AMENDMENT NO. 2 (the  "Amendment")  dated as of August 2, 1999 to
          the Credit Agreement dated as of March 30, 1998 (as the same has been,
          or may hereafter be,  amended,  amended and restated,  supplemented or
          otherwise modified, renewed or replaced from time to time, the "Credit
          Agreement"),  among (i) MMH  HOLDINGS,  INC.,  a Delaware  corporation
          ("Holdings"),   (ii)  MORRIS  MATERIAL  HANDLING,   INC.,  a  Delaware
          corporation  (the  "Company"),  (iii) MORRIS  MATERIAL  HANDLING,  LLC
          (formerly  known  as  Material  Handling,  LLC),  a  Delaware  limited
          liability  company,  (iv) MORRIS MATERIAL  HANDLING  EQUIPMENT LIMITED
          (formerly  known  as  Morris  Material  Handling,   Ltd.),  a  company
          organized  under the laws of England  and Wales,  (v) MONDEL  ULC,  an
          unlimited  liability  company organized under the laws of Nova Scotia,
          (vi)  KAVERIT  STEEL AND CRANE ULC,  an  unlimited  liability  company
          organized  under the laws of Nova Scotia,  (vii) the Banks referred to
          therein,  (viii) the New York branch of CREDIT AGRICOLE  INDOSUEZ,  as
          syndication   agent  for  the  Banks,   (ix)   BANKBOSTON,   N.A.,  as
          documentation  agent for the Banks and (x) CANADIAN  IMPERIAL  BANK OF
          COMMERCE,  as administrative  agent and collateral agent for the Banks
          (in such capacities, the "Administrative Agent").


                             INTRODUCTORY STATEMENT


                  All capitalized  terms not otherwise defined in this Amendment
are used herein as defined in the Credit Agreement.

                  The Company has requested that the Credit Agreement be amended
to modify certain provisions thereof as hereinafter set forth.

                  In consideration of the mutual agreements contained herein and
other good and  valuable  consideration,  the  parties  hereto  hereby  agree as
follows:

                  SECTION 1. Amendment to the Credit  Agreement.  Subject to the
provisions of Section 6 hereof, the Credit Agreement is hereby amended effective
as of the  Effective  Date (such term being used  herein as defined in Section 6
hereof) as follows:
                                       1
<PAGE>

                  (A) The first  paragraph of the Agreement is hereby amended by
deleting the phrase "the lending  institutions listed in Annex I (each, a "Bank"
and, collectively, the "Banks")" and inserting the phrase "the Banks referred to
herein" in lieu thereof.

                  (B) Clause (ii)(b) of the second  WHEREAS clause  appearing on
page 1 of the Agreement is hereby amended in its entirety to read as follows:

               "(b) with respect to the  Acquisition  Term Loans,  either (1) to
          provide  financing  for  acquisitions  and to  pay  related  fees  and
          expenses or (2) to provide  working capital to the Borrowers and their
          Subsidiaries  and for general  corporate  or business  purposes of the
          Borrowers  and  their  Subsidiaries,  in each  case,  on the terms and
          subject to the conditions set forth in this Agreement."

                  (C) The first  paragraph of Section  1.01 of the  Agreement is
hereby amended (i) by inserting the parenthetical  phrase  "(including,  without
limitation, Section 1.12 hereof)" in the second line immediately after the words
"conditions  herein set forth" appearing  therein and (ii) by deleting the words
"in connection  with Designated  Acquisitions"  appearing in clause (ii) of such
paragraph.

                  (D) Section  1.01(b) of the Agreement is hereby amended in its
entirety to read as follows:
                                       2
<PAGE>

               "(b) Subject to the limitations set forth in Section 1.12 hereof,
          Loans  under the  Acquisition  Portion of the Loan  Facility  (each an
          "Acquisition  Term Loan") (i) shall be made to a U.S.  Borrower  after
          the Closing  Date and prior to the  Acquisition  Term Loan  Commitment
          Termination Date; provided, however, that the U.S. Borrowers shall not
          be entitled to request or receive from the Banks,  and the Banks shall
          have no obligation  whatsoever to fund, any Acquisition  Term Loans in
          excess  of  the  Acquisition  Term  Loans  outstanding  prior  to  the
          effective date of Amendment No. 2 in the aggregate principal amount of
          $7,430,082.82   (it  being   understood  that  the  Banks  shall  make
          Acquisition  Term Loans  which are  Sponsor  Loans and which have been
          funded pursuant to, and in accordance with, the Sponsor  Participation
          Agreement); and provided,  further, however, that any Acquisition Term
          Loan to be made on or after  the  effective  date of  Amendment  No. 2
          shall only be made pursuant to the  Additional  Sponsor  Participation
          and in accordance with Section 1.12 hereof,  (ii) shall, at the option
          of the  Applicable  Borrower,  be Base Rate Loans or Reserve  Adjusted
          Eurodollar Loans; provided that all Acquisition Term Loans made by the
          applicable Banks having an Acquisition  Term Loan Commitment  pursuant
          to the same Borrowing shall,  unless otherwise  specifically  provided
          herein,  consist  entirely  of Loans of the same Type  (provided  that
          partial  conversions  are permitted in accordance  with Section 1.06),
          (iii)  shall  not  exceed  for any  Bank at any time  outstanding  the
          Acquisition  Term Loan  Commitment of such Bank at such time, and (iv)
          shall not be made pursuant to a particular  Notice of Borrowing if the
          aggregate principal amount of Acquisition Term Loans then outstanding,
          after giving  effect to the  Acquisition  Term Loan  requested by such
          Notice of  Borrowing,  would  exceed the Total  Acquisition  Term Loan
          Commitment or be contrary to the limitations set forth in Section 1.12
          hereof. Once repaid, Acquisition Term Loans may not be reborrowed."

                  (E) Section  1.01(c) of the Agreement is hereby amended (i) by
inserting  the phrase  "subject  to the  limitations  set forth in Section  1.12
hereof," at the beginning  thereof,  immediately  preceding the word "Loans" and
(ii) by inserting the following new subclause  immediately  preceding  subclause
(y) appearing in clause (v) of such section:

          "(x) the applicable  borrowing  limitations  set forth in Section 1.12
     hereof or"

                  (F) Section  1.01(d) of the Agreement is hereby amended (i) by
inserting  the phrase  "Subject  to the  limitations  set forth in Section  1.12
hereto," at the beginning  thereof,  immediately  preceding the words "Swingline
Loans",  (ii) by inserting the words "or letters of credit or guaranty or bonds"
at the end of the first  clause (ii)  appearing  therein  immediately  after the
words "Reserve  Adjusted  Eurodollar Loans" and (iii) by inserting the following
new  subclause  immediately  preceding  subclause (y) appearing in clause (v) of
such section:

          "(x) the applicable  borrowing  limitations  set forth in Section 1.12
     hereof or"

                  (G) Section  1.01(e) of the Agreement is hereby amended in its
entirety to read as follows:
                                       3
<PAGE>

               "(e) Notice to the Administrative  Agent (which shall give notice
          to all Revolving Facility Banks) (i) may be given on any Business Day,
          (A) in the sole discretion of the U.S.  Swingline Bank with respect to
          the  U.S.  Swingline  Loans,  (B) in the sole  discretion  of the U.K.
          Swingline Bank with respect to the U.K. Swingline Loans and (C) in the
          sole  discretion  of the Canadian  Swingline  Bank with respect to the
          Canadian  Swingline Loans and (ii) shall be deemed to be automatically
          given by each Swingline Bank with respect to all Swingline  Loans upon
          the occurrence of an Event of Default under Section 8.05 (with respect
          to Holdings or the Company or any of its Significant  Subsidiaries) or
          upon  the  exercise  of any  of  the  remedies  provided  in the  last
          paragraph of Section 8, that the Dollar  Equivalent of such  Swingline
          Bank's outstanding Swingline Loans to the Applicable Borrower shall be
          funded with a Borrowing in Dollars of  Revolving  Loans or in the case
          of outstanding U.K. Swingline Letters of Credit, shall be supported by
          the  issuance  of a  Letter  of  Credit  in  Dollars  naming  the U.K.
          Swingline Bank as the beneficiary  thereof in the face amount equal to
          the Dollar Equivalent of the aggregate face amount of such outstanding
          U.K.  Swingline  Letters  of  Credit.  In any such  case,  either  (x)
          Revolving  Loans in Dollars,  for the  benefit of the U.S.  Borrowers,
          constituting  Base Rate  Loans  (each  such  Borrowing,  a  "Mandatory
          Borrowing") shall be made on the immediately  succeeding  Business Day
          by all Revolving  Facility  Banks pro rata based on each Bank's Dollar
          Percentage and the proceeds  thereof shall be applied  directly to the
          Applicable  Swingline  Bank to  repay  such  Swingline  Bank  for such
          outstanding  Swingline  Loans  (other than U.K.  Swingline  Letters of
          Credit) or (y) in the case of U.K.  Swingline  Letters  of Credit,  an
          Issuing  Bank shall issue a Letter of Credit  pursuant to Section 1.13
          hereof naming the U.K. Swingline Bank as beneficiary,  which Letter of
          Credit  shall be in the face  amount  equal  to the  aggregate  Dollar
          Equivalent  of the face  amount  of such  outstanding  U.K.  Swingline
          Letters of Credit.  Any  Swingline  Loan (other than a U.K.  Swingline
          Letter of Credit) that is denominated in a currency other than Dollars
          shall be converted  into Dollars  immediately  upon such notice at the
          Spot Rate. Each Revolving  Facility Bank hereby  irrevocably 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 the
          Applicable  Swingline  Bank and an  Issuing  Bank  agrees to issue the
          aforementioned Letter of Credit upon one (1) Business Day's notice and
          on  the  date  specified  in  writing  by  the  Administrative   Agent
          notwithstanding (i) that the amount of any Mandatory Borrowing may not
          comply with the Minimum Borrowing Amount otherwise  required hereunder
          or in the  case of the  issuance  of the  Letter  of  Credit,  all the
          conditions  in Section  1.13 being  complied  with,  (ii)  whether any
          conditions specified in Section 4 are then satisfied,  (iii) whether a
          Default  or an Event of  Default  then  exists,  (iv) the date of such
          Mandatory Borrowing or issuance of Letter of Credit, as applicable and
          (v) the amount of the Total Revolving Loan Commitment at such time. In
          the event that any Mandatory  Borrowing  cannot be made or a Letter of
          Credit  issued for any  reason 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 any of the
          Borrowers),  then each such Revolving Facility Bank hereby agrees that
          it shall forthwith purchase (as of the date the Mandatory Borrowing or
          issuance of the Letter of Credit would  otherwise have  occurred,  but
          adjusted for the Dollar  Equivalent of any payments  received from the
          Applicable  Borrower (or Borrowers) on or after such date and prior to
          such purchase) from the applicable  Swingline Bank such participations
          in the outstanding Swingline Loans as shall be necessary to cause such
          Revolving  Facility  Banks to share in the Dollar  Equivalent  of such
          Swingline Loans ratably based upon their Dollar  Percentage;  provided
          that (x) all interest  payable on the Swingline  Loans  (including the
          commission  on letters of credit or  guaranty  or bonds  issued by the
          U.K.  Swingline Bank as U.K. Swingline Loans) shall be for the account
          of the  applicable  Swingline  Bank  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  participant  from and after  such date and (y) at the time any
          purchase of participations pursuant to this sentence is actually made,
          the  purchasing  Revolving  Facility Bank shall be required to pay the
          applicable  Swingline  Bank  interest on the  principal  amount of the
          participation  purchased  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,  and at the rate
          otherwise  applicable to Revolving Loans maintained as Base Rate Loans
          hereunder."

                  (H) Section  1.03(a) of the Agreement is hereby amended (i) by
deleting the words "and,  in the case of a Loan under the  Acquisition  Portion,
that all  additional  conditions  under  Section  4.03"  appearing in the sixth,
seventh  and  eighth  lines  thereof  and  (ii) by  adding  the  phrase  ",  the
limitations set forth in Section 1.12 hereof,"  immediately after the words "the
Borrowing Base" in clause (ii) of such Section 1.03(a).

                  (I)  Section  1.03(d) of the  Agreement  is hereby  amended by
inserting  the  following  text after the words "on the date"  appearing  in the
seventh line of such section:

          "or, with respect to U.K.  Swingline Letters of Credit, not later than
     10:00 a.m. (London time) three Business Days prior to the date,"

                  (J) Section  1.08(e) of the Agreement is hereby amended in its
entirety to read as follows:
                                       4
<PAGE>

               "(e)  Notwithstanding  anything to the contrary contained in this
          Agreement,  interest on all Loans shall accrue from and  including the
          date of any  Borrowing  to but  excluding  the  date of any  repayment
          thereof  and shall be  payable  (i)  monthly  in  arrears  on the last
          Business Day of each month,  beginning August 31, 1999 and (ii) on any
          prepayment  (on  the  amount   prepaid),   at  maturity   (whether  by
          acceleration  or  otherwise)  and,  after  such  maturity,  on demand.
          Notwithstanding  the foregoing,  interest payable at the rate provided
          in Section 1.08(d) shall be payable on demand."

                  (K)  Section  1.09  of the  Agreement  is  hereby  amended  by
deleting the words "be a one, two, three,  six or, if available by all the Banks
and only with respect to Dollar Loans, twelve month period" appearing at the end
of the first  paragraph  of such  section and  inserting  the words "be a one or
three month period" in lieu thereof.

                  (L) Section  1.12 of the  Agreement  is hereby  amended in its
entirety to read as follows:

                                       5
<PAGE>
               "1.12.  Amount of Outstanding Loans and Commitments;  Limitations
          on  Outstanding  Loan  Amounts.  (A)  Notwithstanding  anything to the
          contrary  contained  in this  Agreement,  upon  the  effectiveness  of
          Amendment No. 2, (i) the aggregate  principal  amount of outstanding A
          Term Loans shall be $18,375,000  and the Total A Term Loan  Commitment
          shall  be  $18,375,000;   (ii)  the  aggregate   principal  amount  of
          outstanding  B Term Loans  shall be  $34,562,500  and the Total B Term
          Loan Commitment  shall be $34,562,500;  (iii) the aggregate  principal
          amount of outstanding  Acquisition Term Loans shall be  $12,430,082.82
          ($7,430,082.82  of such  Acquisition Term Loans shall have been funded
          by the Banks and $5,000,000 of such  Acquisition Term Loans shall have
          been funded by the Sponsors (in accordance  with, and as  contemplated
          by, the Sponsor  Participation  Agreement)) and the Total  Acquisition
          Term Loan Commitment  shall be $30,000,000 in accordance  with, and as
          provided in, the Sponsor Participation  Agreement;  (iv) the aggregate
          principal   amount   of   outstanding   Revolving   Loans   shall   be
          $25,061,106.42  and the  Total  Revolving  Loan  Commitment  shall  be
          $50,700,000  (including up to $10,000,000  of Letters of Credit);  (v)
          the aggregate  principal  amount of outstanding  U.S.  Swingline Loans
          shall be $3,500,000 and the Total U.S. Swingline Loan Commitment shall
          be  $6,000,000;  (vi) the dollar  equivalent  amount of the  aggregate
          principal amount of outstanding U.K. Swingline Loans (as determined by
          the  Administrative  Agent)  shall be  $868,750.20  and the Total U.K.
          Swingline Loan Commitment shall be $6,000,000; and (vii) the aggregate
          principal amount of outstanding  Canadian  Swingline Loans shall be $0
          and the Total Canadian  Swingline Loan Commitment shall be $3,000,000.
          Notwithstanding  anything to the contrary  contained in this Agreement
          and subject to the  borrowing  limitations  set forth in this  Section
          1.12,  (a) in no event  shall  the sum of  (without  duplication)  the
          aggregate  principal amount of all Term Loans,  Acquisition Term Loans
          and Revolving Loans of any Bank plus such Bank's  participation in the
          Dollar  Equivalent of Letter of Credit Usage,  at any time exceed such
          Bank's portion of the Total Commitment,  (b) in no event shall the sum
          of the aggregate principal amount of all Term Loans,  Acquisition Term
          Loans,  Revolving  Loans and the Dollar  Equivalent of Swingline Loans
          from all Banks plus the Dollar Equivalent of Letter of Credit Usage at
          any time  exceed  the  Total  Commitment,  (c) in no event  shall  the
          aggregate  principal  amount of all Acquisition  Term Loans exceed the
          Total  Acquisition  Term Loan Commitment or the borrowing  limitations
          set forth in this Section  1.12,  (d) in no event shall the  Revolving
          Loans,  the  Dollar  Equivalent  of  Swingline  Loans  and the  Dollar
          Equivalent  of Letter  of Credit  Usage,  after  giving  effect to all
          Revolving Loans, Swingline Loans and Letters of Credit then requested,
          exceed the Total Revolving Loan Commitment,  (e) in no event shall the
          aggregate   principal  amount  of  all  Revolving  Loans,  the  Dollar
          Equivalent of Swingline  Loans and the Dollar  Equivalent of Letter of
          Credit Usage,  after giving effect to all Revolving  Loans,  Swingline
          Loans and Letters of Credit then  requested,  exceed the lesser of the
          Borrowing Base or the applicable  borrowing  limitations  set forth in
          this  Section  1.12,  (f) in no event  shall the  aggregate  principal
          amount  of all  Revolving  Loans  and  the  Dollar  Equivalent  of all
          Swingline Loans (other than U.K.  Swingline  Letters of Credit) exceed
          the borrowing  limitations  set forth in this Section 1.12,  (g) in no
          event shall the sum of the  aggregate  maximum  outstanding  Letter of
          Credit  Usage in respect of the Dollar  Equivalent  of all  Letters of
          Credit plus the aggregate maximum outstanding U.K. Swingline Letter of
          Credit Usage in respect of the Dollar Equivalent of all U.K. Swingline
          Letters of Credit  exceed the  limitations  set forth in this  Section
          1.12 or  elsewhere  in this  Agreement  and (h) in no event  shall the
          aggregate  principal  Dollar  Equivalent of Swingline Loans exceed the
          applicable Maximum Swingline Amount.  Once repaid,  none of the A Term
          Loans,  the B  Term  Loans  or  the  Acquisition  Term  Loans  may  be
          reborrowed.
                                       6
<PAGE>

               (B) The U.S.  Borrowers  hereby  agree that neither of them shall
          request  that the Banks fund  Acquisition  Term Loans,  and neither of
          them shall be entitled to receive any Acquisition Term Loans funded by
          the Banks,  in either case,  in excess of the  Acquisition  Term Loans
          outstanding  prior to the  effective  date of  Amendment  No. 2 in the
          aggregate principal amount of $7,430,082.82. The parties hereto hereby
          agree that, as  contemplated by the Sponsor  Participation  Agreement,
          any additional Acquisition Term Loan that may be requested by the U.S.
          Borrowers to be made pursuant to the Additional Sponsor  Participation
          after the effective date of Amendment No. 2 (it being  understood this
          does not include the $5,000,000 Acquisition Term Loan to be made on or
          prior to the  effective  date of  Amendment  No. 2 and  funded  by the
          Sponsors,  in  accordance  with,  and  as  provided  in,  the  Sponsor
          Participation  Agreement)  (i)  may be  made  by  any of the  Sponsors
          (and/or another participant acceptable to the Administrative Agent and
          the Required  Banks) (it being  understood that the Sponsors shall not
          be obligated to make any such Loans), (ii) must be approved in writing
          by the  Administrative  Agent, the Required Banks and each Sponsor (or
          other  acceptable  participant,  if applicable)  which chooses to fund
          such additional  Acquisition Term Loan and (iii) shall be deemed to be
          a Sponsor Loan when made.

               (C)  Notwithstanding any other provision of this Agreement to the
          contrary,  (i)  the  aggregate  principal  amount  of all  outstanding
          Revolving Loans and the aggregate Dollar Equivalent of all outstanding
          Swingline Loans (other than U.K.  Swingline Letters of Credit) may not
          exceed  $40,700,000  at any time  and  (ii)  the sum of the  aggregate
          maximum  outstanding  Letter of Credit  Usage in respect of the Dollar
          Equivalent  of all  Letters  of  Credit  plus  the  aggregate  maximum
          outstanding  U.K.  Swingline  Letter of Credit Usage in respect of the
          Dollar  Equivalent  of all U.K.  Swingline  Letters  of Credit may not
          exceed $10,000,000 at any time; provided,  however, that the aggregate
          principal  amount of all outstanding  Revolving Loans may be increased
          so that the aggregate  principal  amount of all outstanding  Revolving
          Loans and the aggregate Dollar Equivalent of all outstanding Swingline
          Loans  (other  than  U.K.   Swingline   Letters  of  Credit)   exceeds
          $40,700,000,  solely by an amount  equal to any amount drawn under any
          Letter of Credit or any U.K. Swingline Letter of Credit but, (1) in no
          event may the aggregate principal amount of all outstanding  Revolving
          Loans,  the aggregate Dollar  Equivalent of all outstanding  Swingline
          Loans and the  Dollar  Equivalent  of Letter  of Credit  Usage  exceed
          $50,700,000 at any time and (2) if the aggregate  principal  amount of
          all outstanding Revolving Loans and the aggregate Dollar Equivalent of
          all outstanding  Swingline Loans (other than U.K. Swingline Letters of
          Credit) exceeds $40,700,000 solely because of a drawing under a Letter
          of Credit or a U.K.  Swingline Letter of Credit,  then the $10,000,000
          limit set forth in clause (ii) shall be reduced by such  amount  drawn
          under such Letter of Credit or such U.K. Swingline Letter of Credit."

                  (M) Clause (iv) appearing in Section  1.13(a) of the Agreement
is hereby amended in its entirety to read as follows:

                                       7
<PAGE>
               "(iv) the U.S.  Borrowers shall not request that any Issuing Bank
          issue, and no Issuing Bank shall issue, any Letter of Credit if, after
          giving effect to such issuance and the issuance of all other requested
          Letters of Credit,  the sum of the then  outstanding  Letter of Credit
          Usage in  respect of the Dollar  Equivalent  of all  Letters of Credit
          plus the outstanding U.K.  Swingline Letter of Credit Usage in respect
          of the Dollar  Equivalent of all U.K.  Swingline Letters of Credit (in
          each case, including,  without limitation,  any increase in the amount
          that may become available under any Letter of Credit or U.K. Swingline
          Letter of Credit then  outstanding or being requested  pursuant to the
          terms of such Letter of Credit or U.K.  Swingline Letter of Credit, as
          applicable) would exceed $10,000,000"

                  (N)  Subsections  2 and 3 of Section  1.13(f) of the Agreement
are hereby amended in their entirety to read as follows:

               "(2) The Applicable  Borrower agrees to pay to the Administrative
          Agent for distribution to each Bank having a Revolving Loan Commitment
          in respect of each Letter of Credit outstanding,  such Bank's pro rata
          share of a commission  equal to 3.50% per annum of the maximum  amount
          available from time to time to be drawn under such outstanding Letters
          of Credit,  payable in  arrears  on and  through  the last day of each
          month and  calculated  on the basis of a 360-day  year and the  actual
          number of days elapsed.  Upon the happening and during the continuance
          of an Event of Default  described  in  Section  8.01,  the  commission
          referred to in the preceding sentence shall be 5.50% per annum.

               (3) The Applicable Borrower agrees to pay to each Issuing Bank in
          respect of each Letter of Credit a commission equal to .125% per annum
          of the  maximum  amount  available  at any time to be drawn under such
          Letter of Credit  issued by such Issuing  Bank,  payable in arrears on
          and through the last day of each month and  calculated on the basis of
          a  360-day  year and the  actual  number  of days  elapsed  or, if the
          maximum  amount  available  to be drawn under such Letter of Credit is
          the Dollar  Equivalent of $40,000 or less, $500 per annum,  payable in
          arrears on the last day of each month."

                  (O) The  parenthetical  phrase appearing in the proviso at the
end of Section  1.13(g) of the  Agreement  is hereby  amended in its entirety to
read as follows:

                    "(as  determined by a final judgment of a court of competent
               jurisdiction)."

                  (P) The last paragraph of Section  1.13(i) of the Agreement is
hereby  amended by deleting the words "or out of the  wrongful  dishonor by such
Issuing Bank of a proper  demand for payment  under the Letters of Credit issued
by it" appearing therein and inserting the parenthetical  phrase "(as determined
by a final judgment of a court of competent jurisdiction)" in lieu thereof.

                                       8
<PAGE>
                  (Q) Section  1.14 of the  Agreement  is hereby  amended (i) by
deleting  the  following  parenthetical  phrase  "(or,  with  respect  to Pounds
Sterling loans referred to in paragraph (a), the U.K. Swingline Bank)" appearing
in the first  paragraph  of such  section and (ii) by adding the  following  new
section to the end thereof:

                    "(g) all U.K.  Swingline Loans and Canadian Swingline Loans,
                         plus  all  Letter  of  Credit  Usage  on the day of any
                         requested Borrowing comprised of Revolving Loans and/or
                         U.S. Swingline Loans."

                    (R)  The  following new sections are hereby added at the end
                         of Section 1 of the Agreement:

                                    "1.18.  Reporting  by the  Swingline  Banks.
                           Each of the  Swingline  Banks  hereby  agrees that on
                           each  Business  Day, by no later than 12:00 noon (New
                           York City time),  it shall notify the  Administrative
                           Agent in  writing  of (a) the  aggregate  outstanding
                           principal  amount  of  Swingline  Loans and any other
                           credit  accommodations made by such Swingline Bank to
                           the Borrowers  (including,  without  limitation,  any
                           Swingline Loan or credit  accommodation to be made by
                           the  applicable  Swingline Bank on such Business Day)
                           and  (b)  the  nature  of  any  such   other   credit
                           accommodations.

                                       9
<PAGE>
               1.19.  U.K.  Swingline  Letters  of  Credit.  (a) U.K.  Swingline
          Letters  of  Credit.  Subject  to the  terms  and  conditions  of this
          Agreement and in reliance upon the  representations  and warranties of
          the Borrowers set forth herein and in the other Credit Documents,  the
          U.K.  Borrower may request,  in accordance with the provisions of this
          Section 1.19 that the U.K. Swingline Bank issue U.K. Swingline Letters
          of Credit for the account of the U.K. Borrower;  provided that (i) the
          U.K. Borrower shall not request the U.K. Swingline Bank issue any U.K.
          Swingline Letter of Credit and the U.K. Swingline Bank shall not issue
          any U.K.  Swingline  Letter of Credit,  if after giving effect to such
          issuance the sum of (A) the Dollar Equivalent amount of U.K. Swingline
          Letter  of Credit  Usage on the date of such  issuance,  after  giving
          effect to the issuance of all U.K. Swingline Letters of Credit subject
          to outstanding  requests for issuance,  plus (B) the Dollar Equivalent
          amount of U.K. Swingline Loans (exclusive of U.K. Swingline Letters of
          Credit) then  outstanding,  after  giving  effect to the making of all
          U.K.  Swingline  Loans then requested by all  outstanding but unfunded
          Notices of  Borrowing,  would  exceed the Total  U.K.  Swingline  Loan
          Commitment  then in effect;  (ii) the U.K.  Borrower shall not request
          that the U.K. Swingline Bank issue any U.K. Swingline Letter of Credit
          and the U.K.  Swingline Bank shall not issue any U.K. Swingline Letter
          of Credit if after  giving  effect  to such  issuance,  the sum of the
          amount  described in clause (i) above,  plus the Dollar  Equivalent of
          Letter  of  Credit  Usage on the date of such  issuance  after  giving
          effect to the issuance of all Letters of Credit subject to outstanding
          requests for issuance,  plus the Dollar  Equivalent of Revolving Loans
          and Swingline Loans (other than U.K. Swingline Loans) then outstanding
          after giving effect to the making of all Revolving Loans and Swingline
          Loans (other than U.K.  Swingline  Loans) then requested  would exceed
          (x) the Borrowing Base as shown in the Borrowing Base Certificate that
          was last delivered  pursuant to Section 6.01;  provided such Borrowing
          Base  Certificate was required to be delivered  pursuant to and was in
          compliance with Section 6.01 or was delivered after the Borrowing Base
          Certificate last required to be delivered  pursuant to Section 6.01 or
          (y) the  limitations  set  forth  in  Section  1.12  or (z) the  Total
          Revolving  Loan  Commitment  then in effect;  (iii) the U.K.  Borrower
          shall  not  request  that  the  U.K.  Swingline  Bank  issue  any U.K.
          Swingline  Letter of Credit  which would cause any of the  limitations
          set forth in Section 1.12, Section 1.13 or elsewhere in this Agreement
          to be  violated;  and (iv) in no event shall the U.K.  Swingline  Bank
          issue any U.K.  Swingline  Letter of Credit having an expiration  date
          later than thirty (30) Business  Days prior to the Revolving  Maturity
          Date  (after  giving  effect  to any  possible  renewal  of such  U.K.
          Swingline Letter of Credit).

               Each U.K.  Swingline  Letter of Credit may provide  that the U.K.
          Swingline Bank may (but shall not be required to) pay the  beneficiary
          thereof  upon  the   occurrence   of  an  Event  of  Default  and  the
          acceleration  of the  maturity  of the U.K.  Swingline  Loans  or,  if
          payment is not then due to the beneficiary, provide for the deposit of
          funds in an account to secure payment to the  beneficiary and that any
          funds  so  deposited  shall  be paid to the  beneficiary  of the  U.K.
          Swingline Letter of Credit if conditions to such payment are satisfied
          or returned to the U.K.  Swingline Bank (or, if all Obligations  shall
          have been paid in full, to the U.K. Swingline  Borrower) if no payment
          to the  beneficiary  has been made and the final  date  available  for
          drawings  under the  applicable  U.K.  Swingline  Letter of Credit has
          passed. Each payment or deposit of funds by the U.K. Swingline Bank as
          provided in this  paragraph  shall be treated for all purposes of this
          Agreement as a drawing duly honored by the U.K.  Swingline  Bank under
          the related U.K. Swingline Letter of Credit.

                                       10
<PAGE>
               (b) Request for Issuance.  Whenever the U.K. Borrower desires the
          issuance of a U.K. Swingline Letter of Credit, it shall deliver to the
          U.K.  Swingline  Bank  (with a copy  to the  Administrative  Agent)  a
          request  for  issuance of a U.K.  Swingline  Letter of Credit no later
          than Noon (London time) at least three  Business Days, or such shorter
          period  as  may  be  agreed  to by  the  U.K.  Swingline  Bank  in any
          particular  instance,  in advance of the  proposed  date of  issuance;
          provided  that a U.K.  Swingline  Letter  of Credit  denominated  in a
          currency other than U.S. Dollars,  Canadian Dollars or Pounds Sterling
          will be issued  as soon as  available,  which  may be more than  three
          Business  Days after the request  therefor.  The request for  issuance
          with respect to any U.K.  Swingline Letter of Credit shall specify (i)
          the proposed date of issuance (which shall be a business day in London
          and Chicago) of such U.K.  Swingline  Letter of Credit,  (ii) the face
          amount and currency of such U.K. Swingline Letter of Credit, (iii) the
          expiration date of such U.K.  Swingline  Letter of Credit and (iv) the
          name and address of the beneficiary of such U.K.  Swingline  Letter of
          Credit. Prior to the date of issuance, the U.K. Borrower shall specify
          a precise  description  of the  documents and the verbatim text of any
          certificate to be presented by the beneficiary of such U.K.  Swingline
          Letter of Credit which, if presented by such beneficiary  prior to the
          expiration date of the U.K. Swingline Letter of Credit,  would require
          the U.K.  Swingline  Bank to make  payment  under  the U.K.  Swingline
          Letter of Credit;  provided that the U.K.  Swingline Bank, in its sole
          judgment,  may require changes in any such documents and certificates;
          and provided,  further,  that no U.K. Swingline Letter of Credit shall
          require  payment  against  a  conforming  draft to be made  thereunder
          earlier than Noon in the time zone of the U.K.  Swingline  Bank on the
          Business  Day (which  shall be a business day under the laws of London
          and Chicago)  three  Business  Days  following the Business Day (which
          shall be a  Business  Day under the laws of London and  Chicago)  that
          such draft is presented.  In determining whether to pay under any U.K.
          Swingline  Letter  of  Credit,   the  U.K.  Swingline  Bank  shall  be
          responsible  only to determine  that the  documents  and  certificates
          required to be delivered  under that U.K.  Swingline  Letter of Credit
          have  been  delivered  and that  they  comply  on their  face with the
          requirements of that U.K. Swingline Letter of Credit.

               Following the occurrence of a Default or an Event of Default, the
          U.K.  Swingline  Bank may  require the U.K.  Borrower to deposit  cash
          collateral with the U.K.  Swingline Bank having a value, as determined
          by the U.K. Swingline Bank, equal to 105% of the aggregate face amount
          of all U.K. Swingline Letters of Credit.

                                       11
<PAGE>
               (c)  Payment of Amounts  Drawn  Under U.K.  Swingline  Letters of
          Credit.  In the  event  of any  request  for  drawing  under  any U.K.
          Swingline  Letter  of  Credit  by the  beneficiary  thereof,  the U.K.
          Swingline Bank shall notify the U.K.  Borrower and the  Administrative
          Agent on or before the date on which the U.K.  Swingline  Bank intends
          to honor such drawing,  and the U.K. Borrower shall reimburse the U.K.
          Swingline  Bank on the day on which  such  drawing  is  honored  in an
          amount  in same  day  funds  equal  to the  amount  of and in the same
          currency as such drawing;  provided that,  anything  contained in this
          Agreement  to  the  contrary  notwithstanding,  (i)  unless  the  U.K.
          Borrower  shall  have  notified  the  U.K.   Swingline  Bank  and  the
          Administrative  Agent prior to Noon (London  time) on the Business Day
          of the  date of  such  drawing  that  the  U.K.  Borrower  intends  to
          reimburse the U.K.  Swingline Bank for the amount of such drawing with
          funds  other  than the  proceeds  of U.K.  Swingline  Loans,  the U.K.
          Borrower shall be deemed to have timely given a Notice of Borrowing to
          the  U.K.  Swingline  Bank  requesting  U.K.  Swingline  Loans  on the
          Business Day following the date on which such drawing is honored in an
          amount equal to the Dollar Equivalent amount of such drawing, and (ii)
          the U.K. Swingline Bank shall, on the date of such drawing,  make U.K.
          Swingline  Loans in the amount of such drawing,  the proceeds of which
          shall be applied to reimburse the U.K.  Swingline  Bank for the Dollar
          Equivalent amount of such drawing.

                           (d)      Compensation.

               (i) The U.K.  Borrower  agrees to pay the following  amounts with
          respect to all U.K. Swingline Letters of Credit:

                    (x) with respect to drawings  made under any U.K.  Swingline
               Letter of Credit, interest, payable on demand, on the amount paid
               by the U.K.  Swingline  Bank in respect of each such drawing from
               and  including  the date of the  drawing  through  the date  such
               amount is reimbursed  by the U.K.  Borrower  (including  any such
               reimbursement  out of the proceeds of Swingline Loans pursuant to
               Section  1.19(c)) at a rate which is equal to the  interest  rate
               then  applicable to U.K.  Swingline Loans for the period from the
               date of such  drawing to and  including  the first  Business  Day
               after the date of such drawing and  thereafter at a rate equal to
               2% per annum in excess of the rate of interest  otherwise payable
               under this Agreement for U.K. Swingline Loans during such period;
               provided that amounts reimbursed after 2:00 p.m. (London time) on
               any date shall be deemed to be reimbursed on the next  succeeding
               Business Day;

                    (y) with respect to the  issuance,  amendment or transfer of
               each  U.K.  Swingline  Letter  of Credit  and each  drawing  made
               thereunder, documentary and processing charges in accordance with
               the U.K.  Swingline Bank's standard  schedule for such charges in
               effect at the time of such amendment, transfer or drawing, as the
               case may be.

                                       12
<PAGE>
                    (ii) The U.K.  Borrower agrees to pay to the U.K.  Swingline
               Bank  in  respect  of  each  U.K.   Swingline  Letter  of  Credit
               outstanding  for the sole  account of the U.K.  Swingline  Bank a
               commission  equal  to  3.50%  per  annum  of the  maximum  amount
               available  from time to time to be drawn  under such  outstanding
               U.K.  Swingline  Letters  of  Credit,  payable  in arrears on and
               through the last day of each month and calculated on the basis of
               a 360-day  year and the  actual  number of days  elapsed  or such
               other basis as may be agreed to between the U.K.  Swingline  Bank
               and  the  U.K.  Borrower.  Upon  the  happening  and  during  the
               continuance of an Event of Default, the commission referred to in
               the preceding sentence shall be 5.50% per annum. In addition, the
               U.K. Borrower agrees to pay to the U.K.  Swingline Bank an amount
               equal  to any  costs  incurred  by the U.K.  Swingline  Bank as a
               result of funding any deposit or other reserve or charge required
               by the Bank of England or any other  authority which replaces all
               or any of its functions  and any charge  imposed by the Financial
               Services  Authority or any other  authority which replaces all or
               any of its functions.

                    (e)  Obligations  Absolute.   The  obligation  of  the  U.K.
               Borrower to reimburse the U.K.  Swingline  Bank for drawings made
               under the U.K.  Swingline Letters of Credit issued by it shall be
               unconditional  and  irrevocable  and  shall be paid  strictly  in
               accordance   with  the   terms  of  this   Agreement   under  all
               circumstances  including,   without  limitation,   the  following
               circumstances:

                    (i) any  lack of  validity  or  enforceability  of any  U.K.
               Swingline Letter of Credit;

                    (ii) the  existence of any claim,  setoff,  defense or other
               right  that  the  U.K.  Borrower  or any  Affiliate  of the  U.K.
               Borrower  or any  other  Person  may have at any time  against  a
               beneficiary  or any  transferee of any U.K.  Swingline  Letter of
               Credit (or any persons or entities for whom any such  beneficiary
               or transferee may be acting),  the U.K.  Swingline Bank, any Bank
               or any other Person,  whether in connection  with this Agreement,
               the   transactions   contemplated   herein   or   any   unrelated
               transaction;

                    (iii) any draft,  demand,  certificate or any other document
               presented under any U.K. Swingline 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)  payment  by such U.K.  Swingline  Bank  under any U.K.
               Swingline  Letter of  Credit  against  presentation  of a demand,
               draft or  certificate or other document that does not comply with
               the terms of such U.K. Swingline Letter of Credit;

                                       13
<PAGE>
                    (v) any other  circumstance or happening  whatsoever that is
               similar to any of the foregoing; or

                    (vi) the fact that a Default or Event of Default  shall have
               occurred and be continuing;

               provided,  in each case, that payment by the U.K.  Swingline Bank
          under the applicable  U.K.  Swingline  Letter of Credit shall not have
          constituted  gross  negligence  or  willful  misconduct  of  the  U.K.
          Swingline Bank under the circumstances in question (as determined by a
          final judgment of a court of competent jurisdiction).

               (f) Additional Payments. If by reason of (i) any change after the
          effective date of Amendment No. 2 in applicable law, regulation, rule,
          decree or regulatory  requirement or any change in the  interpretation
          or  application  by any judicial or  regulatory  authority of any law,
          regulation,  rule, decree or regulatory requirement or (ii) compliance
          by the U.K. Swingline Bank with any directive,  request or requirement
          (whether  or not  having  the  force  of law) of any  governmental  or
          monetary authority including, without limitation, Regulation D:

               (x) the U.K.  Swingline  Bank shall be subject to any tax,  levy,
          charge  or  withholding  of any  nature  or to any  variation  thereof
          (except  for  changes in the rate of tax  imposed on the net income or
          net  profits of such Bank or any tax on or  measured by the capital of
          the U.K.  Swingline  Bank or any franchise tax based on the net income
          or net profits of such Bank,  in any case  pursuant to the laws of the
          jurisdiction  in which  its  principal  office or  applicable  lending
          office is located) or to any penalty with  respect to the  maintenance
          or fulfillment  of its  obligations  under this Section 1.19,  whether
          directly or by such being imposed on or suffered by the U.K. Swingline
          Bank;

               (y) any reserve,  deposit or similar  requirement  is or shall be
          applicable,  imposed or  modified  in  respect  of any U.K.  Swingline
          Letter of Credit issued by the U.K. Swingline Bank; or

               (z) there shall be imposed on the U.K.  Swingline  Bank any other
          condition  regarding this Section 1.19 or any U.K. Swingline Letter of
          Credit;

                                       14
<PAGE>
               and the result of the  foregoing  is to  directly  or  indirectly
          increase  the cost to the U.K.  Swingline  Bank of issuing,  making or
          maintaining  any U.K.  Swingline  Letter of  Credit,  or to reduce the
          amount receivable in respect thereof by the U.K.  Swingline Bank, then
          and in any such case the U.K.  Swingline  Bank  shall,  as promptly as
          practical,  but in any event within 90 days, after the U.K.  Swingline
          Bank obtains actual  knowledge that the additional cost is incurred or
          the amount received is reduced,  notify the U.K. Borrower and the U.K.
          Borrower  shall pay on demand such amounts as the U.K.  Swingline Bank
          may specify to be necessary to compensate the U.K.  Swingline Bank for
          such  additional  cost or reduced  receipt,  together with interest on
          such amount from the date demanded  until payment in full thereof at a
          rate per  annum  equal at all  times  to the rate  applicable  to U.K.
          Swingline Loans then in effect;  provided,  however,  that if the U.K.
          Swingline  Bank  fails to give such  notice  within  90 days  after it
          obtains  actual  knowledge of such an event,  the U.K.  Swingline Bank
          shall,  with respect to compensation  payable pursuant to this Section
          1.19(f),  only be entitled to payment  under this Section  1.19(f) for
          such costs or other  amounts  from and after the date 90 days prior to
          the date  that the U.K.  Swingline  Bank  does  give  such  notice.  A
          certificate  in reasonable  detail as to the amount of such  increased
          cost or  reduced  receipt,  submitted  to the  U.K.  Borrower  and the
          Administrative  Agent by the U.K.  Swingline Bank, as the case may be,
          shall, absent manifest error, be final, conclusive and binding for all
          purposes.

               (g)  Indemnification;  Nature of U.K. Swingline Bank's Duties. In
          addition to amounts  payable as  elsewhere  provided  in this  Section
          1.19, without duplication, the U.K. Borrower hereby agrees to protect,
          indemnify,  pay and save the U.K.  Swingline  Bank  harmless  from and
          against any and all claims,  demands,  liabilities,  damages,  losses,
          costs, charges and expenses (including  reasonable attorneys' fees and
          allocated  costs of internal  counsel) which such Bank may incur or be
          subject to as a consequence,  direct or indirect,  of (i) the issuance
          of the U.K.  Swingline  Letters  of Credit or (ii) the  failure of the
          U.K. Swingline Bank to honor a drawing under any U.K. Swingline Letter
          of Credit as a result of any Governmental Act.

                                       15
<PAGE>
                    As between the U.K.  Borrower and the U.K.  Swingline  Bank,
               the U.K. Borrower assumes all risks of the acts and omissions of,
               or misuse of the U.K.  Swingline  Letters of Credit issued by the
               U.K.  Swingline  Bank  at  the  U.K.  Borrower's  request  by the
               respective  beneficiaries  of  such  U.K.  Swingline  Letters  of
               Credit.  In  furtherance  and not in limitation of the foregoing,
               the U.K.  Swingline  Bank shall not be  responsible:  (i) for the
               form,  validity,  sufficiency,  accuracy,  genuineness  or  legal
               effects of any document submitted by any party in connection with
               the application for and issuance of such U.K.  Swingline  Letters
               of  Credit,  even if it should in fact  prove to be in any or all
               respects invalid, insufficient, inaccurate, fraudulent or forged;
               (ii)  for  the  validity  or   sufficiency   of  any   instrument
               transferring or assigning or purporting to transfer or assign any
               such U.K.  Swingline  Letter of Credit or the rights or  benefits
               thereunder  or proceeds  thereof,  in whole or in part,  that may
               prove to be  invalid or  ineffective  for any  reason;  (iii) for
               failure of the beneficiary of any such U.K.  Swingline  Letter of
               Credit to comply fully with conditions  required in order to draw
               upon  such U.K.  Swingline  Letter of  Credit;  (iv) for  errors,
               omissions, interruptions or delays in transmission or delivery of
               any  messages,  by mail,  cable,  telegraph,  telex or otherwise,
               whether   or  not  they  are  in   cipher;   (v)  for  errors  in
               interpretation  of technical terms; (vi) for any loss or delay in
               the  transmission or otherwise of any document  required in order
               to make a drawing under any such U.K.  Swingline Letter of Credit
               or of the proceeds thereof;  (vii) for the  misapplication by the
               beneficiary  of any such U.K.  Swingline  Letter of Credit of the
               proceeds  of any  drawing  under  such U.K.  Swingline  Letter of
               Credit;  and  (viii) for any  consequences  arising  from  causes
               beyond the control of the U.K. Swingline Bank, including, without
               limitation,  any Government Acts. None of the above shall affect,
               impair,  or  prevent  the  vesting  of any of the U.K.  Swingline
               Bank's rights or powers hereunder.

                    In  furtherance  and  extension and not in limitation of the
               specific  provisions  hereinabove set forth,  any action taken or
               omitted by the U.K.  Swingline  Bank in connection  with the U.K.
               Swingline   Letters  of  Credit  issued  by  it  or  the  related
               certificates,  if taken or omitted in good  faith,  shall not put
               the U.K. Swingline Bank under any resulting liability to the U.K.
               Borrower.

                    Notwithstanding  anything to the contrary  contained in this
               Section  1.19,  the U.K.  Borrower  shall have no  obligation  to
               indemnify  the U.K.  Swingline  Bank in respect of any  liability
               incurred by the U.K.  Swingline Bank arising solely out of and to
               the extent of the gross  negligence or willful  misconduct of the
               U.K. Swingline Bank (as determined by a final judgment of a court
               of competent jurisdiction)."

                    (S)  Section  2.01 of the  Agreement  is hereby  amended  by
               inserting the phrase "once the Total  Revolving  Loan  Commitment
               has been reduced to zero,"  immediately  after the number  "(ii)"
               appearing in the ninth line of such section.

                    (T) Section  2.03(a) of the  Agreement is hereby  amended by
               (i) deleting the figure  "1/2%"  appearing in the first  sentence
               thereof and  inserting the figure "3/4%" in lieu thereof and (ii)
               by amending the second  sentence  thereof in its entirety to read
               as follows:

                                       16
<PAGE>
                    "Accrued  Commitment  Commission  shall  be due and  payable
               monthly  in  arrears  on the  last  Business  Day of each  month,
               commencing  with  August  31,  1999  and  on the  Revolving  Loan
               Commitment  Termination  Date, based on the actual number of days
               elapsed over a year of 360 days."

                    (U) The  following new section is hereby added at the end of
               Section 2.03 of the Agreement:

                    "(c) The Company  agrees to pay The First  National  Bank of
               Chicago,  the fees set forth in,  and at the times  required  by,
               that  certain  letter  agreement  dated July 30, 1999 between the
               Company and The First National Bank of Chicago, in respect of the
               U.K. Swingline Loan."

                    (V) The second  sentence of Section 2.04 of the Agreement is
               hereby  amended by inserting the words "which  restriction is not
               able to be cured if violated" immediately after the words "Dollar
               Equivalent amount in this Agreement".

                    (W) The  following new Section is hereby added at the end of
               Section 2:

                    "2.07.  Interest  Adjustments.  If the  provisions  of  this
               Agreement  or any Note  would at any time  require  payment  by a
               Borrower  to a Bank of any  amount of  interest  in excess of the
               maximum  amount then permitted by the law applicable to any Loan,
               the interest payments to that Bank shall be reduced to the extent
               and in such a manner  as is  necessary  in order  that  such Bank
               shall not receive interest in excess of such maximum amount.  If,
               as a result  of the  foregoing,  a Bank  shall  receive  interest
               payments  hereunder  or under a Note in an  amount  less than the
               amount otherwise provided  hereunder,  such deficit  (hereinafter
               called  the  "Interest  Deficit")  will,  to the  fullest  extent
               permitted by applicable law, cumulate and will be carried forward
               (without  interest)  until  the  termination  of this  Agreement.
               Interest  otherwise  payable to a Bank hereunder and under a Note
               for any  subsequent  period  shall be  increased  by the  maximum
               amount  of the  Interest  Deficit  that may be so  added  without
               causing  such Bank to receive  interest  in excess of the maximum
               amount then permitted by the law applicable to the Loans.

                                       17
<PAGE>
                    The amount of any Interest  Deficit relating to a Loan and a
               Note shall be treated as a prepayment  penalty and shall,  to the
               fullest  extent  permitted by applicable  law, be paid in full at
               the time of any  voluntary  prepayment  by the  Borrowers  to the
               Banks  of all the  Loans at that  time  outstanding  pursuant  to
               Section 3.01 hereof.  The amount of any Interest Deficit relating
               to a particular Loan and Note at the time of any complete payment
               of the Loans at that time  outstanding  (other  than a  voluntary
               prepayment  thereof  pursuant to Section  3.01  hereof)  shall be
               canceled and not paid.

                    (X) Clause (iv) of the first sentence of Section 3.01 of the
               Agreement  is  hereby  amended  by  inserting  the  words "or any
               Acquisition  Term  Loans"  immediately  after the words "any Term
               Loans" appearing therein.

                    (Y)  Section  3.01 of the  Agreement  is hereby  amended  by
               adding the following sentence at the end thereof:

                    "Notwithstanding  anything to the contrary contained herein,
               the Sponsor  Loans may not be prepaid  prior to the Sponsor  Loan
               Repayment Date."

                    (Z) Section 3.02(A)(a) of the Agreement is hereby amended by
               adding the following proviso at the end thereof:

                    "provided, however, that prior to the Sponsor Loan Repayment
               Date,  Non-Sponsor  Acquisition  Term  Loans  hereunder  shall be
               prepaid  pursuant to this  Section  3.02(A)(a)  before any of the
               Sponsor Loans are prepaid."

                    (AA) Section  3.02(A)(b) of the Agreement is hereby  amended
               by deleting  "and (ii)"  appearing  in the fifth line thereof and
               inserting the following in lieu thereof:

            ",(iii) the  borrowing  limitations  set forth in  Section  1.12 and
               (iii)"

                    (BB) Section  3.02(A)(f) of the Agreement is hereby  amended
               by deleting the parenthetical phrase "(after giving effect to the
               ability  to  reinvest  any  such Net Cash  Proceeds  pursuant  to
               Section 7.17)" appearing therein.

          (CC) Section  3.02(A)(f) of the Agreement is hereby  amended by adding
               the following proviso at the end thereof:

                    "provided,  however,  that  with  respect  to the  Net  Cash
               Proceeds  received by the Company and/or any of its  Subsidiaries
               from the sale of the Mondel  Brake  Business,  the Company  shall
               apply or cause to be applied  an amount  equal to 50% of such Net
               Cash Proceeds as provided in Section 3.02(B)(d)."

                    (DD) Section  3.02(A)(i) of the Agreement is hereby  amended
               in its entirety to read as follows:

                                       18
<PAGE>
                    "(i)  At  the  Administrative  Agent's  discretion,  on  the
               Business  Day after the date of receipt  thereof  by the  Company
               and/or any of its Subsidiaries,  the Company shall apply or cause
               to be  applied  an  amount  equal  to (x)  100% of any  insurance
               proceeds  other than Net  Proceeds or  insurance  proceeds of the
               type  referred to in clause (y) below (less  reasonably  incurred
               costs to recover)  received less any portion of such proceeds not
               in excess of $3,000,000  attributable  to a casualty,  so long as
               there exists no Event of Default, that is applied or committed to
               be  applied  within a  reasonable  period  of time to  repair  or
               replace  the  damaged  property;   provided  that  any  insurance
               proceeds  received in respect of an  inventory  loss shall not be
               counted towards the $3,000,000 limit and shall not be required to
               be applied as a mandatory  prepayment  pursuant  to this  Section
               3.02(A)(i),  and (y) 100% of any business interruption  insurance
               proceeds  (less  reasonably   incurred  costs  to  recover)  over
               $3,000,000  attributable to a casualty,  in each case as provided
               in Section 3.02(B)(a)."

                    (EE) Section  3.02(A)(j) of the Agreement is hereby  amended
               by  deleting  the  figure  "$10,000,000"  appearing  therein  and
               inserting the figure "$1,000,000" in lieu thereof.

                    (FF) Section  3.02(A)(k) of the Agreement is hereby  amended
               by deleting the figure "75%" appearing  therein and inserting the
               figure "100%" in lieu thereof.

                    (GG) Section  3.02(B)(a) of the Agreement is hereby  amended
               by  adding  the  following  phrase  to  the  beginning   thereof,
               immediately preceding the word "Prepayments":

                    "Subject  to  the  terms  and   provisions  of  the  Sponsor
               Participation Agreement,"

                    (HH) The following new Section is hereby added at the end of
               Section 3.02(B) of the Agreement:

                                       19
<PAGE>
                    "(d)  Subject  to the terms and  provisions  of the  Sponsor
               Participation  Agreement,  prepayments resulting from the sale of
               the Mondel Brake Business to be applied  pursuant to this Section
               3.02(B)(d) shall be applied as follows:  (i) first, on a pro rata
               basis  among  the  A  Term  Loans,  the  B  Term  Loans  and  any
               outstanding  Acquisition  Term Loans as follows:  (x) $712,500 of
               the applicable Net Cash Proceeds shall be applied in the order of
               maturity  to  the  remaining  Scheduled  A Term  Loans  Principal
               Payments, the remaining Scheduled B Term Loans Principal Payments
               and the  remaining  Scheduled  Acquisition  Term  Loan  Principal
               Payments and (y) the balance of the  applicable Net Cash Proceeds
               shall be applied in inverse  order of maturity  to the  remaining
               Scheduled  A  Term  Loans  Principal   Payments,   the  remaining
               Scheduled  B Term  Loans  Principal  Payments  and the  remaining
               Scheduled Acquisition Term Loan Principal Payments; provided that
               each holder of B Term Loans may,  upon  reasonable  notice to the
               Borrowers  and  the  Administrative   Agent,   decline  any  such
               prepayment,  in which  case such  prepayment  shall be applied to
               Scheduled  A  Term  Loans   Principal   Payments  and   Scheduled
               Acquisition  Term Loan  Principal  Payments  as  aforesaid;  (ii)
               second,  as  provided  in  clauses  (ii)  and  (iii)  of  Section
               3.02(B)(a)  above.  Amounts  applied  pursuant  to  this  Section
               3.02(B)(d) may not be reborrowed."

                    (II) Section  3.05(a) of the Agreement is hereby  amended by
               (i)  inserting the words "and U.K.  Swingline  Letters of Credit"
               immediately  after the words "Letters of Credit" appearing in the
               fourth and fifth  lines of such  section and (ii)  inserting  the
               words "U.S.  Swingline  Loans,"  immediately  preceding the words
               "U.K. Swingline Loans" in clause (ii) of such section.

                    (JJ) Section  3.05(b) of the Agreement is hereby  amended in
               its entirety to read as follows:

                                       20
<PAGE>
                    "(b) Subject to Section 1.10(f),  if on any Computation Date
               the  Administrative  Agent  shall  have  determined  that (i) the
               aggregate  outstanding  Revolving Loans and the Dollar Equivalent
               amount of the  Swingline  Loans and Letter of Credit Usage exceed
               the lesser of (x) the Total  Revolving Loan  Commitment,  (y) the
               borrowing  limitations  set  forth  in  Section  1.12 and (z) the
               Borrowing  Base as shown in the Borrowing Base  Certificate  that
               was last  delivered  pursuant  to  Section  6.01,  provided  such
               Borrowing Base Certificate was required to be delivered  pursuant
               to and was in compliance with Section 6.01 or was delivered after
               the  Borrowing  Base  Certificate  last  required to be delivered
               pursuant to Section  6.01,  (ii) the aggregate  outstanding  U.K.
               Swingline Loans exceed the applicable  Maximum  Swingline Amount,
               (iii) the aggregate  outstanding  Canadian Swingline Loans exceed
               the  applicable  Maximum  Swingline  Amount,  (iv) the  aggregate
               outstanding  Revolving Loans and the Dollar  Equivalent amount of
               Swingline  Loans  (other than U.K.  Swingline  Letters of Credit)
               exceed the  limitations set forth in Section 1.12, or (v) the sum
               of the Dollar  Equivalent  amount of Letter of Credit  Usage plus
               the Dollar Equivalent  amount of U.K.  Swingline Letter of Credit
               Usage exceeds  $10,000,000,  in each such case due to a change in
               applicable  rates of exchange  between U.S.  Dollars,  on the one
               hand,  and  Pounds  Sterling  or  Canadian  Dollars  or any other
               applicable  currency,  on the other hand, then the Administrative
               Agent  shall  give  notice  to the  Applicable  Borrowers  that a
               prepayment  of  Revolving  Loans (or, if no  Revolving  Loans are
               outstanding,  payment of  unreimbursed  drawings under Letters of
               Credit or, if none thereof, cash collateralization of outstanding
               Letters  of  Credit),   U.K.   Swingline  Loans  (or  payment  of
               unreimbursed  drawings under U.K.  Swingline Letters of Credit or
               if none, cash  collateralization  of outstanding  U.K.  Swingline
               Letters of Credit) or  Canadian  Swingline  Loans is  required or
               that  certain  outstanding  Letters  of Credit or U.K.  Swingline
               Letters of Credit  must be cash  collateralized,  as the case may
               be, under this subsection,  and the Applicable Borrowers agree if
               such excess shall not have been prepaid or such Letters of Credit
               or U.K.  Swingline Letters of Credit cash  collateralized (as the
               case may be) within five (5)  Business  Days of such notice or if
               within five (5) Business Days such excess has not been eliminated
               by  changes  in  currency  exchange  rates,  then the  Applicable
               Borrowers  shall make  prepayments  (by such  repayment of Loans,
               payment of unreimbursed  drawings or cash  collateralization)  or
               shall  cash  collateralize  Letters  of Credit or U.K.  Swingline
               Letters  of  Credit  such  that,  after  giving  effect  to  such
               prepayment or payment, cash  collateralization  and/or changes in
               currency exchange rates, (i) the aggregate  outstanding Revolving
               Loans and the Dollar Equivalent amount of the Swingline Loans and
               Letter of Credit  Usage do not exceed the lesser of (x) the Total
               Revolving Loan  Commitments  then  available  pursuant to Section
               1.01(d), (y) the borrowing  limitations set forth in Section 1.12
               or  (z)  the  Borrowing  Base  as  shown  in the  Borrowing  Base
               Certificate  that was last  delivered  pursuant to Section  6.01;
               provided  such  Borrowing  Base  Certificate  was  required to be
               delivered  pursuant to and was in compliance with Section 6.01 or
               was delivered after the Borrowing Base  Certificate last required
               to be  delivered  pursuant  to  Section  6.01,  (ii)  the  Dollar
               Equivalent amount of aggregate  outstanding U.K.  Swingline Loans
               and Canadian Swingline Loans do not exceed the applicable Maximum
               Swingline Amount, (iii) the aggregate outstanding Revolving Loans
               and the Dollar  Equivalent  amount of Swingline Loans (other than
               U.K.  Swingline  Letters of Credit) do not exceed the limitations
               set  forth  in  Section  1.12,  and  (iv)  the sum of the  Dollar
               Equivalent  amount  of Letter of  Credit  Usage  plus the  Dollar
               Equivalent  amount of U.K.  Swingline Letter of Credit Usage that
               is not cash collateralized does not exceed $10,000,000."

               (KK) Section  4.02(c)(i)  of the  Agreement is hereby  amended by
          deleting the date "October 31, 1997"  appearing  therein and inserting
          the date "April 30, 1999" in lieu thereof.

               (LL)  Section 4.02 of the  Agreement is hereby  amended by adding
          the  following  new section  immediately  after  section (g) appearing
          therein:

          "(h) Borrowing  Certificate.   The  Administrative  Agent  shall  have
               received a Notice of Borrowing."

               (MM)  Section  4.03 of the  Agreement  is hereby  deleted  in its
          entirety.

                                       21
<PAGE>
          (NN) The following new section is hereby added at the end of Section 4
               of the Agreement:

               "4.05.  Conditions  Precedent  to All U.K.  Swingline  Letters of
          Credit.  The right of the U.K.  Borrower to obtain the issuance of any
          U.K.  Swingline  Letter  of  Credit  from the U.K.  Swingline  Bank is
          subject to prior or  concurrent  satisfaction  of all of the following
          conditions:

               (A) Required  Documentation.  On or prior to the date of issuance
          of a U.K.  Swingline Letter of Credit, the U.K. Swingline Bank and the
          Administrative  Agent  shall have  received,  in  accordance  with the
          provisions  of Section  1.19, a request for  issuance  with respect to
          such  U.K.  Swingline  Letter of Credit  (the  furnishing  by the U.K.
          Borrower  of each  such  request  for  issuance  shall  be  deemed  to
          constitute a representation  and warranty of the U.K.  Borrower to the
          effect that the  conditions  set forth in 4.02 are satisfied as of the
          date  of  delivery  and  will be  satisfied  on the  relevant  date of
          issuance),  all other information  specified in Section 1.19, and such
          other documents as the U.K.  Swingline Bank may reasonably  require in
          connection with the issuance of such U.K. Swingline Letter of Credit.

               (B)  Conditions.  On the date of issuance of each U.K.  Swingline
          Letter of Credit, all conditions  precedent  described in Section 4.02
          shall be  satisfied  to the same extent as though the issuance of such
          Letter of Credit were the making of a Revolving Loan."

               (OO)  Section  5.05 of the  Agreement  is hereby  amended  in its
          entirety to read as follows:

               "5.05. Use of Proceeds.  (a) The proceeds of all A Term Loans and
          B Term Loans to be made to the Company  hereunder shall be utilized by
          the Company to finance the  Recapitalization  and to pay related  fees
          and expenses.

               (b) Proceeds of the  Revolving  Loans,  proceeds of the Swingline
          Loans and the proceeds of the Acquisition  Term Loans made on or after
          the  effective  date of Amendment No. 2, shall be utilized for working
          capital  and other  general  corporate  purposes  (including,  without
          limitation, to finance Acquisitions to the extent permitted by Section
          7.22 hereof).

                                       22
<PAGE>
               (c) The  proceeds of all  Acquisition  Term Loans made  hereunder
          prior to the  effective  date of Amendment No. 2 have been utilized to
          provide the  financing  required to  consummate  acquisitions,  to pay
          related fees and expenses and to pay Indebtedness permitted by Section
          7.04(i),  all in  accordance  with the  terms and  provisions  of this
          Agreement as in effect prior to the effective date of Amendment No. 2.

               (d) Neither the making of any Loan hereunder,  nor the use of the
          proceeds thereof,  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."

               (PP) The last sentence of the last  paragraph of Section  5.11(b)
          of the  Agreement is hereby  amended by deleting the date "October 31,
          1997"  appearing  therein and  inserting  the date "April 30, 1999" in
          lieu thereof.

               (QQ) Section  5.11(c) of the  Agreement is hereby  amended in its
          entirety to read as follows:

               "(c) On May 25,  1999,  the  Company  delivered  to the Banks pro
          forma  consolidated   income  projections  for  the  Company  and  its
          Subsidiaries, pro forma consolidated balance sheet projections for the
          Company  and its  Subsidiaries  and pro forma  consolidated  cash flow
          projections for the Company and its  Subsidiaries,  all for the fiscal
          years ending October 31, 1999 through October 31, 2002, inclusive (the
          "Projected Financial  Statements").  The assumptions made in preparing
          the Projected  Financial  Statements  are reasonable as of the date of
          such  projections  and as of the effective date of Amendment No. 2 and
          all  material  assumptions  with  respect to the  Projected  Financial
          Statements  are set forth  therein,  it being  recognized by the Banks
          that  such  projections  as to future  events  are not to be viewed as
          facts and that actual results during the period or periods  covered by
          any such projections may differ from the projected results."

               (RR) The  following  new  section  is hereby  added at the end of
          Section 5 of the Agreement:

               "5.25. Bank Accounts.  Attached hereto as Schedule 5.25 is a true
          and  complete  list of each bank  account  maintained  by the  Company
          and/or any of its Subsidiaries and the balance (if any) required to be
          maintained   in  each  such  account  by  the   applicable   financial
          institution where such account is located."

                                       23
<PAGE>
               (SS) The initial  paragraph of each of Section 6 and Section 7 of
          the Agreement are hereby amended by adding the following at the end of
          each thereof immediately preceding the colon appearing therein:

               "and all  Letters  of Credit  and all U.K.  Swingline  Letters of
          Credit   have   expired  or  been   terminated,   cancelled   or  cash
          collateralized  in an amount  equal to 105% of the face amount of such
          Letters of Credit and U.K. Swingline Letters of Credit"

               (TT)  Section  6.01(l)  of the  Agreement  is hereby  amended  by
          deleting the last sentence appearing therein.

               (UU)  Section  6.01(m)  of the  Agreement  is hereby  amended  by
          deleting in its entirety the proviso appearing therein.

               (VV)  Section 6.01 of the  Agreement is hereby  amended by adding
          the following new sections to the end thereof:

               "(n) Within twenty (20) Business Days after the last Business Day
          of each month, (i) for each bank account  maintained by the Company or
          any of its Subsidiaries that has either average monthly receipts or an
          average  monthly  balance  of  $100,000  or more  (each  a  "Specified
          Account"),  a copy of the summary  page  (which  shows the opening and
          closing  balances in such account)  from the most  recently  available
          monthly bank  statement for such account and (ii) a  certificate  from
          the Vice President of Finance,  the Treasurer or the Controller of the
          Company  certifying that attached  thereto is a true and complete list
          of all  Specified  Accounts  maintained  by the  Company or any of its
          Subsidiaries.

               (o) on  Thursday of each week  (commencing  August 19,  1999),  a
          statement  of total cash  receipts and total cash  disbursements  on a
          country  by  country  basis  for the  prior  week,  together  with (A)
          comparisons  to the  amounts  set forth in the  Company's  most recent
          projections  for such week and (B) projections for the following eight
          (8) weeks, including without limitation anticipated payments of Loans,
          if any, during such period."

               (WW) The first  sentence of Section  6.03(b) of the  Agreement is
          hereby  amended by  deleting  the words "to the extent that such types
          and such amounts of insurance are available at commercially reasonable
          rates" appearing therein.

               (XX)  Section  6.13 of the  Agreement  is hereby  amended  in its
          entirety to read as follows:

                                       24
<PAGE>
               "From time to time, at the request of the Administrative Agent or
          the Required Banks, the Company will  participate,  and will cause its
          chief financial  officer to be available for and to participate,  in a
          meeting  with  the  Agents  and the  Banks  to be  held at  reasonable
          intervals at locations and times requested by the Administrative Agent
          and reasonably satisfactory to the Borrowers."

               (YY)  Section  6.14 of the  Agreement  is hereby  amended  in its
          entirety to read as follows:

                                       25
<PAGE>
               "6.14. Pledge of Additional Collateral. Subject to the exceptions
          set forth in Section 6.12(b),  unless the Administrative  Agent in its
          reasonable  discretion  consents  to  any  Additional  Collateral  (as
          hereinafter  defined)  being  excluded  from  the  provisions  of this
          Section 6.14,  within 30 days after the  acquisition by the Company or
          any of its Subsidiaries of (i) Real Property in the United States, the
          United  Kingdom or Canada;  provided that for purposes of this Section
          6.14,  leased Real  Property  shall only be included if  manufacturing
          operations take place on such leased Real Property, (ii) assets (other
          than the  Real  Property)  of the type  that  would  have  constituted
          Collateral  (pursuant to any Security  Document on the Closing Date or
          Effective  Date, as  applicable)  at the Closing Date or the Effective
          Date (this clause (ii) shall include, without limitation,  such assets
          of any  Subsidiary  described in clause (iii) below) or (iii)  capital
          stock  or  other  equity  interest  of any  Subsidiary  (other  than a
          Subsidiary of a Non-Guarantor  Subsidiary),  which shall be limited to
          65% of the  capital  stock or other  equity  interest in the case of a
          Foreign  Subsidiary  that is not a  pass-through  entity and where the
          pledge  would have the effects  set forth in clause  (a)(i) or (ii) of
          the  definition  of  Non-Guarantor   Subsidiary  (whether  by  capital
          contribution or acquisition)  (collectively,  (i), (ii) and (iii); the
          "Additional Collateral"), the Company will, and will cause each of its
          Subsidiaries  to,  take  all  necessary  action,  including,   without
          limitation,  the filing of appropriate  financing statements under the
          provisions  of the UCC,  applicable  foreign,  domestic or local laws,
          rules or  regulations  in each of the  offices  where  such  filing is
          necessary or appropriate, entering into or amending Security Documents
          or, in the case where the Company or any of its  Subsidiaries  creates
          or  acquires  a  Subsidiary,  entering  into  such  additional  pledge
          agreements and security agreements in form and substance  satisfactory
          to the Collateral  Agent (and, in the case of the  acquisition of Real
          Property  in  the  United  States,   the  United  Kingdom  or  Canada,
          satisfaction  of the  conditions  set forth in  Sections  4.01(b)(iv),
          4.01(q) and 4.01(u)  and, in the case of the  acquisition  of personal
          property,  satisfaction  of  the  conditions  set  forth  in  Sections
          4.01(b)(iv)  (upon the request of the Collateral  Agent) and 4.01(n)),
          to grant to the  Collateral  Agent a perfected  first priority Lien in
          such  Collateral  subject to no other Liens other than Prior Liens and
          other Liens expressly  permitted by the applicable  Security  Document
          pursuant to and to the full extent required by the Security  Documents
          and this Agreement.  Notwithstanding the foregoing,  (i) Non-Guarantor
          Subsidiaries  and  (ii)  Foreign   Subsidiaries  to  the  extent  that
          Additional  Collateral  of such  Foreign  Subsidiaries  consisting  of
          inventory and  receivables is not permitted to be pledged to the Banks
          by Indebtedness  incurred  pursuant to Section  7.04(f),  shall not be
          required to comply with the provisions of the foregoing sentence.  The
          Borrowers  shall  use  their  reasonable  best  efforts  to limit  the
          collateral that Foreign Subsidiaries acquired after the Effective Date
          shall  provide  to  lenders  providing  the  facilities  permitted  by
          Sections  7.04(f) and  7.04(g).  All  actions  taken by the parties in
          connection  with  the  pledge  of  Additional  Collateral,  including,
          without limitation,  costs of counsel for the Agents or the Collateral
          Agent, shall be for the account of the Borrowers,  which shall pay all
          sums due on demand."

          (ZZ) The heading of Section 6.15 of the Agreement is hereby amended in
     its entirety to read as follows:

                 "6.15. Security Interests. Further Assurances."

               (AAA) The  following  paragraphs  are hereby  added at the end of
          Section 6.15 of the Agreement:

               "Upon the request of the Administrative  Agent, the Company will,
          and will cause its Subsidiaries to, duly execute and deliver, or cause
          to be duly  executed  and  delivered,  at the cost and  expense of the
          Borrowers,  such further instruments and documents as may be necessary
          in the reasonable  judgment of the  Administrative  Agent to carry out
          the  provisions  and purposes of this  Agreement  and the other Credit
          Documents  including,  without  limitation,  documentation  to  effect
          further cash management  arrangements  requested by the Administrative
          Agent.

               The Company will, and will cause its  Subsidiaries  to,  promptly
          undertake to deliver or cause to be  delivered  to the  Administrative
          Agent   from  time  to  time  such  other   documentation,   consents,
          authorizations   and  approvals  in  form  and  substance   reasonably
          satisfactory to the Administrative  Agent, as the Administrative Agent
          shall deem  reasonably  necessary  or advisable to perfect or maintain
          the Liens of the Agent for the benefit of the Banks."

               (BBB)  Section  6.18 of the  Agreement  is hereby  deleted in its
          entirety.

                                       26
<PAGE>
               (CCC)Section  6.20 of the  Agreement is hereby  amended by adding
          the following new sections at the end thereof:

               "(d)  The  Company   shall,   and  shall  cause  its   applicable
          Subsidiaries to, implement a cash management  system acceptable to the
          Administrative Agent no later than September 10, 1999; and

               (e) No later than  September  10,  1999,  the Company  shall have
          delivered   to  the   Administrative   Agent  (i)  a  fully   executed
          Contribution  Agreement,  (ii) fully executed amendments to certain of
          the Credit Documents, (iii) such documents and instruments, all as the
          Administrative Agent or its counsel shall reasonably request, in order
          to grant, maintain,  perfect or confirm the security interests granted
          to the  Administrative  Agent  pursuant to the Credit  Documents or to
          carry out the provisions  and purposes of any of the Credit  Documents
          and (iv) evidence  (satisfactory to the  Administrative  Agent) of the
          release of the  charge  granted by Morris  Material  Handling  Limited
          (formerly known as Morris  Mechanical  Handling  Limited)  ("MMHL") in
          favor of ABN-AMRO  BANK,  N.V. with respect to MMHL's bank accounts at
          ABN-AMRO BANK, N.V."

               (DDD)  Section  7.01 of the  Agreement  is hereby  amended in its
          entirety to read as follows:

               "7.01.  Conduct of  Business.  The Company will not, and will not
          permit any of its  Subsidiaries  to, engage in any business other than
          the business  conducted by the Company and its  Subsidiaries  prior to
          the Closing  Date,  the MHE Business and any  businesses or activities
          substantially  similar  thereto.  Holdings  will  not  engage  in  any
          business  other than  holding the capital  stock of its  Subsidiaries;
          provided  that  Holdings  may hold the capital  stock of  Subsidiaries
          which may engage in other  businesses so long as (i) management of the
          Company and its Subsidiaries  continues to devote substantially all of
          its time to the affairs of the Company and its  Subsidiaries,  (ii) no
          resources of the Company and its Subsidiaries are utilized in any such
          business,  except for  Dividends  permitted  by Section 7.08 and (iii)
          Holdings may not provide credit support for any such Subsidiary except
          for a limited  guarantee to the extent of the fair market value of the
          shares  of such  Subsidiary  and  supported  solely by a pledge of the
          shares of such Subsidiary."

               (EEE)  Section  7.03(c)  of the  Agreement  is hereby  amended by
          deleting the figure  "$5,000,000"  appearing therein and inserting the
          figure "$1,000,000" in lieu thereof.

                                       27
<PAGE>
               (FFF)  Section  7.03(p)  of the  Agreement  is hereby  amended by
          deleting the figure "$12,500,000"  appearing therein and inserting the
          figure "$2,500,000" in lieu thereof.

               (GGG)Section  7.03 of the  Agreement is hereby  amended by adding
          the following new clause to the end thereof:

               "(q) Liens not otherwise  permitted by the foregoing  clauses (a)
          through  (o),  granted  to  Persons  (who  are not  Affiliates  of the
          Company)  to  secure  the  obligations  of the  Company  or any of its
          Subsidiaries   under  any  contract  pursuant  to  which  such  Person
          receiving  the Lien has or will be  making  progress  payments  to the
          Company or any of its Subsidiaries  provided,  that the aggregate fair
          market  value of assets  subject to Liens  permitted  by this  Section
          7.03(q) may not exceed $10,000,000 at any time."

               (HHH) Section  7.04(g) is hereby  amended in its entirety to read
               as follows:

               "(g) up to $11,000,000 aggregate principal amount of Indebtedness
          at any  one  time  outstanding  of  the  Company's  Subsidiaries,  the
          jurisdiction of  incorporation,  organization or formation of which is
          located in Mexico, Singapore, South Africa or Australia; provided that
          the amount of  Indebtedness  in each such country shall not exceed the
          following:  (i) $2,000,000  aggregate principal amount at any one time
          outstanding in Mexico;  (ii) $2,000,000  aggregate principal amount at
          any one time  outstanding  in Singapore;  (iii)  $2,000,000  aggregate
          principal  amount at any one time outstanding in South Africa and (iv)
          $5,000,000  aggregate  principal amount at any one time outstanding in
          Australia."

               (III)  Section  7.04(e)  of the  Agreement  is hereby  amended by
          deleting  the  figure   "$5,000,000"   and  by  inserting  the  figure
          "$1,000,000" in lieu thereof.

               (JJJ) Section  7.04(f) of the Agreement is hereby  amended in its
          entirety to read as follows:

               "(f)  Indebtedness  of Foreign  Subsidiaries  incurred to provide
          working capital for Designated Acquisitions in an amount not to exceed
          $15,000,000 aggregate principal amount outstanding at any time;"

                  (KKK) Section  7.04(i) of the  Agreement is hereby  amended by
deleting the words "a Designated  Acquisition"  appearing  therein and inserting
the words "an  Acquisition  permitted  to be made  pursuant to the terms of this
Agreement" in lieu thereof.

                                       28
<PAGE>
                  (LLL) Section  7.04(k) of the  Agreement is hereby  amended by
deleting the figure  "$12,500,000"  appearing  therein and  inserting the figure
"$2,500,000" in lieu thereof.

                  (MMM) Section 7.05 of the  Agreement is hereby  amended in its
entirety to read as follows:

               "7.05. Capital  Expenditures.  The Company will not, and will not
          permit  any  of  its  Subsidiaries  to,  make   Consolidated   Capital
          Expenditures  in any  fiscal  year for any  purpose  in  excess of the
          amounts  set  forth  below  for  such  fiscal  year   provided,   that
          Consolidated  Capital  Expenditures  for the fiscal year ended October
          31, 1998 shall only be for the period  beginning  on the Closing  Date
          and ending on October 31, 1998:
                                                          Amount
                           Fiscal Year ending          in Millions

                           October 31, 1998 ............... $7.5
                           October 31, 1999 ...............  9.0
                           October 31, 2000 ................ 6.0
                           October 31, 2001 ................ 7.5
                           October 31, 2002 ................ 9.0
                           October 31, 2003 ................ 9.0
                           October 31, 2004 ................ 9.0

               In  addition,  the amount of  Consolidated  Capital  Expenditures
          permitted  by this Section 7.05 for any fiscal year shall be increased
          for such year only by an amount  equal to 75% of the excess of (x) the
          permitted   Consolidated  Capital  Expenditures  for  the  immediately
          preceding  fiscal year in accordance  with the  foregoing  chart (i.e.
          without  giving effect to the provisions of this  paragraph)  over (y)
          the amount of Consolidated Capital Expenditures  actually made in such
          immediately preceding fiscal year."

                  (NNN) Section  7.06(j) of the  Agreement is hereby  amended in
its entirety to read as follows:

               "(j)  investments  which the  Company  and its  Subsidiaries  are
          contractually  committed to make pursuant to contracts in existence on
          the effective date of Amendment No. 2 as set forth on Schedule 7.06(j)
          hereto;"


                  (OOO) Section  7.06(m) of the  Agreement is hereby  amended in
its entirety to read as follows:

                                       29
<PAGE>
                    "(m)  additional  loans,  advances  and/or  investments of a
               nature not contemplated by the foregoing  clauses (a) through (l)
               and (n)  through  (p);  provided  that all  loans,  advances  and
               investments  made in any fiscal year  pursuant to this clause (m)
               shall not exceed  $1,000,000 in the  aggregate and  $4,000,000 in
               the aggregate  during the term of this  Agreement for the Company
               and its Subsidiaries;"

                    (PPP) Section  7.06(o) of the Agreement is hereby amended in
               its entirety to read as follows:

               "(o) Designated  Acquisitions and any Acquisition permitted under
                    the terms of this Agreement; and"

                    (QQQ) Clause (a) of Section 7.07 of the  Agreement is hereby
               amended by deleting the phrase "of the type  described in Section
               7.04(b), (c), (d)" appearing therein and inserting the phrase "of
               the type  described in Section  7.04(b),  (c),  (d), (h)" in lieu
               thereof.

                    (RRR) Clause (b) of Section 7.07 of the  Agreement is hereby
               amended by  deleting  the words  "that  Indebtedness  of the type
               described in Section 7.04(i) may be prepaid with Acquisition Term
               Loans in accordance with Section 4.03 and" appearing therein.

               (SSS)Clause  (vi) of  Section  7.08 of the  Agreement  is  hereby
                    amended in its entirety to read as follows:

                    "(vi) so long as no Default  or Event of Default  shall have
               occurred and be  continuing or would result  therefrom,  from and
               after the fifth  anniversary of the Closing Date, the Company may
               pay Dividends to Holdings in order to permit Holdings to pay cash
               dividends on the Preferred Stock."

                    (TTT)Clause  (i) of Section 7.09 of the  Agreement is hereby
               amended in its entirety to read as follows:

                    "(i)  transactions  between  or  among  Credit  Parties  and
               Intercompany Advances;"

                    (UUU)Section  7.09 of the  Agreement  is hereby  amended  by
               adding the following new clause at the end thereof:

                                       30
<PAGE>
                    "and (ix) any transaction  between or among any Credit Party
               and any  Subsidiary  of the  Company  that is not a Credit  Party
               which transaction (A) is consented to by the Administrative Agent
               in its  reasonable  discretion or (B) does not involve  aggregate
               consideration  in excess of $250,000 for any one  transaction  or
               does not involve aggregate  consideration which when added to the
               aggregate  consideration  involved in all other transactions that
               have  been   permitted  by  this   subclause  (B)  in  excess  of
               $2,500,000."

                    (VVV)Clause  (v) of Section 7.09 of the  Agreement is hereby
               amended in its entirety to read as follows:

                    "(v)  payments to Chartwell  (x)  pursuant to the  Chartwell
               Financial  Advisory  Agreement  on the  Closing  Date and (y) for
               management   services   pursuant  to  the  Chartwell   Management
               Consulting  Agreement not to exceed  $500,000 in cash on or about
               each of  April 1 and  October  1 of each  year,  plus  reasonable
               expenses; provided, in the case of (y), that (A) 50% of such fees
               due on each such date shall be deferred by Chartwell pursuant to,
               and in accordance with, the Sponsor Participation Agreement until
               the Sponsor Loan  Repayment  Date and (B) 100% of such fees shall
               accrue and shall not be paid by the Company at any time after the
               occurrence  and  during  the  continuance  of an Event of Default
               pursuant  to  Section  8.01 until such Event of Default is cured,
               whereupon (1) if it is prior to the Sponsor Loan Repayment  Date,
               50% of such  accrued and unpaid fees may be paid and (2) if it is
               on or after the Sponsor Loan Repayment Date, 100% of such accrued
               and unpaid fees may be paid;"

                    (WWW) Section 7.10 of the Agreement is hereby amended in its
               entirety to read as follows:

                    "7.10.  Total  Interest  Coverage  Ratio.  The  ratio of (i)
               Consolidated  EBITDA for the Company and its Subsidiaries to (ii)
               Consolidated   Interest   Expense   for  the   Company   and  its
               Subsidiaries,   minus  any  Sponsor  Loan  Interest,   minus  the
               aggregate  amount of new Sponsor Loans actually funded in cash by
               the Sponsors  pursuant to, and in  accordance  with,  the Sponsor
               Participation  Agreement,  in each  case for or  during  the Test
               Period ending on each date listed  below,  shall not be less than
               the ratio set forth opposite such date below:

                           Test Period ending              Ratio

                           July 31, 1998 ..............  1.35 to 1.0
                           October 31, 1998 ..........   1.35 to 1.0
                           January 31, 1999 ..........   1.35 to 1.0
                           April 30, 1999 ............   1.17 to 1.0
                           July 31, 1999 ..............   .77 to 1.0
                           October 31, 1999 ...........   .80 to 1.0
                           January 31, 2000 ...........   .88 to 1.0
                           April 30, 2000 ............   1.00 to 1.0
                           July 31, 2000 .............   1.13 to 1.0
                           October 31, 2000 ..........   1.13 to 1.0
                           January 31, 2001 ..........   1.25 to 1.0
                           April 30, 2001 ............   1.50 to 1.0
                           July 31, 2001 .............   1.50 to 1.0
                           October 31, 2001 ..........   1.75 to 1.0
                           January 31, 2002 ..........   1.75 to 1.0
                           April 30, 2002 ............   1.75 to 1.0
                           July 31, 2002 .............   1.75 to 1.0
                           October 31, 2002 ..........   2.00 to 1.0
                           January 31, 2003 ..........   2.00 to 1.0
                           April 30, 2003 ............   2.00 to 1.0
                           July 31, 2003 .............   2.00 to 1.0
                           October 31, 2003 ..........   2.00 to 1.0
                           January 31, 2004 ..........   2.00 to 1.0
                           April 30, 2004 ............   2.00 to 1.0
                           July 31, 2004 .............   2.00 to 1.0
                           October 31, 2004 ..........   2.00 to 1.0
                           January 31, 2005 ..........   2.00 to 1.0"

                  (XXX)  Section  7.11 of the  Agreement  is hereby  amended  by
inserting the letter "(a)" at the beginning thereof,  immediately  preceding the
words "The Company will".

     (YYY)The chart appearing in Section 7.11 of the Agreement is hereby amended
in its entirety to read as follows:

                           Test Period ending         Ratio

                           April 30, 2001 .....   1.10 to 1.0
                           July 31, 2001 ......   1.10 to 1.0
                           October 31, 2001 ...   1.10 to 1.0
                           January 31, 2002 ...   1.10 to 1.0
                           April 30, 2002 .....   1.10 to 1.0
                           July 31, 2002 ......   1.10 to 1.0
                           October 31, 2002 ...   1.10 to 1.0
                           January 31, 2003 ...   1.10 to 1.0
                           April 30, 2003 .....   1.10 to 1.0
                           July 31, 2003 ......   1.10 to 1.0
                           October 31, 2003 ...   1.10 to 1.0
                           January 31, 2004 ...   1.10 to 1.0
                           April 30, 2004 .....   1.10 to 1.0
                           July 31, 2004 ......   1.10 to 1.0
                           October 31, 2004 ...   1.10 to 1.0
                           January 31, 2005 ...   1.10 to 1.0"

                                       31
<PAGE>
                  (ZZZ) The  following new section is hereby added at the end of
Section 7.11 of the Agreement, immediately after the chart appearing therein:

     "(b) The Company  will not permit the ratio of (i)  Consolidated  EBITDA of
the Company and its  Subsidiaries to (ii) the sum of the  Consolidated  Interest
Expense, plus the Consolidated Capital Expenditures,  plus the Consolidated Cash
Taxes in each case for the Company and its Subsidiaries,  minus any Sponsor Loan
Interest,  minus the aggregate  amount of new Sponsor Loans  actually  funded in
cash  by  the  Sponsors  pursuant  to,  and  in  accordance  with,  the  Sponsor
Participation  Agreement,  during  or for the Test  Period  ending  on each date
listed below, to be less than the ratio set forth opposite such date below:

                           Test Period                Ratio

                           July 31, 2000            .97 to 1.00
                           October 31, 2000         .97 to 1.00
                           January 31, 2001        1.10 to 1.00"

     (AAAA) The chart  appearing in Section  7.12(a) of the  Agreement is hereby
amended in its entirety to read as follows:

                           Test Period ending            Ratio

                           April 30, 2001 ............   5.50 to 1.0
                           July 31, 2001 .............   5.35 to 1.0
                           October 31, 2001 ..........   5.00 to 1.0
                           January 31, 2002 ..........   4.90 to 1.0
                           April 30, 2002 ............   4.75 to 1.0
                           July 31, 2002 .............   4.60 to 1.0
                           October 31, 2002 ..........   4.40 to 1.0
                           January 31, 2003 ..........   4.20 to 1.0
                           April 30, 2003 ............   4.00 to 1.0
                           July 31, 2003 .............   4.00 to 1.0
                           October 31, 2003 ..........   4.00 to 1.0
                           January 31, 2004 ..........   4.00 to 1.0
                           April 30, 2004 ............   4.00 to 1.0
                           July 31, 2004 .............   4.00 to 1.0
                           October 31, 2004 ..........   4.00 to 1.0
                           January 31, 2005 .........   4.00 to 1.0"

                                       32
<PAGE>
                  (BBBB) The chart appearing in Section 7.12(b) of the Agreement
is hereby amended in its entirety to read as follows:

                           Test Period ending              Ratio

                           April 30, 2001 ..............   2.25 to 1.0
                           July 31, 2001 ...............   2.25 to 1.0
                           October 31, 2001 ............   2.25 to 1.0
                           January 31, 2002 ............   2.25 to 1.0
                           April 30, 2002 ..............   2.25 to 1.0
                           July 31, 2002 ...............   2.25 to 1.0
                           October 31, 2002 ............   2.00 to 1.0
                           January 31, 2003 ............   2.00 to 1.0
                           April 30, 2003 ..............   2.00 to 1.0
                           July 31, 2003 ...............   2.00 to 1.0
                           October 31, 2003 ............   2.00 to 1.0
                           January 31, 2004 ............   2.00 to 1.0
                           April 30, 2004 ..............   2.00 to 1.0
                           July 31, 2004 ...............   2.00 to 1.0
                           October 31, 2004 ............   2.00 to 1.0
                           January 31, 2005 ...........   2.00 to 1.0"

     (CCCC) The chart  appearing  in  Section  7.13 of the  Agreement  is hereby
amended in its entirety to read as follows:

                                                         Minimum EBITDA
                           Test Period                         ($Millions)

                           October 31, 1998 .........................  39.50
                           January 31, 1999 ........................   35.60
                           April 30, 1999 ..........................   30.10
                           July 31, 1999 ...........................   21.00
                           October 31, 1999 ........................   18.25
                           January 31, 2000 ........................   20.25
                           April 30, 2000 ..........................   22.00
                           July 31, 2000 ...........................   25.50
                           October 31, 2000 ........................   29.50
                           January 31, 2001 ........................   34.00
                           April 30, 2001 ..........................   50.40
                           July 31, 2001 ...........................   50.40
                           October 31, 2001 ........................   54.60
                           January 31, 2002 ........................   54.60
                           April 30, 2002 ..........................   57.20

                                       33
<PAGE>
                           July 31, 2002 .......................   57.20
                           October 31, 2002 ....................   61.00
                           January 31, 2003 ....................   61.00
                           April 30, 2003 ......................   61.00
                           July 31, 2003 .......................   61.00
                           October 31, 2003 ....................   61.00
                           January 31, 2004 ....................   61.00
                           April 30, 2004 ......................   61.00
                           July 31, 2004 .......................   61.00
                           October 31, 2004 ....................   61.00
                           January 31, 2005 ....................   61.00

          (DDDD)  Section  7.17 (a) of the  Agreement  is hereby  amended in its
     entirety to read as follows:

          "7.17.  Asset Sales. (a) The Company will not, and will not permit any
     of its  Subsidiaries  to,  make any Asset  Sale  except (i) the sale of the
     Mondel Brake  Business and (ii) Assets Sales made after the effective  date
     of Amendment No. 2 which on an aggregate  basis over the remaining  term of
     this Agreement, do not involve assets having an aggregate fair market value
     of more  than  $3,000,000;  provided,  that with  regard to any Asset  Sale
     permitted by this Section 7.17: (A) the sale price of the asset(s)  subject
     to such  Asset Sale  shall not be less than the fair  market  value of such
     asset(s)  at the  time  of  sale  thereof,  (B) not  less  than  90% of the
     aggregate  sale price of the  asset(s)  subject to such Asset Sale shall be
     payable  in  cash  on the  date of such  sale,  (C) any  non-cash  proceeds
     received  from such Asset Sale  shall be  pledged to the  Collateral  Agent
     pursuant to, and in accordance with, the applicable  Security Documents and
     shall constitute Collateral, (D) if such sale is to an Affiliate, such sale
     shall be made in compliance  with Section 7.09, and (E) upon the receipt of
     Net Cash  Proceeds from such Asset Sale,  the Company and its  Subsidiaries
     shall have complied with the mandatory  prepayment and Commitment reduction
     provisions of this Agreement."

          (EEEE)  Section  7.18(iv)  of  the  Agreement  is  hereby  amended  by
     inserting  the words "and in existence on the  effective  date of Amendment
     No. 2 or in connection with  Acquisitions  permitted to be made pursuant to
     the  terms of this  Agreement"  immediately  after  the  words  "Designated
     Acquisitions" appearing therein.

          (FFFF)  Clauses (ix),  (x) and (xi) of Section 7.18 are hereby amended
     in their entirety to read as follows:

                                       34
<PAGE>

          "(ix)reserves  for adjustments in connection with any Asset Sale which
     reserves are established in accordance with GAAP;

          (x)  guarantees  by  the  Company  of  obligations  not   constituting
     Indebtedness of its Subsidiaries; and

          (xi) customary  indemnification  and liquidated damage  obligations in
     connection with sales of assets not constituting Asset Sales, provided such
     obligations  (A) are given in the ordinary  course of the  Company's or the
     applicable  Subsidiary's business, in accordance with past practices and in
     the exercise of the  Company's or the  applicable  Subsidiary's  reasonable
     judgment  and (B) are  customary  given  the  type  and  size of the  sales
     transaction."

          (GGGG) Section 7.20 of the Agreement is hereby amended by deleting the
     words "under Section 7.17 hereof" appearing therein and inserting the words
     "under this Agreement" in lieu thereof.

          (HHHH) The  following  new  sections  are  hereby  added at the end of
     Section 7 of the Agreement:

          "7.21. Cash Management.  The Company will not, and will not permit any
     of its  Subsidiaries  to, (a) open or maintain any bank account  other than
     the  bank   accounts   listed  on  Schedule   5.25   hereto,   without  the
     Administrative  Agent's prior written  consent or (b) maintain  balances of
     collected  funds in any accounts  (other than those listed on Schedule 5.25
     marked  with an  asterisk  and those  accounts  with  respect  to which the
     applicable  financial  institution  at which such account is maintained has
     executed a letter  agreement  relating to cash  management  arrangements in
     form  and  substance  satisfactory  to  the  Administrative  Agent)  in  an
     aggregate  amount for the Company and its Subsidiaries  taken together,  in
     excess of $1,000,000 at any one time.

          7.22.  Acquisitions.  The Company will not, and will not permit any of
     its  Subsidiaries  to, make  Acquisitions on or after the effective date of
     Amendment No. 2, other than an Acquisition  (i) which involves assets to be
     used in, or a Person  engaged in, the MHE  Business,  (ii) with  respect to
     which the Banks shall have received at least five (5) Business  Days' prior
     written  notice from the  Company or the  applicable  Subsidiary  and (iii)
     which is not otherwise prohibited by this Agreement."

          (IIII)  Section 8.02 of the  Agreement is hereby  amended by inserting
     the word  "Holdings,"  immediately  preceding  the words "any Credit Party"
     appearing therein.

                                       35
<PAGE>

          (JJJJ) Section 8.03 of the Agreement is hereby amended in its entirety
     to read as follows:

          "8.03.  Covenants.  Holdings  or any  Credit  Party or its  respective
     Subsidiaries  shall (a) default in the due  performance or observance by it
     of any term,  covenant or agreement  contained in Section 6.10, 6.12, 6.14,
     6.15,  6.16 or  Section 7 hereof or  Section  1.1 of any  Mortgage  of Real
     Property  in the United  States or (b)  default in the due  performance  or
     observance by it of any other term, covenant or agreement contained in this
     Agreement or any Credit  Document  (other than those referred to in Section
     8.01,  8.02,  8.03(a),  8.08 or  8.11)  and  such  default  shall  continue
     unremedied for a period of at least thirty (30) days after the date of such
     default; or"

          (KKKK)  Section  8.04  of  the  Agreement  is  hereby  amended  (i) by
     inserting the word  "Holdings,"  at the beginning of subsection (a) thereof
     immediately  preceding the words "Any Credit Party";  (ii) by inserting the
     word  "Holdings,"  immediately  preceding  the words "all  Credit  Parties"
     appearing in clause (i) of  subsection  (a) thereof;  and by inserting  the
     word  "Holdings,"  immediately  preceding  the  words  "any  Credit  Party"
     appearing in subsection (b) thereof".

          (LLLL)  Section 8.06 of the Agreement is hereby  amended by adding the
     words "Employee Benefit Plans or" immediately  preceding the words "Foreign
     Plans" appearing therein.

          (MMMM) Section 8.08 of the Agreement is hereby amended by deleting the
     figure  "$2,500,000"  appearing therein and inserting the figure "$500,000"
     in lieu thereof.

          (NNNN)  Section 8.09 of the  Agreement is hereby  amended by inserting
     the word "Holdings", immediately preceding the words "any Credit Party" and
     "all Credit Parties" appearing therein.

          (OOOO) The  following  new section is hereby added to Section 8 of the
     Agreement immediately after Section 8.10:

          "8.11.  Borrowing Base  Certificate.  The Company shall have failed to
     submit any Borrowing Base  Certificate to the  Administrative  Agent within
     fifteen (15) Business Days after the end of any month."

          (PPPP) Clause (ii) of the last paragraph of Section 8 of the Agreement
     is hereby  amended  by  inserting  the  words  "Holdings  and"  immediately
     preceding the words "each Credit Party" appearing therein.

                                       36
<PAGE>

          (QQQQ) The definition of "A Term Loan Commitment" appearing in Section
     9 of the Agreement is hereby amended in its entirety to read as follows:

          "`A Term Loan Commitment' means, with respect to each Bank, the amount
     set forth (i) opposite  such Bank's name on Schedule 1 hereto in the column
     entitled "A Term Loan Commitment" or (ii) in any applicable  Assignment and
     Assumption  Agreement  to which it may be a party,  as the case may be,  as
     such amount may be reduced from time to time in  accordance  with the terms
     of this Agreement."

          (RRRR)  The  definition  of  "Account"  appearing  in Section 9 of the
     Agreement is hereby amended by deleting the following  words "and including
     accounts for goods  shipped or goods  subject to a progress,  percentage of
     completion or similar  accounting  or payment  method,  which  accounts are
     unbilled; provided the invoice for such goods is sent within 15 days of the
     date the goods were shipped" from clause (i) appearing therein.

          (SSSS)  The  definition  of  "Acquisition   Term  Loan  Closing  Date"
     appearing in Section 9 of the Agreement is hereby deleted in its entirety.

          (TTTT) The definition of "Acquisition Term Loan Commitment"  appearing
     in Section 9 of the Agreement is hereby  amended in its entirety to read as
     follows:

          "`Acquisition  Term Loan Commitment' means, with respect to each Bank,
     the amount set forth (i) opposite  such Bank's name on Schedule 1 hereto in
     the  column  entitled  "Acquisition  Term Loan  Commitment"  or (ii) in any
     applicable  Assignment and Assumption Agreement to which it may be a party,
     as the case may be,  as such  amount  may be  reduced  from time to time in
     accordance with the terms of this Agreement."

          (UUUU) The definition of "B Term Loan Commitment" appearing in Section
     9 of the Agreement is hereby amended in its entirety to read as follows:

          "`B Term Loan Commitment' means, with respect to each Bank, the amount
     set forth (i) opposite  such Bank's name on Schedule 1 hereto in the column
     entitled "B Term Loan Commitment" or (ii) in any applicable  Assignment and
     Assumption  Agreement  to which it may be a party,  as the case may be,  as
     such amount may be reduced from time to time in  accordance  with the terms
     of this Agreement."

          (VVVV)  The  definition  of  "Bank"  appearing  in  Section  9 of  the
     Agreement is hereby amended in its entirety to read as follows:

                                       37
<PAGE>
          "`Bank' or `Banks' means the financial institutions whose names appear
     at the foot  hereof and any  assignee of a Bank  pursuant to Section  11.04
     hereof, and their respective successors."

          (WWWW) The  definition of "Borrowing  Base"  appearing in Section 9 of
     the Agreement is hereby amended in its entirety to read as follows:

          "`Borrowing Base' means an amount equal to the sum (without any double
     counting) of (i) 85% of the Eligible Accounts Receivable; provided that the
     advance  rate  shall  be 50% for the  additional  $10,000,000  of  Eligible
     Accounts Receivable specified in clause (e) of the definition thereof, (ii)
     50% of the Eligible  Inventory  that is not Work in Process  Inventory  and
     (iii) 35% of Work in Process Inventory."

          (XXXX) The  definition of "Business Day" appearing in Section 9 of the
     Agreement is hereby amended by adding the words "are authorized or required
     by law to close"  immediately after the  parenthetical  phrase appearing in
     the third and fourth lines thereof.

          (YYYY)  The  definition  of  "Canadian   Swingline  Loan   Commitment"
     appearing in Section 9 of the  Agreement is hereby  amended in its entirety
     to read as follows:

          "`Canadian  Swingline  Loan  Commitment'  means,  with respect to each
     Bank,  the amount set forth (i)  opposite  such  Bank's  name on Schedule 1
     hereto in the column entitled "Canadian  Swingline Loan Commitment" or (ii)
     in any applicable  Assignment and Assumption Agreement to which it may be a
     party,  as the case may be, as such amount may be reduced from time to time
     in accordance with the terms of this Agreement."

          (ZZZZ) The definition of "Computation  Date" appearing in Section 9 of
     the  Agreement  is  hereby  amended  by  deleting  the  words  "or the U.K.
     Swingline Bank, as the case may be," appearing therein.

          (AAAAA)  The  definition  of   "Consolidated   Capital   Expenditures"
     appearing in Section 9 of the  Agreement is hereby  amended in its entirety
     to read as follows:

                                       38
<PAGE>
          "`Consolidated  Capital  Expenditures"  of any Person  means,  for any
     period,  the  amount  required  to be  included  in  capital  assets on the
     consolidated  balance  sheet of such Person in  conformity  with GAAP,  but
     excluding   expenditures   made  in   connection   with  the   replacement,
     substitution  or  restoration  of assets  (i) to the extent  financed  from
     insurance  proceeds  paid on account of the loss of or damage to the assets
     being replaced or restored,  (ii) with awards of compensation  arising from
     the taking by eminent domain or  condemnation of the assets being replaced,
     (iii) with regard to equipment  that is purchased  simultaneously  with the
     trade-in of existing  equipment,  fixed assets or improvements,  the credit
     granted by the seller of such equipment for the trade-in of such equipment,
     fixed  assets  or   improvements;   provided  that   Consolidated   Capital
     Expenditures  for any such  period  shall  in any  event  include  the cash
     purchase price paid in such period in connection with any Acquisition  made
     on or after the effective date of Amendment No. 2."

          (BBBBB The definition of "Contingent Obligations" appearing in Section
     9 of the  Agreement  is hereby  amended by deleting  the words "and amounts
     that are  included  in  Section  7.18"  appearing  at the end of the  first
     sentence of such definition.

          (CCCCC The definition of "Credit Documents"  appearing in Section 9 of
     the Agreement is hereby  amended by adding the following  text "and (v) the
     Contribution Agreement" at the end thereof.

          (DDDDD The definition of "Designated Acquisition" appearing in Section
     9 of the Agreement is hereby amended in its entirety to read as follows:

          "`Designated  Acquisition'  shall  mean any  Acquisition  that (i) was
     completed  prior  to the  effective  date of  Amendment  No. 2 and (ii) was
     permitted to be made under the terms and provisions of the Credit Agreement
     as in effect on the date of such Acquisition."

          (EEEEE  The  parenthetical  phrase  appearing  in the fourth and fifth
     lines of the  definition  of "Eligible  Accounts  Receivable"  appearing in
     Section 9 of the  Agreement  is hereby  amended in its  entirety to read as
     follows:

          "(excluding  any  Unbilled  Accounts  and any  Accounts  set  forth in
     clauses (ii) through (vi) of such definition)"

          (FFFFF The definition of "Eligible  Inventory"  appearing in Section 9
     of the Agreement is hereby amended (i) by inserting the words "and goods in
     transit  between a Credit Party and an Affiliate of a Credit  Party" at the
     end of clause (B) appearing  therein and (ii) by adding the following  text
     at the end of the first sentence:

          "; plus (D) the amount by which Eligible  Inventory  determined solely
     pursuant  to  clause  (A) above  shall  have  been  reduced  as a result of
     percentage  of  completion  accounting  provided,  such amount has not been
     included in the Borrowing  Base pursuant to clause (iii) of the  definition
     thereof."

                                       39
<PAGE>
          (GGGGG The definition of "Eurodollar  Rate"  appearing in Section 9 of
     the Agreement is hereby  amended by adding the following text at the end of
     such definition:

          "by 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)  applicable  to any
     member  bank of the  Federal  Reserve  System in  respect  to  Eurocurrency
     liabilities  as defined  in  Regulation  D (or any  successor  category  of
     liabilities under Regulation D)"

          (HHHHH Clause (e) of the definition of "Excess Cash Flow" appearing in
     Section 9 of the  Agreement  is hereby  amended in its  entirety to read as
     follows:

          "(e) for the period from November 1, 1998 through the  effective  date
     of Amendment No. 2, 100% of the funds used on or prior to the date payments
     are due  under  Section  3.02(A)(g),  for  the  applicable  period  to make
     Designated Acquisitions (other than to the extent Acquisition Term Loans or
     the  $12,500,000  Revolving  Loan basket were used in  accordance  with the
     Credit Agreement then in effect)."

          (IIIII The  definition of  "Guarantees"  appearing in Section 9 of the
     Agreement  is hereby  amended  (i) by deleting  the words "U.K.  Subsidiary
     Guarantee"  and inserting the words "U.K.  Subsidiary  Guarantees"  in lieu
     thereof and (ii) by deleting  the number  "6.17" and  inserting  the phrase
     "6.16 or otherwise in connection with the transactions contemplated hereby"
     in lieu thereof.

          (JJJJJ Clause (viii) of the definition of "Indebtedness"  appearing in
     Section 9 of the  Agreement  is hereby  amended by deleting  the word "net"
     appearing therein.

          (KKKKK The first proviso of the definition of "Intercompany  Advances"
     appearing in Section 9 of the  Agreement is hereby  amended in its entirety
     to read as follows:

          "provided that the aggregate amount of Intercompany Advances made to a
     Foreign Subsidiary of the Company which is a Non-Guarantor Subsidiary shall
     not exceed an amount at any time outstanding equal to $14,000,000; and"

          (LLLLL  Clause  (ii)  of  the  second  proviso  of the  definition  of
     "Intercompany  Advances"  appearing in Section 9 of the Agreement is hereby
     amended by inserting the words "or Acquisitions  permitted  pursuant to the
     terms  of  this  Agreement"   immediately   after  the  words   "Designated
     Acquisitions" appearing therein.

                                       40
<PAGE>
          (MMMMM The definition of "Interest  Margin"  appearing in Section 9 of
     the Agreement is hereby amended in its entirety to read as follows:

          "`Interest  Margin'  shall  mean,  in respect of (i) Base Rate  Loans,
     2.00% and (ii)  Reserve  Adjusted  Eurodollar  Loans,  3.50%.  The Interest
     Margin in respect of Swingline  Loans shall be that margin agreed among the
     Applicable  Borrower,  the applicable Swingline Bank and the Administrative
     Agent.  The Interest  Margin in respect of Acquisition  Term Loans that are
     Sponsor  Loans  shall be that  margin set forth in Section 5 of the Sponsor
     Participation Agreement."

          (NNNNN The definition of "Letter of Credit"  appearing in Section 9 of
     the Agreement is hereby  amended by inserting  the following  phrase at the
     end thereof:

          "but specifically excluding any U.K. Swingline Letter of Credit."

          (OOOOO The definition of "Net Cash Proceeds" appearing in Section 9 of
     the Agreement is hereby amended in its entirety to read as follows:

                                       41
<PAGE>
          "`Net Cash  Proceeds'  means with  respect to any Asset Sale:  (a) the
     aggregate  cash  proceeds   received  by  the  Company  or  the  applicable
     Subsidiary  (including,  without limitation,  all cash proceeds received by
     way of (i) deferred payment of principal  pursuant to a note or installment
     receivable or otherwise, but only as and when received and (ii) receivables
     retained  by the  Company or any of its  Subsidiaries  as part of the sales
     consideration),  minus (b) reasonable and customary  brokerage  commissions
     and other  reasonable  and customary  fees and direct  expenses  (including
     reasonable  and  customary  fees and  expenses  of counsel  and  investment
     bankers and reasonable and customary  inventory  liquidation costs actually
     paid by the  Company or the  applicable  Subsidiary)  related to such sale,
     lease,  transfer or other  disposition,  minus (c) payments  made to retire
     Indebtedness  (other than the Loans)  secured by such assets  being sold or
     otherwise  disposed of where  payment of such  Indebtedness  is required in
     connection with such sale or disposition  provided that (i) with respect to
     taxes,  expenses  shall only  include  taxes to the  extent  that taxes are
     payable in cash in the  current  year or in the next  succeeding  year with
     respect to the current  year as a result of such Asset Sale;  (ii) Net Cash
     Proceeds  shall not include any amounts or items included in the definition
     of Financing Proceeds or Net Financing  Proceeds  (including in any proviso
     appearing therein or exclusion therefrom) and (iii) Net Cash Proceeds shall
     not  include  appropriate  amounts  to be  provided  by  the  Company  or a
     Subsidiary  as a  reserve,  in  accordance  with GAAP and  approved  by the
     Administrative  Agent,  against any liabilities  associated with the assets
     sold or  disposed  of in such Asset Sale and  retained  by the Company or a
     Subsidiary after such Asset Sale,  including,  without limitation,  pension
     and other  post-employment  benefit  liabilities and liabilities related to
     environmental matters or against any indemnification obligations associated
     with the assets sold or disposed of in such Asset Sale, provided,  however,
     that at such time as such amounts are no longer reserved or such reserve is
     no longer necessary (but in no event longer than 18 months from the receipt
     of such proceeds),  any remaining amounts shall become Net Cash Proceeds to
     be allocated in accordance with the terms of this Agreement."

          (PPPPP The definition of  "Obligations"  appearing in Section 9 of the
     Agreement is hereby amended in its entirety to read as follows:

          "`Obligations' means all obligations (a) whether,  direct or indirect,
     contingent  or  absolute,  of  every  type or  description  and at any time
     existing,  of the  Borrowers  to  make  due  and  punctual  payment  of (i)
     principal of and all interest on the Loans, the Commitment Commission,  any
     reimbursement  obligations  in respect  of  Letters  of  Credit,  costs and
     attorneys' fees and all other monetary  obligations of any of the Borrowers
     to any of the Agents,  any Issuing  Bank or any Bank under or in respect of
     this Agreement, any Note, any other Credit Document or any fee letter, (ii)
     all amounts  payable by any of the Borrowers to any Bank under any Currency
     Protection  Agreement  or  Interest  Rate  Agreement,   provided  that  the
     Administrative  Agent shall have received written notice thereof within ten
     (10) Business Days after execution of such Currency Protection Agreement or
     Interest Rate Agreement and (iii) amounts payable to Canadian Imperial Bank
     of Commerce in  connection  with any bank account  maintained by any of the
     Borrowers or any other Credit Party at Canadian  Imperial  Bank of Commerce
     or any other banking services provided to any of the Borrowers or any other
     Credit Party by Canadian  Imperial  Bank of Commerce with respect to, or in
     any  way  related  to,  any of the  Credit  Documents  (including,  without
     limitation,  interest accruing at the then applicable rate provided in this
     Agreement after the maturity of the Loans and interest accruing at the then
     applicable rate provided in this Agreement after the filing of any petition
     in bankruptcy or the commencement of any insolvency, reorganization or like
     proceeding,  relating to any of the  Borrowers,  whether or not a claim for
     post-filing or  post-petition  interest is allowed in such  proceeding) and
     (b) all other obligations of any of the Borrowers or any other Credit Party
     pursuant to this Agreement and any other Credit Document."

                                       42
<PAGE>
          (QQQQQ The definition of "Pledged  Securities"  appearing in Section 9
     of the Agreement is hereby amended in its entirety to read as follows:

          "`Pledged  Securities'  means all  Pledged  Securities  under the U.S.
     Security   Agreement,   the  U.K.   Security   Agreements  and  the  Pledge
     Agreements."

          (RRRRR The definition of "Real Property" appearing in Section 9 of the
     Agreement is hereby amended in its entirety to read as follows:

          "`Real Property' means any and all parcels of real property  acquired,
     leased or otherwise  owned by any Credit Party together with, in each case,
     all  improvements  and  appurtenant  fixtures and equipment,  easements and
     other property and rights  incidental to the ownership,  lease or operation
     thereof."

          (SSSSS Clause (x) of the definition of "Replacement  Assets" appearing
     in Section 9 of the  Agreement is hereby  amended by deleting the words "or
     in a business similar or reasonably  related thereto" appearing therein and
     inserting  the words "or in a business  substantially  similar  thereto" in
     lieu thereof.

          (TTTTT The  definition of  "Revolving  Loan  Commitment"  appearing in
     Section 9 of the Agreement is hereby amended in its entirety as follows:

          "`Revolving  Loan  Commitment'  means,  with respect to each Bank, the
     amount set forth (i)  opposite  such Bank's name on Schedule 1 hereto under
     the column entitled  "Revolving Loan Commitment," or (ii) in any applicable
     Assignment and Assumption Agreement to which it may be a party, as the case
     may be, as such amount may be reduced from time to time in accordance  with
     the terms of this Agreement."

          (UUUUU The proviso  appearing in the  definition of "Swingline  Expiry
     Date"  appearing  in Section 9 of the  Agreement  is hereby  amended in its
     entirety to read as follows:

          "provided that the U.K.  Swingline  Bank shall give the U.K.  Borrower
     notice 90 days (or such shorter time period as shall be consented to by the
     U.K.  Swingline Bank, the U.K.  Borrower and the  Administrative  Agent) in
     advance of the then  current  Swingline  Expiry  Date of  whether  the U.K.
     Swingline  Bank will extend the  Swingline  Expiry Date with respect to the
     U.K.  Swingline  Loans for a further  period of 364 days (or such longer or
     shorter period as the U.K. Borrower and the U.K.  Swingline Bank may agree)
     but not to expire  later  than the date  five  Business  Days  prior to the
     Revolving Maturity Date."

                                       43
<PAGE>
          (VVVVV The definition of "U.K.  Swingline Loan" appearing in Section 9
     is hereby  amended by inserting the following  parenthetical  phrase at the
     end thereof:

          "(anysuch documentary letter of credit or guarantee, including any bid
     bond or performance  bond shall be referred to herein as a "U.K.  Swingline
     Letter of Credit")"

          (WWWWW The definition of "U.K. Swingline Loan Commitment" appearing in
     Section 9 of the  Agreement  is hereby  amended in its  entirety to read as
     follows:

          "`U.K.  Swingline Loan Commitment'  means,  with respect to each Bank,
     the amount set forth (i)  opposite  such  Bank's  name on Schedule 1 hereto
     under the column entitled "U.K.  Swingline Loan  Commitment" or (ii) in any
     applicable  Assignment and Assumption Agreement to which it may be a party,
     as the case may be,  as such  amount  may be  reduced  from time to time in
     accordance with the terms of this Agreement."

          (XXXXX The definition of "U.S.  Swingline  Loan  Commitment" is hereby
     amended in its entirety to read as follows:

          "`U.S.  Swingline Loan Commitment'  means,  with respect to each Bank,
     the amount set forth (i)  opposite  such  Bank's  name on Schedule 1 hereto
     under the column entitled "U.S.  Swingline Line  Commitment" or (ii) in any
     applicable  Assignment and Assumption Agreement to which it may be a party,
     as the case may be,  as such  amount  may be  reduced  from time to time in
     accordance with the terms of this Agreement."

          (YYYYY The following new  definitions are hereby added (in the correct
     alphabetical sequence) to Section 9 of the Agreement:

                                       44
<PAGE>
          "`Acquisition'  means any transaction pursuant to which the Company or
     any of its  Subsidiaries  (a)  acquires  equity  securities  (or  warrants,
     options or other  rights to acquire  such  securities)  of any Person other
     than the  Company  or any  Person  which is not  then a  Subsidiary  of the
     Borrower, pursuant to a solicitation of tenders therefor, or in one or more
     negotiated  block,  market or other  transactions  not  involving  a tender
     offer, or a combination of any of the foregoing,  or (b) makes any Person a
     Subsidiary of the Company,  or causes any such Person to be merged into the
     Company  or any of its  Subsidiaries,  in any case  pursuant  to a  merger,
     purchase  of assets or any  reorganization  providing  for the  delivery or
     issuance to the holders of such Person's then  outstanding  securities,  in
     exchange for such  securities,  cash or securities of the Company or any of
     its  Subsidiaries,  or a  combination  thereof,  or  (c)  purchases  all or
     substantially all of the business or assets of any Person.

          `Additional  Sponsor  Participation'  has the meaning set forth in the
     Sponsor Participation Agreement.

          `Amendment No. 2' means  Amendment No. 2 dated as of August 2, 1999 to
     this Agreement.

          `Contribution Agreement' means that certain Contribution Agreement (in
     form and substance satisfactory to the Administrative Agent) to be executed
     by Holdings,  the Borrowers and the other Credit Parties, as such agreement
     may be amended,  supplemented  or otherwise  modified,  renewed or replaced
     from time to time.

          `Interest Deficit' has the meaning set forth in Section 2.07.

          `Mondel Brake  Business' means the capital stock or the assets of, and
     the business presently conducted by, Mondel.

          `Non-Sponsor Acquisition Term Loans' means Acquisition Term Loans that
     are not Sponsor Loans.

          `Sponsor Loans' has the meaning set forth in the Sponsor Participation
     Agreement.

          `Sponsor Loan Interest' means, for any period, the aggregate amount of
     interest accrued, but not paid in cash, by the U.S. Borrowers in connection
     with the Sponsor Loans  (pursuant to, and in accordance  with,  the Sponsor
     Participation Agreement) for such period.

          `Sponsor Loan Repayment Date' has the meaning set forth in the Sponsor
     Participation Agreement.

          `Sponsor  Participation  Agreement'  means that certain  Participation
     Agreement  dated as of August 2, 1999  among the  Sponsors,  Holdings,  the
     Borrowers,  the other Credit  Parties and each of the Banks  referred to in
     Section  C of  Schedule  1 of  such  agreement,  as such  agreement  may be
     amended,  supplemented or otherwise modified, renewed or replaced from time
     to time.

          `Sponsors'  has the  meaning  set forth in the  Sponsor  Participation
     Agreement.

                                       45
<PAGE>
          `U.K.Swingline  Letter of  Credit'  has the  meaning  set forth in the
     definition of U.K. Swingline Loan herein.

          `U.K.  Swingline  Letter of  Credit  Usage'  means,  as at any date of
     determination,  the sum of (i) the maximum  aggregate  amount that is or at
     any time thereafter may become available under all U.K.  Swingline  Letters
     of Credit then  outstanding  plus (ii) the aggregate amount of all drawings
     under U.K.  Swingline Letters of Credit honored by all U.K. Swingline Banks
     and not theretofore reimbursed by the U.K. Borrower.

          `Unbilled  Accounts' means accounts for goods shipped or goods subject
     to a progress,  percentage of  completion or similar  accounting or payment
     method, which accounts are unbilled.

          `Workin Process  Inventory'  means Eligible  Inventory that is neither
     raw materials nor finished goods."

          (ZZZZZ The following new section is hereby added at the end of Section
     10 of the Agreement:

          "10.12.  Authorization to Release Lien. The Banks hereby authorize the
     Administrative  Agent (in its sole  discretion) in connection with the sale
     or other  disposition of any asset included in the Collateral or all of the
     capital  stock or other equity  interests of any  Guarantor,  to the extent
     undertaken in accordance with the terms of this  Agreement,  to release the
     Lien  granted  to it (for the  benefit  of Banks) on such  asset or capital
     stock  and/or to release  such  Guarantor  from its  obligations  under the
     Credit  Documents;  provided,  however,  that this  Section  10.12 does not
     modify the provisions of Section 11.12 or Section 7.17 hereof."

          (AAAAAA  The  following  new  section  is  hereby  added at the end of
     Section 11 of the Agreement:

                                       46
<PAGE>
          "11.18.  No  Conflict  with  the  Sponsor   Participation   Agreement.
     Notwithstanding anything to the contrary contained in this Agreement,  each
     payment from or on behalf of Holdings or any Credit Party in respect of any
     of the Obligations relating to the Acquisition Term Loans, which payment is
     received  by  the  Administrative   Agent,  shall  be  distributed  by  the
     Administrative   Agent  in  accordance   with  the  Sponsor   Participation
     Agreement.  In the event of any  inconsistency  relating to the Acquisition
     Term Loans or the rights of the Sponsors with respect thereto,  between the
     terms of this Agreement or any  Acquisition  Term Note on the one hand, and
     those of the Sponsor  Participation  Agreement on the other hand, the terms
     of the Sponsor Participation Agreement shall control."

          (BBBBBB Annex III to the Agreement is hereby deleted in its entirety.

          (CCCCCC  Schedule 1 and Schedule 5.25 attached hereto are hereby added
     to the Agreement.

          SECTION 2. Reduction of the Total Revolving Loan Commitment, the Total
     U.S.  Swingline Loan Commitment,  the total U.K.  Swingline Loan Commitment
     and the Total  Canadian  Swingline  Loan  Commitment.  Each of the  parties
     hereto hereby agrees that as of the Effective Date, (a) the Total Revolving
     Loan Commitment shall be permanently reduced to $50,700,000,  (b) the Total
     U.S. Swingline Loan Commitment shall be permanently  reduced to $6,000,000,
     (c) the Total U.K.,  Swingline Loan Commitment shall be permanently reduced
     to $6,000,000 and (d) the Total Canadian Swingline Loan Commitment shall be
     permanently reduced to $3,000,000.

          SECTION  3.  Amendments  to the  Credit  Documents.  Each of the Banks
     hereby  consents to the  Administrative  Agent entering into amendments (in
     form and substance  satisfactory to the Administrative Agent) to certain of
     the Credit Documents (other than the Agreement) as the Administrative Agent
     shall determine in its sole discretion to cure any ambiguity, to correct or
     supplement any provision in any such Credit Document which may be defective
     or inconsistent  with any other provision in any of the Credit Documents or
     with the  intent  of any of the  Credit  Documents,  or to make  any  other
     provisions  with respect to matters or questions  arising  under any of the
     Credit  Documents  (other than the Agreement);  provided that any amendment
     shall not  adversely  affect  the  interests  of the Banks in any  material
     respect.

          SECTION  4.  Confirmation  and   Acknowledgment  of  the  Obligations;
     Release.  Each of the Borrowers  hereby  confirms and  acknowledges  to the
     Agents and the Banks that it is validly  and justly  indebted to the Agents
     and the Banks for the payment of all Obligations  without offset,  defense,
     cause of action or counterclaim of any kind or nature  whatsoever.  Each of
     the Credit  Parties,  on its own behalf and on behalf of its successors and
     assigns,  hereby  waives,  releases and discharges the Agents and each Bank
     and all of the  affiliates  of the  Agents  and each  Bank,  and all of the
     directors,  officers,  employees,  attorneys and agents of the Agents, each
     Bank and such  affiliates,  from any and all  claims,  demands,  actions or
     causes of action (known and unknown)  arising out of or in any way relating
     to the Credit  Documents and any documents,  agreements,  dealings or other
     matters  connected  with any of the Credit  Documents,  in each case to the
     extent  arising (x) on or prior to the date hereof or (y) out of,  relating
     to, actions,  dealings or matters occurring on or prior to the date hereof.
     The waivers,  releases, and discharges in this Section 4 shall be effective
     regardless of whether the  conditions  to this  Amendment are satisfied and
     regardless  of any other  event that may occur or not occur  after the date
     hereof.

                                       47
<PAGE>
          SECTION  5.  Agreement  by the  Borrowers.  Notwithstanding  that  the
     Borrowers  may not have  received  prior  notice of the  engagement  of any
     counsel,  appraisers,  consultants or other advisors by an Agent or a Bank,
     the Borrowers hereby agree to pay all  out-of-pocket  costs and expenses of
     each of the Agents and each of the Banks as  contemplated  by Section 11.01
     of the Agreement.

          SECTION 6.  Conditions to  Effectiveness.  The  effectiveness  of this
     Amendment  is  subject  to  the  satisfaction  in  full  of  the  following
     conditions  precedent on or before  August 2, 1999 (the first date on which
     all such  conditions  have been satisfied  being herein  referred to as the
     "Effective Date"):

          (A the Administrative Agent shall have received executed  counterparts
     of this  Amendment,  which,  when taken  together,  bear the  signatures of
     Holdings,  each of the Credit  Parties and those Banks  required by Section
     11.12 of the Credit Agreement; and

          (B the Administrative Agent shall have received executed  counterparts
     of the  Sponsor  Participation  Agreement  (such  term  being  used in this
     Amendment as defined in Section  1(YYYYY) above and which  agreement  shall
     include,  among  other  things,  the  purchase  of a  participation  in the
     unfunded  Acquisition Term Loan Commitments of certain of the Banks), which
     counterparts,   when   taken   together,   bear  the   signatures   of  the
     Administrative  Agent,  the  Sponsors,  the Selling  Banks (as such term is
     defined  in the  Sponsor  Participation  Agreement)  and all of the  Credit
     Parties; and

          (C the Company shall have received the $5,000,000 in proceeds from the
     Acquisition  Term Loan to be made on or before the Effective Date and to be
     funded  pursuant  to  and as  contemplated  by  the  Sponsor  Participation
     Agreement; and

          (D a borrowing  base audit shall have been completed by an independent
     audit firm which is acceptable to the  Administrative  Agent, and the scope
     and results of such audit  shall in all  respects  be  satisfactory  to the
     Administrative Agent; and

          (E The  Administrative  Agent  (for the  benefit of the Agents and the
     Banks, as applicable) shall have received the following:

                           (i)   an amendment  fee in an amount equal to 1/4% of
                                 each such Bank's Total Commitment (after giving
                                 effect to the reductions set forth in Section 2
                                 above); and

                           (ii)  the payment of all  invoiced  amounts  owing to
                                 any of the  Agents  and any  Bank  pursuant  to
                                 Section  11.01 of the  Agreement  after  giving
                                 effect to Section 5 of this Amendment; and

          (F [intentionally omitted]

                                       48
<PAGE>
          (G the Borrowers shall have obtained all consents and waivers from any
     Governmental  Authority  or  other  Person  necessary  for  the  execution,
     delivery  and  performance  of this  Amendment,  the Sponsor  Participation
     Agreement  and any  other  document  or  transaction  contemplated  by this
     Amendment or the Sponsor Participation Agreement; and

          (H No Event of Default (which has not been properly waived in writing)
     shall  have  occurred  and then be  continuing  and no  Default or Event of
     Default  shall  occur  or be  continuing  upon  the  effectiveness  of this
     Amendment or the Sponsor Participation Agreement or the consummation of the
     transactions contemplated by either of the foregoing and the Administrative
     Agent shall have  received a certificate  of the Borrowers  with respect to
     the foregoing and the matters set forth in subsection (G) above; and

          (I all legal matters in  connection  with this  Amendment,  the Credit
     Documents and/or the Collateral shall be reasonably satisfactory to Morgan,
     Lewis & Bockius LLP, counsel for the Administrative Agent.

          SECTION 7.  Representations  and  Warranties.  Holdings and the Credit
     Parties hereby  represent and warrant to the Banks that after giving effect
     to this Amendment:

          (A  the  representations  and  warranties   contained  in  the  Credit
     Agreement  and in the other  Credit  Documents  are true and correct in all
     material  respects on and as of the date hereof as if such  representations
     and  warranties  had been made on and as of the date hereof  (except to the
     extent such  representations and warranties  expressly relate to an earlier
     date); and

          (B  Holdings  and the Credit  Parties are in  compliance  with all the
     terms and provisions set forth in the Credit Agreement and the other Credit
     Documents  and no Default or Event of Default has occurred or is continuing
     under the Credit  Agreement  or will occur upon the  effectiveness  of this
     Amendment or the Sponsor Participation Agreement or the consummation of the
     transactions contemplated by either of the foregoing.

          SECTION  8. Full  Force and  Effect.  Except  as  expressly  set forth
     herein,  this Amendment does not constitute a waiver or modification of any
     provision  of the Credit  Agreement  or a waiver of any Default or Event of
     Default under the Credit Agreement,  in either case whether or not known to
     any of the Agents or the Banks.  Except as expressly  amended  hereby,  the
     Credit Agreement shall continue in full force and effect in accordance with
     the  provisions  thereof on the date  hereof and the  Credit  Agreement  as
     heretofore amended and as amended by this Amendment are hereby ratified and
     confirmed.  As used in the Credit Agreement,  the terms "Credit Agreement",
     "this Agreement",  "herein", "hereafter",  "hereto", "hereof", and words of
     similar import,  shall,  unless the context  otherwise  requires,  mean the
     Credit  Agreement  as amended by this  Amendment.  References  to the terms
     "Agreement" or "Credit Agreement" appearing in the Exhibits or Schedules to
     the Credit Agreement,  shall, unless the context otherwise  requires,  mean
     the Credit Agreement as amended by this Amendment.

                                       49
<PAGE>
          SECTION 9.  APPLICABLE  LAW. THIS AMENDMENT  SHALL BE GOVERNED BY, AND
     CONSTRUED IN ACCORDANCE  WITH,  THE LAWS OF THE STATE OF NEW YORK WHICH ARE
     APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF
     NEW YORK.

          SECTION 10.  Counterparts.  This  Amendment  may be executed in two or
     more counterparts,  each of which shall constitute an original,  but all of
     which when taken together shall  constitute but one  instrument.  Signature
     pages may be detached from  counterpart  documents and  reassembled to form
     duplicate  executed  originals.  Delivery of an executed  counterpart  of a
     signature page of this Amendment by telecopy shall be effective as delivery
     of a manually executed counterpart of this Amendment.

          SECTION 11. Expenses.  Whether or not this Amendment becomes effective
     or the  transactions  contemplated  hereby  are  consummated,  each  of the
     Borrowers  agrees,  on a joint and several basis, to pay all  out-of-pocket
     expenses  incurred  by the  Administrative  Agent  in  connection  with the
     preparation,  execution  and  delivery  of this  Amendment  and  any  other
     documentation  contemplated hereby, including, but not limited to, the fees
     and disbursements of counsel for the Administrative Agent.

          SECTION  12.  Headings.  The  headings of this  Amendment  are for the
     purposes of reference only and shall not affect the  construction of, or be
     taken into consideration in interpreting, this Amendment.

          SECTION 13. Acknowledgment and Consent by the Guarantors.

          (A Each Guarantor hereby  acknowledges that it has read this Amendment
     and  consents to the terms  hereof and further  confirms  and agrees  that,
     notwithstanding  the  effectiveness of this Amendment,  (i) its obligations
     under  its  Guarantee  shall  not be  impaired  or  affected  and (ii) such
     Guarantee  is,  and shall  continue  to be, in full force and effect and is
     hereby confirmed and ratified in all respects.

          (B Each Guarantor hereby confirms and acknowledges  that it is validly
     and justly  indebted  to the Agents and the Banks for the payment of all of
     the Obligations which it has guaranteed,  without offset, defense, cause of
     action or counterclaim of any kind or nature whatsoever.

                                       50
<PAGE>
          IN WITNESS  WHEREOF,  the parties hereto have caused this Amendment to
     be duly executed by their duly authorized officers,  all as of the date and
     year first written above.

                            [signature pages follow]

                                       51
<PAGE>

BORROWERS:

MORRIS MATERIAL HANDLING, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

MORRIS MATERIAL HANDLING, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager

MORRIS MATERIAL HANDLING
  EQUIPMENT LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director

MONDEL ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

KAVERIT STEEL AND CRANE ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

                                       52
<PAGE>

GUARANTORS:

MMH HOLDINGS, INC.


By:   /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


MHE TECHNOLOGIES, INC.


By: /s/ David W. Dupert
      Name: David W. Dupert
      Title:   President


PHMH HOLDING COMPANY


By: /s/ David W. Dupert
      Name: David W. Dupert
      Title:   President


MATERIAL HANDLING EQUIPMENT
  NEVADA CORPORATION


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


CMH MATERIAL HANDLING, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager

                                       53
<PAGE>

EPH MATERIAL HANDLING, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager


HARNISCHFEGER DISTRIBUTION &
  SERVICE, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager


HPH MATERIAL HANDLING, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager


MERWIN, LLC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Manager


MORRIS MECHANICAL HANDLING, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

                                       54
<PAGE>

MPH CRANE, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


NPH MATERIAL HANDLING, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


PHME SERVICE, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


SPH CRANE & HOIST, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


MHE CANADA ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

                                       55
<PAGE>


3016117 NOVA SCOTIA ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


HYDRAMACH ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


BUTTERS ENGINEERING SERVICES LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


INVERCOE ENGINEERING LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


LOWFILE LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director

                                       56
<PAGE>


REDCROWN, ULC


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


MMH (HOLDINGS) LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


MORRIS MATERIAL HANDLING LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


M.M.H. INTERNATIONAL LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Director


MORRIS MATERIAL HANDLING MEXICO
  S.A. DE C.V.


By: /s/ Peter A. Kerrick
      Name: Peter A. Kerrick
      Title:   Director

                                       57
<PAGE>

BIRMINGHAM CRANE & HOIST, INC.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


ARIZONA MOTOR AND CONTROL CORPORATION


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


DAJU HOLDINGS LTD.


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


OVERHEAD CRANE SERVICE & SUPPLY COMPANY LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary


OVERHEAD CRANE SERVICE AND SUPPLY COMPANY (SUDBURY) LIMITED


By: /s/ Martin L. Ditkof
      Name: Martin L. Ditkof
      Title:   Secretary

                                       58
<PAGE>

MORRIS MATERIAL HANDLING
  AUSTRALIA PTY LIMITED


By: /s/ Michael John Maddock
      Name: Michael John Maddock
      Title: Director


MORRIS JDN PTY LIMITED


By: /s/ Michael John Maddock
      Name: Michael John Maddock
      Title: Director


MORRIS POWERLEC PTY LIMITED


By: /s/ Michael John Maddock
      Name: Michael John Maddock
      Title: Director

                                       59
<PAGE>

BANKS:

CANADIAN IMPERIAL BANK
  OF COMMERCE, individually and as
  Administrative Agent and Collateral Agent


By:/s/Lindsay Gordon
      Name:  Lindsay Gordon
      Title: Executive Director


CIBC INC.


By:/s/Lindsay Gordon
      Name:  Lindsay Gordon
      Title: Executive Director



CREDIT AGRICOLE INDOSUEZ, individually and as Syndication Agent


By:/s/Kenneth Kencel
      Name:  Kenneth J. Kencel
      Title: Managing Direcot


By:/s/Patricia Frankel
      Name:  Patricia Frankel
      Title: First Vice President


BANKBOSTON, N.A., individually and as
  Documentation Agent


By:/s/Linda EC Alto
      Name:  Linda EC Alto
      Title: Vice President

                                       60
<PAGE>

ABN-AMRO BANK N.V.


By:/s/William J. Fitzgerald
      Name:  William J. Fitzgerald
      Title: Senior Vice President

By:/s/William J. Teresky, Jr.
      Name:  William J. Teresky, Jr.
      Title: Vice President


BANK AUSTRIA CREDITANSTALT
  CORPORATE FINANCE, INC.


By:/s/Patrick J. Rounds
      Name:  Patrick J. Rounds
      Title: Vice President

By:/s/Jack R. Bertges
      Name:  Jack R. Bertges
      Title: Senior Vice President


THE FIRST NATIONAL BANK OF CHICAGO


By:/s/Deborah Stevens
      Name:  Deborah Stevens
      Title: Authorized Agent


FIRST UNION NATIONAL BANK


By:/s/Scott Santa Cruz
      Name:  Scott Santa Cruz
      Title: Vice President

                                       61
<PAGE>

FLEET NATIONAL BANK


By:/s/Alisa B. Cure
      Name:  Alisa B. Cure
      Title: Executive Director


ARCHIMEDES FUNDING, L.L.C.
  By:  ING Capital Advisors, Inc.,
                  as Collateral Manager


  By:/s/Michael D. Hatley
        Name:  Michael D. Hatley
        Title: Managing Director


RIGGS BANK N.A.


By:______________________________
      Name:
      Title:


FLEET BUSINESS CREDIT CORPORATION


By:/s/Alan F. Lyster, Jr.
      Name:  Alan F. Lyster, Jr.
      Title: Vice President


CRESCENT/MACH I PARTNERS, L.P.
  By:  TCW Asset Management Company,
                  Its Investment Manager


  By:______________________________
        Name:
        Title:



<PAGE>


WELLS FARGO BANK, N.A.


By:______________________________
      Name:
      Title:


PILGRIM PRIME RATE TRUST
  By:  Pilgrim Investments, Inc.,
            as its Investment Manager


  By:/s/Jason T. Groom
        Name:  Jason T. Groom
        Title: Assistant Vice President


SENIOR DEBT PORTFOLIO
  By:  Boston Management and Research,
                  as Investment Advisor


  By:/s/Payson F. Swaffield
        Name:  Payson F. Swaffield
        Title: Vice President


CYPRESSTREE INVESTMENT PARTNERS II, LTD.
  By:  CypressTree Investment ManagementCompany, Inc., as Portfolio Manager


  By:/s/Philip C. Robbins
       Name:  Philip C. Robins
       Title: Principal



                                       62
<PAGE>


INDOSUEZ CAPITAL FUNDING IIA,
  LIMITED
  By:  Indosuez Capital, as Portfolio Advisor


  By:/s/Daniel H. Smith
        Name:  Daniel H. Smith
        Title: Authorized Signatory


INDOSUEZ CAPITAL FUNDING IV, L.P.
  By:  Indosuez Capital, as Portfolio Advisor


  By:/s/Daniel H. Smith
        Name:  Daniel H. Smith
        Title: Authorized Signatory

                                       63
<PAGE>

                                   Schedule 1

<PAGE>

                                  Schedule 5.25

                                  Bank Accounts