<PAGE>


                                                                  EXHIBIT 10.14
                            Secured Credit Agreement
                                      Among
                            Maverick Tube Corporation
                                       And
                          Harris Trust And Savings Bank
                                    AS AGENT
                                       And
                          Harris Trust And Savings Bank
                                       AND
                      Mercantile Bank National Association,
                                   AS LENDERS
                         DATED AS OF SEPTEMBER 18, 1998







                                TABLE OF CONTENTS
                            MAVERICK TUBE CORPORATION
                            SECURED CREDIT AGREEMENT



SECTION 1.                 THE CREDITS........................................1

       Section 1.1.            The Revolving Credit...........................1
       Section 1.2.            The Notes......................................2
       Section 1.3.            Interest Rates.................................3
       Section 1.4.            Letter of Credit...............................6
       Section 1.5.            Reimbursement Obligations......................7
       Section 1.6.            Manner of Borrowing and Rate Selection.........7
       Section 1.7.            Participation in the L/C.......................8
       Section 1.8.            The Collateral.................................9

SECTION 2.                 FEES, PREPAYMENTS AND TERMINATIONS.................9

       Section 2.1.            Commitment Fees................................9
       Section 2.2.            Other Fees.....................................9
       Section 2.3.            Optional Prepayments..........................10
       Section 2.4.            Mandatory Prepayments-Borrowing Base..........10
       Section 2.5.            Terminations..................................10
       Section 2.6.            Capital Adequacy..............................10

SECTION 3.                 PLACE AND APPLICATION OF PAYMENTS.................11


SECTION 4.                 DEFINITIONS.......................................11

       Section 4.2.            Interpretation................................21

SECTION 5.                 REPRESENTATIONS AND WARRANTIES....................21

       Section 5.1.            Organization and Qualification................21
       Section 5.2.            Financial Reports.............................21
       Section 5.3.            Litigation; Tax Returns; Approvals............22
       Section 5.4.            Regulation U..................................22
       Section 5.5.            No Default....................................22
       Section 5.6.            ERISA.........................................22
       Section 5.7.            Environmental Law.............................23
       Section 5.8.            Security Interests............................23
       Section 5.10.           Accurate Information..........................24
       Section 5.11.           Enforceability................................24
       Section 5.12.           Year 2000 Compliance..........................25

SECTION 6.                 CONDITIONS PRECEDENT..............................25

       Section 6.1.            General.......................................25
       Section 6.2.            Initial Extension of Credit...................25
       Section 6.3.            Each Extension of Credit......................26
       Section 6.4.            Legal Matters.................................27

SECTION 7.                 COVENANTS.........................................27

       Section 7.1.            Maintenance of Property.......................27
       Section 7.2.            Taxes.........................................27
       Section 7.3.            Maintenance of Insurance......................27
       Section 7.4.            Financial Reports.............................28
       Section 7.5.            Inspection....................................29
       Section 7.6.            Consolidation and Merger......................29
       Section 7.7.            Transactions with Affiliates..................30
       Section 7.8.            Maximum Total Funded Debt Ratio...............30
       Section 7.9.            [Intentionally Omitted].......................30
       Section 7.10.           Consolidated Tangible Net Worth...............30
       Section 7.11.           Maximum Leverage Ratio........................30
       Section 7.12.           Minimum Fixed Charge Coverage Ratio...........30
       Section 7.13.           Restricted Payments...........................30
       Section 7.14.           Liens.........................................31
       Section 7.15.           Borrowings and Guaranties.....................32
       Section 7.16.           Investments, Loans, Advances and Acquisitions.33
       Section 7.17.           Sale of Property..............................35
       Section 7.18.           Notice of Suit or Adverse Change in
                                   Business or Default.......................35
       Section 7.19.           ERISA.........................................35
       Section 7.20.           Supplemental Performance......................35
       Section 7.21.           Use of Proceeds...............................35
       Section 7.22.           Compliance with Laws, etc.....................36
       Section 7.23.           Environmental Covenant........................36
       Section 7.24.           No Restrictions on Subsidiaries...............36

SECTION 8.                 EVENTS OF DEFAULT AND REMEDIES....................37

       Section 8.1.            Definitions...................................37
       Section 8.2.            Remedies for Non-Bankruptcy Defaults..........39
       Section 8.3.            Remedies for Bankruptcy Defaults..............39
       Section 8.4.            L/Cs..........................................39

SECTION 9.                 CHANGE IN CIRCUMSTANCES REGARDING
                             EURODOLLAR LOANS................................40

       Section 9.1.            Change of Law.................................40
       Section 9.2.            Unavailability of Deposits or Inability to
                                   Ascertain the Adjusted Eurodollar Rate....40
       Section 9.3.            Taxes and Increased Costs.....................40
       Section 9.4.            Funding Indemnity.............................41
       Section 9.5.            Lending Branch................................42
       Section 9.6.            Discretion of Bank as to Manner of Funding....42

SECTION 10.                THE AGENT.........................................42

       Section 10.1.           Appointment and Powers........................42
       Section 10.2.           Powers........................................42
       Section 10.3.           General Immunity..............................42
       Section 10.4.           No Responsibility for Loans, Recitals, etc....43
       Section 10.5.           Right to Indemnity............................43
       Section 10.6.           Action Upon Instructions of Banks.............43
       Section 10.7.           Employment of Agents and Counsel..............43
       Section 10.8.           Reliance on Documents; Counsel................43
       Section 10.9.           May Treat Payee as Owner......................43
       Section 10.10.          Agent's Reimbursement.........................44
       Section 10.11.          Rights as a Lender............................44
       Section 10.12.          Bank Credit Decision..........................44
       Section 10.13.          Resignation of Agent..........................44
       Section 10.14.          Duration of Agency............................44

SECTION 11.                MISCELLANEOUS.....................................45

       Section 11.1.           Amendments and Waivers........................45
       Section 11.2.           Waiver of Rights..............................45
       Section 11.3.           Several Obligations...........................45
       Section 11.4.           Non-Business Day..............................46
       Section 11.5.           Survival of Indemnities.......................46
       Section 11.6.           Documentary Taxes.............................46
       Section 11.7.           Representations...............................46
       Section 11.8.           Notices.......................................46
       Section 11.9.           Costs and Expenses............................47
       Section 11.10.          Counterparts..................................48
       Section 11.11.          Successors and Assigns; Governing Law;
                                   Entire Agreement..........................48
       Section 11.12.          No Joint Venture..............................48
       Section 11.13.          Severability..................................48
       Section 11.14.          Table of Contents and Headings................48
       Section 11.15.          Sharing of Payments...........................48
       Section 11.16.          Conflict Among Documents......................49
       Section 11.17.          Confidentiality...............................49
       Section 11.18.          Participants..................................50
       Section 11.19.          Assignment Agreements.........................50



Exhibit A                     Revolving Credit Note
Exhibit B                     Pay-off Letter
Exhibit C                     Application and Agreement for Letter of Credit
Exhibit D                     Borrowing Base Certificate
Exhibit E                     Schedule of Subsidiaries
Exhibit F                     Security Agreement Re: Accounts Receivable
                              and Inventory
Exhibit G                     Compliance Certificate
Exhibit H                     Form of Legal Opinion
Exhibit I                           Accounts Receivable Aging Report
Exhibit J                     Environmental Disclosure
Exhibit K                     Liens
Exhibit L                     Indebtedness
Exhibit M                  Certain Restrictions

<PAGE>
                            MAVERICK TUBE CORPORATION
                            SECURED CREDIT AGREEMENT



Harris Trust and Savings Bank
Chicago, Illinois


Mercantile Bank National Association
St. Louis, Missouri


Ladies and Gentlemen:

         The undersigned, MAVERICK TUBE CORPORATION, a Delaware corporation (the
"Borrower")  applies  to you for your  several  commitments,  subject to all the
terms  and  conditions  hereof  and on the  basis  of  the  representations  and
warranties  hereinafter  set forth,  to make a revolving  credit (the "Revolving
Credit")  available to the Borrower,  all as more fully  hereinafter  set forth.
Each of you is hereinafter  referred to individually as "Bank" and  collectively
as  "Banks."  Harris  Trust  and  Savings  Bank in its  individual  capacity  is
sometimes  referred to herein as "Harris,"  and in its capacity as Agent for the
Banks is hereinafter in such capacity called the "Agent."





SECTION 1.           THE CREDITS.

         Section 1.1. The Revolving Credit.  (a) Subject to all of the terms and
conditions  hereof,  the Banks agree,  severally  and not  jointly,  to extend a
Revolving  Credit to the  Borrower  which may be  utilized  in the form of loans
(individually a "Revolving  Credit Loan" and collectively the "Revolving  Credit
Loans"),  and L/Cs (as hereinafter  defined).  The aggregate principal amount of
all Revolving  Credit Loans under the Revolving Credit plus the amount available
for drawing  under the L/Cs,  and the aggregate  principal  amount of all unpaid
Reimbursement Obligations (as hereinafter defined) at any time outstanding shall
not  exceed  the  lesser of (i) the  Banks'  Revolving  Credit  Commitments  (as
hereinafter  defined)  in  effect  from  time to time  during  the  term of this
Agreement  and (ii) the  Borrowing  Base as  determined on the basis of the most
recent  Borrowing Base  Certificate.  The Revolving Credit shall be available to
the Borrower, and may be availed of by the Borrower from time to time, be repaid
(subject to the  restrictions  on  prepayment  set forth herein) and used again,
during the period from the date hereof to and including  September 30, 2003 (the
"Termination Date").

         The respective  maximum  aggregate  principal  amounts of the Revolving
Credit  at  any  one  time  outstanding  and  the  percentage  (the  "Commitment
Percentage")  of the Revolving  Credit  available at any time which each Bank by
its acceptance  hereof severally agrees to make available to the Borrower are as
follows  (collectively,  the "Revolving Credit Commitments" and individually,  a
"Revolving Credit Commitment"):

Harris Trust and Savings Bank                    $25,000,000                50%
Mercantile Bank National Association             $25,000,000                50%

Total                                            $50,000,000                100%

         (c)  Loans  under  the  Revolving  Credit  may be  Eurodollar  Loans or
Domestic  Rate Loans.  All Loans under the  Revolving  Credit shall be made from
each Bank in proportion to its respective  Revolving Credit  Commitment as above
set forth.  Each Domestic Rate Loan shall be in an amount not less than $250,000
or such  greater  amount  which is an integral  multiple  of  $100,000  and each
Eurodollar  Loan shall be in an amount not less than  $1,000,000 or such greater
amount which is an integral multiple of $500,000.

         (d) The initial  borrowing  under this Agreement  shall be in an amount
sufficient  to pay all amounts  outstanding  under that certain  Secured  Credit
Agreement dated as of May 15, 1992, as amended (the "Existing  Agreement") among
the  Borrower,  Harris  Trust  and  Savings  Bank,  individually  and  as  agent
thereunder, and Mercantile Bank National Association.  The Agent shall apply the
proceeds of the initial  borrowing  hereunder to pay all  principal and interest
outstanding under the Existing Agreement.

         Section 1.2. The Notes.  All  Revolving  Credit Loans made by each Bank
under its Revolving  Credit  Commitment,  shall be evidenced by a single Secured
Revolving  Credit Note of the  Borrower  substantially  in the form of Exhibit A
hereto  individually,  a "Revolving Note" and together,  the "Revolving  Notes")
payable  to the  order  of each  Bank in the  principal  amount  of such  Bank's
Revolving Credit Commitment,  but the aggregate principal amount of indebtedness
evidenced  by such  Revolving  Note at any time  shall be, and the same is to be
determined by, the aggregate principal amount of all Revolving Credit Loans made
by such  Bank  to the  Borrower  pursuant  hereto  on or  prior  to the  date of
determination  less  the  aggregate  amount  of  principal  repayments  on  such
Revolving Credit Loans received by or on behalf of such Bank on or prior to such
date of  determination.  Each  Revolving Note shall be dated as of the execution
date of this Agreement,  shall be delivered  concurrently herewith, and shall be
expressed to mature on the Termination  Date and to bear interest as provided in
Section  1.3  hereof.  Each Bank  shall  record on its books or  records or on a
schedule to its Revolving Note the amount of each Revolving  Credit Loan made by
it  hereunder,  whether each  Revolving  Credit Loan is a Domestic  Rate Loan or
Eurodollar  Loan, and, with respect to Eurodollar  Loans,  the interest rate and
Interest Period applicable  thereto,  and all payments of principal and interest
and the principal balance from time to time outstanding,  provided that prior to
any transfer of such  Revolving  Note all such amounts  shall be recorded on the
schedule to such Revolving Note. The record thereof, whether shown on such books
or  records or on the  schedule  to the  Revolving  Note,  shall be prima  facie
evidence as to all such amounts; provided, however, that the failure of any Bank
to record, or any mistake in recording,  any of the foregoing shall not limit or
otherwise  affect the  obligation of the Borrower to repay all Revolving  Credit
Loans made hereunder together with accrued interest thereon. Upon the request of
any Bank, the Borrower will furnish a new Revolving Note to such Bank to replace
its outstanding  Revolving Note and at such time the first notation appearing on
the schedule on the reverse side of, or attached to, such  Revolving  Note shall
set forth the aggregate  unpaid  principal amount of Revolving Credit Loans then
outstanding  from such Bank,  and,  with respect to each  Eurodollar  Loan,  the
interest rate and Interest Period applicable thereto.  Such Bank will cancel and
deliver to the Borrower the  outstanding  Revolving  Credit Note upon receipt of
the new Revolving Credit Note.

         Section 1.3. Interest Rates. (a) Domestic Rate. Each Domestic Rate Loan
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid  principal amount thereof from the date such Loan is made
until maturity (whether by acceleration, upon prepayment or otherwise) at a rate
per annum equal to the sum of the Applicable  Margin plus the Domestic Rate from
time to time in  effect,  payable  monthly  in  arrears  on the last day of each
month,   commencing  on  September   30,  1998  and  at  maturity   (whether  by
acceleration, upon prepayment or otherwise).

         (b) Eurodollar Rate. Each Eurodollar Loan shall bear interest (computed
on the  basis of a year of 360 days  and  actual  days  elapsed)  on the  unpaid
principal  amount  thereof from the date such Loan is made until the last day of
the Interest Period applicable  thereto or, if earlier,  until maturity (whether
by  acceleration  or  otherwise)  at a rate  per  annum  equal to the sum of the
Applicable Margin plus the Adjusted  Eurodollar Rate, payable on the last day of
each Interest Period applicable thereto and at maturity (whether by acceleration
or  otherwise),  and,  with  respect  to any  Interest  Period  applicable  to a
Eurodollar  Loan in excess of three months,  on the date  occurring  every three
months after the date such Interest Period began and at the end of such Interest
Period;  provided that if on the last day of the Interest  Period  applicable to
any  Eurodollar  Loan the  Borrower  does not prepay such Loan,  such Loan shall
become a Domestic Rate Loan as of the last day of the Interest Period applicable
thereto.

         "Adjusted  Eurodollar Rate" means a rate per annum determined  pursuant
to the following formula:

         Adjusted Eurodollar Rate  = Eurodollar Rate/(100% - Reserve Percentage)

         "Eurodollar Rate" means, for each Interest Period,  (a) the LIBOR Index
Rate for such Interest Period,  if such rate is available,  and (b) if the LIBOR
Index Rate cannot be determined, the arithmetic average of the rates of interest
per annum (rounded upward, if necessary,  to the nearest 1/100th of 1%) at which
deposits in U.S. Dollars in immediately available funds are offered to the Agent
at 11:00 a.m. (London,  England time) two (2) Business Days before the beginning
of such  Interest  Period  by three  (3) or more  major  banks in the  interbank
eurodollar  market  selected  by the Bank for a  period  equal to such  Interest
Period and in an amount equal or comparable to the  applicable  Eurodollar  Loan
scheduled to be outstanding during such Interest Period.

         "LIBOR Index Rate" means, for any Interest  Period,  the rate per annum
(rounded upwards, if necessary,  to the next higher one  hundred-thousandth of a
percentage  point)  for  deposits  in U.S.  Dollars  for a period  equal to such
Interest  Period,  which  appears  on the  Telerate  Page 3750 as of 11:00  a.m.
(London,  England time) on the day two (2) Business Days before the commencement
of such Interest Period.

         "Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British  Bankers'  Association  as
the  information   vendor  for  the  purpose  of  displaying   British  Bankers'
Association   Interest   Settlement  Rates  for  U.S.  Dollar  deposits).   Each
determination  of the Eurodollar  Rate made by the Agent shall be conclusive and
binding absent manifest error.

         "Interest  Period"  means,  with respect to any  Eurodollar  Loan,  the
period  commencing  on,  as the  case  may be,  the  creation,  continuation  or
conversion  date with  respect to such  LIBOR Loan and ending one (1),  two (2),
three (3) or six (6) months thereafter as selected by the Borrower in its notice
as provided herein;  provided that all of the foregoing  provisions  relating to
Interest Periods are subject to the following:

                   (i) if any Interest Period would otherwise end on a day which
         is not a Business Day,  that  Interest  Period shall be extended to the
         next succeeding  Business Day, unless in the case of an Interest Period
         for a Eurodollar  Loan the result of such  extension  would be to carry
         such Interest  Period into another  calendar  month in which event such
         Interest Period shall end on the immediately preceding Business Day;

                  (ii) no Interest Period may extend beyond  the  final maturity
         date of the Notes;

                 (iii) the interest  rate to be applicable to each Loan for each
         Interest  Period shall apply from and  including  the first day of such
         Interest Period to but excluding the last day thereof; and

                  (iv) no Interest Period may be selected if after giving effect
         thereto  the  Company  will  be  unable  to  make a  principal  payment
         scheduled to be made during such Interest Period without paying part of
         a  Eurodollar  Loan on a date other  than the last day of the  Interest
         Period applicable thereto.

For purposes of determining an Interest  Period, a month means a period starting
on one day in a calendar month and ending on a numerically  corresponding day in
the next calendar month, provided,  however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest  Period is to end, then such  Interest  Period shall end on
the last Business Day of such month.

         "Reserve Percentage" means the daily arithmetic average maximum rate at
which reserves (including,  without limitation,  any supplemental,  marginal and
emergency  reserves) are imposed on member banks of the Federal  Reserve  System
during the applicable  Interest  Period by the Board of Governors of the Federal
Reserve  System  (or  any  successor)   under   Regulation  D  on  "eurocurrency
liabilities"  (as  such  term  is  defined  in  Regulation  D),  subject  to any
amendments of such reserve  requirement by such Board or its  successor,  taking
into  account  any  transitional  adjustments  thereto.  For  purposes  of  this
definition,  the Eurodollar Loans shall be deemed to be Eurocurrency liabilities
as  defined  in  Regulation  D without  benefit  or credit  for any  prorations,
exemptions or offsets under Regulation D.

                   (c) Default  Rate. If any payment of principal or interest on
         any Revolving  Credit Loan is not made when due  (including any payment
         due upon acceleration),  such Loan shall bear interest (computed on the
         basis of a year of 360 days and actual days elapsed) from the date such
         payment  was due until paid in full,  payable on demand,  at a rate per
         annum equal to:

                            (i) with respect to any Domestic Rate Loan,  the sum
                  of 2% plus the  Applicable  Margin plus the Domestic Rate from
                  time to time in effect; and

                           (ii) with respect to any Eurodollar  Loan, the sum of
                  2% plus the rate of interest in effect  thereon at the time of
                  such  default  until  the  end of  the  Interest  Period  then
                  applicable thereto, and, thereafter, at a rate per annum equal
                  to the sum of 2% plus the Applicable  Margin plus the Domestic
                  Rate from time to time in effect.

                   (d) Interest Rate and Commitment Fee Margin Adjustments.  The
         Applicable  Margin specified in subsections (a) and (b) hereof shall be
         subject to  reduction  if the  Borrower's  Total  Funded Debt to EBITDA
         Ratio for any fiscal quarter and for the preceding fiscal quarter shall
         have been in a lower range specified  below than that range  associated
         with the interest rate margins then in effect,  and shall be subject to
         increase if the  Borrower's  Total  Funded Debt to EBITDA Ratio for any
         fiscal  quarter  shall be in a higher  range  specified  below than the
         range  associated  with the interest  rate margins then in effect.  The
         margins from time to time  applicable to the Revolving  Credit Loans in
         accordance  herewith  are  hereinafter  referred to as the  "Applicable
         Margins".

--------------------------------------------------------------------------------

                             SUMMARY PRICING MATRIX
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                      Level I      Level II         Level III        Level IV

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Total Funded Debt    less than    greater than     greater than     greater than
to EBITDA Ratio      1.00 time    or equal to      or equal to      or equal to
                                  1.00 time and    2.00 times &     2.50 times
                                  less than        less than
                                  2.00 times       2.50 times
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Domestic Rate           0%            0%               0%               0%
Margin
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Eurodollar Margin      .75%         1.00%            1.25%            1.50%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Commitment Fee         .20%          .25%             .25%             .375%
--------------------------------------------------------------------------------

         Not later  than ten  Business  Days  after  receipt by the Agent of the
financial  statements  called  for by  Section  7.4  hereof  for the  applicable
quarter, the Agent shall determine the Total Funded Debt to EBITDA Ratio for the
applicable  period and shall promptly  notify the Borrower and each Bank of such
determination and of any change in the Applicable  Margins resulting  therefrom.
Any such change in the Applicable  Margins shall be effective as of the date the
Agent so notifies the Borrower  with  respect to all Loans  outstanding  on such
date,  and such new  Applicable  Margins  shall  continue  in  effect  until the
effective date of the next  quarterly  redetermination  in accordance  with this
Section 1.3(d).  Each determination of the Total Funded Debt to EBITDA Ratio and
Applicable  Margins by the Agent in  accordance  with this Section be conclusive
and binding on the Borrower  absent  manifest error or willful  misconduct.  The
Applicable  Margins  shall  first be  adjusted  upon  receipt  of the  financial
statements  for the fiscal  quarter  ending  September  30, 1999.  From the date
hereof until the date the Applicable Margins are first adjusted pursuant hereto,
the Applicable Margins shall be those set forth in Level II above.

         Section  1.4.  Letter  of  Credit.  (a)  Subject  to all the  terms and
conditions  hereof and  satisfaction  of all  conditions  precedent to borrowing
under this Agreement and so long as no Potential  Default or Event of Default is
in existence,  at the  Borrower's  request  Harris shall issue letters of credit
(individually,  an "L/C" and  collectively  the  "L/Cs")  for the account of the
Borrower  in  an  aggregate  amount  not  to  exceed   $5,000,000,   subject  to
availability  under  the  Revolving  Credit,  and  the  Banks  hereby  agree  to
participate  therein as more fully  described  in Section 1.7  hereof.  Each L/C
shall be issued  pursuant to an  application  and agreement for letter of credit
(individually,  an "L/C Agreement" and collectively the "L/C Agreements") in the
form of Exhibit C hereto,  shall consist of a standby or trade letter of credit,
shall be in form and  substance  acceptable  to Harris and the Banks,  and shall
have an expiry  date not more than one year from the date of  issuance  thereof,
subject to annual  renewals (but in no event later than the  Termination  Date).
The aggregate amount available to be drawn under all L/Cs issued pursuant hereto
shall be  deducted  from the  credit  otherwise  available  under the  Revolving
Credit.  In  consideration  of the issuance of L/Cs the  Borrower  agrees to pay
Harris for the benefit of the Banks a fee (the "L/C  Participation  Fee") in the
amount per annum  equal to the  Applicable  Margin  (but not to exceed 1% in any
event) for Eurodollar  Loans (computed on the basis of a 360 day year and actual
days  elapsed)  of the face  amount for each L/C  issued for the  account of the
Borrower  hereunder.  In addition,  the Borrower shall pay Harris (x) a fee (the
"L/C  Issuance  Fee") in the amount  per annum  equal to (i) for  standby  L/Cs,
one-eighth  of one  percent  (0.125%) of the stated  amount of each  standby L/C
issued  hereunder and (ii) for commercial  L/Cs, the customary  issuance fee for
commercial  L/Cs as may be established by Harris from time to time, and (y) such
drawing, negotiation, amendment and other administrative fees in connection with
each  L/C  as  may be  established  by  Harris  from  time  to  time  (the  "L/C
Administrative  Fee"). All L/C Issuance Fees and L/C Participation Fees shall be
payable  quarterly in arrears on the last day of each December,  March, June and
September commencing September 30, 1998 and on the Termination Date, and all L/C
Administrative  Fees  shall  be  payable  on the  date of  issuance  of each L/C
hereunder and on the date required by Harris.

         (b) The Agent shall give prompt telephone, telex, or telecopy notice to
each Bank of each issuance of, or amendment to, an L/C  specifying the effective
date of the L/C or amendment,  the amount,  the beneficiary,  and the expiration
date of the L/C, in each case as established  originally or through the relevant
amendment, as applicable,  the account party or parties for the L/C, each Bank's
pro rata  participation in such L/C and whether the Agent has classified the L/C
as a  commercial,  performance,  or  financial  letter of credit for  regulatory
reporting purposes.

         Section 1.5. Reimbursement Obligations;. The Borrower is obligated, and
hereby unconditionally agrees to pay in immediately available funds to the Agent
for the  account of Harris and the Banks who are  participating  in the L/Cs the
face  amount of each draft drawn and  presented  under each L/C issued by Harris
hereunder  (the  obligation  of  the  Borrower  under  this  Section  1.5  is  a
"Reimbursement  Obligation").  If at any  time  the  Borrower  fails  to pay any
Reimbursement  Obligation  when  due,  the  Borrower  shall  be  deemed  to have
automatically requested a Domestic Rate Loan from the Banks hereunder, as of the
maturity date of such Reimbursement Obligation, the proceeds of which Loan shall
be used to repay such Reimbursement Obligation.  Such Loan shall only be made if
no Potential Default or Event of Default shall exist and upon approval by all of
the Banks, and shall be subject to availability  under the Revolving  Credit. If
such Loan is not made by the Banks for any  reason,  the  unpaid  amount of such
Reimbursement  Obligation shall be due and payable to the Agent for the pro rata
benefit of the Banks upon demand and shall bear interest at the rate of interest
specified in Section 1.3(c)(i) hereof.

         Section 1.6. Manner of Borrowing and Rate  Selection.  (a) The Borrower
(through any one of its Authorized Representatives) shall give telephonic, telex
or telecopy notice to the Agent (which notice, if telephonic,  shall be promptly
confirmed  in writing) no later than (i) 11:00 a.m.  (Chicago  time) on the date
the Banks are  requested  to make each  Domestic  Rate Loan under the  Revolving
Credit  and (ii)  11:00  a.m.  (Chicago  time) on the  date at least  three  (3)
Business  Days prior to the date of each  Eurodollar  Loan  under the  Revolving
Credit which the Banks are requested to make. Each such notice shall specify the
date of the Loan  requested  (which shall be a Business Day), the amount of such
Loan,  whether the Loan is to be made available by means of a Domestic Rate Loan
or Eurodollar  Loan and, with respect to Eurodollar  Loans,  the Interest Period
applicable thereto; provided, that in no event shall the principal amount of any
requested  Revolving  Credit  Loan plus the  aggregate  principal  amount of all
Loans, the undrawn face amount of all L/Cs and unpaid Reimbursement  Obligations
outstanding  hereunder exceed the amounts  specified in Section 1.1 hereof.  The
Borrower  agrees  that  the  Agent  may rely on any  such  telephonic,  telex or
telecopy notice given by any person who the Agent believes is authorized to give
such notice without the necessity of independent  investigation and in the event
any notice by such means  conflicts with the written  confirmation,  such notice
shall govern if any Bank has acted in reliance thereon.  The Agent shall, on the
day any such notice is received by it, give prompt telephonic, telex or telecopy
(if  telephonic,  to be confirmed in writing  within one Business Day) notice of
the receipt of notice from the  Borrower  hereunder  to each of the Banks (using
its best efforts to give such notice by no later than 1:00 p.m.,  Chicago  time,
of the day such notice is received [if received at or before 11:00 a.m., Chicago
time] or by no later than the  morning  of the  following  Business  Day [if not
received prior to 11:00 a.m.,  Chicago time]),  and, if such notice requests the
Banks to make any Eurodollar  Loans,  the Agent shall confirm to the Borrower by
telephonic,  telex or telecopy means, which confirmation shall be conclusive and
binding on the Borrower in the absence of manifest error or willful  misconduct,
the Interest Period and the interest rate applicable thereto promptly after such
rate is determined by the Agent.

         (b) Subject to the provisions of Section 6 hereof, the proceeds of each
Revolving  Credit Loan shall be made  available to the Borrower at the principal
office of the Agent in Chicago, Illinois, in immediately available funds, on the
date such Loan is requested to be made,  except to the extent a Revolving Credit
Loan represents a refinancing of a Reimbursement  Obligation,  in which case the
proceeds  of such Loan shall be applied to the  payment of the  relevant  unpaid
Reimbursement  Obligation.  Not later than 3:00 p.m.  Chicago  time, on the date
specified for any Loan to be made hereunder, each Bank shall make its portion of
such Loan  available  to the  Borrower  in  immediately  available  funds at the
principal office of the Agent,  except as otherwise  provided above with respect
to repaying any outstanding Reimbursement Obligations.

         (c) Unless the Agent  shall have been  notified by a Bank prior to 2:00
p.m.  (Chicago time) on the date of a Loan to be made by such Bank (which notice
shall be effective upon receipt and may be made by telecopy) that such Bank does
not intend to make the proceeds of such Loan  available to the Agent,  the Agent
may assume that such Bank has made such proceeds  available to the Agent on such
date and the  Agent  may in  reliance  upon such  assumption  (but  shall not be
required  to) make  available to the Borrower a  corresponding  amount.  If such
corresponding  amount is not in fact made  available  to the Agent by such Bank,
the Agent shall be entitled to receive such amount on demand from such Bank (or,
if such Bank fails to pay such amount  forthwith  upon such  demand,  to recover
such amount,  together with interest  thereon at the rate  otherwise  applicable
thereto  under  Section 1.3 hereof,  from the  Borrower)  together with interest
thereon in respect  of each day  during the period  commencing  on the date such
amount  was made  available  to the  Borrower  and  ending on the date the Agent
recovers such amount, at a rate per annum equal to the effective rate charged to
the Agent for  overnight  Federal  funds  transactions  with member banks of the
Federal Reserve System for each day, as determined by the Agent (or, in the case
of a day which is not a Business Day, then for the preceding  Business Day) (the
"Fed Funds Rate").  Nothing in this Section 1.6(c) shall be deemed to permit any
Bank to breach its  obligations  to make Loans under the Revolving  Credit or to
limit the Borrower's claims against any Bank for such breach.

         Section 1.7. Participation in the L/C. Each of the Banks will acquire a
risk  participation  in each L/C upon the issuance thereof ratably in accordance
with its Commitment Percentage. In the event any Reimbursement Obligation is not
immediately paid by the Borrower pursuant to Section 1.5 hereof,  each Bank will
pay to Harris funds in an amount equal to such Bank's  Commitment  Percentage of
such Reimbursement Obligation. At the election of all of the Banks, such funding
by the  Banks  of an  unpaid  Reimbursement  Obligations  shall  be  treated  as
additional  Revolving  Credit  Loans to the  Borrower  hereunder  rather  than a
purchase  of  participations  by the  Banks  in the  L/C  held  by  Harris.  The
availability  of funds to the  Borrower  under  the  Revolving  Credit  shall be
reduced in an amount equal to the undrawn face amount of the L/C. The obligation
of  the  Banks  to  Harris   under  this  Section  1.7  shall  be  absolute  and
unconditional  and shall not be  affected or impaired by any Event of Default or
Potential  Default which may then be continuing  hereunder.  Harris shall notify
each Bank by telephone of its proportionate  share relative to its percentage of
the total Banks' Revolving Credit Commitments set forth in Section 1.1 hereof (a
"Commitment Percentage") of such unpaid Reimbursement Obligation. If such notice
has been given to each Bank by 12:00 Noon, Chicago time, each Bank agrees to pay
Harris  in  immediately  available  and  freely  transferable  funds on the same
Business Day its Commitment Percentage of such Reimbursement  Obligation.  Funds
shall be so made available at the account designated by Harris in such notice to
the Banks.  Upon the election by the Banks to treat such  funding as  additional
Revolving Credit Loans hereunder and payment by each Bank, such Loans shall bear
interest in accordance with Section 1.3(a) hereof.  Harris shall share with each
Bank its  Commitment  Percentage of each payment of a  Reimbursement  Obligation
(whether of principal or interest) and any L/C  Participation Fee payable by the
Borrower.  The L/C Issuance Fee and L/C  Administration  Fee shall be solely for
Harris'  account  and shall not be shared by the other  Banks.  Any such  amount
shall be promptly  remitted to the Banks when and as received by Harris from the
Borrower.

         Section  1.8.  The  Collateral.  The  Revolving  Notes  and  the  other
obligations  of the Borrower  hereunder  and under the Loan  Documents  shall be
secured  by valid  and  perfected  first  liens on the  inventory  and  accounts
receivable  of the Borrower and the  Guarantors,  in each  instance  whether now
owned  or  existing  or  hereafter   acquired  or  arising   (collectively   the
"Collateral")  and the  Borrower  agrees  that it  will,  and  will  cause  each
Guarantor  to, from time to time at the request of the Agent or any Bank execute
and deliver such documents and do such acts and things as the Agent or such Bank
may reasonably request in order to provide for or perfect such liens.


SECTION 2.           FEES, PREPAYMENTS AND TERMINATIONS.

         Section 2.1.  Commitment  Fees.  For the period from the date hereof to
and including the Termination  Date, or such earlier date on which the Revolving
Credit is terminated in whole pursuant to Section 2.5 hereof, the Borrower shall
pay to the Agent for the account of the Banks a  commitment  fee with respect to
the Revolving  Credit at the rate per annum  (computed on the basis of a year of
360 days for the actual number of days elapsed) equal to the Applicable  Margin,
of the average daily unused amount of the Banks'  Revolving  Credit  Commitments
hereunder in effect from time to time, all such fees to be payable  quarterly in
arrears on the last day of each  calendar  quarter  commencing  on September 30,
1998,  unless the Revolving Credit is terminated in whole on an earlier date, in
which event the  commitment  fees for the final period shall be paid on the date
of such earlier termination in whole.

         Section 2.2.  Other Fees.

         (a) Agent's Fees.  The Borrower shall pay to  and for the  sole account
of the Agent such fees as the  Borrower  and the Agent may agree upon in writing
from time to time.  Such fees shall be in  addition  to any fees and charges the
Agent may be entitled to receive under the other Loan Documents.

         (b) Closing Fee.  The  Borrower  shall pay to the Agent for the ratable
account  of the Banks a closing  fee in an amount  equal to 0.20% of the  Banks'
Revolving Credit  Commitments as in effect on the date hereof.  All such closing
fees  payable  pursuant to this  Section  2.2(b) shall be payable on the date of
this Agreement and shall be non-refundable.

         Section 2.3.  Optional  Prepayments.  (a) The  Borrower  shall have the
privilege of prepaying  without  premium or penalty and in whole or in part (but
if in part,  then in a minimum  principal  amount of  $100,000  or such  greater
amount which is an integral  multiple of $100,000)  any Domestic Rate Loan under
the Revolving  Credit at any time upon prior telex or  telephonic  notice to the
Agent on or before  12:00 Noon on the same  Business  Day.  Except as  otherwise
provided in Section  2.3(b)  hereof,  the Borrower may not prepay any Eurodollar
Loan under the Revolving Credit.

         (b) The Borrower may prepay any Eurodollar Loans upon telephonic notice
(which shall be promptly confirmed in writing by facsimile communication,  telex
or  telegraph)  by no later than 11:00 a.m.  (Chicago  time) on the date of such
prepayment  from the Borrower to the Agent,  such  prepayment  to be made by the
payment of the principal  amount to be prepaid and accrued  interest thereon and
any  compensation  required  by Section  9.4 hereof,  if  applicable;  provided,
however, that any such prepayment shall be in a principal amount of no less than
$250,000 or such greater amount which is an integral  multiple of $100,000,  and
after giving effect to any such prepayment the outstanding  principal  amount of
such  Eurodollar  Loans  prepaid in part shall not be less than $250,000 or such
greater amount which is an integral multiple of $100,000.

         (c) Any amount prepaid under the Revolving  Credit may,  subject to the
terms and conditions of this Agreement, be borrowed, repaid and borrowed again.

         Section 2.4. Mandatory  Prepayments-Borrowing  Base. The Borrower shall
not  permit  the sum of the  principal  amount  of all  Loans  plus  the  amount
available for drawing under the L/Cs and the aggregate  principal  amount of all
unpaid Reimbursement Obligations at any time outstanding to exceed the lesser of
(i) the  Banks'  Revolving  Credit  Commitments  or (ii) the  Borrowing  Base as
determined  on the  basis of the most  recent  Borrowing  Base  Certificate.  In
addition to the  Borrower's  obligations  to pay any  outstanding  Reimbursement
Obligations  as set forth in Section 1.5  hereof,  the  Borrower  will make such
payments  on any  outstanding  Loans  and  Reimbursement  Obligations  which are
necessary  to cure  any  such  excess  within  three  Business  Days  after  the
occurrence  thereof  without  any notice or demand  from the Agent or any of the
Banks,  all of which are  expressly  waived by the  Borrower.  Any amount repaid
under the  Revolving  Credit may,  subject to the terms and  conditions  of this
Agreement, be borrowed, repaid and borrowed again.

         Section 2.5.  Terminations.  The  Borrower  shall have the right at any
time upon 5 Business  Days' prior notice to the Banks to terminate the Revolving
Credit  Commitments  in whole or in part (but if in part in a minimum  amount of
$5,000,000  or any  integral  multiple  thereof);  provided,  however,  that the
Borrower may not terminate any portion of the Revolving Credit  Commitments that
is in use in the form of Revolving  Credit Loans,  Reimbursement  Obligations or
L/Cs.

         Section 2.6.  Capital  Adequacy.  If, after the date of this Agreement,
any Bank or the Agent  shall have  determined  in good  faith that the  adoption
after such date of any  applicable  law,  rule or regulation  regarding  capital
adequacy, or any change therein (including,  without limitation, any revision in
the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal
Reserve System (12 CFR Part 208,  Appendix A; 12 CFR Part 225, Appendix A) or of
the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in
any  other  applicable  capital  rules  heretofore  adopted  and  issued  by any
governmental  authority),  or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Lending  Office) with any request or directive  regarding  capital  adequacy
(whether or not having the force of law) of any such authority,  central bank or
comparable  agency,  has or would have the effect of reducing the rate of return
on such Bank's capital,  or on the capital of any corporation  controlling  such
Bank, in each case as a consequence  of its  obligations  hereunder,  to a level
below that which such Bank would have achieved but for such adoption,  change or
compliance  (taking  into  consideration  such Bank's  policies  with respect to
capital  adequacy) by an amount  deemed by such Bank to be  material,  then from
time to time,  within thirty (30) days after demand by such Bank (with a copy to
the  Agent),  the  Borrower  shall pay to such Bank  such  additional  amount or
amounts as will compensate such Bank for such reduction.


SECTION 3.           PLACE AND APPLICATION OF PAYMENTS.

         All payments of principal  and interest made by the Borrower in respect
of the Revolving Notes and Reimbursement Obligations and all fees payable by the
Borrower hereunder,  shall be made to the Agent at its office at 111 West Monroe
Street,  Chicago,  Illinois 60690 and in immediately  available funds,  prior to
12:00 noon on the date of such payment.  All such payments shall be made without
setoff or  counterclaim  and without  reduction  for, and free from, any and all
present  and  future  levies,   imposts,   duties,  fees,  charges,   deductions
withholdings, restrictions or conditions of any nature imposed by any government
or any political  subdivision or taxing authority thereof. Any payments received
after 12:00 noon Chicago time (or after the time the Banks may otherwise direct)
shall be deemed received upon the following  Business Day. The Agent shall remit
to each Bank its  proportionate  share of each payment of  principal,  interest,
commitment fees and L/C fees received by the Agent by 12:00 noon Chicago time on
the same day of its receipt  and its  proportionate  share of each such  payment
received  by the  Agent  after  12:00  noon  Chicago  time on the  Business  Day
following  its  receipt by the Agent.  In the event the Agent does not remit any
amount to any Bank when required by the preceding sentence,  the Agent shall pay
to such Bank interest on such amount until paid at a rate per annum equal to the
Fed Funds Rate. The Borrower hereby authorizes the Agent to automatically  debit
its accounts with Harris for any principal, interest and fees when due under the
Revolving Notes, the L/C Agreements or this Agreement and to transfer the amount
so debited from such account to the Agent for  application  as herein  provided.
All  proceeds  of  Collateral  shall be applied in the manner  specified  in the
applicable Security Documents.


SECTION 4.           DEFINITIONS.

         Section 4.1.  Certain Terms Defined.  The terms  hereinafter  set forth
when used herein shall have the following meanings:

         "Account Debtor"  shall  mean  the  person  who  is  obligated  on  a
Receivable.

         "PMAC  Acquisition"  shall  mean the  acquisition  by the  Borrower  of
certain  assets  comprising the "Cold Draw  Department"  of PMAC,  Ltd., a Texas
limited partnership, pursuant to the Acquisition Documents.

         "Acquisition   Documents"   shall  mean  that  certain  Asset  Purchase
Agreement  dated as of August 17, 1998 between the  Borrower and PMAC,  Ltd. and
all other agreements executed in connection therewith.

         "Adjusted  Eurodollar  Rate"  shall  have  the  meaning  specified  in 
Section 1.3(b) hereof.

         "Affiliate"  shall mean any person,  company or business  entity  under
common control or having  shareholders owning at least ten percent (10%) of each
thereof,  whether  such  common  control  be  direct  or  indirect.  All  of the
Borrower's officers, directors, joint venturers, Subsidiaries and partners shall
be deemed to be the Borrower's Affiliates for purposes of this Agreement.

         "Agent" is defined in the first paragraph of this Agreement.

         "Agreement"  shall mean this Secured Credit  Agreement as  supplemented
and amended from time to time.

         "Applicable Margin" shall have the meaning specified in  Section 1.3(d)
hereof.

         "Authorized  Representatives"  shall mean Gregg Eisenberg, Barry Pearl,
Pam Boone,  Mary Hulsey,  Karen Thiel, and Delene Rice.

         "Bank" and  "Banks"  shall  have the  meanings  specified  in the first
paragraph of this Agreement.

         "Bill and Hold" shall mean unpaid  Receivables  resulting from the sale
of Inventory  which has not yet been delivered to, and is not yet in the process
of being delivered to, the Account Debtor on such Receivables.

         "Borrower" is defined in the first paragraph hereof.

         "Borrowing  Base",  as  determined  on the  basis  of  the  information
contained in the most recent  Borrowing Base  Certificate,  shall mean an amount
equal to:

             (a) 85% of the amount of Eligible Receivables of the Borrower, plus

             (b) 55% of the Value of Eligible Bill and Hold Receivables, plus

             (c) 55% of the Value of Eligible  Inventory of the Borrower,
                 provided that in no event shall such amount exceed an amount
                 equal to 60% of the aggregate principal amount of all Loans,
                 Reimbursement  Obligations and L/Cs  outstanding  under this
                 Agreement at any time.

         "Borrowing Base Certificate"  shall mean the certificate in the form of
Exhibit D hereto which is required to be  delivered  to the Banks in  accordance
with Sections 1.6(a) and 7.4(c) hereof.

         "Business  Day" shall mean any day except  Saturday  or Sunday on which
banks  are  open for  business  in  Chicago,  Illinois,  and,  with  respect  to
Eurodollar  Loans,  dealing in United States Dollar deposits in London,  England
and Nassau, Bahamas.

         "Capitalized  Lease"  shall mean any lease or  obligation  for  rentals
which is required  to be  capitalized  on a  consolidated  balance  sheet of the
Borrower and its Subsidiaries in accordance with generally  accepted  accounting
principles.

         "Capitalized  Lease Obligation" shall mean the present discounted value
of  the  rental   obligations  under  any  Capitalized  Lease  determined  on  a
consolidated basis in accordance with generally accepted accounting principles.

         "CERCLA"   shall  mean  the   Comprehensive   Environmental   Response,
Compensation and Liability Act of 1980, as amended from time to time.

         "Change in Law" shall have the meaning specified in Section 9.3 hereof.

         "Collateral"  shall mean the collateral  security provided to the Agent
for the benefit of the Banks pursuant to the Security Documents.

         "Commitment Percentage" shall have the meaning set forth in Section 1.1
hereof.

         "Consolidated  EBITDA"  shall  mean,  with  reference  to  any  period,
Consolidated Net Income for such period plus all amounts deducted in arriving at
such  Consolidated  Net Income  amount in respect of (a)  Consolidated  Interest
Expense for such period, plus (b) foreign, federal, state and local income taxes
for such period, plus (c) all amounts properly charged for depreciation of fixed
assets and amortization of intangible  assets during such period on the books of
the Company and its Subsidiaries.

         "Consolidated  Interest  Expense"  shall mean,  with  reference  to any
period, the sum of all interest charges (including imputed interest charges with
respect to Capitalized Lease Obligations,  all amortization of debt discount and
expense),  of the Borrower and its Subsidiaries for such period  determined on a
consolidated basis in accordance with generally accepted  accounting  principles
consistently applied.

         "Consolidated Net Income" shall mean the net income of the Borrower and
its  Subsidiaries,  all as determined  and computed on a  consolidated  basis in
accordance with generally accepted accounting principles consistently applied.

         "Consolidated Stockholders' Equity" shall mean the stockholders' equity
of the Borrower and its  Subsidiaries,  determined  on a  consolidated  basis in
accordance with generally accepted accounting principles, consistently applied.

         "Consolidated  Tangible  Net Worth"  shall mean the sum of all  capital
stock,  preferred stock,  capital in excess of par value and retained  earnings,
less the amount of goodwill and all other Intangible Assets and Deferred Charges
(other  than  Deferred  Charges  for  income  taxes)  of the  Borrower  and  the
Subsidiaries,  determined on a consolidated  basis in accordance  with generally
accepted accounting principles, consistently applied.

         "Debt"  of any  Person  shall  mean as of any  time  the  same is to be
determined,  the aggregate of (i) all liabilities,  reserves and any other items
which would be classified  as a liability on a balance sheet in accordance  with
generally  accepted  accounting  principles,  (ii) all guaranties,  endorsements
(other than any liability arising out of the endorsement of items for deposit or
collection in the ordinary course of business) and other contingent  obligations
in respect of, or any obligations to purchase or otherwise acquire, indebtedness
of others, (iii) all reimbursement and other obligations with respect to letters
of credit and  banker's  acceptances,  (iv) the  aggregate  amount of rentals or
other  consideration  payable under all leases and other agreements for the use,
acquisition  or  retention  of real or  personal  property of a nature such that
payments due thereunder may under generally  accepted  accounting  principles in
effect on the date hereof be included in a balance sheet of the lessee,  and (v)
all indebtedness and liabilities secured by any lien or any security interest on
any  Property  or  assets  of such  person,  whether  or not the  same  would be
classified  as a  liability  on a  balance  sheet,  but  excluding  all  general
contingency  reserves  and reserves  for  deferred  income taxes and  investment
credit, and with respect to Debt of the Borrower, all computed and determined on
a consolidated basis for the Borrower and its Subsidiaries after the elimination
of  intercompany  items  in  accordance  with  generally   accepted   accounting
principles  consistent  with those used in the  preparation  of the audit report
referred to in Section 5.2 hereof.

         "Deferred  Charges"  shall  mean all  items  which  are  classified  as
deferred  charges in accordance with generally  accepted  accounting  principles
consistently applied, on a basis consistent with the principles reflected in the
financial statements referred to in Section 5.2 hereof.

         "Domestic  Rate"  means for any day the rate of interest  announced  by
Harris  from  time to time as its prime  commercial  rate in effect on such day,
with any  change in the  Domestic  Rate  resulting  from a change in said  prime
commercial  rate to be effective  as of the date of the relevant  change in said
prime  commercial rate (the "Harris Prime Rate"),  provided that if the rate per
annum  determined by adding 0.5% to the rate at which Harris would offer to sell
federal funds in the interbank  market on or about 10:00 a.m.  (Chicago time) on
any day (the  "Adjusted  Fed Funds  Rate") shall be higher than the Harris Prime
Rate on such day,  the  Domestic  Rate for such day and for any  succeeding  day
which  is not a  Business  Day  shall  be such  Adjusted  Fed  Funds  Rate.  The
determination  of the  Adjusted  Fed  Funds  Rate by  Harris  shall be final and
conclusive provided Harris has acted in good faith in connection therewith.

         "Domestic Rate Loan" means a Revolving Credit Loan which bears interest
as provided in Section 1.3(a) hereof.

         "Eligible  Bill  and  Hold  Receivables"   shall  mean  Bill  and  Hold
Receivables which would otherwise be Eligible Receivables had the Inventory from
which they arose been delivered to, or been in the process of being delivered to
the Account Debtor on such Receivables.

         "Eligible  Inventory"  shall mean any Inventory of the Borrower and the
Guarantors in which the Agent has a first priority  perfected  security interest
which the Banks in their reasonable judgment deem to be acceptable for inclusion
in  the  Borrowing   Base,  and  which  complies  with  each  of  the  following
requirements:

                   (a) It  consists  of any  material in the form of raw pipe or
         tube and finished drawn over mandrill pipe or tube,  which are in first
         class condition and are suitable for sale in the ordinary course of the
         Borrower's business or coil steel or couplings which are in first-class
         condition,  are in the form in which they were when originally acquired
         by the Borrower or applicable Guarantor and are suitable for use in the
         production of Borrower's or such Guarantor's finished goods Inventory;

                   (b) It  substantially  conforms  to the  Borrower's  or  such
         Guarantor's  advertised  or  represented   specifications,   applicable
         government  standards and regulations  and other quality  standards and
         has not been  determined  by the Banks to be  unacceptable  due to age,
         type, variety, quality, quantity, or location;

                   (c) All warranties of the Borrower or applicable Guarantor in
         the Loan Documents are true and correct with respect thereto;

                   (d) It is owned by the Borrower or applicable Guarantor;

                   (e) It  has  been  identified to  the  Agent  in  the  manner
         prescribed by the Banks pursuant to the Security Documents;

                   (f) It is either (i) located at a location  disclosed  to and
         approved by the Agent and the Banks,  and if  requested by the Agent or
         any Bank,  any Person (other than the Borrower)  owning or  controlling
         such location shall have waived all right, title and interest in and to
         such Inventory in a manner  satisfactory  to the Agent and such Bank or
         (ii) in  transit  between  any two such  locations  and has not been in
         transit  for more than (A) four days if it has been  shipped  by truck,
         (B)  fourteen  days if it has been shipped by rail or (C) 30 days if it
         has been shipped by barge; and

                   (g) If it is evidenced by a negotiable  warehouse  receipt or
         other negotiable  document of title,  such receipt or document of title
         has been  endorsed  in blank or to the  order of the Agent and has been
         delivered to the Agent or its trustee or bailee.

         "Eligible Receivables" shall mean any Receivable of the Borrower or any
Guarantor in which the Agent has a first priority  perfected  security  interest
which the Banks in their reasonable judgment deem to be acceptable for inclusion
in  the  Borrowing   Base,  and  which  complies  with  each  of  the  following
requirements:

                   (a) It arises out of a bona fide sale of Inventory  which has
         been  delivered  to, or is in the  process  of being  delivered  to the
         Account Debtor on said  Receivable in the ordinary course of Borrower's
         or such  Guarantor's  business,  in the  case  of  payment  terms,  and
         otherwise in the ordinary course of business on ordinary trade terms;

                   (b) All warranties  of the Borrower or such  Guarantor in the
         Loan Documents are true and correct with respect thereto;

                   (c) It has  been  identified  to  the  Banks  in  the  manner
         required by the Banks;

                   (d) It is evidenced  by an invoice  dated  not later than the
         date of shipment to the Account Debtor thereunder;

                   (e) It has not remained  unpaid in whole or in part more than
         90 days  from and  after  its due date or more  than 120 days  from and
         after its invoice date;

                   (f) It is net  of  any  credit  or  allowance  given  by  the
         Borrower or such Guarantor to such Account Debtor;

                   (g) It is not owing by an  Account  Debtor who (i) has become
         insolvent,  (ii)  is  the  subject  of  any  bankruptcy,   arrangement,
         reorganization  proceedings or other  proceedings for relief of debtors
         or (iii) has admitted its  inability to pay its debts  generally or has
         stopped paying its debts generally;

                   (h) If the  Account  Debtor is also a supplier to or creditor
         of the  Borrower or a Guarantor,  then either (i) that  Account  Debtor
         shall have  entered  into an  agreement  with or for the benefit of the
         Banks  with  respect  to the  waiver  of  rights  of  setoff  which  is
         acceptable to the Banks or (ii) 120% of the amount owed at such time by
         the Borrower or the  applicable  Guarantor to that Account Debtor shall
         be subtracted from the amount of the Receivable;

                   (i) The Account Debtor is not principally located outside the
         continental  United States unless (A) such  Receivable is secured by an
         irrevocable  letter of  credit  issued by a  commercial  Bank  which is
         acceptable  to the Banks or the Banks are  satisfied  that all  filings
         have  been  made and  actions  taken as are  required  by the  Banks in
         connection therewith as a result of the location of such Account Debtor
         or (B) the Account Debtor thereon is principally  located in Canada and
         either (i) the  Administrative  Agent shall have made such  filings and
         taken such other  action as may be  necessary  for it to obtain a first
         priority  security  interest  therein  under  applicable  Canadian  law
         without  regard to any filings made in any State of the United  States,
         or (ii) the  Administrative  Agent  shall have  received  an opinion of
         Canadian   counsel   satisfactory   in  form  and   substance   to  the
         Administrative  Agent to the  effect  that the  Administrative  Agent's
         security  interest in such  Receivables  is  perfected  by filings made
         under the applicable state's version of the Uniform Commercial Code;

                   (j) It is not owing by the  United  States of  America or any
         department,  agency or  instrumentality  thereof unless the Banks shall
         have received evidence satisfactory to the Banks of compliance with the
         Assignment of Claims Act;

                   (k) Such  Receivable   is   not  subject   to  any   dispute,
         counterclaim or defense asserted by the Account Debtor thereunder;

                   (l) The Account Debtor has not failed to pay within the times
         specified in  subsection  (e) above 50% or more in aggregate  amount of
         all its Receivables on which it is the Account Debtor;

                   (m) The Account Debtor is not an Affiliate of the Borrower or
         any Guarantor;

                   (n) The Receivable does not arise from a "sale or return," or
         a "sale  on  approval"  of  Inventory  or a  "Bill  and  Hold"  sale of
         Inventory; and

                   (o) If the  Account  Debtor  is  located  in the State of New
         Jersey or the State of Minnesota,  Borrower or the applicable Guarantor
         (i) has filed and has  effective  (A) in  respect  of  Account  Debtors
         located in the State of New  Jersey,  a Notice of  Business  Activities
         Report with the New Jersey  Division of Taxation  for the then  current
         year or (B) in  respect  of  Account  Debtors  located  in the State of
         Minnesota,  a Minnesota  Business  Activity  Report with the  Minnesota
         Department of Revenue for the then current year, as applicable, or (ii)
         is otherwise exempt from such reporting  requirements under the laws of
         such State(s).

         "Environmental Laws" shall have the meaning specified in Section 5.7(a)
hereof.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

         "Eurodollar Loan" means a Revolving Credit Loan which bears interest as
provided in Section 1.3(b) hereof.

         "Eurodollar Rate" shall  have  the  meaning specified in Section 1.3(b)
hereof.

         "Event of Default" shall mean any event or condition identified as such
in Section 8.1 hereof.

         "Executive  Officer"  shall mean,  with  respect to the Borrower or any
Subsidiary,  any of the  Chairman,  Chief  Executive  Officer,  Chief  Financial
Officer or any Vice President of the Borrower or such Subsidiary.

         "Existing Agreement" shall have the meaning specified in Section 1.1(d)
hereof.

         "Existing Lender" shall  have  the  meaning specified in Section 1.1(d)
hereof.

         "Exposure" shall mean, as to any Bank, the sum (without duplication) of
such Bank's (a) unused  Revolving  Credit  Commitment,  if any, (b)  outstanding
Revolving  Credit  Loans,  if any,  (c)  interest in  outstanding  Reimbursement
Obligations,  if any,  and (d) the amount of its  participation  in  outstanding
L/Cs.

         "Fed Funds Rate" shall  have  the  meaning  specified in Section 1.6(c)
hereof.

         "Fixed Charge  Coverage Ratio" shall mean, for any period for which the
same is to be  determined,  the ratio for such period of (a)  "Consolidated  Net
Income  Available for Fixed  Charges",  defined as earnings  before interest and
taxes plus  depreciation  and  amortization  plus  operating  and capital  lease
expenses less capital  expenditures,  all determined on a consolidated basis for
the  Borrower  and  its  Subsidiaries  in  accordance  with  generally  accepted
accounting principles,  consistently applied, to (b) "Fixed Charges", defined as
interest expense plus operating and capital lease expense plus current scheduled
maturities  of all  indebtedness  for  borrowed  money other than the  Revolving
Credit Loans,  all determined on a  consolidated  basis for the Borrower and its
Subsidiaries  in  accordance  with  generally  accepted  accounting  principles,
consistently applied.

         "Funded  Debt" of any Person shall mean all  indebtedness  for borrowed
money of such  Person,  whether  classified  as long-term  or  short-term  under
generally accepted accounting principles.

         "Generally  accepted   accounting   principles"  shall  mean  generally
accepted  accounting  principles  consistently  applied and consistent  with the
audited consolidated financial statements described in Section 5.2 hereof.

         "Guarantors"  shall  mean  Maverick  Tube,  L.P.,  a  Delaware  limited
partnership,  and Maverick Investment Corporation,  a Delaware corporation,  and
"Guarantor" shall mean any of the Guarantors.

         "Harris" shall have the meaning specified  in  the  first  paragraph of
this Agreement.

         "Intangible  Assets"  shall  mean  amortizable  loan  costs,   business
acquisition  costs,  license  agreements,   trademarks,  trade  names,  patents,
capitalized research and development,  proprietary products (the results of past
research  and  development  treated  as  long  term  assets  and  excluded  from
Inventory),  goodwill  and  all  other  assets  which  would  be  classified  as
intangible  assets  (all  determined  in  accordance  with  generally   accepted
accounting principles consistently applied).

         "Interest Period" shall  have  the  meaning specified in Section 1.3(b)
hereof.

         "Inventory"  shall mean all raw  materials,  work in process,  finished
goods,  and goods held for sale or lease or furnished  or to be furnished  under
contracts  of  service  in  which  the  Borrower  or any  Subsidiary  now has or
hereafter acquires any right.

         "L/C" shall have the meaning set forth in Section 1.4 hereof.

         "L/C Agreement" shall have the meaning set forth in Section 1.4 hereof.

         "Loan" shall mean a Revolving  Credit Loan and the term  "Loans"  shall
mean any two or more Revolving Credit Loans collectively.

         "Loan  Documents"  shall mean this  Agreement  and any and all exhibits
hereto, the Revolving Notes, the L/C Agreements, the Subsidiary Guaranty and, if
applicable, the Security Documents.

         "Person" shall mean and include any  individual,  sole  proprietorship,
partnership,  joint venture, trust,  unincorporated  organization,  association,
corporation,   institution,  entity,  party  or  government  (whether  national,
federal,  state,  county,  city,  municipal,  or otherwise,  including,  without
limitation, any instrumentality, division, agency, body or department thereof).

         "PBGC" shall mean the Pension Benefit Guaranty Corporation.

         "Plan"  shall mean any employee  benefit plan  covering any officers or
employees of the Borrower or any  Subsidiary,  any benefits of which are, or are
required to be, guaranteed by the PBGC.

         "Potential  Default" shall mean any event or condition which,  with the
lapse of time,  or giving  of  notice,  or both,  would  constitute  an Event of
Default.

         "Property"   shall  mean  all  assets  and  properties  of  any  nature
whatsoever, whether real or personal, tangible or intangible,  including without
limitation intellectual property.

         "Receivables"  shall mean all accounts,  contract rights,  instruments,
documents,  chattel paper and general  intangibles  in which the Borrower or any
Subsidiary now has or hereafter acquires any right.

         "Reimbursement Obligation" has  the  meaning  specified  in Section 1.5
hereof.

         "Rentals" shall mean and include all fixed rents (including as such all
payments  which the lessee is obligated to make to the lessor on  termination of
the lease or surrender of the property) payable by the Borrower or a Subsidiary,
as lessee or sublessee under a lease of real or personal property,  but shall be
exclusive  of any amounts  required to be paid by the  Borrower or a  Subsidiary
(whether  or not  designated  as  rents  or  additional  rents)  on  account  of
maintenance,  repairs,  insurance,  taxes and similar charges. Fixed rents under
any so-called  "percentage  leases" shall be computed solely on the basis of the
minimum  rents,  if any,  required to be paid by the lessee  regardless of sales
volume or gross revenues.  Capitalized  Lease Obligations shall be excluded from
the definition of Rentals for all purposes  hereunder  other than the use of the
term "rentals" in the  definitions of Capitalized  Lease and  Capitalized  Lease
Obligations.

         "Required  Banks"  shall mean any Bank or Banks which in the  aggregate
hold  66-2/3%  of the  aggregate  unpaid  principal  balance  of the  Loans  and
Reimbursement  Obligations  or,  if no Loans or  Reimbursement  Obligations  are
outstanding hereunder,  any Bank or Banks in the aggregate having 66-2/3% of the
Revolving Credit Commitments.

         "Reserve Percentage" shall have the meaning specified in Section 1.3(b)
hereof.

         "Restricted Payments" shall  have the meaning specified in Section 7.15
hereof.

         "Revolving  Credit"  shall  have the  meaning  specified  in the  first
paragraph of this Agreement.

         "Revolving Credit Commitment" and "Revolving Credit  Commitments" shall
have the meanings specified in Section 1.1(b) hereof.

         "Revolving  Credit Loan" and  "Revolving  Credit  Loans" shall have the
meanings specified in Section 1.1(a) hereof.

         "Revolving Note" or "Revolving Notes" shall have the meanings specified
in Section 1.2 hereof.

         "Security  Agreement"  shall mean the Security  Agreement Re:  Accounts
Receivable, Inventory and General Intangibles of the Borrower and the Guarantors
in the form of Exhibit F hereto.

         "Security  Documents"  shall mean the Security  Agreement and any other
agreements and financing  statements now or hereafter  executed and delivered by
the Borrower in respect of the Collateral.

         "Subsidiary"  shall  mean any  corporation  or other  entity at least a
majority of the outstanding  voting stock of which is at the time owned directly
or indirectly by the Borrower and/or its Subsidiaries.

         "Subsidiary  Guaranty"  shall mean the Guaranty  Agreement of even date
herewith from the Guarantors to the Banks, as the same may be  supplemented  and
amended from time to time.

         "Termination Date" shall  have  the meaning set forth in Section 1.1(a)
hereof.

         "Total  Capitalization"  shall  mean  the sum of (a)  the  Consolidated
Stockholders' Equity, plus (b) Consolidated Funded Debt.

         "Total  Consolidated  Funded  Debt"  shall  mean  with  respect  to the
Borrower all Funded Debt of the Borrower and its Subsidiaries, on a consolidated
basis eliminating intercompany items.

         "Total  Funded Debt Ratio" shall mean, as of any date the same is to be
determined,  the ratio of (a) the aggregate  outstanding principal amount of the
Total Consolidated  Funded Debt as of such date, to (b) the Consolidated  EBITDA
for the four consecutive fiscal quarters of the Borrower most recently ended.

         "Year 2000 Problem" means any significant risk that computer  hardware,
software,  or equipment containing embedded microchips essential to the business
or operations of the Borrower or any of its  Subsidiaries  will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
efficiently  and  reliably  as in the case of times  or time  periods  occurring
before January 1, 2000, including the making of accurate leap year calculations.

         Section 4.2.  Interpretation.  Capitalized  terms defined  elsewhere in
this Agreement shall, unless otherwise specified,  have the meanings so ascribed
to them in all  provisions  of this  Agreement.  The foregoing  definitions  are
equally  applicable to both the singular and plural forms of the terms  defined.
All  references to time of day herein are  references to Chicago,  Illinois time
unless  otherwise  specifically  provided.  Where the character or amount of any
asset or liability or item of income or expense is required to be  determined or
any consolidation or other accounting computation is required to be made for the
purposes  of this  Agreement,  it shall  be done in  accordance  with  generally
accepted  accounting  principles  except where such principles are  inconsistent
with the specific provisions of this Agreement.


SECTION 5.           REPRESENTATIONS AND WARRANTIES.

         The Borrower represents and warrants to the Banks as follows:

         Section  5.1.  Organization  and  Qualification.  The  Borrower is duly
organized and validly existing under the laws of the State of Delaware, has full
and adequate corporate power to carry on its business as now conducted,  is duly
licensed or qualified in all jurisdictions  wherein the nature of its activities
requires  such  licensing  or  qualifying,  except  where the  failure  to be so
licensed or qualified would not have a material adverse effect on the condition,
financial or otherwise,  of the Borrower, has full right, power and authority to
make the  PMAC  Acquisition,  to enter  into  the  Acquisition  Documents,  this
Agreement  and the  other  Loan  Documents  to which it is a party,  to make the
borrowings  herein  provided for and encumber its assets as collateral  security
therefor,  to execute and issue the Revolving Notes in evidence thereof,  and to
perform each and all of the matters and things herein and therein  provided for;
and this  Agreement  does not, nor does the  performance  or  observance  by the
Borrower of any of the matters or things  provided  for in this  Agreement,  the
other Loan Documents and the Acquisition Documents,  contravene any provision of
law or any charter or by-law  provision or any covenant,  indenture or agreement
of or judgment,  order or decree  applicable to or affecting the Borrower or any
of its Property.

         Section 5.2. Financial Reports.  The Borrower  heretofore has delivered
to each Bank a copy of the annual audit report as of September  30, 1997, of the
Borrower and its Subsidiaries and unaudited financial statements of the Borrower
and its  Subsidiaries as of, and for the nine month period ending June 30, 1998.
Such  financial  statements  have been  prepared in  accordance  with  generally
accepted accounting  principles (except that such unaudited financial statements
may omit any  footnotes),  on a basis  consistent,  except  as  otherwise  noted
therein,  with that of the previous fiscal year or period and fairly reflect the
financial  position of the Borrower as of the dates thereof,  and the results of
its operations  for the periods  covered  thereby.  To the best knowledge of the
Executive  Officers of the  Borrower and each  Subsidiary,  the Borrower and its
Subsidiaries  have  no  significant   contingent   liabilities   (determined  in
accordance with generally accepted accounting  principles  consistently applied)
other than as  indicated  on said  financial  statements  and since said date of
September  30,  1997,  has been no  material  adverse  change in the  condition,
financial  or  otherwise,  of the  Borrower  or  any  Subsidiary,  except  those
disclosed in writing to the Banks prior to the date of this Agreement.

         Section  5.3.  Litigation;   Tax  Returns;   Approvals.   There  is  no
litigation,  labor controversy or governmental  proceeding  pending,  nor to the
best  knowledge of the  Executive  Officers of the Borrower and each  Subsidiary
threatened, against the Borrower or any Subsidiary which if adversely determined
would  result in any  material  adverse  change in the  properties,  business or
operations of the Borrower or any  Subsidiary.  All United States federal income
tax returns for the Borrower and its Subsidiaries required to be filed have been
filed on a timely  basis,  and all amounts  required to be paid as shown by said
returns have been paid.  Except as disclosed in the letter  referred to above in
this  Section  5.3,  there  are no  pending  or,  to the best  knowledge  of the
Executive Officers of the Borrower and each Subsidiary, threatened objections to
or  controversies  in respect of the United States federal income tax returns of
the  Borrower  and its  Subsidiaries  for any  fiscal  year.  No  authorization,
consent,  license,  exemption  or  filing  or  registration  with  any  court or
governmental department,  agency or instrumentality,  is or will be necessary to
the  valid  execution,  delivery  or  performance  by the  Borrower  of the Loan
Documents or the Acquisition Documents to which it is a party.

         Section 5.4.  Regulation U. Neither the Borrower nor any  Subsidiary is
engaged in the business of  extending  credit for the purpose of  purchasing  or
carrying  margin  stock  (within  the  meaning of  Regulation  U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
or other  extension  of credit  hereunder  will be used to purchase or carry any
margin stock or to extend credit to others for such a purpose.

         Section 5.5. No Default. The Borrower is in full compliance with all of
the terms and conditions  of the Loan Documents,  and  no  Potential  Default or
Event of Default is existing under this Agreement.

         Section 5.6. ERISA. The Borrower and its Subsidiaries are in compliance
in all material  respects with ERISA to the extent  applicable to it and neither
the Borrower nor any Subsidiary has received any notice to the contrary from the
PBGC or any other  governmental  entity or  agency.  No steps have been taken to
terminate any Plan, and no contribution failure has occurred with respect to any
Plan  sufficient  to give rise to a lien  under  Section  302(f)  of  ERISA.  No
condition  exists or event or transaction  has occurred with respect to any Plan
which might result in the  incurrence  by the Borrower or any  Subsidiary of any
material liability, fine or penalty. Neither the Borrower nor any Subsidiary has
any  contingent  liability with respect to any  post-retirement  benefit under a
Plan,  other than  liability for  continuation  coverage  described in Part 6 of
Title I of ERISA.

         Section 5.7.  Environmental  Law. (a) Except as disclosed on Exhibit J,
no Executive  Officer of the Borrower nor any Executive  Officer of a Subsidiary
has received any notice to the effect,  or has any knowledge,  that its Property
or operations are not in compliance  with any of the  requirements of applicable
federal,  state  and  local  environmental,   health  and  safety  statutes  and
regulations  ("Environmental  Laws") or are the  subject of any federal or state
investigation  evaluating  whether any remedial action is needed to respond to a
release of any  hazardous  substances  as  defined  in the  CERCLA or  petroleum
products  or  crude  oil  or  any  fraction  thereof  (collectively   "Hazardous
Substances") into the environment, which non-compliance or remedial action could
have a material adverse effect on the business, operations,  Property, assets or
conditions (financial or otherwise) of the Borrower or any Subsidiary;

         (b) there have been no releases of Hazardous Substances at, on or under
any  Property  now or  previously  owned or leased by the Borrower or any of its
Subsidiaries  that,  singly or in the  aggregate,  have,  or may  reasonably  be
expected  to  have,  a  material  adverse  effect  on the  financial  condition,
operations,  assets,  business,  Properties or prospects of the Borrower and its
Subsidiaries;

         (c) there  are no  underground  storage  tanks,  active  or  abandoned,
including  petroleum  storage tanks,  on or under any Property now or previously
owned or leased by the Borrower or any of its  Subsidiaries  that,  singly or in
the aggregate,  have, or may reasonably be expected to have, a material  adverse
effect on the financial condition,  operations,  assets, business, Properties or
prospects of the Borrower and its Subsidiaries;

         (d) neither the Borrower nor any Subsidiary  has directly  transported,
or received any notice or has any knowledge that they have directly arranged for
the transportation of, any Hazardous  Substances to any location which is listed
or proposed for listing on the National  Priorities List pursuant to CERCLA,  on
the  CERCLIS or on any  similar  state list or which is the  subject of federal,
state or local  enforcement  actions or other  investigations  which may lead to
material claims against the Borrower or such Subsidiary thereof for any remedial
work,  damage to natural  resources or personal  injury,  including claims under
CERCLA; and

         (e)  except as  disclosed  on Exhibit J no  conditions  exist at, on or
under any Property now owned or leased by the  Borrower or any  Subsidiary,  and
the  Borrower  has no knowledge  that any  conditions  exist at, on or under any
Property  previously  owned or leased by the Borrower or any Subsidiary,  which,
with the  passage of time,  or the giving of notice or both,  would give rise to
liability under any  Environmental Law which may reasonably be expected to have,
a  material  adverse  effect on the  financial  condition,  operations,  assets,
business, Properties or prospects of the Borrower and its Subsidiaries.

         Section 5.8. Security Interests. There are no security interests, liens
or  encumbrances  on  any of the  assets  or  Property  of the  Borrower  or any
Subsidiary  except  the  security  interests,  liens and  charges  which are now
existing and are permitted by Section 7.15 of this Agreement.

         Section 5.9.  Subsidiaries.  As of the date hereof, the Borrower's only
Subsidiaries  are identified on Exhibit E hereof.  Each of said  Subsidiaries is
duly  organized and validly  existing  under the laws of the state or country of
its  incorporation,  has  full  and  adequate  corporate  power  to carry on its
business as now  conducted,  is duly licensed or qualified to do business in all
jurisdictions  wherein the nature of its  activities  requires such licensing or
qualification  except when the failure to be so licensed or qualified  would not
have a material adverse effect on the condition, financial or otherwise, of such
Subsidiary. Each Guarantor has full right, power and authority to enter into the
Subsidiary  Guaranty,  to guaranty the payment of the  Borrower's  indebtedness,
obligations and liabilities to the Agent and the Banks,  and to perform each and
all of the matters and things therein provided for; and the Subsidiary  Guaranty
does not, nor does the  performance or observance by any Guarantor of any of the
matters or things  provided for therein,  contravene any provision of law or any
charter, partnership agreement or by-law provision or any covenant, indenture or
agreement  of or  judgment,  order or  decree  applicable  to or  affecting  any
Guarantor or any of their respective Property.

        Section 5.10. Accurate  Information.  No information,  exhibit or report
furnished by the Borrower or any Subsidiary to the Banks in connection  with the
negotiation  or  performance  of  the  Loan  Documents   contains  any  material
misstatement  of fact or omits to state a material fact or any fact necessary to
make  the  statements   contained   therein  not  misleading  in  light  of  the
circumstances in which made. The financial projections furnished by the Borrower
to the Banks  contain  reasonable  projections  as of the date  hereof of future
results  of  operations   and  financial   position  of  the  Borrower  and  its
Subsidiaries.

        Section  5.11.   Enforceability.   This  Agreement,  when  executed  and
delivered by the Borrower,  will be a legal,  valid and binding agreement of the
Borrower,  enforceable against it in accordance with its terms, except as may be
limited by (i)  bankruptcy,  insolvency,  reorganization,  fraudulent  transfer,
moratorium or other similar laws or judicial decisions for the relief of debtors
or the  limitation  of  creditors'  rights  generally;  and (ii)  any  equitable
principles  relating to or limiting  the rights of  creditors  generally  or any
equitable remedy which may be granted to cure any defaults;  and the Acquisition
Documents,  the  Revolving  Notes,  the  other  Loan  Documents  and  any  other
instrument or agreement  required  hereunder  has been so  authorized  and, when
executed and delivered, will be similarly valid, binding and enforceable, except
as may be  limited by (i)  bankruptcy,  insolvency,  reorganization,  fraudulent
transfer,  moratorium or other similar laws or judicial decisions for the relief
of  debtors or the  limitation  of  creditors'  rights  generally;  and (ii) any
equitable  principles  relating to or limiting the rights of creditors generally
or any  equitable  remedy  which may be  granted to cure any  defaults;  and the
Subsidiary  Guaranty,  when executed and delivered by each Guarantor,  will be a
legal, valid and binding agreement of such Guarantor,  enforceable against it in
accordance  with  its  terms,  except  as may  be  limited  by  (i)  bankruptcy,
insolvency,  reorganization,  fraudulent  transfer,  moratorium or other similar
laws or  judicial  decisions  for the  relief of debtors  or the  limitation  of
creditors' rights generally;  and (ii) any equitable  principles  relating to or
limiting the rights of creditors  generally or any equitable remedy which may be
granted to cure any defaults.

        Section 5.12.  Year 2000  Compliance.  The Borrower is in the process of
conducting a comprehensive review and assessment of the computer applications of
the Borrower  and its  Subsidiaries  and is in the process of making  inquiry of
their material  suppliers,  vendors  (including data  processors) and customers,
with respect to any defect in computer software, data bases, hardware,  controls
and  peripherals  related to the  occurrence  of the year 2000 or the use at any
time of any date which is before,  on and after December 31, 1999, in connection
therewith.  Based on the foregoing review,  assessment and inquiry, the Borrower
believes  that no such defect  could  reasonably  be expected to have a material
adverse  effect on the business or financial  affairs of the Borrower (or of the
Borrower and its Subsidiaries taken on a consolidated basis).


SECTION 6.           CONDITIONS PRECEDENT.

         The  obligation  of the  Banks to make any Loan  pursuant  hereto or to
issue any L/C shall be subject to the following conditions precedent:

         Section 6.1. General.  The  Agent  shall  have  received  the notice of
borrowings and request for any L/C hereinabove provided for.

         Section 6.2.  Initial  Extension  of  Credit.  Prior  to  the  initial 
extension  hereunder,  the  following  conditions  precedent  shall  have  been
satisfied:

         (a) the Borrower  shall have provided a Borrowing  Base  Certificate to
the Agent, and shall have delivered to the Agent for the benefit of the Banks in
sufficient counterparts for distribution to the Banks:

                   (a) the Revolving Notes;

                   (b) the fully executed Subsidiary Guaranty;

                   (c) the fully executed  Security Agreement and such financing
         statements relating thereto as the Agent may request;

                   (d) evidence of insurance  required by Section 7.3 hereof and
         by the Security  Documents  showing the Agent as loss payee  thereunder
         pursuant to an endorsement acceptable to the Banks;

                   (e) a good standing  certificate  or certificate of existence
         for the  Borrower  and each  Guarantor  dated as of the date no earlier
         than September 9, 1998 from the office of the secretary of state of the
         states of their respective organization;

                   (f) copies of the Certificate of Incorporation or Certificate
         of Limited Partnership,  and all amendments thereto, of each Guarantor,
         certified by the office of the secretary of state of Delaware as of the
         date no earlier than September 9, 1998.

                   (g) copies of the By-Laws or Limited  Partnership  Agreement,
         and all  amendments  thereto,  of each  Guarantor  certified  as  true,
         correct  and  complete  on the date  hereof  by the  Secretary  of each
         Guarantor;

                   (h) copies, certified by the Secretary or Assistant Secretary
         of the  Borrower  and each  Guarantor,  of  resolutions  regarding  the
         transactions  contemplated by this Agreement, duly adopted by the Board
         of  Directors of the Borrower  and each  Guarantor,  respectively,  and
         satisfactory in form and substance to all of the Banks;

                   (i) an incumbency  signature  certificate  for  the  Borrower
         and each Guarantor satisfactory in form  and  substance  to  all of the
         Banks;

                   (j)  the  favorable  written  opinions  of  counsel  for  the
         Borrower and the Guarantors in form and substance  satisfactory to each
         of the Banks and their respective legal counsel; and

                   (k) copies,  certified  as true,  complete and correct by the
         Secretary of the Borrower, of the Acquisition Documents.

         (b) all conditions precedent to the PMAC Acquisitions  shall  have been
satisfied;

         (c) the   Acquisition   Documents  shall  be  in  form  and  substance
satisfactory to the Banks and their respective legal counsel;

         (d) the Agent shall have received  evidence  satisfactory  to the Banks
that the total  consideration to be paid by the Borrower and its Subsidiaries in
connection with the PMAC Acquisition shall not exceed $12,500,000; and

         (e) except as  previously  disclosed  to the Lenders in the  Borrower's
financial  statements  for the period ending July 31, 1998, no material  adverse
change in the financial condition,  operations or Properties of the Borrower and
its Subsidiaries shall have occurred since September 30, 1997;

         Section 6.3.  Each  Extension  of Credit.  As of the time of the making
of each Loan and the issuance of the L/C hereunder:

                   (a) each of the  representations  and warranties set forth in
         Section 5 hereof  shall be and remain true and correct as of said time,
         except that the  representations  and warranties made under Section 5.2
         shall  be  deemed  to refer to the  most  recent  financial  statements
         furnished to the Banks pursuant to Section 7.4 hereof;

                   (b) the Borrower shall be in full  compliance with all of the
         terms and  conditions  hereof,  and no  Potential  Default  or Event of
         Default shall have occurred and be continuing;

                   (c) after giving effect to the requested  extension of credit
         and to each  Revolving  Credit  Loan  that has  been  made and each L/C
         issued  hereunder,  the  aggregate  principal  amount of all  Revolving
         Credit Loans,  the amount  available for drawing under all L/Cs and the
         aggregate  principal  amount  of  all  Reimbursement  Obligations  then
         outstanding  shall not exceed the Banks' Revolving  Credit  Commitments
         then in effect;

and the request by the Borrower for any Loan or L/C pursuant hereto shall be and
constitute a warranty to the foregoing effects.

         Section 6.4. Legal Matters.  Legal matters  incident  to the  execution
and delivery  of  the  Loan Documents shall be satisfactory to each of the Banks
and their legal counsel.


SECTION 7.           COVENANTS.

         It is  understood  and  agreed  that  so long  as  credit  is in use or
available  under this  Agreement or any amount  remains  unpaid on any Revolving
Note, Reimbursement Obligation or L/C remains outstanding,  except to the extent
compliance in any case or cases is waived in writing by the Required Banks:

         Section 7.1. Maintenance of Property. The Borrower will, and will cause
each Subsidiary to, keep and maintain all of its Properties  necessary or useful
in  its  business  in  good   condition,   and  make  all  necessary   renewals,
replacements,   additions,   betterments  and  improvements  thereto;  provided,
however,  that  nothing  in this  Section  shall  prevent  the  Borrower  or any
Subsidiary  from  discontinuing  the  operating  and  maintenance  of any of its
properties if such discontinuance is, in the judgment of the Borrower, desirable
in the conduct of its business and not  disadvantageous  in any material respect
to the Banks as holders of the Revolving Notes.

         Section 7.2.  Taxes.  The Borrower will, and will cause each Subsidiary
to, duly pay and discharge all taxes, rates, assessments,  fees and governmental
charges upon or against the Borrower or any Subsidiary or against its Properties
in each case before the same  becomes  delinquent  and before  penalties  accrue
thereon unless and to the extent that the same is being  contested in good faith
and by  appropriate  proceedings  which prevent  enforcement of the matter under
contest and adequate reserves,  determined in accordance with generally accepted
accounting  principles  consistently applied, have been established with respect
thereto.

         Section 7.3.  Maintenance  of Insurance.  The Borrower  will,  and will
cause each  Subsidiary  to,  maintain  insurance  with  insurers  recognized  as
financially  sound and reputable by prudent  business  persons in such forms and
amounts and against  such risks as is usually  carried by  companies  engaged in
similar  business and owning  similar  properties  in the same general  areas in
which the Borrower or such Subsidiary operates. The Agent shall be named as loss
payee under any insurance policies which relate to the Collateral.  The Borrower
shall,  at the Agent's or any Bank's  request,  provide  copies to the Agent and
each  Bank  of all  insurance  policies  and  other  materials  related  thereto
maintained by the Borrower and its Subsidiaries.

         Section 7.4. Financial Reports.  The Borrower will, and will cause each
Subsidiary  to,  maintain  a system  of  accounting  in  accordance  with  sound
accounting  practice  and will  furnish  promptly  to the Banks  and their  duly
authorized   representatives  such  information   respecting  the  business  and
financial  condition of the Borrower  and its  Subsidiaries  as may from time to
time be requested and, without any request, will furnish each Bank:

                   (a) as soon as  available,  and in any  event  within 45 days
         after the close of each monthly  period of the  Borrower  which is also
         the end of a fiscal  quarter of the  Borrower  and within 30 days after
         the close of each other  monthly  fiscal  period of the  Borrower (i) a
         copy of consolidated  balance sheets and profit and loss statements for
         the Borrower and its Subsidiaries (for such monthly period and the year
         to date) for such  period of such  Borrower  and for the  corresponding
         periods of the preceding  fiscal year, and (ii)  consolidating  balance
         sheets  and  profit  and  loss  statements  for the  Borrower  and each
         Subsidiary  for the year to date,  and (iii) in  respect  of each month
         which is also the end of a fiscal  quarter of the  Borrower,  a copy of
         the Borrower's 10-Q for such period, all in reasonable detail, prepared
         by the Borrower and  certified  by the chief  financial  officer of the
         Borrower;

                   (b) as soon as  available,  and in any  event  within 90 days
         after the close of each fiscal year of the Borrower,  (i) a copy of the
         audit  report  for such  year and  accompanying  financial  statements,
         including    consolidated    and    consolidating    balance    sheets,
         reconciliations  of change in  stockholders'  equity,  profit  and loss
         statements  and  statements  of cash  flows  for the  Borrower  and its
         Subsidiaries  showing in comparative  form the figures for the previous
         fiscal year of the Borrower,  all in reasonable detail,  accompanied by
         the unqualified  opinion of Ernst & Young or other  independent  public
         accountants of nationally  recognized standing selected by the Borrower
         and satisfactory to each Bank;

                   (c)  within  30 days  after  the  last day of each  month,  a
         Borrowing  Base  Certificate  in the form of Exhibit D hereto,  setting
         forth a  computation  of the  Borrowing  Base as of the last day of the
         period covered  thereby,  certified as correct by the Borrower's  chief
         financial   officer,   and  certifying  that  the  signer  thereof  has
         re-examined  the terms and provisions of the Loan Documents and that to
         the best of his knowledge and belief,  no Potential Default or Event of
         Default  has  occurred  or, if any such  Potential  Default or Event of
         Default has occurred,  setting forth the  description of such Potential
         Default or Event of Default and specifying the action, if any, taken by
         the Borrower to remedy the same;

                   (d)  within  30 days  after the last day of every  month,  an
         accounts  receivable  aging  report in the form of  Exhibit I  attached
         hereto;

                   (e) within 45 days after the last day of every month which is
         also the end of a fiscal  quarter  of the  Borrower  and within 30 days
         after the last day of every other month,  a Compliance  Certificate  in
         the form of Exhibit G attached hereto, prepared and signed by the chief
         financial officer of the Borrower;

                   (f) promptly  upon their  becoming  available,  copies of all
         registration statements and regular periodic reports, if any, which the
         Borrower shall have filed with the  Securities and Exchange  Commission
         or any  governmental  agency  substituted  therefor,  or  any  national
         securities exchange, including copies of the Borrower's form 10K annual
         report,  including  financial  statements  audited  by Ernst & Young or
         other independent public accountants of nationally  recognized standing
         selected by the Borrower and  reasonably  satisfactory  to the Required
         Banks,  its form 10Q quarterly  report to the  Securities  and Exchange
         Commission  and any Form 8K filed by the Borrower  with the  Securities
         and Exchange Commission; and

                   (g) promptly upon the mailing thereof to the  shareholders of
         the Borrower generally, copies of all financial statements, reports and
         proxy statements so mailed.

         Section  7.5.  Inspection.  The  Borrower  shall,  and shall cause each
Subsidiary to, permit the Banks, by their representatives and agents, to inspect
any of the Properties, corporate books and financial records of the Borrower and
each  Subsidiary,  to examine and make copies of the books of accounts and other
financial  records of the  Borrower  and its  Subsidiaries  and to  discuss  the
affairs, finances and accounts of the Borrower and its Subsidiaries with, and to
be advised as to the same by, its  officers at such times and  intervals  as the
Banks may  request.  So long as no Potential  Default or Event of Default  shall
have occurred and be  continuing,  the Borrower shall pay to the Banks from time
to time upon demand an amount sufficient to compensate the Banks for their fees,
charges and expenses in connection  with two field audits of the  Collateral per
year for the Borrower. During the existence of any Event of Default or Potential
Default, the Banks may perform more than two field audits in each calendar year,
with all fees, charges and expenses of the Banks associated therewith to be paid
by the Borrower.

         Section 7.6.  Consolidation and Merger. The Borrower will not, and will
not permit any  Subsidiary  to,  consolidate  with or merge into any Person,  or
permit any other Person to merge into it, or acquire (in a transaction analogous
in purpose or effect to a consolidation or merger) all or  substantially  all of
the Property or capital stock of any other Person, unless:

                   (a) the Borrower or Subsidiary shall be the surviving  entity
         of any such merger;

                   (b) the Person merging into or being acquired by the Borrower
         or a  Subsidiary  shall be in the same or a related line of business as
         the Borrower or one or more of its Subsidiaries;

                   (c) no  Potential  Default  or  Event of Default  shall exist
         before or after giving effect to such merger; and

                   (d) the aggregate  consideration paid by the Borrower and its
         Subsidiaries in all such mergers and  acquisitions  and all investments
         and acquisitions permitted by Sections 7.16(j) and (k) hereof in any 12
         month period, shall not exceed $5,000,000.

;provided,  however, that nothing contained in this Section 7.6 shall operate to
prevent the PMAC Acquisition.

         Section 7.7.  Transactions with Affiliates.  The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction, including without
limitation,  the  purchase,  sale,  lease or  exchange of any  Property,  or the
rendering of any  service,  with any  Affiliate  of the  Borrower  except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than would be obtained in a comparable arm's-length  transaction
with a Person not an Affiliate of the Borrower.

         Section 7.8.   Maximum  Total  Funded  Debt Ratio.  The  Borrower  will
not permit its Total Funded Debt Ratio to exceed 3.25 to 1 at any time.

         Section 7.9.    [INTENTIONALLY OMITTED].

        Section  7.10.  Consolidated  Tangible  Net  Worth.  The  Borrower  will
maintain  Consolidated  Tangible  Net  Worth  in an  amount  not  less  than (a)
$70,000,000 at all times from the date hereof through September 30, 1998 and (b)
at all times during each fiscal  quarter of the Borrower  thereafter,  an amount
equal to the sum of (i) the minimum  amount of  Consolidated  Tangible Net Worth
the Borrower was required to maintain  during the immediately  preceding  fiscal
quarter,  plus (ii) 75% of the Borrower's  Consolidated Net Income (but not less
than zero) for such fiscal quarter then ended.

        Section 7.11.  Maximum Leverage Ratio. The Borrower will not permit  the
ratio of its Total Consolidated Funded  Debt  to  its  Total  Capitalization  to
exceed 0.5 to 1 at any time.

        Section 7.12.  Minimum Fixed Charge Coverage Ratio.  The  Borrower  will
not permit its  Fixed  Charge  Coverage  Ratio  to be less than 1.25 to 1 at any
time.

        Section 7.13. Restricted Payments.  The Borrower will not (a) declare or
pay any dividends on any class of stock,  (b) directly or  indirectly  purchase,
redeem or otherwise  acquire or retire any of its capital stock, or (c) make any
distribution  of any  kind or  character  with  respect  to its  capital  stock;
provided,  however,  in each case no Potential Default or Event of Default shall
then exist or result therefrom the Borrower may pay cash dividends on its common
stock and may  purchase its capital  stock in an  aggregate  amount for all such
dividends  and  purchases in each fiscal year of the Borrower not  exceeding the
lesser of a (a)$6,000,000 and (b) 50% of Borrower's  consolidated net income for
the most recently completed fiscal year.

        Section  7.14.  Liens.  The  Borrower  will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon or be subjected to any lien,  charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof), on any of its Properties of any kind or character at any
time owned by the Borrower or any Subsidiary, other than:

                   (a) liens,  pledges or deposits  for  worker's  compensation,
         unemployment   insurance,   old  age   benefits   or  social   security
         obligations, taxes, assessments, statutory obligations or other similar
         charges, good faith deposits made in connection with tenders, contracts
         or leases to which the  Borrower  or a  Subsidiary  is a party or other
         deposits  required  to be  made in the  ordinary  course  of  business,
         provided  in each case the  obligation  secured is not  overdue  or, if
         overdue,  is being  contested in good faith by appropriate  proceedings
         and adequate  reserves have been provided  therefor in accordance  with
         generally accepted accounting principles and that the obligation is not
         for borrowed money,  customer advances,  trade payables, or obligations
         to agricultural producers;

                   (b) the  pledge of assets  for the  purpose  of  securing  an
         appeal or stay or  discharge  in the  course of any legal  proceedings,
         provided that the aggregate  amount of  liabilities of the Borrower and
         all  Subsidiaries  so secured by a pledge of property  permitted  under
         this subsection (b) including interest and penalties  thereon,  if any,
         shall not be in excess of $2,500,000 at any one time outstanding;

                   (c) liens, pledges,  mortgages,  security interests, or other
         charges   granted  to  the  Agent  to  secure  the   Revolving   Notes,
         Reimbursement Obligations, the L/Cs and other amounts payable under the
         Loan Documents;

                   (d) liens,  pledges,  mortgages,  security interests or other
         charges existing on the date hereof and set forth on Exhibit K attached
         hereto;

                   (e) liens, pledges,  mortgages,  security interests and other
         encumbrances  on Property  which secure only  indebtedness  incurred to
         finance the acquisition of such Property (but only to the extent of the
         fair market value of such  Property and not  including  purchase  money
         security interests in Inventory);

                   (f) liens for property taxes and assessments or  governmental
         charges or levies which are not yet due and payable;

                   (g)  liens  incidental  to the  conduct  of  business  or the
         ownership of Properties  and assets  (including  warehousemen's  liens,
         grower liens and attorneys'  liens and statutory  landlords'  liens) or
         other liens of like general nature  incurred in the ordinary  course of
         business and not in connection with the borrowing of money, provided in
         each case,  the  obligation  secured is not overdue or, if overdue,  is
         being contested in good faith by appropriate actions or proceedings and
         for which adequate  reserves,  determined in accordance  with generally
         accepted accounting principles, have been established;

                   (h) minor survey exceptions or minor encumbrances,  easements
         or reservations,  or rights of others for rights-of-way,  utilities and
         other similar purposes,  or zoning or other  restrictions as to the use
         of  real  properties,  which  are  necessary  for  the  conduct  of the
         activities of the Borrower and its  Subsidiaries  or which  customarily
         exist on properties of corporations  engaged in similar  activities and
         similarly  situated  and  which do not in any event  materially  impair
         their use in the  operation  of the  business of the  Borrower  and its
         Subsidiaries; and

                   (i) mortgages,  liens and encumbrances on the Borrower's real
         estate and  equipment  securing  only Funded Debt  permitted by Section
         7.15(f) hereof.

        Section 7.15. Borrowings and Guaranties. The Borrower will not, and will
not permit any Subsidiary to, issue, incur,  assume,  create or have outstanding
any  indebtedness  for  borrowed  money  (including  as  such  all  indebtedness
representing  the  deferred  purchase  price of Property  and all  indebtedness,
obligations  and  liabilities  relating  to bankers  acceptances  and letters of
credit) or customer  advances,  nor be or remain  liable,  whether as  endorser,
surety,  guarantor  or  otherwise,  for  or  in  respect  of  any  liability  or
indebtedness of any other Person, other than:

                   (a)  indebtedness  of the Borrower  arising under or pursuant
         to this Agreement or the other Loan Documents;

                   (b)  the  liability  of the  Borrower  and  its  Subsidiaries
         arising out of the  endorsement for deposit or collection of commercial
         paper received in the ordinary course of business;

                   (c)   indebtedness  of  the  Borrower  and  its  Subsidiaries
         existing on the date hereof and set forth on Exhibit L attached hereto,
         other than indebtedness under the Existing Agreement;

                   (d)  trade payables of  the  Borrower  and  its  Subsidiaries
         arising in the ordinary course  of the Borrower's and its Subsidiaries'
         business;

                   (e)  indebtedness of the Subsidiaries to the Borrower;

                   (f) Funded  Debt in an  aggregate  principal  amount of up to
         $6,000,000 with respect to bonds or notes or other secured indebtedness
         to be guaranteed by ADFA and/or AIDC and any refundings or refinancings
         thereof;

                   (g)  indebtedness  not  otherwise  permitted  by this Section
         7.15,  provided  that  the  aggregate  principal  amount  of  all  such
         indebtedness outstanding at any time does not exceed $7,500,000; and

                   (h)  indebtedness  of  the  Guarantors  to the  Borrower  and
         indebtedness  of the  Guarantors  to the Agent and the Banks  under the
         Subsidiary Guaranty.

        Section  7.16.  Investments,   Loans,  Advances  and  Acquisitions.  The
Borrower  will not,  and will not permit any  Subsidiary  to, make or retain any
investment  (whether  through  the  purchase  of  stock,  obligations,   capital
contributions or otherwise) in or make any loan or advance to, any other Person,
or acquire  substantially  as an entirety  the Property or business of any other
Person, other than:

                   (a)  investments in certificates of deposit having a maturity
         of two years or less  issued by any Bank and which are held by the Bank
         issuing the same;

                   (b)  investments  in  commercial  paper  rated P1 by  Moody's
         Investors  Services,  Inc.  or A1 by  Standard  and Poor's  Corporation
         maturing within 270 days of the date of issuance thereof;

                   (c) loans or  advances  in the usual and  ordinary  course of
         business to officers,  directors and employees for expenses  (including
         moving  expenses  related to a transfer)  incidental to carrying on the
         business of the Borrower or any Subsidiary of the Borrower;

                   (d) investments shown on the financial statements referred to
         in Section 5.2 in existing Subsidiaries;

                   (e) advances to the  Borrower's  foreign  sales  corporations
         made in the ordinary course of the Borrower's  business in an aggregate
         principal amount outstanding at any time of up to $100,000;

                   (f)  marketable  obligations  issued,  guarantied,  or  fully
         insured by the United  States of  America,  or those for which the full
         faith and  credit of the United  States of  America is pledged  for the
         repayment  of  principal  and  interest  thereof;  provided  that  such
         obligations  have a final  maturity  of no more than two years from the
         date acquired by the Borrower;

                   (g)  marketable  obligations  issued,   guarantied  or  fully
         insured by any agency,  instrumentality,  or  corporation of the United
         States established or to be established by the Congress,  for the which
         the credit of such agency,  instrumentality,  or corporation is pledged
         for the repayment of the principal and interest thereof;  provided that
         such  obligations  have a final  maturity of no more than one year from
         the date acquired by the Borrower; and

                   (h) any investments  listed from time to time on the "working
         list" maintained by Harris Trust and Savings Bank or Harris  Investment
         Management, Inc., acting as a fiduciary agent;

                   (i) loans, advances and guaranties not otherwise permitted by
         this  Section  7.16,  provided  that the  aggregate  amount of all such
         loans, advances and guaranties  outstanding at any time does not exceed
         $5,000,000;

                   (j) other  investments  in and  acquisitions  (other  than by
         merger or  consolidation)  substantially as an entirety of the Property
         or business  of any Person or a majority of the capital  stock or other
         equity interests of any other Person, provided that:

                            (i) such Person  shall  be  in the same or a related
                  line of business as the Borrower or one or more Subsidiaries;

                           (ii) the board of directors (or equivalent  governing
                  body) of such  Person  shall  have  given its prior  effective
                  written consent or approval of such acquisition;

                          (iii) no Potential  Default or Event of Default  shall
                  exist before or after giving effect to such acquisition;

                           (iv) the aggregate  consideration  paid in connection
                  with  all  such  investments  and  acquisitions,  all  mergers
                  permitted  by  Section  7.6  hereof  and all  investments  and
                  acquisitions  permitted by Section  7.16(k)  hereof,  does not
                  exceed $5,000,000 in any 12 month period;

                   (k)  investments  in and  acquisitions  of less  than  all or
         substantially  all of the Property or business of any Person or of less
         than a majority of the capital  stock or other equity  interests of any
         other Person, provided that:

                            (i) such Person  shall  be  in the same or a related
                  line of business as the Borrower or one or more Subsidiaries;

                           (ii) the Board of Directors (or equivalent  governing
                  body) of such  Person  shall  have  given its prior  effective
                  written consent or approval of such acquisition;

                          (iii) no Potential  Default or Event of Default  shall
                  exist before or after giving effect to such acquisition;

                           (iv) the aggregate  consideration  paid in connection
                  with  all  such  investments  and  acquisitions,  all  mergers
                  permitted by Section 7.6 and all investments and  acquisitions
                  permitted by 7.16(j) hereof, does not exceed $5,000,000 in any
                  12 month period;

                   (l)  investments in and loans and advances to the Guarantors;
         and

                   (m)  investments or advances made in connection with the PMAC
         Acquisition.

        Section  7.17.  Sale of  Property.  The  Borrower  will not and will not
permit any Subsidiary to, sell, lease, assign,  transfer or otherwise dispose of
(whether in one  transaction  or in a series of related  transactions)  all or a
material part of its Property to any other Person;  provided,  however,  that so
long as no Event of Default or Potential  Default has occurred and is continuing
or would result after giving effect thereto,  the Borrower and its  Subsidiaries
may make:

                   (a)  sales  of  its  Inventory  in  the  ordinary  course  of
         business; and

                   (b)  sales or leases of its  surplus,  obsolete  or  worn-out
         machinery and equipment.

         For purposes of this Section,  "material part" shall mean 5% or more of
the book value of all of the property of the Borrower and its Subsidiaries.

        Section 7.18.  Notice of Suit or Adverse  Change in Business or Default.
The Borrower shall,  as soon as possible,  and in any event within ten (10) days
after it learns of the following, give written notice to the Agent and each Bank
of  (i)  any  material  proceeding(s)  being  instituted  or  threatened  to  be
instituted by or against the Borrower or any  Subsidiary in any federal,  state,
local or  foreign  court or  before  any  commission  or other  regulatory  body
(federal,  state,  local or foreign),  (ii) any material  adverse  change in the
business,  Property or  condition,  financial or otherwise  (including,  without
limitation, any material loss or depreciation in the value of the Collateral) of
the Borrower,  and (iii) the  occurrence  of any  Potential  Default or Event of
Default.

        Section 7.19.  ERISA.  The Borrower will, and will cause each Subsidiary
to, promptly pay and discharge all  obligations  and  liabilities  arising under
ERISA of a character  which if unpaid or  unperformed is likely to result in the
imposition  of a lien against any of its Property and will  promptly  notify the
Agent and each Bank of (i) the occurrence of any reportable event (as defined in
ERISA)  which  might  result in the  termination  by the PBGC of any Plan,  (ii)
receipt of any notice from PBGC of its intention to seek termination of any such
Plan or appointment of a trustee therefor,  and (iii) its intention to terminate
or  withdraw  from any Plan.  The  Borrower  will not,  and will not  permit any
Subsidiary to, terminate any such Plan or withdraw  therefrom unless it shall be
in  compliance  with all of the terms and  conditions  of this  Agreement  after
giving  effect to any  liability  to PBGC  resulting  from such  termination  or
withdrawal.

        Section 7.20.  Supplemental  Performance.  The Borrower  will,  and will
cause each  Subsidiary to, at any time and from time to time upon request of any
Bank take or cause to be taken any action and execute,  acknowledge,  deliver or
record any further  documents,  security  agreements or other  instruments which
such Bank in its  discretion  deems  necessary  to carry out the purposes of the
Loan Documents.

        Section 7.21.  Use of Proceeds.  The Borrower  shall use the proceeds of
each  Loan  and  other  extensions  of  credit  hereunder  only  (a) to pay  the
Borrower's  indebtedness under the Existing  Agreement,  (b) to finance the PMAC
Acquisition and (c) so long as such use of proceeds is not otherwise  prohibited
by the terms hereof and such use would not otherwise  cause the  occurrence of a
Potential  Default  or an Event  of  Default  hereunder,  for  proper  corporate
purposes of the Borrower.

        Section 7.22.  Compliance  with Laws,  etc. The Borrower  will, and will
cause each of its  Subsidiaries  to,  comply in all material  respects  with all
applicable  laws,  rules,  regulations  and orders,  such  compliance to include
(without limitation) the maintenance and preservation of its corporate existence
and  qualification  as a foreign  corporation  except where the failure to be so
qualified would not have a material  adverse effect on the condition,  financial
or otherwise, of Borrower or any Subsidiary.

        Section 7.23.  Environmental Covenant. The Borrower will, and will cause
each of its Subsidiaries to,

                   (a) use and operate all of its  facilities  and Properties in
         compliance with all Environmental Laws where the failure to do so could
         have  a  material  adverse  effect  on  the  condition,   financial  or
         otherwise,  of  the  Borrower  or any of  its  Subsidiaries,  keep  all
         necessary  permits,   approvals,   certificates,   licenses  and  other
         authorizations  relating to environmental  matters in effect and remain
         in material compliance therewith, and handle all hazardous materials in
         material compliance with all applicable Environmental Laws;

                   (b)  immediately  notify the Agent and each Bank and  provide
         copies  upon  receipt of all  written  claims,  complaints,  notices or
         inquiries  relating to the condition of its  facilities and Property or
         compliance with Environmental Laws, and shall promptly, but in no event
         later than 45 days (or, if such actions or  proceedings  are capable of
         being  cured but not within 45 days,  then,  in no event later than 105
         days so long as Borrower continues to diligently proceed to cure) after
         the occurrence of such actions or proceedings, cure and have dismissed,
         to  the  reasonable   satisfaction  of  the  Banks,   any  actions  and
         proceedings relating to compliance with Environmental Laws; and

                   (c) provide such  information  and  certifications  which the
         Agent or any Bank may reasonably  request from time to time to evidence
         compliance with this Section 7.23.

        Section 7.24. No  Restrictions on  Subsidiaries.  The Borrower shall not
and shall not permit any of its Subsidiaries directly or indirectly to create or
otherwise  cause  or  suffer  to  exist  or  become   effective  any  consensual
encumbrance  or restriction of any kind on the ability of any Subsidiary (or the
Borrower,  in the case of  subsections  (e) and (g) of this Section) to: (a) pay
dividends or make any other  distribution  on any of such  Subsidiary's  capital
stock or other equity  interests  owned by the Borrower or any Subsidiary of the
Borrower; (b) pay any indebtedness owed to the Borrower or any other Subsidiary;
(c) make loans or advances to the Borrower or any other Subsidiary; (d) transfer
any of its Property or assets to the Borrower or any other Subsidiary; (e) merge
or  consolidate  with  or into  the  Borrower  or any  other  Subsidiary  of the
Borrower;  (f)  guaranty the payment  when due of the  Borrower's  indebtedness,
obligations and liabilities to the Agent or the Banks; or (g) grant to the Agent
for the benefit of the Banks liens and security  interests on such  Subsidiary's
or the  Borrower's  assets to  secure  the  payment  of the  Borrower's  and the
Guarantors' indebtedness,  obligations and liabilities under the Loan Documents;
provided that (i) the foregoing shall not apply to  restrictions  and conditions
imposed  by law or by this  Agreement,  (ii) the  foregoing  shall  not apply to
restrictions and conditions  existing on the date hereof identified on Exhibit M
(but  shall  apply  to  any  extension  or  renewal  of,  or  any  amendment  or
modification  expanding the scope of, any such restriction or condition),  (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements  relating to the sale of a Subsidiary pending such sale,  provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, (iv) clause (g) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
indebtedness  permitted by this  Agreement if such  restrictions  or  conditions
apply only to the Property  securing such indebtedness and (v) clause (g) of the
foregoing shall not apply to customary  provisions in leases and other contracts
restricting the assignment thereof.

Section 7.25.Year 2000 Assessment. The Borrower shall take all actions necessary
and commit adequate resources to assure that its computerbased and other systems
(and those of all Subsidiaries) are able to effectively process dates, including
dates before, on and after January 1, 2000,  without  experiencing any Year 2000
Problem that could cause a material  adverse effect on the business or financial
affairs of the  Borrower (or of the  Borrower  and its  Subsidiaries  taken on a
consolidated  basis).  At the request of the Bank, the Borrower will provide the
Bank with written assurances and substantiations (including, but not limited to,
the  results of  internal or external  audit  reports  prepared in the  ordinary
course of business)  reasonably  acceptable to the Bank as to the  capability of
the  Borrower  and its  Subsidiaries  to conduct  its and their  businesses  and
operations  before,  on and after January 1, 2000,  without  experiencing a Year
2000  Problem  causing a material  adverse  effect on the  business or financial
affairs of the  Borrower (or of the  Borrower  and its  Subsidiaries  taken on a
consolidated basis).


SECTION 8.           EVENTS OF DEFAULT AND REMEDIES.

         Section 8.1.  Definitions.  Any  one  or  more  of  the following shall
constitute an Event of Default:

                   (a) Default in the payment  when due of any  principal  of or
         interest on any Revolving Note,  whether at the stated maturity thereof
         or as required  by Section 2.4 hereof or at any other time  provided in
         this Agreement,  or of any Reimbursement  Obligation,  or of any fee or
         other amount payable by the Company  pursuant to this Agreement,  which
         default, in the case of default in the payment when due of any interest
         on any  Revolving  Note,  continues  for five  days  after the due date
         therefor;

                   (b) Default in the  observance or performance of any covenant
         set forth in Sections 7.3, 7.5, 7.6, 7.8, 7.10, 7.11, 7.12, 7.13, 7.14,
         7.15, 7.16, 7.17, 7.20 and 7.24, inclusive, hereof, or of any provision
         of any Security Document  requiring the maintenance of insurance on the
         Collateral  subject  thereto or dealing with the use or  remittance  of
         proceeds of such Collateral;

                   (c) Default in the  observance  or  performance  of any other
         covenant, condition,  agreement or provision hereof or any of the other
         Loan  Documents and such default  shall  continue for 30 days after the
         first to occur of (i) the Borrower's  knowledge thereof or (ii) written
         notice thereof to the Borrower by the Agent or any Bank;

                   (d) Default shall occur under any evidence of indebtedness in
         a principal amount exceeding $2,000,000 issued or assumed or guaranteed
         by the Borrower or any Subsidiary, or under any mortgage,  agreement or
         other similar  instrument under which the same may be issued or secured
         and such  default  shall  continue for a period of time  sufficient  to
         permit the  acceleration  of  maturity  of any  indebtedness  evidenced
         thereby or outstanding or secured thereunder;

                   (e) Any  representation  or  warranty  made  by the  Borrower
         herein  or in any Loan  Document  or in any  statement  or  certificate
         furnished  by it  pursuant  hereto  or  thereto,  proves  untrue in any
         material  respect as of the date made or deemed  made  pursuant  to the
         terms hereof;

                   (f) Any judgment or judgments,  writ or writs,  or warrant or
         warrants of attachment, or any similar process or processes, other than
         those fully  covered by insurance in a manner  acceptable to the Banks,
         in an  aggregate  amount in excess of  $2,000,000  shall be  entered or
         filed  against the Borrower or any  Subsidiary  or against any of their
         respective  Property or assets and remain unstayed and undischarged for
         a period of 60 days from the date of its entry;

                   (g)  Any  reportable   event  (as  defined  in  ERISA)  which
         constitutes  grounds  for  the  termination  of any  Plan  or  for  the
         appointment  by the  appropriate  United  States  District  Court  of a
         trustee to administer  or liquidate any such Plan,  shall have occurred
         and be continuing  thirty (30) days after written notice to such effect
         shall have been  given to the  Borrower  by any Bank;  or any such Plan
         shall be terminated; or a trustee shall be appointed by the appropriate
         United  States  District  Court to  administer  any such  Plan;  or the
         Pension Benefit  Guaranty  Corporation  shall institute  proceedings to
         administer or terminate any such Plan;

                   (h) The  Borrower or any  Subsidiary  shall (i) have  entered
         involuntarily  against it an order for relief under the Bankruptcy Code
         of 1978, as amended, (ii) admit in writing its inability to pay, or not
         pay, its debts  generally as they become due or suspend  payment of its
         obligations,  (iii) make an  assignment  for the benefit of  creditors,
         (iv) apply for, seek, consent to, or acquiesce in, the appointment of a
         receiver,  custodian,  trustee,  conservator,   liquidator  or  similar
         official for it or any  substantial  part of its  property,  (v) file a
         petition  seeking  relief or institute any  proceeding  seeking to have
         entered  against it an order for relief  under the  Bankruptcy  Code of
         1978, as amended, to adjudicate it insolvent,  or seeking  dissolution,
         winding up, liquidation,  reorganization,  arrangement,  marshalling of
         assets,  adjustment  or  composition  of it or its debts  under any law
         relating  to  bankruptcy,  insolvency  or  reorganization  or relief of
         debtors  or fail to  file an  answer  or  other  pleading  denying  the
         material  allegations of any such proceeding  filed against it, or (vi)
         fail to contest in good faith any  appointment or proceeding  described
         in Section 8.1(i) hereof;

                   (i) A custodian,  receiver, trustee, conservator,  liquidator
         or  similar  official  shall  be  appointed  for  the  Borrower  or any
         Subsidiary or any  substantial  part of its respective  Property,  or a
         proceeding  described in Section 8.1(h)(v) shall be instituted  against
         any  Borrower  or  any  Subsidiary  and  such   appointment   continues
         undischarged or any such proceeding  continues  undismissed or unstayed
         for a period of 60 days; or

                   (j) Any Guarantor shall breach, repudiate, disavow or purport
         to terminate its obligations under the Subsidiary  Guaranty or any part
         thereof,  or the Subsidiary  Guaranty or any part thereof shall for any
         reason not be the legal,  valid and binding obligation of any Guarantor
         Subsidiary.

         Section 8.2. Remedies for  Non-Bankruptcy  Defaults.  When any Event of
Default,  other than an Event of Default described in subsections (h) and (i) of
Section 8.1 hereof,  has occurred and is continuing,  the Agent,  if directed by
any of the Banks,  shall give notice to the  Borrower and take any or all of the
following  actions:  (i) terminate the remaining  Revolving  Credit  Commitments
hereunder  on the date (which may be the date  thereof)  stated in such  notice,
(ii) declare the principal of and the accrued  interest on the  Revolving  Notes
and  unpaid  Reimbursement  Obligations  to be  forthwith  due and  payable  and
thereupon the Revolving  Notes and unpaid  Reimbursement  Obligations  including
both  principal and interest,  shall be and become  immediately  due and payable
without  further demand,  presentment,  protest or notice of any kind, and (iii)
proceed to foreclose against any Collateral under any of the Security Documents,
take any  action or  exercise  any  remedy  under any of the Loan  Documents  or
exercise any other action, right, power or remedy permitted by law. Any Bank may
exercise  the right of set off with  regard  to any  deposit  accounts  or other
accounts maintained by the Borrower with any of the Banks.

         Section  8.3.  Remedies  for  Bankruptcy  Defaults.  When any  Event of
Default  described in subsections  (h) or (i) of Section 8.1 hereof has occurred
and is continuing,  then the Revolving  Notes shall  immediately  become due and
payable  without  presentment,  demand,  protest or notice of any kind,  and the
obligation of the Banks to extend  further  credit  pursuant to any of the terms
hereof shall immediately terminate.

         Section 8.4. L/Cs.  Promptly following the acceleration of the maturity
of the Revolving Notes pursuant to Section 8.2 or 8.3 hereof, the Borrower shall
immediately  pay to the Agent for the benefit of the Banks the full undrawn face
amount of all then  outstanding  L/Cs.  The Agent  shall hold all such funds and
proceeds  thereof as additional  collateral  security for the obligations of the
Borrower  to the Banks under the Loan  Documents.  The amount paid under any L/C
for which the Borrower has not reimbursed the Banks shall bear interest from the
date of such  payment  at the  default  rate of  interest  specified  in Section
1.3(c)(i) hereof.


SECTION 9.           CHANGE IN CIRCUMSTANCES REGARDING EURODOLLAR LOANS.

         Section 9.1.  Change of Law.  Notwithstanding  any other  provisions of
this Agreement or any Revolving  Note, if at any time after the date hereof with
respect to  Eurodollar  Loans,  any Bank shall  determine in good faith that any
change in applicable law or regulation or in the interpretation thereof makes it
unlawful for such Bank to make or continue to maintain any Eurodollar Loan or to
give effect to its obligations as contemplated  hereby, such Bank shall promptly
give notice thereof to the Borrower to such effect,  and such Bank's  obligation
to make or relend any such affected  Eurodollar Loans under this Agreement shall
terminate  until it is no longer unlawful for such Bank to make or maintain such
affected Loan. The Borrower shall prepay the outstanding principal amount of any
such affected  Eurodollar  Loan made to it,  together with all interest  accrued
thereon and all other  amounts due and payable to the Banks under Section 9.4 of
this Agreement, on the earlier of the last day of the Interest Period applicable
thereto  and the  first  day on which it is  illegal  for such Bank to have such
Loans outstanding;  provided, however, the Borrower may then elect to borrow the
principal  amount of such  affected  Loan by means of another  type of Revolving
Credit Loan available  hereunder,  subject to all of the terms and conditions of
this Agreement.

         Section 9.2.  Unavailability  of Deposits or Inability to Ascertain the
Adjusted Eurodollar Rate.  Notwithstanding any other provision of this Agreement
or any  Revolving  Note to the  contrary,  if prior to the  commencement  of any
Interest  Period any Bank shall determine (i) that deposits in the amount of any
Eurodollar  Loan  scheduled  to be  outstanding  are not  available to it in the
relevant  market or (ii) by  reason  of  circumstances  affecting  the  relevant
market, adequate and reasonable means do not exist for ascertaining the Adjusted
Eurodollar  Rate,  then the Agent shall promptly give telephonic or telex notice
thereof to the  Borrower and the Banks (such notice to be confirmed in writing),
and the obligation of the Banks to make any such  Eurodollar Loan in such amount
and for such Interest  Period shall  terminate until deposits in such amount and
for the  Interest  Period  selected  by the  Borrower  shall  again  be  readily
available in the relevant  market and  adequate and  reasonable  means exist for
ascertaining the Adjusted  Eurodollar Rate. Upon the giving of such notice,  the
Borrower  may  elect to  either  (i) pay or  prepay,  as the  case may be,  such
affected Loan,  subject to the provisions of Section 9.4 hereof or (ii) reborrow
such affected Loan as another type of Revolving Credit Loan available hereunder,
subject to all terms and conditions of this Agreement.

         Section 9.3. Taxes and Increased Costs. With respect to any outstanding
Eurodollar  Loans,  if any Bank shall determine in good faith that any change in
any  applicable  law,  treaty,  regulation  or  guideline  (including,   without
limitation,  Regulation  D of the  Board of  Governors  of the  Federal  Reserve
System) or any new law, treaty,  regulation or guideline,  or any interpretation
of  any  of the  foregoing  by  any  governmental  authority  charged  with  the
administration  thereof or any central bank or other  fiscal,  monetary or other
authority  having  jurisdiction  over  such  Bank or its  lending  branch or the
Eurodollar Loans contemplated by this Agreement (whether or not having the force
of law) ("Change in Law") shall:

                   (a) impose,  modify or deem  applicable any reserve,  special
         deposit or similar  requirements against assets held by, or deposits in
         or for the account of, or Loans by, or any other  acquisition  of funds
         or  disbursements  by, such Bank (other than  reserves  included in the
         determination of the Adjusted Eurodollar Rate);

                   (b) subject such Bank, any Eurodollar  Loan, or any Revolving
         Note to any tax  (including,  without  limitation,  any  United  States
         interest  equalization  tax or similar tax however named  applicable to
         the  acquisition  or holding of debt  obligations  and any  interest or
         penalties with respect thereto), duty, charge, stamp tax, fee deduction
         or withholding in respect of this  Agreement,  any Eurodollar  Loan, or
         any Revolving  Note except such taxes as may be measured by the overall
         net  income of such  Bank or its  lending  branch  and  imposed  by the
         jurisdiction, or any political subdivision or taxing authority thereof,
         in which such Bank's  principal  executive office or its lending branch
         is located or in which the Bank has nexus;

                   (c) change the basis of taxation of payments of principal and
         interest  due from the  Borrower  to such Bank  hereunder  or under any
         Revolving  Note  (other than by a change in taxation of the overall net
         income of such Bank); or

                   (d)  impose  on such Bank any  penalty  with  respect  to the
         foregoing  or  any  other  condition  regarding  this  Agreement,   its
         disbursement, any Eurodollar Loan, or any Revolving Note;

and such  Bank  shall  determine  in good  faith  that the  result of any of the
foregoing  is to increase  the cost  (whether by incurring a cost or adding to a
cost) to such Bank of making or maintaining  any Eurodollar Loan hereunder or to
reduce the amount of  principal  or  interest  received  by such Bank,  then the
Borrower shall pay to such Bank from time to time as specified by such Bank such
additional amounts as such Bank shall determine are sufficient to compensate and
indemnify it for such increased cost or reduced amount. If any Bank makes such a
claim for compensation,  it shall provide to the Borrower a certificate  setting
forth such increased  cost or reduced amount as a result of any event  mentioned
herein  specifying such Change in Law, and such certificate  shall be conclusive
and  binding  on the  Borrower  as to the amount  thereof  except in the case of
manifest error or willful misconduct.  Upon the imposition of any such cost, the
Borrower may prepay any affected Loan, subject to the provisions of Sections 2.3
and 9.4 hereof.

         Section 9.4. Funding  Indemnity.  (a) In the event any Bank shall incur
any loss, cost, expense or premium (including,  without limitation,  any loss of
profit  and any  loss,  cost,  expense  or  premium  incurred  by  reason of the
liquidation or re-employment of deposits or other funds acquired by such Bank to
fund or maintain any  Eurodollar  Loan or the relending or  reinvesting  of such
deposits or amounts paid such Bank) as a result of:

                   (i) any payment or prepayment of a Eurodollar  Loan on a date
         other than the last day of the then applicable Interest Period;

                  (ii) any failure by the Borrower to borrow any Eurodollar Loan
         on the date  specified  in the notice  given  pursuant  to Section  1.6
         hereof; or

                 (iii) the occurrence of any Event of Default;

then,  upon the demand of such Bank,  the  Borrower  shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense.

         (b) If any Bank makes a claim for compensation  under this Section 9.4,
it shall provide to the Borrower a certificate  setting forth the amount of such
loss,  cost or  expense  in  reasonable  detail  and such  certificate  shall be
conclusive  and binding on the Borrower as to the amount  thereof  except in the
case of manifest error.

         Section 9.5.  Lending  Branch.  Each Bank may, at its option,  elect to
make,  fund or maintain its Eurodollar  Loans  hereunder at the branch or office
specified  opposite its signature on the signature  page hereof or such other of
its branches or offices as such Bank may from time to time elect, subject to the
provisions of Section 1.6(b) hereof.

         Section   9.6.   Discretion   of  Bank  as  to   Manner   of   Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and  maintain its funding of all or any part of its Loans in
any manner it sees fit, it being  understood  however,  that for the purposes of
this Agreement all determinations  hereunder  (including  determinations for the
purposes of Section 9.4) shall be made as if the Banks had  actually  funded and
maintained  each  Eurodollar  Loan  during  each  Interest  Period for such Loan
through  the  purchase of deposits in the  relevant  interbank  market  having a
maturity  corresponding  to such  Interest  Period and bearing an interest  rate
equal to the Adjusted Eurodollar Rate for such Interest Period.


SECTION 10.          THE AGENT.

        Section 10.1.  Appointment and Powers.  Harris Trust and Savings Bank is
hereby  appointed by the Banks as Agent under the Loan Documents,  including but
not limited to the Security  Documents,  wherein the Agent shall hold a security
interest  for the  benefit of the Banks,  solely as the Agent of the Banks,  and
each of the Banks  irrevocably  authorizes the Agent to act as the Agent of such
Bank. The Agent agrees to act as such upon the express  conditions  contained in
this Agreement.

        Section 10.2.  Powers. The Agent shall have and may exercise such powers
hereunder  as are  specifically  delegated to the Agent by the terms of the Loan
Documents,  together with such powers as are incidental thereto. The Agent shall
have no implied duties to the Banks, nor any obligation to the Banks to take any
action under the Loan Documents except any action  specifically  provided by the
Loan Documents to be taken by the Agent.

        Section  10.3.  General  Immunity.  Neither  the  Agent  nor  any of its
directors,  officers,  agents or  employees  shall be liable to the Banks or any
Bank for any  action  taken or  omitted to be taken by it or them under the Loan
Documents  or in  connection  therewith  except  for  its  or  their  own  gross
negligence or willful misconduct.

        Section  10.4. No  Responsibility  for Loans,  Recitals,  etc. The Agent
shall not (i) be responsible to the Banks for any recitals, reports, statements,
warranties  or  representations  contained  in the Loan  Documents  or furnished
pursuant  thereto,  (ii)  be  responsible  for  the  value,  worth,  payment  or
collection of any Loans hereunder,  (iii) be bound to ascertain or inquire as to
the performance or observance of any of the terms of the Loan Documents, or (iv)
be responsible to determine or verify the existence, eligibility or value of any
Collateral,  or the correctness of any Borrowing Base Certificate.  In addition,
neither  the Agent nor its  counsel  shall be  responsible  to the Banks for the
enforceability or validity of any of the Loan Documents.

        Section 10.5.  Right to Indemnity.  The Banks hereby indemnify the Agent
for any actions taken in accordance with this Section 10, and the Agent shall be
fully justified in failing or refusing to take any action  hereunder,  unless it
shall first be indemnified to its satisfaction by the Banks pro rata against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, other than any liability which may arise out
of Agent's gross negligence or willful misconduct.

        Section 10.6. Action Upon Instructions of Banks. The Agent agrees,  upon
the written  request of the Banks,  to take any action of the type  specified in
the Loan  Documents  as being  within  the  Agent's  rights,  duties,  powers or
discretion.  The Agent shall in all cases be fully  protected  in acting,  or in
refraining from acting, hereunder in accordance with written instructions signed
by the  Banks,  and such  instructions  and any  action  taken or failure to act
pursuant  thereto shall be binding on all of the Banks and on all holders of the
Revolving  Notes. In the absence of a request by the Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any action, unless the
Loan Documents specifically require the consent of all of the Banks.

        Section 10.7.  Employment  of Agents and Counsel.  The Agent may execute
any of its  duties as Agent  hereunder  by or  through  employees,  agents,  and
attorneys-in-fact  and shall not be answerable to the Banks,  except as to money
or  securities  received  by it or its  authorized  agents,  for the  default or
misconduct of any such agents or attorneys-in-fact  selected by it in good faith
and with  reasonable  care. The Agent shall be entitled to advice and opinion of
legal  counsel  concerning  all matters  pertaining  to the duties of the agency
hereby created.

        Section 10.8. Reliance on Documents; Counsel. Absent gross negligence or
willful misconduct, the Agent shall be entitled to rely upon any Revolving Note,
notice, consent,  certificate,  affidavit, letter, telegram, statement, paper or
document  believed  by it to be genuine  and  correct and to have been signed or
sent by the proper person or persons, and, in respect to legal matters, upon the
opinion of legal counsel selected by the Agent.

        Section 10.9. May Treat Payee as Owner. The Agent may deem and treat the
payee of any Revolving Note as the owner thereof for all purposes  hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request,  authority or consent of any person,  firm or
corporation  who at the time of making such request or giving such  authority or
consent is the holder of any such Revolving Note shall be conclusive and binding
on any  subsequent  holder,  transferee or assignee of such Revolving Note or of
any Revolving Note issued in exchange therefor.

       Section 10.10. Agent's  Reimbursement.  Each Bank agrees to reimburse the
Agent pro rata in accordance  with its Commitment  Percentage for any reasonable
out-of-pocket  expenses  (including  fees and  charges  for  field  audits)  not
reimbursed by the Borrower (a) for which the Agent is entitled to  reimbursement
by the  Borrower  under  the Loan  Documents  and (b) for any  other  reasonable
expenses  incurred by the Agent on behalf of the Banks,  in connection  with the
preparation,  execution,  delivery,  administration  and enforcement of the Loan
Documents.

       Section 10.11. Rights as a Lender. With respect to its commitment,  Loans
made by it, the L/C issued by it and the Revolving Notes issued to it, the Agent
shall have the same rights and powers hereunder as any Bank and may exercise the
same as though it were not the  Agent,  and the term  "Bank" or  "Banks"  shall,
unless the context  otherwise  indicates,  include  the Agent in its  individual
capacity.  The Agent may accept  deposits  from,  lend  money to, and  generally
engage in any kind of banking or trust  business with the Borrower as if it were
not the Agent.

       Section 10.12. Bank Credit Decision.  Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 5.2 and such other documents and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into the Loan Documents.  Each Bank also  acknowledges that it
will,  independently  and without  reliance upon the Agent or any other Bank 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 the Loan Documents.

       Section  10.13.  Resignation  of Agent.  Subject to the  appointment of a
successor  Agent,  the Agent  may  resign  as Agent  for the  Banks  under  this
Agreement  and the other Loan  Documents  at any time by sixty  days'  notice in
writing to the Banks.  Such  resignation  shall take effect upon  appointment of
such successor.  The Banks shall have the right to appoint a successor Agent who
shall be  entitled  to all of the rights of, and vested with the same powers as,
the  original  Agent under the Loan  Documents.  In the event a successor  Agent
shall not have been appointed  within the sixty day period  following the giving
of notice by the Agent, the Agent may appoint its own successor.  Resignation by
the Agent shall not affect or impair the rights of the Agent under Sections 10.5
and 10.10 hereof with respect to all matters  preceding  such  resignation.  Any
successor  Agent must be a national  banking  association or a Bank chartered in
any State of the United States.

       Section 10.14. Duration of Agency. The agency established by Section 10.1
hereof shall  continue,  and Sections  10.1 through and  including  this Section
10.14 shall remain in full force and effect,  until the Revolving  Notes and all
other amounts due hereunder and  thereunder,  including  without  limitation all
Reimbursement  Obligations,  shall  have  been  paid  in  full  and  the  Banks'
commitments  to extend  credit to or for the benefit of the Borrower  shall have
terminated or expired.


SECTION 11.          MISCELLANEOUS.

        Section 11.1.  Amendments and Waivers. Any term, covenant,  agreement or
condition of this Agreement may be amended only by a written amendment  executed
by the  Borrower,  the Required  Banks and, if the rights or duties of the Agent
are affected  thereby,  the Agent,  or compliance  therewith  only may be waived
(either  generally  or in a  particular  instance  and either  retroactively  or
prospectively),  if the Borrower  shall have  obtained the consent in writing of
the  Required  Banks  and,  if the  rights or  duties of the Agent are  affected
thereby, the Agent,  provided,  however,  that without the consent in writing of
the  holders  of  all  outstanding  Revolving  Notes  and  unpaid  Reimbursement
Obligations and the issuer of the L/Cs, or all Banks if no Revolving Note or L/C
is  outstanding,  no such  amendment  or waiver  shall (a)  change the amount or
postpone the date of payment of any scheduled payment or required  prepayment of
principal  of the  Revolving  Notes or  reduce  the rate or  extend  the time of
payment of interest on the  Revolving  Notes,  or reduce the amount of principal
thereof,  or modify any of the provisions of the Revolving Notes with respect to
the payment or prepayment thereof, (b) give to any Revolving Note any preference
over any other Revolving  Notes, (c) amend the definition of Required Banks, (d)
alter,  modify or amend the  provisions  of this  Section  11.1,  (e) change the
amount or term of any of the Banks'  Revolving  Credit  Commitments  or the fees
required under Section 2.1 hereof, (f) alter,  modify or amend the provisions of
Section  6 of this  Agreement,  (g)  alter,  modify or amend  any  Bank's  right
hereunder  to consent to any action,  make any  request or give any notice,  (h)
change the advance rates under the Borrowing Base, or (i) release any Collateral
under the Security  Documents,  unless such release is permitted or contemplated
by the Loan  Documents.  Any such amendment or waiver shall apply equally to all
Banks and the holders of the Revolving Notes and  Reimbursement  Obligations and
shall be binding upon them,  upon each future holder of any  Revolving  Note and
Reimbursement  Obligation  and upon the Borrower,  whether or not such Revolving
Note  shall have been  marked to  indicate  such  amendment  or waiver.  No such
amendment  or waiver  shall  extend to or affect any  obligation  not  expressly
amended or waived.

        Section 11.2.  Waiver of Rights.  No delay or failure on the part of the
Agent or any Bank or on the part of the holder or holders of any Revolving  Note
or Reimbursement  Obligation in the exercise of any power or right shall operate
as a waiver thereof, nor as an acquiescence in any Potential Default or Event of
Default, nor shall any single or partial exercise of any power or right preclude
any other or further  exercise  thereof,  or the  exercise of any other power or
right, and the rights and remedies  hereunder of the Agent, the Banks and of the
holder or holders of any Revolving  Notes are  cumulative  to, and not exclusive
of, any rights or remedies which any of them would otherwise have.

        Section 11.3. Several Obligations.  The commitments of each of the Banks
hereunder  shall be the several  obligations of each Bank and the failure on the
part of any one or more of the Banks to perform  hereunder  shall not affect the
obligation of the other Banks hereunder,  provided that nothing herein contained
shall relieve any Bank from any liability for its failure to so perform.  In the
event that any one or more of the Banks  shall fail to  perform  its  commitment
hereunder,  all payments  thereafter  received by the Agent on the  principal of
Loans and Reimbursement  Obligations  hereunder,  whether from any Collateral or
otherwise, shall be distributed by the Agent to the Banks making such additional
Loans  ratably  as  among  them in  accordance  with  the  principal  amount  of
additional  Loans made by them until such additional Loans shall have been fully
paid and satisfied,  and all payments on account of interest shall be applied as
among all the Banks ratably in accordance  with the amount of interest  owing to
each of the Banks as of the date of the receipt of such interest payment.

        Section  11.4.  Non-Business  Day.  (a) If any payment of  principal  or
interest  on any  Domestic  Rate  Loan  shall  fall due on a day  which is not a
Business  Day,  interest  at the rate such Loan  bears for the  period  prior to
maturity  shall  continue to accrue on such  principal  from the stated due date
thereof to and including the next  succeeding  Business Day on which the same is
payable.

         (b) If any payment of  principal  or interest  on any  Eurodollar  Loan
shall fall due on a day which is not a Business  Day,  the payment  date thereof
shall be  extended  to the next date  which is a Business  Day and the  Interest
Period for such Loan shall be accordingly  extended,  unless as a result thereof
any  payment  date would  fall in the next  calendar  month,  in which case such
payment date shall be the next preceding Business Day.

        Section  11.5.   Survival  of  Indemnities.   All  indemnities  and  all
provisions  relative  to  reimbursement  to the Banks of amounts  sufficient  to
protect the yield to the Banks with respect to Eurodollar Loans, including,  but
not limited to,  Sections 9.3 and 9.4 hereof,  shall survive the  termination of
this Agreement and the payment of the Revolving Notes.

        Section 11.6. Documentary Taxes. Although the Borrower is of the opinion
that no documentary or similar taxes are payable in respect to this Agreement or
the  Revolving  Notes,  Borrower  agrees that it will pay such taxes,  including
interest and penalties, in the event any such taxes are assessed irrespective of
when such  assessment  is made and  whether  or not any credit is then in use or
available hereunder.

        Section 11.7.  Representations.  All representations and warranties made
herein or in certificates  given pursuant hereto shall survive the execution and
delivery of this  Agreement and of the Revolving  Notes,  and shall  continue in
full force and effect with respect to the date as of which they were made and as
reaffirmed  on the date of each  borrowing,  request  for L/C and as long as any
credit is in use or available hereunder.

        Section 11.8.  Notices.  Unless otherwise expressly provided herein, all
communications  provided for herein shall be in writing or by telex and shall be
deemed to have been given or made when served personally, when an answer back is
received in the case of notice by telex or 2 days after the date when  deposited
in the United States mail (registered,  if to Borrower) addressed if to Borrower
to  16401  Swingley  Ridge  Road,  Suite  700,  Chesterfield,   Missouri  63017,
Attention:  Vice President Finance; if to the Agent or Harris at 111 West Monroe
Street, Chicago, Illinois 60690, Attention:  Emerging Majors West; and if to any
of the Banks, at the address for each Bank set forth under its signature hereon;
or at such other address as shall be designated by any party hereto in a written
notice to each other party pursuant to this Section 11.8.

        Section  11.9.  Costs and  Expenses.  (a) The Borrower  agrees to pay on
demand all costs and expenses of the Agent and each Bank in connection  with the
negotiation,   preparation,  execution  and  delivery  of  this  Agreement,  the
Revolving  Notes  and  the  other  instruments  and  documents  to be  delivered
hereunder or in connection with the transactions  contemplated hereby, including
the fees and  expenses of Chapman and Cutler,  special  counsel to the Agent and
Thompson Coburn, counsel to Mercantile Bank National Association;  all costs and
expenses  of the  Agent  and the  reasonable  costs  and  expenses  of each Bank
(including in each case  attorneys'  fees and  expenses)  incurred in connection
with any consents or waivers hereunder or amendments  hereto,  and all costs and
expenses  (including  attorneys'  fees and  expenses),  if any,  incurred by the
Agent,  the Banks or any other holders of a Revolving Note or any  Reimbursement
Obligation in connection with the enforcement of this Agreement or the Revolving
Notes and the other  instruments  and  documents to be delivered  hereunder.  In
addition,  at the time of requesting any amendment hereof the Borrower shall pay
to the Agent for the  account of the Banks an  amendment  fee of $5,000 for each
such requested amendment. The Borrower agrees to indemnify and save harmless the
Banks and the Agent from any and all  liabilities,  losses,  costs and  expenses
incurred  by the  Banks or the  Agent in  connection  with any  action,  suit or
proceeding  brought against the Agent or any Bank by any Person which arises out
of the  transactions  contemplated or financed hereby or by the Revolving Notes,
or out of  any  action  or  inaction  by the  Agent  or any  Bank  hereunder  or
thereunder,  except  for such  thereof as is caused by the gross  negligence  or
willful misconduct of the party indemnified.

         (b) Without  limiting the  generality  of the  foregoing,  the Borrower
unconditionally agrees to forever indemnify, defend and hold harmless, the Agent
and each Bank, and covenants not to sue for any claim for contribution  against,
the Agent or any Bank for any damages, costs, loss or expense, including without
limitation,  response,  remedial  or removal  costs,  arising  out of any of the
following:  (i) any  presence,  release,  threatened  release or disposal of any
hazardous or toxic  substance or petroleum by the Borrower or any  Subsidiary or
otherwise  occurring on or with respect to their respective  Property,  (ii) the
operation or violation of any  Environmental  Law,  whether  federal,  state, or
local,  and any  regulations  promulgated  thereunder,  by the  Borrower  or any
Subsidiary  or  otherwise  occurring  on or with  respect  to  their  respective
Property,  (iii) any claim for personal  injury or property damage in connection
with the Borrower or any Subsidiary or otherwise occurring on or with respect to
their   respective   Property,   and  (iv)  the  inaccuracy  or  breach  of  any
environmental  representation,  warranty or covenant by the Borrower made herein
or in any loan agreement,  promissory note,  mortgage,  deed of trust,  security
agreement  or any other  instrument  or  document  evidencing  or  securing  any
indebtedness,  obligations  or liabilities of the Borrower owing to the Agent or
any Bank or setting forth terms and conditions  applicable  thereto or otherwise
relating  thereto,  except for damages  arising  from the Agent's or such Bank's
willful misconduct or gross negligence.  This indemnification  shall survive the
payment and satisfaction of all indebtedness, obligations and liabilities of the
Borrower owing to the Agent and the Banks and the termination of this Agreement,
and shall remain in force beyond the  expiration  of any  applicable  statute of
limitations  and payment or  satisfaction in full of any single claim under this
indemnification.  This indemnification  shall be binding upon the successors and
assigns of the  Borrower  and shall  inure to the benefit of Agent and the Banks
and their respective  directors,  officers,  employees,  agents,  and collateral
trustees, and their successors and assigns.

                  (c) The provisions of this Section 11.9 shall survive  payment
of the Revolving Notes and Reimbursement  Obligations and the termination of the
Banks' Revolving Credit Commitments hereunder.

       Section 11.10. Counterparts. This Agreement may be executed in any number
of  counterparts  and all such  counterparts  taken  together shall be deemed to
constitute one and the same  instrument.  One or more of the Banks may execute a
separate  counterpart  of this  Agreement  which has also been  executed  by the
Borrower, and this Agreement shall become effective as and when Borrower and all
of the Banks have  executed this  Agreement or a counterpart  thereof and lodged
the same with the Agent.

       Section 11.11.  Successors and Assigns;  Governing Law; Entire Agreement.
This  Agreement  shall be  binding  upon the  Borrower  and the  Banks and their
respective  successors  and  assigns,  and  shall  inure to the  benefit  of the
Borrower  and each of the Banks and the benefit of their  respective  successors
and  assigns,   including  any  subsequent  holder  of  any  Revolving  Note  or
Reimbursement  Obligation.  This  Agreement  and the  rights  and  duties of the
parties hereto shall be construed and determined in accordance  with the laws of
the State of  Illinois,  except  conflict  of laws  principles.  This  Agreement
constitutes the entire  understanding of the parties with respect to the subject
matter hereof and any prior  agreements,  whether  written or oral, with respect
thereto are superseded  hereby. The Borrower may not assign any of its rights or
obligations hereunder without the written consent of all of the Banks.

       Section 11.12.   No Joint  Venture.  Nothing contained in this  Agreement
shall be deemed  to  create  a  partnership  or  joint venture among the parties
hereto.

       Section  11.13.  Severability.  In the event  that any term or  provision
hereof is determined to be  unenforceable  or illegal,  it shall deemed  severed
herefrom to the extent of the illegality and/or  unenforceability  and all other
provisions hereof shall remain in full force and effect.

       Section 11.14. Table of Contents and Headings.  The table of contents and
section  headings in this  Agreement are for reference only and shall not affect
the construction of any provision hereof.

       Section 11.15. Sharing of Payments. Each Bank agrees with each other Bank
that if such Bank shall  receive and retain any  payment,  whether by set-off or
application  of  deposit  balances  or  otherwise  ("Set-Off"),   on  any  Loan,
Reimbursement  Obligation or other amount  outstanding  under this  Agreement in
excess of its ratable share of payments on all Loans,  Reimbursement Obligations
and other amounts then  outstanding to the Banks,  then such Bank shall purchase
for cash at face value,  but without  recourse,  ratably  from each of the other
Banks such amount of the Loans and  Reimbursement  Obligations held by each such
other Bank (or  interest  therein) as shall be  necessary  to cause such Bank to
share such excess payment ratably with all the other Banks;  provided,  however,
that if any such  purchase is made by any Bank,  and if such  excess  payment or
part thereof is thereafter  recovered  from such  purchasing  Bank,  the related
purchases from the other Banks shall be rescinded ratably and the purchase price
restored  as to the  portion of such excess  payment so  recovered,  but without
interest.  Each Bank's  ratable share of any such Set-Off shall be determined by
the proportion that the aggregate  principal  amount of Loans and  Reimbursement
Obligations  then due and  payable  to such Bank  bears to the  total  aggregate
principal amount of Loans and Reimbursement  Obligations then due and payable to
all the Banks.

       Section  11.16.  Conflict Among  Documents.  In the event of any conflict
between the terms hereof and the terms of any Loan  Document  other than the L/C
Agreement,  the  terms  of such  other  Loan  Document  shall  govern  as to the
provision in conflict and in the event of any conflict  between the terms hereof
and the terms of the L/C Agreement,  the terms of this Agreement shall govern as
to the provision in conflict.

       Section 11.17. Confidentiality. Each Bank agrees (on behalf of itself and
its affiliates,  directors,  officers, employees, agents and representatives) to
use  reasonable  precautions  to  keep  confidential,  in  accordance  with  its
customary procedures for handling confidential information of this nature and in
accordance  with safe and sound banking  practices,  any non-public  information
supplied  to such Bank by the  Borrower or any of its  Subsidiaries  pursuant to
this  Agreement  which is  identified  to such  Banks  by any of such,  as being
confidential at the time the same is delivered to such Bank; provided,  however,
that  nothing  contained  in this  Section  11.17  shall  prohibit  or limit the
disclosure by any Bank of any such information (i) to the extent required by any
statute,   rule,   regulation,   subpoena  or  judicial  process,  (ii)  to  any
governmental or regulatory  agency having  jurisdiction over such Bank, (iii) to
any professional advisors, including counsel and accountants, for any Bank, (iv)
to any bank  examiners or auditors,  (v) in  connection  with any  litigation to
which any Bank is a party, (vi) in connection with the enforcement of any Bank's
rights and remedies under this  Agreement,  any of the Revolving Notes or any of
the other Loan Documents or (vii) to any assignee or participant of any Bank (or
prospective assignee or participant) so long as such assignee or participant (or
prospective  assignee or participant) first executes and delivers to such Bank a
confidentiality  agreement in  substantially  the form of this Section 11.17 and
such Bank  delivers  to the  Borrower  a copy of such  executed  confidentiality
agreement; and provided further, that in no event shall any Bank be obligated or
required to return any  materials  furnished to such Bank by the Borrower or any
of its Subsidiaries,  hereunder.  Notwithstanding  the foregoing,  no Bank shall
have any  liability to the Borrower or to any of its  Subsidiaries  or to any of
their shareholders, partners, directors, officers, employees or agents by reason
of, or in any way claimed to be related to, any  disclosure by such Bank (or any
of its affiliates, directors, officers, employees, agents or representatives) of
any information with respect to the Borrower or any of its  Subsidiaries  except
as the same results from the gross negligence or willful misconduct of such Bank
as determined by a court of competent jurisdiction.

       Section  11.18.  Participants.  Each Bank shall have the right at its own
cost to grant  participations  (to be  evidenced  by one or more  agreements  or
certificates  of  participation)  in the  Revolving  Credit  Loans  made  and/or
Reimbursement   Obligations,   participations   in  L/Cs  and  Revolving  Credit
Commitment  held by such  Bank at any time and from  time to time to one or more
other Persons; provided that (i) no such participation shall relieve any Bank of
any of its obligations under this Agreement, (ii) no such participant shall have
any direct rights under this Agreement except as provided in this Section 11.18,
and no Agent shall have any obligation or  responsibility  to such  participant.
Any agreement pursuant to which such participation is granted shall provide that
the granting Bank shall retain the sole right and  responsibility to enforce the
obligations  of the Borrower  under this  Agreement and the other Loan Documents
including, without limitation, the right to approve any amendment,  modification
or waiver of any provision of the Loan Documents, except that such agreement may
provide that such Bank will not agree to any  modification,  amendment or waiver
of the Loan Documents that would reduce the amount of or postpone any fixed date
for payment of any  Obligation in which such  participant  has an interest.  Any
party to which such a participation  has been granted shall have the benefits of
Section 9.3 and Section 9.4  hereof,  up to an amount not  exceeding  the amount
that would  otherwise  have been payable to the Bank who sold the  participation
interest to such party. The Borrower and each Guarantor  authorizes each Bank to
disclose to any participant or prospective  participant under this Section 11.18
any financial or other information pertaining to the Borrower or any Guarantor.

       Section  11.19.  Assignment  Agreements.  (a) Each Bank  may,  at its own
expense,  from time to time,  assign  to other  commercial  lenders  part of its
rights and obligations under this Agreement  (including  without  limitation the
indebtedness evidenced by the Revolving Notes then owned by such assigning Bank,
together  with an  equivalent  proportion  of its  obligation  to make loans and
advances and  participate  in L/Cs) pursuant to written  agreements  executed by
such  assigning  Bank,  such  assignee  lender or lenders,  the Borrower and the
Agent,  which  agreements  shall  specify in each  instance  the  portion of the
indebtedness  evidenced by the  Revolving  Notes which is to be assigned to each
such assignee lender and the portion of the Revolving  Credit  Commitment of the
assigning  Bank to be assumed  by it (the  "Assignment  Agreements");  provided,
however,  that  unless,  in the case of  clauses  (i) and (iii) the  Agent,  the
Borrower,  the assignor Bank and the assignee lender,  in writing,  agree to the
contrary,  (i) the aggregate  amount of the Exposure of the assigning Bank being
assigned to such assignee lender pursuant to each such assignment (determined as
of the effective date of the relevant Assignment Agreement) shall in no event be
less than $5,000,000 and shall be an integral multiple of $1,000,000 (other than
assignments  between  existing Banks which may be in the amount of $1,000,000 or
in such greater  amount  which is an integral  multiple of  $500,000);  (ii) the
parties  to each such  assignment  shall  execute  and  deliver  to the Agent an
Assignment  Agreement,  together  with  any  Revolving  Notes  subject  to  such
assignment,  (iii) each Bank  (other than  Harris)  shall  maintain  for its own
account at least $15,000,000 of its Exposure or assign all of its Exposure; (iv)
the Agent and (except for an assignment made during the continuance of any Event
of  Default)  the  Borrower  must  each  consent,  which  consents  shall not be
unreasonably  withheld,  to each such assignment to (provided no such consent is
required for any assignment to any affiliate of the assigning Bank), and (v) the
assignee lender must pay to the Agent a processing and recordation fee of $3,500
and any  out-of-pocket  attorney's fees incurred by the Agent in connection with
such Assignment  Agreement.  Upon the execution of each Assignment  Agreement by
the assigning Bank thereunder,  the assignee lender thereunder, the Borrower and
the Agent,  satisfaction of all of the conditions set forth above and payment to
such  assigning  Bank by such  assignee  lender  of the  purchase  price for the
portion of the Exposure  being  acquired by it, (i) such  assignee  lender shall
thereupon become a "Bank" for all purposes of this Agreement with an Exposure in
the  amounts  set forth in such  Assignment  Agreement  and with all the rights,
powers and obligations afforded a Bank hereunder, (ii) such assigning Bank shall
have no further liability for funding the portion of any of its Revolving Credit
Commitment assumed by such other Bank, and (iii) the address for notices to such
assignee Bank shall be as specified in the Assignment  Agreement executed by it.
Concurrently with the execution and delivery of such Assignment  Agreement,  the
Borrower  shall execute and deliver new Revolving  Notes to the assignee Bank in
the amount of its Revolving  Credit  Commitment or Revolving Credit Loan and new
Revolving  Notes to the assigning  Bank in the amounts of its  Revolving  Credit
Commitment  or  Revolving  Credit  Loan  after  giving  effect to the  reduction
occasioned by such assignment, such new Revolving Notes to constitute "Revolving
Notes" for all purposes of this Agreement.

                  (b) Any Bank  may at any  time  pledge  or  assign  all or any
portion of its rights under this Agreement and its Revolving Note to any Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment.
<PAGE>



         Upon your acceptance  hereof in the manner  hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.

Dated as of September 18, 1998.

MAVERICK TUBE CORPORATION


By   /s/ Gregg M. Eisenberg______________________________
Its   President_______________________________________


Accepted and Agreed to as of the day and year last above written.

HARRIS TRUST AND SAVINGS BANK, individually and as Agent


By   /s/ Donald Busse
Its Vice President

Address:                  111 West Monroe Street
                          Chicago, Illinois 60690
Attention:                Emerging Majors West


MERCANTILE BANK NATIONAL ASSOCIATION


By
Its

Address:                  721 Locust Street
                          St. Louis, Missouri  63101
Attention:                St. Louis Group