made by  such  Bank from  such Federal  Reserve
             Bank.

                       13.05  No Waiver;  Remedies Cumulative.  No fail-
             ure or delay  on the part of  the Agent or any  Bank or any
             holder  of  any Note  in  exercising  any right,  power  or
             privilege hereunder or under  any other Credit Document and
             no course  of dealing between  the Borrowers  or any  other
             Credit Party and the Agent or any Bank or the holder of any
             Note  shall  operate as  a  waiver thereof;  nor  shall any
             single or partial exercise of any right, power or privilege
             hereunder or  under any other Credit  Document preclude any
             other or further  exercise thereof or  the exercise of  any
             other right, power  or privilege  hereunder or  thereunder.
             The  rights, powers  and remedies  herein or  in any  other
             Credit  Document expressly provided  are cumulative and not
             exclusive of any rights, powers or remedies which the Agent



                                        -165-


             


             or any Bank or the holder of any Note would otherwise have.
             No notice  to or  demand on  any Credit Party  in any  case
             shall  entitle any  Credit Party  to any  other or  further
             notice  or  demand in  similar  or  other circumstances  or
             constitute a waiver of the rights of the  Agent or any Bank
             or the holder of any Note to any other or further action in
             any circumstances without notice or demand.

                       13.06    Payments  Pro  Rata.    (a)   Except  as
             otherwise provided in this Agreement, the Agent agrees that
             promptly  after its  receipt  of each  payment  from or  on
             behalf of the Borrowers in respect of any Obligations here-
             under, it shall distribute such payment to the Banks (other
             than  any Bank that has  consented in writing  to waive its
             pro rata share  of any  such payment) pro  rata based  upon
             their respective  shares, if  any, of the  Obligations with
             respect to which such payment was received.

                       (b)  Each of the Banks  agrees that, if it should
             receive any amount hereunder (whether by voluntary payment,
             by realization upon security, by  the exercise of the right
             of  setoff  or  banker's  lien, by  counterclaim  or  cross
             action, by  the enforcement of  any right under  the Credit
             Documents, or  otherwise), which is applicable  to the pay-
             ment of the principal of, or interest on, the Loans, Unpaid
             Drawings,  Commitment Commission  or other  Fees, of  a sum
             which with respect to  the related sum or sums  received by
             other  Banks is in a  greater proportion than  the total of
             such Obligation then owed and due to such Bank bears to the
             total of such  Obligation then owed and  due to all  of the
             Banks  immediately prior  to such  receipt, then  such Bank
             receiving such excess payment shall purchase for cash with-
             out recourse or  warranty from the other Banks  an interest
             in  the Obligations of the  respective Credit Party to such
             Banks  in such  amount as  shall result  in a  proportional
             participation  by all  the Banks  in such  amount; provided
             that if all or any portion  of such excess amount is there-
             after  recovered from  such  Bank, such  purchase shall  be
             rescinded and the purchase price  restored to the extent of
             such recovery, but without interest.

                       (c)  Notwithstanding  anything  to  the  contrary
             contained herein, the provisions  of the preceding Sections
             13.06(a) and (b) shall be subject to the express provisions
             of this Agreement which  require, or permit, differing pay-
             ments to  be made  to  Non-Defaulting Banks  as opposed  to
             Defaulting Banks.

                       13.07    Calculations;  Computations.    (a)  The
             financial statements to be  furnished to the Banks pursuant



                                        -166-


             


             hereto shall be made and prepared in accordance with gener-
             ally accepted  accounting principles in  the United  States
             (or  the  equivalent thereof  in  any  country in  which  a
             Foreign Sales Corporation is doing business, as applicable)
             consistently  applied  throughout  the   periods  involved,
             provided   that,  (i)  except   as  otherwise  specifically
             provided herein,  all  computations of  Excess  Cash  Flow,
             Available $10 Million Basket Amount, Available CapX Amount,
             Available  Retained  Excess  Cash  Flow  Amount,  Available
             Unrestricted  Proceeds  Amount  and  Available  Net  Income
             Amount  and all  computations  determining compliance  with
             Sections 9.02 through  9.10, inclusive,  shall utilize  ac-
             counting principles and policies  in conformity with  those
             used  to   prepare  the  historical   financial  statements
             delivered to  the Banks  pursuant to Section  7.05(a), (ii)
             for  all   purposes  of  this   Agreement,  all  Attributed
             Receivables  Facility  Indebtedness   of  the   Receivables
             Subsidiary  shall  be included  in  the combined  financial
             statements of INTERCO and its  Restricted Subsidiaries, and
             shall be considered Indebtedness of a Restricted Subsidiary
             of INTERCO hereunder, regardless of any differing treatment
             pursuant  to  generally  acceptable accounting  principles,
             (iii)  for purposes  of  calculating financial  terms,  all
             covenants  and related  definitions, all  such calculations
             based  on  the operations  of  INTERCO  and its  Restricted
             Subsidiaries  on a  combined  basis shall  be made  without
             giving  effect   to  the  operations  of  any  Unrestricted
             Subsidiaries,  and (iv)  the  amount of  any tax  liability
             arising from  the Florsheim Disposition, and  the amount of
             any Converse Tax Liability to the extent not paid, shall be
             treated  as Indebtedness  (determined  in the  case of  the
             Converse Tax Liability in accordance with the definition of
             Consolidated  Debt) for  all computations  determining com-
             pliance with  Sections 9.08 through 9.10, inclusive, during
             all periods which such liabilities remain unpaid, and shall
             be deemed  to accrue interest at a rate of 9% per annum for
             all such periods.

                       (b)  All  computations  of  interest,  Commitment
             Commission and other  Fees hereunder shall  be made on  the
             basis of a  year of 360 days for the  actual number of days
             (including  the  first  day  but excluding  the  last  day)
             occurring in the period for which such interest, Commitment
             Commission or other Fees are payable.









                                        -167-


             


                       13.08  GOVERNING LAW; SUBMISSION TO JURISDICTION;
             VENUE; WAIVER OF JURY  TRIAL.  (a)  THIS AGREEMENT AND  THE
             OTHER CREDIT  DOCUMENTS AND  THE RIGHTS AND  OBLIGATIONS OF
             THE PARTIES  HEREUNDER  AND  THEREUNDER  SHALL,  EXCEPT  AS
             OTHERWISE  PROVIDED IN  CERTAIN OF  THE MORTGAGES,  BE CON-
             STRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE
             STATE OF NEW  YORK.   ANY LEGAL ACTION  OR PROCEEDING  WITH
             RESPECT TO THIS AGREEMENT OR  ANY OTHER CREDIT DOCUMENT MAY
             BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
             UNITED STATES  FOR THE SOUTHERN DISTRICT OF  NEW YORK, AND,
             BY EXECUTION  AND DELIVERY OF  THIS AGREEMENT, EACH  OF THE
             BORROWERS  HEREBY  IRREVOCABLY ACCEPTS  FOR  ITSELF  AND IN
             RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
             JURISDICTION  OF  THE  AFORESAID   COURTS.    EACH  OF  THE
             BORROWERS  HEREBY  IRREVOCABLY  DESIGNATES,   APPOINTS  AND
             EMPOWERS CT  CORPORATION SYSTEM,  WITH OFFICES ON  THE DATE
             HEREOF AT  1633 BROADWAY,  NEW YORK, NEW YORK 10019  AS ITS
             DESIGNEE,  APPOINTEE  AND  AGENT  TO  RECEIVE,  ACCEPT  AND
             ACKNOWLEDGE  FOR AND ON ITS  BEHALF, AND IN  RESPECT OF ITS
             PROPERTY, SERVICE  OF ANY  AND ALL LEGAL  PROCESS, SUMMONS,
             NOTICES  AND DOCUMENTS  WHICH  MAY BE  SERVED  IN ANY  SUCH
             ACTION OR PROCEEDING.   IF  FOR ANY  REASON SUCH  DESIGNEE,
             APPOINTEE AND AGENT SHALL  CEASE TO BE AVAILABLE TO  ACT AS
             SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE,
             APPOINTEE  AND AGENT IN NEW YORK CITY  ON THE TERMS AND FOR
             THE PURPOSES  OF THIS  PROVISION SATISFACTORY TO  THE AGENT
             UNDER  THIS  AGREEMENT.    EACH OF  THE  BORROWERS  FURTHER
             IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF
             THE AFOREMENTIONED COURTS IN  ANY SUCH ACTION OR PROCEEDING
             BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
             MAIL, POSTAGE PREPAID, TO  ANY CREDIT PARTY AT  ITS ADDRESS
             SET  FORTH OPPOSITE  ITS SIGNATURE  BELOW, SUCH  SERVICE TO
             BECOME  EFFECTIVE  30 DAYS  AFTER  SUCH  MAILING.   NOTHING
             HEREIN  SHALL  AFFECT THE  RIGHT  OF THE  AGENT  UNDER THIS
             AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PRO-
             CESS  IN ANY OTHER MANNER  PERMITTED BY LAW  OR TO COMMENCE
             LEGAL PROCEEDINGS  OR OTHERWISE PROCEED  AGAINST ANY CREDIT
             PARTY IN ANY OTHER JURISDICTION.

                       (b)  EACH  OF  THE  BORROWERS HEREBY  IRREVOCABLY
             WAIVES  ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
             THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PRO-
             CEEDINGS  ARISING OUT OF OR  IN CONNECTION WITH THIS AGREE-
             MENT OR  ANY OTHER  CREDIT DOCUMENT  BROUGHT IN  THE COURTS
             REFERRED  TO IN CLAUSE  (a) ABOVE AND  HEREBY FURTHER IRRE-
             VOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
             COURT  THAT ANY  SUCH ACTION  OR PROCEEDING BROUGHT  IN ANY
             SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.





                                        -168-


             


                       (c)  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
             IRREVOCABLY  WAIVES ALL  RIGHT TO  A TRIAL  BY JURY  IN ANY
             ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELAT-
             ING TO THIS  AGREEMENT, THE OTHER  CREDIT DOCUMENTS OR  THE
             TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                       13.09  Counterparts.   This Agreement may be exe-
             cuted in  any number of  counterparts and by  the different
             parties hereto on separate counterparts, each of which when
             so  executed and delivered shall be an original, but all of
             which shall  together constitute  one and the  same instru-
             ment.   A set of  counterparts executed by  all the parties
             hereto shall be lodged with the Borrowers and the Agent.

                       13.10    Effectiveness.    This  Agreement  shall
             become  effective on  the  date (the  "Effective Date")  on
             which  the Agent, the Borrowers and each of the Banks shall
             have  signed  a counterpart  hereof  (whether  the same  or
             different counterparts) and  shall have delivered the  same
             to the  Agent at its Notice  Office or, in the  case of the
             Banks, shall have given  to the Agent telephonic (confirmed
             in writing), written or telex notice (actually received) at
             such office that the same has been signed and mailed to it.
             The  Agent will  give the  Borrowers  and each  Bank prompt
             written notice of the occurrence of the Effective Date.

                       13.11  Headings Descriptive.  The headings of the
             several sections and subsections  of this Agreement are in-
             serted for convenience only and shall not in any way affect
             the meaning or construction of any provision of this Agree-
             ment.

                       13.12   Amendment or  Waiver; etc.   (a)  Neither
             this Agreement nor  any other Credit Document nor any terms
             hereof  or thereof  may be  changed, waived,  discharged or
             terminated unless  such change,  waiver, discharge  or ter-
             mination  is in  writing  signed by  the respective  Credit
             Parties party thereto and the Required Banks, provided that
             no such  change, waiver,  discharge  or termination  shall,
             without the consent of  each Bank (other than  a Defaulting
             Bank) with Obligations being directly affected thereby, (i)
             extend  the final scheduled maturity of any Loan or Note or
             extend  the stated maturity of  any Letter of Credit beyond
             the Final Maturity Date,  or reduce the rate or  extend the
             time  of payment of interest or Fees thereon, or reduce the
             principal amount  thereof (except  to the extent  repaid in
             cash),  (ii)  release  all  or  substantially  all  of  the
             Collateral  under  all  the Security  Documents  (except as
             expressly  provided in the  Credit Documents), (iii) amend,
             modify  or waive any provision of  this Section 13.12, (iv)



                                        -169-


             


             reduce  the  percentage  specified  in  the  definition  of
             Required Banks (it being  understood that, with the consent
             of the Required Banks, additional extensions of credit pur-
             suant to this Agreement  may be included in  the determina-
             tion of the Required Banks on substantially the  same basis
             as  the  extensions  of   Term  Loans  and  Revolving  Loan
             Commitments  are included  on  the Effective  Date) or  (v)
             consent to the  assignment or transfer by  the Borrowers of
             any of  their rights and obligations  under this Agreement;
             provided further, that no such change, waiver, discharge or
             termination shall (u) increase  the Commitments of any Bank
             over the amount thereof then  in effect without the consent
             of  such   Bank  (it  being  understood   that  waivers  or
             modifications of conditions precedent,  covenants, Defaults
             or Events of  Default or  of a mandatory  reduction in  the
             Total Commitment  shall not  constitute an increase  of the
             Commitment  of  any  Bank,  and that  an  increase  in  the
             available portion of any Commitment  of any Bank shall  not
             constitute an increase in the Commitment of such Bank), (v)
             without  the  consent of  the  respective  Issuing Bank  or
             Issuing  Banks, amend,  modify  or waive  any provision  of
             Section 2 with respect to Letters of Credit issued by it or
             alter its rights or obligations with respect to  Letters of
             Credit  or Acceptances,  (w) without  the consent  of BTCo,
             amend, modify  or waive  any provision of  Sections 1.01(c)
             and (d) or alter its rights and obligations with respect to
             Swingline  Loans, (x)  without  the consent  of the  Agent,
             amend,  modify or waive any provision of Section 12 as same
             applies  to  such  Agent or  any  other  provision  as same
             relates to  the rights  or obligations  of such  Agent, (y)
             without the consent of  the Collateral Agent, amend, modify
             or  waive   any  provision   relating  to  the   rights  or
             obligations  of the  Collateral Agent  and (z)  without the
             consent  of  the  Supermajority  Banks  of  the  respective
             Tranche (1) amend, modify or waive any Scheduled Repayment,
             (2) release any significant portion of the Collateral under
             the Security Documents (except as expressly provided in the
             Credit  Documents) or  release  any significant  Subsidiary
             Guarantor   from  its  obligations   under  the  Subsidiary
             Guaranty  (other  than  in  connection with  a  transaction
             permitted pursuant to Section  9.02); provided that no Col-
             lateral shall constitute a  significant portion of the Col-
             lateral  and no  Subsidiary  Guarantor  shall constitute  a
             significant Subsidiary  Guarantor if the  fair market value
             of the Collateral to be released plus the fair market value
             of the assets owned or held by such Subsidiary Guarantor is
             $20  million  or  less   in  the  aggregate  (based  on   a
             certificate  of the  chief  financial  officer  of  INTERCO
             taking into account all  prior releases) or (3)  reduce the




                                        -170-


             


             percentage  specified  in the  definition  of Supermajority
             Banks with respect to such Tranche.

                       (b)  If, in  connection with any proposed change,
             waiver, discharge  or termination to any  of the provisions
             of this  Agreement as  contemplated by clauses  (i) through
             (v), inclusive,  of the first proviso  to Section 13.12(a),
             the  consent of  the  Required Banks  is  obtained but  the
             consent of one or more of such other Banks whose consent is
             required is not obtained, then the Borrowers shall have the
             right, so long as all non-consenting Banks whose individual
             consent  is required  are  treated as  described in  either
             clauses (A) or (B)  below, to either (A) replace  each such
             non-consenting  Bank or  Banks  (or, at  the option  of the
             Borrowers if the respective Bank's consent is required with
             respect  to less  than all  Tranches of  Loans  (or related
             Commitments),  to replace  only the  respective Tranche  or
             Tranches  of Commitments  and/or Loans   of  the respective
             non-consenting Bank  which gave rise to the  need to obtain
             such   Bank's  individual   consent)  with   one   or  more
             Replacement Banks  pursuant to Section  1.13 so long  as at
             the time  of such  replacement, each such  Replacement Bank
             consents  to the  proposed   change,  waiver, discharge  or
             termination or  (B)  terminate such  non-consenting  Bank's
             Revolving  Loan  Commitment  (if  such  Bank's  consent  is
             required  as a  result  of its  Revolving Loan  Commitment)
             and/or repay outstanding Term Loans of such Bank which gave
             rise to the need  to obtain such Bank's consent,  in accor-
             dance with Sections 3.02(b)  and/or 4.01(v), provided that,
             unless the  Commitments are terminated,  and Loans  repaid,
             pursuant   to  the  preceding  clause (B)  are  immediately
             replaced in full at  such time through the addition  of new
             Banks or the increase of the Commitments and/or outstanding
             Loans of existing Banks (who in each case must specifically
             consent thereto), then  in the case of  any action pursuant
             to  preceding  clause (B)  the  Required  Banks (determined
             before  giving   effect  to  the   proposed  action)  shall
             specifically consent thereto, provided further, that in any
             event the Borrowers shall  not have the right to  replace a
             Bank, terminate its Revolving  Loan Commitment or repay its
             Loans solely as  a result  of the exercise  of such  Bank's
             rights (and the withholding of any required consent by such
             Bank) pursuant to the second proviso to Section 13.12(a). 

                       13.13    Survival.   All  indemnities  set  forth
             herein  including,  without limitation,  in  Sections 1.10,
             1.11, 2.06, 4.04, 13.01 and 13.06 shall, subject to Section
             13.15 (to  the extent  applicable), survive the  execution,
             delivery and  termination of  this Agreement and  the Notes
             and the making and repayment of the Loans.



                                        -171-


             


                       13.14  Domicile of Loans.  Each Bank may transfer
             and carry  its Loans  at,  to or  for  the account  of  any
             office,    Subsidiary   or   Affiliate    of   such   Bank.
             Notwithstanding  anything to the contrary contained herein,
             to the extent  that a  transfer of Loans  pursuant to  this
             Section 13.14 would,  at the time of  such transfer, result
             in increased  costs under Section 1.10, 1.11,  2.06 or 4.04
             from those  being charged by  the respective Bank  prior to
             such transfer, then the Borrowers shall not be obligated to
             pay such  increased costs (although the  Borrowers shall be
             obligated to  pay any  other increased  costs  of the  type
             described above  resulting from  changes after the  date of
             the respective transfer).

                       13.15  Limitation  on  Additional  Amounts,  etc.
             Notwithstanding  anything  to  the  contrary  contained  in
             Sections 1.10, 1.11, 2.06 or 4.04 of this Agreement, unless
             a Bank gives notice  to the Borrowers that it  is obligated
             to pay an  amount under  any such Section  within one  year
             after the later of (x) the date the Bank incurs the respec-
             tive  increased costs, Taxes,  loss, expense  or liability,
             reduction in amounts received or receivable or reduction in
             return  on capital  or (y)  the date  such Bank  has actual
             knowledge  of its  incurrence of  the respective  increased
             costs, Taxes,  loss, expense  or  liability, reductions  in
             amounts received  or receivable  or reduction in  return on
             capital,  then  such  Bank  shall only  be  entitled  to be
             compensated for  such amount  jointly and severally  by the
             Borrowers  pursuant to  said  Section 1.10,  1.11, 2.06  or
             4.04, as the case may be,  to the extent the costs,  Taxes,
             loss, expense  or liability, reduction in  amounts received
             or  receivable  or  reduction  in  return  on  capital  are
             incurred  or suffered on or after the date which occurs one
             year prior to such Bank giving notice to the Borrowers that
             it is obligated  to pay the respective  amounts pursuant to
             said Section 1.10, 1.11,  2.06 or 4.04, as the case may be.
             This  Section  13.15 shall  have  no  applicability to  any
             Section of  this Agreement  other than said  Sections 1.10,
             1.11, 2.06 and 4.04.

                       13.16   Confidentiality.    (a)   Subject to  the
             provisions of clause  (b) of this Section 13.16,  each Bank
             agrees  that it will use  its best efforts  not to disclose
             without the prior  consent of the Borrowers  (other than to
             its employees, auditors, advisors  or counsel or to another
             Bank if the Bank  or such Bank's holding or  parent company
             in  its  sole discretion  determines  that  any such  party
             should  have access  to  such  information,  provided  such
             Persons shall be subject to the  provisions of this Section
             13.16 to the same extent as such Bank) any information with



                                        -172-


             


             respect  to INTERCO or any of its Subsidiaries which is now
             or in  the future furnished  pursuant to this  Agreement or
             any  other  Credit  Document  and which  is  designated  by
             INTERCO to  the Banks in writing  as confidential, provided
             that  any Bank may disclose any such information (a) as has
             become generally  available to  the public, (b)  as may  be
             required  or  appropriate  in  any  report,   statement  or
             testimony  submitted to  any  municipal,  state or  Federal
             regulatory  body having  or  claiming to  have jurisdiction
             over  such  Bank or  to the  Federal  Reserve Board  or the
             Federal Deposit Insurance  Corporation or similar organiza-
             tions (whether in the United  States or elsewhere) or their
             successors,  (c)  as  may  be required  or  appropriate  in
             respect to  any summons or  subpoena or in  connection with
             any litigation, (d) in order to comply with any law, order,
             regulation or ruling  applicable to such  Bank, (e) to  the
             Agent or the Collateral Agent and (f) to any prospective or
             actual transferee  or participant  in  connection with  any
             contemplated transfer or participation  of any of the Notes
             or  Commitments  or  any  interest therein  by  such  Bank,
             provided,  that  such  prospective  transferee  executes an
             agreement    with    such   Bank    containing   provisions
             substantially  the  same  as  to those  contained  in  this
             Section.

                       (b)  Each  of the  Borrowers hereby  acknowledges
             and  agrees  that  each Bank  may  share  with  any of  its
             affiliates any information related to INTERCO or any of its
             Subsidiaries (including, without limitation,  any nonpublic
             customer  information  regarding  the  creditworthiness  of
             INTERCO and its Subsidiaries),  provided such Persons shall
             be subject to the  provisions of this Section 13.16  to the
             same extent as such Bank.

                       13.17  Register.  The Borrowers  hereby designate
             the Agent to serve as the Borrowers' agent, solely for pur-
             poses of this  Section 13.17, to  maintain a register  (the
             "Register") on  which it  will record the  Commitments from
             time to time of each  of the Banks, the Loans made  by each
             of the Banks and each repayment in respect of the principal
             amount of the Loans of each Bank.  Failure to make any such
             recordation,  or any  error in  such recordation  shall not
             affect the Borrowers' obligations in respect of such Loans.
             With respect to  any Bank, the transfer  of the Commitments
             of  such Bank  and  the rights  to  the principal  of,  and
             interest  on, any  Loan made  pursuant to  such Commitments
             shall not be effective  until such transfer is recorded  on
             the  Register  maintained  by  the Agent  with  respect  to
             ownership of such Commitments  and Loans and prior  to such
             recordation  all  amounts  owing  to  the  transferor  with



                                        -173-


             


             respect to such Commitments and Loans shall remain owing to
             the transferor.  The registration of assignment or transfer
             of  all or  part  of any  Commitments  and Loans  shall  be
             recorded  by  the  Agent  on  the Register  only  upon  the
             acceptance  by  the  Agent   of  a  properly  executed  and
             delivered  Assignment and Assumption  Agreement pursuant to
             Section 13.04(b).   Coincident with the delivery of such an
             Assignment  and  Assumption  Agreement  to  the  Agent  for
             acceptance and  registration of assignment  or transfer  of
             all  or  part  of   a  Loan,  or  as  soon   thereafter  as
             practicable,  the   assigning  or  transferor   Bank  shall
             surrender the Note evidencing  such Loan, and thereupon one
             or more new  Notes in the  same aggregate principal  amount
             shall be issued to the assigning or transferor  Bank and/or
             the new Bank.  The Borrowers jointly and severally agree to
             indemnify the Agent  from and against  any and all  losses,
             claims, damages and liabilities  of whatsoever nature which
             may be  imposed  on, asserted  against or  incurred by  the
             Agent in  performing its  duties under this  Section 13.17,
             provided  that the  Borrowers shall  have no  obligation to
             indemnify the Agent for  any loss, claim, damage, liability
             or  expense   which  resulted  primarily  from   the  gross
             negligence or wilful misconduct of the Agent.






























                                        -174-


             


                    IN  WITNESS WHEREOF,  the  parties  hereto have  caused
          their  duly  authorized  officers  to execute  and  deliver  this
          Agreement as of the date first above written.

          Address:

          101 South Hanley Road                 INTERCO INCORPORATED
          St. Louis, MO 63105
          Tel: (314) 863-1100
          Fax: (314) 863-5306
          Attention: David P. Howard            By  David P. Howard          
                                                  Title: Vice President



          c/o INTERCO INCORPORATED              BROYHILL FURNITURE 
          101 South Hanley Road                   INDUSTRIES, INC.
          St. Louis, MO 63105
          Tel: (314) 863-1100
          Fax: (314) 863-5306
          Attention: David P. Howard            By  Duane A. Patterson       
                                                  Title: Vice President



          c/o INTERCO INCORPORATED              THE LANE COMPANY,
          101 South Hanley Road                   INCORPORATED
          St. Louis, MO 63105
          Tel: (314) 863-1100
          Fax: (314) 863-5306
          Attention: David P. Howard            By  Duane A. Patterson       

                                                  Title: Vice President



          One Bankers Trust Plaza               BANKERS TRUST COMPANY,
          130 Liberty Street                      Individually and as Agent
          New York, NY 10006
          Tel: (212) 250-1724
          Fax: (212) 250-7200
          Attention: Dana F. Klein             By  Dana Klein                
                                                 Title: Vice President










                                        -175-


          






                                             BANK OF MONTREAL


                                             By:  Jonathan D. Hook           
                                                Title: Director


                                             THE BANK OF NEW YORK


                                             By:  Natalie Egleston           
                                                Title: Vice President


                                             BANK OF SCOTLAND


                                             By:  Catherine M. Oniffrey      
                                                Title: Vice President


                                             BANQUE PARIBAS


                                             By:  Ann C. Pifer               
                                                Title: Assistant Vice
                                                       President


                                             By:  Richard G. Burrows         
                                                Title: Vice President


                                             THE BOATMEN'S NATIONAL BANK
                                                  OF ST. LOUIS


                                             By:  Patricia M. Watson         
                                                Title: Vice President


          






                                             CAISSE NATIONALE DE CREDIT
                                                  AGRICOLE


                                             By:  David Bouhl                
                                                Title: First Vice President


                                             CREDIT LYONNAIS CAYMAN ISLAND
                                                  BRANCH


                                             By:  Raymond A. Whiteman        
                                                Title: Vice President


                                             CREDIT LYONNAIS CHICAGO BRANCH


                                             By:  Mary Ann Klemm             
                                                Title: Vice President


                                             DRESDNER BANK AG
                                             Chicago Branch and Grand
                                                  Cayman Branch


                                             By:  E.R. Holder                
                                                Title: Senior Vice President


                                             By:  John H. Schaus             
                                                Title: First Vice President


                                             FIRST AMERICAN NATIONAL
                                                  BANK


                                             By:  Kelli H. Ernst             
                                                Title: Corporate Bank Officer







                                        -177-


          






                                             THE FUJI BANK LIMITED


                                             By:  Peter L. Chinnici          
                                                Title: Joint General Manager


                                             THE INDUSTRIAL BANK OF JAPAN,
                                                  LIMITED


                                             By:  Hiroaki Nakamura           
                                                Title: Joint General Manager



                                             THE LONG-TERM CREDIT BANK
                                                  OF JAPAN, LTD.


                                             By:  Armund J. Schoen           
                                                Title: Vice President and
                                                       Deputy General Manager


                                             MERCANTILE BANK OF ST. LOUIS
                                                  NATIONAL ASSOCIATION


                                             By:  Arnold J. Conrad           
                                                Title: Vice President


                                             NATIONAL CITY BANK


                                             By:  Robert C. Rowe             
                                                Title: Assistant Vice
                                                       President










                                        -178-


          






                                             NATIONAL WESTMINSTER
                                                  BANK USA


                                             By:  Gerard Painter             
                                                Title: Vice President


                                             NBD BANK, N.A.


                                             By:  Robert Lawrence            
                                                Title: Vice President


                                             THE SANWA BANK, LIMITED


                                             By:  Kenneth C. Eichwald        
                                                Title: Vice President &
                                                       Manager


                                             SHAWMUT BANK CONNECTICUT,
                                                  N.A.


                                             By:  Peter F. Samson            
                                                Title: Assistant Vice
                                                       President



















                                        -179-



                                                              SCHEDULE I


                                     COMMITMENTS


                                       Term Loan          Revolving Loan
             Bank                      Commitment           Commitment  

             Bankers Trust Company     19,395,833.32      5,104,166.68

             Credit Lyonnais           19,395,833.32*/     5,104,166.68*/

             Bank of Montreal          17,416,666.67      4,583,333.33

             The Bank of New York      17,416,666.67      4,583,333.33

             The Boatmen's National    17,416,666.67      4,583,333.33
               Bank of St. Louis

             The Industrial Bank       17,416,666.67      4,583,333.33
               of Japan, Limited

             The Long-Term Credit      17,416,666.67      4,583,333.33
               Bank of Japan, LTD

             National City Bank        17,416,666.67      4,583,333.33

             National Westminster      17,416,666.67      4,583,333.33
               Bank USA

             NBD Bank, N.A.            17,416,666.67      4,583,333.33

             Bank of Scotland          11,875,000.00      3,125,000.00

             Banque Paribas            11,875,000.00      3,125,000.00

             Caisse Nationale de       11,875,000.00      3,125,000.00
               Credit Agricole

             Dresdner Bank AG          11,875,000.00      3,125,000.00
               Chicago Branch and
               Grand Cayman Branch

             First American            11,875,000.00      3,125,000.00
               National Bank 



                                 

             */  Evidenced by two promissory notes which shall exist
             contemporaneously; provided, however, that the aggregate
             outstanding principal amount under both such promissory
             notes shall not exceed such amount at any time.

          



                                                              SCHEDULE I
                                                                  Page 2




                                       Term Loan          Revolving Loan
             Bank                      Commitment           Commitment  

             The Fuji Bank Limited     11,875,000.00      3,125,000.00

             Mercantile Bank of        11,875,000.00      3,125,000.00
               St. Louis National
               Association

             The Sanwa Bank, Limited   11,875,000.00      3,125,000.00

             Shawmut Bank
               Connecticut, N.A.       11,875,000.00      3,125,000.00

                                                                        
             Total                     $285,000,000.00    $75,000,000.00


































          



                                                             SCHEDULE II


                                    BANK ADDRESSES


             BANK OF MONTREAL
             115 South LaSalle Street
             Chicago, IL  60603
             Tel:  (312) 750-3888
             Fax:  (312) 750-4304
             Attention:  John Hook


             THE BANK OF NEW YORK
             1 Wall Street
             New York, NY  10286
             Tel:  (212) 635-8448
             Fax:  (212) 635-1208
             Attention:  Natalie Egleston


             BANK OF SCOTLAND
             181 West Madison Street
             Suite 4710
             Chicago, IL  60602
             Tel:  (312) 263-4054
             Fax:  (312) 263-1143
             Attention:  Bruce Robertson


             BANKERS TRUST COMPANY
             130 Liberty Street
             New York, New York  10006
             Tel: (212) 250-2500
             Fax: (212) 250-7200
             Attention:  Mary Kay Coyle


             BANQUE PARIBAS
             787 Seventh Avenue
             32nd Floor
             New York, NY  10019
             Tel:  (212) 841-2000
             Fax:  (212) 841-2333
             Attention:  Tim Deason
                         Ann Pifer






             



                                                             SCHEDULE II
                                                                  Page 2





             THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
             Boatmen's Center
             1 Boatmen's Plaza
             800 Market Street
             14th Floor
             St. Louis, MO  63101
             Tel:  (314) 466-6000
             Fax:  (314) 444-4651
             Attention:  Pat Watson


             CAISSE NATIONALE DE CREDIT AGRICOLE
             55 East Monroe Street
             47th Floor
             Chicago, IL  60603-5702
             Tel:  (312) 917-7440
             Fax:  (312) 372-3724
             Attention:  Roger Weis


             CREDIT LYONNAIS
             Credit Lyonnais Building
             1301 Avenue of the Americas
             New York, NY  10019
             Tel:  (212) 261-7876
             Fax:  (212) 459-3176
             Attention:  Raymond Whiteman


             DRESDNER BANK AG CHICAGO BRANCH AND GRAND CAYMAN BRANCH
             190 South LaSalle Street
             Suite 2700
             Chicago, IL  60603
             Tel:  (312) 444-1300
             Fax:  (312) 444-1305
             Attention:  John Schaus


             FIRST AMERICAN NATIONAL BANK 
             First American Center
             Nashville, TN  37237
             Tel:  (615) 748-2000
             Fax:  (615) 748-6072
             Attention:  Kelli Ernst


             



                                                             SCHEDULE II
                                                                  Page 3





             THE FUJI BANK LIMITED
             225 West Wacker Drive
             Suite 2000
             Chicago, IL  60606
             Tel:  (312) 621-0397
             Fax:  (312) 621-0539
             Attention:  Mark McCracken


             THE INDUSTRIAL BANK OF JAPAN, LIMITED
             227 West Monroe Street
             Suite 2600
             Chicago, IL  60606
             Tel:  (312) 855-8258
             Fax:  (312) 855-8200
             Attention:  Chuck Smith


             THE LONG-TERM CREDIT BANK OF JAPAN, LTD
             190 South LaSalle Street
             Suite 800
             Chicago, IL  60603
             Tel:  (312) 704-5479
             Fax:  (312) 704-8505
             Attention:  Armund Schoen


             MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION
             Mercantile Tower Tram 10-6
             7th & Washington Street
             St. Louis, MO  63101
             Tel:  (314) 425-2049
             Fax:  (314) 425-2162
             Attention:  Elizabeth Vahlkamp


             NATIONAL CITY BANK
             1900 East Ninth Street
             Cleveland, OH  44114
             Tel:  (216) 575-3163
             Fax:  (216) 696-3849
             Attention:  Robert Rowe




             



                                                             SCHEDULE II
                                                                  Page 4




             NATIONAL WESTMINSTER BANK USA
             175 Water Street
             New York, NY  10038
             Tel:  (212) 602-2559
             Fax:  (212) 602-2671
             Attention:  Gerard Painter


             NBD BANK, N.A.
             611 Woodward Avenue
             Mezzanine Level
             National Banking Division
             Detroit, MI  48226
             Tel:  (313) 225-1000
             Fax:  (313) 225-2649
             Attention:  Kurt Price


             THE SANWA BANK, LIMITED
             10 South Wacker Drive
             31st Floor
             Chicago, IL  60606
             Tel:  (312) 368-3000
             Fax:  (312) 346-6677
             Attention:  Jerry Hullinger


             SHAWMUT BANK CONNECTICUT, N.A.
             MSN 203
             777 Main Street
             Hartford, CT  06115
             Tel:  (203) 728-2000
             Fax:  (203) 722-9378
             Attention:  Peter Sampson