AMENDMENT NO. 3 TO CREDIT AGREEMENT, DATED AS OF AUGUST 23, 1996


                  This Amendment No. 3 (this "Amendment"),  dated as of June 30,
1998, is made by and among ALLIED PRODUCTS  CORPORATION,  a Delaware corporation
(the "Company"), the financial institutions party hereto (the "Banks"), and Bank
of America  National  Trust and Savings  Association  (as successor by merger to
Bank of  America  Illinois),  as agent  for the  Banks  (in such  capacity,  the
"Agent").  Terms defined in the Credit  Agreement shall have the same respective
meanings  when used  herein  and the  provisions  of  Section  13 of the  Credit
Agreement shall apply, mutatis mutandis, to this Amendment.

                              W I T N E S S E T H:
                              --------------------

                  WHEREAS,  the  parties  hereto  are  parties  to that  certain
Amended and Restated Credit Agreement,  dated as of August 23, 1996, (as amended
or modified and in effect on the date hereof,  the "Existing  Credit  Agreement"
and as amended and modified by this Amendment, the "Credit Agreement");

                  WHEREAS,  the  Company  has  requested  that the Banks and the
Agent  agree to amend and modify the  Existing  Credit  Agreement  as  described
herein; and

                  WHEREAS,  the Banks and the  Agent  are  willing  to amend and
modify the  Existing  Credit  Agreement  on the terms and  conditions  contained
herein;

                  NOW, THEREFORE,  in consideration of the premises,  the mutual
covenants  herein  contained  and other  good and  valuable  consideration  (the
receipt, adequacy and sufficiency of which is hereby acknowledged),  the parties
hereto, intending legally to be bound, hereby agree as follows:

                  1.       Amendments.  Subject to the satisfaction of the
                           -----------
conditions precedent set forth in Section 5 below, the Existing
Credit Agreement is hereby amended as follows:

                  (a) Section 1.1.3 of the Existing  Credit  Agreement  shall be
         amended by deleting each reference to  $125,000,000  contained  therein
         and replacing it with $145,000,000.

                  (b) Section 5.3 is deleted in its entirety  and replaced  with
         the following:






<PAGE>



                           "SECTION 5.3 Upper Usage Fee.  The Company  agrees to
                                        ---------------
                  pay an upper usage fee of 1/8 of 1% per annum on the amount by
                  which the average  daily used  amount of the total  Commitment
                  exceeds  $75,000,000  and an upper  usage fee of 1/4 of 1% per
                  annum on the amount by which the average  daily used amount of
                  the total  Commitment  exceeds  $125,000,000.  Any such  upper
                  usage fee shall be  payable in arrears on the last day of each
                  Fiscal Quarter and on the Revolving  Termination  Date for any
                  period  then  ending for which such upper  usage fee shall not
                  have  been  theretofore  paid.  Any  upper  usage fee shall be
                  computed for the actual number of days elapsed on the basis of
                  a year of 360 days."

                  (c)  Section 6.1 of the  Existing  Credit  Agreement  shall be
         amended by (i) inserting  "(a)" at the beginning  thereof and replacing
         the "." at the end thereof with "; and" and (ii) adding a new paragraph
         (b) thereto which shall read in its entirety as follows:

                           "(b) the aggregate  Commitments of the Banks shall be
                  automatically and permanently  reduced, pro rata, in an amount
                  sufficient to reduce the aggregate Commitments of the Banks to
                  $100,000,000 on March 1, 1999."

                  (d) Section 10.6 of the Existing  Credit  Agreement is deleted
         in its entirety and replaced with the following:

                           "SECTION 10.6 Funded  Debt/Operating Cash Flow Ratio.
                                         --------------------------------------
                  Not permit the ratio ("Funded Debt/Operating Cash Flow Ratio")
                  of (x)  Consolidated  Total  Funded  Debt to (y)  Consolidated
                  Operating  Cash Flow  during  any  period of four  consecutive
                  Fiscal  Quarters  to  exceed  the ratio of  3.25:1:00  for any
                  Fiscal  Quarter  ending  on or prior to March  31,  1999,  and
                  3.00:1.00 for each Fiscal Quarter thereafter."

                  (e) Section 10.19 of the Existing Credit  Agreement is amended
         by deleting  the number  $75,000,000  therefrom  and  replacing it with
         $100,000,000.

                  (f) The definition of Revolving  Termination Date set forth in
         Section 13 of the  Existing  Credit  Agreement  shall be deleted in its
         entirety and replaced with the following:

                           "Revolving  Termination Date shall mean September 30,
                           ----------------------------
                  2000; provided that such date may be extended by the Banks, in
                  their sole and absolute  discretion,  until September 30, 2001
                  upon the written  request by the Company to the Agent no later
                  than June 30, 2000.






<PAGE>



                  Nothing contained herein shall be deemed to require the
                  Banks to extend the Revolving Termination Date."

                  (g) Exhibit A to the Existing  Credit  Agreement is deleted in
         its entirety and replaced with Exhibit A attached hereto.

                  2. Documents Remain in Effect.  Except as amended and modified
                     --------------------------
by this  Amendment,  the  Existing  Credit  Agreement  remains in full force and
effect and the Company confirms that its representations, warranties, agreements
and covenants  contained in, and obligations and liabilities  under,  the Credit
Agreement  and each of the other  Loan  Documents  are true and  correct  in all
material   respects  as  if  made  on  the  date   hereof,   except  where  such
representation, warranty, agreement or covenant speaks as of a specified date.

                  3. References in Other  Documents.  References to the Existing
                     ------------------------------
Credit Agreement in any other document shall be deemed to include a reference to
the Credit Agreement, whether or not reference is made to this Amendment.

                  4. Representations. The Company hereby represents and warrants
                     ---------------
to the Banks and the Agent that:

                  (a) The execution,  delivery and performance of this Amendment
         and  the  Restated  Notes  (as  hereinafter  defined)  are  within  the
         Company's  corporate  authority,  have  been  duly  authorized  by  all
         necessary  corporate action,  have received all necessary  consents and
         approvals  (if  any  shall  be  required),  and do  not  and  will  not
         contravene or conflict with any provision of law or of the  Certificate
         of Incorporation or By-laws of the Company or its  Subsidiaries,  or of
         any other  agreement  binding upon the Company or its  Subsidiaries  or
         their respective property;

                  (b) This  Amendment  and the  Restated  Notes  constitute  the
         legal,  valid,  and binding  obligations  of the  Company,  enforceable
         against the Company in accordance with its terms; and

                  (c) no Default has occurred and is  continuing  or will result
         from this Amendment or the Restated Notes.

                  5. Conditions  Precedent.  The effectiveness of this Amendment
                     ---------------------
is  subject  to the  receipt  by the  Agent  of  each  of  the  following,  each
appropriately  completed and duly executed as required and otherwise in form and
substance satisfactory to the Agent:







<PAGE>



                  (a) Certified  copies of resolutions of the Board of Directors
         of the Company  authorizing  or ratifying the  execution,  delivery and
         performance by the Company of this Amendment and the Restated Notes;

                  (b) A certificate of the President or a Vice- President of the
         Company that all necessary  consents or approvals  with respect to this
         Amendment and the Restated Notes have been obtained;

                  (c) A certificate  of the Secretary or Assistant  Secretary of
         the Company,  certifying  the name(s) of the  officer(s) of the Company
         authorized to sign this Amendment, the Restated Notes and the documents
         related hereto on behalf of the Company;

                  (d) Restated  Revolving  Notes, in the form attached hereto as
         Exhibit B, payable to the order of each Bank in principal  amount equal
         to such Bank's aggregate Commitment;

                  (d) An opinion of Mark  Standefer  covering  those matters set
         forth in clauses (a) and (b) of Section 4 and such other legal  matters
         as the Agent or its counsel may request; and

                  (e) Such other  instruments,  agreements  and documents as the
         Agent may  reasonably  request,  in each case duly executed as required
         and otherwise in form and substance satisfactory to the Banks.

                  6.       Miscellaneous.
                           --------------

                  (a)  Section   headings   used  in  this   Amendment  are  for
convenience  of reference  only, and shall not affect the  construction  of this
Amendment.

                  (b) This  Amendment  and any  amendment  hereof or  supplement
hereto  may be  executed  in any  number of  counterparts  and by the  different
parties on separate counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same agreement.

                  (c) This Amendment shall be a contract made under and governed
by the  internal  laws of the  State  of  Illinois,  without  giving  effect  to
principles of conflicts of laws.

                  (d) All obligations of the Company and rights of the Banks and
the Agent, that are expressed herein, shall be in






<PAGE>



addition to and not in limitation to those provided by applicable
law.

                  (e) Whenever  possible,  each  provision of this Amendment and
the Restated  Notes shall be  interpreted  in such manner as to be effective and
valid under  applicable  law;  but if any  provision  of this  Amendment  or the
Restated  Notes shall be  prohibited by or invalid  under  applicable  law, such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Amendment or the Restated Notes.

                  (f) This  Amendment  and the  Restated  Notes shall be binding
upon the Company,  the Banks and the Agent and their  respective  successors and
assigns,  and shall inure to the benefit of the Company, the Banks and the Agent
and their respective successors and assigns.


                            *        *        *






<PAGE>



                  IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  the
execution and delivery hereof by their respective representatives thereunto duly
authorized as of the date first herein appearing.


                                             ALLIED PRODUCTS CORPORATION


                                             By:    /S/ Richard A. Drexler
                                                ---------------------------
                                             Name:      Richard A. Drexler
                                                  -------------------------
                                             Title:     Chairman & CEO
                                                   ------------------------



                                             BANK  OF  AMERICA  NATIONAL
                                             TRUST      AND      SAVINGS
                                             ASSOCIATION  (as  successor
                                             by   merger   to   Bank  of
                                             America Illinois), as Agent


                                             By:    /S/ David A. Johanison
                                                ---------------------------
                                             Name:      David A. Johanison
                                                  -------------------------
                                             Title:     Vice President
                                                   ------------------------



                                             BANK  OF  AMERICA  NATIONAL
                                             TRUST      AND      SAVINGS
                                             ASSOCIATION  (as  successor
                                             by   merger   to   Bank  of
                                             America  Illinois),  in its
                                             individual corporate capacity


                                             By:    /S/ Rob Ritter
                                                ---------------------------
                                             Name:      Rob Ritter
                                                  -------------------------
                                             Title:     Vice President
                                                   ------------------------


                                             LASALLE NATIONAL BANK


                                             By:    /S/ Mary Lou Bartlett
                                                ---------------------------
                                             Name:      Mary Lou Bartlett
                                                  -------------------------
                                             Title:     Vice President
                                                   ------------------------









<PAGE>



                                    EXHIBIT A

                        COMMITMENT LIMITS AND PERCENTAGES
<TABLE>
<CAPTION>

<S>                                     <C>              <C>                <C>               <C>
                                        Column I:        Column II:         Column III:       Column IV:
                                        Amount of        Amount of Letter   Total Amount of
Name of Bank                            Revolving Loan   of Credit          Commitments       Percentage
                                        Commitment       Commitment

BANK OF AMERICA .....................   $101,500,000     $ 14,000,000       $101,500,000             70%
NATIONAL TRUST AND
SAVINGS ASSOCIATION
LASALLE NATIONAL BANK ...............   $ 43,500,000     $  6,000,000       $ 43,500,000             30%
                                        ------------     ------------       ------------      ----------
                               TOTALS   $145,000,000     $ 20,000,000       $145,000,000            100%


</TABLE>







<PAGE>



                                    EXHIBIT B

                                     FORM OF
                             RESTATED REVOLVING NOTE


$ __________________                                               June __, 1998
                                                               Chicago, Illinois


         On or before the Revolving  Termination  Date (as defined in the Credit
Agreement referred to below), the undersigned,  for value received,  promises to
pay  to  the   order  of   __________________   at  the   principal   office  of
__________________________  (the "Bank"), in Chicago,  Illinois  _______________
Dollars  ($_______)  or, if less,  the aggregate  unpaid amount of all Revolving
Loans made by the payee to the undersigned  pursuant to the Credit Agreement (as
shown in the records of the payee or, at the  payee's  option,  on the  schedule
attached hereto and any continuation thereof).

         The  undersigned  further  promises  to  pay  interest  on  the  unpaid
principal  amount of each Revolving Loan evidenced  hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.

         This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and  provisions  of, the  Amended  and  Restated  Credit
Agreement,  dated as of August 23, 1996, as amended (herein,  as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the  undersigned,  various  banks  (including  the  payee)  and Bank of  America
National Trust and Savings Association,  as agent for the Banks, to which Credit
Agreement  reference is hereby made for a statement of the terms and  provisions
under which this  Restated  Revolving  Note may or must be paid prior to its due
date or may have its due date accelerated.  Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.

         In  addition  to  and  not  in  limitation  of the  foregoing  and  the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation  imposed by applicable  law, to pay all  reasonable  expenses,
including reasonable attorneys' fees and legal expenses,  incurred by the holder
of this Restated  Revolving Note in  endeavoring to collect any amounts  payable
hereunder which are not paid when due, whether by acceleration or otherwise.

         This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.








<PAGE>



         This Restated  Revolving  Note is issued in  replacement of a Revolving
Note issued pursuant to the Credit Agreement. The indebtedness evidenced by this
Note represents an extension and renewal of indebtedness owing to the payee.


                         ALLIED PRODUCTS CORPORATION



                         By: ___________________________
                         Title: ________________________









<PAGE>



Schedule Attached to Restated  Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of

Date and Amount   Date and Amount
of Revolving      of Repayment or
Loan or of        of Conversion
Conversion from   into another                 Unpaid        Notation Made
another type of   type of           Interest   Principal     by
Revolving Loan    Revolving Loan    Period     Balance

                             1. FLOATING RATE LOANS

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                               2. EURODOLLAR LOANS

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<PAGE>



                             RESTATED REVOLVING NOTE


$ 101,500,000                                                      June 30, 1998
                                                               Chicago, Illinois


         On or before the Revolving  Termination  Date (as defined in the Credit
Agreement referred to below), the undersigned,  for value received,  promises to
pay to the order of Bank of America National Trust and Savings  Association (the
"Bank"), at its office located at 231 South LaSalle Street,  Chicago,  Illinois,
One Hundred One Million  Five Hundred  Thousand  Dollars  ($101,500,000)  or, if
less,  the aggregate  unpaid amount of all Revolving  Loans made by the payee to
the undersigned pursuant to the Credit Agreement (as shown in the records of the
payee or,  at the  payee's  option,  on the  schedule  attached  hereto  and any
continuation thereof).

         The  undersigned  further  promises  to  pay  interest  on  the  unpaid
principal  amount of each Revolving Loan evidenced  hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.

         This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and  provisions  of, the  Amended  and  Restated  Credit
Agreement,  dated as of August 23, 1996, as amended (herein,  as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the  undersigned,  various  banks  (including  the  payee)  and Bank of  America
National Trust and Savings Association,  as agent for the Banks, to which Credit
Agreement  reference is hereby made for a statement of the terms and  provisions
under which this  Restated  Revolving  Note may or must be paid prior to its due
date or may have its due date accelerated.  Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.

         In  addition  to  and  not  in  limitation  of the  foregoing  and  the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation  imposed by applicable  law, to pay all  reasonable  expenses,
including reasonable attorneys' fees and legal expenses,  incurred by the holder
of this Restated  Revolving Note in  endeavoring to collect any amounts  payable
hereunder which are not paid when due, whether by acceleration or otherwise.

         This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.








<PAGE>



         This Restated  Revolving  Note is issued in  replacement  of a Restated
Revolving Note issued pursuant to the Credit Agreement on December 31, 1997. The
indebtedness  evidenced  by this Note  represents  an  extension  and renewal of
indebtedness owing to the payee.


                         ALLIED PRODUCTS CORPORATION



                         By: ___________________________
                         Title: ________________________









<PAGE>



Schedule Attached to Restated  Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of Bank of America National Trust and Savings Association

Date and Amount    Date and Amount
of Revolving       of Repayment or
Loan or of         of Conversion
Conversion from    into another                  Unpaid       Notation Made
another type of    type of           Interest    Principal    by
Revolving Loan     Revolving Loan    Period      Balance

                             1. FLOATING RATE LOANS

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                               2. EURODOLLAR LOANS

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<PAGE>



                             RESTATED REVOLVING NOTE


$ 43,500,000                                                       June 30, 1998
                                                               Chicago, Illinois


         On or before the Revolving  Termination  Date (as defined in the Credit
Agreement referred to below), the undersigned,  for value received,  promises to
pay to the order of LaSalle  National Bank (the "Bank"),  at its offices located
at 120 South LaSalle Street, Chicago,  Illinois 60603,  Forty-Three Million Five
Hundred Thousand Dollars  ($43,500,000) or, if less, the aggregate unpaid amount
of all  Revolving  Loans made by the payee to the  undersigned  pursuant  to the
Credit  Agreement  (as shown in the  records  of the  payee  or, at the  payee's
option, on the schedule attached hereto and any continuation thereof).

         The  undersigned  further  promises  to  pay  interest  on  the  unpaid
principal  amount of each Revolving Loan evidenced  hereby from the date of such
Revolving Loan until such Revolving Loan is paid in full, payable at the rate(s)
and at the time(s) set forth in the Credit Agreement. Payments of both principal
and interest are to be made in lawful money of the United States of America.

         This Restated Revolving Note evidences indebtedness incurred under, and
is subject to the terms and  provisions  of, the  Amended  and  Restated  Credit
Agreement,  dated as of August 23, 1996, as amended (herein,  as further amended
or otherwise modified from time to time, called the "Credit Agreement"), between
the  undersigned,  various  banks  (including  the  payee)  and Bank of  America
National Trust and Savings Association,  as agent for the Banks, to which Credit
Agreement  reference is hereby made for a statement of the terms and  provisions
under which this  Restated  Revolving  Note may or must be paid prior to its due
date or may have its due date accelerated.  Terms used but not otherwise defined
herein are used herein as defined in the Credit Agreement.

         In  addition  to  and  not  in  limitation  of the  foregoing  and  the
provisions of the Credit Agreement, the undersigned further agrees, subject only
to any limitation  imposed by applicable  law, to pay all  reasonable  expenses,
including reasonable attorneys' fees and legal expenses,  incurred by the holder
of this Restated  Revolving Note in  endeavoring to collect any amounts  payable
hereunder which are not paid when due, whether by acceleration or otherwise.

         This Restated Revolving Note is made under and governed by the internal
laws of the State of Illinois.








<PAGE>



         This Restated  Revolving  Note is issued in  replacement  of a Restated
Revolving Note issued pursuant to the Credit Agreement on December 31, 1997. The
indebtedness  evidenced  by this Note  represents  an  extension  and renewal of
indebtedness owing to the payee.


                         ALLIED PRODUCTS CORPORATION



                         By: ___________________________
                         Title: ________________________









<PAGE>


Schedule Attached to Restated  Revolving Note dated June 30, 1998 of THE COMPANY
payable to the order of LaSalle National Bank

Date and Amount    Date and Amount
of Revolving       of Repayment or
Loan or of         of Conversion
Conversion from    into another                   Unpaid        Notation Made
another type of    type of             Interest   Principal     by
Revolving Loan     Revolving Loan      Period     Balance

                             1. FLOATING RATE LOANS

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                               2. EURODOLLAR LOANS

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