U.S. $500,000,000


                                CREDIT AGREEMENT


                       Dated as of August 28, 1997, among


                             SUN MICROSYSTEMS, INC.

                                   as Borrower

                                       and

                            THE LENDERS NAMED HEREIN

                                   as Lenders

                                       and

                               CITICORP USA, INC.

                             as Administrative Agent



<PAGE>
<TABLE>

                                                  TABLE OF CONTENTS
<CAPTION>

                                                                                                                Page
                                                                                                                ----

<S>               <C>            <C>                                                                             <C>

         ARTICLE I

                                         DEFINITIONS AND ACCOUNTING TERMS.......................................  1
                  SECTION 1.01.  Certain Defined Terms..........................................................  1
                  SECTION 1.02.  Computation of Time Periods.................................................... 11
                  SECTION 1.03.  Accounting Terms............................................................... 11
                  SECTION 1.04.  Application of Level Pricing................................................... 11

         ARTICLE II

                                         AMOUNTS AND TERMS OF THE ADVANCES...................................... 12
                  SECTION 2.01.  The A Advances................................................................. 12
                  SECTION 2.02.  Making the A Advances.......................................................... 12
                  SECTION 2.03.  The B Advances................................................................. 14
                  SECTION 2.04.  Fees........................................................................... 17
                  SECTION 2.05.  Termination, Reduction or Increase of the Commitments.......................... 17
                  SECTION 2.06.  Repayment of A Advances........................................................ 20
                  SECTION 2.07.  Interest on A Advances......................................................... 20
                  SECTION 2.08.  Notes.......................................................................... 21
                  SECTION 2.09.  Interest Rate Determination.................................................... 21
                  SECTION 2.10.  Sharing of Payments, Etc....................................................... 21
                  SECTION 2.11.  Prepayments of A Advances...................................................... 22
                  SECTION 2.12.  Increased Costs................................................................ 22
                  SECTION 2.13.  Illegality..................................................................... 23
                  SECTION 2.14.  Payments and Computations...................................................... 24
                  SECTION 2.15.  Taxes.......................................................................... 25

         ARTICLE III

                                               CONDITIONS OF LENDING............................................ 27
                  SECTION 3.01.  Condition Precedent to Initial Advances........................................ 27
                  SECTION 3.02.  Conditions Precedent to Each A Borrowing....................................... 28
                  SECTION 3.03.  Conditions Precedent to Each B Borrowing....................................... 28

         ARTICLE IV

                                          REPRESENTATIONS AND WARRANTIES........................................ 29
                  SECTION 4.01.  Representations and Warranties of the Borrower................................. 29

                                                         i

<PAGE>

         ARTICLE V

                                             COVENANTS OF THE BORROWER.......................................... 33
                  SECTION 5.01.  Affirmative Covenants.......................................................... 33
                  SECTION 5.02.  Negative Covenants............................................................. 38

         ARTICLE VI

                                                 EVENTS OF DEFAULT.............................................. 43
                  SECTION 6.01.  Events of Default.............................................................. 43
                  SECTION 6.02.  Mandatory Prepayment; Event of Early Termination............................... 45

         ARTICLE VII

                                                     THE AGENT.................................................. 46
                  SECTION 7.01.  Authorization and Action....................................................... 46
                  SECTION 7.02.  Agent's Reliance, Etc.......................................................... 46
                  SECTION 7.03.  CUSA and Affiliates............................................................ 47
                  SECTION 7.04.  Lender Credit Decision......................................................... 47
                  SECTION 7.05.  Indemnification................................................................ 47
                  SECTION 7.06.  Successor Agent................................................................ 48
                  SECTION 7.07   Co-Agents...................................................................... 48

         ARTICLE VIII

                                                   MISCELLANEOUS................................................ 48
                  SECTION 8.01.  Amendments Etc................................................................. 48
                  SECTION 8.02.  Notices; Payments, Etc......................................................... 49
                  SECTION 8.03.  No Waiver; Remedies............................................................ 49
                  SECTION 8.04.  Costs and Expenses............................................................. 49
                  SECTION 8.05.  Right of Set-off............................................................... 51
                  SECTION 8.06.  Binding Effect................................................................. 52
                  SECTION 8.07.  Assignments and Participations................................................. 52
                  SECTION 8.08.  Governing Law.................................................................. 55
                  SECTION 8.09.  Headings....................................................................... 55
                  SECTION 8.10.  Commitment Extension........................................................... 55
                  SECTION 8.11.  Execution in Counterparts...................................................... 55
                  SECTION 8.12.  Confidentiality................................................................ 56
                  SECTION 8.13.  Termination.................................................................... 56
                  SECTION 8.14.  Jurisdiction, Etc.............................................................. 56
                  SECTION 8.15.  WAIVER OF JURY TRIAL........................................................... 57

</TABLE>

                                                         ii

<PAGE>


                                    SCHEDULES

SCHEDULE I

                                    EXHIBITS

EXHIBIT A-1       FORM OF A NOTE
EXHIBIT A-2       FORM OF B NOTE
EXHIBIT B-1       NOTICE OF A BORROWING
EXHIBIT B-2       NOTICE OF B BORROWING
EXHIBIT C         ASSIGNMENT AND ACCEPTANCE
EXHIBIT D         ASSUMPTION AGREEMENT
EXHIBIT E         OPINION OF WILSON, SONSINI, GOODRICH & ROSATI
EXHIBIT F         COVENANT COMPLIANCE CERTIFICATE
EXHIBIT G         LIENS
EXHIBIT H         SUBSIDIARIES
EXHIBIT I         RESPONSIBLE OFFICERS

                                       iii

<PAGE>

                                CREDIT AGREEMENT

                           Dated as of August 28, 1997

         SUN MICROSYSTEMS,  INC., a Delaware  corporation (the "Borrower"),  the
Lenders listed on the signature pages hereof, and CITICORP USA, INC., a Delaware
corporation  ("CUSA"),  as  administrative  agent (the  "Agent") for the Lenders
hereunder, agree as follows:


                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

         SECTION 1.01.  Certain Defined Terms.  As used in this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

         "A Advance"  means an advance by a Lender to the Borrower as part of an
A Borrowing  and refers to an Alternate  Base Rate Advance or a Eurodollar  Rate
Advance, each of which shall be a "Type" of A Advance.

         "A Borrowing"  means a borrowing  consisting of simultaneous A Advances
of the same Type made by each of the Lenders pursuant to Section 2.01.

         "A Note" means a promissory  note of the Borrower  payable to the order
of any Lender, in substantially  the form of Exhibit A-1 hereto,  evidencing the
aggregate  indebtedness  of the  Borrower  to such Lender  resulting  from the A
Advances made by such Lender.

         "Adjusted EBIT" means,  for any accounting  period,  net income (or net
loss) plus the amounts (if any) which,  in the  determination  of net income (or
net loss) for such period,  have been deducted for (a) gross  interest  expense,
(b) income tax expense and (c) rent  expense  under  leases of real and personal
property (excluding, however, from the determination of such rent expense, taxes
and  normal and  customary  operating  expenses  passed on to the  Borrower  for
reimbursement  pursuant  to the  terms  of such  real  property  leases  whether
denominated  under such leases as "rent",  "additional  rent" or otherwise,  but
only to the extent that such operating expenses are actually incurred and passed
through to the Borrower),  in each case  determined in accordance with generally
accepted accounting principles, consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(e).

         "Advance" means an A Advance or a B Advance.



<PAGE>

                                        2

         "Affiliate" means, as to any Person, any other Person that, directly or
indirectly,  controls,  is  controlled  by or is under common  control with such
Person or is a director or officer of such Person.

         "Alternate  Base  Rate"  means,  for any  period  (including  a  period
consisting of a single day), a  fluctuating  interest rate per annum as shall be
in effect  from time to time which rate per annum shall at all times be equal to
the highest of:

         (a) the rate of  interest  announced  publicly by Citibank in New York,
     New York, from time to time, as Citibank's base rate; or

         (b) 1/2 of one  percent per annum  above the latest  three-week  moving
     average of secondary market morning offering rates in the United States for
     three-month  certificates  of deposit of major  United  States money market
     banks,  such three- week moving  average  being  determined  weekly on each
     Monday (or, if any such date is not a Business Day, on the next  succeeding
     Business Day) for the  three-week  period ending on the previous  Friday by
     the Agent on the basis of such rates  reported  by  certificate  of deposit
     dealers to and  published  by the Federal  Reserve  Bank of New York or, if
     such  publication  shall  be  suspended  or  terminated,  on the  basis  of
     quotations  for such  rates  received  by the  Agent  from  three  New York
     certificate  of deposit  dealers of  recognized  standing  selected  by the
     Agent,  in either case  adjusted to the nearest  1/16 of one percent or, if
     there is no nearest  1/16 of one  percent,  to the next  higher 1/16 of one
     percent; or

         (c) for any day,  1/2 of one  percent  per  annum  above  the  weighted
     average of the rates on overnight  Federal funds  transactions with members
     of the  Federal  Reserve  System  arranged  by Federal  funds  brokers,  as
     published for such day (or, if such day is not a Business Day, for the next
     preceding  Business  Day) by the Federal  Reserve Bank of New York,  or, if
     such rate is not so  published  for any day which is a  Business  Day,  the
     average of the quotations for such day on such transactions received by the
     Agent from three Federal funds brokers of recognized  standing  selected by
     it.

         "Alternate  Base Rate Advance"  means an A Advance which bears interest
as provided in Section 2.07(a).

         "Applicable  Lending Office" means,  with respect to each Lender,  such
Lender's  Domestic Lending Office in the case of an Alternate Base Rate Advance,
and such Lender's  Eurodollar  Lending  Office in the case of a Eurodollar  Rate
Advance and, in the case of a B Advance,  the office of such Lender  notified by
such Lender to the Agent as its Applicable Lending Office with respect to such B
Advance.


<PAGE>


                                        3

         "Assignment and Acceptance" means an assignment and acceptance  entered
into  by a  Lender  and an  assignee  reasonably  acceptable  to the  Agent  and
reasonably consented to by the Borrower,  in substantially the form of Exhibit C
hereto.

         "Assuming Lender" means an assignee reasonably  acceptable to the Agent
not  previously  a Lender that  becomes a Lender  hereunder  pursuant to Section
2.05(b).

         "B Advance" means an advance by a Lender to the Borrower as part of a B
Borrowing  resulting  from the auction  bidding  procedure  described in Section
2.03.

         "B  Borrowing"  means a borrowing  consisting  of B Advances made at or
about the same  time by each of the  Lenders  whose  offer to make one or more B
Advances as part of such  borrowing has been accepted by the Borrower  under the
auction bidding procedure described in Section 2.03.

         "B Note" means a promissory  note of the Borrower  payable to the order
of any Lender, in substantially  the form of Exhibit A-2 hereto,  evidencing the
indebtedness  of the Borrower to such Lender  resulting from a B Advance made by
such Lender.

         "B Reduction" has the meaning specified in Section 2.01.

         "Borrowing" means an A Borrowing or a B Borrowing.

         "Business Day" means a day of the year other than a Saturday, Sunday or
other day on which  banks are not  required or  authorized  to close in New York
City or San Francisco, California and, if the applicable Business Day relates to
any Eurodollar  Rate  Advances,  on which dealings are carried on in the London,
England interbank market.

         "Change of Control Event" means the  occurrence of the  following:  (i)
any corporation or Person, or a group of related corporations or Persons,  shall
acquire (a)  beneficial  ownership  in excess of 50% of the  outstanding  Voting
Stock of the  Borrower  or (b) all or  substantially  all of the  assets  of the
Borrower,  or (ii) a majority of the Board of  Directors  of the Borrower is, at
any time,  composed of persons  other than (a) persons who were  members of such
Board on the date of this  Agreement,  (b) successors to such persons elected or
nominated in the ordinary course of business,  and (c) any person who has served
as a member of such Board for at least the prior 12 months.

         "Citibank" means Citibank, N.A., a national banking association.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.


<PAGE>

                                        4

         "Commitment" has the meaning specified in Section 2.01.

         "consolidated"  refers  to the  consolidation  of the  accounts  of the
Borrower and its Subsidiaries in accordance with generally  accepted  accounting
principles, including principles of consolidation, consistent with those applied
in the  preparation  of the  consolidated  financial  statements  referred to in
Section 4.01(e).

         "Consolidated  Tangible  Net Worth"  means the  excess of  consolidated
total assets over consolidated total liabilities,  consolidated total assets and
consolidated total liabilities each to be determined on a consolidated basis for
the  Borrower  in  accordance  with  generally  accepted  accounting  principles
consistent  with those applied in the  preparation  of the financial  statements
referred to in Section 4.01(e),  excluding,  however,  from the determination of
consolidated total assets (i) goodwill,  organizational  expenses,  research and
development  expenses,  trademarks,  trade names,  copyrights,  patents,  patent
applications, licenses and rights in any thereof, and other similar intangibles,
(ii)  all  unamortized  debt  discount  and  expense,  (iii)  asset,  liability,
contingency and other appropriate reserves,  including reserves for depreciation
and for deferred income taxes, (iv) treasury stock, (v) any write-up in the book
value of any asset resulting from a revaluation  thereof  subsequent to June 30,
1996,  (vi) the book value of investments  in Persons that are not  Subsidiaries
(unless the same are readily  marketable),  and (vii) any items not  included in
clauses (i) through (vi) above which are treated as  intangibles  in  conformity
with generally accepted accounting principles.

         "Debt" of any Person means (i)  indebtedness  for borrowed money,  (ii)
obligations evidenced by bonds, debentures,  notes or other similar instruments,
(iii)  obligations  to pay the deferred  purchase  price of property or services
(excluding ordinary trade payables incurred in the ordinary course of business),
(iv)  obligations  as lessee under leases which shall have been or should be, in
accordance with generally accepted  accounting  principles,  recorded as capital
leases,  (v) all  obligations  of such Person to purchase  securities  (or other
property)  which  arise  out of or in  connection  with  the sale of the same or
substantially similar securities or property, (vi) any reimbursement obligations
of such Person to the issuer of a letter of credit or similar instrument,  (vii)
all indebtedness or obligations of others secured by a lien on any asset of such
Person,  whether or not such  indebtedness  or  obligations  are assumed by such
Person  (to the  extent of the value of the  asset),  (viii)  any  reimbursement
obligation  of such Person or other  arrangement  of whatever  nature having the
effect of  assuring  or holding  harmless  any other  Person  against  loss with
respect to any real  property  owned by such other  Person,  including,  without
limitation,  assuring or  guaranteeing  that such other Person  shall  receive a
specified  amount in connection with the conveyance of such real property,  (ix)
obligations  under direct or indirect  guaranties in respect of, and obligations
(contingent  or  otherwise)  to purchase or otherwise  acquire,  or otherwise to
assure a creditor  against loss in respect of,  indebtedness  or  obligations of
others of the kinds  referred to in clauses (i) through  (viii)  above,  and (x)
liabilities in respect of unfunded vested


<PAGE>

                                        5

benefits under plans covered by Title IV of ERISA. Notwithstanding any provision
herein to the contrary,  no obligations of any Person (whether such  obligations
be direct or indirect,  contingent or otherwise) under any Permitted Receivables
Facility  shall be "Debt" for  purposes  of this  Agreement;  provided  that the
foregoing  exclusion  shall not apply to obligations of any such Person pursuant
to  the  indemnity  or  reimbursement  provisions  contained  in  any  Permitted
Receivables  Facility and to fees and expenses payable pursuant to any Permitted
Receivables  Facility to the extent that any such obligations are required to be
recorded as liabilities on such Person's balance sheet under generally  accepted
accounting principles.

         "Default" means any event which, with the passage of time or the giving
of  notice or both,  would (if not cured  within  any  applicable  cure  period)
constitute an Event of Default.

         "Domestic Lending Office" means, with respect to any Lender, the office
of such Lender  specified as its "Domestic  Lending Office" opposite its name on
Schedule  I hereto or in the  Assignment  and  Acceptance  pursuant  to which it
became a Lender,  or such other  office of such  Lender as such  Lender may from
time to time specify to the Borrower and the Agent.

         "Environmental  Laws"  means  any and all  federal,  state,  local  and
foreign statutes,  laws,  regulations,  ordinances,  rules,  judgments,  orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental  restrictions  relating  to  the  environment,   or  to  emissions,
discharges  or releases of  pollutants,  contaminants,  petroleum  or  petroleum
products,  chemicals or industrial, toxic or hazardous substances or wastes into
the  environment,  including,  without  limitation,  ambient air, surface water,
ground water,  or land, or otherwise  relating to the  manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
pollutants,   contaminants,   petroleum  or  petroleum  products,  chemicals  or
industrial,  toxic or  hazardous  substances  or wastes or the clean-up or other
remediation thereof.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.

         "ERISA  Affiliate"  means any  Person who for  purposes  of Title IV of
ERISA is a member of the Borrower's  controlled  group,  or under common control
with the  Borrower,  within  the  meaning of  Section  414 of the Code,  and the
regulations promulgated and rulings issued thereunder.

         "ERISA  Termination  Event" means (i) a Reportable  Event  described in
Section 4043 of ERISA and the regulations  promulgated  thereunder (other than a
Reportable  Event not subject to the  provision for 30 day notice to the Pension
Benefit Guaranty

<PAGE>

                                        6

Corporation under such  regulations),  or (ii) the withdrawal of the Borrower or
any  Subsidiary  from a Plan  during a plan year in which it was a  "substantial
employer" as defined in Section  4001(a) (2) of ERISA,  or (iii) the filing of a
notice of intent to terminate a Plan or the  treatment of a Plan  amendment as a
termination  under Section 4041 of ERISA or (iv) the  institution of proceedings
to terminate a Plan by the Pension Benefit  Guaranty  Corporation  under Section
4042 of ERISA,  or (v) any  other  event or  condition  which  would  constitute
grounds under Section 4042 of ERISA for the  termination  of, or the appointment
of a trustee to administer, any Plan.

         "Eurocurrency  Liabilities"  has the  meaning  assigned to that term in
Regulation  D of the Board of  Governors of the Federal  Reserve  System,  as in
effect from time to time.

         "Eurodollar  Lending  Office"  means,  with respect to any Lender,  the
office of such Lender specified as its "Eurodollar  Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance  pursuant to which
it became a Lender (or, if no such office is  specified,  its  Domestic  Lending
Office),  or such other  office of such  Lender as such  Lender may from time to
time specify to the Borrower and the Agent.

         "Eurodollar  Margin" means,  on any day, with respect to any Eurodollar
Rate Advance made or  outstanding  on such day, an interest rate per annum equal
at all times to (i) .130% for each day  during a Level I Period;  (ii) .170% for
each day during a Level II Period;  (iii)  .200% for each day during a Level III
Period; (iv) .250% for each day during a Level IV Period; and (v) .325% for each
day during a Level V Period.

         "Eurodollar  Rate" means,  for the Interest  Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing, an interest rate per annum
determined by the Agent to be (a) the  arithmetic  mean  (rounded  upward to the
nearest whole multiple of 1/16 of 1% per annum,  if such  arithmetic mean is not
such a multiple)  of the rates  notified to the Agent at which  deposits in U.S.
dollars are offered by the principal office of each of the Eurodollar  Reference
Banks in London,  England to prime banks in the London interbank market at 11:00
A.M.  (London  time) two  Business  Days  before the first day of such  Interest
Period in an amount  substantially equal to the respective  Eurodollar Reference
Bank's (or its  Affiliate's)  Eurodollar Rate Advance  comprising part of such A
Borrowing  and for a period  equal to such  Interest  Period,  divided  by (b) a
percentage  equal to 100%  minus the  Eurodollar  Rate  Reserve  Percentage  (as
defined  below)  for  such  Interest   Period.   The  "Eurodollar  Rate  Reserve
Percentage" for the Interest Period for each Eurodollar Rate Advance  comprising
part of the  same A  Borrowing  means  the  reserve  percentage  applicable  two
Business  Days before the first day of such  Interest  Period under  regulations
issued from time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve  requirement  (including,
but not  limited  to, any  emergency,  supplemental  or other  marginal  reserve
requirement) for a member bank of the Federal

<PAGE>

                                        7

Reserve System in New York City with deposits exceeding One Billion Dollars with
respect  to  liabilities  or  assets  consisting  of or  including  Eurocurrency
Liabilities (or with respect to any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar  Rate Advances is
determined) having a term equal to such Interest Period.

         "Eurodollar  Rate Advance"  means an A Advance which bears  interest as
provided in Section 2.07(b).

         "Eurodollar  Reference  Banks" means the  principal  London  offices of
Citibank,  [Bank of America National Trust and Savings  Association and ABN AMRO
Bank  N.V.] and each such  other  bank as may be  approved  pursuant  to Section
8.07(i).

         "Events of Default" has the meaning specified in Section 6.01.

         "Excess  Interest  in  Receivables"  means the  extent to which (i) any
ownership  interest,  security  interest or other interest of any third party in
the accounts  receivable of the Borrower and its Subsidiaries,  exceeds (ii) the
aggregate amount advanced by such third party in respect of the purchase of such
interest  (net of amounts  received by such third party from the  collection  of
such accounts receivable).

         "Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the  weighted  average of the
rates on  overnight  Federal  funds  transactions  with  members of the  Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of New York,  or, if such rate is not so published for any
day which is a Business Day, the average of the  quotations for such day on such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized standing selected by it.

         "Fixed  Charges" means,  for any accounting  period,  the sum,  without
duplication,  of (i)  gross  interest  expense  during  such  period,  plus (ii)
scheduled  amortization  of  principal in respect of all Debt during such period
(but excluding any required  principal payment in respect of any obligation that
is a  "bullet"  payment,  i.e.,  the  entire  amount  thereof  is due in full at
maturity  without any amortizing  payments prior to said  maturity),  plus (iii)
amortization  of debt discount (but  excluding from this clause (iii) and clause
(i)  above  noncash  amortization  of  debt  discount  if  the  maturity  of the
obligation  so  discounted  is no earlier than December 31, 1998 pursuant to the
terms and  conditions  of the  instruments  and  agreements  creating  such debt
discount),  plus (iv) rent expense  under  leases of real and personal  property
during such period  (excluding,  however,  from the  determination  of such rent
expense,  taxes and normal and  customary  operating  expenses  passed on to the
Borrower for  reimbursement  pursuant to the terms of such real property  leases
whether denominated

<PAGE>

                                        8

under such leases as "rent",  "additional  rent" or  otherwise,  but only to the
extent that such operating  expenses are actually incurred and passed through to
the Borrower).

         "Interest  Period" means,  for each Eurodollar Rate Advance  comprising
part of the  same A  Borrowing,  the  period  commencing  on the  date of such A
Advance  and  ending  on the last day of the  period  selected  by the  Borrower
pursuant to the  provisions  below.  The duration of each such  Interest  Period
shall be 1, 2, 3 or 6 months or, if available,  9 or 12 months,  as the Borrower
may, upon notice received by the Agent in accordance with Section 2.02,  select;
provided, however, that:

         (i) the Borrower  may not select any  Interest  Period which ends after
the then existing Termination Date;

         (ii)  Interest  Periods  commencing  on the same  date  for A  Advances
comprising part of the same A Borrowing shall be of the same duration; and

         (iii)  whenever  the last day of any Interest  Period  would  otherwise
occur on a day other than a Business Day, the last day of such  Interest  Period
shall be extended to occur on the next succeeding Business Day; provided, in the
case  of any  Interest  Period  for a  Eurodollar  Rate  Advance,  that  if such
extension  would cause the last day of such Interest Period to occur in the next
following  calendar  month,  the last day of such Interest Period shall occur on
the next preceding Business Day.

         "Lenders"  means the lenders  listed on the signature  pages hereof and
each assignee that shall become a party hereto  pursuant to Sections  8.07(a) or
(b).

         "Level I Period" means a period of time,  which may consist of a single
day,  during  which the Public Debt Rating is (i) A- or better by S&P or (ii) A3
or better by Moody's.

         "Level II  Period"  means a period of time other than a Level I Period,
which may  consist of a single day,  during  which the Public Debt Rating is (i)
BBB+ or better by S&P or (ii) Baa1 or better by Moody's.

         "Level III  Period"  means a period of time other than a Level I Period
or a Level II Period, which may consist of a single day, during which the Public
Debt Rating is (i) BBB or better by S&P or (ii) Baa2 or better by Moody's.

         "Level IV Period" means a period of time other than a Level I Period, a
Level II Period or a Level III Period, which may consist of a single day, during
which the  Public  Debt  Rating  is (i) BBB- or  better by S&P,  or (ii) Baa3 or
better by Moody's.

<PAGE>

                                        9

         "Level V Period" means a period of time,  which may consist of a single
day, during which the Public Debt Rating is (i) lower than BBB- by S&P and lower
than Baa3 by  Moody's  (or lower  than the level  indicated  for  either  S&P or
Moody's if unrated by the other), or (ii) no Public Debt Rating is available for
whatever reason.

         "Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing, any
conditional  sale or other title  retention  agreement,  any lease in the nature
thereof,  and the filing of or agreement to give any financing  statement  under
the Uniform Commercial Code of any  jurisdiction).  Customary bankers' rights of
set-off  arising by operation of law or by contract in  connection  with working
capital facilities,  lines of credit, term loans and letter of credit facilities
and other  contractual  arrangements  entered  into with  banks in the  ordinary
course of business are not "Liens" for the purposes of this Agreement.

         "Majority  Lenders"  means at any time Lenders  holding at least 51% of
the then aggregate  unpaid  principal  amount of the A Advances then outstanding
or, if no such  principal  amount is then  outstanding,  then  either (i) if the
Commitments  have not been  terminated  or there are no B Advances  outstanding,
Lenders having at least 51% of the Commitments,  or (ii) if the Commitments have
been terminated and there are B Advances  outstanding,  Lenders holding at least
51% of the  then  aggregate  unpaid  principal  amount  of the B  Advances  then
outstanding.

         "Material  Subsidiary"  means,  at any  point in time,  any  Subsidiary
having total assets of $500,000 or more as of the end of its most recent  fiscal
year or annual  gross  revenues  of  $5,000,000  or more  during its most recent
fiscal year.

         "Moody's" means Moody's Investors Service, Inc., or its successors.

         "Note" means an A Note or a B Note.

         "Notice of A Borrowing" has the meaning specified in Section 2.02(a).

         "Notice of B Borrowing" has the meaning specified in Section 2.03(a).

         "Permitted  Receivables  Facility"  shall  mean  one or  more  accounts
receivable  securitization  arrangements  which  provide  for  (a)  the  sale of
accounts  receivables  and any related  property  by Borrower  and/or any of its
Subsidiaries  to a financing party or a special  purpose  vehicle,  and (b) if a
special  purpose  vehicle is used in any such  arrangement,  the  granting  of a
security  interest in  accounts  receivables  and any  related  property by such
special purpose  vehicle and/or the granting of a security  interest by Borrower
in any such related property,  provided,  however, that the sum of the aggregate
net  unrecovered  investment  and the  aggregate  outstanding  advances from the
financing parties under such

<PAGE>

                                       10

accounts receivables securitization arrangements shall not exceed the greater of
(i)  $250,000,000  and (ii) 15% of  Consolidated  Tangible  Net Worth at any one
time.

         "Person" means an  individual,  partnership,  corporation  (including a
business trust), joint stock company, trust, unincorporated  association,  joint
venture or other entity, or a government or any political  subdivision or agency
thereof.

         "Plan"  means at any time an  employee  pension  benefit  plan which is
covered  under  Title IV of ERISA or subject to the  minimum  funding  standards
under  Section 412 of the Code and is either (i)  maintained  by the Borrower or
any  Subsidiary  for  employees  of the  Borrower  or  any  Subsidiary  or  (ii)
maintained  pursuant  to  a  collective   bargaining   agreement  or  any  other
arrangement under which more than one employer makes  contributions and to which
the Borrower or any  Subsidiary is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions.

         "Public Debt Rating" means,  as of any date, the lowest rating that has
been most  recently  announced  (and is then in effect) by either S&P or Moody's
for any class of non-credit  enhanced  long-term senior unsecured debt issued by
the Borrower or, if the  Borrower has no such debt issued,  the lowest  "implied
rating"  (or  similar  rating  in effect  from time to time)  that has been most
recently  stated in writing  (and is then in effect) by S&P and/or  Moody's  for
non-credit  enhanced  long-term  senior  unsecured  debt  of the  Borrower.  For
purposes of the  foregoing,  (a) if any rating  established  by either of S&P or
Moody's shall be changed, such change shall be effective as of the date on which
such change is first announced publicly by the rating agency making such change;
and  (b)  if S&P or  Moody's  shall  change  the  basis  on  which  ratings  are
established,  each  reference  to the Public  Debt  Rating  announced  by S&P or
Moody's, as the case may be, shall refer to the then equivalent rating by S&P or
Moody's, as the case may be.

         "Register" has the meaning specified in Section 8.07(c).

         "Responsible  Financial Officer" means the chief financial officer, the
controller, the treasurer or any assistant treasurer of the Borrower.

         "Responsible  Officer"  means the  individuals  occupying the executive
offices of the Borrower  described in Exhibit I hereto and any successors to the
offices  held  by  the  individuals  identified  therein,  and  the  individuals
occupying any other executive offices of the Borrower which at any time have the
authority, functions and responsibilities as the offices described in Exhibit I.

         "S&P" means Standard and Poor's Ratings Group, or its successors.


<PAGE>

                                       11

         "Subsidiary"  means any  corporation  of which the Borrower  and/or its
other  Subsidiaries  own,  directly or  indirectly,  such number of  outstanding
shares as have more than 50% of the  ordinary  voting  power for the election of
directors.

         "Termination  Date"  means  August  26,  2002  or  such  later  date as
determined pursuant to Section 8.10, or the earlier date of termination in whole
of the Commitments pursuant to Section 2.05 or 6.01.

         "Transfer" means,  with respect to any asset, to sell, lease,  transfer
or otherwise dispose of such asset.

         "Voting  Stock" of any Person  means any shares of stock of such Person
whose holders are entitled under ordinary circumstances to vote for the election
of  directors of such Person  (irrespective  of whether at the time stock of any
other class or classes  shall have or might have  voting  power by reason of the
happening of any contingency).

         "wholly owned  Subsidiary"  means any Subsidiary all of the outstanding
capital  stock (other than  directors'  qualifying  shares and shares  issued to
satisfy local ownership requirements) of which is owned, directly or indirectly,
by the Borrower.

         SECTION 1.02.  Computation  of Time Periods.  In this  Agreement in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
means "to but excluding".

         SECTION 1.03.  Accounting  Terms. All accounting terms not specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial statements referred to in Section 4.01(e).

         SECTION 1.04.  Application of Level  Pricing.  For purposes of applying
the Level  pricing  formula in the  definition  of  "Eurodollar  Margin"  and in
Section  2.04(a),  (a) if only one of S&P and  Moody's  shall  have in  effect a
Public Debt Rating, the applicable Level shall be determined by reference to the
available  rating  and (b) if the Public  Debt  Ratings  established  by S&P and
Moody's shall fall within different Levels,  the applicable Level shall be based
upon the higher rating; provided that, if the lower of such ratings is more than
one level below the higher of such ratings,  the applicable Level shall be based
on the level immediately above such lower rating.


<PAGE>

                                       12

                                   ARTICLE II

                        AMOUNTS AND TERMS OF THE ADVANCES

         SECTION 2.01.  The A Advances.  Each Lender  severally  agrees,  on the
terms and conditions  hereinafter  set forth, to make A Advances to the Borrower
from time to time on any  Business  Day during the period  from the date  hereof
until the Termination  Date in an aggregate amount not to exceed at any time the
amount set forth  opposite such Lender's name on the signature  pages hereof or,
if such Lender has entered into any  Assignment  and  Acceptance,  set forth for
such Lender in the Register maintained by the Agent pursuant to Section 8.07(c),
as  such  amount  may  be  reduced  pursuant  to  Section  2.05  (such  Lender's
"Commitment");  provided that the  aggregate  amount of the  Commitments  of the
Lenders  shall be deemed  used from time to time to the extent of the  aggregate
amount of the B Advances then  outstanding  and such deemed use of the aggregate
amount of the Commitments  shall be applied to the Lenders ratably  according to
their  respective  Commitments  (such deemed use of the aggregate  amount of the
Commitments  being a "B  Reduction").  Each A Borrowing shall be in an aggregate
amount not less than $10,000,000 or an integral multiple of $1,000,000 in excess
thereof  (or,  with respect to an A Borrowing  comprised of Alternate  Base Rate
Advances,  such lesser amount as shall equal the then  unborrowed  amount of the
aggregate Commitments), and shall consist of A Advances of the same Type made on
the same day by the Lenders ratably  according to their respective  Commitments.
Within the limits of each  Lender's  Commitment,  the  Borrower may from time to
time borrow,  prepay pursuant to Section 2.11(b) and reborrow under this Section
2.01.

         SECTION 2.02. Making the A Advances. (a) Each A Borrowing shall be made
on notice,  given not later than 11:00 A.M. (New York City time) on (x) the date
of a proposed A Borrowing comprised of Alternate Base Rate Advances, and (y) the
third  Business  Day prior to the date of a proposed A  Borrowing  comprised  of
Eurodollar Rate Advances, by the Borrower to the Agent, which shall give to each
Lender prompt  notice  thereof (and in any event not later than the same day) by
telecopier  or  telex.  Each such  notice  of an A  Borrowing  (a  "Notice  of A
Borrowing") shall be by telecopier or telex,  confirmed  immediately in writing,
in  substantially  the  form of  Exhibit  B-1  hereto,  specifying  therein  the
requested (i) date of such A Borrowing,  (ii) Type of A Advances comprising such
A  Borrowing,  (iii)  aggregate  amount of such A Borrowing,  and (iv)  Interest
Period for each such A Advance in the case of  Eurodollar  Rate  Advances.  Each
Lender  shall,  before  12:00  Noon (New  York City  time) on the date of such A
Borrowing,  make available for the account of its  Applicable  Lending Office to
the Agent at its address referred to in Section 8.02(b), in same day funds, such
Lender's ratable portion of such A Borrowing.  After the Agent's receipt of such
funds and upon  fulfillment  of the  applicable  conditions set forth in Article
III,  the Agent will make such funds  available  to the  Borrower at the Agent's
aforesaid address.


<PAGE>

                                       13


         (b) Each Notice of A Borrowing  shall be irrevocable and binding on the
Borrower. In the case of any A Borrowing which the related Notice of A Borrowing
specifies is to be comprised of Eurodollar  Rate  Advances,  the Borrower  shall
indemnify each Lender against any loss, cost or expense  incurred by such Lender
as a result of any  failure to fulfill on or before the date  specified  in such
Notice of A Borrowing for such A Borrowing the  applicable  conditions set forth
in Article III,  including,  without  limitation,  any loss  (including  loss of
anticipated  profits),  cost or expense incurred by reason of the liquidation or
reemployment  of deposits  or other funds  acquired by such Lender to fund the A
Advance  to be made by such  Lender  as  part of such A  Borrowing  when  such A
Advance, as a result of such failure, is not made on such date.

         (c) Unless the Agent shall have received  notice from a Lender prior to
the date of any A  Borrowing  that such Lender  will not make  available  to the
Agent such Lender's  ratable  portion of such A Borrowing,  the Agent may assume
that such  Lender has made such  portion  available  to the Agent on the date of
such A Borrowing in accordance  with subsection (a) of this Section 2.02 and the
Agent may, in reliance upon such  assumption,  make available to the Borrower on
such date a  corresponding  amount.  If and to the extent that such Lender shall
not have so made such ratable  portion  available to the Agent,  such Lender and
the  Borrower  severally  agree to repay to the Agent  forthwith  on demand such
corresponding  amount together with interest thereon, for each day from the date
such  amount is made  available  to the  Borrower  until the date such amount is
repaid to the  Agent,  at (i) in the case of the  Borrower,  the  interest  rate
applicable at the time to A Advances comprising such A Borrowing and (ii) in the
case of such Lender,  the Federal  Funds Rate. If such Lender shall repay to the
Agent such  corresponding  amount,  such amount so repaid shall  constitute such
Lender's A Advance as part of such A Borrowing  for purposes of this  Agreement,
and the interest  payable  thereon shall be allocated  such that the Agent shall
receive (from a combination of the sum, if any, paid to the Agent by such Lender
pursuant to clause (ii) of the preceding  sentence and any interest payment made
by the  Borrower)  an amount equal to interest on such A Advance at the interest
rate  applicable  thereto  from  the  date  the  corresponding  amount  was made
available by the Agent to the Borrower as  contemplated  by this Section 2.02(c)
to and including the date such amount is repaid to the Agent by such Lender, and
such  Lender  shall  receive the balance of the  interest  payments  made by the
Borrower with respect to such Advance in accordance  with the provisions of this
Agreement.

         (d) The failure of any Lender to make the A Advance to be made by it as
part of any A Borrowing shall not relieve any other Lender of its obligation, if
any,  hereunder  to make its A Advance on the date of such A  Borrowing,  but no
Lender  shall be  responsible  for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A Borrowing.


<PAGE>

                                       14

         SECTION 2.03. The B Advances. (a) Each Lender severally agrees that the
Borrower may make B Borrowings  under this Section 2.03 from time to time on any
Business Day during the period from the date hereof until the date  occurring 30
days prior to the Termination Date in the manner set forth below; provided that,
following the making of each B Borrowing,  the aggregate  amount of the Advances
then outstanding shall not exceed the aggregate amount of the Commitments of the
Lenders (computed without regard to any B Reduction).

         (i) The Borrower  may request a B Borrowing  under this Section 2.03 by
delivering  to the Agent,  by  telecopier  or telex,  confirmed  immediately  in
writing, a notice of a B Borrowing (a "Notice of B Borrowing"), in substantially
the form of Exhibit B-2 hereto,  specifying the date and aggregate amount of the
proposed B Borrowing,  the maturity  date for  repayment of each B Advance to be
made as part of such B  Borrowing  (which  maturity  date (x) may not be earlier
than the date  occurring  seven days after the date of such B Borrowing or later
than 180  days  after  the date of such B  Borrowing  or the  Termination  Date,
whichever  occurs  first,  if the  Borrower  shall  specify  in the  Notice of B
Borrowing that the rates of interest to be offered by the Lenders shall be fixed
rates per  annum,  or (y)  shall be 1, 2, 3, 4, 5 or 6 months  after the date of
such B  Borrowing  (but in no  event  later  than the  Termination  Date) if the
Borrower shall instead specify in the Notice of B Borrowing the basis to be used
by the Lenders in determining the rates of interest to be offered by them),  the
interest  payment  date or  dates  relating  thereto,  whether  the  proposed  B
Borrowing shall bear interest at a fixed or fluctuating rate per annum and, if a
fluctuating  rate is so  specified,  the  basis  to be used  by the  Lenders  in
determining  the rate of interest to be offered by them,  and any other terms to
be  applicable  to such B  Borrowing,  not later than 11:00 A.M.  (New York City
time)  (A) at  least  one  Business  Day  prior to the  date of the  proposed  B
Borrowing,  if the Borrower  shall specify in the Notice of B Borrowing that the
rates of interest  to be offered by the  Lenders  shall be fixed rates per annum
and (B) at  least  four  Business  Days  prior  to the  date of the  proposed  B
Borrowing,  if the Borrower  shall instead  specify in the Notice of B Borrowing
the basis to be used by the Lenders in  determining  the rates of interest to be
offered by them.  The Agent  shall in turn  promptly  notify each Lender of each
request for a B  Borrowing  received  by it from the  Borrower  by sending  such
Lender a copy of the related Notice of B Borrowing.

         (ii) Each Lender may, if, in its sole  discretion,  it elects to do so,
irrevocably offer to make one or more B Advances to the Borrower as part of such
proposed B Borrowing at a rate or rates of interest  specified by such Lender in
its sole  discretion,  by notifying  the Agent  (which shall give prompt  notice
thereof to the Borrower)  before 10:00 A.M. (New York City time) (A) on the date
of such proposed B Borrowing,  in the case of a Notice of B Borrowing  delivered
pursuant to clause (A) of paragraph (i) above and (B) three Business Days before
the date of such  proposed B  Borrowing,  in the case of a Notice of B Borrowing
delivered  pursuant to clause (B) of paragraph (i) above,  of the minimum amount
and maximum  amount of each B Advance which such Lender would be willing to make
as


<PAGE>

                                       15

part of such proposed B Borrowing  (which amounts may, subject to the proviso to
the first sentence of this Section  2.03(a),  exceed such Lender's  Commitment),
the rate or rates of interest  therefor  and such  Lender's  Applicable  Lending
Office  with  respect  to such B  Advance;  provided  that if the  Agent  in its
capacity  as a  Lender  shall,  in its sole  discretion,  elect to make any such
offer,  it shall notify the  Borrower of such offer  before 9:00 A.M.  (New York
City time) on the date on which  notice of such  election  is to be given to the
Agent by the other Lenders. If any Lender shall elect not to make such an offer,
such Lender shall so notify the Agent, before 10:00 A.M. (New York City time) on
the date on which  notice  of such  election  is to be given to the Agent by the
other  Lenders,  and such Lender shall not be obligated  to, and shall not, make
any B Advance  as part of such B  Borrowing;  provided  that the  failure by any
Lender to give such notice  shall not cause such Lender to be  obligated to make
any B Advance as part of such proposed B Borrowing.

         (iii) The Borrower shall, in turn, (A) before 11:00 A.M. (New York City
time) on the date of such  proposed  B  Borrowing,  in the case of a Notice of B
Borrowing delivered pursuant to clause (A) of paragraph (i) above and (B) before
12:00  Noon (New York City time)  three  Business  Days  before the date of such
proposed B Borrowing,  in the case of a Notice of B Borrowing delivered pursuant
to clause (B) of paragraph (i) above, either

                  (x) cancel such B Borrowing by giving the Agent notice to that
effect, or

                  (y)  accept  one or more of the  offers  made by any Lender or
Lenders  pursuant to paragraph  (ii) above,  in its sole  discretion,  by giving
notice to the Agent of the amount of each B Advance (which amount shall be equal
to or greater  than the  minimum  amount,  and equal to or less than the maximum
amount,  notified to the Borrower by the Agent on behalf of such Lender for such
B Advance pursuant to paragraph (ii) above) to be made by each Lender as part of
such B Borrowing,  and reject any remaining  offers made by Lenders  pursuant to
paragraph  (ii) above by giving the Agent notice to that effect;  provided  that
acceptance of offers may only be made on the basis of ascending  interest  rates
specified by the Lenders pursuant to paragraph (ii) above.

         (iv) If the  Borrower  notifies  the  Agent  that such B  Borrowing  is
cancelled  pursuant to  paragraph  (iii)(x)  above,  the Agent shall give prompt
notice thereof to the Lenders and such B Borrowing shall not be made.

         (v) If offers are made by two or more Lenders  with the same  specified
rate of interest  for a greater  aggregate  principal  amount than the amount in
respect of which offers are accepted for any B Borrowing,  the principal  amount
of B Advances in respect of which such offers are accepted shall be allocated by
the Agent  among  such  Lenders  as nearly as  possible  (in such  multiples  of
$1,000,000 as the Agent may deem appropriate) in


<PAGE>

                                       16

proportion to the aggregate  principal amount of such offers.  Determinations by
the Agent of the  amounts of B Advances  shall be  conclusive  in the absence of
manifest error.

         (vi) If the  Borrower  accepts  one or more of the  offers  made by any
Lender or Lenders pursuant to paragraph  (iii)(y) above, the Agent shall in turn
promptly notify (A) each Lender that has made an offer as described in paragraph
(ii) above, of the date and aggregate  amount of such B Borrowing and whether or
not any offer or offers made by such Lender  pursuant  to  paragraph  (ii) above
have been  accepted  by the  Borrower,  and (B) each  Lender that is to make a B
Advance as part of such B Borrowing,  of the amount of each B Advance to be made
by such  Lender as part of such B  Borrowing.  Each  Lender  that is to make a B
Advance  as part of such B  Borrowing  shall,  before  12:00 noon (New York City
time) on the date of such B Borrowing  specified in the notice received from the
Agent pursuant to clause (A) of the preceding  sentence,  make available for the
account of its Applicable Lending Office to the Agent at its address referred to
in Section 8.02(b) such Lenders portion of such B Borrowing,  in same day funds.
Upon  satisfaction  of the  applicable  conditions  set forth in Article III and
after  receipt  by the  Agent of such  funds,  the Agent  will  make such  funds
available to the Borrower at the Agent's aforesaid address.  Promptly after each
B Borrowing  the Agent will notify each Lender of the amount of the B Borrowing,
the  consequent B Reduction and the dates upon which such B Reduction  commenced
and will terminate.

         (b) Each B  Borrowing  shall be in an  aggregate  amount  not less than
$10,000,000  or an  integral  multiple  of  $1,000,000  in excess  thereof  and,
following  the making of each B Borrowing,  the Borrower  shall be in compliance
with the limitation set forth in the proviso to the first sentence of subsection
(a) above.

         (c) Within the limits and on the  conditions  set forth in this Section
2.03,  the Borrower may from time to time borrow under this Section 2.03,  repay
or prepay  pursuant to  subsection  (d) below,  and reborrow  under this Section
2.03;  provided that a B Borrowing shall not be made within two Business Days of
the date of any other B Borrowing.

         (d) The  Borrower  shall  repay to the  Agent for the  account  of each
Lender  which has made a B  Advance,  or each other  holder of a B Note,  on the
maturity date of each B Advance (such  maturity date being that specified by the
Borrower for  repayment  of such B Advance in the related  Notice of B Borrowing
delivered pursuant to subsection (a)(i) above), the then unpaid principal amount
of such B Advance.  The  Borrower  shall  have no right to prepay any  principal
amount of any B Advance  unless,  and then only on the terms,  specified  by the
Borrower  for such B Advance  in the  related  Notice of B  Borrowing  delivered
pursuant  to  subsection  (a)(i)  above;  provided  that the  Borrower  shall be
obligated  to  reimburse  each Lender  whose B Advance  has been  prepaid by the
Borrower in respect thereof pursuant to Section 8.04(b).


<PAGE>

                                       17


         (e) The Borrower shall pay interest on the unpaid  principal  amount of
each B Advance from the date of such B Advance to the date the principal  amount
of such B Advance is repaid in full,  at the rate of interest for such B Advance
specified by the Lender making such B Advance in its notice with respect thereto
delivered  pursuant to subsection  (a)(ii)  above,  payable on the maturity date
specified by the Borrower for such B Advance and on each other interest  payment
date or dates specified by the Borrower for such B Advance in the related Notice
of B Borrowing delivered pursuant to subsection (a)(i) above; provided, however,
that if the  maturity  date of the B Advances  comprising  a B Borrowing is more
than 90 days after the date of such B Borrowing,  then interest shall be payable
on each day  which  occurs  at  intervals  of 90 days  after  the date of such B
Borrowing;  provided,  further,  that any amount of principal  which is not paid
when due (whether at stated  maturity,  by acceleration or otherwise) shall bear
interest, from the date on which such amount is due until such amount is paid in
full,  payable on demand,  at a rate per annum  equal at all times (i) from such
due date to the  applicable  maturity  date,  to 2% per annum above the interest
rate otherwise payable with respect to such B Advance  hereunder,  and (ii) from
and after the applicable maturity date, to 2% per annum above the Alternate Base
Rate in effect from time to time.

         SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent,  for the  account of each  Lender,  a facility  fee on the daily  average
amount of such Lender's  Commitment  (including both the portion thereof that is
used and the portion thereof that is unused) from the date hereof in the case of
each Lender  listed on the signature  pages hereof and from the  effective  date
specified in the Assignment and Acceptance  pursuant to which it became a Lender
in the case of each other Lender until the Termination Date,  payable in arrears
on the last day of each March,  June,  September and December during the term of
such Lender's Commitment,  commencing September 30, 1997, and on the Termination
Date, at the rate of (i) .070% per annum during each Level I Period,  (ii) .080%
per annum  during each Level II Period,  (iii) .100% per annum during each Level
III Period,  (iv) .125% per annum  during each Level IV Period and (v) .175% per
annum during each Level V Period.

         (b) Agent's Fees. The Borrower  agrees to pay to the Agent certain fees
for its role hereunder and in connection  with the execution and delivery hereof
in the  amounts  and at the times  described  in one or more  letter  agreements
between the  Borrower  and the Agent dated on or about the date  hereof,  as the
same may be amended, modified, supplemented or replaced from time to time by the
mutual  agreement of the Borrower and the Agent.  All such fees shall be for the
sole account and benefit of the Agent.

         SECTION 2.05.  Termination,  Reduction or Increase of the  Commitments.
(a)  Termination  or Reduction of the  Commitments.  The Borrower shall have the
right,  upon at least three Business Days' notice to the Agent,  to terminate in
whole  or  reduce  ratably  in  part  the  unused  portions  of  the  respective
Commitments of the Lenders; provided, that the


<PAGE>

                                       18

aggregate  amount of the  Commitments  of the Lenders shall not be reduced to an
amount which is less than the aggregate  principal amount of the B Advances then
outstanding;  provided  further  that  each  partial  reduction  shall be in the
aggregate amount of $10,000,000 or an integral  multiple of $1,000,000 in excess
thereof. Any Commitments  terminated or reduced by the Borrower pursuant to this
Section  2.05 may not be  reinstated,  unless  pursuant  to an  increase  of the
Commitments as described below in Section 2.05(b).

         (b) Increase in Aggregate of the  Commitments.  (i) The Borrower may at
any time,  by notice to the  Agent,  propose  that the  aggregate  amount of the
Commitments be increased (such incremental increased amount being, a "Commitment
Increase"),  effective as at a date prior to the Termination  Date (an "Increase
Date") as to which  agreement is to be reached by an earlier  date  specified in
such notice (a "Commitment Date"); provided,  however, that (A) the Borrower may
not propose more than two Commitment  Increases in any 12-month period,  (B) the
minimum proposed Commitment Increase per notice shall be $25,000,000,  (C) in no
event  shall  the  aggregate  amount  of  the  Commitments  at any  time  exceed
$650,000,000,  (D) the  Borrower has a Public Debt Rating from S&P or Moody's of
better than or equal to BBB- or Baa3,  respectively,  but if the  Borrower has a
Public  Debt  Rating  from both S&P and  Moody's,  the Public Debt Rating of the
Borrower is better than or equal to BBB- and Baa3, respectively,  (E) no Default
shall  have  occurred  and  be  continuing  on  such  Increase  Date  and  (F) a
certificate as to corporate  authorization  and other  documentation  similar to
that  delivered  pursuant to Section  3.01 is  received by the Agent.  The Agent
shall notify the Lenders  thereof  promptly upon its receipt of any such notice.
The Agent agrees that it will cooperate  with the Borrower in  discussions  with
the Lenders and other assignees with a view to arranging the proposed Commitment
Increase  through the increase of the  Commitments of one or more of the Lenders
(each such Lender that is willing to increase its Commitment  hereunder being an
"Increasing Lender") and the addition of one or more other assignees as Assuming
Lenders and as parties to this Agreement; provided, however, that it shall be in
each Lender's sole  discretion  whether to increase its Commitment  hereunder in
connection with the proposed Commitment Increase;  and provided further that the
minimum  Commitment  of each such  Assuming  Lender that becomes a party to this
Agreement  pursuant  to  this  Section  2.05(b)  shall  be  at  least  equal  to
$25,000,000.   If  any  of  the  Lenders  agree  to  increase  their  respective
Commitments  by an  aggregate  amount  in  excess  of  the  proposed  Commitment
Increase, the proposed Commitment Increase shall be allocated among such Lenders
as determined at such time by the Borrower.  If agreement is reached on or prior
to the  applicable  Commitment  Date with any  Increasing  Lenders and  Assuming
Lenders as to a Commitment Increase (which may be less than but not greater than
specified in the  applicable  notice from the  Borrower),  such  agreement to be
evidenced by a notice in reasonable  detail from the Borrower to the Agent on or
prior to the applicable  Commitment Date, such Assuming  Lenders,  if any, shall
become Lenders hereunder as of the applicable  Increase Date and the Commitments
of such Increasing  Lenders and such Assuming Lenders shall become or be, as the
case may be, as of the  Increase  Date,  the amounts  specified  in such notice;
provided that:


<PAGE>

                                       19


                  (x) the  Agent  shall  have  received  (with  copies  for each
         Lender,  including  each such  Assuming  Lender) by no later than 10:00
         A.M.  (New  York  City  time) on the  applicable  Increase  Date a copy
         certified  by the  Secretary,  an  Assistant  Secretary or a comparable
         officer of the  Borrower,  of the  resolutions  adopted by the Board of
         Directors of the Borrower authorizing such Commitment  Increase,  which
         resolutions shall be satisfactory to the Agent;

                  (y) each such  Assuming  Lender  shall have  delivered  to the
         Agent by no later than 10:00 A.M. (New York City time) on such Increase
         Date, an appropriate  Assumption Agreement in substantially the form of
         Exhibit  D  hereto,  duly  executed  by such  Assuming  Lender  and the
         Borrower; and

                  (z) each such  Increasing  Lender shall have  delivered to the
         Agent by no later than 10:00 A.M. (New York City time) on such Increase
         Date  (A)  its  existing  A  Note  and  (B)   confirmation  in  writing
         satisfactory to the Agent as to its increased Commitment.

                  (ii) In the event that the Agent  shall have  received  notice
from the Borrower as to its  agreement  to a Commitment  Increase on or prior to
the applicable  Commitment Date and each of the actions  provided for in clauses
(x)  through (z) above shall have  occurred  prior to 10:00 A.M.  (New York City
time) on the  applicable  Increase  Date,  the Agent  shall  notify the  Lenders
(including  any Assuming  Lenders) and the  Borrower of the  occurrence  of such
Commitment Increase by telephone,  confirmed immediately in writing,  telecopier
or telex and in any event no later  than 1:00 P.M.  (New York City time) on such
Increase  Date and shall record in the Register  the relevant  information  with
respect to each Increasing  Lender and Assuming Lender.  Each Increasing  Lender
and each  Assuming  Lender  shall,  before 2:00 P.M. (New York City time) on the
applicable  Increase  Date,  make  available  for the account of its  Applicable
Lending Office to the Agent at the Agent's  Account,  in same day funds,  in the
case of such Assuming Lender,  an amount equal to such Assuming Lender's ratable
portion of the A Borrowings then outstanding (calculated based on its Commitment
as a percentage of the aggregate Commitments  outstanding after giving effect to
the relevant Commitment Increase) and, in the case of such Increasing Lender, an
amount equal to the excess of (i) such  Increasing  Lender's  ratable portion of
the A Borrowings  then  outstanding  (calculated  based on its  Commitment  as a
percentage of the aggregate  Commitments  outstanding after giving effect to the
relevant Commitment Increase) over (ii) such Increasing Lender's ratable portion
of the A  Borrowings  then  outstanding  (calculated  based  on  its  Commitment
(without giving effect to the relevant  Commitment  Increase) as a percentage of
the aggregate  Commitments  (without  giving  effect to the relevant  Commitment
Increase).  After the  Agent's  receipt of such funds from each such  Increasing
Lender and each such Assuming Lender,  the Agent will promptly  thereafter cause
to be  distributed  like  funds to the other  Lenders  for the  account of their
respective  Applicable  Lending  Offices in an amount to each other  Lender such
that the aggregate amount of the


<PAGE>

                                       20

outstanding  A  Advances  owing  to each  Lender  after  giving  effect  to such
distribution  equals such  Lender's  ratable  portion of the A  Borrowings  then
outstanding (calculated based on its Commitment as a percentage of the aggregate
Commitments   outstanding  after  giving  effect  to  the  relevant   Commitment
Increase). Within five Business Days after the Borrower receives notice from the
Agent, the Borrower, at its own expense, shall execute and deliver to the Agent,
A Notes  payable  to the  order  of each  Assuming  Lender,  if any,  and,  each
Increasing  Lender,  dated as of the  applicable  Increase  Date, in a principal
amount equal to such  Lender's  Commitment  after giving  effect to the relevant
Commitment  Increase,  and substantially in the form of Exhibit A-1 hereto.  The
Agent, upon receipt of such A Notes,  shall promptly deliver such A Notes to the
respective Assuming Lenders and Increasing Lenders.

         (iii) In the event that the Agent shall not have  received  notice from
the Borrower as to such agreement on or prior to the applicable  Commitment Date
or that Borrower shall, by notice to the Agent prior to the applicable  Increase
Date,  withdraw its  proposal  for a  Commitment  Increase or any of the actions
provided for above in clauses  (i)(x)  through (i)(z) shall not have occurred by
10:00 A.M. (New York City time) on the such Increase Date,  such proposal by the
Borrower  shall be deemed  not to have been made.  In such  event,  any  actions
theretofore  taken under clauses  (i)(x) through (i)(z) above shall be deemed to
be of no effect and all the rights and obligations of the parties shall continue
as if no such proposal had been made.

         SECTION  2.06.  Repayment of A Advances.  The Borrower  shall repay the
principal  amount of each A Advance  made by each  Lender on the last day of the
Interest Period for such A Advance.

         SECTION 2.07.  Interest on A Advances.  The Borrower shall pay interest
on the unpaid  principal  amount of each A Advance  made by each Lender from the
date of such A Advance until such principal amount shall be paid in full, at the
following rates per annum and at the following times:

         (a)  Alternate  Base Rate  Advances.  If such A Advance is an Alternate
Base Rate  Advance,  a rate per annum equal at all times to the  Alternate  Base
Rate in effect  from  time to time,  payable  quarterly  on the last day of each
March,  June,  September,  and December and on the date such Alternate Base Rate
Advance shall be paid in full; provided that any amount of principal or interest
which is not paid when due  (whether  at stated  maturity,  by  acceleration  or
otherwise) shall bear interest,  from the date on which such amount is due until
such amount is paid in full, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Alternate Base Rate in effect from time to time.


<PAGE>

                                       21

         (b) Eurodollar  Rate Advances.  If such A Advance is a Eurodollar  Rate
Advance, a rate per annum equal at all times during the Interest Period for such
A Advance to the sum of the  Eurodollar  Rate for such Interest  Period plus the
applicable  Eurodollar  Margin,  payable on the last day of such Interest Period
and, if such Interest Period is longer than three months,  at intervals of three
months  after the first day  thereof;  provided  that any amount of principal or
interest which is not paid when due (whether at stated maturity, by acceleration
or  otherwise)  shall bear  interest,  from the date on which such amount is due
until such amount is paid in full,  payable on demand, at a rate per annum equal
at all times (i) from such due date to the last day of the  applicable  Interest
Period,  to 2% per annum above the interest rate otherwise  payable with respect
to such A  Advance  hereunder,  and  (ii)  from  and  after  the last day of the
applicable  Interest  Period,  to 2% per annum above the Alternate  Base Rate in
effect from time to time.

         SECTION  2.08.  Notes.  The  obligation  of the Borrower to repay the A
Advances  made to the  Borrower  by  each  Lender  hereunder  shall  be  further
evidenced  by an A Note in favor of such  Lender  in the form and  substance  of
Exhibit A-1  attached  hereto.  The  obligation  of the  Borrower to repay the B
Advances  made to the  Borrower by any Lender  shall be evidenced by a B Note in
favor of such Lender in the form and substance of Exhibit A-2 attached hereto.

         SECTION  2.09.  Interest Rate  Determination.  (a) The Agent shall give
prompt  notice to the Borrower and the Lenders of the  applicable  interest rate
determined by the Agent for purposes of Section 2.07(a) or (b).

         (b) If the Majority Lenders shall, at least one Business Day before the
date of any requested A Borrowing comprised of Eurodollar Rate Advances,  notify
the Agent that the Eurodollar Rate for Eurodollar Rate Advances  comprising such
A Borrowing  will not  adequately  reflect the cost to such Majority  Lenders of
making,  funding or maintaining  their  respective  Eurodollar Rate Advances for
such A  Borrowing,  the Agent shall  forthwith  so notify the  Borrower  and the
Lenders,  whereupon the right of the Borrower to select Eurodollar Rate Advances
for such A Borrowing or any subsequent A Borrowing  shall be suspended until the
Agent shall notify the Borrower and the Lenders that the  circumstances  causing
such suspension no longer exist, and each A Advance  comprising such A Borrowing
shall be an Alternate Base Rate Advance.

         SECTION 2.10. Sharing of Payments,  Etc. If any Lender shall obtain any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or  otherwise)  on account of the A  Advances  made by it (other  than
pursuant to Section 2.12 or 2.15) in excess of its ratable  share of payments on
account  of the A  Advances  obtained  by all the  Lenders,  such  Lender  shall
forthwith purchase from the other Lenders such  participations in the A Advances
made by them as shall be necessary to cause such purchasing  Lender to share the
excess payment ratably with each of them; provided, however, that if all or any


<PAGE>
                                       22

portion of such excess  payment is  thereafter  recovered  from such  purchasing
Lender,  such purchase from each Lender shall be rescinded and such Lender shall
repay to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such Lender's  ratable share  (according to the
proportion  of (i) the amount of such  Lender's  required  repayment to (ii) the
total amount so recovered from the  purchasing  Lender) of any interest or other
amount paid or payable by the  purchasing  Lender in respect of the total amount
so recovered.  The Borrower agrees that any Lender so purchasing a participation
from another  Lender  pursuant to this  Section 2.10 may, to the fullest  extent
permitted  by law,  exercise all its rights of payment  (including  the right of
set-off) with respect to such  participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.

         SECTION 2.11. Prepayments of A Advances. (a) The Borrower shall have no
right to prepay any principal amount of any A Advances other than as provided in
subsection (b) below.

         (b) The Borrower  may, upon at least two Business  Days' notice,  or in
the case of A Borrowings  comprised of Alternate Base Rate Advances notice given
not later  than 11:00 A.M.  (New York City time) one  Business  Day prior to the
proposed  date of  prepayment,  to the  Agent  stating  the  proposed  date  and
aggregate  principal  amount of the prepayment,  and if such notice is given the
Borrower  shall,  prepay  the  outstanding  principal  amounts of the A Advances
comprising  part of the same A Borrowing  in whole or ratably in part,  together
with accrued  interest to the date of such  prepayment on the  principal  amount
prepaid;  provided,  however,  that (x) each partial  prepayment  shall be in an
aggregate  principal amount not less than $10,000,000 or an integral multiple of
$1,000,000 in excess  thereof,  and (y) in the case of any such  prepayment of a
Eurodollar  Rate  Advance,  the Borrower  shall be  obligated  to reimburse  the
Lenders in respect thereof pursuant to Section 8.04(b).

         (c) Except as provided in Section  2.03(d),  the Borrower shall have no
right to prepay any principal amount of any B Advance.

         SECTION 2.12.  Increased Costs.  (a) If, after the date hereof,  due to
either (i) the  introduction  of or any change  (other than any change by way of
imposition or increase of reserve  requirements,  in the case of Eurodollar Rate
Advances,  included in the  Eurodollar  Rate  Reserve  Percentage)  in or in the
interpretation  of any  law or  regulation  or  (ii)  the  compliance  with  any
guideline  or request  from any  central  bank or other  governmental  authority
(whether  or not having the force of law),  there  shall be any  increase in the
cost to any  Lender  of  agreeing  to make or  making,  funding  or  maintaining
Eurodollar  Rate  Advances,  then the  Borrower  shall  from time to time,  upon
written  demand by such Lender (with a copy of such demand to the Agent),  which
demand  must be made no later  than the date that is one year  after the date on
which the Commitments have been terminated and all


<PAGE>

                                       23

sums owing hereunder have been paid in full, pay to the Agent for the account of
such Lender  additional  amounts  sufficient to compensate  such Lender for such
increased cost. A certificate as to the amount of such increased cost, submitted
to the Borrower and the Agent by such Lender,  shall be  conclusive  and binding
for all purposes, absent manifest error. It shall be assumed, for the purpose of
computing  amounts to be paid by the  Borrower to CUSA  pursuant to this Section
2.12(a),  that  the  making,  funding  or  maintaining  by CUSA  of any  Advance
hereunder has been by Citibank.

         (b) If any Lender determines that compliance with any law or regulation
or any  guideline  or  request  from  any  central  bank or  other  governmental
authority (whether or not having the force of law) affects the amount of capital
to be maintained by such Lender or any corporation  controlling  such Lender and
that the amount of such capital is  increased by or based upon the  existence of
such Lender's  commitment to lend hereunder and other  commitments of this type,
then,  upon  written  demand by such  Lender  (with a copy of such demand to the
Agent),  which demand must be made no later than the date that is one year after
the date on which  the  Commitments  have  been  terminated  and all sums  owing
hereunder  have been paid in full,  the Borrower  shall  immediately  pay to the
Agent for the account of such  Lender,  from time to time as  specified  by such
Lender,  additional  amounts  sufficient  to  compensate  such  Lender  or  such
corporation in the light of such  circumstances,  to the extent that such Lender
reasonably  determines such increase in capital is allocable to the existence of
such Lender's  commitment to lend  hereunder.  A certificate  as to such amounts
submitted to the Borrower and the Agent by such Lender shall be  conclusive  and
binding for all purposes,  absent manifest  error. It shall be assumed,  for the
purpose of computing amounts to be paid by the Borrower to CUSA pursuant to this
Section 2.12(b), that the making,  funding or maintaining by CUSA of any Advance
hereunder has been by Citibank.

         (c) Each  Lender  agrees  that if the  Borrower is required to make any
payments to such Lender upon demand therefor pursuant to Sections 2.12(a) or (b)
such Lender shall use  reasonable  efforts to select an  alternative  Applicable
Lending  Office  which would avoid the need  thereafter  for making such demand;
provided,  however,  that no Lender shall be obligated to select an  alternative
Applicable Lending Office if such Lender determines in its reasonable discretion
that (i) as a result of such  selection such Lender would be in violation of any
applicable  law,  regulation,  treaty or  directive of any central bank or other
governmental   authority,   or  (ii)   such   selection   would   be   otherwise
disadvantageous to such Lender.

         SECTION 2.13.  Illegality.  (a)  Notwithstanding any other provision of
this Agreement, if any Lender shall notify the Agent that the introduction of or
any  change  in or in the  interpretation  of any  law or  regulation  makes  it
unlawful, or any central bank or other governmental authority asserts that it is
unlawful,  for any  Lender  or its  Eurodollar  Lending  Office to  perform  its
obligations hereunder to make Eurodollar Rate Advances or to fund or


<PAGE>

                                       24

maintain Eurodollar Rate Advances  hereunder,  (i) the obligation of the Lenders
to make Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the  circumstances  causing such suspension no
longer exist and (ii) the Borrower shall forthwith prepay in full all Eurodollar
Rate Advances of all Lenders then  outstanding,  together with interest  accrued
thereon.

         (b) Each Lender agrees that if it  determines,  or if a central bank or
other  governmental  authority  asserts,  that it is unlawful for such Lender to
make, fund or maintain Eurodollar Rate Advances hereunder, such Lender shall use
reasonable efforts to select an alternative Eurodollar Lending Office to perform
its obligations  hereunder to make,  fund or maintain  Eurodollar Rate Advances;
provided,  however,  that no Lender shall be obligated to select an  alternative
Eurodollar Lending Office if such Lender determines in its reasonable discretion
that (i) as a result of such  selection such Lender would be in violation of any
applicable  law,  regulation,  treaty or  directive of any central bank or other
governmental   authority,   or  (ii)   such   selection   would   be   otherwise
disadvantageous to such Lender.

         SECTION 2.14.  Payments and  Computations.  (a) The Borrower shall make
each payment  hereunder  and under the Notes not later than 11:00 A.M. (New York
City  time) on the day  when due in U.S.  dollars  to the  Agent at its  address
referred  to in  Section  8.02(b) in same day  funds.  The Agent  will  promptly
thereafter  cause to be  distributed  like  funds  relating  to the  payment  of
principal  or interest or facility  fees  ratably  (other than  amounts  payable
pursuant to Section 2.03,  2.12 or 2.15) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other  amount  payable to any Lender to such  Lender for the  account of its
Applicable  Lending  Office,  in each case to be applied in accordance  with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording  of the  information  contained  therein in the  Register  pursuant to
Section 8.07(d),  from and after the effective date specified in such Assignment
and Acceptance,  the Agent shall make all payments hereunder and under the Notes
in respect of the interest  assigned thereby to the Lender assignee  thereunder,
and the parties to such  Assignment  and Acceptance  shall make all  appropriate
adjustments  in such payments for periods prior to such  effective date directly
between themselves.

         (b) The Borrower hereby  authorizes  each Lender,  if and to the extent
payment  owed to such  Lender is not made when due  hereunder  or under any Note
held by such  Lender,  to charge from time to time against (i) any or all of the
Borrower's  accounts  with such Lender or (ii) in the event any such  payment is
not made to CUSA when due, any or all of the  Borrower's  accounts with Citibank
or any other Affiliate of CUSA (and the Borrower hereby authorizes  Citibank and
each such Affiliate to permit such charge), any amount so due.

         (c) All computations of interest based on the Alternate Base Rate shall
be made by the Agent on the basis of a year of 365 or 366 days,  as the case may
be, and all


<PAGE>

                                       25

computations  of interest based on the Eurodollar Rate or the Federal Funds Rate
and of interest on B Advances prior to the maturity date applicable  thereto and
of facility  fees shall be made by the Agent on the basis of a year of 360 days,
in each  case  for the  actual  number  of days  (including  the  first  day but
excluding the last day)  occurring in the period for which such interest or fees
are payable. Each determination by the Agent of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.

         (d) Whenever any payment  hereunder and under the Notes shall be stated
to be 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 in such case be
included in the  computation of payment of interest or facility fee, as the case
may be; provided,  however, if such extension would cause payment of interest on
or  principal  of  Eurodollar  Rate  Advances  to be made in the next  following
calendar month, such payment shall be made on the next preceding Business Day.

         (e) Unless the Agent shall have received notice from the Borrower prior
to the  date on which  any  payment  is due to the  Lenders  hereunder  that the
Borrower  will not make such  payment  in full,  the Agent may  assume  that the
Borrower  has made such  payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender.  If and to the
extent  that the  Borrower  shall not have so made such  payment  in full to the
Agent,  each  Lender  shall repay to the Agent  forthwith  on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the Federal Funds Rate.

         SECTION 2.15.  Taxes. (a) All payments by the Borrower  hereunder shall
be made  without  set-off  or  counterclaim  and free and  clear of and  without
deduction  on  account  of  restrictions  or  conditions  of any  nature  now or
hereafter  imposed or levied by the United States or any  political  subdivision
thereof,  except as  specifically  provided to the contrary in Section  2.15(b),
unless the  Borrower  is required  by law to make such  deductions.  If any such
obligation is imposed upon the Borrower with respect to any amount payable by it
hereunder, it will pay to each affected Lender, on the date on which such amount
becomes due and payable hereunder,  such additional amount as shall be necessary
to enable  such  Lender  to  receive  the same net  amount  which it would  have
received on such due date had no such obligation been imposed upon the Borrower.

         (b) Each  payment to be made by the  Borrower  hereunder  to any Lender
shall be made free and clear of and without  deduction or withholding  for or on
account of any tax imposed by any  governmental or taxing authority of or in the
United States unless the Borrower is required to make such a payment  subject to
the deduction or withholding of such tax, in which case the Borrower will pay to
each affected Lender, on the date on which

<PAGE>

                                       26

such amount becomes due and payable  hereunder,  such additional amount as shall
be necessary to enable such Lender to receive the same net amount which it would
have  received on such due date had no such  obligation  been  imposed  upon the
Borrower;  provided, however, that the Borrower shall not be required to pay any
additional  amount on account of any tax of, or imposed  by, the United  States,
pursuant to this Section 2.15(b),  to any Lender and shall be entitled to deduct
and  withhold  such tax if such  Lender (i) shall have  failed to submit a valid
United States  Internal  Revenue Service Form 1001 or any successor form thereto
("Form 1001")  relating to such Lender and entitling it to a complete  exemption
from  deduction  or  withholding  on all amounts to be received by such  Lender,
including fees,  pursuant to this  Agreement,  or a valid United States Internal
Revenue  Service Form 4224 or any successor form thereto ("Form 4224")  relating
to such Lender and entitling it to receive all amounts, including fees, pursuant
to this Agreement,  without deduction or withholding,  or a statement conforming
to the requirements of United States Treasury  Regulation  1.1441-5(b),  or (ii)
shall have failed to submit such form or other statement which it is required to
deliver pursuant to Section 2.15(c) hereof.

         (c)  Prior to the  date of the  initial  Borrowing  in the case of each
Lender listed on the signature  pages hereof,  and on the date of the Assignment
and  Acceptance  pursuant  to which it became a Lender in the case of each other
Lender,  each Lender  agrees that it will deliver to the  Borrower  either (i) a
statement,  in  duplicate,  conforming  to the  requirements  of  United  States
Treasury Regulation Section 1.1441-5(b), or (ii) if it is not incorporated under
the laws of the United States or a state thereof,  two duly completed  copies of
Form 1001 or 4224, or successor applicable forms, as the case may be, certifying
that such Lender is entitled to receive  payments under this  Agreement  without
deduction or withholding  of any United States federal income taxes.  Subject to
any change in applicable laws or regulations,  each Lender which delivers to the
Borrower a Form 1001 or 4224,  or successor  applicable  forms,  pursuant to the
provisions  of this  Section  2.15(c),  further  undertakes  to  deliver  to the
Borrower,  upon request by the Borrower, two further copies of said Form 1001 or
4224, or successor  applicable  forms,  on or before the date that any such form
expires or becomes  obsolete  certifying that such Lender is entitled to receive
payments  under this  Agreement  without  deduction or withholding of any United
States federal income taxes.

         (d) Without  prejudice  to the  survival of any other  agreement of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
this  Section  2.15  shall  survive  the  termination  of  this  Agreement,  the
termination of the Commitments and the payment in full of the Notes.

         (e) Each Lender agrees that if the Borrower is required to increase any
amounts  payable to such Lender under Sections  2.15(a) or 2.15(b),  such Lender
shall use reasonable efforts to select an alternative  Applicable Lending Office
which would not result in such increased payment by the Borrower to such Lender;
provided, however, that no

<PAGE>

                                       27

Lender shall be obligated to select an alternative  Applicable Lending Office if
such Lender determines in its reasonable discretion that (i) as a result of such
selection such Lender would be in violation of any applicable  law,  regulation,
treaty or directive of any central bank or other governmental authority, or (ii)
such selection would be otherwise disadvantageous to such Lender.


                                   ARTICLE III

                              CONDITIONS OF LENDING

         SECTION   3.01.   Condition   Precedent   to  Initial   Advances.   The
effectiveness  of the  Commitment  of each  Lender is subject  to the  condition
precedent  that  the  Agent  shall  have  received  the  following,  in form and
substance  satisfactory  to the Agent and (except  for the Notes) in  sufficient
copies for each Lender:

         (a) The Notes payable to the order of the Lenders, respectively.

         (b) This Agreement executed by the Borrower,  the Agent and each of the
Lenders.

         (c) Certified  copies of the  resolutions  of the Board of Directors of
the  Borrower  approving  this  Agreement  and the  Notes  and of all  documents
evidencing other necessary corporate action and governmental  approvals, if any,
with respect to this Agreement and the Notes.

         (d) A  certificate  of the  Secretary or an Assistant  Secretary of the
Borrower  certifying  the  names  and true  signatures  of the  officers  of the
Borrower authorized to sign this Agreement and the Notes and the other documents
to be delivered hereunder.

         (e) A favorable opinion of Wilson, Sonsini,  Goodrich & Rosati, special
counsel for the Borrower,  substantially  in the form attached hereto as Exhibit
E, and  covering  such  other  matters  as any  Lender  through  the  Agent  may
reasonably request.

         (f) Evidence that the  obligations of the lenders and agent  (including
commitments to make advances  thereunder)  under that certain  Credit  Agreement
dated as of June 28, 1996 among the Borrower,  the lenders  thereunder and CUSA,
as agent for the lenders  thereunder,  as amended,  have been terminated and all
unpaid  principal and interest  thereunder and all other amounts then payable by
the  Borrower  thereunder  have  been  paid in full  (or will be paid in full by
application of the proceeds of the initial Borrowing hereunder).

         (g) A favorable opinion of Shearman & Sterling, counsel for the Agent.


<PAGE>

                                       28


         SECTION 3.02. Conditions Precedent to Each A Borrowing.  The obligation
of  each  Lender  to make  an A  Advance  on the  occasion  of each A  Borrowing
(including the initial A Borrowing)  shall be subject to the further  conditions
precedent that (i) the Agent shall have received the written confirmatory Notice
of A Borrowing with respect thereto and (ii) on the date of such A Borrowing (a)
the following statements shall be true (and each of the giving of the applicable
Notice of A Borrowing and the acceptance by the Borrower of the proceeds of such
A Borrowing shall constitute a representation  and warranty by the Borrower that
on the date of such A Borrowing such statements are true):

         (1) The  representations  and warranties  contained in Section 4.01 are
     correct  on  and  as  of  the  date  of  such  A   Borrowing   (except  the
     representation  contained in Section  4.01(e) which shall be made only upon
     the  initial  A  Borrowing),  before  and  after  giving  effect  to such A
     Borrowing and to the application of the proceeds therefrom,  as though made
     on and as of such  date  (except  to the  extent  such  representations  or
     warranties specifically relate to an earlier date, in which case they shall
     be true and correct as of such date),

         (2) No Default or Event of Default has occurred and is  continuing,  or
     would result from such A Borrowing or from the  application of the proceeds
     therefrom, and

         (3) The aggregate  amount of such A Borrowing and all other  Borrowings
     to be made on the same day hereunder is within the aggregate  amount of the
     unused Commitments of the Lenders, and

         (b) if the Agent or any Lender  has any  reason to believe  that any of
the conditions set forth in this Section 3.02 shall not be satisfied on the date
of such A Borrowing,  then the Agent shall have received  such other  approvals,
opinions  or  documents  as the  Agent or such  Lender  through  the  Agent  may
reasonably request.

         SECTION 3.03. Conditions Precedent to Each B Borrowing.  The obligation
of each  Lender  which is to make a B Advance on the  occasion  of a B Borrowing
(including  the  initial B  Borrowing)  to make such B Advance as part of such B
Borrowing  shall be subject to the  further  conditions  precedent  that (i) the
Agent shall have received the written  confirmatory  Notice of B Borrowing  with
respect  thereto,  and  (ii)  on the  date  of such B  Borrowing  the  following
statements  shall be true (and each of the giving of the applicable  Notice of B
Borrowing and the acceptance by the Borrower of the proceeds of such B Borrowing
shall constitute a representation  and warranty by the Borrower that on the date
of such B Borrowing such statements are true):

         (a) The  representations  and warranties  contained in Section 4.01 are
correct on and as of the date of such B Borrowing before and after giving effect
to such B

<PAGE>

                                       29

Borrowing and to the  application of the proceeds  therefrom,  as though made on
and as of such date  (except to the extent such  representations  or  warranties
specifically  relate to an  earlier  date,  in which case they shall be true and
correct as of such date),

         (b) No Default or Event of Default has occurred and is  continuing,  or
would  result  from such B Borrowing  or from the  application  of the  proceeds
therefrom, and

         (c) The aggregate  amount of such B Borrowing and all other  Borrowings
to be made on the same day  hereunder  is  within  the  aggregate  amount of the
unused Commitments of the Lenders.


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         SECTION 4.01.  Representations  and  Warranties  of the  Borrower.  The
Borrower represents and warrants as follows:

         (a) The Borrower is a corporation duly organized,  validly existing and
in good standing under the laws of the  jurisdiction  indicated at the beginning
of this Agreement.  Each Subsidiary is duly organized and validly existing under
the laws of the jurisdiction in which it is incorporated and is in good standing
under the laws of such  jurisdiction  except  where the failure to so be in good
standing  (i) in the  case of  Restricted  Subsidiaries,  is  remedied  within a
reasonable  time period after a  Responsible  Officer has  knowledge of any such
failure,  and (ii) such failure will not have a material  adverse  effect on the
business,  financial condition, assets, properties or operations of the Borrower
or the Borrower  and its  Subsidiaries  taken as a whole.  The Borrower and each
Restricted Subsidiary has the corporate power to own its respective property and
to carry on its respective business as now being conducted.

         (b) The  execution,  delivery and  performance  by the Borrower of this
Agreement and the Notes are within the Borrower's  corporate  powers,  have been
duly authorized by all necessary corporate action, and do not contravene (i) the
Borrower's charter or by-laws or (ii) any law or contractual restriction binding
on or affecting the Borrower.

         (c) No  authorization  or approval or other action by, and no notice to
or filing with, any  governmental  authority or regulatory  body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the Notes.


<PAGE>

                                       30

         (d) This Agreement is, and the Notes when delivered  hereunder will be,
legal,  valid and binding  obligations of the Borrower  enforceable  against the
Borrower in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency,  reorganization,  moratorium or
similar laws affecting the enforcement of creditors' rights generally.

         (e) The audited  consolidated  balance sheet of the Borrower as at June
30,  1996,  and the  related  consolidated  audited  statements  of  income  and
stockholders'  equity of the Borrower for the fiscal year then ended,  copies of
which  have been  furnished  to each  Lender,  fairly  present  in all  material
respects the  consolidated  financial  condition of the Borrower as at such date
and the  consolidated  results of the  operations of the Borrower for the period
ended  on such  date,  all in  accordance  with  generally  accepted  accounting
principles  consistently  applied  except as noted  therein,  and since June 30,
1996,  there has been no  material  adverse  change in the  business,  financial
condition,  assets, properties or operations of the Borrower or the Borrower and
its Subsidiaries taken as a whole.

         (f) There is no pending or, to the knowledge of any Responsible Officer
of the Borrower,  threatened action or proceeding  affecting the Borrower or any
of its Subsidiaries before any court,  governmental agency or arbitrator,  which
(i)  is  reasonably   likely  to  be  adversely   determined  and  such  adverse
determination  would  likely  have a material  adverse  effect on the  business,
financial  condition,  assets,  properties  or operations of the Borrower or the
Borrower and its  Subsidiaries  taken as a whole, or (ii) purports to affect the
legality, validity or enforceability of this Agreement or any Note.

         (g) The Borrower is not engaged in the business of extending credit for
the  purpose of  purchasing  or  carrying  margin  stock  (within the meaning of
Regulation U issued by the Board of Governors  of the Federal  Reserve  System),
and no  proceeds  of any  Advance  will be used to  purchase or carry any margin
stock or to extend  credit to others for the purpose of  purchasing  or carrying
any margin stock.

         (h) The Borrower and each of its  Restricted  Subsidiaries  has met its
minimum  funding  requirements  under ERISA with respect to all of its Plans and
has  not  incurred  any  material  liability  to the  Pension  Benefit  Guaranty
Corporation  under ERISA in connection with any such Plan. No ERISA  Termination
Event has occurred and is continuing with respect to any Plan.

         (i)  The  Borrower  is  not  an  "investment   company"  or  a  company
"controlled"  by an "investment  company",  within the meaning of the Investment
Company Act of 1940, as amended.

         (j) Except as  disclosed  to the Agent and the Lenders in that  certain
letter dated  August 28, 1997 from the  Borrower to the Agent,  the Borrower and
its Restricted


<PAGE>


                                       31

Subsidiaries,  to the best knowledge of the Responsible Officers,  have obtained
the  right  to  use  all  patents,  trademarks,   service-marks,   trade  names,
copyrights,  licenses and other rights,  free from burdensome  restrictions,  or
could  obtain the same on terms and  conditions  not  materially  adverse to the
Borrower and its Restricted  Subsidiaries and their operations taken as a whole,
that are necessary for the operation of their respective businesses as presently
conducted  and for the  operation  of  businesses  described  to the  Lenders in
writing as proposed to be conducted.

         (k)  The  Borrower  has and  each  of its  Subsidiaries  has  good  and
indefeasible title to all material  properties,  assets and rights of every type
and nature now  purported  to be owned by it (other than  properties  and assets
disposed of in the ordinary course of business),  subject to no Lien of any kind
except Liens permitted by Section 5.02(a). All leases material to the conduct of
the  respective  businesses  of the Borrower and its  Subsidiaries  as currently
conducted are valid and subsisting and are in full force and effect.

         (l) The Borrower has and each of its Restricted  Subsidiaries has filed
all Federal,  State and other tax returns  which,  to the best  knowledge of the
Borrower, are required to be filed, and each has paid all taxes as shown on such
returns and on all assessments received by it to the extent that such taxes have
become  due,  except  such  taxes  as are  being  contested  in  good  faith  by
appropriate proceedings and for which adequate reserves have been established in
accordance with generally  accepted  accounting  principles and except where (i)
nonpayment  thereof  will not have a material  adverse  effect on the  business,
financial condition,  assets, properties or operations of the Borrower or of the
Borrower  and its  Subsidiaries  taken  as a  whole,  and  (ii)  either  (A) the
aggregate  unpaid  amount  thereof  is less than  $1,000,000,  or (B) the unpaid
amount  thereof  shall  be  paid in  full  promptly  upon  the  Borrower  or the
Restricted  Subsidiary  owing the same  obtaining  knowledge of the  delinquency
thereof, together with any penalties payable as a result of such delinquency.

         (m) Neither the Borrower nor any of its  Subsidiaries is a party to any
contract or agreement or subject to any charter or other  corporate  restriction
which  materially  and  adversely  affects the  business,  financial  condition,
assets,  properties  or  operations  of the  Borrower  or the  Borrower  and its
Subsidiaries  taken as a whole.  Neither  the  execution  nor  delivery  of this
Agreement or the Notes,  nor  fulfillment of nor  compliance  with the terms and
provisions  hereof or thereof will  conflict  with, or result in a breach of the
terms,  conditions or provisions of, or constitute a default under, or result in
any  violation  of,  or  result  in the  creation  of any  Lien  upon any of the
properties  or  assets of the  Borrower  or any of its  Restricted  Subsidiaries
pursuant  to, the charter or by-laws of the  Borrower  or any of its  Restricted
Subsidiaries,  any  award of any  arbitrator  or any  agreement  (including  any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the Borrower or any of its  Restricted  Subsidiaries
is subject.


<PAGE>

                                       32


         (n) The documents, certificates and written statements furnished by any
Responsible Officer to the Agent or any Lender pursuant to any provision of this
Agreement or any other agreement,  document or instrument delivered to the Agent
or any Lender pursuant hereto or in connection herewith, taken together with all
such other documents,  certificates and written  statements,  do not contain any
untrue  statement of a material fact or omit any material fact necessary to make
the statements made therein, taken together, in light of the circumstances under
which they were made,  not  misleading.  It is  recognized  by the Agent and the
Lenders that projections and forecasts provided by or on behalf of the Borrower,
although  reflecting the Borrower's good faith projections or forecasts based on
methods and data which the Borrower believes to be reasonable and accurate,  are
not to be viewed as facts and that actual  results  during the period or periods
covered by any such  projections  and  forecasts  may (and are likely to) differ
from the projected or forecasted results.

         (o) Listed on Exhibit H attached hereto are all of the  Subsidiaries of
the  Borrower  as of the  date  of  this  Agreement,  identifying  which  of the
Subsidiaries   constitute  Restricted  Subsidiaries  as  of  the  date  of  this
Agreement.  All of the issued and  outstanding  shares (other than shares of any
foreign Subsidiary required by applicable local law to be issued to directors of
such foreign Subsidiary or shares of foreign  Subsidiaries  issued to Persons to
satisfy local  ownership  requirements  imposed by applicable  local law) of the
capital stock of each  Subsidiary  owned by the Borrower or any  Subsidiary  are
duly  issued and  outstanding,  fully paid and  non-assessable  and are free and
clear of any Lien.

         (p) In the ordinary  course of its business,  the Borrower  conducts an
ongoing review of the effect of Environmental  Laws on the business,  operations
and properties of the Borrower and its  Subsidiaries,  in the course of which it
identifies and evaluates  associated  liabilities and costs (including,  without
limitation,  any capital or  operating  expenditures  required  for  clean-up or
closure of its  properties,  any capital or operating  expenditures  required to
achieve or maintain compliance with environmental  protection  standards imposed
by law or as a  condition  of any  license,  permit  or  contract,  any  related
constraints  on  operating  activities,  including  any  periodic  or  permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations  conducted  thereat and any actual or potential  liabilities to third
parties,  including employees, and any related costs and expenses). On the basis
of this review,  the Borrower has reasonably  concluded that  Environmental Laws
are not  likely to have a material  adverse  effect on the  business,  financial
condition,  assets, properties or operations of the Borrower or the Borrower and
its Subsidiaries taken as a whole.


<PAGE>

                                       33

                                    ARTICLE V

                            COVENANTS OF THE BORROWER

         SECTION  5.01.  Affirmative  Covenants.  So long as any amount  payable
hereunder  or under any Note shall  remain  unpaid or any Lender  shall have any
Commitment  hereunder,  the Borrower  will,  unless the Majority  Lenders  shall
otherwise consent in writing:

         (a)  Compliance  with  Laws,  Etc.  Comply,   and  cause  each  of  its
Subsidiaries  to comply,  in all material  respects  with all  applicable  laws,
rules,  regulations and orders of any governmental authority,  the noncompliance
with which would materially adversely affect the business,  financial condition,
assets,  properties  or  operations  of the  Borrower  or the  Borrower  and its
Subsidiaries taken as a whole.

         (b) Payment of Taxes and Claims.  Pay, and cause each of its Restricted
Subsidiaries  to pay,  all taxes,  assessments  and other  governmental  charges
imposed upon it or any of its  properties  or assets or in respect of any of its
franchises,  business,  income or profits before any penalty  accrues thereon or
immediately  upon any  determination  that any interest is due thereon,  and all
claims (including, without limitation, claims for labor, services, materials and
supplies)  for sums which have  become due and  payable and which by law have or
may become a Lien upon any of its  properties  or assets;  provided that no such
tax,  assessment,  charge or claim need be paid if it is being contested in good
faith by appropriate  proceedings  promptly instituted and diligently  conducted
and if such accrual or other appropriate provision, if any, as shall be required
by  generally  accepted  accounting  principles  shall have been made  therefor;
provided,  further,  that the Borrower shall not be deemed to have breached this
Section  5.01(b)  on account  of the  failure  to pay any such tax,  assessment,
charge  or claim if (i)  nonpayment  thereof  will not have a  material  adverse
effect on the business, financial condition, assets, properties or operations of
the Borrower or the Borrower and its Restricted  Subsidiaries  taken as a whole,
and (ii) either (A) the aggregate unpaid amount thereof is less than $1,000,000,
or (B) the  unpaid  amount  thereof  shall  be paid in full  promptly  upon  the
Borrower or the Restricted  Subsidiary owing the same obtaining knowledge of the
delinquency  thereof,  together with any  penalties  payable as.a result of such
delinquency.

         (c) Maintenance of Properties;  Insurance;  Books and Records. Maintain
or cause to be  maintained,  and cause each of its  Restricted  Subsidiaries  to
maintain  or cause to be  maintained  (i) to the  extent  consistent  with  good
business practices,  in good repair,  working order and condition all properties
material  to the  continued  conduct of the  business  of the  Borrower  and its
Subsidiaries  taken as a whole,  and from  time to time will make or cause to be
made all  necessary  repairs,  renewals  and  replacements  thereof;  (ii)  with
financially  sound  and  reputable  insurers,  insurance  with  respect  to  its
properties  and  business  and the  properties  and  business of its  Restricted
Subsidiaries against loss or damage of the

<PAGE>

                                       34

kinds  customarily  insured against by  corporations  of established  reputation
engaged in the same or similar  business and similarly  situated,  of such types
and in such amounts as are customarily  carried under similar  circumstances  by
such other corporations ("Industry  Standards");  provided that the Borrower and
its  Restricted  Subsidiaries  may self  insure to the  extent,  and only to the
extent, consistent with Industry Standards; and (iii) proper books of record and
account in accordance with generally accepted accounting principles consistently
applied.

         (d) Corporate  Existence,  etc. At all times  preserve and keep in full
force and effect its corporate  existence,  and corporate  rights and franchises
material  to its  business,  and those of each of its  Restricted  Subsidiaries,
except as  otherwise  specifically  permitted  by  Sections  5.02(b).  5.02(d)or
5.02(e),  and will qualify,  and cause each of its  Restricted  Subsidiaries  to
qualify,  to do business in any  jurisdiction  where the failure to do so (i) is
remedied  within a  reasonable  time  period  after a  Responsible  Officer  has
knowledge of any such failure,  and (ii) will not have a material adverse effect
on the business,  financial condition,  assets,  properties or operations of the
Borrower or the Borrower and its  Subsidiaries  taken as a whole;  provided that
the corporate  existence of any  Subsidiary  may be  terminated  if, in the good
faith judgment of the Board of Directors of the Borrower, such termination is in
the best interests of the Borrower and is not disadvantageous to the Lenders.

         (e) Reporting Requirements. Furnish to the Lenders:

                  (i) as soon as available and in any event within 45 days after
     the end of each of the first three  fiscal  quarters of each fiscal year of
     the Borrower,  the unaudited  consolidated balance sheet of the Borrower as
     of the end of such quarter and consolidated unaudited statements of income,
     stockholders'  equity  and  cash  flow  of  the  Borrower  for  the  period
     commencing  at the end of the previous  fiscal year and ending with the end
     of  such  quarter,  setting  forth  in  comparative  form  figures  for the
     corresponding  period in the  preceding  fiscal  year,  in the case of such
     statements of income,  stockholders'  equity  and.cash flow, and figures at
     the end of the preceding fiscal year in the case of such balance sheet, all
     in reasonable  detail,  in accordance  with generally  accepted  accounting
     principles  consistently  applied  (except as noted  therein and subject to
     normal  year-end  adjustments),   and  certified  in  a  manner  reasonably
     acceptable to the Majority  Lenders by a Responsible  Financial  Officer of
     the Borrower;

                  (ii) as soon as  available  and in any  event  within  90 days
     after the end of each fiscal year of the Borrower, the consolidated balance
     sheet of the  Borrower as of the end of such  fiscal year and  consolidated
     statements  of income,  stockholders'  equity and cash flow of the Borrower
     for the period commencing at the end of the previous fiscal year and ending
     with the end of such fiscal year, setting forth in comparative form figures
     for the preceding fiscal year, all in reasonable


<PAGE>

                                       35

     detail,  in  accordance  with  generally  accepted  accounting   principles
     consistently  applied (except as noted therein),  and certified in a manner
     reasonably  acceptable  to  the  Majority  Lenders  by  independent  public
     accountants of recognized  national standing  reasonably  acceptable to the
     Majority Lenders;

                  (iii)  together  with the  financial  statements  furnished in
     accordance with subdivisions (i) and (ii) of this Section 5.01(e) except as
     noted with respect to clause (d) hereof,  a  certificate  of a  Responsible
     Financial  Officer of the Borrower in the form of Exhibit F attached hereto
     (a)  representing  and  warranting  that no Event of Default or Default has
     occurred and is continuing  (or, if such an Event of Default or Default has
     occurred,  stating  the nature  thereof and the action  which the  Borrower
     proposes  to take with  respect  thereto),  (b)  setting  forth a  schedule
     containing the information and calculations  with respect to the Borrower's
     compliance with Sections 5.01(h)- 5.01(i) and 5.02(h), (c) stating that the
     representations  and  warranties  contained  in  Section  4.01 are true and
     correct on and as of the date of such  certificate as though made on and as
     of such date  (except  to the extent  such  representations  or  warranties
     specifically  relate to an earlier  date,  in which case they shall be true
     and correct as of such date),  and (d) only as to the financial  statements
     furnished in  accordance  with  subdivision  (ii) of this Section  5.01(e),
     setting  forth  all  changes,  if any,  to  Exhibit H since the date of the
     previous certificate furnished to the Lenders hereunder;  provided that the
     Borrower  may, if no Advance is  outstanding  and no other  amount  payable
     hereunder  or under the  Notes is then  unpaid,  elect  not to  submit  the
     statement  otherwise  required pursuant to the foregoing clause (c) so long
     as such statement is made at least once each calendar year;

         (iv) as soon as  possible  and in any event  within  five days  after a
     Responsible Officer or a Responsible  Financial Officer knows or has reason
     to know of the  occurrence  of any Default  that is not an Event of Default
     (provided,  with respect to any such  Default,  at the time of such Default
     any Advance is outstanding  or any other amount payable  hereunder or under
     the Notes shall remain  unpaid) and any Event of Default,  a statement of a
     Responsible Financial Officer of the Borrower setting forth details of such
     Event of Default or Default and the action which the Borrower has taken and
     proposes to take with respect thereto;

         (v)  promptly  after  the  same  are  sent,  copies  of  all  financial
     statements  and  reports  which  the  Borrower  sends  to its  shareholders
     generally;  and  promptly  after  the same are  filed,  copies of all final
     registration  statements  on Form S-1,  S-2, S-3 or S-4  (without  exhibits
     unless  specifically  requested)  or  their  successor  forms  relating  to
     offerings  of debt or equity by the  Borrower  and copies of all reports on
     Form  10-K,  Form  10-Q  and Form 8-K or  their  successor  forms  (without
     exhibits unless specifically  requested) which the Borrower may make to, or
     file with,  the  Securities  and Exchange  Commission  or any  successor or
     similar governmental entity;

<PAGE>

                                       36


         (vi) as soon as  practicable  and in any event (a) within 30 days after
     any Responsible  Officer or any Responsible  Financial Officer knows or has
     reason to know that any ERISA  Termination Event described in clause (i) of
     the  definition  of ERISA  Termination  Event with  respect to Any Plan has
     occurred  and (b)  within 10 days  after  any  Responsible  Officer  or any
     Responsible  Financial  Officer  knows or has reason to know that any other
     ERISA Termination Event with respect to any Plan has occurred,  a statement
     of a Responsible  Financial  Officer of the Borrower  describing such ERISA
     Termination  Event and the action, if any, which the Borrower or such ERISA
     Affiliate proposes to take with respect thereto;

         (vii)  promptly  upon  receipt  thereof,  a copy of each other  summary
     report  in its final  form  submitted  to the  Borrower  or any  Restricted
     Subsidiary for delivery to, or which is actually delivered to, the Board of
     Directors of the Borrower by independent accountants in connection with any
     annual,  interim or special audit made by them of the books of the Borrower
     or any Restricted Subsidiary;

         (viii) promptly after a Responsible Officer or a Responsible  Financial
     Officer knows or has reason to know thereof,  notice of all actions,  suits
     and   proceedings   before   any  court  or   governmental   authority   or
     instrumentality  affecting the Borrower or any of its  Subsidiaries  of the
     type described in Section 4.01(f),  and promptly after any material adverse
     development or change in the status of any such continuing action,  suit or
     proceeding, notice of such development or change;

         (ix) promptly  after a Responsible  Officer or a Responsible  Financial
     Officer knows or has reason to know thereof, notice of any violation of any
     Environmental  Law that is reported or reportable by the Borrower or any of
     its Subsidiaries to any federal,  state or local environmental  agency that
     could be  reasonably  expected  to have a  material  adverse  effect on the
     business,  financial  condition,  assets,  properties  or operations of the
     Borrower or the Borrower and its Subsidiaries taken as a whole;

         (x) (a) promptly after any termination of any commitment (other than at
     the  request of the  Borrower or any of its  Subsidiaries)  pursuant to any
     Permitted  Receivables Facility,  notice of such termination;  (b) promptly
     after any change in any collection  agent or similar entity pursuant to any
     Permitted  Receivables  Facility (other than  designation of any collection
     agent  affiliated with the Borrower),  notice of such change;  (c) promptly
     after any material change in the financial  institutions  participating  in
     any  Permitted  Receivables  Financing,  notice  of  such  change;  and (d)
     promptly after the execution and delivery thereof,  copies of any Permitted
     Receivables Facility and all amendments thereto, whether or not the consent
     thereto of the Lenders is required hereunder; and


<PAGE>

                                       37

         (xi) such other  information  respecting  the condition or  operations,
     financial  or  otherwise   (including,   without  limitation,   information
     pertaining to any change in accounting  principles  adopted by the Borrower
     or any of its domestic  Subsidiaries (or any of its foreign Subsidiaries if
     such change in accounting  principles  would have a material  effect on the
     financial condition, operating performance or cash flow of the Borrower and
     its  Subsidiaries  taken as a whole) during any fiscal year of the Borrower
     and the effect thereof on the financial condition, operating performance or
     cash flow of the Borrower and its  Subsidiaries  taken as a whole),  of the
     Borrower  or any of its  Subsidiaries  as any Lender  through the Agent may
     from time to time reasonably request.

     (f)  Inspection  of  Property.  Permit  any  employee  of,  or  independent
financial,  legal,  environmental  or other  professional  consultant or advisor
(other than a Person that is or is  affiliated  with a direct  competitor of the
Borrower)  retained  by,  the  Agent  or any of the  Lenders  or any  agents  or
representatives  thereof,  at the Agent's or such Lender's expense, to visit and
inspect any of the properties of the Borrower and its  Subsidiaries,  to examine
the corporate books and financial  records of the Borrower and its  Subsidiaries
and make copies thereof or extracts  therefrom (except that the Borrower,  as to
any information certified by the Borrower as constituting trade secrets or other
proprietary information of a non-financial nature, in a certificate delivered to
the Agent or Lender who has  requested  copies or extracts of such  information,
may in its discretion refuse to allow such copies or extracts to be made) and to
discuss the affairs,  finances and accounts of any of such corporations with the
principal officers of the Borrower or its independent public accountants (and by
this  provision the Borrower  authorizes  such  accountants  to discuss with any
Person so designated the affairs,  finances and accounts of the Borrower and its
Subsidiaries,  whether or not the Borrower is present),  all at such  reasonable
times and as often as the Agent or any Lender may  reasonably  request,  in each
case as to matters  reasonably  related to this  Agreement  or the  transactions
contemplated hereby or the interests of the Agent or the Lenders hereunder.

     (g) Use of Proceeds. The proceeds of all Advances shall be used for general
corporate  purposes,  including,  without  limitation,  the  retirement of Debt.
Notwithstanding  any other term or  provision  set forth in this  Agreement,  no
portion of any Advance may be used to initiate or participate in the acquisition
of a  controlling  interest  in the  Voting  Stock or assets of any  corporation
unless such  acquisition is made with the consent of such  corporation  and does
not otherwise violate the terms and provisions of this Agreement.

     (h) Debt to Consolidated  Tangible Net Worth Ratio. Maintain a ratio of (A)
Consolidated Debt of the Borrower, to (B) Consolidated Tangible Net Worth of not
more than 0.45 to 1.00.


<PAGE>

                                       38

     (i) Fixed Charge Ratio. Maintain (i) as of the last day of the first fiscal
quarter of each fiscal year of the Borrower a ratio of (A) Adjusted  EBIT of the
Borrower  determined on a consolidated  basis for the 12-month  period ending on
such date,  to (B)  consolidated  Fixed Charges of the Borrower for the 12-month
period  ending on such date,  of not less than 1.25 to 1.00;  and (ii) as of the
last day of the second,  third and fourth fiscal quarters of each fiscal year of
the  Borrower a ratio of (A)  Adjusted  EBIT of the  Borrower  for the  12-month
period  ending on such date, to (B)  consolidated  Fixed Charges of the Borrower
for the 12-month  period  ending on such date, of not less than 1.50 to 1.00, in
each case determined on a consolidated basis.

     SECTION 5.02. Negative  Covenants.  So long as any amount payable hereunder
or under any Note shall remain  unpaid or any Lender  shall have any  Commitment
hereunder,  the Borrower will not,  without the written  consent of the Majority
Lenders:

     (a) Liens,  Excess  Interest in  Receivables,  Etc.  (i) Create,  assume or
suffer to exist, or permit any Subsidiary to create,  assume or suffer to exist,
any Lien upon any of its  property  or assets,  whether  now owned or  hereafter
acquired , or any Excess Interest in Receivables, except

                  (A) Liens  for  taxes not yet due or which are being  actively
         contested in good faith by appropriate proceedings,

                  (B) other Liens  incidental  to the conduct of its business or
         the  ownership  of its  property  and assets which were not incurred in
         connection  with the borrowing of money or the obtaining of advances of
         credit,  and which do not in the aggregate  materially detract from the
         value of its  property or assets or  materially  impair the use of such
         property or assets in the operation of its business,

                  (C) Liens  existing on the  property or assets of the Borrower
         or any  Subsidiary  on the  date of this  Agreement  and set  forth  on
         Exhibit G,

                  (D) Liens on  property  or assets  of a  Subsidiary  to secure
         obligations  of such  Subsidiary  to the  Borrower  or a  wholly  owned
         Subsidiary,

                  (E) any Lien created to secure the  purchase  price or cost of
         construction,  or to secure Debt incurred to pay the purchase  price or
         cost of construction,  of any property  acquired by the Borrower or any
         Subsidiary  after the date hereof or any  improvements to real property
         constructed  by or for the account of the  Borrower  or any  Subsidiary
         after  the  date  hereof;  provided  that (x) any  such  Lien  shall be
         confined  solely  to the item or  items  of  property  so  acquired  or
         constructed (and any theretofore unimproved real property on


<PAGE>

                                       39

         which such  improvements  are located),  and (y) any such Lien shall be
         created concurrently with or within 12 months following the acquisition
         of such property or the  completion  of  construction  of  improvements
         thereon,

                  (F) Liens on accounts  receivable and related  property of any
         Subsidiary and/or on any such related property of the Borrower, in each
         case  subject  to a  Permitted  Receivables  Facility  and  created  in
         connection with such Permitted Receivables Facility,

                  (G) Liens existing on property  including the proceeds thereof
         and  accessions  thereto  acquired by the  Borrower  or any  Subsidiary
         (including  Liens on assets of any corporation at the time it becomes a
         Subsidiary,  unless  such Lien was  created  in  contemplation  of such
         corporation becoming a Subsidiary),

                  (H) Liens  which  constitute  rights of set-off of a customary
         nature or bankers'  Liens with  respect to amounts on deposit,  whether
         arising  by  operation  of  law  or by  contract,  in  connection  with
         arrangements  entered  into  with  banks  in  the  ordinary  course  of
         business,  including rights of set-off created pursuant to or by virtue
         of this Agreement and the Notes,

                  (I) leases or subleases and license and sublicenses granted to
         others in the ordinary  course of the  Borrower's  or any  Subsidiary's
         business not  interfering in any material  respect with the business of
         the Borrower and its Subsidiaries taken as a whole, and any interest or
         title of a lessor or licensor under any lease or license,

                  (J) Liens arising from  judgments,  decrees or  attachments in
         circumstances  not  constituting  an Event  of  Default  under  Section
         6.01(i), and Liens to secure appeal bonds,  supersedeas bonds and other
         similar Liens arising in connection with court proceedings  (including,
         without  limitation,  surety  bonds and letters of credit) or any other
         instrument serving a similar purpose; provided, however, that the total
         amount secured by Liens described in this subsection (J) may not exceed
         at any  time 5% of  Consolidated  Tangible  Net  Worth  (plus  Liens so
         described  that are  permitted in accordance  with Section  5.02(a)(ii)
         below),

                  (K)  easements,  reservations,  rights-of-way,   restrictions,
         minor defects or  irregularities  in title and other similar charges or
         encumbrances  affecting  real property not  interfering in any material
         respect with the  ordinary  conduct of the business of the Borrower and
         its Subsidiaries taken as a whole,


<PAGE>

                                       40

                  (L) Liens in favor of customs and revenue  authorities arising
         as a matter of law to secure  payment of customs  duties in  connection
         with the importation of goods, and

                  (M) any  Lien  renewing,  extending,  or  refunding  any  Lien
         permitted  under  clauses (A) through (L),  inclusive,  of this Section
         5.02(a);  provided that the principal  amount  secured is not increased
         and that  such  Lien is not  extended  to other  property  (other  than
         pursuant to its original terms).

         (ii)  Notwithstanding  the provisions  contained in subdivision  (i) of
     this Section  5.02(a),  in addition to the permitted Liens described above,
     the Borrower and its  Subsidiaries,  or any of them, may create,  assume or
     suffer to exist other Liens and Excess  Interest in  Receivables  if, after
     giving  effect  thereto  and  to  the  retirement  of  any  Debt  which  is
     concurrently  being retired,  the aggregate of (A) the total amount of Debt
     then secured by such Liens,  and (B) the total amount of Excess Interest in
     Receivables then existing, does not exceed 10% of Consolidated Tangible Net
     Worth; provided,  however, if the aggregate of (A) the total amount of Debt
     then secured by such Liens,  and (B) the total amount of Excess Interest in
     Receivables then existing,  exceeds 10% of Consolidated Tangible Net Worth,
     no  Event  of  Default   shall  occur   hereunder   provided  the  Borrower
     simultaneously  therewith  makes or causes to be made  effective  provision
     whereby the indebtedness  evidenced by this Agreement and the Notes will be
     secured by such Liens  (pursuant  to  documentation  in form and  substance
     reasonably  satisfactory to the Agent and the Majority Lenders) equally and
     ratably with any and all other Debt  thereby  secured so long as such other
     Debt shall be so secured.

     (b) Merger and  Consolidation.  Merge  into or  consolidate  with or into a
corporation,  or permit any  Subsidiary to do so, except that (i) any Subsidiary
may merge or consolidate  with any other Subsidiary and any Subsidiary may merge
into the  Borrower,  (ii) the Borrower may merge or  consolidate  with any other
corporation;  provided that (A) either (1) the Borrower  shall be the continuing
or surviving  corporation,  or (2) the successor  corporation shall be a solvent
corporation  organized  under  the laws of any  State of the  United  States  of
America with a financial condition at least equal to that of the Borrower at the
time of such  merger or  consolidation,  and such  corporation  shall  expressly
assume in writing all of the  obligations  of the Borrower  under this Agreement
and under the Notes,  including all covenants herein and therein contained which
assumption shall not otherwise violate any term,  condition or provision of this
Agreement or the Notes, and such successor shall be substituted for the Borrower
with the same effect as if it had been named herein as a party  hereto,  and (B)
immediately after giving effect to such merger or  consolidation,  no Default or
Event of  Default  shall have  occurred,  (iii) a  Subsidiary  may merge into or
consolidate  with a corporation in connection with such  corporation  becoming a
Subsidiary  or being  combined with any existing  Subsidiary,  and (iv) provided
that the disposition of such


<PAGE>

                                       41

Subsidiary  is not  otherwise  prohibited  under  the  terms  of this  Agreement
(including pursuant to Section 5.02(d)(ii) below), any Subsidiary may merge into
or  consolidate  with a  corporation,  if after giving  effect to such merger or
consolidation, neither such Subsidiary nor such corporation is a Subsidiary.

     (c) Change in Nature of Business.  Make, or permit any  Subsidiary to make,
any  material  change in the  nature of its  business  as carried on at the date
hereof; provided, however, that the Borrower and its Subsidiaries-may enter into
businesses  which are  appropriate  extensions of or are  reasonably  related or
incidental to the current businesses of the Borrower and its Subsidiaries.

     (d) Maintenance of Ownership of Subsidiaries.  Sell or otherwise dispose of
any shares of capital stock of any Subsidiary or permit any Subsidiary to issue,
sell or  otherwise  dispose of any shares of its  capital  stock or the  capital
stock of any other Subsidiary, except

                  (i) to the Borrower or another Subsidiary;

                  (ii) that all  shares of stock of any  Subsidiary  at the time
         owned by the Borrower or any  Subsidiary may be sold as an entirety for
         a consideration  which represents the fair value (as determined in good
         faith by the Board of Directors of the Borrower) at the time of sale of
         the shares of stock so sold;  provided  that after giving effect to the
         sale thereof the sum of (A) the total assets of all Subsidiaries  whose
         stock is so sold  pursuant  to this  clause (ii) after the date of this
         Agreement, plus (B) the total assets of all Subsidiaries that have been
         merged into or consolidated with a corporation  pursuant to clause (iv)
         of Section  5.02(b) after the date of this  Agreement,  does not exceed
         15% of the consolidated total assets of the Borrower;

                  (iii) shares of stock of any  Subsidiary may be sold if, after
         giving  effect to such sale,  such  Subsidiary  shall  continue to be a
         Subsidiary; and

                  (iv) shares of stock of any foreign  Subsidiary  may be issued
         to directors of such foreign  Subsidiary to satisfy director  ownership
         requirements  imposed  by  applicable  local law and shares of stock of
         foreign  Subsidiaries  may be issued to Persons to the extent necessary
         to satisfy local  ownership  requirements  imposed by applicable  local
         law.

         (e) Sales,  Etc.  of Assets.  Transfer,  or permit  any  Subsidiary  to
Transfer any assets,  if after giving effect to such Transfer the sum of (1) the
total assets as to which there has been a Transfer not  permitted by clauses (i)
or (ii) of this Section 5.02(e) after the date of this  Agreement,  plus (2) the
total assets of all Subsidiaries  whose stock is sold pursuant to clause (ii) of
Section 5.02(d) after the date of this Agreement, plus (3) the total


<PAGE>

                                       42

assets of all  Subsidiaries  that have been merged into or  consolidated  with a
corporation  pursuant to clause (iv) of Section  5.02(b)  after the date of this
Agreement,  would exceed 20% of the  consolidated  total assets of the Borrower,
except that:

         (i) any Subsidiary may Transfer any of its assets to the Borrower or to
     another  Subsidiary and the Borrower may Transfer  assets to a wholly-owned
     Subsidiary  that had been  transferred  to the  Borrower  from a Subsidiary
     after the date of this Agreement; and

         (ii) the provisions of this Section  5.02(e) shall not apply to (A) any
     Transfer  made in the  ordinary  course of  business,  (B) any  Transfer of
     obsolete  assets,  (C) any  Transfer by the Borrower or any  Subsidiary  of
     assets (but not of all or substantially all of its assets) if such Transfer
     is made  pursuant to a plan to replace the assets  subject to such Transfer
     and such  replacement  occurs no later than six months  after the  Transfer
     (or, if replacement is not reasonable by such date, binding  commitments to
     construct and/or acquire replacement assets shall have been entered into no
     later than six months after the Transfer and such  replacement  shall occur
     within a  reasonable  period  of time,  which  shall in no event  exceed 18
     months),  or (D) the sale of notes, leases and accounts receivable pursuant
     to and in accordance with the terms of a Permitted  Receivables Facility by
     Borrower or any Subsidiary.

     (f) Sale of Receivables.  Sell with recourse, or discount or otherwise sell
for less than the face  value  thereof,  or sell with or  without  recourse  for
consideration  other than cash, or permit any  Subsidiary to sell with recourse,
or discount or otherwise sell for less than the face value thereof, or sell with
or without  recourse  for  consideration  other  than cash,  any of its notes or
accounts receivable; provided that the foregoing restrictions shall not apply to
(i) any  license or sale of  products  or  services  in the  ordinary  course of
business where payment For such  transactions  is made by credit card;  provided
that the fees and  discounts  incurred  by the  Borrower  or the  Subsidiary  in
connection  therewith  shall  not  exceed  the  normal  and  customary  fees and
discounts  incurred for general  credit card  transactions  through major credit
card issuers;  (ii) the delivery and endorsement to banks in the ordinary course
of  business by the  Borrower or any of its  Subsidiaries  of  promissory  notes
received in payment of trade  receivables,  where delivery and  endorsement  are
made prior to the date of maturity of such promissory  notes,  and the retention
by said banks of normal and customary fees and discounts therefor; provided that
such practice is usual and customary in the country where such activity  occurs;
and (iii) any sale of notes or accounts receivable (or interests therein) by the
Borrower or any Subsidiary in connection with a Permitted Receivables Facility.

     (g) Subsidiary Debt. Permit any Subsidiary  organized under the laws of any
State of the United  States of America  to  create,  incur,  assume or suffer to
exist any Debt if, after giving effect thereto and to the  concurrent  repayment
of any other Debt, the

<PAGE>

                                       43

aggregate Debt of all such Subsidiaries will exceed  $300,000,000 (not including
Debt  of  Subsidiaries   incurred  in  connection  with  Permitted   Receivables
Facilities).


                                   ARTICLE VI

                                EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:

     (a) the  Borrower  shall fail to pay (i) any  principal of any Advance when
the same  becomes due and  payable;  or (ii) any  interest on any Advance or any
fees payable  hereunder within five Business Days after the same becomes due; or
(iii) any other amounts payable  hereunder within 30 days of the date of invoice
or written demand therefor; or

     (b) any  representation  or warranty made by the Borrower  herein or by the
Borrower (or any of its officers) in connection  with this Agreement shall prove
to have been incorrect in any material respect when made; or

     (c) the Borrower  shall fail.  to perform or observe any term,  covenant or
agreement contained in Sections 5.01(h),  5.01(i),  5.02(b),  5.02(c),  5.02(d),
5.02(e), 5.02(g) or 5.02(h); or

     (d) the  Borrower  shall fail to perform or observe  any term,  covenant or
agreement  contained in this  Agreement  (other than those  covered by the other
clauses of this  Section  6.01) on its part to be  performed  or observed if the
failure to perform or observe  such other  term,  covenant  or  agreement  shall
remain unremedied for 30 days after written notice thereof shall have been given
to the Borrower by the Agent at the request of any Lender; or

     (e) (i)  the  Borrower  or any of its  Subsidiaries  shall  fail to pay any
principal  of or  premium or  interest  on any Debt  which is  outstanding  in a
principal  amount of at least  $10,000,000  in the aggregate (but excluding Debt
outstanding  hereunder) of the Borrower or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled  maturity,  required
prepayment,  acceleration, demand or otherwise), and such failure shall continue
after the  applicable  grace  period,  if any,  specified  in the  agreement  or
instrument  relating to such Debt;  or any other event shall occur or  condition
shall  exist under any  agreement  or  instrument  relating to any such Debt and
shall  continue  after the applicable  grace period,  if any,  specified in such
agreement or instrument; but only if the effect of such failure to pay, event or
condition is to accelerate  the maturity of such Debt; or any such Debt shall be
declared by the creditor to be due and payable, or required


<PAGE>

                                       44

to be  prepaid  (other  than  by a  regularly  scheduled  required  prepayment),
redeemed,  purchased or  defeased,  or an offer to prepay,  redeem,  purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity  thereof;  or (ii) any event shall occur or condition shall exist under
any agreement or  instrument  relating to any Debt of the Borrower or any of its
Subsidiaries  outstanding in a principal  amount in excess of $50,000,000 in the
aggregate  and  shall  continue  after  the  applicable  grace  period,  if any,
specified  in such  agreement  or  instrument,  if the  effect of such  event or
condition is to permit the acceleration by the creditor of, the maturity of such
Debt; or

     (f) the Borrower or any of its  Subsidiaries  shall  generally  not pay its
debts as such debts  become due, or shall admit in writing its  inability to pay
its debts  generally,  or shall  make a general  assignment  for the  benefit of
creditors;  or any proceeding  shall be instituted by or against the Borrower or
any of its  Subsidiaries  seeking to adjudicate  it a bankrupt or insolvent,  or
seeking  liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief, or composition of it or its debts under any law relating to
bankruptcy,  insolvency or reorganization  or relief of debtors,  or seeking the
entry  of an  order  for  relief  or the  appointment  of a  receiver,  trustee,
custodian or other similar  official for it or for any  substantial  part of its
property and, in the case of any such proceeding  instituted against it (but not
instituted by it), either such proceeding  shall remain  undismissed or unstayed
for a period  of 30  consecutive  days,  or any of the  actions  sought  in such
proceeding  (including,  without  limitation,  the entry of an order for  relief
against, or the appointment of a receiver,  trustee,  custodian or other similar
official for, it or for any  substantial  part of its property)  shall occur; or
the  Borrower  or any of its  Subsidiaries  shall take any  corporate  action to
authorize any of the actions set forth above in this subsection (f); or

     (g) any order, judgment or decree is entered in any proceedings against the
Borrower or any Material Subsidiary decreeing the dissolution of the Borrower or
such Material Subsidiary and such order, judgment or decree remains unstayed and
in effect for more than 60 consecutive days; or

     (h) any order, judgment or decree is entered in any proceedings against the
Borrower or any Material Subsidiary decreeing a split-up of the Borrower or such
Material  Subsidiary  which requires the  divestiture  of assets  representing a
substantial part, or the divestiture of the stock of a Material Subsidiary whose
assets represent a substantial part, of the consolidated  assets of the Borrower
(determined in accordance  with  generally  accepted  accounting  principles) or
which  requires the  divestiture of assets,  or stock of a Material  Subsidiary,
which shall have  contributed a substantial  part of the consolidated net income
of the Borrower  (determined in accordance  with generally  accepted  accounting
principles) for any of the three fiscal years then most recently ended, and such
order,  judgment  or decree  remains  unstayed  and in  effect  for more than 60
consecutive days; or


<PAGE>

                                       45

     (i) a final  judgment  or order for the  payment of money in an amount (not
covered by insurance)  which exceeds  $10,000,000  shall be rendered against the
Borrower  or any of its  Subsidiaries  and;  prior to the payment in full of the
amount thereof,  either (i) enforcement proceedings shall have been commenced by
any creditor upon such  judgment or order,  or (ii) there shall be any period of
30  consecutive  days during  which a stay of  enforcement  of such  judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or

     (j) any ERISA  Termination  Event that the Lenders  determine in good faith
might constitute  grounds for the termination of any Plan or for the appointment
by the  appropriate  United States district court of a trustee to administer any
Plan shall have  occurred and be  continuing  for 30 days after  written  notice
shall  have  been  given to the  Borrower  by the  Agent,  or any Plan  shall be
terminated,  or a trustee  shall be appointed by an  appropriate  United  States
district  court  to  administer  any  Plan,  or  the  Pension  Benefit  Guaranty
Corporation  shall  institute  proceedings to terminate any Plan or to appoint a
trustee to administer any Plan;

     then,  and in any such event,  the Agent (i) shall at the  request,  or may
with the consent,  of the Majority Lenders,  by notice to the Borrower,  declare
the obligation of each Lender to make Advances to be  terminated,  whereupon the
same shall forthwith  terminate,  and (ii) shall at the request, or may with the
consent,  of the  Majority  Lenders,  by notice  to the  Borrower,  declare  the
Advances,  all  interest  thereon  and all  other  amounts  payable  under  this
Agreement to be forthwith  due and payable,  whereupon  the  Advances,  all such
interest  and all such amounts  shall  become and be forthwith  due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that if an Event
of Default specified in Section 6.01(f) shall occur or in the event of an actual
or deemed  entry of an order for relief with  respect to the  Borrower or any of
its subsidiaries  under the Federal  Bankruptcy Code, (A) the obligation of each
Lender to make Advances shall  automatically be terminated and (B) the Advances,
all such interest and all such amounts shall automatically become and be due and
payable, without presentment,  demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower.

     SECTION   6.02.   Mandatory   Prepayment;   Event  of  Early   Termination.
Notwithstanding  anything to the contrary  contained herein, in the event that a
Change of Control Event shall occur with respect to the Borrower,  the Agent (i)
shall at the request,  or may with the  consent,  of the  Majority  Lenders,  by
notice to the Borrower,  declare the  obligation of each Lender to make Advances
to be terminated,  whereupon the same shall forthwith terminate,  and (ii) shall
at the request,  or may with the consent,  of the Majority Lenders, by notice to
the Borrower,  declare the Advances,  all interest thereon and all other amounts
payable  under this  Agreement to be forthwith  due and payable,  whereupon  the
Advances,  all such  interest and all such amounts shall become and be forthwith
due and

<PAGE>

                                       46

payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower.


                                   ARTICLE VII

                                    THE AGENT

     SECTION 7.01.  Authorization  and Action.  Each Lender hereby  appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers  under this  Agreement  as are  delegated  to the Agent by the terms
hereof,  together with such powers as are reasonably  incidental  thereto. As to
any matters not expressly  provided for by this  Agreement  (including,  without
limitation, enforcement or collection of the amounts payable hereunder and under
the Notes),  the Agent shall not be required to exercise any  discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Majority Lenders,  and such  instructions  shall be binding upon all Lenders
and all  holders  of  Notes;  provided,  however,  that the  Agent  shall not be
required to take any action  which  exposes the Agent to personal  liability  or
which is contrary to this Agreement or applicable  law. The Agent agrees to give
to each Lender prompt notice of each notice given to it by the Borrower pursuant
to the terms of this Agreement.

     SECTION  7.02.  Agent's  Reliance,  Etc.  Neither  the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in  connection  with this  Agreement,
except  for its or their own gross  negligence  or willful  misconduct.  Without
limitation of the  generality  of the  foregoing,  the Agent:  (i) may treat the
payee of any Note as the holder  thereof until the Agent receives and accepts an
Assignment and Acceptance  entered into by the Lender which is the payee of such
Note,  as  assignor,  and an  assignee,  as provided in Section  8.07;  (ii) may
consult with legal counsel  (including  counsel for the  Borrower),  independent
public  accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in  accordance  with
the advice of such counsel,  accountants or experts;  (iii) makes no warranty or
representation  to any Lender and shall not be responsible to any Lender for any
statements,  warranties or representations  (whether written or oral) made in or
in connection with this Agreement;  (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions  of this  Agreement  on the part of the  Borrower  or to inspect  the
property  (including  the books and records) of the  Borrower;  (v) shall not be
responsible   to  any  Lender  for  the  due  execution,   legality,   validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument  or  document  furnished  pursuant  hereto;  and (vi) shall  incur no
liability  under or in  respect of this  Agreement  by acting  upon any  notice,
consent, certificate or other


<PAGE>

                                       47

instrument or writing  (which may be by  telecopier,  telegram,  cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.

     SECTION 7.03. CUSA and  Affiliates.  With respect to its Commitment and the
Advances  made by lt and the Notes issued to lt, CUSA shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent; and the term "Lender" or "Lenders"  shall,  unless
otherwise expressly indicated, include CUSA in its individual capacity. CUSA and
its  Affiliates may accept  deposits  from,  lend money to, act as trustee under
indentures of, and generally  engage in any kind of business with, the Borrower,
any  of its  Subsidiaries  and  any  Person  who  may do  business  with  or own
securities of the Borrower or any such  Subsidiary,  all as if CUSA were not the
Agent and without any duty to account therefor to the Lenders.

     SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it has,
independently  and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as lt has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement.  Each Lender also  acknowledges  that it
will,  independently and without reliance upon the Agent or any other Lender and
based on such  documents and  information  as it shall deem  appropriate  at the
time,  continue to make its own credit  decisions in taking or not taking action
under this Agreement.

     SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower),  ratably according to the respective
principal amounts outstanding under the A Notes then held by each of them (or if
no A Advances are at the time  outstanding or if any A Notes are held by Persons
which are not  Lenders,  ratably  according to the  respective  amounts of their
Commitments),  from and against any and all  claims,  liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted  against the Agent in any way relating to or arising out of this
Agreement  or any action  taken or omitted  by the Agent  under this  Agreement;
provided  that no  Lender  shall  be  liable  for any  portion  of such  claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements  resulting from the Agent's gross negligence or
willful misconduct.  Without limitation of the foregoing,  each Lender agrees to
reimburse  the  Agent  promptly  upon  demand  for  its  ratable  share  of  any
out-of-pocket  expenses  (including  counsel  fees,  court  costs  and all other
reasonable  litigation expenses,  including,  but not limited to, expert witness
fees, document copying expenses, exhibit preparation, courier expenses, postage,
and  communication  expenses)  incurred  by the  Agent  in  connection  with the
preparation,  execution, delivery.  administration,  modification,  amendment or
enforcement (whether through  negotiations,  legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities  under, 

<PAGE>

                                       48

this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the Borrower,  provided that to the extent  indemnification  payments made by
the Lenders pursuant to this Section 7.05 are subsequently recovered from or for
the account of the Borrower,  the Agent shall  promptly  refund such  previously
paid indemnification payments to the Lenders.

     SECTION 7.06.  Successor  Agent. The Agent may resign at any time by giving
written  notice  thereof  to  the  Lenders  and  the  Borrower.  Upon  any  such
resignation,  the Majority  Lenders  shall have the right to appoint a successor
Agent,  which  successor  Agent  shall (if no Event of Default  then  exists) be
subject to the approval of the Borrower not to be unreasonably  withheld.  If no
successor Agent shall have been so appointed by the Majority Lenders,  and shall
have accepted such appointment, within 20 days after the retiring Agent's giving
of notice of resignation, then the Borrower may appoint a successor Agent, which
successor Agent shall be subject to the approval of the Majority  Lenders not to
be unreasonably  withheld. If no successor Agent shall have been so appointed by
the Borrower, and shall have accepted such appointment, within 30 days after the
retiring  Agent's giving of notice of resignation,  then the retiring Agent may,
on behalf of the Lenders,  appoint a successor Agent which shall be a commercial
bank  organized  under the laws of the United  States of America or of any State
thereof and having a combined capital and surplus of at least $300,000,000 or an
Affiliate thereof.  Upon the acceptance of any appointment as Agent hereunder by
a successor  Agent,  such successor Agent shall thereupon  succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring Agent's resignation  hereunder as Agent, the
provisions  of this  Article  VII shall  inure to its  benefit as to any actions
taken or omitted to be taken by lt while lt was Agent under this Agreement.

     SECTION 7.07. Co-Agents.  None of the Lenders identified on the facing page
or  signature  pages of this  Agreement  as a  "co-agent"  shall have any right,
power, obligation, liability,  responsibility or duty under this Agreement other
than those applicable to any Lender. Without limiting the foregoing, none of the
Lenders  so  identified  as a "co-  agent"  shall  have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has not
relied,  and will not rely,  on any of the Lenders so  identified in deciding to
enter into this Agreement or in taking or not taking any action hereunder.


                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION  8.01.  Amendments  Etc. No amendment or waiver of any provision of
this  Agreement  or the Notes,  nor  consent to any  departure  by the  Borrower
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by the  Majority  Lenders and the  Borrower,  and then such waiver or
consent  shall be effective  only in the specific  instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive any of the  conditions  specified in Section 3.01.  3.02 or 3.03,  (b)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations,  (c) reduce the  principal  of, or interest on, the Advances or any
fees or other  amounts  payable  hereunder,  (d) postpone any date fixed for any
payment of  principal  of, or  interest  on, the  Advances  or any fees or other
amounts payable  hereunder,  (e) change the percentage of the Commitments or the
number of Lenders which shall be required for the Lenders or any of them to take
any action hereunder,  or (f) amend this Section 8.01; and 

<PAGE>

                                       49

provided further that no amendment,  waiver or consent shall,  unless in writing
and signed by the Agent in addition to the Lenders  required  above to take such
action, affect the rights or duties of the Agent under this Agreement.

     SECTION  8.02.   Notices;   Payments,   Etc.  (a)  All  notices  and  other
communications  provided for hereunder shall be in writing (including telecopier
communication) and mailed,  telecopied or delivered,  if to the Borrower, at its
address at 2550  Garcia  Avenue  PAL 1-211,  Mountain  View,  California  94043,
Attention:  Treasurer,  with a copy to the  attention of General  Counsel at the
same address (but with the following mail stop  substituted:  PAL 1-521);  if to
any Lender  specified on Schedule I, at its Domestic  Lending  Office  specified
opposite its name on Schedule I hereto;  if to any other Lender, at its Domestic
Lending Office  specified in the Assignment and Acceptance  pursuant to which it
became a Lender; and if to the Agent, at its address c/o Citicorp North America,
Inc. at  Citicorp  Center,  One  Sansome  Street,  27th  Floor,  San  Francisco,
California 94111,  Attention:  John Wetzler with copies to Citicorp  Securities,
Inc.,  Two Penns Way, Suite 200, New Castle,  Delaware  19720,  Attention:  Loan
Disclosure,  Elizabeth Bradley;  provided that all notices to the Agent pursuant
to Article II shall be at Citicorp  Securities,  Inc., Two Penns Way, Suite 200,
New Castle,  Delaware 19720,  Attention:  Loan Investor Services;  or, as to the
Borrower  or the Agent,  at such other  address as shall be  designated  by such
party in a written  notice to the other parties and, as to each other party,  at
such other address as shall be  designated by such party in a written  notice to
the Borrower and the Agent. All such notices and communications  shall, (i) when
telecopied,  be effective when telecopied,  (ii) when sent by an overnight (next
day)  courier  service,  be  effective  on the  Business Day after the date when
delivered  to such  service,  and (iii) when  mailed,  be effective on the fifth
Business  Day after the date  deposited  in the mails,  except that  notices and
communications to the Agent pursuant to Article II or VII shall not be effective
until  received  by the Agent,  and any notice of default  which is given to the
Borrower only by means of telecopier  shall not be effective until such telecopy
is received by the Borrower.

     (b) All payments made or funds  delivered to the Agent  hereunder  shall be
made or delivered to the Agent at its Domestic  Lending  Office or at such other
address as the Agent may designate  from time to time in a written notice to the
other parties.

     SECTION 8.03. No Waiver;  Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising,  any right hereunder or under
any Note  shall  operate  as a waiver  thereof;  nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

     SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on written
demand all  reasonable  costs and expenses  incurred by the Agent in  connection
with the  preparation,  execution,  delivery,  administration,  modification and
amendment and

<PAGE>
                                       50

syndication of this Agreement, the Notes and the other documents to be delivered
hereunder,  including, without limitation, the reasonable fees and out-of-pocket
expenses  of counsel  for the Agent with  respect  thereto  and with  respect to
advising the Agent as to its rights and  responsibilities  under this Agreement.
The Borrower  further agrees to pay on written  demand all reasonable  costs and
expenses, if any (including, without limitation,  reasonable counsel fees, court
costs, and all other reasonable litigation expenses,  including, but not limited
to, expert witness fees, document copying expenses, exhibit preparation, courier
expenses,  postage,  communication  expenses  and other  expenses,  specifically
including reasonable allocated costs of in-house counsel), incurred by the Agent
and  the  Lenders  in  connection   with  the   enforcement   (whether   through
negotiations,  legal proceedings or otherwise) of this Agreement,  the Notes and
the other documents to be delivered  hereunder,  including,  without limitation,
reasonable  counsel  fees and expenses in  connection  with the  enforcement  of
rights under this Section 8.04(a).  In addition,  the Borrower shall pay any and
all stamp and other taxes payable or determined to be payable in connection with
the execution and delivery of this Agreement,  the Notes and the other documents
to be delivered hereunder, and agrees to save the Agent and each Lender harmless
from and against any and all  liabilities  with respect to or resulting from any
delay in paying or omission to pay such taxes.

     (b) If any payment of principal of any Eurodollar Rate Advance or B Advance
is made other than on the last day of the Interest  Period for such A Advance or
the applicable maturity date for such B Advance, as the case may be, as a result
of a payment  pursuant to Section  2.13 or  acceleration  of the maturity of the
Advances  pursuant to Section 6.01 or for any other reason,  the Borrower shall,
upon written demand by any Lender (with a copy of such demand to the Agent), pay
to the Agent for the account of such Lender any amounts  required to  compensate
such Lender for any additional losses, costs or expenses which it may reasonably
incur as a result  of such  payment,  including,  without  limitation,  any loss
(including loss of anticipated  profits),  cost or expense incurred by reason of
the  liquidation  or  reemployment  of deposits  or other funds  acquired by any
Lender to fund or maintain such Advance.  Upon the Borrower's  written  request,
any Lender  demanding  compensation  under this Section 8.04(b) shall furnish to
the  Borrower a summary  statement as to the method of  calculation  of any such
losses, costs or expenses.

     (c) The Borrower agrees to indemnify, protect, defend and hold harmless the
Agent  and each  Lender  and  each of  their  Affiliates  and  their  respective
officers,  directors,  employees, agents, advisors and representatives (each, an
"Indemnified  Party")  from and  against any and all  claims,  damages,  losses,
liabilities,   obligations,   penalties,   actions,   judgments,  suits,  costs,
disbursements and expenses (including,  without limitation,  reasonable fees and
expenses  of  counsel,  including  but not  limited to court costs and all other
reasonable  litigation  expenses  including,  but not limited to, expert witness
fees, document copying expenses, exhibit preparation, courier expenses, postage,
and  communication  expenses)  that may be incurred  by or asserted  against any
Indemnified  Party,  in each case

<PAGE>
                                       51

arising out of or in connection  with or by reason of, or in connection with the
preparation  for a defense  of, any  investigation,  litigation,  proceeding  or
settlement  arising out of, related to or in connection  with (i) this Agreement
or the transactions contemplated by this Agreement or the use of any proceeds of
the Advances,  (ii) the Advances,  the Borrowings or the Commitments,  (iii) the
failure of the Borrower or any of its  Subsidiaries to comply fully with any and
all  Environmental  Laws  applicable to it, or (iv) any  acquisition or proposed
acquisition by the Borrower or any of its  Subsidiaries of all or any portion of
the stock or substantially all of the assets of any Person  (including,  without
limitation,  the  Borrower),  whether  or not an  Indemnified  Party  is a party
thereto and whether or not the transactions  contemplated hereby are consummated
and whether or not such  investigation,  litigation  or proceeding is brought by
the Borrower, any of its shareholders or creditors,  an Indemnified Party or any
other Person, except to the extent such claims,  damages,  losses,  liabilities,
obligations,  penalties,  actions,  judgments,  suits, costs,  disbursements and
expenses  are found in a final,  nonappealable  judgment by a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
such Indemnified Party; provided,  however, that the Borrower's  indemnification
obligations  set forth  herein  shall not extend to  expenses or fees paid by an
Indemnified  Party for reasons other than in connection  with this  Agreement or
the transactions  contemplated  hereby.  The Borrower agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Borrower or any of its creditors or shareholders in connection
with this Agreement or the transactions contemplated hereby except to the extent
such  liability  is  found  in a  final,  nonappealable  judgment  by a court of
competent  jurisdiction  to have  resulted from such  Indemnified  Party's gross
negligence or willful misconduct.

     (d)  Without  prejudice  to the  survival  of any  other  agreement  of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
this  Section  8.04  shall  survive  the  termination  of  this  Agreement,  the
termination of the Commitments and the payment in full of the Notes.

     SECTION  8.05.  Right of Set-off.  Upon (i) the  occurrence  and during the
continuance  of any Event of Default  and (ii) the making of the  request or the
granting of the consent  specified  by Section  6.01 to  authorize  the Agent to
declare the Advances and all other amounts  payable  under this  Agreement to be
forthwith  due and payable  pursuant to the  provisions  of Section  6.01,  each
Lender is hereby  authorized  at any time and from time to time,  to the fullest
extent  permitted by law, to set off and apply any and all deposits  (general or
special,  time or  demand,  provisional  or  final)  at any time  held and other
indebtedness  at any  time  owing by such  Lender  to or for the  credit  or the
account of the Borrower  against any and all of the  obligations of the Borrower
now or hereafter existing under this Agreement and any Note held by such Lender,
whether or not such Lender  shall have made any demand  under this  Agreement or
such Note and although such  obligations  may be  unmatured.  Each Lender agrees
promptly to notify the Borrower after any such set-off and  application  made by
such Lender;  provided that the failure to give such notice shall not affect

<PAGE>
                                       52

the  validity of such set-off and  application.  The rights of each Lender under
this  Section  8.05 are in addition  to other  rights and  remedies  (including,
without  limitation,  other  rights of setoff)  which such Lender may have.  The
Borrower  hereby  authorizes  CUSA,  in accordance  with the  provisions of this
Section  8.05,  to so set off and apply any and all such deposits held and other
indebtedness  owing by  Citibank  or any other  Affiliate  of CUSA to or for the
credit or the account of the  Borrower and hereby  authorizes  Citibank and each
such Affiliate to permit such setoff and application by CUSA.

     SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been  executed by the Borrower and the Agent and when the Agent shall
have  been  notified  by each  Lender  that  such  Lender  has  executed  it and
thereafter  shall be binding upon and inure to the benefit of the Borrower,  the
Agent and each Lender and their respective  successors and assigns,  except that
the  Borrower  shall not have the right to assign  its rights  hereunder  or any
interest herein without the prior written consent of the Lenders.

     SECTION 8.07. Assignments and Participations. (a) Each Lender may assign to
one or more banks or other financial institutions all or a portion of its rights
and Obligations under this Agreement  (including,  without limitation,  all or a
portion of its Commitment and the A Advances owing to it and the A Note or Notes
held by it);  provided,  however,  that (i) each such  assignment  shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement  (other  than any B  Advances  or B  Notes),  (ii) the  amount  of the
Commitment  of the  assigning  Lender  being  assigned  pursuant  to  each  such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with
respect to such assignment)  shall in no event be less than $25,000,000 (or such
assigning  Lender's entire  Commitment if such Lender's  Commitment is less than
$25,000,000)  and shall be an integral  multiple of $1,000,000,  (iii) each such
assignment  shall be to an  assignee  reasonably  acceptable  to the  Agent  and
consented to by the Borrower,  which consent shall not be unreasonably withheld;
provided,  however,  that the consent of the Borrower shall not be required with
respect to any such  assignment  by CUSA to Citibank or any other  Affiliate  of
CUSA of any Advance made by CUSA or any such  assignment  by any other Lender to
an Affiliate  of such Lender of any Advance  made by such  Lender,  and (iv) the
parties to each such assignment  shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with  any A Note or  Notes  subject  to such  assignment  and a  processing  and
recordation  fee of  $3,000.  Upon  such  execution,  delivery,  acceptance  and
recording,  from and after the effective date  specified in each  Assignment and
Acceptance,  x) the  assignee  thereunder  shall be a party  hereto  and, to the
extent that rights and  obligations  hereunder have been assigned to it pursuant
to such Assignment and  Acceptance,  have the rights and obligations of a Lender
hereunder  and (y) the Lender  assignor  thereunder  shall,  to the extent  that
rights and  obligations  hereunder  have been  assigned  by it  pursuant to such
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and  obligations  under this  Agreement,  such Lender  shall cease to be a party
hereto).
<PAGE>
                                       53


     (b) By executing and  delivering an Assignment and  Acceptance,  the Lender
assignor  thereunder and the assignee  thereunder confirm to and agree with each
other and the other  parties  hereto as  follows:  (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this Agreement or any other instrument or document  furnished  pursuant
hereto;  (ii) such  assigning  Lender  makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to the  financial  condition  of the
Borrower  or  the  performance  or  observance  by  the  Borrower  of any of its
obligations  under this Agreement or any other instrument or document  furnished
pursuant  hereto;  (iii) such  assignee  confirms that it has received a copy of
this Agreement,  together with copies of the financial statements referred to in
Section  4.01  and  such  other  documents  and  information  as it  has  deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance upon the Agent,  such assigning Lender or any other Lender and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise  such powers under this  Agreement
as are delegated to the Agent by the terms hereof,  together with such powers as
are reasonably  incidental  thereto;  and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

     (c) The Agent shall maintain at its address  referred to in Section 8.02(a)
a copy of each  Assignment and Acceptance  delivered to and accepted by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment of, and principal amount of the A Advances owing to, each Lender from
time to time (the  "Register").  The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person  whose name is recorded in the Register as
a Lender  hereunder for all purposes of this  Agreement.  The Register  shall be
available for  inspection by the Borrower or any Lender at any  reasonable  time
and from time to time upon reasonable prior notice.

     (d) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning  Lender  and an  assignee  acceptable  to  the  Agent  and  reasonably
consented to by the Borrower  together  with any A Note or Notes subject to such
assignment,  the  Agent  shall,  if such  Assignment  and  Acceptance  has  been
completed and is in substantially the form of Exhibit C hereto,  (i) accept such
Assignment and Acceptance,  (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
<PAGE>

                                       54

     (e) Each  Lender may assign to one or more  banks or other  entities  any B
Note or Notes held by it.

     (f) A Lender may at any time grant  participations  to one or more banks or
other entities in or to all or any part of its rights and obligations under this
Agreement or any Borrowings hereunder without the consent of the Borrower or the
Agent; provided,  however, that (i) the Borrower and the Agent shall be entitled
to continue to deal solely with the granting Lender regarding notices, payments,
payment  instructions  and any other matters arising pursuant to this Agreement;
(ii) the  granting  Lender's  obligations  under  this  Agreement  shall  remain
unchanged  and the  granting  Lender  shall remain  solely  responsible  for the
performance  thereof,  and (iii) the granting  Lender shall remain the holder of
its Note(s) for all purposes  under this  Agreement.  Any agreement  pursuant to
which any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the obligations
of the Borrower hereunder,  including,  without limitation, the right to approve
any  amendment,  modification  or waiver  of any  provision  of this  Agreement;
provided that such participation agreement may provide that such Lender will not
agree, without the consent of the participant, to any modification, amendment or
waiver of any provision of this  Agreement  described in clauses (b), (c) or (d)
of Section  8.01,  or to the release of any Lien that may at any time be created
to secure any  obligations  owing to the Agent  and/or the Lenders  hereunder or
under the Note.

     (g) Any Lender may, in connection with any assignment or  participation  or
proposed assignment or participation  pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating  to the  Borrower  furnished  to such  Lender  by or on  behalf  of the
Borrower;  provided  that,  prior  to  any  such  disclosure,  the  assignee  or
participant or proposed assignee or participant shall agree, pursuant to Section
8.11, to preserve the confidentiality of any confidential  information  relating
to the Borrower received by it from such Lender.

     (h) Notwithstanding anything else contained herein, each Lender may assign,
as collateral or otherwise,  any of its rights (including,  without  limitation,
rights to payments of principal or interest) under this Agreement to any Federal
Reserve Bank  without  notice to or the consent of the Borrower or the Agent and
without any requirement  that the assignee assume any obligations of such Lender
hereunder.

     (i) If any Eurodollar  Reference Bank or its Lender  Affiliate  assigns its
Notes to an unaffiliated institution,  the Agent shall, in consultation with the
Borrower and with the consent of the Majority  Lenders,  appoint another bank to
act as a Eurodollar Reference Bank hereunder, and pending such appointment,  the
Eurodollar  Rate shall be determined  on the basis of the  remaining  Eurodollar
Reference Bank(s).

<PAGE>
                                       55


     SECTION  8.08.  Governing  Law.  This  Agreement  shall be governed by, and
construed in accordance with, the laws of the State of California.

     SECTION 8.09.   Headings.  Article and Section  headings in this  Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     SECTION 8.10.   Commitment Extension.  The Borrower shall have the right in
each year to  request  a  one-year  extension  of the  Termination  Date then in
effect;  such  request  shall be received by the Agent at least 60 days (but not
more than 75 days) prior to each anniversary of the Effective Date. Such request
shall be  irrevocable  and binding upon the Borrower.  The Agent shall  promptly
notify each Lender of such request.  If a Lender  agrees,  in its individual and
sole discretion,  to so extend its Commitment (an "Extending  Lender"),  it will
notify the Agent,  in  writing,  of its  decision  to do so within 30 days after
receipt of such  notice  from the Agent but in any event,  no later than 15 days
prior to the next  anniversary  of the  Effective  Date.  The  Commitment of any
Lender  that  fails to  accept  the  Borrower's  request  for  extension  of the
Termination  Date (a "Declining  Lender") shall be terminated on the Termination
Date originally in effect  (without  regard to extension by other Lenders).  The
Borrower  shall  have the  right to first,  accept  from the  Extending  Lenders
increases  in their  respective  Commitments  by an  aggregate  amount up to the
amount of all Declining  Lenders'  Commitments and second, to identify assignees
(reasonably  acceptable  to the  Agent)  that  agree to  accept  assignments  of
Commitments  ("Replacement  Lenders")  in an amount  equal to the  amount of all
Declining Lenders'  Commitments not otherwise assumed by Extending  Lenders,  in
each case by requiring  each  Declining  Lender to assign in full its rights and
obligations under this Agreement to one or more extending Lenders or Replacement
Lenders;  provided  that (i) such  assignment  is otherwise in  compliance  with
Section  8.07,  (ii)  such  Declining  Lender  receives  payment  in full of the
principal amount of all Advances owing to such Declining  Lender,  together with
accrued  interest thereon to the date of such payment of principal and all other
amounts payable to such Declining Lender under this Agreement and (iii) any such
assignment  shall be effective on the date  specified by the Borrower and agreed
to by the applicable  Extending Lenders or Replacement Lenders and the Agent. If
Extending Lenders and/or Replacement Lenders provide Commitments in an aggregate
amount  equal to 100% of the  aggregate  amount of the  Commitments  outstanding
immediately  prior to the  Termination  Date in effect at the time the  Borrower
requests such extension, the Termination Date shall be extended by one year.

     SECTION 8.11. Execution in Counterparts.  This Agreement may be executed in
any  number  of  counterparts  and  by  different  parties  hereto  in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
<PAGE>
                                       56

     SECTION  8.12.  Confidentiality.   In  accordance  with  normal  procedures
regarding  proprietary  information  supplied by customers,  each of the Lenders
agrees  to  keep   confidential   and  to  cause  its   employees,   agents  and
representatives to keep confidential information relating to the Borrower or any
Subsidiary  received pursuant to or in connection with this Credit Agreement and
the  transactions  contemplated  hereby;  provided that nothing  herein shall be
construed to prevent the Agent or any Lender from  disclosing  such  information
(i) upon the order of any court or administrative  agency, (ii) upon the request
or demand of any regulatory  agency or authority  having  jurisdiction  over the
Agent or such Lender,  (iii) which has been publicly  disclosed,  (iv) which has
been  lawfully  obtained  by any of the  Lenders  from a Person  other  than the
Borrower or any Subsidiary, the Agent or any other Lender, or (v) to the Agent's
or any Lender's attorneys,  accountants or auditors (internal or independent) or
to any participant in or assignee of, or prospective  participant in or assignee
of, all or any part of the rights and  obligations  of such Agent or such Lender
under this  Agreement or any Advances  hereunder  (provided  that such attorney,
accountant,  auditor,  participant or assignee,  or  prospective  participant or
assignee,  agrees to comply with the  confidentiality  requirements set forth in
this Section 8.12).

     SECTION 8.13.  Termination.  Except as otherwise provided in this Agreement
and the Notes and the other agreements and instruments executed pursuant hereto,
all rights and  obligations  hereunder and thereunder  shall  terminate when all
amounts payable under this Agreement,  the Notes and such other agreements shall
have  been  paid in full and no  Lender  shall  have any  Commitment  hereunder;
provided,  however, that notwithstanding the foregoing the Borrower shall remain
liable for all of its  obligations  hereunder  and  thereunder  to  indemnify or
reimburse the Agent and the Lenders, including, without limitation,  pursuant to
the provisions of Sections 2.12. 2.15 and 8.04 hereof.

     SECTION  8.14.  Jurisdiction,  Etc. (a) Each of the parties  hereto  hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction of any California State court or federal court of the
United States of America sitting in San Francisco,  and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement or the Notes, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such California  State or, to the extent  permitted by law, in
such federal court. Each of the parties hereto agrees that a final nonappealable
judgment  in any  such  action  or  proceeding  shall be  conclusive  and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding  relating to this Agreement
or the Notes in the courts of any jurisdiction.

     (b) Each of the parties hereto irrevocably and  unconditionally  waives, to
the fullest  extent it may legally and  effectively do so, any objection that it
may now or  hereafter  have to the  laying  of  venue  of any  suit,  action  or
proceeding  arising  out of or 

<PAGE>
                                       57

relating  to this  Agreement  or the Notes in any  California  State or  federal
court.  Each of the parties  hereto hereby  irrevocably  waives,  to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

     SECTION 8.15. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND THE
LENDERS  HEREBY  IRREVOCABLY  WAIVES  ALL RIGHT TO TRIAL BY JURY IN ANY  ACTION,
PROCEEDING  OR  COUNTERCLAIM  (WHETHER  BASED ON  CONTRACT,  TORT OR  OTHERWISE)
ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR THE NOTES OR THE ACTIONS OF THE
AGENT  OR  ANY  LENDER  IN  THE  NEGOTIATION,  ADMINISTRATION,   PERFORMANCE  OR
ENFORCEMENT THEREOF.


              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


<PAGE>

                                       58

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

                                   SUN MICROSYSTEMS, INC.


                                   By: /s/ Alton D. Page
                                       ----------------------------
                                       Name: Alton D. Page
                                       Title: Vice President & Treasurer


                                   CITICORP USA, INC.,
                                        as Administrative Agent


                                   By:
                                       ----------------------------
                                       Name:
                                       Title:


                                   CITICORP USA, INC.,
COMMITMENTS:                                     as Lender


$41,000,000                        By:
                                       ----------------------------
                                       Name:
                                       Title:


                                   ABN AMRO BANK N.V.,
                                      as Lender and Co-Agent



$36,000,000                        By:
                                       ----------------------------
                                       Name:
                                       Title:

                                   By:
                                       ----------------------------
                                       Name:
                                       Title:

<PAGE>


                                       59



                                     BANK OF AMERICA NATIONAL
                                     TRUST AND SAVINGS ASSOCIATION,
                                        as Lender and Co-Agent



$36,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:


                                     MORGAN GUARANTY TRUST
                                     COMPANY OF NEW YORK,
                                        as Lender and Co-Agent



$36,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:

                                     UNION BANK OF CALIFORNIA, N.A.,
                                        as Lender and Co-Agent



$36,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:

                                     THE BANK OF NEW YORK,
                                        as Lender



$21,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:


<PAGE>

                                       60

                                     BANKBOSTON, N.A.
                                        as Lender



$21,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:

                                     BANQUE NATIONALE DE PARIS,
                                        as Lender



$21,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:


                                     By:
                                         ----------------------------
                                         Name:
                                         Title:

                                     BARCLAYS BANK PLC,
                                        as Lender



$21,000,000                          By:
                                         ----------------------------
                                         Name:
                                         Title:



<PAGE>

                                       61

                                      BAYERISCHE VEREINSBANK AG,
                                         Los Angeles Agency, as Lender



$21,000,000                           By:
                                          ----------------------------
                                          Name:
                                          Title:


                                      By:
                                          ----------------------------
                                          Name:
                                          Title:

                                      CARIPLO-CASSA DI RISPARMIO
                                      DELLE PROVINCIE LOMBARDE SPA,
                                         as Lender



$21,000,000                           By:
                                          ----------------------------
                                          Name:
                                          Title:


                                      By:
                                          ----------------------------
                                          Name:
                                          Title:

                                      CORESTATES BANK, N.A.,
                                         as Lender



$21,000,000                           By:
                                          ----------------------------
                                          Name:
                                          Title:

<PAGE>

                                       62

                                       THE FUJI BANK, LIMITED,
                                           San Francisco Agency, as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:

                                       THE INDUSTRIAL BANK OF
                                       JAPAN, LIMITED,
                                          San Francisco Agency, as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:

                                       THE NORTHERN TRUST COMPANY,
                                          as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:

                                       ROYAL BANK OF CANADA,
                                          as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:



<PAGE>

                                       63

                                       THE SAKURA BANK, LIMITED,
                                          San Francisco Agency, as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:

                                       THE SUMITOMO BANK, LIMITED,
                                          San Francisco Branch, as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:


                                       By:
                                           ----------------------------
                                           Name:
                                           Title:


                                       THE SUMITOMO TRUST & BANKING
                                       CO, LTD., Los Angeles Agency,
                                          as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:


                                       By:
                                           ----------------------------
                                           Name:
                                           Title:


<PAGE>

                                       64

                                       THE TOYO TRUST AND BANKING
                                       COMPANY LTD., New York Branch
                                          as Lender



$21,000,000                            By:
                                           ----------------------------
                                           Name:
                                           Title:

                                       By:
                                           ----------------------------
                                           Name:
                                           Title:


$500,000,000 Total Commitments