CREDIT AGREEMENT



                                      among



                             WILLIAMS CONTROLS, INC.
                                AJAY SPORTS, INC.
                               LEISURE LIFE, INC.
                             PALM SPRINGS GOLF, INC.
                           AJAY LEISURE PRODUCTS, INC.
                             AGROTEC WILLIAMS, INC.
                              APTEK WILLIAMS, INC.
                                 GEOFOCUS, INC.
                              HARDEE WILLIAMS, INC.
                              KENCO/WILLIAMS, INC.
                               NESC WILLIAMS, INC.
                       PREMIER PLASTIC TECHNOLOGIES, INC.
                          WACCAMAW WHEEL WILLIAMS, INC.
                       WILLIAMS CONTROLS INDUSTRIES, INC.
                           WILLIAMS TECHNOLOGIES, INC.
                           WILLIAMS WORLD TRADE, INC.
                            WILLIAMS AUTOMOTIVE, INC.
                             TECHWOOD WILLIAMS, INC.

                                       and

                     WELLS FARGO BANK, NATIONAL ASSOCIATION,



                         TOTAL COMMITMENT -- $34,088,000



                                  July 11, 1997


<PAGE>


                                CREDIT AGREEMENT


      THIS  AGREEMENT is entered into as of July 11, 1997, by and among WILLIAMS
CONTROLS,   INC.  a  Delaware   corporation,   AJAY  SPORTS,  INC.,  a  Delaware
corporation,  LEISURE LIFE,  INC., a Tennessee  corporation,  PALM SPRINGS GOLF,
INC.,  a  Colorado  corporation,   AJAY  LEISURE  PRODUCTS,   INC.,  a  Delaware
corporation,  AGROTEC WILLIAMS,  INC., a Delaware  corporation,  APTEK WILLIAMS,
INC., a Delaware  corporation,  GEOFOCUS,  INC., a Florida  corporation,  HARDEE
WILLIAMS,  INC.,  a  Delaware  corporation,  KENCO/WILLIAMS,  INC.,  a  Delaware
corporation,  NESC  WILLIAMS,  INC.,  a Delaware  corporation,  PREMIER  PLASTIC
TECHNOLOGIES,  INC., a Delaware  corporation,  WACCAMAW WHEEL WILLIAMS,  INC., a
Delaware   corporation,   WILLIAMS   CONTROLS   INDUSTRIES,   INC.,  a  Delaware
corporation, WILLIAMS TECHNOLOGIES, INC., a Delaware corporation, WILLIAMS WORLD
TRADE,  INC.,  a Delaware  corporation,  WILLIAMS  AUTOMOTIVE,  INC., a Delaware
corporation, TECHWOOD WILLIAMS, INC., a Delaware corporation, (each individually
referred to as "Borrower" and all collectively referred to as "Borrowers"),  and
WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

      Borrowers have requested the credit facilities  described herein, and Bank
has agreed to provide  said  credit  facilities  to  Borrowers  on the terms and
conditions contained herein.

      NOW,  THEREFORE,  in consideration of the mutual covenants and promises of
the parties contained herein, Borrowers and Bank hereby agree as follows:



ARTICLE I.  DEFINITIONS

      SECTION 1.1 DEFINED TERMS

      All terms  defined  above shall have the  meanings  set forth  above.  Any
accounting term used in this Agreement which is not specifically  defined herein
shall have the meaning  customarily  given to it under GAAP, and all other terms
contained  in this  Agreement  which are not defined  herein  shall,  unless the
context indicates  otherwise,  have the meanings provided for by the Code to the
extent  such terms are  defined  therein.  The  following  terms  shall have the
meanings  set forth below (with all such  meanings to be equally  applicable  to
both the singular and plural forms of the terms defined):

      "Accounts" shall have the meaning attributed to the term "accounts" in the
Code and shall include, without limitation, all presently existing and hereafter
arising  rights to payment  for goods sold or leased or for  services  rendered,
which are not evidenced by  instruments  or chattel  paper,  whether or not they
have been earned by performance.

                                       P1
<PAGE>

      "Agent" means  Williams  Controls,  Inc., a Delaware  corporation,  in its
capacity as agent for each Borrower.

      "Agreement"   means  this  Credit   Agreement  as  amended,   modified  or
supplemented from time to time.

      "Aggregate  Working Capital" means, as of any date, an amount equal to (i)
the  amount  (which  may  be a  negative  number)  by  which  Williams  Parent's
consolidated   current  assets  exceed  its  consolidated   current  liabilities
(exclusive of the Revolving Loans) plus (ii) the amount (which may be a negative
number)  by  which  Ajay  Parent's   consolidated   current  assets  exceed  its
consolidated  current liabilities  (exclusive of the Revolving Loans),  computed
without duplication with respect to the Obligations.

      "Ajay Parent" means Ajay Sports, Inc., a Delaware corporation.

      "A/R Advance Rates" means the following (or such other rates as Bank
may designate from time to time in its sole discretion) with respect to
the Eligible Accounts of each Borrower listed below:  (i) 70% for Hardee
Williams, Inc. and Kenco/Williams, Inc.; (ii) 75% for Agrotec Williams,
Inc.; (iii) 80% for Palm Springs Golf, Inc. and Premier Plastics
Technologies, Inc. and (iv) 85% for Leisure Life, Inc., Ajay Leisure
Products, Inc., Williams Controls Industries, Inc., Aptek Williams, Inc.,
NESC Williams, Inc., GeoFocus, Inc. and Waccamaw Wheel Williams, Inc.

      "Authorized Representative" means a person designated by Agent on the most
current Notice of Authorized Representatives delivered by Agent to Bank as being
authorized  to request any  borrowing  or make any  interest  rate  selection on
behalf of Borrowers hereunder,  or to give Bank any other notice hereunder which
is required by the terms hereof to be made through an Authorized Representative.

      "Available  Credit" means,  at any time, the amount by which the aggregate
of the outstanding  principal amount of the Revolving Loans at such time and the
Letter  of  Credit  Obligations  at such  time is less  than the  lesser  of (i)
$26,000,000 or (ii) the Borrowing Base.

      "Availability  Reserves"  means,  as of any  date of  determination,  such
amounts  (expressed  as  either  a  specified  amount  or as a  percentage  of a
specified  category or item) as Bank may from time to time  establish and revise
in Good Faith reducing the amount of Revolving Loans and Letters of Credit which
would otherwise be available to Borrowers under the lending formula(s)  provided
for herein: (a) to reflect events, conditions,  contingencies or risks which, as
determined by Bank in Good Faith,  do or may affect either (i) the Collateral or
its value, (ii) the assets, business or prospects of Borrower or any Obligor, or
(iii)  the  security  interests  and  other  rights  of Bank  in the  Collateral
(including  the  enforceability,  perfection  and priority  thereof),  or (b) to
reflect  Bank's  Good  Faith  belief  that any  collateral  report or  financial
information  furnished  by or on behalf of Borrower or any Obligor to Bank is or
may have been incomplete,  inaccurate or misleading in any material respect,  or
(c) in  respect  of any  state of facts  which  Bank  determines  in Good  Faith
constitutes a Default.

                                       P2
<PAGE>

      "Bankruptcy  Code" means the Bankruptcy Reform Act, Title 11 of the United
States Code, as amended or recodified from time to time,  including  (unless the
context otherwise requires) any rules or regulations promulgated thereunder.

      "Base Rate"  means,  for any day, an interest  rate per annum equal to the
rate of interest most recently  announced within Bank at its principal office in
San Francisco,  California, as its prime rate, with any change in the prime rate
to be effective as of the day such change is announced  within Bank and with the
understanding that the prime rate is one of Bank's base rates used to price some
loans and may not be the  lowest  rate at which  Bank  makes  any  loan,  and is
evidenced by the recording thereof in such internal  publication or publications
as Bank may designate.

      "Base Rate Loan" means the outstanding  principal  amount of any Loan that
bears interest with reference to the Base Rate.

      "Borrowing Base" means, as of any date of determination, an amount
equal to the following amount:

            (i) the  applicable  A/R Advance Rates applied to an amount equal to
      (A) the face  amount of the then  outstanding  Eligible  Accounts  of each
      Borrower for whom there is an A/R Advance  Rate less (B) sales,  excise or
      similar  taxes  included  in the  amount  thereof  and less  (C)  returns,
      discounts,  claims,  credits  and  allowances  of any  nature  at any time
      issued,  owing,  granted,  outstanding,  available or claimed with respect
      thereto;

            (ii)  plus  the  lesser  of (a)  $15,000,000  or (b) the  applicable
      Inventory Advance Rates applied,  with respect to the applicable  category
      of  Eligible  Inventory,  to the then  amount of such  Eligible  Inventory
      valued at the lower of cost  (determined on a "first in, first out" basis)
      or market value;

            (iii) less all outstanding Letter of Credit Obligations; and

            (iv)  less all Availability Reserves.

      "Business  Day" means (i) for all purposes other than as covered by clause
(ii)  below,  any day  other  than a  Saturday,  Sunday  or  other  day on which
commercial  banks are  authorized  or  required  to be closed in San  Francisco,
California, and (ii) with respect to all notices,  determinations,  fundings and
payments in connection with any LIBOR interest  selection or LIBOR Loan, any day
that is a Business Day  described in clause (i) above and that also is a day for
trading by and between  banks in U.S.  dollar  deposits in the London  interbank
eurocurrency market.

      "Capitalized Lease" means, as to any Person, any lease of property by such
Person as lessee which would be  capitalized  on a balance  sheet of such Person
prepared in accordance with GAAP.

                                       P3

<PAGE>

      "Capitalized Lease  Obligations"  means, as to any Person, the capitalized
amount of all obligations of such Person and its subsidiaries  under Capitalized
Leases, as determined on a consolidated basis in accordance with GAAP.

      "Cash Collateral Account" has the meaning set forth in Section 4.1
hereof.

      "Change of Law" means the adoption of any Governmental Rule, any change in
any Governmental  Rule or the application or requirements  thereof (whether such
change occurs in accordance with the terms of such Governmental Rule as enacted,
as a result of  amendment or  otherwise),  any change in the  interpretation  or
administration  of any  Governmental  Rule  by any  Governmental  Authority,  or
compliance by Bank (or any entity controlling Bank) with any request,  guideline
or  directive  (whether  or not  having  the  force of law) of any  Governmental
Authority.

      "Closing Date" means the date of this Agreement.

      "Code" means the Uniform Commercial Code of the State of Oregon as amended
from time to time.

      "Collateral"  means (i) all property and rights in and to property of each
Borrower,  including,  without  limitation,  all Rights to  Payment,  Inventory,
General Intangibles,  Equipment, Records and money and all instruments,  chattel
paper, deposit accounts,  documents, goods, investment property (except stock of
a Borrower) and fixtures; (ii) all products,  proceeds, rents and profits of the
foregoing;  and (iii) all of the  foregoing,  whether  now owned or  existing or
hereafter  acquired  or arising or in which any  Borrower  now has or  hereafter
acquires any rights.

      "Commodity Contracts" means commodity options,  futures,  swaps, and other
similar  agreements  and  arrangements  designed to provide  protection  against
fluctuations in commodity prices.

      "Contaminant" means any pollutant,  hazardous substance,  toxic substance,
hazardous waste or other  substance  regulated or forming the basis of liability
under any Environmental Law.

      "Contingent  Obligation"  means,  as applied to any Person,  any direct or
indirect liability,  contingent or otherwise, of such Person with respect to any
Indebtedness  or  Contractual  Obligation of another  Person,  if the purpose or
intent of such  Person in  incurring  the  Contingent  Obligation  is to provide
assurance to the obligee of such  Indebtedness  or Contractual  Obligation  that
such Indebtedness or Contractual Obligation will be paid or discharged,  or that
any agreement entered into by such other Person relating to such Indebtedness or
Contingent  Obligation  will be  complied  with,  or  that  any  holder  of such
Indebtedness or Contractual Obligation will be protected against loss in respect
thereof. Contingent Obligations of a Person include, without limitation, (a) the
direct or indirect guarantee,  endorsement (other than for collection or deposit
in the ordinary  course of business),  co-making,  discounting  with recourse or
sale with recourse by such Person of an obligation of another Person, and (b)

                                       P4

<PAGE>

any  liability of such Person for an obligation  of another  Person  through any
agreement  (contingent  or otherwise)  (i) to purchase,  repurchase or otherwise
acquire such  obligation or any security  therefor,  or to provide funds for the
payment or discharge of such obligation (whether in the form of a loan, advance,
stock  purchase,  capital  contribution  or  otherwise),  (ii) to  maintain  the
solvency or any balance  sheet item,  level of income or financial  condition of
another  Person,  (iii) to make  take-or-pay or similar  payments,  if required,
regardless  of  non-performance  by any other party or parties to an  agreement,
(iv) to purchase,  sell or lease (as lessor or lessee) property,  or to purchase
or sell  services,  primarily  for the  purpose of  enabling  the debtor to make
payment of such  obligation or to assure the holder of such  obligation  against
loss,  or (v) to supply  funds to or in any other  manner  invest in such  other
Person  (including,   without  limitation,  to  pay  for  property  or  services
irrespective  of  whether  such  property  is  received  or  such  services  are
rendered),  if in the  case  of  any  agreement  or  liability  described  under
subclause (i), (ii),  (iii), (iv) or (v) of this sentence the primary purpose or
intent  thereof is as described  in the  preceding  sentence.  The amount of any
Contingent  Obligation  shall be equal to the lesser of (i) the  amount  payable
under such Contingent  Obligation (if quantifiable),  or (ii) the portion of the
obligation so guaranteed or otherwise supported.

      "Contractual  Obligation" of any Person means any  obligation,  agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement,  undertaking,  contract, lease, indenture, mortgage, deed of trust or
other  instrument  to which such  Person is a party or by which it or any of its
property is bound or to which any of its property is subject.

      "Default"  means an Event of Default or an event or  condition  which with
the giving of notice or the passage of time, or both,  would constitute an Event
of Default.

      "Disclosure Schedule" means Schedule I attached hereto.

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974,  as
amended or recodified from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.

      "Eligible  Accounts"  means those  Accounts  which Bank  determines  to be
eligible  in the Good  Faith  exercise  of its  discretion  pursuant  to Section
3.1(e).

      "Eligible  Inventory"  means (i)  Inventory  which Bank  determines  to be
eligible in the Good Faith exercise of its discretion pursuant to Section 3.1(f)
plus  (ii) the face  amount  of each  documentary  Letter  of  Credit  issued in
connection  with the  acquisition by Borrower of goods that will be, on delivery
to Borrower in the United States,  Eligible Inventory as defined under item (i),
provided such Letter of Credit provides that no draft against it will be honored
unless all  documents  necessary to claim and take  delivery of the goods in the
United States are delivered  with the draft and provided  Borrower has delivered
to Bank such  evidence of insurance of the goods (and  provision  for payment of
the proceeds thereof to Bank) as Bank may require.

                                       P5

<PAGE>
      "Environmental  Law" means all applicable  federal,  state and local laws,
statutes,   ordinances  and   regulations,   and  any  applicable   judicial  or
administrative  interpretation,  order, consent decree or judgment,  relating to
the regulation and protection of the environment. Environmental Laws include but
are not limited to the Comprehensive Environmental Response,  Compensation,  and
Liability  Act of 1980, as amended (42 U.S.C.  ss. 9601 et seq.);  the Hazardous
Material Transportation Act, as amended (49 U.S.C. ss. 180 et seq.); the Federal
Insecticide,  Fungicide,  and Rodenticide  Act, as amended (7 U.S.C.  ss. 136 et
seq.);  the Resource  Conservation  and Recovery Act, as amended (42 U.S.C.  ss.
6901 et seq.);  the Toxic Substance  Control Act, as amended (42 U.S.C. ss. 7401
et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.); the Federal
Water Pollution  Control Act, as amended (33 U.S.C.  ss. 1251 et seq.);  and the
Safe  Drinking  Water Act,  as amended (42 U.S.C.  ss. 300f et seq.),  and their
state and local  counterparts  or  equivalents  and any  applicable  transfer of
ownership notification or approval statutes.

      "Environmental  Liabilities  and  Costs"  means,  as to  any  Person,  all
liabilities, obligations,  responsibilities,  Remedial Actions, losses, damages,
punitive  damages,  consequential  damages,  treble damages,  costs and expenses
(including, without limitation, all fees, disbursements and expenses of counsel,
experts and consultants  and costs of  investigation  and feasibility  studies),
fines,  penalties,  sanctions and interest  incurred as a result of any claim or
demand by any other Person, whether based in contract,  tort, implied or express
warranty,  strict  liability,  criminal  or civil  statute,  including,  without
limitation,  any thereof arising under any Environmental  Law, Permit,  order or
agreement with any Governmental  Authority or other Person,  and which relate to
any violation or alleged  violation of an  Environmental  Law or a Permit,  or a
Release or threatened Release.

      "Equipment"  shall have the meaning  attributed to the term "equipment" in
the Code and shall  include,  without  limitation,  all now owned and  hereafter
acquired  equipment,  machinery,  computers  and computer  hardware and software
(whether  owned  or  licensed),   vehicles,  tools,  furniture,   fixtures,  all
attachments, accessions and property now or hereafter affixed thereto or used in
connection  therewith,  and  substitutions  and replacements  thereof,  wherever
located.

      "Event of Default" has the meaning set forth in Section 10.1 hereof.

      "Excess Cash Flow" means, for any period,  net income for such period plus
all depreciation,  amortization and other noncash charges for such period,  less
all capital  expenditures  (other than expenditures paid for with  non-operating
sources) made (as  determined in accordance  with GAAP) during such period,  but
only to the extent that such  capital  expenditures  are  permitted  pursuant to
Section  9.14,  less the scheduled  portion of any long-term  debt which matured
during such period and was paid during such period,  less (or plus) any increase
(or  decrease)  in  working  capital  (calculated  exclusive  of  cash  and  the
outstanding Revolving Loan balance) from the beginning of such period to the end
of such period,  plus all federal,  state and local income taxes accrued  during
such  period,  and less all federal,  state and local  income tax payments  made
during such period.

                                       P6

<PAGE>
     "Fee Computation Amount" means, as of the date of computation, the total of
(i) the  amount  set  forth  in item  (i) of  Section  3.1(a)  and (ii) the then
outstanding principal balance of Term Loan I, Term Loan II and Real Estate Loan.

      "Fixed Rate Term"  means a period of one,  two,  three or six  months,  as
designated by Agent,  during which a Loan bears interest  determined in relation
to LIBOR;  provided  however,  that no Fixed  Rate Term may  extend  beyond  the
Maturity  Date,  and if the last day of a Fixed Rate Term is not a Business Day,
such term shall be extended to the next succeeding  Business Day, or if the next
succeeding  Business Day falls in another calendar month, such term shall end on
the next preceding Business Day.

      "GAAP" means generally accepted accounting  principles as in effect in the
United States from time to time, consistently applied.

      "General  Intangibles"  shall  have  the  meaning  attributed  to the term
"general intangible" in the Code, and shall include, without limitation, all tax
and duty refunds,  registered  and  unregistered  patents,  trademarks,  service
marks, copyrights,  trade names, applications for the foregoing,  trade secrets,
goodwill, processes, drawings, blueprints,  customer lists, licenses, whether as
licensor or licensee,  choses in action and other claims and existing and future
leasehold interests in equipment.

      "Good  Faith"  means  honesty  in  fact  in  the  conduct  or  transaction
concerned,   without  regard  to  whether   standards   which  might  be  deemed
commercially reasonable have been observed.

      "Governmental  Authority" means any domestic or foreign national, state or
local government,  any political  subdivision thereof,  any department,  agency,
authority  or bureau of any of the  foregoing,  or any other  entity  exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining to government,  including the Federal Deposit Insurance  Corporation,
the Federal Reserve Board, the Comptroller of the Currency,  any central bank or
any comparable authority.

      "Governmental Rule" means any applicable law, rule, regulation, ordinance,
order, code interpretation,  judgment, decree, directive,  guidelines, policy or
similar form of decision of any Governmental Authority.

      "Indebtedness"  of  any  Person  means,  without   duplication,   (a)  all
indebtedness of such Person for borrowed money (including,  without  limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and  bankers'  acceptances,  whether or not  matured) or for the deferred
purchase  price of  property or  services,  (b) all  obligations  of such Person
evidenced  by  notes,  bonds,   debentures  or  similar  instruments,   (c)  all
indebtedness  of such Person  created or arising under any  conditional  sale or
other title retention agreement with respect to property acquired by such Person
(even  though  the  rights  and  remedies  of the  seller or lender  under  such
agreement  in the event of default are limited to  repossession  or sale of such
property),  (d)  all  Capitalized  Lease  Obligations  of such  Person,  (e) all
Contingent Obligations of such Person, (f) all obligations of such Person to

                                       P7

<PAGE>
purchase,  redeem,  retire,  defease or otherwise acquire for value any Stock or
Stock Equivalents of such Person with a mandatory  repurchase or redemption date
of less than ten years from the date of issuance thereof, (g) all obligations of
such Person under  Interest  Rate  Contracts and  Commodity  Contracts,  (h) all
Indebtedness  referred to in clause (a),  (b),  (c),  (d), (e), (f) or (g) above
secured by (or for which the holder of such  Indebtedness has an existing right,
contingent  or  otherwise,  to be  secured  by) any  Lien  upon  or in  property
(including, without limitation,  Accounts and General Intangibles) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such  Indebtedness,  (i) in the case of Borrower,  its obligations  under the
Loan  Documents,  (j) all  liabilities  of such Person which would be shown on a
balance  sheet of such Person  prepared  in  accordance  with GAAP,  and (k) all
liabilities  of such Person in connection  with the failure to make when due any
contribution or payment pursuant to or under any Plan.

      "Interest Rate Contracts"  means interest rate swap  agreements,  interest
rate cap agreements,  interest rate collar agreements,  interest rate insurance,
and other  agreements or  arrangements  designed to provide  protection  against
fluctuations in interest rates.

      "Indemnitees" has the meaning set forth in Section 11.5 hereof.

      "Inventory"  shall have the meaning  attributed to the term "inventory" in
the Code and, in addition, means all now owned and hereafter acquired inventory,
goods,  merchandise and other personal property  wherever located,  while in the
possession of Borrower, a bailee, or other Person,  furnished under any contract
of service or intended for sale or lease,  including,  without  limitation,  all
farm products,  raw materials,  work in process,  spare parts,  component parts,
finished  goods and  materials and supplies of any kind,  nature or  description
which are or might be used or consumed in Borrower's business or are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or  finishing of such goods,  merchandise  and other  personal  property and all
documents of title or documents representing the same.

      "Inventory  Advance  Rates" means  percentages  to be fixed and subject to
change by Bank from time to time in Good Faith and in its discretion,  which are
applied to Eligible  Inventory for purposes of determining  the Borrowing  Base.
Initially, the Inventory Advance Rates shall be as follows: (i) 35% with respect
to raw  materials  and  (ii)  50%  with  respect  to  finished  goods.  Bank may
establish,  in the Good Faith exercise of its discretion,  one or more Inventory
Advance  Rates which may be applied  severally  against  specific  categories or
types of Eligible Inventory, and may from time to time adjust one or more of the
Inventory  Advance Rates to reflect  contingencies or risks which may affect the
Collateral, the business, business prospects or financial condition of Borrower,
or the security of the Loans.

      "Letter of Credit"  means a letter of credit  issued by Bank  pursuant  to
Section 3.2 hereof.

      "Letter  of  Credit  Agreement"  means  Bank's  standard  letter of credit
application  and  documentation  modified to such extent,  if any, as Bank deems
necessary.

                                       P8
<PAGE>
      "Letter of Credit Obligations" means, at any time, all liabilities at such
time of Borrowers to Bank with respect to Letters of Credit,  whether or not any
such liability is contingent.

      "LIBOR"  means,  for each  Fixed Rate  Term,  the rate per annum  (rounded
upward if necessary to the nearest whole 1/16 of 1%) and determined  pursuant to
the following formula:

      LIBOR =             Base LIBOR
                 ------------------------------------
                    100% - LIBOR Reserve Percentage

      As used herein,  (i) "Base LIBOR" means the average of the rates per annum
at which U.S.  dollar  deposits  are  offered  to Bank in the  London  interbank
eurocurrency  market on the second  Business Day prior to the  commencement of a
Fixed Rate Term at or about 11:00 A.M.  (London time), for delivery on the first
day of such Fixed Rate Term, for a term comparable to the number of days in such
Fixed Rate Term and in an amount  approximately equal to the principal amount to
which such Fixed Rate Term shall  apply,  and (ii)  "LIBOR  Reserve  Percentage"
means the reserve percentage prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for "Eurocurrency  Liabilities" (as defined in
Regulation D of the Federal  Reserve  Board,  as amended),  adjusted by Bank for
changes in such reserve percentage during the applicable Fixed Rate Term.

      "LIBOR Loan" means the outstanding principal amount of any Loan that bears
interest with reference to LIBOR.

      "Lien"  means  any  mortgage,   deed  of  trust,  pledge,   hypothecation,
assignment,  deposit  arrangement,   encumbrance,  lien  (statutory  or  other),
security  interest,   priority  or  other  security  agreement  or  preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention  agreement or the interest of a lessor
under a Capitalized Lease Obligation or any other lease.

      "Loan"  means an  advance  made by Bank to  Borrowers  pursuant  to any of
Sections 3.1, 3.3, 3.4 or 3.5.

      "Loan Documents" means this Agreement and all notes, guarantees,  security
agreements,  subordination  agreements,  and  other  agreements,  documents  and
instruments now or at any time hereafter  executed and/or  delivered by Borrower
or any Obligor in connection with this  Agreement,  as the same now exist or may
hereafter be amended,  modified,  supplemented,  extended,  renewed, restated or
replaced.

      "Material  Adverse  Effect"  means a  material  adverse  effect on (a) the
condition (financial or otherwise), business, performance, prospects, operations
or  properties  of  Borrowers,  (b) the  ability of  Borrowers  to  perform  the
Obligations, or (c) the rights and remedies of Bank under the Loan Documents.

      "Maturity Date" means the third anniversary of the Closing Date.

                                       P9

<PAGE>
      "Note"  means a  promissory  note  executed by  Borrowers in favor of Bank
evidencing  Loans,  substantially  in one of the  forms  attached  as  Exhibit A
hereto.

      "Notice of Authorized Representatives" has the meaning set forth in
Section 2.2 hereof.

      "Notice of Borrowing" has the meaning set forth in Section 3.1(d)
hereof.

      "Notice of Conversion or Continuation" has the meaning set forth in
Section 3.7(b) hereof.

      "Obligations"   means  all  of  Borrowers'   obligations  under  the  Loan
Documents,  whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising.

      "Obligor" means any guarantor,  endorser, acceptor, surety or other person
liable on or with  respect  to the  Obligations,  or any of them,  or who is the
owner of any  property  which is security for the  Obligations,  or any of them,
other than Borrowers.

      "Permit" means any permit, approval,  authorization,  license, variance or
permission   required  from  a  Governmental   Authority   under  an  applicable
Governmental Rule.

      "Permitted  Liens" means (i) Liens  arising by operation of law for taxes,
assessments  or  governmental  charges  not yet  due,  (ii)  statutory  Liens of
mechanics,  materialmen,  shippers,  warehousemen,  carriers,  and other similar
persons for services or materials arising in the ordinary course of business for
which payment is not yet due,  (iii)  non-consensual  Liens incurred or deposits
made  in  the  ordinary   course  of  business  in   connection   with  workers'
compensation,  unemployment  insurance and other types of social security,  (iv)
Liens  for  taxes  or  statutory  Liens  of  mechanics,  materialmen,  shippers,
warehousemen, carriers and other similar persons for services or materials which
are due but are being  contested  in good  faith and by  appropriate  and lawful
proceedings  promptly initiated and diligently  conducted and for which reserves
satisfactory to Bank have been established, (v) Liens listed on Schedule I, (vi)
Liens in favor of Bank and (vii) liens to United States  National Bank of Oregon
which are subject to subordination terms acceptable to Bank.

      "Person" means an individual, partnership, corporation (including, without
limitation,  a business trust), joint stock company,  limited liability company,
trust,  unincorporated  association,   joint  venture  or  other  entity,  or  a
Governmental Authority.

      "Plan"  means an  employee  benefit  plan,  as defined in Section  3(3) of
ERISA,  which  Borrower  maintains,  contributes  to or  has  an  obligation  to
contribute to on behalf of participants who are or were employed by any of them.

      "Real Estate Loan" has the meaning set forth in Section 3.5(a)
hereof.

                                      P10

<PAGE>
      "Records" means all of Borrower's  present and future records and books of
account of every kind or nature, purchase and sale agreements,  invoices, ledger
cards, bills of lading and other shipping evidence, statements,  correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor,  together with the tapes,  disks,  diskettes and other data and software
storage  media and  devices,  file  cabinets  or  containers  in or on which the
foregoing  are stored  (including  any rights of  Borrower  with  respect to the
foregoing maintained with or by any other Person).

      "Release"  means,  as to any  Person,  any  unpermitted  spill,  emission,
leaking, pumping, injection, deposit, disposal,  discharge,  dispersal, leaching
or migration of a Contaminant into the environment.

      "Remedial Action" means all actions required to clean up, remove,  prevent
or  minimize a Release or threat of Release or to perform  pre-remedial  studies
and investigations and post-remedial monitoring and care.

      "Revolving Loan" means a Loan made to Borrowers pursuant to
Section 3.1(a).

      "Rights to Payment"  means all  Accounts,  General  Intangibles,  contract
rights,  chattel  paper,  documents,  instruments,  letters of  credit,  bankers
acceptances  and  guaranties,   and  all  present  and  future  liens,  security
interests,  rights,  remedies,  title  and  interest  in, to and in  respect  of
Accounts and other Collateral,  and shall include without limitation, (a) rights
and remedies under or relating to guaranties,  contracts of suretyship,  letters
of credit and credit and other insurance  related to the Collateral,  (b) rights
of stoppage in transit, replevin, repossession, reclamation and other rights and
remedies of an unpaid vendor,  lienor or secured party,  (c) goods  described in
invoices,  documents,  contracts  or  instruments  with respect to, or otherwise
representing  or evidencing,  Accounts or other  Collateral,  including  without
limitation,  returned,  repossessed and reclaimed goods, and (d) deposits by and
property of account debtors or other persons securing the obligations of account
debtors, monies,  securities,  credit balances,  deposits,  deposit accounts and
other property of Borrower now or hereafter held or received by or in transit to
Bank or any of its  affiliates or at any other  depository or other  institution
from or for the account of Borrower,  whether for safekeeping,  pledge, custody,
transmission, collection or otherwise.



                                     P11

<PAGE>
      "Stock"  means  shares  of  capital   stock,   beneficial  or  partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or other entity, whether voting or non-voting, and includes,
without limitation, common stock and preferred stock.

      "Stock Equivalents" means all securities  convertible into or exchangeable
for Stock and all warrants, options or other rights to purchase or subscribe for
any Stock, whether or not presently convertible, exchangeable or exercisable.

      "Subsidiary"  means  any  corporation,   association,  partnership,  joint
venture or other business  entity which is not a Borrower and of which more than
fifty  percent  (50%) of the  voting  stock or other  equity  interest  is owned
directly or indirectly by Williams Parent or Ajay Parent.

                                      P12
<PAGE>
      "Tangible Net Worth" means  stockholders'  equity less: (i) all intangible
assets (net of amortization); (ii) all treasury stock; and (iii) all obligations
due from stockholders, employees and/or affiliates.

      "Term Loan I" has the meaning set forth in Section 3.3(a) hereof.

      "Term Loan II" has the meaning set forth in Section 3.4(a) hereof.

      "Tranche" means a collective  reference to LIBOR Loans,  the  then-current
Fixed Rate Term with  respect to all of which  begin on the same date and end on
the same later date (whether or not such LIBOR Loans shall have  originally been
made on the same day).

      "Williams Parent" means Williams Controls, Inc., a Delaware
corporation.

      SECTION 1.2 HEADINGS

      Headings in the Loan  Documents are for  convenience of reference only and
are not part of the substance hereof or thereof.

                                     P13

<PAGE>

ARTICLE II.  APPOINTMENT OF AGENT; JOINT AND SEVERAL LIABILITY

      SECTION 2.1 APPOINTMENT OF AGENT

      In order to  facilitate  and  insure  prompt  and  accurate  communication
between   Borrowers   and  Bank  and  to  insure  the  efficient  and  effective
distribution  of proceeds of the Loans,  each Borrower  hereby appoints Agent as
its agent to perform the  functions  of the Agent under the Loan  Documents,  to
take such  actions  and make such  elections  on such  Borrower's  behalf as are
delegated to the Agent in the Loan Documents and for the following purposes: (i)
communicating  to and receiving  communications  from Bank;  (ii)  receiving all
proceeds of the Loans and making all  decisions  regarding the  distribution  of
such  proceeds  among  the  Borrowers  as  Agent,  in the sole  exercise  of its
discretion,  deems fair and  appropriate;  and (iii)  making all  decisions  and
elections  with respect to requests for advances of credit,  issuance of Letters
of Credit and election of interest options.

      SECTION 2.2 AUTHORIZED REPRESENTATIVES

      On the Closing Date, and from time to time  subsequent  thereto at Agent's
option,  Agent shall  deliver to Bank a written  notice in the form of Exhibit B
attached hereto, which designates by name one or more Authorized Representatives
and includes each of their respective  specimen  signatures  (each, a "Notice of
Authorized Representatives"). Bank shall be entitled to rely conclusively on the
authority of each person designated as an Authorized  Representative in the most
current  Notice of  Authorized  Representatives  delivered by Agent to Bank,  to
request  borrowings and select interest rate options  hereunder,  and to give to
Bank such  other  notices  as are  specified  herein as being  made  through  an
Authorized  Representative,  until such time as Agent has delivered to Bank, and
Bank has actual receipt of, a new written Notice of Authorized  Representatives.
Bank shall have no duty or obligation to Borrowers to verify the authenticity of
any  signature  appearing on any Notice of  Borrowing,  Notice of  Conversion or
Continuation or any other written notice from an Authorized Representative or to
verify  the   authenticity  of  any  person   purporting  to  be  an  Authorized
Representative giving any telephonic notice permitted hereby.

      SECTION 2.3 JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION

      (a) Each  Borrower  states and  acknowledges  that:  (i)  pursuant to this
Agreement,   Borrowers  desire  to  utilize  their  borrowing   potential  on  a
consolidated basis to the same extent possible if they were merged into a single
corporate entity;  (ii) it has determined that it will benefit  specifically and
materially from the advances of credit contemplated by this Agreement;  (iii) it
is both a condition  precedent to the obligations of Bank hereunder and a desire
of Borrowers that each Borrower execute and deliver to Bank this Agreement;  and
(iv)  Borrowers  have requested and bargained for the structure and terms of the
credit contemplated by this Agreement.

      (b) Each Borrower hereby irrevocably and unconditionally:  (i) agrees that
it is jointly and  severally  liable to Bank for the full and prompt  payment of
the  Obligations  and  the  performance  by  each  Borrower  of its  obligations
hereunder in  accordance  with the terms of the Loan  Documents;  (ii) agrees to
fully and promptly perform all of its obligations  under the Loan Documents with
respect to each  advance of credit  hereunder  as if such  advance had been made
directly to it; and (iii) agrees as a primary  obligation  to indemnify  Bank on
demand  for and  against  any loss  incurred  by Bank as a result  of any of the
obligations of any one or more of Borrowers  under the Loan  Documents  being or
becoming void, voidable, unenforceable or ineffective for any reason whatsoever,
whether or not known to Bank or any other Person,  the amount of such loss being
the amount which Bank would otherwise have been entitled to recover from any one
or more of  Borrowers.  Each Borrower  hereby  irrevocably  and  unconditionally
accepts,  not  merely as a surety  but also as a  co-debtor,  joint and  several
liability with each other  Borrower with respect to the payment and  performance
of all of the Obligations.  If and to the extent that any Borrower fails to make
any payment with respect to the Obligations as and when due or to perform any of
its obligations in accordance with the terms of the Loan Documents, then in each
such  event the other  Borrowers  will make such  payment  with  respect  to, or
perform, such obligations.

      (c) The joint and several  liability of each Borrower for the  Obligations
shall be absolute and unconditional  irrespective of and shall not be subject to
any reduction, limitation,  impairment or termination for any reason, including,
without  limitation,  any claim of waiver,  release,  surrender,  alteration  or
compromise,  and shall not be  subject to any  defense or setoff,  counterclaim,
recoupment or termination whatsoever by reason of the invalidity,  illegality or
unenforceability of any of the Obligations. Without limiting the generality of

                                      P14

<PAGE>
the  foregoing,  the  obligations  of each  Borrower  shall not be discharged or
impaired or otherwise affected by:

            (i)  any  change  in the  manner,  place  or  terms  of  payment  or
      performance  and/or  any  change or  extension  of the time of  payment or
      performance  of,  renewal or alteration of, any  Obligation,  any security
      therefor,  or any  liability  incurred  directly or  indirectly in respect
      thereof, or any rescission of, or amendment,  waiver or other modification
      of, or any consent to  departure  from any Loan  Document,  including  any
      increase in the  Obligations  resulting  from the  extension of additional
      credit to any of Borrowers;

            (ii) any sale, exchange,  release,  surrender,  realization upon any
      property  at  any  time   pledged  or  mortgaged  to  secure  any  of  the
      Obligations, and/or any offset against, or failure to perfect, or continue
      the  perfection  of,  any  lien in any  such  property,  or  delay  in the
      perfection  of any such lien,  or any amendment or waiver of or consent to
      departure from any other guaranty for any of the Obligations;

            (iii)  the  failure  of Bank to  assert  any  claim or  demand or to
      enforce any right or remedy against any Borrower or any other Person under
      the provisions of any Loan Document;

            (iv) any  settlement or compromise of any  Obligation,  any security
      therefor  or any  liability  incurred  directly or  indirectly  in respect
      thereof,  and any  subordination of the payment of any part thereof to the
      payment of any  obligation  (whether due or not) of any other  Borrower to
      creditors of such other Borrower other than any other Borrower;

            (v) any manner of application of any collateral for the  Obligations
      or proceeds thereof,  to any of the Obligations,  or any manner of sale or
      other disposition of any such collateral for all or any of the Obligations
      or any other assets of any Borrower;

            (vi)  any change, restructuring or termination of the
      existence of any Borrower; or

            (vii) any other agreement or  circumstance of any nature  whatsoever
      that might in any manner or to any extent  vary the risk of any  Borrower,
      or that might otherwise at law or in equity constitute a defense available
      to, or a discharge of, the  obligations of any Borrower,  or a defense to,
      or discharge  of, any Borrower or any other Person  relating to any of the
      Obligations.

      (d) The joint and several  liability of Borrowers  shall  continue in full
force and effect  notwithstanding  any absorption,  merger,  amalgamation or any
other  change  whatsoever  in the  name,  membership,  constitution  or place of
formation of any Borrower.

                                      P15

<PAGE>
      (e) It is the intent of each Borrower that the  indebtedness,  obligations
and liability  hereunder of no one of them be subject to challenge on any basis.
Accordingly,  as of the date hereof,  the liability of each  Borrower  under the
Loan Documents,  together with all of its other liabilities to all Persons as of
the date  hereof and as of any other date on which a transfer is deemed to occur
by virtue of this  Agreement,  calculated  in an  amount  sufficient  to pay its
probable net liabilities  (including contingent  liabilities) as the same become
absolute  and  matured  ("Dated  Liabilities")  is, and is to be,  less than the
amount  of  the  aggregate  of a  fair  valuation  of its  property  as of  such
corresponding date ("Dated Assets"). To this end each Borrower hereby (i) grants
to and recognizes in each other  Borrower,  ratably,  rights of subrogation  and
contribution in the amount,  if any, by which the Dated Assets of such Borrower,
but for the aggregate of subrogation and  contribution  in its favor  recognized
herein,  would exceed the Dated Liabilities of such Borrower or, as the case may
be (ii)  acknowledges  receipt of and recognizes  its right to  subrogation  and
contribution  ratably from each of the other Borrowers in the amount, if any, by
which  the  Dated  Liabilities  of  such  Borrower,  but for  the  aggregate  of
subrogation and  contribution in its favor recognized  herein,  would exceed the
Dated Assets of such Borrower.  In recognizing the value of the Dated Assets and
the Dated  Liabilities,  it is understood that Borrowers will  recognize,  to at
least the same extent of their aggregate  recognition of liabilities  hereunder,
their  rights  to  subrogation  and  contribution  hereunder.  It is a  material
objective of this Section that each Borrower  recognizes  rights to  subrogation
and  contribution  rather than be deemed to be  insolvent  (or in  contemplation
thereof) by reason of its joint and several obligations hereunder.


                                     P16

<PAGE>
ARTICLE III.  THE CREDITS

      SECTION 3.1 REVOLVING LOANS

      (a) On  the  terms  and  subject  to  the  conditions  contained  in  this
Agreement, Bank agrees to make loans (each a "Revolving Loan") to Borrowers from
time to time until the Maturity Date in an aggregate amount not to exceed at any
time  outstanding  the lesser of (i)  $26,000,000  or (ii) the  Borrowing  Base.
Borrowers  may  from  time to time  borrow,  partially  or  wholly  repay  their
outstanding Revolving Loans, and reborrow, subject to all the limitations, terms
and conditions contained herein.

      (b) If at any time the Available  Credit is negative,  Borrowers,  without
demand or notice,  shall  immediately  repay that portion of the Revolving Loans
necessary to cause the Available  Credit to be zero.  Borrowers  shall repay the
outstanding  principal balance of the Revolving Loans, together with all accrued
and unpaid  interest and related fees on the earlier of the Maturity Date or the
due date determined pursuant to Section 10.2.

      (c)   The Revolving Loans shall be evidenced by a Note payable to
the order of Bank.


      (d) Agent,  through one of the Authorized  Representatives,  shall request
each advance under Section 3.1(a) by giving Bank  irrevocable  written notice or
telephonic  notice  (confirmed  promptly in  writing),  in the form of Exhibit C
attached hereto (each, a "Notice of Borrowing"),  which  specifies,  among other
things:

            (i)   the principal amount of the requested advance;

            (ii)  the proposed date of borrowing, which shall be a
      Business Day;

            (iii) whether such advance is to be a Base Rate Loan or a
      LIBOR Loan; and

            (iv) if such advance is to be a LIBOR Loan,  the length of the Fixed
      Rate Term applicable thereto.

      Each such Notice of Borrowing  must be received by Bank not later than (i)
10:00 a.m. (San Francisco time) on the date of borrowing if a Base Rate Loan, or
(ii) at least  three  Business  Days prior to the date of  borrowing  if a LIBOR
Loan. In addition to advances  requested by Agent,  advances of Revolving  Loans
may be made  automatically  pursuant to certain  arrangements made by Agent with
Bank and each such advance shall be a Base Rate Loan.


                                     P17

<PAGE>
      (e) Bank shall have the right in its discretion to determine in Good Faith
which Accounts are eligible for the purpose of determining  the Borrowing  Base.
General criteria for Eligible  Accounts may be established and revised from time
to time by Bank in Good Faith.  Without  limiting  such  discretion  as to other
Accounts, the following Accounts shall not be Eligible Accounts:

            (i)  Accounts  which  do not  consist  of  ordinary  trade  accounts
      receivable  owned by Borrower,  payable in cash in United  States  dollars
      (except  for  amounts  payable  in a foreign  currency  if the  applicable
      Borrower has entered into a currency hedge  agreement with respect to such
      foreign currency on terms acceptable to Bank) and arising out of the final
      sale of  Inventory  or  provision  of services in the  ordinary  course of
      Borrower's business as presently conducted by it;

           (ii) Accounts with respect to which the services covered thereby have
      not been rendered or the goods covered  thereby have not been delivered to
      the  account  debtor or its  designee  or with  respect to which  Borrower
      failed to issue an original  invoice at the agreed-upon  purchase price to
      the account debtor  promptly  after  rendering such services or delivering
      such goods to the account debtor;

          (iii)   Accounts which are not absolutely and unconditionally
      payable;

           (iv)  Accounts  with respect to which more than 150 days have elapsed
      since the date of the original invoice applicable thereto;

            (v)   Accounts which are more than 60 days past due;


                                      P18

<PAGE>
        (vi) Accounts  with respect to which the account  debtor is an affiliate
      of Borrower or any officer,  employee or agent of the account debtor is an
      officer,  employee or agent of or  affiliated  with  Borrower  directly or
      indirectly by virtue of family membership,  ownership, control, management
      or otherwise;

          (vii)  Accounts with respect to which the account debtor is the United
      States of America or any department,  agency or  instrumentality  thereof,
      except for those  Accounts as to which  Borrower has assigned its right to
      payment  thereof  to  Bank,  and the  assignment  has  been  acknowledged,
      pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
      ss.3727);

         (viii) the chief executive office of the account debtor with respect to
      such  Account is not located in the United  States of America,  unless (a)
      the account  debtor has  delivered  to Borrower an  irrevocable  letter of
      credit issued or confirmed by a bank  satisfactory to Bank,  sufficient to
      cover such  Account,  in form and substance  satisfactory  to Bank and, if
      required by Bank, the original of such letter of credit has been delivered
      to Bank or Bank's agent and the issuer thereof  notified of the assignment
      of the  proceeds  of such  letter of credit to Bank,  (b) such  Account is
      subject to credit  insurance  payable to Bank  issued by an insurer and on
      terms and in an amount  acceptable to Bank, (c) the account debtor resides
      in a province of Canada which recognizes Bank's perfection and enforcement
      rights as to  Accounts  by reason of the filing of a UCC-1 in the state of
      the applicable  Borrower's chief executive  office, or (d) such Account is
      otherwise  acceptable  in all  respects to Bank  (subject to such  lending
      formula with respect thereto as Bank may determine);


                                     P19

<PAGE>
           (ix) Accounts for which the prospect of payment or performance by the
      account debtor is or will be impaired in the Good Faith  determination  of
      Bank;

            (x)  Accounts  with  respect to which Bank does not have a valid and
      prior,  fully  perfected  lien or which are not free of all liens or other
      claims of all other Persons (except Permitted Liens);

           (xi) Accounts with respect to which the account debtor is the subject
      of  bankruptcy  or  a  similar  insolvency  proceeding,  or  has  made  an
      assignment  for the  benefit  of  creditors,  or whose  assets  have  been
      conveyed to a receiver or trustee,  or who has failed or suspended or gone
      out of business;

          (xii) Accounts with respect to which the account  debtor's  obligation
      to pay the Accounts is conditional upon the account debtor's approval;

         (xiii)  except as  otherwise  designated  by Bank in a notice to Agent,
      Accounts  from an account  debtor to the extent that the account  debtor's
      indebtedness  to  a  Borrower  (whether  evidenced  by  such  Accounts  or
      otherwise)  exceeds an amount which is greater than 25% of the face amount
      (less maximum  discounts,  credits and allowances which may be taken by or
      granted  to  account   debtors  in  connection   therewith)  of  the  then
      outstanding Eligible Accounts owned by such Borrower;

                                      P20

<PAGE>
          (xiv) Accounts owed by a particular account debtor if less than 75% of
      the aggregate  Accounts  then owed to Borrower by that account  debtor and
      its affiliates constitute Eligible Accounts;

           (xv)  Accounts of a particular  account  debtor in excess of a credit
      limit established as to that account debtor by Borrower or by Bank;

          (xvi)   Accounts which represent a prepayment or progress
      payment or a partial payment under an installment contract;

         (xvii)   Accounts which are evidenced by a promissory note or
      other instrument;

        (xviii)   Accounts with respect to which the terms or conditions
      prohibit or restrict assignment or collection rights;

          (xix)  Accounts with respect to which the account debtor is located in
      any  jurisdiction  requiring  the timely filing by Borrower of a report or
      document  before  such  Account  is  created  in order  to  bring  suit or
      otherwise  enforce its remedies  against such account debtor in the courts
      or through any judicial process of such jurisdiction,  unless Borrower has
      filed, or is exempt from filing, such a report; and

           (xx)  Accounts  with  respect to which the  account  debtor is also a
      creditor  of  Borrower,  but  only to the  extent  of the  amount  owed by
      Borrower to such account  debtor if such amount is less than the amount of
      all Accounts with respect to such account debtor which  otherwise would be
      Eligible Accounts.

      Bank  shall  have the  right,  but not the  duty,  to  declare  particular
accounts  ineligible.  The fact that Bank has not declared a particular  account
ineligible shall not be deemed to be a determination or  representation  by Bank
as to the creditworthiness or financial condition of any account debtor. Because
of banking  relationships between account debtors of Borrower and Bank, Bank may
have information about the  creditworthiness  of such account debtors;  however,
Bank shall have no duty to Borrowers to disclose  information  it may have about
any Borrower's  account  debtors and Borrowers  shall have no right to rely upon
any action or inaction of Bank  concerning  the  creditworthiness  or  financial
condition of Borrower's  account  debtors.  BORROWERS HEREBY COVENANT NOT TO SUE
AND  TO  HOLD  HARMLESS  BANK,  ITS  OFFICERS,  DIRECTORS,   EMPLOYEES,  AGENTS,
SUCCESSORS AND ASSIGNS FOR AND FROM ANY AND ALL DAMAGES, LIABILITY, OR CLAIMS OF
LIABILITY,  WHETHER  KNOWN OR UNKNOWN,  OF WHATSOEVER  NATURE  ARISING OUT OF OR
BASED  IN  WHOLE  OR  IN  PART  UPON  BANK'S  FAILURE  TO  DISCLOSE  UNFAVORABLE
INFORMATION  ABOUT AN  ACCOUNT  DEBTOR OF  BORROWER'S  TO  BORROWERS,  OR BANK'S
FAILURE TO TREAT AS  INELIGIBLE  THE  ACCOUNT OF AN ACCOUNT  DEBTOR OF  BORROWER
ABOUT WHOM BANK HAS UNFAVORABLE INFORMATION.

                                      P21

<PAGE>
      (f) Bank shall have the right in its discretion to determine in Good Faith
which  Inventory is eligible for the purpose of determining  the Borrowing Base.
Without limiting such discretion as to other Inventory,  the following Inventory
shall in any event not constitute Eligible Inventory:

            (i)  finished  goods  which  are not  held by  Borrower  for sale as
      Inventory  in the  ordinary  course of  Borrower's  business as  presently
      conducted  by it or which  are  obsolete,  not in good  condition,  not of
      merchantable  quality or not saleable in the ordinary course of Borrower's
      business or which are subject to defects  which would  affect their market
      value;

           (ii)   work in process;

          (iii)  Inventory  which  Bank  in  the  Good  Faith  exercise  of  its
      discretion  determines to be  unacceptable  due to age, type,  category or
      quantity;

           (iv) Inventory with respect to which Bank,  does not have a valid and
      prior,  fully  perfected  Lien and which is not free of all  other  Liens,
      other than Permitted Liens;

            (v) Inventory in the possession of a warehouseman or other bailee if
      Bank has not  received  a  bailee  letter  acceptable  to Bank  from  such
      warehouseman or bailee; and

           (vi) Inventory located on premises leased by Borrower if Bank has not
      received  a  landlord's  waiver  acceptable  to Bank with  respect to such
      premises.

      SECTION 3.2 LETTER OF CREDIT FACILITY

      (a) On  the  terms  and  subject  to  the  conditions  contained  in  this
Agreement,  Bank agrees  promptly to issue one or more  Letters of Credit at the
request of Agent for the  account of  Borrowers  from time to time until 30 days
prior to the Maturity  Date;  provided,  however,  that Bank shall not issue any
Letter of Credit if:

            (i) any order,  judgment or decree of any Governmental  Authority or
      arbitrator  of which Bank is aware shall purport by its terms to enjoin or
      restrain Bank from issuing such Letter of Credit or any Governmental  Rule
      applicable to Bank or any request or directive  (whether or not having the
      force of law) from any Governmental  Authority with jurisdiction over Bank
      shall prohibit, or request that Bank refrain from, the issuance of letters
      of credit generally or such Letter of Credit in particular or shall impose
      upon Bank with respect to such Letter of Credit any restriction or reserve
      or capital  requirement (for which Bank is not otherwise  compensated) not
      in effect on the date hereof or result in any loss,  cost or expense which
      (A) was not applicable, in effect or known to Bank on the Closing Date and
      which Bank in Good Faith deems  material to it, and (B) the  reimbursement
      of which is not provided for hereunder;

                                      P22
<PAGE>
            (ii)  any of the applicable conditions contained in
      Article VII is not then satisfied;

            (iii) after giving effect to the issuance of such Letter of
      Credit, the Letter of Credit Obligations exceed $4,000,000;

            (iv)  the amount of the Letter of Credit requested exceeds the
      Available Credit; or

            (v)   fees due in connection with a requested issuance have
      not been paid.

      (b) In no event shall the expiry date of any Letter of Credit be more than
(A) one  year,  in the case of a Letter of  Credit  that is a standby  letter of
credit,  or (B) 180 days, in the case of a Letter of Credit that is a commercial
(documentary)  letter of credit,  after the date of issuance thereof,  but in no
event  shall the  expiry  date of any  Letter of  Credit,  whether  by virtue of
automatic renewal or otherwise, fall after 10 days prior to the Maturity Date.

      (c) Prior to the issuance of each Letter of Credit,  Borrowers  shall have
delivered to Bank, if requested by Bank, a Letter of Credit Agreement, signed by
Borrowers, and such other documents or items as Bank may require pursuant to the
terms thereof.

      (d) Subject to the terms and  conditions  of this Section 3.2 and provided
that the  applicable  conditions  set forth in Article VII have been  satisfied,
Bank  shall,  on the  requested  date,  issue a Letter  of  Credit  on behalf of
Borrower in accordance  with the applicable  letter of credit request and Bank's
usual  and  customary   business  practices  and  in  a  final  form  reasonably
satisfactory to Borrower.

      (e) If Bank makes any  payment  under any Letter of Credit,  such  payment
shall be  deemed  to be and  shall  constitute  a Base Rate Loan made by Bank to
Borrowers pursuant to Section 3.1(a).

      SECTION 3.3 TERM LOAN I

      (a) On  the  terms  and  subject  to  the  conditions  contained  in  this
Agreement,  Bank agrees to make a term loan ("Term Loan I") to  Borrowers in the
amount of  $4,430,000.  Borrowers  shall repay the  principal  of Term Loan I in
monthly  principal  payments of  $52,738.10  each on the first day of each month
beginning  September 1, 1997.  Borrowers shall repay the  outstanding  principal
balance  of Term Loan I,  together  with all  accrued  and unpaid  interest  and
related  fees on the  earlier of the  Maturity  Date or the due date  determined
pursuant to Section 10.2.

      (b)   Term Loan I shall be evidenced by a Note payable to the order
of Bank.

      (c)  Borrowers  may prepay the  portion of the Term Loan I which is a Base
Rate Loan in whole or in part, from time to time. Each partial  prepayment shall
be applied to the principal balance of Term Loan I in inverse order of maturity.


      SECTION 3.4 TERM LOAN II

      (a) On  the  terms  and  subject  to  the  conditions  contained  in  this
Agreement,  Bank agrees to make a term loan ("Term Loan II") to Borrowers in the
amount of  $1,000,000.  Borrowers  shall repay the  principal of Term Loan II as
follows:  (i) in monthly principal  payments of $41,667 each on the first day of
each month  beginning  September 1, 1997;  (ii) on or before  January 31 of each
year, an amount equal to 50% of Williams Parent's  consolidated Excess Cash Flow
for the immediately preceding fiscal year of Williams Parent; (iii) on or before
April 30 of each  year,  an amount  equal to 50% of Ajay  Parent's  consolidated
Excess Cash Flow for the immediately  preceding fiscal year of Ajay Parent; (iv)
within  three  Business  Days of the receipt by Borrower  of  additional  equity
(other than equity  contributed  by another  Borrower),  an amount  equal to the
amount of (or fair market value of) such additional equity; (v) upon the receipt
thereof,  an amount equal to the net proceeds  from the sale or  liquidation  of
Kenco/Williams,  Inc. or of substantially all of its assets after deducting from
such proceeds an amount equal to the portion of the Revolving Loans and Term




                                     P23

<PAGE>
Loan I based on the assets sold (or  otherwise  transferred)  and applying  such
amount to the  reduction of the  Revolving  Loans and Term Loan I; and (vi) upon
the receipt  thereof,  an amount equal to the net proceeds  from the sale of any
asset out of the ordinary  course of business after deducting from such proceeds
an amount  equal to the  portion of the  Revolving  Loans,  Term Loan I and Real
Estate Loan based on the assets sold and applying  such amount to the  reduction
of the Revolving Loans, Term Loan I and Real Estate Loan.  Borrowers shall repay
the outstanding principal balance of Term Loan II, together with all accrued and
unpaid  interest and related fees on the earlier of June 1, 1999 or the due date
determined pursuant to Section 10.2.

      (b)   Term Loan II shall be evidenced by a Note payable to the order
of Bank.

      (c)  Borrowers  may prepay Term Loan II in whole or in part,  from time to
time. Each partial  prepayment shall be applied to the principal balance of Term
Loan II in inverse order of maturity.


      SECTION 3.5 REAL ESTATE LOAN

      (a) On  the  terms  and  subject  to  the  conditions  contained  in  this
Agreement,  Bank agrees to make a term loan ("Real Estate Loan") to Borrowers in
the amount of  $2,658,000.  Borrowers  shall repay the  principal of Real Estate
Loan in monthly  principal  payments  of  $11,075  each on the first day of each
month  beginning  September  1,  1997.  Borrowers  shall  repay the  outstanding
principal  balance of Real  Estate  Loan,  together  with all accrued and unpaid
interest and related  fees on the earlier of the  Maturity  Date or the due date
determined pursuant to Section 10.2.

      (b)   Real Estate Loan shall be evidenced by a Note payable to the
order of Bank.

      (c)  Borrowers  may prepay the  portion of the Real Estate Loan which is a
Base Rate Loan in whole or in part, from time to time.  Each partial  prepayment
shall be applied to the  principal  balance of Real Estate Loan in inverse order
of maturity.

      SECTION 3.6 INTEREST/FEES

      (a) Interest.  The  outstanding  principal  balance of each Revolving Loan
which is a Base Rate Loan shall bear  interest at a  fluctuating  rate per annum
equal to the  aggregate  of the Base  Rate in  effect  from time to time plus 50
basis points. The outstanding  principal balance of each Revolving Loan which is
a LIBOR Loan shall bear interest at a fixed rate per annum determined by Bank to
be equal to the aggregate of LIBOR in effect on the first day of the  applicable
Fixed Rate Term plus 275 basis points. The outstanding principal balance of each
portion of Term Loan I and Real Estate Loan which is a Base Rate Loan shall bear
interest at a fluctuating rate per annum equal to the aggregate of the Base Rate
in effect  from time to time plus 75 basis  points.  The  outstanding  principal
balance  of that  portion of Term Loan I and Real  Estate  Loan which is a LIBOR
Loan shall bear  interest  at a fixed  rate per annum  determined  by Bank to be
equal to the  aggregate  of LIBOR in effect  on the first day of the  applicable
Fixed Rate Term plus 300 basis points. The outstanding principal balance of Term
Loan II  shall  bear  interest  at a  fluctuating  rate per  annum  equal to the
aggregate  of the Base Rate in effect  from time to time plus 100 basis  points.
The  foregoing  notwithstanding,  the rate of interest  applicable  at all times
during the  continuation of an Event of Default shall be the applicable rate set
forth above plus an additional  200 basis points.  All fees,  expenses and other
amounts not paid when due shall bear interest  (from the date due until paid) at
a fluctuating  rate per annum equal to the Base Rate in effect from time to time
plus 300 basis points.


                                     P24

<PAGE>
      (b)  Letter  of  Credit  Fees.  Borrowers  shall pay to Bank fees upon the
issuance or  amendment  of each Letter of Credit and upon the payment by Bank of
each draft  under any Letter of Credit  determined  in  accordance  with  Bank's
Commercial  Finance  Division's  standard fees and charges in effect at the time
any  Letter of Credit is issued or amended  or any draft is paid.  In  addition,
Borrowers  shall pay to Bank a fee equal to 1.50% per annum on the average daily
amount  available  to be drawn  during each month under  outstanding  Letters of
Credit, which fee shall be due and payable on the first day of each month.

      (c) Servicing Fee.  Borrowers shall pay to Bank monthly a servicing fee of
$7,500 in respect of Bank's  services for each month any of the  Obligations are
outstanding provided,  however, such fee shall be $10,000 if as of the date such
fee is due  Borrowers are required to submit a collateral  activity  report on a
daily basis,  and  provided,  further,  such fee shall be prorated for the first
month if the Closing  Date is not the first day of a month and the last month if
all Obligations are not paid on the last day of a month. Such fee shall be fully
earned as of and payable in advance on the Closing  Date and on the first day of
each month hereafter.

      (d)  Unused  Revolver  Fee.  On the  first  day of each  month  and on the
Maturity  Date,  Borrowers  shall  pay  Bank a fee  equal  to  0.25%  per  annum
multiplied by the average daily amount during the  immediately  preceding  month
(or if the  Maturity  Date is not on the first day of a month,  then  during the
month of the Maturity Date) by which the aggregate of the outstanding  principal
amount of the Revolving Loans and the Letter of Credit Obligations was less than
$26,000,000.

                                      P25

<PAGE>
      (e)   Closing Fee.  Borrowers shall pay to Bank a closing fee of
$390,880, which fee shall be fully earned as of the Closing Date and
payable as follows:  (i) $190,880 on the Closing Date and (ii) $50,000 per
month on the first day of September, October, November and December, 1997.

      (f) Computation.  All interest and per annum fees shall be computed on the
basis of a 360-day year, actual days elapsed. Interest shall be payable monthly,
in arrears, on the first day of each month, and, in addition,  interest on LIBOR
Loans shall be paid on the last day of each Fixed Rate Term.

      SECTION 3.7 INTEREST OPTIONS

      (a)  Election.  Subject  to the  requirement  that each LIBOR Loan be in a
minimum amount of $3,000,000 and in integral  multiples of $100,000,  (i) except
as  otherwise  provided  herein,  at any time when a Default  is not  continuing
Borrowers may convert all or any portion of a Base Rate Loan to a LIBOR Loan for
a Fixed  Rate Term  designated  by  Agent,  and (ii) at any time  Borrowers  may
convert  all or a  portion  of a LIBOR  Loan at the end of the  Fixed  Rate Term
applicable  thereto to a Base Rate Loan or, if no Default  is  continuing,  to a
LIBOR Loan for a new Fixed Rate Term  designated by Agent. If Borrowers have not
made the required interest rate conversion or continuation election prior to the
last day of any Fixed Rate Term,  Borrowers  shall be deemed to have  elected to
convert such LIBOR Loan to a Base Rate Loan.

      (b) Notice to Bank. Agent, through one of the Authorized  Representatives,
shall  request each  interest rate  conversion  or  continuation  by giving Bank
irrevocable written notice or telephonic notice (confirmed promptly in writing),
in  the  form  of  Exhibit  E  attached  hereto  (a  "Notice  of  Conversion  or
Continuation"), which specifies, among other things:

            (i)   the Loan to which such Notice of Conversion or
      Continuation applies;

            (ii)  the principal amount which is the subject of such
      conversion or continuation;

            (iii) the proposed date of such conversion or continuation,
      which shall be a Business Day;

            (iv) and if such Notice pertains to a LIBOR interest selection,  the
      length of the applicable Fixed Rate Term.

      Any such Notice of Conversion or Continuation must be received by Bank not
later than (i) 10:00 a.m. (San Francisco time) on the effective date of any Base
Rate  interest  selection,  and (ii) at least three  Business  Days prior to the
effective date of any LIBOR interest selection.

                                      P26

<PAGE>
      SECTION 3.8 CHANGE OF CIRCUMSTANCES

      (a) Inability to Determine  Rate. If Bank at any time shall determine that
adequate and reasonable means do not exist for ascertaining  LIBOR or that LIBOR
does not  adequately  reflect  the cost to Bank of making or  maintaining  LIBOR
interest  rates  hereunder,  then Bank shall give  telephonic  notice  (promptly
confirmed  in writing) to Agent of such  determination.  If such notice is given
and until such  notice  has been  withdrawn  in  writing by Bank,  then no LIBOR
interest option may be selected by Borrowers.

      (b) LIBOR Illegality; Termination of Commitment. Notwithstanding any other
provisions  herein,  if any Change of Law shall make it unlawful for Bank (i) to
make a LIBOR interest rate  available,  or (ii) to maintain LIBOR interest rates
hereunder,  then, in the former event,  any obligation of Bank hereunder to make
available such unlawful LIBOR interest rate shall forthwith be canceled,  and in
the latter event, any such unlawful LIBOR interest rate then  outstanding  shall
at the option of Bank be converted so that interest is determined in relation to
the Base Rate pursuant to the terms of this Agreement;  provided however, if any
such Change in Law shall permit a LIBOR  interest  rate until the  expiration of
the Fixed Rate Term relating  thereto,  then such permitted  LIBOR interest rate
shall  continue as such until the end of such Fixed Rate Term. If as a result of
this  Section a LIBOR  interest  rate is  converted  to a lower  interest  rate,
Borrowers  shall pay to Bank  immediately  upon demand such amount or amounts as
may be necessary to compensate Bank for any loss in connection therewith.

      (c) Illegality;  Compensation.  Upon the occurrence of any event described
in Section 3.8(b) hereof,  Borrowers shall pay to Bank, immediately upon demand,
such amount or amounts as may be  necessary  to  compensate  Bank for any fines,
fees,  changes,  penalties or other amounts  payable by Bank as a result thereof
and which are  attributable  to LIBOR interest rates made available to Borrowers
hereunder.  In determining  which amounts payable by Bank and/or losses incurred
by Bank are  attributable  to LIBOR  interest  rates made available to Borrowers
hereunder, any reasonable allocation made by Bank among its operations shall, in
the absence of manifest error, be conclusive and binding upon Borrowers.


                                     P27

<PAGE>
      (d)   Change of Law; Compensation.  If any Change of Law

            (i) shall subject Bank to any tax, duty or other charge with respect
      to any LIBOR  interest  rate,  or shall  change the basis of  taxation  of
      payments by Borrowers to Bank of  principal,  interest,  fees or any other
      amount  payable  hereunder  (except for changes in the rate of taxation on
      the  overall  net  income  of  imposed  by  the   jurisdiction  of  Bank's
      incorporation  or by any  jurisdiction  in which  its  applicable  lending
      office is located); or

            (ii) shall impose,  modify or hold  applicable any reserve,  special
      deposit,  compulsory loan or similar  requirement  against assets held by,
      deposits or other  liabilities in or for the account of, advances or loans
      by, or any other acquisition of funds by Bank; or

            (iii) shall impose on Bank any other condition;

and the  effect  of any of the  foregoing  is to  increase  the  cost to Bank of
making, renewing or maintaining any LIBOR Loan hereunder or to reduce any amount
receivable by Bank in connection  therewith,  then Borrowers shall,  immediately
upon demand, pay to Bank such amount or amounts as may be necessary to reimburse
Bank for such increased costs or to compensate Bank for such reduced amounts.  A
certificate  as to the  amount  of such  increased  costs  or  reduced  amounts,
delivered  by  Bank to  Agent  shall,  in the  absence  of  manifest  error,  be
conclusive and binding on Borrowers for all purposes.

      (e) Capital Requirements; Compensation. If Bank shall have determined that
any Change of Law  regarding  capital  adequacy  has or shall have the effect of
reducing  the rate of return on the  capital of Bank (or any entity  controlling
Bank) as a  consequence  of Bank's  obligations  hereunder to a level below that
which Bank or such entity would have achieved but for such Change of Law (taking
into  consideration  Bank's or such  entity's  policies  with respect to capital
adequacy),  by an amount deemed by Bank to be material,  then from time to time,
within  fifteen days after demand by Bank,  Borrowers  shall pay to Bank or such
entity such additional  amounts as shall compensate Bank or such entity for such
reduction. Any such request by Bank under this Section shall set forth the basis
of the  calculation  of such  additional  amounts  and shall,  in the absence of
manifest error, be conclusive and binding on Borrowers for all purposes.

SECTION 3.9    LIBOR PREPAYMENTS; FUNDING LOSS INDEMNIFICATION

      (a)  Borrowers may prepay the principal of any portion of a Tranche at any
time and in the minimum amount of $3,000,000. In consideration of Bank providing
this prepayment option to Borrowers or if any such portion of a LIBOR Loan shall
become due and  payable at any time prior to the last day of the Fixed Rate Term
applicable  thereto by  acceleration  or otherwise,  Borrowers shall pay to Bank
immediately  upon  demand  a fee  which  is the  sum of the  discounted  monthly
difference  for each month  from the month of  prepayment  through  the month in
which such Fixed Rate Term matures, calculated as follows for each such month:


                                     P28

<PAGE>
      (i)   determine the amount of interest which would have accrued each month
            on the amount prepaid at the interest rate applicable to such amount
            had it  remained  outstanding  until the last day of the Fixed  Rate
            Term applicable thereto;

      (ii)  subtract  from the  amount  determined  in (i) above  the  amount of
            interest  which would have  accrued for the same month on the amount
            prepaid for the  remaining  term of such Fixed Rate Term at LIBOR in
            effect on the date of  prepayment  for new loans  made for such term
            and in a principal amount equal to the amount prepaid; and

      (iii) if the result  obtained in (ii) for any month is greater  than zero,
            discount that difference by LIBOR used in (ii) above.


      Borrowers  acknowledge  that  prepayment of such amount may result in Bank
incurring  additional  costs,  expenses  and/or  liabilities,  and  that  it  is
difficult  to  ascertain  the  full  extent  of  such  costs,   expenses  and/or
liabilities.  Borrowers,  therefore, agree to pay the above-described prepayment
fee  and  agree  that  said  amount  represents  a  reasonable  estimate  of the
prepayment costs,  expenses and/or liabilities of Bank. If Borrowers fail to pay
any prepayment fee when due, the amount of such prepayment fee shall  thereafter
bear  interest  until  paid at a rate per annum  equal to the Base Rate plus 300
basis points.

      (b) If Borrowers shall (a) fail to borrow the full amount set forth in any
Notice of Borrowing which has been delivered to Bank (whether as a result of the
failure to satisfy  any  applicable  conditions  or  otherwise),  or (b) fail to
convert  or  continue  at the LIBOR  interest  option  any  portion of a Loan in
accordance  with a  Notice  of  Conversion  or  Continuation  delivered  to Bank
(whether  as a result of the  failure to satisfy any  applicable  conditions  or
otherwise),  Borrowers shall, upon demand by Bank,  reimburse Bank and hold Bank
harmless  for  all  costs  and  losses  incurred  by Bank  as a  result  of such
repayment,  prepayment  or  failure.  Borrowers  understand  that such costs and
losses may include,  without limitation,  losses incurred by Bank as a result of
funding and other  contracts  entered into by Bank to fund any LIBOR Loan.  Bank
shall  deliver  to Agent a  certificate  setting  forth the  amount of costs and
losses for which  demand is made.  Such  certificate  shall,  in the  absence of
manifest  error, be conclusive and binding on Borrowers as to the amount of such
loss for all purposes. This Section 3.9(b) shall survive the termination of this
Agreement.


                                     P29

<PAGE>
ARTICLE IV.    COLLECTION AND ADMINISTRATION

      SECTION 4.1 CASH COLLATERAL ACCOUNT

            (a) Cash Collateral  Account.  Borrower shall, at Borrower's expense
and in the manner  requested by Bank from time to time,  direct that remittances
and all other collections and proceeds of Accounts and other Collateral shall be
deposited  into a lock box account  maintained  in Bank's  name.  In  connection
therewith,  Borrower  shall  execute  such  lockbox  agreement(s)  as Bank shall
require. Borrower shall maintain with Bank, and Borrower hereby grants to Bank a
security interest in, a non-interest bearing deposit account over which Borrower
shall have no control ("Cash Collateral Account") and into which the proceeds of
all  Borrower's  Rights to Payment  shall be  deposited  immediately  upon their
receipt.

            (b) Calculations. For purposes of calculating interest on the Loans,
such payments or other funds  received will be applied  (conditional  upon final
collection)  as a principal  reduction  one Business Day  following  the date of
receipt by Bank's  Commercial  Finance  Division of the  inter-branch  advice of
deposit  that such  payments  or other  funds  have been  deposited  in the Cash
Collateral  Account.  For purposes of  calculating  the amount of the  Revolving
Loans  available to Borrower  such payments  will be applied  (conditional  upon
final  collection) to the Revolving  Loans on the Business Day of receipt by the
Commercial Finance Division, if such advices are received within sufficient time
(in accordance with Bank's usual and customary  practices as in effect from time
to time) to credit  Borrower's loan account on such day, and if not, then on the
next Business Day.

            (c)  Immediate  Deposit.  Borrowers  and  all of  their  affiliates,
subsidiaries,  shareholders,  directors,  employees or agents  shall,  acting as
trustee for Bank, receive, as the property of Bank, any monies,  checks,  notes,
drafts,  or any other payment  relating to and/or  proceeds of Accounts or other
Collateral  which  come  into  their  possession  or  under  their  control  and
immediately  upon  receipt  thereof,  shall  deposit  or  cause  the  same to be
deposited in the Cash Collateral Account, or remit the same or cause the same to
be remitted,  in kind, to Bank.  In no event shall the same be  commingled  with
Borrower's own funds.

      SECTION 4.2 STATEMENTS

      Bank  shall  render to Agent  each  month a  statement  setting  forth the
balance in the loan account(s) maintained by Bank for Borrowers pursuant to this
Agreement,  including principal,  interest,  fees, costs and expenses. Each such
statement  shall be subject to subsequent  adjustment by Bank but shall,  absent
manifest  errors or  omissions,  be  considered  correct and deemed  accepted by
Borrowers and conclusively binding upon Borrowers as an account stated except to
the extent  that Bank  receives  a written  notice  from  Agent of any  specific
exceptions  thereto  within  thirty (30) days after the date such  statement has
been mailed by Bank.  Until such time as Bank shall have  rendered to Borrower a
written statement as provided above, the balance in the loan account(s) shall be
presumptive evidence of the amounts due and owing to Bank by Borrowers.


                                     P30

<PAGE>
      SECTION 4.3 PAYMENTS

      All  amounts due under any of the Loan  Documents  shall be payable to the
Cash Collateral Account as provided in Section 4.1 hereof or such other place as
Bank may designate from time to time.  Whenever any payment due hereunder  shall
fall due on a day other than a Business  Day,  such payment shall be made on the
next  succeeding  Business Day, and such  extension of time shall be included in
the computation of interest or fees, as the case may be. Bank may apply payments
received or collected  from Borrower or for the account of Borrower  (including,
without limitation,  the monetary proceeds of collections or of realization upon
any Collateral) to such of the Loans, whether or not then due, in such order and
manner as Bank  determines.  At Bank's option,  all principal,  interest,  fees,
costs,  expenses and other charges  provided for in this  Agreement or the other
Loan  Documents  may be charged  directly to the loan  account(s)  of  Borrower.
Borrower  shall  make all  payments  due Bank  free and clear  of,  and  without
deduction  or  withholding  for or on  account  of,  any  setoff,  counterclaim,
defense,   duties,  taxes,  levies,  imposts,  fees,  deductions,   withholding,
restrictions  or  conditions of any kind. If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations Bank is
required to surrender or return such payment or proceeds to any person or entity
for any reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated  and continue and this Agreement  shall continue in
full force and effect as if such  payment or proceeds  had not been  received by
Bank.  Borrower  shall be liable to pay to Bank,  and does hereby  indemnify and
hold Bank  harmless  for the amount of any payments or proceeds  surrendered  or
returned.  This Section 4.3 shall remain effective  notwithstanding any contrary
action  which may be taken by Bank in reliance  upon such  payment or  proceeds.
This  Section  4.3  shall  survive  the  payment  of  the  Obligations  and  the
termination of this Agreement.

      SECTION 4.4 USE OF PROCEEDS

      Borrower  shall use the initial  proceeds of the Loans provided by Bank to
Borrower  hereunder  only for: (a) payments to each of the persons listed in the
disbursement  order  furnished  by Borrower to Bank on or about the date hereof;
and  (b)  costs,   expenses  and  fees  in  connection  with  the   preparation,
negotiation,  execution  and  delivery  of this  Agreement  and the  other  Loan
Documents.  All  other  Loans  made or  Letters  of Credit  provided  by Bank to
Borrower  pursuant to the  provisions  hereof shall be used by Borrower only for
general  operating,  working  capital  and other  proper  corporate  purposes of
Borrower not otherwise  prohibited by the terms of this  Agreement.  None of the
proceeds will be used, directly or indirectly,  for the purpose of purchasing or
carrying  any margin  security or for the  purposes of reducing or retiring  any
indebtedness  which was  originally  incurred  to  purchase  or carry any margin
security or for the any other  purpose  which might cause any of the Loans to be
considered a "purpose credit" within the meaning of Regulation U of the Board of
Governors  of  the  Federal   Reserve   System,   as  amended.   The   foregoing
notwithstanding,  up to  $375,000  of the  proceeds  of the Loans may be used by
Agent as a loan by Agent to Williams  Controls,  Inc.  Employee Stock  Ownership
Plan and Trust  ("Trust");  provided  that Agent  gives  Bank ten days'  advance
notice  of its  intention  to make  such loan and  delivers  to Bank,  with such
notice, an opinion from ESOP counsel to the Trust reasonably acceptable to Bank,
including,  without  limitation,  the  opinions  set forth on Exhibit H attached
hereto.

                                     P31

<PAGE>

ARTICLE V.  SECURITY

      SECTION 5.1  GRANT OF SECURITY INTEREST

      Borrowers  hereby  grant  to  Bank  a  security  interest  in  all  of the
Collateral as security for the full and prompt  payment in cash and  performance
of the Obligations.

      SECTION 5.2  PERFECTION; DUTY OF CARE

      (a) Until all the  Obligations  have been fully satisfied and paid in cash
Borrowers  shall  perform all steps  requested by Bank to perfect,  maintain and
protect  Bank's  security  interest  in  the  Collateral,   including,   without
limitation,  executing and filing financing and continuation  statements in form
and substance satisfactory to Bank.

      (b) Bank  shall  have the right at all  times,  and from time to time,  to
contact Borrower's account debtors to verify Rights to Payment.


      (c)  Borrowers  shall pay or cause to be paid all taxes,  assessments  and
governmental  charges  levied or assessed or imposed upon or with respect to the
Collateral  or any part  thereof;  provided,  however,  Borrowers  shall  not be
required to pay any tax if the validity and/or amount thereof is being contested
in good faith and by appropriate and lawful  proceedings  promptly initiated and
diligently conducted of which Agent has given prior notice to Bank and for which
appropriate  reserves  have been  established  and so long as levy and execution
have been and continue to be stayed.  If Borrowers fail to pay or so contest and
reserve for such taxes,  assessments  and  governmental  charges,  Bank may (but
shall not be required to) pay the same and add the amount of such payment to the
principal of the Revolving Loan.

      (d) In order to protect or perfect  the  security  interest  which Bank is
granted hereunder,  Bank may discharge any Lien which is not a Permitted Lien or
bond the same, pay for any insurance  which Borrowers have failed to maintain as
required by this Agreement,  maintain guards,  pay any service bureau, or obtain
any record and add the same to the principal of the Revolving Loan.

      (e) Bank shall have no duty of care with respect to the Collateral, except
that Bank shall  exercise  reasonable  care with  respect to the  Collateral  in
Bank's  custody,  but shall be deemed to have exercised  reasonable care if such
property is accorded  treatment  substantially  equal to that which Bank accords
its own property, or if Bank takes such action with respect to the Collateral as
the Agent shall request in writing,  provided that no failure to comply with any
such  request nor any  omission to do any such act  requested  by Agent shall be
deemed a failure to exercise  reasonable  care.  Bank's failure to take steps to
preserve  rights  against any  parties or  property  shall not be deemed to be a
failure to exercise  reasonable  care with respect to the  Collateral  in Bank's
custody.


                                     P32

<PAGE>
      SECTION 5.3 ADDITIONAL SECURITY

      As  additional  security  for the  full  and  prompt  payment  in cash and
performance of the Obligations,  certain  Borrowers have granted to Bank a first
mortgage lien on certain real property and improvements thereon.



ARTICLE VI.    REPRESENTATIONS AND WARRANTIES

      Each Borrower  makes the following  representations  and  warranties  with
respect to itself to Bank, subject to the exceptions set forth on the Disclosure
Schedule,  which  representations  and warranties shall survive the execution of
this  Agreement  and shall  continue in full force and effect until the full and
final payment in cash and satisfaction and discharge of all Obligations:


      SECTION 6.1 LEGAL STATUS

      It is a  corporation,  duly  organized  and existing and in good  standing
under the laws of the  jurisdiction  of its  incorporation,  and is qualified or
licensed to do business  (and is in good standing as a foreign  corporation,  if
applicable) in all  jurisdictions  in which such  qualification  or licensing is
required or in which the failure to so qualify or to be so licensed could have a
Material Adverse Effect.


                                     P33

<PAGE>

      SECTION 6.2 OWNERSHIP; SUBSIDIARIES

      (a) All of its outstanding capital stock has been validly issued, is fully
paid and  nonassessable.  On the date  hereof  (i) no  authorized  but  unissued
shares, no treasury shares and no other outstanding  shares of its capital stock
are  subject to any  option,  warrant,  right of  conversion  or purchase or any
similar  right  granted  by it, and (ii) it is not a party to any  agreement  or
understanding with respect to the voting,  sale or transfer of any shares of its
capital stock.

      (b) As of the Closing  Date,  it has no  Subsidiaries  and does not own or
hold,  directly or indirectly,  any capital stock or equity  security of, or any
equity interest in, any Person.

      (c) Except for Williams Parent and Ajay Parent, it is a direct or indirect
subsidiary of either Williams Parent or Ajay Parent.

      SECTION 6.3 AUTHORIZATION AND VALIDITY

      The Loan Documents have been duly  authorized and the performance by it of
its obligations  under the Loan Documents  constitute a proper corporate purpose
under all applicable law. The Loan Documents,  upon their execution and delivery
in accordance  with the provisions  hereof,  will  constitute  legal,  valid and
binding  agreements and  obligations of it enforceable  against it in accordance
with their respective terms.

      SECTION 6.4 NO VIOLATION

      The  execution,  delivery  and  performance  by it of  each  of  the  Loan
Documents  do not  violate  or  contravene  any  provision  of its  Articles  of
Incorporation or By-Laws and do not violate any Governmental Rule or result in a
breach of or constitute a default under any contract,  obligation,  indenture or
other  instrument to which it or any  subsidiary of it is a party or by which it
may be bound,  which violation,  breach or default would have a Material Adverse
Effect.

      SECTION 6.5 NO CLAIMS

      There are no pending, or to the best of its knowledge threatened, actions,
claims, investigations,  suits or proceedings before any governmental authority,
arbitrator,  court or administrative  agency which could have a Material Adverse
Effect.

                                      P34

<PAGE>
      SECTION 6.6 CORRECTNESS OF FINANCIAL STATEMENTS

      (a) The consolidated  financial  statements of Williams Parent dated as of
April 30, 1997,  heretofore  delivered by Agent to Bank,  (a) present fairly the
financial condition of Persons reported therein; (b) disclose all liabilities of
Borrowers  that are  required to be reflected  or reserved  against  under GAAP,
whether  liquidated  or  unliquidated,  fixed or  contingent;  and (c) have been
prepared  in  accordance  with GAAP.  Except as  disclosed  to Bank  pursuant to
Section  8.4,  since  the date of such  financial  statements  there has been no
change or changes which have resulted in a Material Adverse Effect.

      (b) The consolidated financial statements of Ajay Parent dated as of April
30,  1997,  heretofore  delivered  by Agent  to Bank,  (a)  present  fairly  the
financial condition of Persons reported therein; (b) disclose all liabilities of
Borrowers  that are  required to be reflected  or reserved  against  under GAAP,
whether  liquidated  or  unliquidated,  fixed or  contingent;  and (c) have been
prepared  in  accordance  with GAAP.  Except as  disclosed  to Bank  pursuant to
Section  8.4,  since  the date of such  financial  statements  there has been no
change or changes which have resulted in a Material Adverse Effect.

      SECTION 6.7 INCOME TAX RETURNS

      It does not have any knowledge of any pending  assessments  or adjustments
of any income tax  payable by it with  respect to any year the  payment of which
would have a Material Adverse Effect.

      SECTION 6.8 NO SUBORDINATION

      There is no  agreement,  indenture,  contract or instrument to which it or
any  Subsidiary  is a party or by which it or any  Subsidiary  may be bound that
requires the subordination in right of payment of any of its obligations subject
to this Agreement to any other obligation of it or such Subsidiary.

      SECTION 6.9 ERISA

      It  is  in  compliance  in  all  material  respects  with  the  applicable
provisions of ERISA. It has not violated any provision of any Plan maintained or
contributed to by it in a manner that could result in a Material Adverse Effect.
No  "reportable  event" (as  defined in Title IV of ERISA) has  occurred  and is
continuing with respect to any Plan initiated by it.


                                     P35

<PAGE>
      SECTION 6.10      OTHER OBLIGATIONS

      It is not in default with respect to any of its Indebtedness or any of its
material Contractual Obligations.

      SECTION 6.11      ENVIRONMENTAL MATTERS

      It and each  Subsidiary of it is in  compliance  in all material  respects
with all Environmental  Laws applicable to it, other than such  noncompliance as
in the  aggregate  will not have a Material  Adverse  Effect.  None of it or any
Subsidiary  of it has  received  notice that it is the subject of any federal or
state investigation evaluating whether any Remedial Action is needed, except for
such notices  received  which in the aggregate do not refer to Remedial  Actions
which would reasonably be expected to result in a Material Adverse Effect. There
have been no Releases by it or a  Subsidiary  of it which  could  reasonably  be
expected to result in a Material Adverse Effect.

      SECTION 6.12      LIENS

      Borrowers have good, indefeasible, and merchantable title to and ownership
of the Collateral,  free and clear of all Liens,  except Permitted Liens.  There
are no  Liens of any  nature  whatsoever  on any of its  properties  other  than
Permitted Liens.

      SECTION 6.13      NO BURDENSOME RESTRICTIONS; NO DEFAULTS

      (a) It is not is a party to any Contractual Obligation the compliance with
which would have a Material  Adverse Effect or the performance of which,  either
unconditionally  or upon the happening of an event,  will result in the creation
of a Lien (other than Permitted Liens) on the property or assets of Borrower.

      (b)   No Default has occurred and is continuing.

      (c)  There is no  Governmental  Rule the  compliance  with  which by it is
reasonably likely to have a Material Adverse Effect.

      SECTION 6.14      NO OTHER VENTURES

      It is not  engaged  in any joint  venture  or  partnership  with any other
Person.

      SECTION 6.15      INVESTMENT COMPANY ACT

      It is not  an  "investment  company"  or an  "affiliated  person"  of,  or
"promoter" or "principal  underwriter"  for, an  "investment  company",  as such
terms are defined in the Investment Company Act of 1940, as amended.

                                     P36

<PAGE>

      SECTION 6.16      INSURANCE

      All current policies of insurance of any kind or nature owned by or issued
to  it,  including,  without  limitation,   policies  of  fire,  theft,  product
liability, public liability, property damage, other casualty, employee fidelity,
workers'  compensation  and employee health and welfare  insurance,  are in full
force and effect and are of a nature and provide such  coverage as is sufficient
and as is customarily carried by companies of its size and character.  It has no
reason to believe that it will be unable to comply with Section 8.5.


      SECTION 6.17      LABOR MATTERS

      (a) There are no strikes,  work stoppages,  slowdowns or lockouts  pending
or, to its  knowledge,  threatened,  against or involving  Borrower,  other than
those which in the aggregate have no reasonable  likelihood of having a Material
Adverse Effect.

      (b) There are no arbitrations  or grievances  pending against or involving
it, nor to its knowledge  are there any  arbitrations  or grievances  threatened
involving Borrower, other than those which, in the aggregate, have no reasonable
likelihood of having a Material Adverse Effect.

      (c)   As of the date hereof it is not a party to, and has no
obligations under, any collective bargaining agreement.

      (d)  There is no  organizing  activity  involving  it  pending  or, to its
knowledge,  threatened,  by any labor  union or group of  employees,  other than
those which in the aggregate have no reasonable  likelihood of having a Material
Adverse Effect.  There are no representation  proceedings pending against it or,
to its knowledge,  threatened  with the National Labor Relations  Board,  and no
labor organization or group of its employees has made a pending demand on it for
recognition,  other  than  those  which  in the  aggregate  have  no  reasonable
likelihood of having a Material Adverse Effect.

      (e) There are no unfair labor practice  charges,  grievances or complaints
pending or in process or, to its knowledge,  threatened,  by or on behalf of any
employee or group of employees  of it,  other than those which in the  aggregate
have no reasonable likelihood of having a Material Adverse Effect.

      (f) There are no  complaints  or charges  against  it  pending  or, to its
knowledge,  threatened  to be filed  with  any  federal,  state or local  court,
governmental  agency or arbitrator based on, arising out of, in connection with,
or otherwise  relating to the  employment  by it of any  individual,  other than
those which in the aggregate have no reasonable  likelihood of having a Material
Adverse Effect.

      (g) It is in  material  compliance  with all laws,  and all  orders of any
court, Governmental Authority or arbitrator, relating to the employment of labor
including  all such  laws  relating  to  wages,  hours,  collective  bargaining,
discrimination,  civil  rights,  and the payment of  withholding  and/or  social
security and similar taxes,  other than those the  non-compliance  with which in
the aggregate would have no Material Adverse Effect.


                                     P37

<PAGE>
      SECTION 6.18      FORCE MAJEURE

      Neither its business nor its properties  are currently  suffering from the
effects  of any  fire,  explosion,  accident,  strike,  lockout  or other  labor
dispute, drought, storm, hail, earthquake,  embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance),  other than those
the  consequences  of which in the  aggregate  would  have no  Material  Adverse
Effect.

       SECTION 6.19      INTELLECTUAL PROPERTY

      It  owns or  licenses  or  otherwise  has the  right  to use all  material
licenses,   Permits,   patents,  patent  applications,   trademarks,   trademark
applications,  service marks, trade names,  copyrights,  copyright applications,
franchises,  authorizations  and other  intellectual  property  rights  that are
necessary  for the operation of its  businesses,  without  infringement  upon or
conflict  with the rights of any other Person with respect  thereto,  including,
without  limitation,  all trade names.  No slogan or other  advertising  device,
product, process, method, substance, part or other material now employed, or now
contemplated  to be employed,  by it infringes upon or conflicts with any rights
owned by any other Person,  which  infringement or conflict is reasonably likely
to have a Material Adverse Effect,  and no claim or litigation  regarding any of
the  foregoing is pending or, to its  knowledge,  threatened,  the  existence of
which is  reasonably  likely  to have a  Material  Adverse  Effect.  No  patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to its knowledge, proposed, other than those the
consequences of which in the aggregate have no reasonable likelihood of having a
Material Adverse Effect.

      SECTION 6.20      CERTAIN INDEBTEDNESS

      The Disclosure Schedule identifies as of the Closing Date all Indebtedness
of it which is either  (a) for  borrowed  money or (b)  incurred  outside of the
ordinary course of the business.

      SECTION 6.21      SENIORITY

      Its  obligations  hereunder  rank at least  pari passu to all of its other
Indebtedness, except Indebtedness secured by Permitted Liens.


                                     P38

<PAGE>
      SECTION 6.22      TRUTH, ACCURACY OF INFORMATION

      All financial and other  information  furnished to Bank in connection with
this  Agreement  is accurate in all  material  respects and does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
in order to make the information furnished,  in light of the circumstances under
which furnished,  not misleading;  provided,  however,  that with respect to any
such information  which is a forecast or projection,  it represents only that it
acted in Good Faith and utilized reasonable assumptions based on due and careful
consideration  and on the information known to it at the time of the preparation
of such forecast or projection.

      SECTION 6.23      CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS

      Its chief executive office and principal place of business is as set forth
in Section 6.23 of the Disclosure Schedule. Its books and records are located at
its chief executive office, and the only other offices and/or locations where it
keeps the Collateral  (except for Inventory which is in transit) or conducts any
of its business are set forth in Section 6.23 of the Disclosure Schedule.


      SECTION 6.24      RIGHTS TO PAYMENT

      Unless  otherwise noted by it, each Right to Payment listed or referred to
on its trial balance,  balance sheet or the books or records,  or referred to in
any report to Bank (other than Rights to Payment  which are  proceeds of letters
of credit,  insurance proceeds,  contract rights, chattel paper, instruments and
documents  not arising  directly out of a sale or lease of goods or services) is
and will be free and clear of Liens in favor of any Person other than Bank, will
cover a bona fide sale or lease and delivery of goods  usually dealt in by it in
the ordinary  course of its business or will cover the  rendition of services by
it to customers  of a kind  ordinarily  rendered in the  ordinary  course of its
business,  and will be for a  liquidated  amount  from a customer  competent  to
contract therefor and maturing as stated by it.

      SECTION 6.25      FISCAL YEAR

      Williams  Parent's  fiscal year ends on September 30. Ajay Parent's fiscal
year ends on December 31.

                                     P39

<PAGE>


ARTICLE VII.   CONDITIONS

      SECTION 7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT

      The obligation of Bank to extend any credit contemplated by this Agreement
is subject to the  fulfillment  to Bank's  satisfaction  of all of the following
conditions:

      (a)   Approval of Bank's Counsel.  All legal matters incidental to
the extension of credit hereunder shall be reasonably satisfactory to
counsel for Bank.

      (b)   Documentation.  Bank shall have received, in form and
substance satisfactory to Bank, each of the following duly executed:

            (i)   this Agreement, a Letter of Credit Agreement for any
      Letter of Credit to be issued on the Closing Date and the Notes;

            (ii)  corporate borrowing resolution from each Borrower;

            (iii) a good standing  certificate  for each Borrower from its state
      of  incorporation  and certified  copy of the Articles or  Certificate  of
      Incorporation for each Borrower;

            (iv)  a copy of the bylaws of each Borrower certified by its
      secretary as correct and complete;


                                     P40

<PAGE>
            (v)   certificate of incumbency from each Borrower;

            (vi)  Notice of Authorized Representatives;

            (vii) an opinion of counsel to Borrowers as to such matters as
      Bank shall reasonably require;

            (viii)      the Florida mortgage of Aptek Williams, Inc.;

            (ix)  title insurance commitment with respect to the Florida
      mortgage of Aptek Williams, Inc.;

            (x) a written  update  from Agent  regarding  the status and plan of
      disposition of the  assets/business of  Kenco/Williams,  Inc. from a buyer
      able to purchase such  assets/business  on terms reasonably  acceptable to
      Bank together with assurances  regarding the consummation of such proposed
      transaction, which assurances are reasonably acceptable to Bank;

            (xi)  a commitment from United States National Bank of Oregon
      to lend $2,000,000 to Ajay Sports, Inc. on terms acceptable to Bank;

            (xii) the Unconditional Continuing Guaranty of Thomas W. Itin
      in the form of Exhibit F attached hereto; and

            (xiii)      such other documents as Bank may require.

      (c) No Material  Adverse Change.  There is no event or circumstance  which
can reasonably be expected to have a Material Adverse Effect,  and completion of
Bank's  due  diligence  with  results  satisfactory  to Bank.  Bank  shall  have
determined that immediately after giving effect to (A) the making of the initial
Loans to be made on the Closing Date, (B) the issuance of Letters of Credit,  if
any, to be issued on the Closing Date,  (C) the payment by Borrowers of all fees
to be  paid  on the  Closing  Date,  and (D) the  payment  or  reimbursement  by
Borrowers to Bank for all closing costs and expenses incurred in connection with
the transactions contemplated hereby, on a pro forma basis, the Available Credit
would be at least $2,000,000 if all of Borrowers'  accounts payable were paid so
that none of them was more than 60 days past due.

      (d) Fees and  Expenses.  Borrowers  shall have paid all fees and  invoiced
costs and expenses then due pursuant to the terms of this Agreement.

      (e)  Insurance.  Agent  shall  have  delivered  to  Bank  evidence  of the
insurance coverage,  including loss payable  endorsements,  required pursuant to
Section 8.5.


      SECTION 7.2 CONDITIONS OF EACH EXTENSION OF CREDIT

      The obligation of Bank to make any Loan  (including any Loan being made by
Bank on the  Closing  Date) and of Bank to issue any  Letter of Credit  shall be
subject to the further conditions precedent that:

      (a) the  following  statements  shall be true on the date of such  Loan or
issuance or  renewal,  both before and after  giving  effect  thereto and to the
application  of the proceeds  therefrom  (and the acceptance by Borrowers of the
proceeds  of such Loan or by the  beneficiary  thereof or its  designee  of such
Letter of Credit  shall  constitute a  representation  and warranty by Borrowers
that on the date of such Loan or such issuance such statements are true):

                                     P41


<PAGE>
            (i) the representations and warranties of each Borrower contained in
      the Loan Documents are correct in all material  respects on and as of such
      date as though made on and as of such date or, as to those representations
      and warranties limited by their terms to a specified date, were correct in
      all material respects on and as of such date; and

            (ii) no Default is  continuing  or would result from the Loans being
      made or the Letter of Credit being issued on such date;

      (b) the making of the Loans or the  issuance  of such  Letter of Credit on
such  date  does  not  violate  any  Governmental  Rule  and  is  not  enjoined,
temporarily, preliminarily or permanently;

      (c)   Bank shall have received such additional documents,
information and materials as Bank may reasonably request; and

      (d) no event or  circumstance  exists which can  reasonably be expected to
have a Material Adverse Effect.


ARTICLE VIII.     AFFIRMATIVE COVENANTS

      Borrowers covenant that so long as Bank remains committed to extend credit
to Borrowers pursuant to the terms hereof or any liabilities  (whether direct or
contingent,  liquidated  or  unliquidated)  of  Borrowers  under any of the Loan
Documents  remain  outstanding,  and  until  payment  in full,  in cash,  of all
Obligations, Borrowers shall, unless Bank otherwise consents in writing:

      SECTION 8.1 PUNCTUAL PAYMENTS

      Punctually pay all principal,  interest,  fees and other  liabilities  due
under  any of the Loan  Documents  at the  times  and  place  and in the  manner
specified therein.


      SECTION 8.2 ACCOUNTING RECORDS

      Keep accurate books and records of the financial  affairs of each Borrower
and  Subsidiaries  sufficient to permit the preparation of financial  statements
therefrom in accordance with GAAP.

      SECTION 8.3 COLLATERAL REPORTING

      Cause Agent to provide Bank with the following  documents and reports in a
form satisfactory to Bank:

      (a)   the periodic reports and other information specified on
Exhibit G attached hereto;

                                     P42

<PAGE>
      (b) upon  Bank's  request,  (i) copies of customer  statements  and credit
memos,  remittance  advices and  reports,  and copies of deposit  slips and bank
statements,  (ii) copies of shipping and delivery documents, and (iii) copies of
purchase  orders,  invoices and delivery  documents  for Inventory and Equipment
acquired by Borrower;

      (c) upon Bank's request,  Borrowers shall, at their expense,  no more than
once during the term of the  Agreement  in the absence of a Default,  but at any
time or times as Bank may request on or after a Default,  deliver or cause to be
delivered to Bank written  reports or appraisals  as to the  Collateral in form,
scope and methodology acceptable to Bank and by an appraiser acceptable to Bank,
addressed to Bank or upon which Bank is expressly permitted to rely;

      (d) within 20 days  after the  sending  or filing  thereof,  copies of all
reports and  statements  sent to or filed by Borrower  with the  Securities  and
Exchange Commission; and

      (e) such other  reports as to the  Collateral  as Bank shall  request from
time to time.

If any Records are prepared or maintained by an accounting service,  contractor,
shipper or other agent,  Borrower  hereby  irrevocably  authorizes such service,
contractor,  shipper or agent to deliver  such  records,  reports,  and  related
documents  to Bank and to follow  Bank's  instructions  with  respect to further
services at any time that a Default exists or has occurred and is continuing.

      SECTION 8.4 FINANCIAL STATEMENTS

      Cause  Agent to  provide  Bank all of the  following,  in form and  detail
satisfactory to Bank:

      (a) not later than 90 days after and as of the end of each  fiscal year of
Williams Parent, audited, consolidated and consolidating financial statements of
Williams  Parent,   prepared  in  accordance  with  GAAP  and  certified  by  an
independent certified public accountant acceptable to Bank and such accountant's
unqualified opinion with respect thereto;

                                      P43

<PAGE>
      (b) not later than 90 days after and as of the end of each  fiscal year of
Ajay Parent,  audited,  consolidated and consolidating  financial  statements of
Ajay Parent,  prepared in accordance  with GAAP and certified by an  independent
certified public accountant acceptable to Bank and such accountant's unqualified
opinion with respect thereto;

      (c) not later than 15 days (25 days until 1998) after and as of the end of
each month  which is not the last month of a fiscal  quarter,  consolidated  and
consolidating  financial  statements of Williams Parent,  prepared in accordance
with GAAP by Williams Parent, including a comparison of Williams Parent's actual
consolidated financial condition for said month and year to date with respect to
the same month and period of the  immediately  preceding  fiscal year,  together
with a certificate by a senior financial  officer of Williams Parent  certifying
that such financial  statements fairly present in all material respects Williams
Parent's  consolidated  balance sheet as of the end of such month and income and
cash flow for such month;

      (d) not later than 45 days after and as of the end of each month  which is
the last month of a fiscal  quarter  but not the last month of the fiscal  year,
consolidated and consolidating financial statements of Williams Parent, prepared
in accordance with GAAP by Williams  Parent,  including a comparison of Williams
Parent's actual consolidated financial condition for said month and year to date
with respect to the same month and period of the  immediately  preceding  fiscal
year,  together with a  certificate  by a senior  financial  officer of Williams
Parent certifying that such financial  statements fairly present in all material
respects  Williams  Parent's  consolidated  balance  sheet as of the end of such
month and income and cash flow for such month;

      (e) not later than 15 days (25 days until 1998) after and as of the end of
each month  which is not the last month of a fiscal  quarter,  consolidated  and
consolidating  financial statements of Ajay Parent,  prepared in accordance with
GAAP by Ajay Parent, including a comparison of Ajay Parent's actual consolidated
financial  condition  for said  month and year to date with  respect to the same
month and period of the  immediately  preceding  fiscal  year,  together  with a
certificate by a senior  financial  officer of Ajay Parent  certifying that such
financial  statements  fairly  present in all material  respects  Ajay  Parent's
consolidated  balance sheet as of the end of such month and income and cash flow
for such month;

      (f) not later than 45 days after and as of the end of each month  which is
the last month of a fiscal quarter,  consolidated  and  consolidating  financial
statements  of Ajay  Parent,  prepared in  accordance  with GAAP by Ajay Parent,
including a comparison of Ajay Parent's actual consolidated  financial condition
for said month and year to date with respect to the same month and period of the
immediately  preceding  fiscal year,  together  with a  certificate  by a senior
financial  officer of Ajay  Parent  certifying  that such  financial  statements
fairly present in all material respects Ajay Parent's consolidated balance sheet
as of the end of such month and income and cash flow for such month;

                                      P44

<PAGE>
      (g)  contemporaneously  with  the  delivery  of each  financial  statement
required  hereby,  a certificate of Agent's chief financial  officer (i) stating
that no Default existed at any time during the period covered by such statement,
except for those events or conditions,  if any, described in such certificate in
reasonable  detail  together with a statement of any action taken or proposed to
be taken with respect thereto and (ii) setting forth the  calculations  required
to establish  compliance  by Borrowers  with the covenants set forth in Sections
8.18 and 9.14 hereof; and

      (h) from  time to time  such  other  information  as Bank  may  reasonably
request, which may include, without limitation, budgets, forecasts,  projections
and other information respecting the Collateral and the business of Borrower.

      SECTION 8.5 INSURANCE

      (a) At all times, Borrowers shall maintain property insurance insuring all
Collateral  which is tangible  property  against loss or damage by fire,  theft,
burglary,  pilferage,  loss in  transit  and such  other  hazards  as Bank shall
specify in an amount equal to the full insurable  value of the  Collateral  with
reasonable  deductible  amounts.  Such insurance shall contain extra expense and
business  interruption  endorsements,  shall  contain a  lender's  loss  payable
endorsement  acceptable to Bank, shall be evidenced by policies containing terms
reasonably  acceptable  to Bank and shall be provided by insurers  acceptable to
Bank.  The  policies or a  certificate  thereof  signed by the insurer  shall be
delivered to Bank within five (5) Business Days after the issuance or renewal of
the policies to  Borrowers.  Each such policy shall provide that such policy may
not be amended or  canceled  without  thirty (30) days prior  written  notice to
Bank. At least fifteen (15) days before the expiration of a policy,  Agent shall
deliver  to Bank a binder  (or other  evidence  reasonably  acceptable  to Bank)
indicating  that such  policy  has been  renewed or that a  substitute  for such
policy will be issued  effective  upon the  expiration of such policy.  If Agent
fails to do so, Bank may (but shall not be required to) procure  such  insurance
and add the cost thereof to the Revolving Loan.

      (b) At all times,  Borrowers  shall maintain in full force and effect such
liability  and  other  insurance  with  respect  to  its  activities  as  may be
reasonably  required by Bank.  Such  liability  insurance  shall name Bank as an
additional  insured with  respect to the  activities  of Borrowers  and shall be
provided by insurer(s) acceptable to Bank.

      (c)   OREGON STATUTORY NOTICE.  The following is inserted pursuant
to ORS 746.201:

                                     WARNING

            Unless you  provide us with  evidence of the  insurance  coverage as
      required by our contract or loan agreement,  we may purchase  insurance at
      your expense to protect our interest.  This  insurance  may, but need not,
      also  protect  your  interest.  If the  collateral  becomes  damaged,  the
      coverage  we  purchase  may not pay any claim  you make or any claim  made
      against you. You may later cancel this coverage by providing evidence that
      you have obtained property coverage elsewhere.

            You are responsible  for the cost of any insurance  purchased by us.
      The cost of this  insurance may be added to your contract or loan balance.
      If the cost is added to your contract or loan  balance,  the interest rate
      on the  underlying  contract or loan will apply to this added amount.  The
      effective date of coverage may be the date your prior  coverage  lapsed or
      the date you failed to provide proof of coverage.

            The coverage we purchase may be  considerably  more  expensive  than
      insurance  you can  obtain  on your own and may not  satisfy  any need for
      property damage coverage or any mandatory liability insurance requirements
      imposed by applicable law.

                                     P45

<PAGE>
      SECTION 8.6 COMPLIANCE

      Preserve and  maintain  all  licenses,  Permits,  governmental  approvals,
rights,  privileges and franchises necessary for the conduct of its business and
comply  in all  material  respects,  with all  Governmental  Rules,  Contractual
Obligations,  commitments,  instruments, licenses, Permits and franchises, other
than such failure to preserve or maintain or non-compliance  the consequences of
which in the  aggregate  are not  reasonably  likely to have a Material  Adverse
Effect.

      SECTION 8.7 FACILITIES

      Keep all  properties  useful or necessary to  Borrowers'  business in good
repair and condition, and from time to time make necessary repairs, renewals and
replacements  thereto  so that  such  property  shall be fully  and  efficiently
preserved and maintained.

      SECTION 8.8 TAXES AND OTHER LIABILITIES

      Pay  and  discharge  when  due  any  and  all  indebtedness,  obligations,
assessments  and taxes,  both real or  personal,  including  without  limitation
Federal  and  state  income  taxes  and  state  and  local  property  taxes  and
assessments,  except such as a Borrower may in good faith contest or as to which
a bona fide dispute may arise,  and for which  Borrowers have made provision for
adequate reserves in accordance with GAAP.

                                     P46


<PAGE>
      SECTION 8.9 LITIGATION

      Promptly  give  notice in  writing  to Bank of any  litigation  pending or
threatened against Borrower or any Subsidiary with a claim in excess of $250,000
in the aggregate for Borrowers and all Subsidiaries.


      SECTION 8.10      NOTICE TO BANK

      (a)  Promptly  (but in no event  more  than two  Business  Days  after the
occurrence  of each  such  event  or  matter)  give  written  notice  to Bank in
reasonable detail of: (i) the occurrence of any Default; (ii) any termination or
cancellation  of any  insurance  policy which  Borrower is required to maintain,
unless such policy is replaced  without any break in coverage with an equivalent
or better  policy;  (iii) any  uninsured or partially  uninsured  loss or losses
through  liability or property damage, or through fire, theft or any other cause
affecting the property of Borrowers in excess of an aggregate of $250,000 during
any twelve-month  period;  or (iv) any change in the name or the  organizational
structure of Borrower or any Subsidiary.

      (b) As soon as possible and in any event within thirty days after Borrower
knows or has reason to know that any "reportable  event" (as defined in Title IV
of ERISA) that triggers an obligation to file a notice with the Pension  Benefit
Guaranty  Corporation  with  respect  to any Plan  has  occurred  that  alone or
together with any other "reportable  event" is reasonably likely to result in an
increase in the present value of future liabilities under all Plans of Borrowers
of more than  $250,000,  deliver to Bank a statement  of the  President or chief
financial officer of Agent setting forth details as to such reportable event and
the action which Borrowers propose to take with respect thereto, together with a
copy of the notice of such  reportable  event to the  Pension  Benefit  Guaranty
Corporation.
                                     P47

<PAGE>
      SECTION 8.11      CONDUCT OF BUSINESS

      Except as otherwise permitted by this Agreement,  (a) conduct its business
in a regular  manner and (b) use its reasonable  efforts in the ordinary  course
and consistent  with past practice to (i) preserve its business and the goodwill
and business of the  customers,  advertisers,  suppliers and others with whom it
has business  relations,  (ii) keep  available  the services and goodwill of its
present employees, and (iii) preserve all rights, Permits, licenses,  approvals,
privileges,  registered patents, trademarks, trade names, copyrights and service
marks and other intellectual property with respect to its business.

      SECTION 8.12      PRESERVATION OF CORPORATE EXISTENCE, ETC.

      Preserve  and  maintain  its  corporate  existence,  rights  (charter  and
statutory)  and  material  franchises,  unless the  failure to so  preserve  and
maintain is not reasonably likely to have a Material Adverse Effect.

      SECTION 8.13      ACCESS

      (a) At any  reasonable  time  and  from  time to time  upon at  least  two
Business  Days' prior notice from Bank (unless a Default shall have occurred and
be continuing, in which case no prior notice is necessary),  permit Bank, or any
agents  or  representatives  thereof,  to (i)  examine  and make  copies  of and
abstracts  from the  records  and books of account of  Borrower,  (ii) visit the
properties  of Borrower,  (iii)  discuss the  affairs,  finances and accounts of
Borrower  with any of its  officers  or  directors  who may  then be  reasonably
available,  and (iv) communicate directly with Borrowers'  independent certified
public  accountants.  Borrower shall authorize its independent  certified public
accountants  to  disclose  to Bank any and all  financial  statements  and other
information of any kind, including, without limitation, copies of any management
letter,  or the substance of any oral information that such accountants may have
with respect to the  business,  financial  condition,  results of  operations or
other affairs of Borrowers and each of its Subsidiaries.

      (b)  Borrowers  shall  execute  and  deliver  at the  request of Bank such
instruments as may be necessary for Bank to obtain such  information  concerning
the business of Borrowers as Bank may require from accountants,  service bureaus
or others  having  custody  of or  maintaining  records  or assets of  Borrower.
Borrowers  shall furnish Bank at reasonable  intervals with such  statements and
reports regarding the Collateral, Borrowers' financial condition and the results
of Borrowers'  operations,  in addition to those otherwise herein  required,  as
Bank may request from time to time.

SECTION 8.14     PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS

      Perform and observe all the terms, covenants and conditions required to be
performed  and  observed  by it under its  Contractual  Obligations  (including,
without  limitation,  to pay all rent and other charges  payable under any lease
and all debts and other  obligations  as the same become due), and do all things
necessary to preserve and to keep  unimpaired its rights under such  Contractual
Obligations, other than such failures the consequences of which in the aggregate
are not reasonably likely to have a Material Adverse Effect.


                                     P48

<PAGE>
      SECTION 8.15      APPLICATION OF PROCEEDS

      Use the entire  amount of the proceeds of each Loan as provided in Section
4.4.

      SECTION 8.16      FISCAL YEAR

      Notify Bank at least 60 days in advance of any action Borrower  intends to
take to change  its fiscal  year,  and at least 30 days in advance of any action
Borrower  intends to take to change its method of accounting,  or any accounting
practice used by it, or the  application  of any generally  accepted  accounting
principle in a manner  inconsistent  with the  financial  statements  previously
delivered by Agent to Bank.

      SECTION 8.17      ENVIRONMENTAL

      (a)  Promptly  give  notice to Bank upon  obtaining  knowledge  of (i) any
claim, injury,  proceeding,  investigation or other action,  including a request
for information or a notice of potential environmental liability, by or from any
Governmental Authority or any third-party claimant that could result in Borrower
or any  Subsidiary  incurring  Environmental  Liabilities  and Costs or (ii) the
discovery  of any Release at, on, under or from any real  property,  facility or
equipment owned or leased by Borrower or a Subsidiary in excess of reportable or
allowable standards or levels under any applicable  Environmental Law, or in any
manner or amount that could  reasonably be expected to result in Borrower or any
Subsidiary incurring Environmental Liabilities and Costs.

      (b) Upon  discovery  of the  presence on any  property  owned or leased by
Borrower or a Subsidiary of any Contaminant that reasonably could be expected to
result in Environmental Liabilities and Costs, take all Remedial Action required
by applicable Environmental Law.

      SECTION 8.18      FINANCIAL COVENANTS

      (a)   The total of Williams Parent's Tangible Net Worth (exclusive
of its investment in Ajay Parent) and Ajay Parent's Tangible Net Worth
shall at all times exceed $11,000,000.

      (b)   Aggregate Working Capital shall at all times exceed
$25,000,000.

      SECTION 8.19      LIENS

      Keep the Collateral free and clear of all Liens, except Permitted Liens.

                                     P49

<PAGE>
      SECTION 8.20      FURTHER ASSURANCES

      At the request of Bank at any time and from time to time, duly execute and
deliver,  or cause to be duly executed and delivered,  such further  agreements,
documents and  instruments,  and do or cause to be done such further acts as may
be necessary or proper to evidence,  perfect,  maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Loan Documents,
at  Borrowers'  expense.  Bank may at any time and from  time to time  request a
certificate  from an  officer  of  Borrower  representing  that  all  conditions
precedent to the making of Loans and issuing Letters of Credit  contained herein
are  satisfied.  In the event of such request by Bank,  Bank may, at its option,
cease to make any further  Loans or provide any further  Letters of Credit until
Bank has received such  certificate  and, in addition,  Bank has determined that
such  conditions  are  satisfied.  Where  permitted  by  law,  Borrowers  hereby
authorize Bank to execute and file one or more UCC financing  statements  signed
only by Bank.


ARTICLE IX.    NEGATIVE COVENANTS

      Borrowers covenant that so long as Bank remains committed to extend credit
to Borrowers pursuant to the terms hereof or any liabilities  (whether direct or
contingent,  liquidated  or  unliquidated)  of  Borrowers  under any of the Loan
Documents  remain  outstanding,  and  until  payment  in  full,  in  cash of all
Obligations, no Borrower will, without the prior written consent of Bank:

      SECTION 9.1 LIENS

      Create or suffer  to exist  any Lien  upon or with  respect  to any of its
properties,  whether  now owned or  hereafter  acquired,  or assign any right to
receive income, except Permitted Liens.

      SECTION 9.2 INDEBTEDNESS

      Borrowers and Subsidiaries,  on a consolidated  basis, create or suffer to
exist any Indebtedness except:

      (a)   the Obligations;

      (b) current liabilities in respect of taxes,  assessments and governmental
charges or levies  incurred,  or liabilities  for labor,  materials,  inventory,
services,  supplies and rentals incurred, or for goods or services purchased, in
the ordinary course of business  consistent with industry practice in respect of
arm's length transactions and the past practice of Borrower; and

            (c)   Indebtedness owed to Borrower.


                                     P50

<PAGE>
      SECTION 9.3 OPERATING LEASE OBLIGATIONS

      During any  twelve-month  period create any  obligations as lessee for the
rental or hire of real or personal  property of any kind under operating  leases
with a term of one year or more which would  cause the  aggregate  liability  of
Borrowers for rent or other compensation payable in any period of 12 consecutive
months with respect to such newly created  leases to exceed  $600,000,  provided
that the foregoing shall not apply to the lease by Aptek  Williams,  Inc. of the
real property  currently  owned by it in Broward County,  Florida  pursuant to a
sale/leaseback transaction.

      SECTION 9.4 RESTRICTED PAYMENTS, REDEMPTIONS

      (a) Declare or make any dividend payment or other  distribution of assets,
properties,  cash, rights, obligations or securities on account or in respect of
any of its Stock or Stock  Equivalents  except (i)  dividends  paid to Borrower,
(ii)  dividends  paid by  Borrower  solely  in  Stock or  Stock  Equivalents  of
Borrower,  and (iii)  preferred  dividends  paid by Ajay Parent on its preferred
stock  pursuant to the terms of such  preferred  stock as such terms  existed on
April 15, 1997;

      (b)   purchase, redeem or otherwise acquire for value any of
Borrower's Stock or Stock Equivalents; or

      (c)  make  any  change  in  its  capital  structure,   including,  without
limitation, the creation of new classes or types of Stock or Stock Equivalents.


      SECTION 9.5 MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC.

      (a) (i)  Merge  or  consolidate  with  any  Person,  (ii)  acquire  all or
substantially  all of the  Stock or Stock  Equivalents  of any  Person  or (iii)
acquire  all or  substantially  all  of  the  assets  of  any  Person  or all or
substantially all of the assets constituting the business of a division,  branch
or other unit  operation  of any Person,  except that  Borrower may acquire such
assets if (A) no Default exists at the time of such acquisition,  (B) no default
would result from such  acquisition and (C)  immediately  after giving effect to
such  acquisition and bringing  current to Bank's  satisfaction  any liabilities
assumed in connection with such  acquisition,  the Available  Credit would be at
least $1,000,000.

      (b) Except for a sale, conveyance, transfer, lease or other disposition to
Borrower,  sell,  convey,  transfer,  lease or  otherwise  dispose of any of its
assets  (including,  without  limitation,  the  Stock  of a  Subsidiary)  or any
interest therein to any Person,  or permit or suffer any other Person to acquire
any interest in any of the assets of Borrower,  except (i)  Permitted  Liens and
(ii) the sale or  disposition  of inventory  in the ordinary  course of business
and/or assets which have become  obsolete or are replaced in the ordinary course
of business.


                                     P51

<PAGE>
      SECTION 9.6 INVESTMENTS IN OTHER PERSONS

      Directly or indirectly,  make or maintain any loan or advance to any other
Person or own, purchase or otherwise acquire any Stock, Stock Equivalents, other
equity interest, obligations or other securities of, or otherwise invest in, any
other Person (any such transaction being an "Investment"), except:

      (a)  investments in Accounts,  contract  rights and chattel  paper,  notes
receivable  and similar  items  arising or acquired  in the  ordinary  course of
business consistent with Borrowers' past practice;

      (b)   incidental advances to employees of Borrower in the ordinary
course of business; and

      (c)   loans and advances to Borrower.

      SECTION 9.7 CHANGE IN NATURE OF BUSINESS

      Directly or  indirectly  engage in any  business  activity  other than its
current business activity or related business activity.

      SECTION 9.8 GUARANTIES

      Guarantee or become liable in any way as surety,  endorser  (other than as
endorser of  negotiable  instruments  for deposit or  collection in the ordinary
course of  business),  accommodation  endorser  or  otherwise  for, or pledge or
hypothecate  any assets of  Borrower or any  Subsidiary  as  security  for,  any
liabilities  or  obligations  of any other  Person  except any of the  foregoing
required by this Agreement.

      SECTION 9.9 PLANS

      (a) Adopt or become  obligated to  contribute  to any Title IV Plan or any
multiemployer  Plan or any other Plan  subject to  Section  412 of the  Internal
Revenue Code (except for any such Plan listed on the Disclosure  Schedule on the
Closing Date),  (b) except as a result of arm's length  negotiation with a labor
union,  establish or become  obligated  with respect to any new welfare  benefit
Plan, or modify any existing welfare benefit Plan, which is reasonably likely to
result  in  an  increase  of  the  present  value  of  future   liabilities  for
post-retirement life insurance and medical benefits,  or (c) establish or become
obligated to contribute to any new unfunded pension Plan, or modify any existing
unfunded  pension Plan,  which is reasonably  likely to result in an increase in
the present value of future unfunded liabilities under all such plans.


                                      P52
<PAGE>


      SECTION 9.10      ACCOUNTING CHANGES

      Make any change in  accounting  practices,  except such  changes as are in
conformity with GAAP and disclosed to Bank pursuant to Section 8.16.

      SECTION 9.11      CANCELLATION OF INDEBTEDNESS OWED TO IT

      Cancel any claim or Indebtedness owed to it except for legitimate business
purposes in the  reasonable  judgment of Borrower and in the ordinary  course of
business and except for obligations owed to it by another Borrower.

      SECTION 9.12      NO SPECULATIVE TRANSACTIONS

      Engage in any  Commodity  Contract or Interest  Rate  Contract  other than
interest rate projection agreements on terms reasonably acceptable to the Bank.

      SECTION 9.13      ENVIRONMENTAL

      Permit any lessee or any other Person to,  dispose of any  Contaminant  by
placing  it in or on the  ground or waters  of any  property  owned or leased by
Borrower  or  any  of its  Subsidiaries,  except  in  material  compliance  with
Environmental  Law or the terms of any Permit or other  than those  which in the
aggregate have no reasonable likelihood of having a Material Adverse Effect.

      SECTION 9.14      CAPITAL EXPENDITURES

      Make any capital  expenditures (which term shall include Capitalized Lease
Obligations) at any time except (i) in the ordinary course of business, and (ii)
in an amount  collectively  for  Borrowers  not in excess of  $2,500,000  in any
twelve-month period.

      SECTION 9.15      TRANSACTIONS WITH AFFILIATES

      Except  for a  transaction  with  Borrower,  enter  into  any  transaction
directly or indirectly  with or for any affiliate  except in the ordinary course
of  business  on a basis  no less  favorable  to such  affiliate  than  would be
obtained in a comparable arm's length transaction with a Person not an affiliate
involving  assets  that are not  material  to the  business  and  operations  of
Borrower.

                                      P53
<PAGE>

      SECTION 9.16      NEW COLLATERAL LOCATION

      Open any new  location  unless (a) Agent gives Bank 30 days prior  written
notice of the  intended  opening  of such new  location  and (b) the  applicable
Borrower   executes  and  delivers  to  Bank  such  agreements,   documents  and
instruments  as Bank may deem  reasonably  necessary or desirable to protect its
interests in the Collateral at such new location, including, without limitation,
UCC-1 financing statements.



ARTICLE X.  EVENTS OF DEFAULT

      SECTION 10.1      EVENTS OF DEFAULT

      The  occurrence  of any of the  following  shall  constitute  an "Event of
Default" under this Agreement:

      (a)   Borrowers shall fail to pay when due any amount payable under
any of the Loan Documents;

      (b) any financial statement or certificate furnished to Bank in connection
with, or any  representation  or warranty made by Borrower under any of the Loan
Documents  shall prove to be false or  misleading  in any material  respect when
furnished or made;

      (c)  Borrowers  shall fail to  provide  any  certificate,  report or other
information  which it is required to provide  pursuant to Section 8.3 or Section
8.4 on the date  specified in Section 8.3 or Section 8.4;  provided  that unless
Borrowers have previously failed to provide any required certificate,  report or
other  information  by the  required  date on two  prior  occasions  within  the
preceding  twelve  months,  such failure shall be considered an Event of Default
only if Borrowers fail to provide such certificate,  report or other information
within five  Business Days of the earlier of (i) the date Borrower has knowledge
of its failure to so provide such certificate,  report or other information,  or
(ii) the date Bank, notifies Agent of such failure;

      (d) any default by Borrowers in the  performance of or compliance with any
obligation, agreement or other provision contained in Sections 8.10, 8.12, 8.13,
8.15, 8.16, 8.18, 9.2, 9.4, 9.5, 9.6;

                                      P54

<PAGE>
      (e) any default by Borrowers in the  performance  or  compliance  with any
obligation,  agreement or other provision  contained in any Loan Document (other
than those referred to in  subsections  (a) through (d) above) for 15 days after
notice thereof by Bank to Agent;

      (f) except as otherwise  provided in Section 10.4, any default by Borrower
in the  payment  or  performance  of any  obligation,  or any  defined  event of
default,  under the terms of any contract or  instrument  (other than any of the
Loan Documents)  evidencing  Indebtedness (other than trade payables incurred in
the  ordinary  course of  business)  in excess of $200,000 to any Person,  which
default is not cured within any cure period applicable thereto;

      (g) except as otherwise  provided in Section 10.4, any judgment,  order or
writ in excess of $250,000 is rendered or entered against Borrower and/or one or
more Subsidiaries, except any judgment for which Borrowers are fully insured and
with respect to which the insurer has admitted in writing its  liability for the
full amount thereof or except if the enforcement of such judgment, order or writ
has been  stayed  or the  liability  thereon  bonded  in a  manner  and on terms
reasonably  satisfactory to Bank; or the service of a notice of levy and/or of a
writ of  attachment  or  execution,  or other like  process,  against any of the
assets of Borrower and/or one or more  Subsidiaries  with respect to obligations
in excess of $100,000;

      (h)  Borrower  shall  become  insolvent,  or shall suffer or consent to or
apply for the  appointment  of a receiver,  trustee,  custodian or liquidator of
itself or any of its  property,  or shall  generally be unable to or fail to pay
its debts as they become due, or shall make a general assignment for the benefit
of creditors; Borrower shall file a voluntary petition in bankruptcy, or seek to
effect a plan or other  arrangement with creditors or any other relief under the
Bankruptcy  Code,  or under any state or other  Federal law  granting  relief to
debtors,  whether now or hereafter  in effect;  or any  involuntary  petition or
proceeding  pursuant to the  Bankruptcy  Code or any other  applicable  state or
other  Federal law relating to  bankruptcy,  reorganization  or other relief for
debtors is filed or commenced  against Borrower and is not dismissed,  stayed or
vacated within 60 days  thereafter;  Borrower shall file an answer admitting the
jurisdiction  of the  court  and the  material  allegations  of any  involuntary
petition;  or Borrower shall be  adjudicated a bankrupt,  or an order for relief
shall be entered by any court of  competent  jurisdiction  under the  Bankruptcy
Code or any other  applicable  state or  Federal  law  relating  to  bankruptcy,
reorganization or other relief for debtors; as used herein;

      (i) there shall exist or occur any event or  condition  which Bank in Good
Faith believes impairs,  or is substantially  likely to impair,  the prospect of
payment or performance by Borrowers of their  obligations  under any of the Loan
Documents  and such event or condition is not cured or removed  within five days
after notice thereof by Bank to Agent;

      (j) the  dissolution  or  liquidation  of  Borrower,  or  Borrower  or its
directors or stockholders shall take action seeking to effect the dissolution or
liquidation of Borrower;

      (k)   Thomas W. Itin shall no longer possess, directly or
indirectly, the power to direct or cause the direction of the management
or policies of Borrower;

                                     P55

<PAGE>
      (l) any Obligor  revokes or terminates  (or attempts or purports to revoke
or terminate) his/her/its guarantee,  endorsement or other agreement in favor of
Bank, or any creditor of Borrower which has executed a subordination in favor of
Bank revokes or terminates (or attempts or purports to revoke or terminate) such
subordination.

      (m) the indictment of Borrower or any Obligor under any criminal  statute,
or  commencement  of  criminal  or civil  proceedings  against  Borrower  or any
Obligor,  pursuant to which  statute or  proceedings  the  penalties or remedies
sought or available  include  forfeiture  of any material  amount of property of
Borrower or such Obligor;

      (n) any  member of  Borrower's  Senior  Management  shall  cease,  for any
reason,  to be employed by Borrower on a full-time basis in his present capacity
unless such person is replaced  within 90 days by another  person  acceptable to
Bank.  Senior  Management means Thomas W. Itin or any two of the chief financial
officer of Williams Parent or a Group Vice President of Williams Parent; or

      (o) the sale, transfer, hypothecation,  assignment or encumbrance, whether
voluntary,  involuntary  or by operation of law,  without  Bank's prior  written
consent,  of all or any  part of or  interest  in any real  property  Collateral
required hereby.

      SECTION 10.2      REMEDIES

      (a) Upon the  occurrence or existence of any Event of Default  (other than
an Event of Default  referred  to in  Section  10.1(h)  hereof)  and at any time
thereafter during the continuance of such Event of Default, Bank may, by written
notice to Agent,  (a) terminate  Bank's  obligation to extend any further credit
under  any of the  Loan  Documents,  and/or  (b)  declare  all  indebtedness  of
Borrowers  under the Loan  Documents to be immediately  due and payable  without
presentment,  demand,  protest or any other notice of any kind, all of which are
hereby  expressly  waived by Borrowers.  Upon the occurrence or existence of any
Event of Default  described in Section 10.1(h)  hereof,  immediately and without
notice, (i) the obligations,  if any, of Bank to extend any further credit under
any of the Loan Documents shall automatically cease and terminate,  and (ii) all
indebtedness of Borrowers under the Loan Documents  shall  automatically  become
immediately due and payable,  without presentment,  demand, protest or any other
notice of any kind, all of which are hereby  expressly  waived by Borrowers.  In
addition to the  foregoing  remedies,  upon the  occurrence  or existence of any
Event of Default,  Bank may exercise any other right, power or remedy granted to
it under any Loan  Document or permitted to it by law,  either by suit in equity
or by action at law, or both.

                                       P56
<PAGE>

      (b) Upon the  occurrence of an Event of Default,  Bank, in addition to any
other rights and remedies contained in the Loan Documents, shall have all of the
rights and remedies of a secured  party under the Code and all other  applicable
law, all of which rights and remedies  shall be cumulative and  nonexclusive  to
the  extent  permitted  by law.  Bank may  cause  the  Collateral  to  remain on
Borrowers'  premises,  at Borrowers' expense,  pending sale or other disposition
thereof.  Bank shall have the right to conduct such sales on Borrowers' premises
or elsewhere,  at Borrowers'  expense,  on such occasion(s) as Bank may see fit,
and Borrowers,  at Bank's  request,  will, at Borrowers'  expense,  assemble the
Collateral and make it available to Bank at such place(s) as Bank may reasonably
designate from time to time. Any sale, lease or other disposition by Bank of the
Collateral, or any part thereof, may be for cash or other value. Borrowers shall
execute and deliver,  or cause to be executed and delivered,  such  instruments,
documents,  assignments,  deeds,  waivers,  certificates and affidavits and take
such further  action as Bank shall  reasonably  require in connection  with such
sale, and Borrower hereby  constitutes Bank as its  attorney-in-fact  to execute
any  such  instrument,   document,  assignment,  deed,  waiver,  certificate  or
affidavit  on behalf of Borrower  and in its name.  Borrowers  acknowledge  that
portions of the  Collateral  may be difficult to preserve and dispose of and may
be subject to complex maintenance and management;  accordingly,  Bank shall have
the  widest  possible  latitude  in the  exercise  of its  rights  and  remedies
hereunder.

      (c) Bank is hereby granted a license and right to use, without charge upon
the occurrence  and during the  continuance of an Event of Default and until the
Obligations  are fully and finally  paid in cash,  Borrowers'  labels,  patents,
copyrights,  rights of use of any name, trade secrets, trade names,  trademarks,
service  marks,  advertising  material or any  property  of a similar  nature in
completing the production, advertising for sale and sale of any Collateral.

                                      P57
<PAGE>

      (d) Any  notice  required  to be given by Bank with  respect to any of the
Collateral  which notice is given  pursuant to Section 11.3 and deemed  received
pursuant to Section 11.3 at least five days before a sale, lease, disposition or
other  intended  action  by Bank with  respect  to any of the  Collateral  shall
constitute fair and reasonable  notice to Borrowers of any such action. A public
sale in the following  fashion shall be  conclusively  presumed to be reasonable
if: (i) the sale is held in a county where any part of the Collateral is located
or in which  Borrowers  have a place of business;  (ii) the sale is conducted by
auction;  and (iii) any Collateral is sold as is and without any preparation for
sale.

      (e) Upon the occurrence and during the continuance of an Event of Default,
Bank shall have,  with  respect to Rights to Payment,  all rights and powers to:
(i) direct any and all account debtors to make all payments in respect of Rights
to Payment  directly to Bank or otherwise demand payment of any or all of Rights
to  Payment;  (ii)  enforce  payment of any or all of Rights to Payment by legal
proceedings  or otherwise;  (iii) exercise  Borrowers'  rights and remedies with
respect to any  actions or  proceedings  brought to collect a Right to  Payment;
(iv) sell or assign any Right to Payment upon such terms, for such amount and at
such time or times as Bank deems  advisable;  (v)  settle,  adjust,  compromise,
extend or renew a Right to  Payment;  (vi)  discharge  or  release  any Right to
Payment; and (vii) prepare,  file and sign Borrower's name on any proof of claim
in  bankruptcy  or any  similar  document  against  an  account  debtor,  and to
otherwise exercise the rights granted herein.

      (f) Bank shall have no obligation to preserve any rights to the Collateral
against any Person. Bank shall be under no obligation to make any demand upon or
pursue or exhaust  any  rights or  remedies  against  Borrowers  or others  with
respect  to payment of the  Obligations,  or to pursue or exhaust  any rights or
remedies  with respect to any of the  Collateral  or any other  security for the
Obligations,  or to marshal any assets in favor of Borrower or any other  Person
against or in payment of any or all of the Obligations.

                                      P58

<PAGE>
      (g) In  addition  to the  Liens  granted  to Bank  and any  rights  now or
hereafter  granted under applicable law and not by way of limitation of any such
Liens and rights, upon the occurrence and during the continuance of any Event of
Default, Bank is hereby irrevocably  authorized by Borrowers at any time or from
time to time,  without  notice to  Borrowers  or to any other  Person,  any such
notice being hereby expressly waived, to set-off,  appropriate and apply against
the Obligations  any and all deposits  (general or special,  including,  but not
limited to, indebtedness  evidenced by certificates of deposit,  whether matured
or unmatured,  but not including trust  accounts) and any other  indebtedness at
any time held or owing by Bank or any  affiliate of Bank to or for the credit of
Borrower.

      (h) Borrowers shall pay to Bank, on demand and as part of the Obligations,
all costs and  expenses,  including  court costs and costs of sale,  incurred by
Bank in exercising  any of its rights or remedies  hereunder,  and all costs and
expenses incurred in connection with any review of any part of the Collateral by
a collateral  analyst employed by Bank (including,  without  limitation,  Bank's
then  customary per diem charges for such analysts) if such review was conducted
at any time during the continuation of an Event of Default.

      SECTION 10.3      BANK AS BORROWERS' ATTORNEY

      Borrower hereby appoints Bank or any other Person whom Bank may designate,
as  Borrower's  attorney,  with  power  during the  continuation  of an Event of
Default:  to indorse Borrower's name on any checks,  notes,  acceptances,  money
orders,  drafts or other forms of payment or security  that may come into Bank's
possession; to sign Borrower's name on any invoice or bill of lading relating to
any Right to Payment, on drafts against customers,  on schedules and assignments
of Rights to Payment, on notices of assignment,  financing  statements and other
public  records,  and on  notices  to  customers;  to  notify  the  post  office
authorities to change the address for delivery of Borrower's  mail to an address
designated by Bank; to receive, open and process all mail addressed to Borrower;
and to do all  things  necessary  to perfect  Bank's  security  interest  in the
Collateral,  to preserve and protect the Collateral  and to otherwise  carry out
this Agreement. Provided Bank acts in a reasonable manner, Borrower ratifies and
approves all acts of such  attorney,  and neither Bank nor the attorney  will be
liable for any acts or  omissions  nor for any error of  judgment  or mistake of
fact or law. This power being coupled with an interest is irrevocable  until the
Obligations have been fully paid in cash or the financing  arrangements  between
Bank and Borrowers are terminated, whichever shall later occur.

      SECTION 10.4      EXCEPTIONS

      If upon the occurrence of an event described in Section 10.1(f) or Section
10.1(g) the Available  Credit exceeds the aggregate  amount of all  Indebtedness
described in Section  10.1(f) and all judgments,  orders,  writs and obligations
described in Section 10.1(g),  then such occurrence shall constitute an Event of
Default  only at such later time as the total of the  Available  Credit plus all
reserves  created  by Bank for such  events no  longer  exceeds  such  aggregate
amount.

                                      P59

<PAGE>
ARTICLE XI.    TERM OF AGREEMENT AND MISCELLANEOUS

      SECTION 11.1  TERM

            (a) Maturity Date. This Agreement and the other Loan Documents shall
become  effective  as of the Closing  Date and shall  continue in full force and
effect for a term ending on the Maturity  Date.  Upon the date of termination of
the Loan  Documents,  Borrowers  shall pay to Bank, in full, all outstanding and
unpaid  Obligations and shall furnish cash collateral to Bank in such amounts as
Bank determines are reasonably  necessary to secure Bank from loss, cost, damage
or expense,  including  attorneys' fees and legal expenses  (whether incurred at
the trial or  appellate  level,  in an  arbitration  proceeding,  in  bankruptcy
(including,  without limitation,  any adversary proceeding,  contested matter or
motion) or otherwise), in connection with any contingent obligations,  including
issued  and  outstanding   Letters  of  Credit  and  checks  or  other  payments
provisionally  credited to the  obligations  and/or as to which Bank has not yet
received  final  and  indefeasible  payment.  Interest  shall be due  until  and
including the next Business Day, if the amounts so paid by Borrowers to the bank
account  designated  by Bank are received in such bank  account  later than noon
(San Francisco time).

            (b) Continuing Obligations.  No termination of this Agreement or the
other Loan  Documents  shall  relieve or  discharge  Borrower of its  respective
duties,  obligations  and  covenants  under  this  Agreement  or the other  Loan
Documents until all Obligations have been fully and finally  discharged and paid
in cash,  and Bank's  continuing  security  interest in the  Collateral  and the
rights  and  remedies  of Bank  hereunder,  under the other Loan  Documents  and
applicable law, shall remain in effect until all Obligations have been fully and
finally discharged and paid in cash.

            (c) Early  Termination  Fee.  If for any reason  (other  than as set
forth in subparagraph  (d) below) this Agreement is terminated  prior to the end
of the then current term of this Agreement,  in view of the  impracticality  and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties  as to a  reasonable  calculation  of Bank's  lost  profits  as a result
thereof,  Borrowers  agree  to pay to  Bank,  upon  the  effective  date of such
termination,  an early  termination  fee in the amount  set forth  below if such
termination is effective in the period indicated:


                                      P60

<PAGE>
                Amount                           Period

          (i)   3% of Fee Computation Amount     Closing Date to and
                                                 including July 10, 1998

          (ii)  1.5% of Fee Computation Amount   July 11, 1998 to and
                                                 including July 10, 1999

          (iii) 0.5% of Fee Computation Amount   July 11, 1999 to and
                                                 including May 11, 2000

Such  early  termination  fee shall be  presumed  to be the  amount  of  damages
sustained by Bank as a result of such early termination and Borrowers agree that
it is reasonable under the circumstances currently existing.

            (d) No Early  Termination  Fee.  No early  termination  fee shall be
payable if (i) a group or division of Bank  (other than the  Commercial  Finance
Division  or the workout  group),  or an  affiliate  of Bank  extends  credit to
Borrowers, which credit refinances and/or replaces in full the credit facilities
granted under this Agreement,  (ii) the Obligations are repaid with the proceeds
of equity and/or the sale of assets,  or (iii) the  Obligations are repaid after
the first  anniversary  of the  Closing  Date from  proceeds  of loans made by a
lender other than Bank,  which lender  includes  collateral of a target  company
being acquired by Borrower in such lender's borrowing base and which acquisition
was not permitted hereunder.

      SECTION 11.2  NO WAIVER

      No delay, failure or discontinuance of Bank in exercising any right, power
or remedy under any of the Loan Documents shall affect or operate as a waiver of
such  right,  power or remedy,  nor shall any single or partial  exercise of any
such right,  power or remedy  preclude,  waive or otherwise  affect any other or
further  exercise  thereof or the exercise of any other right,  power or remedy.
Any waiver,  permit, consent or approval of any kind by Bank of any breach of or
default  under  any of the  Loan  Documents  must be in  writing  and  shall  be
effective only to the extent set forth in such writing.

      SECTION 11.3  NOTICES

      All  notices,  requests  and  demands  which any party is  required or may
desire to give to any other party under any provision of this  Agreement must be
in writing delivered to each party at the following address:

      BORROWERS:              c/o Williams Controls, Inc.
                              14100 SW 72nd Avenue
                               Portland, OR 97224
                              Attn:  Thomas W. Itin, Chairman
                          Telecopy No.: (248) 851-9080

                                      P61

<PAGE>
      WITH A COPY TO:         Gerard A. Herlihy
                              Aptek Williams, Inc.
                              700 N.W. 12th Avenue
                            Deerfield Beach, FL 33442
                          Telecopy No.: (954) 421-8044

      BANK:                   Wells Fargo Bank, National Association
                              Commercial Finance Division
                              245 S. Los Robles Ave., Ste. 600
                              Pasadena, CA 91101
                              Attn:  Angelo Samperisi
                              Telecopy No.:  (626) 884-9063

or to such other  address as any party may  designate  by written  notice to all
other  parties.  Each such  notice,  request and demand shall be deemed given or
made as follows:  (a) if sent by hand delivery,  upon  delivery;  (b) if sent by
mail, upon the earlier of the date of receipt or three days after deposit in the
U.S.  mail,  first class and postage  prepaid;  and (c) if sent by telecopy  and
receipt  confirmed by  telephone,  upon receipt and the sender will  endeavor to
send a hard copy of such telecopied notice to the recipient by mail.

      SECTION 11.4  COSTS, EXPENSES AND ATTORNEYS' FEES

      Borrowers shall pay to Bank immediately upon demand the full amount of all
payments, advances, charges, costs and expenses, including reasonable attorneys'
fees  (whether  incurred  at the trial or  appellate  level,  in an  arbitration
proceeding,  in  bankruptcy,   including,   without  limitation,  any  adversary
proceeding, contested matter or motion), incurred by Bank in connection with (a)
the  negotiation and  preparation of the Loan  Documents,  (b) the  enforcement,
preservation   or  protection  (or  attempted   enforcement,   preservation   or
protection) of Bank's rights, including, without limitation, periodic collateral
examinations  and/or the  collection  of any amounts  which  become due to Bank,
under any of the Loan  Documents,  and (c) the  prosecution  or  defense  of any
action  in any way  related  to any of the  Loan  Documents,  including  without
limitation,  any  action  for  declaratory  relief,  and  including  any  of the
foregoing  incurred in connection  with any  bankruptcy  proceeding  relating to
Borrower;  provided,  however, that Borrower shall not be obligated to reimburse
Bank for any  attorneys'  fees incurred by Bank in any court  proceeding  (other
than a  proceeding  under or related  to 11 U.S.C.  ss. 101 et seq.) if (i) such
fees were incurred in an action by either Bank or Borrower against the other and
(ii) Borrower is the prevailing party in such action.

      SECTION 11.5      INDEMNIFICATION

      To the fullest extent permitted by law, Borrowers hereby agree to protect,
indemnify,   defend  and  hold  harmless  Bank  and  its  officers,   directors,
shareholders,  employees, agents, attorneys and affiliates,  together with their
respective   heirs,   beneficiaries,   executors,   administrators,    trustees,
predecessors,  successors  and assigns  (collectively,  "Indemnitees")  from and
against any liability, loss, damage or expense of any kind or nature and from

                                      P62

<PAGE>
any suit, claim or demand (including in respect of or for reasonable  attorneys'
fees  (whether  incurred  at the trial or  appellate  level,  in an  arbitration
proceeding,  in  bankruptcy  (including,   without  limitation,   any  adversary
proceeding,  contested  matter or  motion)  or  otherwise)  and other  expenses,
including  the  allocated  costs and  expenses of internal  counsel)  arising on
account of or in connection with any matter or thing or action or failure to act
by  Indemnitees,  or any of them,  arising out of relating to any Loan Document,
except to the extent such liability arises from the willful  misconduct or gross
negligence of the  Indemnitees.  Upon receiving  knowledge of any suit, claim or
demand  asserted  by a  third  party  that  Bank  believes  is  covered  by this
indemnity,  Bank  shall give Agent  notice of the matter and an  opportunity  to
defend it, at Borrowers' sole cost and expense,  with legal counsel satisfactory
to Bank.  Bank may also require  Borrowers to defend the matter.  Any failure or
delay of Bank to notify Borrowers of any suit, claim or demand shall not relieve
Borrowers  of  their  obligations  of  this  Section,   but  shall  reduce  such
obligations to the extent of any increase in those obligations  caused solely by
an  unreasonable  failure or delay in providing such notice.  The obligations of
Borrowers  under this Section shall survive the payment in full and  performance
of the other Obligations.

      SECTION 11.6  SUCCESSORS, ASSIGNMENT

      This  Agreement  shall be  binding  upon and inure to the  benefit  of the
successors and assigns of the parties;  provided however,  that Borrower may not
assign or transfer  its  interest  hereunder.  Bank  reserves the right to sell,
assign,  transfer,  negotiate or grant  participations in all or any part of, or
any interest in,  Bank's rights and benefits  under each of the Loan  Documents,
provided,  however,  that  such  sale,  assignment,   transfer,  negotiation  or
participation  is to an  insurance  company,  bank,  finance  company  or  other
financial institution.  In connection therewith, Bank may disclose all documents
and  information  which Bank now has or may  hereafter  acquire  relating to any
credit  extended by Bank to Borrower,  Borrower or its  business,  any guarantor
hereunder or the business of such guarantor, or the Collateral.

      SECTION 11.7  ENTIRE AGREEMENT; AMENDMENT

      This  Agreement  and  the  other  Loan  Documents  constitute  the  entire
agreement  among  Borrowers  and Bank with respect to any extension of credit by
Bank and  supersede  all prior  negotiations,  communications,  discussions  and
correspondence  concerning  the subject  matter  hereof.  This  Agreement may be
amended or modified only by a written instrument executed by each party hereto.

      SECTION 11.8  NO THIRD PARTY BENEFICIARIES

      This  Agreement  is made and  entered  into for the  sole  protection  and
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and no other person or entity shall be a third party beneficiary of, or
have any direct or indirect  cause of action or claim in connection  with,  this
Agreement or any other of the Loan Documents to which it is not a party.

      SECTION 11.9  TIME

      Time is of the essence of each and every  provision of this  Agreement and
each other of the Loan Documents.

                                      P63
<PAGE>

      SECTION 11.10  SEVERABILITY OF PROVISIONS

      If any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision  shall be ineffective  only to the extent of such
prohibition or invalidity  without  invalidating the remainder of such provision
or any remaining provisions of this Agreement.

      SECTION 11.11  COUNTERPARTS

      This  Agreement  may be  executed in any number of  counterparts,  each of
which when executed and delivered shall be deemed to be an original,  and all of
which when taken together shall constitute one and the same Agreement.

      SECTION 11.12  GOVERNING LAW

      This Agreement  shall be governed by and construed in accordance  with the
laws of the State of Oregon.

      SECTION 11.13  PATENT ASSIGNMENT AS COLLATERAL

      Among the Loan  Documents are Patent  Assignment  and Security  Agreements
("Patent Agreements") granted by certain Borrowers to Bank.  Notwithstanding the
form of the Patent  Agreements,  the Patent  Agreements are intended as security
for the  payment and  performance  by  Borrowers  of the  Obligations.  Upon the
payment in full of the Obligations,  Bank will, at Borrowers'  expense,  execute
and deliver to Borrowers such documents as Borrowers shall reasonably request to
evidence the termination of Bank's rights set forth in the Patent Agreements.

      SECTION 11.14  ARBITRATION

            (a) Arbitration.  Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this Agreement.  A "Dispute"  shall mean any action,  dispute,
claim or  controversy  of any kind,  whether in contract or tort,  statutory  or
common law,  legal or equitable,  now existing or hereafter  arising under or in
connection with, or in any way pertaining to, any of the Loan Documents,  or any
past, present or future extensions of credit and other activities,  transactions
or  obligations  of any kind related  directly or  indirectly to any of the Loan
Documents,  including  without  limitation,  any of  the  foregoing  arising  in
connection  with the  exercise  of any self help,  ancillary  or other  remedies
pursuant  to any of the Loan  Documents.  Any party may by  summary  proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails

                                      P64

<PAGE>
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and  expenses  incurred by such other  party in  compelling
arbitration of any Dispute.

            (b) Governing Rules.  Arbitration  proceedings shall be administered
by the American  Arbitration  Association ("AAA") or such other administrator as
the parties  shall  mutually  agree upon in accordance  with the AAA  Commercial
Arbitration Rules. All Disputes shall submitted to arbitration shall be resolved
in  accordance  with the Federal  Arbitration  Act (Title 9 of the United States
Code),  notwithstanding  any  conflicting  choice of law provision in any of the
Loan  Documents.  The  arbitration  shall be  conducted  at a location in Oregon
selected  by the AAA or  other  administrator.  If  there  is any  inconsistency
between the terms hereof and any such rules,  the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being  arbitrated.  Judgment
upon any award  rendered in an  arbitration  may be entered in any court  having
jurisdiction;  provided,  however, that nothing contained herein shall be deemed
to be a waiver by any party  that is a bank of the  protections  afforded  to it
under 12 U.S.C. ss.91 or any similar applicable state law.

            (c) No Waiver; Provisional Remedies;  Self-Help and Foreclosure.  No
provision  hereof  shall  limit  the right of any  party to  exercise  self-help
remedies  such as setoff,  foreclosure  against or sale of any real or  personal
property collateral or security, or to obtain provisional or ancillary remedies,
including  without  limitation  injunctive  relief,  sequestration,  attachment,
garnishment  or the  appointment  of a  receiver,  from  a  court  of  competent
jurisdiction  before,  after or during the pendency of any  arbitration or other
proceeding.  The  exercise of any such  remedy  shall not waive the right of any
party to compel arbitration hereunder.

            (d) Arbitrator  Qualifications and Powers; Awards.  Arbitrators must
be active  members  of the Oregon  State Bar or  retired  judges of the state or
federal  judiciary of Oregon,  with expertise in the substantive laws applicable
to the subject  matter of the  Dispute.  Arbitrators  are  empowered  to resolve
Disputes  by summary  rulings in  response  to motions  filed prior to the final
arbitration  hearing.  Arbitrators  (i) shall resolve all Disputes in accordance
with the  substantive  law of the state of Oregon,  (ii) may grant any remedy or
relief that a court of the state of Oregon could order or grant within the scope
hereof and such  ancillary  relief as is necessary to make  effective any award,
and (iii)  shall  have the  power to award  recovery  of all costs and fees,  to
impose  sanctions and to take such other  actions as they deem  necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure,  the
Oregon Rules of Civil  Procedure or other  applicable  law. Any Dispute in which
the amount in  controversy  is  $5,000,000  or less shall be decided by a single
arbitrator who shall not render an award of greater than  $5,000,000  (including
damages,  costs,  fees and expenses).  By submission to a single  arbitrator not
affiliated  with any party,  each party  expressly  waives any right or claim to
recover  more than  $5,000,000.  Any Dispute in which the amount in  controversy
exceeds  $5,000,000  shall  be  decided  by  majority  vote of a panel  of three
arbitrators not affiliated with any party.

                                      P65

<PAGE>
            (e)  Judicial  Review.   Notwithstanding   anything  herein  to  the
contrary,  in any  arbitration  in  which  the  amount  in  controversy  exceeds
$15,000,000,  the  arbitrators  shall  be  required  to make  specific,  written
findings  of  fact  and  conclusions  of  law.  In  such  arbitrations  (i)  the
arbitrators shall not have the power to make any award which is not supported by
substantial  evidence or which is based on legal error,  (ii) an award shall not
be  binding  upon the  parties  unless the  findings  of fact are  supported  by
substantial  evidence and the  conclusions  of law are not  erroneous  under the
substantive  law of the state of  Oregon,  and (iii) the  parties  shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (A) whether the
findings of fact  rendered  by the  arbitrators  are  supported  by  substantial
evidence,  and (B)  whether  the  conclusions  of law are  erroneous  under  the
substantive law of the state of Oregon.  Judgment  confirming an award in such a
proceeding  may be entered only if a court  determines the award is supported by
substantial  evidence and not based on legal error under the  substantive law of
the state of Oregon.

            (f) Miscellaneous.  To the maximum extent practicable,  the AAA, the
arbitrators  and the parties  shall take all action  required  to  conclude  any
arbitration  proceeding  within 180 days of the filing of the  Dispute  with the
AAA. No arbitrator or other party to an arbitration  proceeding may disclose the
existence,  content or results thereof, except for disclosures of information by
a party  required in the ordinary  course of its business,  by applicable law or
regulation,  or to the extent  necessary to exercise any judicial  review rights
set forth herein.  If more than one agreement for  arbitration by or between the
parties  potentially  applies  to a  Dispute,  the  arbitration  provision  most
directly  related to the Loan  Documents  or the  subject  matter of the Dispute
shall control. This arbitration  provision shall survive termination,  amendment
or  expiration  of any of the Loan  Documents  or any  relationship  between the
parties.

      SECTION 11.15     WAIVER OF JURY TRIAL

      EACH BORROWER AND BANK, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY  IRREVOCABLY  WAIVES  ALL  RIGHT  TO A  TRIAL  BY  JURY  IN  ANY  ACTION,
PROCEEDING,  COUNTERCLAIM  OR  OTHER  LITIGATION  IN ANY WAY  ARISING  OUT OF OR
RELATING  TO THIS  AGREEMENT,  ANY  OTHER  OF THE LOAN  DOCUMENTS  OR ANY OF THE
TRANSACTIONS OR EVENTS  REFERENCED  HEREIN OR THEREIN OR CONTEMPLATED  HEREBY OR
THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS
WAIVER  SHALL  APPLY TO ANY  SUBSEQUENT  AMENDMENTS,  RENEWALS,  SUPPLEMENTS  OR
MODIFICATIONS TO THIS AGREEMENT  AND/OR ANY OTHER OF THE LOAN DOCUMENTS.  A COPY
OF THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF
THE RIGHT TO TRIAL BY JURY AND THE CONSENT TO TRIAL BY COURT.

                                      P66

<PAGE>
      SECTION 11.16     OREGON STATUTORY NOTICE

      UNDER OREGON LAW, MOST  AGREEMENTS,  PROMISES AND COMMITMENTS MADE BY BANK
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR  PERSONAL,  FAMILY OR  HOUSEHOLD  PURPOSES OR SECURED  SOLELY BY  BORROWER'S
RESIDENCE MUST BE IN WRITING,  EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.

      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
executed as of the day and year first written above.

WILLIAMS CONTROLS, INC.                AJAY SPORTS, INC.

By:                                    By:
Title:                                 Title:
LEISURE LIFE, INC.                     PALM SPRINGS GOLF, INC.

By:                                    By:
Title:                                 Title:
AJAY LEISURE PRODUCTS, INC.            AGROTEC WILLIAMS, INC.

By:                                    By:
Title:                                 Title:
APTEK WILLIAMS, INC.                   GEOFOCUS, INC.

By:                                    By:
Title:                                 Title:
HARDEE WILLIAMS, INC.                  KENCO/WILLIAMS, INC.

By:                                    By:
Title:                                 Title:
NESC WILLIAMS, INC.                    PREMIER PLASTIC TECHNOLOGIES, INC.

By:                                    By:
Title:                                 Title:
WACCAMAW WHEEL WILLIAMS, INC.          WILLIAMS CONTROLS INDUSTRIES, INC.

By:                                    By:
Title:                                 Title:


                                       P67
<PAGE>




WILLIAMS TECHNOLOGIES, INC.            WILLIAMS WORLD TRADE, INC.

By:                                    By:

Title:                                 Title:

WILLIAMS AUTOMOTIVE, INC.              TECHWOOD WILLIAMS, INC.

By:                                    By:

Title:                                 Title:

                                       WELLS FARGO BANK, NATIONAL
                                   ASSOCIATION

                                       By:

                                     Title:






                                      P68
<PAGE>


                                   SCHEDULE I

                               Disclosure Schedule



                                  SEE ATTACHED


                                       P1
<PAGE>

                                    CONTENTS

ARTICLE I.     DEFINITIONS ..........................................  1

      SECTION 1.1 DEFINED TERMS .....................................  1

      SECTION 1.2 HEADINGS .......................................... 13

ARTICLE II.    APPOINTMENT OF AGENT; JOINT AND SEVERAL
               LIABILITY ............................................ 14

      SECTION 2.1 APPOINTMENT OF AGENT .............................. 14

      SECTION 2.2 AUTHORIZED REPRESENTATIVES ........................ 14

      SECTION 2.3 JOINT AND SEVERAL LIABILITY; RIGHTS OF
               CONTRIBUTION ......................................... 14

ARTICLE III.   THE CREDITS .......................................... 17

      SECTION 3.1 REVOLVING LOANS ................................... 17

      SECTION 3.2 LETTER OF CREDIT FACILITY ......................... 22

      SECTION 3.3 TERM LOAN I ....................................... 23

      SECTION 3.4 TERM LOAN II ...................................... 23

      SECTION 3.5 REAL ESTATE LOAN .................................. 24

      SECTION 3.6 INTEREST/FEES ..................................... 24

      SECTION 3.7 INTEREST OPTIONS .................................. 26

      SECTION 3.8 CHANGE OF CIRCUMSTANCES ........................... 27

      SECTION 3.9 LIBOR PREPAYMENTS; FUNDING LOSS
               INDEMNIFICATION ...................................... 28

ARTICLE IV.    COLLECTION AND ADMINISTRATION ........................ 30

      SECTION 4.1 CASH COLLATERAL ACCOUNT ........................... 30

      SECTION 4.2 STATEMENTS ........................................ 30

      SECTION 4.3 PAYMENTS .......................................... 31

                                       Pi
<PAGE>
      SECTION 4.4 USE OF PROCEEDS ................................... 31

ARTICLE V.     SECURITY ............................................. 32

      SECTION 5.1  GRANT OF SECURITY INTEREST ....................... 32

      SECTION 5.2  PERFECTION; DUTY OF CARE ......................... 32

      SECTION 5.3 ADDITIONAL SECURITY ............................... 33

ARTICLE VI.    REPRESENTATIONS AND WARRANTIES ....................... 33

      SECTION 6.1 LEGAL STATUS ...................................... 33

      SECTION 6.2 OWNERSHIP; SUBSIDIARIES ........................... 34

      SECTION 6.3 AUTHORIZATION AND VALIDITY ........................ 34

      SECTION 6.4 NO VIOLATION ...................................... 34

      SECTION 6.5 NO CLAIMS ......................................... 34

      SECTION 6.6 CORRECTNESS OF FINANCIAL STATEMENTS ............... 35

      SECTION 6.7 INCOME TAX RETURNS ................................ 35

      SECTION 6.8 NO SUBORDINATION .................................. 35

      SECTION 6.9 ERISA ............................................. 35

      SECTION 6.10 OTHER OBLIGATIONS ................................ 36

      SECTION 6.11 ENVIRONMENTAL MATTERS ............................ 36

      SECTION 6.12 LIENS ............................................ 36

      SECTION 6.13 NO BURDENSOME RESTRICTIONS; NO DEFAULTS .......... 36

      SECTION 6.14 NO OTHER VENTURES ................................ 36

      SECTION 6.15 INVESTMENT COMPANY ACT ........................... 36

      SECTION 6.16 INSURANCE ........................................ 37

      SECTION 6.17 LABOR MATTERS .................................... 37

      SECTION 6.18 FORCE MAJEURE .................................... 38


                                       Pii

<PAGE>
      SECTION 6.19 INTELLECTUAL PROPERTY ............................ 38

      SECTION 6.20 CERTAIN INDEBTEDNESS ............................. 38

      SECTION 6.21 SENIORITY ........................................ 38

      SECTION 6.22 TRUTH, ACCURACY OF INFORMATION ................... 39

      SECTION 6.23 CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS ....... 39

      SECTION 6.24 RIGHTS TO PAYMENT ................................ 39

      SECTION 6.25 FISCAL YEAR ...................................... 39

ARTICLE VII.   CONDITIONS ........................................... 40

      SECTION 7.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT ......... 40

      SECTION 7.2 CONDITIONS OF EACH EXTENSION OF CREDIT ............ 41

ARTICLE VIII.  AFFIRMATIVE COVENANTS ................................ 42

      SECTION 8.1 PUNCTUAL PAYMENTS ................................. 42

      SECTION 8.2 ACCOUNTING RECORDS ................................ 42

      SECTION 8.3 COLLATERAL REPORTING .............................. 42

      SECTION 8.4 FINANCIAL STATEMENTS .............................. 43

      SECTION 8.5 INSURANCE ......................................... 45

      SECTION 8.6 COMPLIANCE ........................................ 46

      SECTION 8.7 FACILITIES ........................................ 46

      SECTION 8.8 TAXES AND OTHER LIABILITIES ....................... 46

      SECTION 8.9 LITIGATION ........................................ 47

      SECTION 8.10 NOTICE TO BANK ................................... 47

      SECTION 8.11 CONDUCT OF BUSINESS .............................. 47

      SECTION 8.12 PRESERVATION OF CORPORATE EXISTENCE, ETC. ........ 48

                                      Piii

<PAGE>
      SECTION 8.13 ACCESS ........................................... 48

      SECTION 8.14 PERFORMANCE AND COMPLIANCE WITH OTHER
               COVENANTS ............................................ 48

      SECTION 8.15 APPLICATION OF PROCEEDS .......................... 49

      SECTION 8.16 FISCAL YEAR ...................................... 49

      SECTION 8.17 ENVIRONMENTAL .................................... 49

      SECTION 8.18 FINANCIAL COVENANTS .............................. 49

      SECTION 8.19 LIENS ............................................ 49

      SECTION 8.20 FURTHER ASSURANCES ............................... 50

ARTICLE IX.    NEGATIVE COVENANTS ................................... 50

      SECTION 9.1 LIENS ............................................. 50

      SECTION 9.2 INDEBTEDNESS ...................................... 50

      SECTION 9.3 OPERATING LEASE OBLIGATIONS ....................... 51

      SECTION 9.4 RESTRICTED PAYMENTS, REDEMPTIONS .................. 51

      SECTION 9.5 MERGERS, STOCK ISSUANCES, SALE OF ASSETS,
               ETC. ................................................. 51

      SECTION 9.6 INVESTMENTS IN OTHER PERSONS ...................... 52

      SECTION 9.7 CHANGE IN NATURE OF BUSINESS ...................... 52

      SECTION 9.8 GUARANTIES ........................................ 52

      SECTION 9.9 PLANS ............................................. 52

      SECTION 9.10 ACCOUNTING CHANGES ............................... 53

      SECTION 9.11 CANCELLATION OF INDEBTEDNESS OWED TO IT .......... 53

      SECTION 9.12 NO SPECULATIVE TRANSACTIONS ...................... 53

      SECTION 9.13 ENVIRONMENTAL .................................... 53

      SECTION 9.14 CAPITAL EXPENDITURES ............................. 53

                                       Piv

<PAGE>
      SECTION 9.15 TRANSACTIONS WITH AFFILIATES ..................... 53

      SECTION 9.16 NEW COLLATERAL LOCATION .......................... 54

ARTICLE X.     EVENTS OF DEFAULT .................................... 54

      SECTION 10.1 EVENTS OF DEFAULT ................................ 54

      SECTION 10.2 REMEDIES ......................................... 56

      SECTION 10.3 BANK AS BORROWERS' ATTORNEY ...................... 59

      SECTION 10.4 EXCEPTIONS ....................................... 59

ARTICLE XI.    TERM OF AGREEMENT AND MISCELLANEOUS .................. 59

      SECTION 11.1  TERM ............................................ 59

      SECTION 11.2  NO WAIVER ....................................... 61

      SECTION 11.3  NOTICES ......................................... 61

      SECTION 11.4  COSTS, EXPENSES AND ATTORNEYS' FEES ............. 62

      SECTION 11.5 INDEMNIFICATION .................................. 62

      SECTION 11.6  SUCCESSORS, ASSIGNMENT .......................... 63

      SECTION 11.7  ENTIRE AGREEMENT; AMENDMENT ..................... 63

      SECTION 11.8  NO THIRD PARTY BENEFICIARIES .................... 63

      SECTION 11.9  TIME ............................................ 63

      SECTION 11.10  SEVERABILITY OF PROVISIONS ..................... 64

      SECTION 11.11  COUNTERPARTS ................................... 64

      SECTION 11.12  GOVERNING LAW .................................. 64

      SECTION 11.13  PATENT ASSIGNMENT AS COLLATERAL ................ 64

      SECTION 11.14  ARBITRATION .................................... 64

      SECTION 11.15 WAIVER OF JURY TRIAL ............................ 66

      SECTION 11.16 OREGON STATUTORY NOTICE ......................... 67

                                       Pv
<PAGE>
                                    SCHEDULES

I     Disclosure Schedule

                                    EXHIBITS
A     Promissory Notes
B     Notice of Authorized Representatives
C     Notice of Borrowing
D     Letter of Credit Request
E     Notice of Conversion or Continuation
F     Continuing Unconditional Guaranty of Thomas W. Itin
G     Periodic Reporting Requirements
H     Opinions of ESOP Counsel

                                       Pvi