<PAGE> 24

                                                       EXHIBIT 10.1


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

                            AMENDED AND RESTATED
                              CREDIT AGREEMENT
                   --------------------------------------

                          Dated as of May 28, 1997
                   --------------------------------------

                           U.S. HOME CORPORATION,

                        The Lenders Parties Thereto,

                                    and

                    The First National Bank of Chicago,
                                  as Agent

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





<PAGE> 25

                             TABLE OF CONTENTS

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

ARTICLE II   THE CREDITS................................................. 20
          2.1.  Commitment............................................... 20
          2.2.  Required Payments ....................................... 20
          2.3.  Ratable Loans............................................ 21
          2.4.  Types of Advances.................................... ... 21
          2.5.  Commitment Fee; Changes in Aggregate Commitment.......... 21
          2.6.  Minimum Amount of Each Advance........................... 24
          2.7.  Optional Principal Payments.............................. 24
          2.8.  Method of Selecting Types and Interest Periods
             for New Advances............................................ 24
          2.9.  Conversion and Continuation of Outstanding Advances...... 25
         2.10.  Changes in Interest Rate, etc............................ 26
         2.11.  Determination of Applicable Margins and Applicable
             Commitment Rate............................................. 26
         2.12.  Rates Applicable After Default........................... 27
         2.13.  Method of Payment        ................................ 27
         2.14.  Notes; Telephonic Notices................................ 28
         2.15.  Interest Payment Dates; Interest and Fee Basis........... 28
         2.16.  Notification of Advances, Interest Rates, Prepayments
             and Commitment Reductions and Increases..................... 28
         2.17.  Lending Installations.................................... 28
         2.18.  Non-Receipt of Funds by the Agent........................ 29
         2.19.  Withholding Tax Exemption................................ 29
         2.20.  Extension of Facility Termination Date................... 30
         2.21.  Replacement of Certain Lenders........................... 31
         2.22.  Swing Line............................................... 32

ARTICLE III  CHANGE IN CIRCUMSTANCES..................................... 33
          3.1.  Yield Protection......................................... 33
          3.2.  Changes in Capital Adequacy Regulations.................. 34
          3.3.  Availability of Types of Advances........................ 35
          3.4.  Funding Indemnification.................................. 35
          3.5.  Lender Statements; Survival of Indemnity................. 35

ARTICLE IV   THE LETTER OF CREDIT FACILITY............................... 36
          4.1.  Facility Letters of Credit............................... 36
          4.2.  Limitations.............................................. 36
          4.3.  Conditions............................................... 37
          4.4.  Procedure for Issuance of Facility Letters of Credit..... 37
          4.5.  Duties of Issuing Bank................................... 39
          4.6.  Participation............................................ 39
          4.7.  Compensation for Facility Letters of Credit.............. 41
          4.8.  Issuing Bank Reporting Requirements...................... 41
          4.9.  Indemnification; Nature of Issuing Bank's Duties......... 42
         4.10.  Designation of Issuing Bank.............................. 43
         4.11.   Obligations............................................. 43
<PAGE> 26

ARTICLE V   CONDITIONS PRECEDENT......................................... 43
          5.1.  Effective Date........................................... 43
          5.2.  Each Advance............................................. 44

ARTICLE VI   REPRESENTATIONS AND WARRANTIES.............................. 46
          6.1.  Existence and Standing................................... 46
          6.2.  Authorization and Validity............................... 46
          6.3.  No Conflict; Government Consent.......................... 46
          6.4.  Financial Statements..................................... 47
          6.5.  Material Adverse Change.................................. 47
          6.6.  Taxes.................................................... 47
          6.7.  Litigation and Contingent Obligations.................... 48
          6.8.  Subsidiaries............................................. 48
          6.9.  ERISA.................................................... 48
         6.l0.  Accuracy of Information.................................. 48
         6.11.  Regulation U............................................. 48
         6.12.  Material Agreements...................................... 49
         6.13.  Labor Disputes and Acts of God........................... 49
         6.14.  Ownership and Liens...................................... 49
         6.15.  Operation of Business.................................... 49
         6.16.  Laws; Environment........................................ 49
         6.17.  Investment Company Act................................... 50
         6.18.   Public Utility Holding Company Act...................... 50
         6.19   Subordinated Indebtedness................................ 51

ARTICLE VII   COVENANTS.................................................. 51
          7.1.  Financial Reporting...................................... 51
          7.2.  Use of Proceeds.......................................... 54
          7.3.  Notice of Default........................................ 55
          7.4.  Conduct of Business...................................... 55
          7.5.  Taxes.................................................... 55
          7.6.  Insurance................................................ 56
          7.7.  Compliance with Laws..................................... 56
          7.8.  Maintenance of Properties................................ 56
          7.9.  Inspection............................................... 56
         7.10.  Environment.............................................. 56
         7.11.  New Subsidiary........................................... 57
         7.12.  Change in Schedules...................................... 57

ARTICLE VIII   NEGATIVE COVENANTS........................................ 57
          8.1.  Dividends................................................ 57
          8.2.  Indebtedness............................................. 58
          8.3.  Merger   58
          8.4   Sale of Assets........................................... 59
          8.5.  Sale and Leaseback....................................... 59
          8.6   Investments and Acquisitions............................. 59
          8.7   Contingent Obligations................................... 61
          8.8   Liens.................................................... 61
          8.9.  Redemption............................................... 62
         8.10.  Affiliates............................................... 62
         8.11.  Subordinated Indebtedness................................ 63
         8.12.  Amendments............................................... 63
         8..13. Financial Undertakings................................... 63
<PAGE> 27

ARTICLE IX   FINANCIAL COVENANTS......................................... 63
          9.1.  Minimum Consolidated Tangible Net Worth.................. 63
          9.2.  Permitted Indebtedness Ratio ............................ 64
          9.3.  Land Owned............................................... 65
          9.4.  Housing Inventory........................................ 65
          9.5.  Rate Protection.......................................... 65


ARTICLE X   DEFAULTS..................................................... 65


ARTICLE XI   ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.............. 68
         11.1.  Acceleration............................................. 68
         11.2.  Amendments............................................... 68
         11.3.  Preservation of Rights................................... 69


ARTICLE XII   GENERAL  PROVISIONS........................................ 69
         12.1.  Survival of Representations ............................. 69
         12.2.  Governmental Regulation.................................. 69
         12.3.  Taxes.................................................... 70
         12.4.  Headings................................................. 70
         12.5.  Entire Agreement......................................... 70
         12.6.  Nature of Obligations; Benefits of this Agreement........ 70
         12.7.  Expenses; Indemnification................................ 70
         12.8.  Numbers of Documents..................................... 71
         12.9.  Accounting............................................... 71
         12.l0.  Severability of Provisions.............................. 71
         12.11.  Nonliability of Lenders and Issuing Bank................ 71
         12.12.  Choice of Law........................................... 71
         112.13.  Consent to Jurisdiction................................ 72
         12.14.  Waiver of Jury Trial.................................... 72
         12.15.  Confidentiality......................................... 72


ARTICLE XIII  THE AGENT.................................................. 73
         13.1.  Appointment.............................................. 73
         13.2.  Powers   73
         13.3.  General Immunity......................................... 73
         13.4.  No Responsibility for Loans, Recitals, etc............... 73
         13.5.  Action on Instructions of Lenders........................ 74
         13.6.  Employment of Agents and Counsel......................... 74
         13.7.  Reliance on Documents; Counsel........................... 74
         13.8.  Agent's Reimbursement and Indemnification................ 74
         13.9.  Rights as a Lender or Issuing Bank....................... 75
         13.l0.  Lender Credit Decision.................................. 75
         13.11.  Successor Agent......................................... 75
         13.12.  Agent's Fee............................................. 76



<PAGE> 28

ARTICLE XIV   SET OFF; RATABLE PAYMENTS.................................. 76
         14.1.  Setoff................................................... 76
         14.2.  Ratable Payments......................................... 77

ARTICLE XV   BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS........... 77
         15.1.  Successors and Assigns................................... 77
         15.2.  Participations........................................... 78
                        15.2.1  Permitted Participants; Effect........... 78
                        15.2.2. Voting Rights............................ 78
                        15.2.3.  Benefit of Setoff....................... 78
         15.3.  Assignments.............................................. 79
                  15.3.1.  Permitted Assignments......................... 79
                        15.3.2.  Effect; Effective Date.................. 79
         15.4   Dissemination of Information............................. 80
         15.5   Tax Treatment............................................ 80


ARTICLE XVI   NOTICES.................................................... 80
         16.1.  Giving Notice............................................ 80
         16.2.  Change of Address........................................ 81


ARTICLE XVII   COUNTERPARTS.............................................. 81


<PAGE> 29

                                  EXHIBITS

EXHIBIT "A"  FORM OF GUARANTY............................................

EXHIBIT "B"  FORM OF NOTE................................................

EXHIBIT "C"  FORM OF OPINION - KAYE, SCHOLER, FIERMAN,
             HAYS AND HANDLER, LLP.......................................

EXHIBIT "D"  INTENTIONALLY DELETED.......................................

EXHIBIT "E"  FORM OF OPINION - LORD BISSELL & BROOK......................

EXHIBIT "F"  INTENTIONALLY DELETED.......................................

EXHIBIT "G"  FORM OF CONTRIBUTION AGREEMENT..............................

EXHIBIT "H"  FORM OF SUBORDINATION AGREEMENT.............................

EXHIBIT "I"  BORROWING CERTIFICATE.......................................

EXHIBIT "J"  QUARTERLY COMPLIANCE CERTIFICATE............................

       SCHEDULE "I" TO COMPLIANCE CERTIFICATE............................

EXHIBIT "K"  ASSIGNMENT AGREEMENT........................................

       EXHIBIT "I"  TO ASSIGNMENT AGREEMENT
                  NOTICE OF ASSIGNMENT...................................

EXHIBIT "L"  COMMITMENT AND ACCEPTANCE...................................


                                 SCHEDULES

SCHEDULE "1-A"   -  GUARANTORS...........................................

SCHEDULE "1-B"   -  NON-BORROWING SUBSIDIARIES...........................

SCHEDULE "2.20"  -  EXTENSION FEES.......................................

SCHEDULE "6.3"   -  REQUIRED CONSENTS....................................

SCHEDULE "6.7"   -  LITIGATION...........................................

SCHEDULE "6.8"   -  SUBSIDIARIES.........................................

SCHEDULE "6.16"  -  EXCEPTIONS TO ENVIRONMENTAL REPRESENTATIONS..........

SCHEDULE "8.2"   -  INDEBTEDNESS.........................................

SCHEDULE "8.6"   -  EXISTING INVESTMENTS.................................


<PAGE> 30

                   AMENDED AND RESTATED CREDIT AGREEMENT

         This Amended and Restated  Credit  Agreement,  dated as of May 28,
1997, is among U.S. Home Corporation,  a Delaware corporation,  the Lenders
listed on the signature  pages of this  Agreement,  and The First  National
Bank of Chicago, as Agent.

         WHEREAS,  the parties hereto have entered into that certain Credit
Agreement  dated as of  September  29,  1995,  as amended  by that  certain
Consent and First  Amendment  to Credit  Agreement  dated as of February 9,
1996,  as  further  amended  by that  certain  Second  Amendment  to Credit
Agreement  dated as of September 25, 1996,  and as further  amended by that
certain Third  Amendment to Credit  Agreement  dated as of November 4, 1996
(as so amended, the "Original Agreement"); and

         WHEREAS,  the  parties  hereto now desire to amend and restate the
Original Agreement in its entirety.

         NOW  THEREFORE,  in  consideration  of the  premises,  the  mutual
covenants  contained herein and for other good and valuable  consideration,
the receipt and  sufficiency of which is hereby  acknowledged,  the parties
hereto  agree that,  effective  as of the  Effective  Date (as  hereinafter
defined),  the  Original  Agreement  is hereby  amended and restated in its
entirety as follows:

                                 ARTICLE I

                                DEFINITIONS
         As used in this Agreement:

         "Acquisition"  means any  transaction,  or any  series of  related
transactions,  consummated on or after the date of this Agreement, by which
the  Borrower  or any  of its  Subsidiaries  (excluding  the  Non-Borrowing
Subsidiaries) (i) acquires any going concern or all or substantially all of
the assets of any firm,  corporation or division  thereof,  whether through
purchase of assets,  merger or  otherwise  or (ii)  directly or  indirectly
acquires (in one transaction or as the most recent  transaction in a series
of transactions) at least a majority (in number of votes) of the securities
of a  corporation  which have  ordinary  voting  power for the  election of
directors  (other than  securities  having such power only by reason of the
happening of a  contingency)  or a majority (by percentage or voting power)
of  the  outstanding   partnership  or  other  ownership   interests  of  a
partnership,  joint  venture,  limited  liability  company or other similar
business organization.

         "Additional Lenders" is defined in Section 2.5(b).



<PAGE> 31


         "Advance" means a borrowing hereunder consisting of either (i) the
aggregate  amount of the several Loans (excluding Swing Line Loans) made by
the  Lenders  to the  Borrower  of the  same  Type  and,  in the  case of a
Eurodollar Advance,  for the same Interest Period or (ii) a Swing Line Loan
made by the Swing Line Bank to the Borrower.

         "Affected Lender" is defined in Section 2.21.

         "Affiliate"  of any  Person  means any other  Person  directly  or
indirectly  controlling,  controlled  by or under common  control with such
Person.  A  Person  shall  be  deemed  to  control  another  Person  if the
controlling  Person  beneficially owns (within the meaning of Rule 13d-3 of
the  Securities  Exchange Act of 1934, as amended) 20% or more of any class
of voting  securities  (or other  ownership  interests)  of the  controlled
Person or possesses,  directly or indirectly,  the power to direct or cause
the  direction  of the  management  or policies of the  controlled  Person,
whether through ownership of stock, by contract or otherwise.

         "Agent"  means The First  National Bank of Chicago in its capacity
as  agent  for  the  Lenders  pursuant  to  Article  XIII,  and  not in its
individual capacity as a Lender, and any successor Agent appointed pursuant
to Article XIII.

         "Aggregate Available Credit" means the aggregate of the Available
Credits of all of the Lenders.

         "Aggregate  Commitment"  means the aggregate of the Commitments of
all the Lenders,  as increased or reduced from time to time pursuant to the
terms hereof. As of the date of this Agreement, the Aggregate Commitment is
$130,000,000.

         "Agreement" means this amended and restated credit  agreement,  as
it may be amended or modified  (including  by  execution  and delivery of a
Commitment  and  Acceptance  in accordance  with the  provisions of Section
2.5(b)) and in effect from time to time.

         "Agreement Accounting Principles" is defined in Section 12.9.

         "Alternate  Base Rate" means,  for any day, a rate of interest per
annum equal to the higher of (i) the  Corporate  Base Rate for such day and
(ii) the sum of (a) the Federal Funds  Effective Rate for such day plus (b)
1/2 of 1% per annum.

         "Applicable   Commitment   Rate"   means,   as  at  any   date  of
determination,  the  rate  per  annum  indicated  in  Section  2.11 as then
applicable in the determination of the commitment fee under Section 2.5.

         "Applicable   Eurodollar   Margin"  means,   as  at  any  date  of
determination,  the margin  indicated in Section 2.11 as then applicable in
the  determination of Eurodollar Rates and the Applicable  Letter of Credit
Rate.


<PAGE> 32

         "Applicable  Floating  Rate  Margin"  means,  as at  any  date  of
determination,  the margin  indicated in Section 2.11 as then applicable in
the determination of the Floating Rate applicable to Floating Rate Advances
and Swing Line Loans,  provided,  however,  that, with respect to the first
$25,000,000  of  Floating  Rate  Advances   (excluding  Swing  Line  Loans)
outstanding at any time, the Applicable  Floating Rate Margin shall be zero
(0).

         "Applicable  Letter  of  Credit  Rate"  means,  as at any  date of
determination,  a rate per  annum  equal to (i) the  Applicable  Eurodollar
Margin as at such date, less (ii) 0.25 percent.

         "Applicable  Margin(s)"  means the  Applicable  Eurodollar  Margin
and/or the Applicable Floating Rate Margin, as the case may be.

         "Article"  means  an  article  of this  Agreement  unless  another
document is specifically referenced.

         "Authorized Officer" means any of the Chairman,  President, Senior
Vice President or any Vice President of the Borrower, acting singly.

         "Available  Credit" means, at any date with respect to any Lender,
the amount (if any) by which such  Lender's  Commitment  exceeds the sum of
(i) the  outstanding  principal  balance of such Lender's  Loans as of such
date  (including,  in the case of the Swing Line Bank,  Swing Line  Loans),
plus (ii) such  Lender's  ratable  share  (determined  in  accordance  with
Section 4.6) of the Facility Letter of Credit Obligations as of such date.

         "Borrower" means U.S. Home Corporation, a Delaware corporation,
and its successors and assigns.

         "Borrowing  Base" means,  with  respect to an Inventory  Valuation
Date for which it is to be  determined,  an amount  equal to the sum of the
following  assets of the Borrower and the Guarantors:  (i) the Receivables,
multiplied by ninety  percent  (90%),  (ii) the book value of Housing Units
Under Contract, multiplied by eighty percent (80%), (iii) the book value of
Inventory  Housing  Units,  multiplied by seventy  percent  (70%),  but not
exceeding thirty percent (30%) of Total Senior Loan  Commitments,  and (iv)
the sum (but not exceeding  thirty-three and one third percent (33 1/3%) of
Total  Senior Loan  Commitments)  of (A) the book value of  Finished  Lots,
multiplied  by fifty  percent  (50%) and (B) the book value of Owned  Land,
multiplied by twenty-five percent (25%).

         "Borrowing Base Certificate" means a written certificate in a form
acceptable  to  the  Required  Lenders  setting  forth  the  amount  of the
Borrowing Base with respect to the calendar month most recently  completed,
certified as true and correct by an Authorized Officer of the Borrower.

         "Borrowing Date" means a date on which an Advance is made hereunder.

         "Borrowing Notice" is defined in Section 2.8.


<PAGE> 33

         "Business Day" means (i) with respect to any borrowing, payment or
rate  selection  of  Eurodollar  Advances,  a day (other than a Saturday or
Sunday) on which banks  generally  are open in Chicago and New York for the
conduct of substantially all of their commercial  lending activities and on
which  dealings  in United  States  dollars  are  carried  on in the London
interbank  market  and (ii) for all other  purposes,  a day  (other  than a
Saturday  or Sunday) on which banks  generally  are open in Chicago for the
conduct of substantially all of their commercial lending activities.

         "Capitalized  Lease" of a Person  means any lease of  Property  by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.

         "Capitalized  Lease  Obligations"  of a Person means the amount of
the  obligations  of such Person  under  Capitalized  Leases which would be
shown  as a  liability  on a  balance  sheet  of such  Person  prepared  in
accordance with Agreement Accounting Principles.

         "Change in Control" means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning
of  Rule  13d-3  of  the  Securities  and  Exchange  Commission  under  the
Securities  Exchange Act of 1934) of 50% or more of the outstanding  shares
of voting stock of the Borrower.

         "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,
reformed or otherwise modified from time to time.

         "Commitment" means, for each Lender, the obligation of such Lender
to make Loans  (other than Swing Line  Loans),  and to  participate  in the
Facility Letters of Credit in accordance with Section 4.6(a), not exceeding
the amount set forth  opposite its  signature  below or as set forth in any
Notice of Assignment  relating to any assignment that has become  effective
pursuant to Section 15.3.2 or as set forth in any Commitment and Acceptance
in accordance with Section 2.5(b), as such amount may be modified from time
to time pursuant to the terms hereof.

         "Commitment and Acceptance" is defined in Section 2.5(b).

         "Consolidated   Funded  Indebtedness"  means,  at  any  date,  the
outstanding  amount of all Indebtedness of the Borrower and the Guarantors,
excluding  accrued expenses incurred in the ordinary course of business and
guarantees of  performance  or completion  and  performance  bonds (but not
excluding  guarantees of payment),  all determined on a consolidated  basis
for the Borrower and the Guarantors in conformity with Agreement Accounting
Principles.


<PAGE> 34

         "Consolidated  Interest  Expense"  means for any  period,  without
duplication,  the aggregate  amount of interest  which,  in conformity with
Agreement  Accounting  Principles,   would  be  set  opposite  the  caption
"interest  expense"  or any like  caption  on an income  statement  for the
Borrower  and  the  Guarantors  (including,   without  limitation,  imputed
interest  included  on  Capitalized  Lease  Obligations,  all  commissions,
discounts and other fees and charges owed with respect to Letters of Credit
and  bankers'  acceptance  financing,  the net costs  associated  with Rate
Hedging Obligations, amortization of other financing fees and expenses, the
interest  portion  of any  deferred  payment  obligation,  amortization  of
discount or premiums,  if any, and all other noncash interest expense other
than interest and other  charges  amortized to cost of sales) and includes,
with respect to the Borrower and the Guarantors,  without duplication,  all
interest included as a component of cost of sales for such period.

         "Consolidated  Interest  Incurred"  means for any period,  without
duplication,  the aggregate  amount of interest  which,  in conformity with
Agreement  Accounting  Principles,   would  be  set  opposite  the  caption
"interest  expense"  or any like  caption  on an income  statement  for the
Borrower  and  the  Guarantors  (including,   without  limitation,  imputed
interest  included  on  Capitalized  Lease  Obligations,  all  commissions,
discounts and other fees and charges owed with respect to Letters of Credit
and  bankers'  acceptance  financing,  the net costs  associated  with Rate
Hedging Obligations, amortization of other financing fees and expenses, the
interest  portion  of any  deferred  payment  obligation,  amortization  of
discount or premiums,  if any, and all other noncash interest expense other
than interest and other  charges  amortized to cost of sales) and includes,
with respect to the Borrower and the Guarantors,  without duplication,  all
capitalized  interest  for  such  period,  all  interest   attributable  to
discontinued  operations for such period to the extent not set forth on the
income statement under the caption "interest  expense" or any like caption,
and all interest  actually  paid by the  Borrower or a Guarantor  under any
Contingent Obligation during such period.

         "Consolidated  Net Income" means,  for any period,  the net income
(or loss) of the Borrower and the  Guarantors on a  consolidated  basis for
such period taken as a single accounting  period,  determined in conformity
with Agreement Accounting Principles; provided that there shall be excluded
from Consolidated Net Income (i) the income (or loss) of any Person that is
not the  Borrower  or a  Guarantor,  except to the  extent of the amount of
dividends  or  other  distributions  actually  paid  to the  Borrower  or a
Guarantor by such Person during such period,  and (ii) the income (or loss)
of any  Person  accrued  prior to the date it becomes a  Subsidiary  of the
Borrower or is merged into or consolidated  with the Borrower or any of its
Subsidiaries or that Person's assets are acquired by the Borrower or any of
its Subsidiaries.



<PAGE> 35

         "Consolidated  Senior Debt  Borrowings"  means,  at any date, with
respect to the Borrower and the Guarantors,  on a consolidated  basis,  the
outstanding  balance of all  obligations  described in clauses (i), (iv) or
(viii) of the  definition of  "Indebtedness"  (including  the  Obligations)
calculated in accordance with Agreement Accounting Principles but excluding
(i)  Indebtedness  of the  Borrower  to a  Guarantor,  a  Guarantor  to the
Borrower  or a Guarantor  to another  Guarantor,  and (ii) the  Convertible
Subordinated Notes and any other Subordinated Indebtedness.

         "Consolidated   Tangible  Net  Worth"  means,  at  any  date,  the
consolidated  stockholders' equity of the Borrower determined in conformity
with Agreement  Accounting  Principles,  less its  consolidated  Intangible
Assets,  all  determined as of such date.  For purposes of this  definition
"Intangible   Assets"  means  the  amount  (to  the  extent   reflected  in
determining such  consolidated  stockholders'  equity) of (i) all write-ups
(other than write-ups  resulting  from foreign  currency  translations  and
write-ups of assets of a going  concern  business made within twelve months
after the acquisition of such business) subsequent to March 31, 1995 in the
book value of any asset  owned by the  Borrower,  (ii) all  investments  in
Non-Borrowing   Subsidiaries  and  (iii)  all  unamortized  debt  discount,
goodwill,  patents,  trademarks,  service marks,  trade names,  copyrights,
organization or developmental expenses and other intangible items.

         "Contingent  Obligation" of a Person means,  without  duplication,
any agreement,  undertaking  or  arrangement by which such Person  assumes,
guarantees  (other than a Guaranty),  endorses (other than  endorsements in
the ordinary  course of business or negotiable  instruments  for deposit or
collection),  contingently  agrees to  purchase  or  provide  funds for the
payment  of, or  otherwise  becomes or is  contingently  liable  upon,  the
obligation or liability of any other Person,  or agrees to maintain the net
worth or working capital or other financial  condition of any other Person,
or  otherwise  assures any  creditor  of such other  Person  against  loss,
including,  without limitation,  any comfort letter,  operating  agreement,
take-or-pay  contract,  or application or other contingent  obligation with
respect to a Letter of Credit,  but excluding  guarantees of performance or
completion and performance bonds, or setoff rights of a lender. "Contingent
Obligation"  does not include the obligation to make capital  contributions
to a joint venture.
         "Contribution Agreement" is defined in Section 5.1(vi).

         "Controlled  Group"  means all  members of a  controlled  group of
corporations  and all trades or  businesses  (whether or not  incorporated)
under  common  control  which,  together  with the  Borrower  or any of its
Subsidiaries,  are treated as a single  employer  under  Section 414 of the
Code.

         "Conversion/Continuation Notice" is defined in Section 2.9.

         "Convertible  Subordinated  Notes"  means the  4.875%  Convertible
Subordinated  Debentures  due 2005 of the  Borrower  issued in the original
principal amount of $80,000,000.


<PAGE> 36

         "Corporate  Base  Rate"  means  a  rate  per  annum  equal  to the
corporate  base rate of interest  announced  by First  Chicago from time to
time, changing when and as said corporate base rate changes.

         "Coverage Test" is defined in Section 9.2(b).

         "Default"  means  an  event  described  in  Article  X  after  the
expiration of any applicable cure or notice period.

         "EBITDA" means, for any period,  without duplication,  (i) the sum
of the  amounts  for  such  period  of (a)  Consolidated  Net  Income,  (b)
Consolidated  Interest Expense, (c) charges against income for all federal,
state and local taxes, (d) depreciation  expense, (e) amortization expense,
(f) other non-cash charges and expenses, and (g) any losses arising outside
of the  ordinary  course  of  business  which  have  been  included  in the
determination  of  Consolidated  Net  Income,  less (ii) any gains  arising
outside of the ordinary  course of business which have been included in the
determination  of  Consolidated   Net  Income,   all  as  determined  on  a
consolidated  basis for the Borrower and the Guarantors in conformity  with
Agreement Accounting Principles.

         "Effective  Date"  means the  later of (a) the date on which  this
Agreement has been fully executed and delivered by the Lenders,  the Agent,
the Issuing Bank and the Borrower and (b) the date on which the  conditions
set forth in Section 5.1 have been satisfied.

         "Equity  Security"  has the meaning set forth in Rule 3a11-1 under
the Securities Exchange Act of 1934, as amended;  provided,  however,  that
the   Convertible   Subordinated   Notes  shall  not   constitute   "Equity
Securities."

         "ERISA" means the Employee Retirement Income Security Act of l974,
as amended from time to time, and any rule or regulation issued thereunder.

         "Eurodollar Advance" means an Advance which bears interest at a 
Eurodollar Rate.

         "Eurodollar Base Rate" means, with respect to a Eurodollar Advance
for the relevant  Interest  Period,  the rate determined by the Agent to be
the rate at which deposits in U.S.  dollars are offered by First Chicago to
first-class  banks in the London  interbank market at approximately 11 a.m.
(London  time) two  Business  Days prior to the first day of such  Interest
Period, in the approximate  amount of First Chicago's  relevant  Eurodollar
Loan and having a maturity  approximately equal to such Eurodollar Interest
Period.

         "Eurodollar Loan" means a Loan which bears interest at a Eurodollar
Rate.


<PAGE> 37

         "Eurodollar Rate" means, with respect to a Eurodollar  Advance for
the  relevant  Interest  Period,  the  sum of (i) the  quotient  of (a) the
Eurodollar Base Rate applicable to such Interest Period, divided by (b) one
minus the Reserve  Requirement  (expressed as a decimal) applicable to such
Interest Period, plus (ii) the Applicable Eurodollar Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate
is not such a multiple.

         "Excluded Taxes" is defined in Section 3.1.

         "Extension Request" is defined in Section 2.20(a).

         "Facility Increase Notice" is defined in Section 2.5(c).

         "Facility Letter of Credit" means a Letter of Credit issued by the
Issuing Bank for the account of the  Borrower or a Guarantor in  accordance
with Article IV.

         "Facility  Letter of Credit Fee" means a fee, payable with respect
to each Facility  Letter of Credit issued by the Issuing Bank, in an amount
per annum equal to the product of (i) the Applicable  Letter of Credit Rate
(determined as of the date on which the monthly  installment of such fee is
due) and (ii) the  greater of (A)  $50,000  or (B) the face  amount of such
Facility Letter of Credit.

         "Facility  Letter of Credit  Obligations"  means, at any date, the
sum of (i) the aggregate  undrawn face amount of all  outstanding  Facility
Letters of Credit, and (ii) the aggregate amount paid by an Issuing Bank on
any Facility Letters of Credit to the extent (if any) not reimbursed by the
Borrower or by the Lenders under Section 4.4.

         "Facility Termination Date" means May 31, 2001, as the same may be
extended as provided in Section 2.20.

         "FCCM" means First Chicago Capital Markets, Inc.

         "Federal  Funds  Effective  Rate" means,  for any day, an interest
rate per annum  equal to the  weighted  average  of the rates on  overnight
Federal  funds  transactions  with  members of the Federal  Reserve  System
arranged by Federal  funds  brokers on such day, as published  for such day
(or,  if such day is not a  Business  Day,  for the  immediately  preceding
Business Day) by the Federal  Reserve Bank of New York, or, if such rate is
not so  published  for any day which is a Business  Day, the average of the
quotations  at  approximately  10 a.m.  (Chicago  time) on such day on such
transactions  received  by the Agent from three  Federal  funds  brokers of
recognized standing selected by the Agent in its sole discretion.


<PAGE> 38

         "Financial  Undertaking"  of a  Person  means  (i) any  repurchase
obligation  or  liability  of such Person or any of its  Subsidiaries  with
respect to accounts or notes  receivable  sold by such Person or any of its
Subsidiaries,  (ii) any sale and leaseback transactions which do not create
a  liability  on the  consolidated  balance  sheet of such  Person  and its
Subsidiaries,   (iii)  any  other   transaction  which  is  the  functional
equivalent of or takes the place of borrowing but which does not constitute
a  liability  on the  consolidated  balance  sheets of such  Person and its
Subsidiaries, or (iv) any Rate Hedging Obligations.

         "Finished Lots" means parcels of land owned by the Borrower or any
Guarantor  which are duly recorded and platted for use as Housing Units and
zoned for such  use,  with  respect  to which  all  requisite  governmental
consents and approvals have been obtained and on which (i) all  development
activity,  other  than the  application  of the seal or  finishing  coat on
improved  roadways  and other  minor  repairs  required  to  dedicate  such
roadways, has been completed and (ii) water and sewer connections have been
brought to the lot shown on the plat covering such parcel and are available
for hook-up to a Housing Unit; provided,  however,  that the term "Finished
Lots" shall not include any real property upon which the  construction of a
Housing Unit has commenced.

         "First  Chicago"  means The First  National Bank of Chicago in its
individual capacity, and its successors.

         "First Indenture" means that certain  Indenture,  dated as of June
21,  1993,  between the  Borrower  and IBJ  Schroder  Bank & Trust  Company
pursuant to which the Senior Notes were issued.

         "Fixed Rate Debt" means any  obligation  described in clauses (i),
(iv) or (viii) of the definition of "Indebtedness"  (i) that bears interest
at a rate that is fixed until maturity of such  Indebtedness  and that does
not fluctuate or vary,  whether on the basis of rates established from time
to time by the obligee,  indices,  market  conditions  or otherwise or (ii)
having  an  average  weighted  maturity  equal  to or  exceeding  the  then
remaining term of this Agreement and with respect to which the Borrower has
arranged   Rate  Hedging   Obligations   that  protect  the  Borrower  from
fluctuations  of  interest  rates,  which  Rate  Hedging   Obligations  are
acceptable  to the  Required  Lenders in all  respects,  including  without
limitation  the  Person or  Persons  that are  parties  thereto,  the fixed
interest rates thereunder and the other terms and conditions thereof.

         "Floating Rate" means,  for any day, a rate per annum equal to (i)
the  Alternate  Base Rate for such day, plus (ii) the  Applicable  Floating
Rate Margin,  in each case  changing  when and as the  Alternate  Base Rate
changes.

         "Floating  Rate Advance"  means an Advance which bears interest at
the Floating Rate.

         "Floating  Rate Loan"  means a Loan which  bears  interest  at the
Floating Rate.


<PAGE> 39

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

         "Guarantors"  means the  Subsidiaries  of the  Borrower  listed on
Schedule "1-A" hereto and any  Subsidiary of Borrower that shall  hereafter
execute  a  Guaranty  in  accordance  with  Section  7.11  hereof,  and any
successors and assigns of any of the foregoing.

         "Guaranty" means a Guaranty,  in substantially the form of Exhibit
"A", duly executed  (whether  prior to, on or after the date hereof) by one
or more of the  Guarantors,  as the same may be amended or modified  and in
effect from time to time.

         "Housing Unit" means a single-family dwelling, whether detached or
attached (including condominiums but excluding mobile homes), including the
parcel  of land on  which  such  dwelling  is  located,  that is (or,  upon
completion of construction  thereof,  will be) available for sale; the term
"Housing Unit" includes an Inventory Housing Unit.

         "Housing  Unit  Closing"  means a closing of the sale of a Housing
Unit by the Borrower or a Guarantor to a bona fide purchaser for value that
is not an Affiliate.

         "Housing  Unit Under  Contract"  means a Housing Unit owned by the
Borrower or a Guarantor  as to which the Borrower or such  Guarantor  has a
bona fide contract of sale, in a form customarily  employed by the Borrower
or such  Guarantor,  entered into not more than 15 months prior to the date
of  determination  with a  Person  who is not  an  Affiliate,  under  which
contract  no  defaults  then exist and not less than  $1,000.00  toward the
purchase price has been paid;  provided,  however,  that in the case of any
Housing Unit the purchase of which is to be financed in whole or in part by
a loan insured by the Federal Housing  Administration  or guaranteed by the
Veterans  Administration,  the required  minimum  downpayment  shall be the
amount (if any) required under the rules of the relevant agency.

         "Indebtedness"  of  a  Person  means,  without  duplication,  such
Person's (i) obligations for borrowed money, (ii) obligations  representing
the  deferred  purchase  price of  Property  or  services  (other  than (A)
accounts  payable arising in the ordinary course of such Person's  business
and (B) rights or duties under option agreements to acquire real property),
(iii)  obligations,  whether or not  assumed,  secured by Liens (other than
Permitted  Encumbrances)  or payable out of the proceeds or production from
Property  now  or  hereafter  owned  or  acquired  by  such  Person,   (iv)
obligations  which are  evidenced by notes,  debentures,  or other  similar
instruments, (v) Capitalized Lease Obligations,  (vi) net liabilities under
Rate  Hedging   Obligations,   (vii)  Contingent   Obligations  and  (viii)
reimbursement  obligations  for which such Person is obligated with respect
to a Letter of Credit.  Indebtedness includes, in the case of the Borrower,
the Obligations.


<PAGE> 40

         "Interest Period" means, with respect to a Eurodollar  Advance,  a
period of one,  two,  three or six  months  commencing  on a  Business  Day
selected by the Borrower  pursuant to this Agreement.  Such Interest Period
shall end on (but exclude) the day which  corresponds  numerically  to such
date one, two, three or six months thereafter,  provided,  however, that if
there is no such numerically  corresponding day in such next, second, third
or sixth  succeeding  month,  such  Interest  Period  shall end on the last
Business Day of such next, second or third or sixth succeeding month. If an
Interest  Period would  otherwise end on a day which is not a Business Day,
such  Interest  Period  shall  end on the  next  succeeding  Business  Day,
provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day.

         "Inventory  Housing  Unit"  means any  Housing  Unit  owned by the
Borrower or any Guarantor that is not a Housing Unit Under Contract.

         "Inventory  Valuation  Date" means the last day of the most recent
calendar  month with  respect to which the  Borrower  is  required  to have
delivered a Borrowing Base Certificate pursuant to Section 7.1(vii) hereof.

         "Investment"  of a Person  means any loan,  advance,  extension of
credit (other than accounts  receivable  arising in the ordinary  course of
business), deposit account or contribution of capital by such Person to any
other Person or any investment in, or purchase or other acquisition of, the
stock,  partnership,  joint venture or limited liability company interests,
notes,  debentures  or other  securities  of any other  Person made by such
Person.

         "Issuance  Date"  means  the date on which a  Facility  Letter  of
Credit is issued, amended or extended.

         "Issuing  Bank"  means  any  Lender  that may from time to time be
designated  as Issuing Bank in  accordance  with the  provisions of Section
4.10,  provided,  however,  that a Lender may be designated as Issuing Bank
only if, at the time of such designation,  it has a rating of not less than
"A" as publicly  announced by S&P. As of the date of this Agreement,  First
Chicago is the Issuing Bank.

         "Lenders" means the lending  institutions  listed on the signature
pages of this Agreement, and any entity that shall become a party hereto as
a Lender in accordance  with the  provisions of Section  2.5(b),  and their
respective successors and assigns.

         "Lending  Installation"  means,  with  respect  to a Lender or the
Agent,  any office,  branch,  subsidiary or Affiliate of such Lender or the
Agent.

         "Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued by a financial  institution upon the application
of such Person or upon which such  Person is an account  party or for which
such Person is in any way liable.


<PAGE> 41

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

         "Loan" means, with respect to a Lender,  (i) such Lender's portion
of any Advance,  including  (unless the context  otherwise  indicates)  any
Advance  consisting  of a Swing  Line  Loan,  and (ii) in the case of a New
Lender, any payment made by such Lender pursuant to Section 2.5(d).

         "Loan Documents" means this Agreement, the Notes, any Guaranties
and any Reimbursement Agreements.

         "Material  Adverse Effect" means a material  adverse effect on (i)
the business,  Property,  condition (financial or otherwise), or results of
operations of the Borrower and the Guarantors,  taken as a whole,  (ii) the
ability  of  the  Borrower  to  perform  its  obligations  under  the  Loan
Documents,  or (iii)  the  validity  or  enforceability  of any of the Loan
Documents  or the  rights or  remedies  of the  Agent,  the  Lenders or any
Issuing Bank thereunder.

         "Moody's" means Moody's Investors Service, Inc.

         "Multiemployer  Plan"  means  a  Plan  maintained  pursuant  to  a
collective  bargaining  agreement  or any  other  arrangement  to which the
Borrower  or any  member of the  Controlled  Group is a party to which more
than one employer is obligated to make contributions.

         "New Lender" is defined in Section 2.5(b).

         "Non-Borrowing   Subsidiaries"   means  the  Subsidiaries  of  the
Borrower  listed on Schedule "1-B" hereto and any Person that (i) hereafter
becomes a Subsidiary of the Borrower and has as its primary business one or
more of the types of  businesses  currently  conducted by the  Subsidiaries
listed on Schedule "1-B" or (ii) is or hereafter  becomes a Subsidiary of a
Non-Borrowing Subsidiary.

         "Non-Recourse  Indebtedness"  with  respect  to any  Person  means
Indebtedness  of such  Person  (i) for which the sole  legal  recourse  for
collection  of principal and interest on such  Indebtedness  is against the
specific property identified in the instruments evidencing or securing such
Indebtedness  and such  property  was  acquired  with the  proceeds of such
Indebtedness  or such  Indebtedness  was incurred  within 90 days after the
acquisition  of such  property and for which no other assets of such Person
may be  realized  upon in  collection  of  principal  or  interest  on such
Indebtedness or (ii) that refinances  Indebtedness  described in clause (i)
and for which the  recourse  is limited  to the same  extent  described  in
clause (i).


<PAGE> 42

         "Note"  means a  promissory  note,  in  substantially  the form of
Exhibit "B" hereto,  duly executed  (whether prior to, on or after the date
hereof) by the  Borrower and payable to the order of a Lender in the amount
of its  Commitment,  including  any  amendment,  modification,  renewal  or
replacement of such promissory note.

         "Notice of Assignment" is defined in Section 15.3.2.

         "Obligations" means all unpaid principal of and accrued and unpaid
interest  on the Notes,  the  Facility  Letter of Credit  Obligations,  all
accrued and unpaid fees and all expenses,  reimbursements,  indemnities and
other  obligations  of the  Borrower to the  Lenders or to any Lender,  the
Agent,  the  Swing  Line Bank any  Issuing  Bank or any  indemnified  party
hereunder arising under the Loan Documents.

         "Original Agreement" is defined in the recitals of this Agreement.

         "Owned Land" means land (other than  Finished  Lots) owned or held
by the  Borrower or any  Guarantor  for  development  or sale or land under
development.

         "Participants" is defined in Section 15.2.1.

         "Payment Date" means the first day of each calendar month.

         "PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.

         "Permitted Encumbrances" means any of the following:

         (i)      Liens for taxes,  assessments or governmental  charges or
                  levies on a  Person's  Property  if the same shall not at
                  the time be delinquent or thereafter  can be paid without
                  penalty,  or are  being  contested  in good  faith and by
                  appropriate  proceedings and for which adequate  reserves
                  shall  have  been  set  aside on such  Person's  books in
                  accordance with GAAP.

    (ii)          Liens imposed by law, such as carriers',  warehousemen's,
                  mechanics'  and  materialmen's  Liens and  other  similar
                  Liens  arising in the ordinary  course of business  which
                  secure payment of obligations  not more than 90 days past
                  due or  which  are  being  contested  in  good  faith  by
                  appropriate  proceedings and for which adequate  reserves
                  shall  have  been  set  aside  on  a  Person's  books  in
                  accordance with GAAP.

   (iii)          Liens arising out of pledges or deposits  under  worker's
                  compensation  laws,  unemployment   insurance,   old  age
                  pensions,   or  other  social   security  or   retirement
                  benefits, or similar legislation in accordance with GAAP.


<PAGE> 43

    (iv)          Utility easements, rights of way, zoning restrictions and
                  such other encumbrances or charges against real property,
                  or  other  minor  irregularities  of  title,  as are of a
                  nature generally existing with respect to properties of a
                  similar  character  and which do not in any  material way
                  interfere with the use thereof or the sale thereof in the
                  business of the Borrower or the Guarantors.

     (v)          Easements,  dedications,  assessment  district or similar
                  Liens  in  connection  with municipal financing and other
                  similar encumbrances or charges, in each case  reasonably
                  necessary or appropriate  for  the  development  of  real
                  property  of  the  Borrower or a Guarantor, and which are
                  granted  in  the  ordinary course of the business of such
                  Borrower  or Guarantor, and which in the aggregate do not
                  materially  burden or impair the fair market value or use
                  of  such  real  property  (or  the project to which it is
                  related)  for  the  purposes  for  which  it  is  or  may
                  reasonably be  expected to be held.

         "Person"  means  any  natural  person,  corporation,  firm,  joint
venture, partnership,  limited liability company, association,  enterprise,
trust or other  entity or  organization,  or any  government  or  political
subdivision or any agency, department or instrumentality thereof.

         "PIR"  means,  at the  date  hereof,  1.75,  as  such  amount  may
hereafter be adjusted from time to time as provided in Section 9.2.

         "Plan" means an employee  pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the  Borrower  or any member of the  Controlled
Group may have any liability.

         "Property" of a Person means any and all  property,  whether real,
personal,  tangible,  intangible, or mixed, of such Person, or other assets
owned, leased or operated by such Person.

         "Purchasers" is defined in Section 15.3.1.

         "Rate  Hedging   Obligations"  of  a  Person  means  any  and  all
obligations  of such Person,  whether  absolute or contingent and howsoever
and  whensoever  created,  arising,  evidenced or acquired  (including  all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all  agreements,  devices  or  arrangements  designed  to
protect  at least  one of the  parties  thereto  from the  fluctuations  of
interest rates,  exchange rates or forward rates applicable to such party's
assets,  liabilities or exchange transactions,  including,  but not limited
to, dollar-denominated or cross-currency interest rate exchange agreements,
forward  currency  exchange   agreements,   interest  rate  cap  or  collar
protection agreements, forward rate currency or interest rate options, puts
and warrants,  and (ii) any and all  cancellations,  buy backs,  reversals,
terminations or assignments of any of the foregoing.



                                    
<PAGE> 44

         "Receivables"  means  the net  proceeds  payable  to,  but not yet
received  by,  the  Borrower  or any  Guarantor  following  a Housing  Unit
Closing.

         "Refinancing   Indebtedness"   means  Indebtedness  that  refunds,
refinances or extends any  Indebtedness  described in Schedule "8.2" hereto
(or  that  refunds,  refinances  or  extends  any  refund,  refinancing  or
extension  of such  Indebtedness),  but  only to the  extent  that  (i) the
Refinancing  Indebtedness  is  subordinated  to  or  pari  passu  with  the
Obligations  to  the  same  extent  as  the  Indebtedness  being  refunded,
refinanced or extended,  if at all, (ii) the  Refinancing  Indebtedness  is
scheduled to mature no earlier than the then current  maturity date of such
Indebtedness being refunded, refinanced or extended, (iii) such Refinancing
Indebtedness  is in an  aggregate  amount that is equal to or less than the
sum of the aggregate amount then outstanding  under the Indebtedness  being
refunded,  refinanced  or extended,  (iv) the Person or Persons (or Persons
who  are  Subsidiaries  of  such  Persons  or of  which  such  Persons  are
Subsidiaries)  liable for the payment of such Refinancing  Indebtedness are
the same  Persons (or Persons who are  Subsidiaries  of such  Persons or of
which such Persons are Subsidiaries)  that were liable for the Indebtedness
being refunded, refinanced or extended when such Indebtedness was initially
incurred and (v) such Refinancing  Indebtedness is incurred within 120 days
after  the  Indebtedness  being  refunded,  refinanced  or  extended  is so
refunded, refinanced or extended.

         "Regulation D" means Regulation D of the Board of Governors of the
Federal  Reserve  System as from time to time in effect  and any  successor
thereto or other  regulation  or official  interpretation  of said Board of
Governors  relating to reserve  requirements  applicable to member banks of
the Federal Reserve System.

         "Regulation U" means Regulation U of the Board of Governors of the
Federal  Reserve  System as from time to time in effect  and any  successor
thereto or other  regulation  or official  interpretation  of said Board of
Governors  relating to the  extension of credit by banks for the purpose of
purchasing  or carrying  margin  stocks  applicable  to member banks of the
Federal Reserve System.

         "Rejecting Lender" is defined in Section 2.20(b).

         "Reimbursement Agreement" means, with respect to a Facility Letter
of Credit,  such form of  application  therefor  and form of  reimbursement
agreement  therefor  (whether  in a  single  or  several  documents,  taken
together) as an Issuing Bank may employ in the ordinary  course of business
for its own account,  with such modifications thereto as may be agreed upon
by such Issuing Bank and the Borrower and as are not materially adverse (in
the  reasonable  judgment  of  such  Issuing  Bank  and the  Agent)  to the
interests of the Lenders;  provided,  however, in the event of any conflict
between the terms of any  Reimbursement  Agreement and this Agreement,  the
terms of this Agreement shall control.

         "Replacement Lender" is defined in Section 2.21.



                                    
<PAGE> 45

         "Reportable  Event" means a reportable event as defined in Section
4043 of ERISA and the regulations  issued under such Section,  with respect
to a  Plan,  excluding,  however,  such  events  as to  which  the  PBGC by
regulation  waived the  requirement of Section  4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however,
that a failure to meet the minimum  funding  standard of Section 412 of the
Code and of Section 302 of ERISA shall be a Reportable  Event regardless of
the  issuance of any such waiver of the notice  requirement  in  accordance
with either Section 4043(a) of ERISA or Section 412(d) of the Code.

         "Required  Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate  Commitment  or, if the Aggregate  Commitment  has
been terminated,  Lenders in the aggregate  holding at least 66-2/3% of the
aggregate unpaid principal amount of the outstanding Advances.

         "Reserve  Requirement"  means, with respect to an Interest Period,
the  maximum   aggregate   reserve   requirement   (including   all  basic,
supplemental,   marginal  and  other   reserves)  which  is  imposed  under
Regulation D on Eurocurrency liabilities (as defined therein).

         "Rights  Plan" means that certain  rights  agreement,  dated as of
November 7, 1996,  between the Borrower and The First Chicago Trust Company
of New York, as agent,  as the same may be modified or amended from time to
time,  provided  that  the  redemption  price  per  right  to  be  redeemed
thereunder shall not exceed $0.01.

         "S&P" means Standard & Poor's Ratings Services.

         "Second  Indenture"  means  that  certain  Indenture,  dated as of
February  16, 1996,  between the  Borrower  and IBJ  Schroder  Bank & Trust
Company pursuant to which the Senior Debt Securities were issued.

         "Section"  means a  numbered  section  of this  Agreement,  unless
another document is specifically referenced.

         "Senior   Debt"  means  the  Senior  Notes  and  the  Senior  Debt
Securities, or if either the Senior Notes or the Senior Debt Securities are
refinanced, the Refinancing Indebtedness with respect thereto.

         "Senior Debt  Rating"  means the second  highest  rating among the
publicly announced ratings by Moody's, S&P, Duff & Phelps Credit Rating Co.
and/or  Fitch  Investors  Service,  L.P.  on the  Borrower's  Senior  Debt,
provided,  however, (i) if neither of the two highest ratings is by Moody's
or S&P, the Senior Debt Rating  shall be (x) the rating  assigned by either
Moody's or S&P,  if only one of Moody's  or S&P shall  publicly  announce a
rating of the Borrower's  Senior Debt, or (y) the higher of the two ratings
by  Moody's  and S&P,  if both  shall  publicly  announce  a rating  of the
Borrower's  Senior Debt, and (ii) if neither Moody's nor S&P shall publicly
announce ratings of the Borrower's Senior Debt, no Senior Debt Rating shall
be deemed to exist.  The Senior Debt Rating  shall  change if and when such
rating(s) change,  and such change in the Senior Debt Rating shall have the
effect provided for in Section 2.11(b) and elsewhere in this Agreement.

         "Senior  Debt  Securities"  means the 7.95%  Notes due 2001 of the

                                     
<PAGE> 46

Borrower issued in the original principal amount of $75,000,000 pursuant to
the Second Indenture.

         "Senior  Notes"  means  the  9-3/4%  Senior  Notes due 2003 of the
Borrower issued in the original  principal amount of $200,000,000  pursuant
to the First Indenture.

         "Significant   Guarantor"  means  any  Guarantor  with  assets  or
liabilities or annual revenues in excess of $1,000,000.

         "Single  Employer Plan" means a Plan maintained by the Borrower or
any member of the  Controlled  Group for  employees  of the Borrower or any
member of the Controlled Group.

         "Subordinated  Indebtedness" of a Person means any Indebtedness of
such  Person  the  payment  of  which is  subordinated  to  payment  of the
Obligations  to  the  reasonable  satisfaction  of  the  Required  Lenders,
including, as to the Borrower, the Convertible Subordinated Notes.

         "Subordination Agreement" is defined in Section 5.1(vii).

         "Subsidiary" of a Person means (i) any  corporation  more than 50%
of the outstanding securities having ordinary voting power for the election
of the board of directors of which shall at the time be beneficially  owned
(within the meaning of Rule 13d-3 of the  Securities  Exchange Act of 1934,
as amended) directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii)
any partnership,  association,  joint venture, limited liability company or
similar  business  organization  more than 50% of the  ownership  interests
having  ordinary  voting  power of  which  shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.

         "Substantial  Portion" means,  with respect to the Property of the
Borrower  and  the  Guarantors,  taken  as  a  whole,  Property  which  (i)
represents  more than 10% of  Consolidated  Tangible Net Worth, as would be
shown in the  consolidated  financial  statements  of the  Borrower and its
Subsidiaries  as at the  beginning  of the  fiscal  quarter  in which  such
determination  is  made,  or (ii)  is  responsible  for  more  than  10% of
Consolidated Net Income, as reflected in the financial  statements referred
to in clause (i) above.

         "Swing Line Bank" means First  Chicago or any  Purchaser  to which
First Chicago  assigns the Swing Line Commitment in accordance with Section
15.3.1.

         "Swing Line  Commitment"  means the  commitment  of the Swing Line
Bank to make Swing Line Loans pursuant to Section  2.22(a).  As of the date
of  this  Agreement,  the  Swing  Line  Commitment  is  in  the  amount  of
$10,000,000.


<PAGE> 47

         "Swing  Line  Loan"  has  the  meaning  assigned  to  such term in
Section 2.22(a).

         "Total  Senior  Loan  Commitments"   means,  at  any  date,  on  a
consolidated basis for the Borrower and the Guarantors,  (i) the sum of (a)
all  outstanding  obligations  described in clauses (i), (iv) and (viii) of
the  definition  of  "Indebtedness"  to Persons that are not the  Borrower,
Subsidiaries of the Borrower or Affiliates of the Borrower or of any of its
Subsidiaries,  plus (b) all bona fide,  binding  but  unfunded  commitments
(including the Commitments) of banks or other financial  institutions  with
respect to the borrowing by the Borrower or any Guarantor of obligations of
the type  referred  to in clause (a) above,  except to the extent that such
commitments are subject to conditions  that have not been satisfied  (other
than  customary  conditions  that  the  Borrower  and  the  Guarantors  can
reasonably be expected to satisfy in the ordinary course of business), less
(ii) the sum of the  outstanding  amounts of the  Convertible  Subordinated
Notes  and  all  other  Subordinated  Indebtedness,  all as  determined  in
accordance with Agreement Accounting Principles.

         "Transferee" is defined in Section 15.4.

         "Type"  means,  with  respect  to any  Advance,  its  nature  as a
Floating Rate Advance or Eurodollar Advance.

         "Unfunded  Liabilities"  means  the  amount  (if any) by which the
present  value of all  vested  nonforfeitable  benefits  under  all  Single
Employer  Plans  exceeds the fair market  value of the assets of such Plans
allocable  to such  benefits,  all  determined  as of the then most  recent
valuation date for such Plans,  using the actuarial methods and assumptions
utilized in the actuarial report for each such Plan as of such date.

         "Unmatured Default" means an event which but for the lapse of time
or the giving of notice, or both, would constitute a Default.

         "Unused Commitment" means, at any date with respect to any Lender,
the amount (if any) by which such  Lender's  Commitment  exceeds the sum of
(i) the outstanding principal balance of such Lender's Loans (including, in
the case of the Swing Line Bank, Swing Line Loans) as of such date and (ii)
such Lender's ratable share  (determined in accordance with Section 4.6) of
the outstanding amount of the Facility Letters of Credit.

         "Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all
of the  outstanding  voting  securities  (or the  election  of the board of
directors)  of which shall at the time be  beneficially  owned  (within the
meaning of Rule 13d-3 of the  Securities  Exchange Act of 1934, as amended)
directly  or  indirectly,  by  such  Person  or  one or  more  Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person,  or (ii) any partnership,  association,  joint
venture, limited liability company or similar business organization 100% of
the ownership  interests having ordinary voting power of which shall at the
time be so owned or controlled.



                                     
<PAGE> 48

         The foregoing  definitions shall be equally applicable to both the
singular and plural forms of the defined terms.


                                 ARTICLE II

                                THE CREDITS
                     
          2.1.     Commitment From and  including the  date of the Original
Agreement   and   prior  to  the  Facility  Termination  Date, each  Lender
severally  agrees,  on   the  terms   and  conditions  set  forth  in  this
Agreement, to make Loans (other than Swing Line Loans) to the Borrower from
time to time in  amounts  not to  exceed in the  aggregate  at any one time
outstanding the amount of its Commitment;  provided, however, that a Lender
shall not be  required to make any Loan or Loans in excess of the amount of
such  Lender's  then  Available  Credit.  Subject  to  the  terms  of  this
Agreement, the Borrower may borrow, repay and reborrow at any time prior to
the Facility  Termination  Date. The  Commitments  to lend hereunder  shall
expire on the Facility Termination Date.

          2.2.    Required Payments.  (a) Any outstanding Advances and
all other unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.

         (b) If at any time Consolidated  Senior Debt Borrowings exceed the
Borrowing  Base, the Borrower  shall pay to the Agent,  as a payment of the
Advances,  an amount  (not to exceed the sum of the  outstanding  Advances)
equal to the amount by which the Consolidated Senior Debt Borrowings exceed
the Borrowing Base.

          2.3.    Ratable Loans.  Each Advance (other than a Swing Line Loan)
hereunder  shall  consist of Loans  (other than Swing Line Loans) made from
the  several  Lenders  ratably  in  proportion  to  the  ratio  that  their
respective Commitments bear to the Aggregate Commitment.

          2.4.    Types of Advances. Advances consisting of Swing Line Loans
shall be Floating  Rate  Advances, and other Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by the
Borrower in accordance with Sections 2.8 and 2.9.

          2.5.   Commitment  Fee;   Changes  in  Aggregate   Commitment
(a) The Borrower agrees to pay to the Agent for the  account of each Lender
a  commitment  fee, at a rate per annum equal to the Applicable  Commitment
Rate, on the daily average  of such Lender's  Unused Commitment  from  the 
date  hereof  to  and including the Facility  Termination Date, payable  in
arrears on the first day of each January, April, July and October hereafter
and on the Facility  Termination  Date. The Borrower may permanently reduce
the Aggregate Commitment in whole,  or in part ratably among the Lenders in
integral  multiples of  $5,000,000 at any time  or from time to time,  upon
at least three (3) Business Days' written notice to the Agent, which notice


                                    
<PAGE> 49

shall  specify  the  amount  of  any  such  reduction, provided,   however,
that the amount of the Aggregate Commitment may not be  reduced  below  the
sum of  (i)  the aggregate  principal  amount  of the outstanding  Advances
and (ii) the Facility Letter of Credit  Obligations. All accrued commitment
fees  shall  be payable  on  the effective  date  of any termination of the
obligations of the Lenders to make Loans hereunder.

         (b) The Borrower may, at any time and from time to time,  request,
by  notice  to the  Agent,  the  Agent's  approval  of an  increase  of the
Aggregate  Commitment  within the limitations  hereafter  described,  which
request  shall set forth the  amount  of such  requested  increase.  Within
twenty (20) days of such  request,  the Agent shall  advise the Borrower of
its  approval  or  disapproval  of such  request;  failure to so advise the
Borrower  shall  constitute  disapproval.  Upon approval of the Agent,  the
Aggregate  Commitment  may be so  increased  either  by  having  additional
financial  institutions approved by the Borrower and the Agent ("Additional
Lenders")  become  Lenders  and/or  by  having  any one or more of the then
existing  Lenders (at their  respective  election in their sole discretion)
that have been approved by the Borrower and the Agent,  increase the amount
of its  Commitment  (any such Lender that elects to increase its Commitment
and any Additional Lender being hereinafter referred to as a "New Lender"),
provided that (i) the Commitment of any Additional Lender shall not be less
than  $10,000,000 and the sum of the Commitments of the Additional  Lenders
and the increases in the  Commitments  of the other New Lenders shall be in
an  aggregate  amount  of not less  than  $10,000,000  (and,  if in  excess
thereof,  in  integral  multiples  of  $10,000,000);   (ii)  the  Aggregate
Commitment shall not exceed  $180,000,000;  (iii) the Borrower and each New
Lender shall have executed and delivered a commitment and  acceptance  (the
"Commitment  and  Acceptance")  substantially  in the form of  Exhibit  "L"
hereto,  and the Agent shall have accepted and executed the same;  (iv) the
Borrower  shall have  executed  and  delivered to the Agent a Note or Notes
payable to the order of each New Lender, each such Note to be in the amount
of  such  New  Lender's  Commitment  or  increase  in  its  Commitment  (as
applicable); (v) the Borrower shall have delivered to the Agent opinions of
counsel  (substantially similar to the forms of opinions attached hereto as
Exhibits "C" and "E,"  modified to apply to the  increase in the  Aggregate
Commitment  and each  Note  and  Commitment  and  Acceptance  executed  and
delivered  in  connection  therewith);   (vi)  the  Guarantors  shall  have
consented in writing to the new Commitments or increases in Commitments (as
applicable)  and shall have agreed that their  Guaranties  continue in full
force and effect;  (vii) the Borrower  and each New Lender shall  otherwise
have executed and  delivered  such other  instruments  and documents as the
Agent  shall  have  reasonably   requested  in  connection  with  such  new
Commitment or increase in the Commitment (as applicable); and (viii) if the
Aggregate  Commitment  shall at any time have been reduced,  any subsequent
increase of the Aggregate  Commitment shall be subject to the provisions of
Section  2.5(c).  The form and  substance of the documents  required  under
clauses (iii)  through (vii) above shall be fully  acceptable to the Agent.
The Agent shall provide  written notice to all of the Lenders  hereunder of
the admission of any Additional Lender or the increase in the Commitment of
any other New Lender  hereunder  and shall  furnish to each of the  Lenders
copies of the documents  required under clauses (iii),  (v), (vi) and (vii)
above.

<PAGE> 50

         (c)   Notwithstanding   the   provisions  of  Section  2.5(b),  in
the  event  that the  Aggregate  Commitment  shall at any  time  have  been
reduced,  the Aggregate Commitment shall not thereafter be increased unless
and until each of the then existing Lenders shall have been given the right
(at its  election)  to increase  its  Commitment  by an amount equal to the
lesser  of  (i)  such  Lender's  ratable  portion  (based  upon  the  ratio
(determined  as of the  date of the  Borrower's  request  for  the  Agent's
approval of such  increase)  of its then  existing  Commitment  to the then
existing  Aggregate  Commitment)  of the  aggregate  amount  of  all  prior
decreases (net of prior increases) in the Aggregate Commitment or (ii) such
Lender's  ratable portion (based upon the ratio  (determined as of the date
of the Borrower's request for the Agent's approval of such increase) of its
then existing Commitment to the then existing Aggregate  Commitment) of the
proposed  increase in the Aggregate  Commitment.  If, at any time after the
Aggregate  Commitment  has  been  reduced,  the  Agent  shall  approve  the
Borrower's request for an increase in the Aggregate  Commitment,  the Agent
shall  promptly,  but not later than ten (10) days after its receipt of the
Borrower's  request,  deliver to the then  existing  Lenders a notice  (the
"Facility  Increase  Notice")  setting  forth the amount of the increase so
requested by the Borrower,  and the Lenders'  rights  hereunder to increase
their Commitments shall be exercisable  within,  but not later than, thirty
(30) days following the date of delivery of the Facility  Increase  Notice.
If a Lender  elects to  exercise  such  right by notice  given to the Agent
within such 30-day period,  then such Lender shall (in accordance  with and
subject to the provisions of Section 2.5(b))  increase its Commitment by an
amount  determined  in accordance  with the first  sentence of this Section
2.5(c).  If such  Lender  does not so elect by  notice  given to the  Agent
within such 30-day period,  the Borrower and the Agent may proceed with the
increase of the Aggregate  Commitment as set forth in the Facility Increase
Notice, subject to and in accordance with Section 2.5(b). Nothing contained
herein shall preclude any Lender,  at its election and with the approval of
the Borrower and the Agent as provided in and otherwise in accordance  with
Section  2.5(b),  from  increasing its Commitment to an amount in excess of
the amount provided for in this Section 2.5(c).

         (d)  Upon  the  effective  date  of   any  increase  in   the
Aggregate  Commitment  pursuant to the provisions  hereof,  which effective
date shall be mutually agreed upon by the Borrower, each New Lender and the
Agent,  each New  Lender  shall  make a  payment  to the Agent in an amount
sufficient, upon the application of such payments by all New Lenders to the
reduction of the  outstanding  Advances  held by the Lenders,  to cause the
principal amount outstanding under the Loans made by each Lender (including
any New  Lender) to be in the  proportion  to the ratio that such  Lender's
Commitment  (upon  the  effective  date  of  such  increase)  bears  to the
Aggregate  Commitment  as so  increased.  The Borrower  hereby  irrevocably
authorizes each New Lender to fund to the Agent the payment  required to be
made pursuant to the immediately  preceding sentence for application to the
reduction of the outstanding Loans held by the other Lenders, and each such
payment shall constitute a Loan hereunder. If, as a result of the repayment
of the  Advances  provided  for in this  Section  2.5(d)  any  payment of a
Eurodollar  Advance  occurs  on a day  which  is not  the  last  day of the
applicable  Interest  Period,  the  Borrower  will pay to the Agent for the
benefit of any of the Lenders  holding a  Eurodollar  Loan any loss or cost


                                     
<PAGE> 51

incurred by such Lender resulting therefrom in accordance with Section 3.4.
Upon the effective date of such increase in the Aggregate  Commitment,  all
Loans outstanding hereunder (including any Loans made by the New Lenders on
such date) shall be Floating Rate Loans, subject to the Borrower's right to
convert the same to  Eurodollar  Loans on or after such date in  accordance
with the provisions of Section 2.9.

         (e)    Upon  the  effective  date  of any  increase  in the
Aggregate  Commitment  and the  making of the Loans by the New  Lenders  in
accordance  with the  provisions of Section  2.5(c),  each New Lender shall
also be  deemed  to have  irrevocably  and  unconditionally  purchased  and
received,  without  recourse or  warranty,  from the Lenders  party to this
Agreement  immediately  prior to the effective  date of such  increase,  an
undivided  interest and participation in any Facility Letter of Credit then
outstanding,  ratably,  such that each Lender  (including  each New Lender)
holds a  participation  interest in each such Facility  Letter of Credit in
proportion to the ratio that such Lender's  Commitment  (upon the effective
date of such increase in the Aggregate  Commitment)  bears to the Aggregate
Commitment as so increased.

         (f)    Nothing  contained  herein  shall   constitute,   or
otherwise  be deemed to be, a  commitment  or  agreement on the part of any
Lender to  increase  its  Commitment  hereunder  at any time or  (except as
provided in Section  2.5(c)) a  commitment  or agreement on the part of the
Borrower or the Agent to give or grant any Lender the right to increase its
Commitment hereunder at any time.

         2.6.   Minimum Amount of Each Advance.   Each Advance (other than
an Advance consisting of a Swing Line Loan) shall be in the minimum amount
of $2,000,000 (and in multiples of $1,000,000 if in excess thereof).

         2.7.   Optional Principal Payments. The Borrower may at any time or
from time to time pay, without penalty or premium, all outstanding Floating
Rate  Advances,  or, in a minimum  aggregate  amount of  $2,000,000  or any
integral  multiple  of  $1,000,000  in excess  thereof,  any portion of the
outstanding  Floating Rate Advances upon one Business Day's prior notice to
the Agent.  The Borrower may, upon three Business Days' prior notice to the
Agent, (a) pay, without penalty or premium,  any Eurodollar Advance in full
on the last day of the Interest Period for such Eurodollar Advance, and (b)
prepay any Eurodollar Advance in full prior to the last day of the Interest
Period for such Eurodollar  Advance,  provided that the Borrower shall also
pay at the time of such prepayment all amounts payable with respect thereto
pursuant to Section 3.4 hereof.  The  provisions  of this Section 2.7 shall
not apply to Swing Line Loans.

         2.8.   Method of  Selecting Types  and  Interest  Periods  for New
Advances. The Borrower shall select the Type of Advance and, in the case of
each Eurodollar  Advance,  the Interest  Period  applicable to each Advance
from time to time. The Borrower shall give the Agent irrevocable  notice (a
"Borrowing  Notice")  not  later  than  10:00  a.m.  (Chicago  time) on the
Borrowing Date of each Floating Rate Advance and three Business Days before
the Borrowing Date of each Eurodollar Advance, specifying:



<PAGE> 52
                                    

      (i)   the Borrowing Date, which shall be a Business Day, of such
            Advance,

     (ii)   the aggregate amount of such Advance,

    (iii)   the Type of Advance selected, and

     (iv)   in the case of each Eurodollar Advance, the Interest Period
            applicable thereto.

Not later than noon  (Chicago  time) on each  Borrowing  Date,  each Lender
shall make available its Loan or Loans, in funds  immediately  available in
Chicago to the Agent at its address specified  pursuant to Article XVI. The
Agent will make the funds so  received  from the Lenders  available  to the
Borrower at the Agent's aforesaid  address.  The provisions of this Section
2.8 shall not apply to Swing Line Loans.

          2.9.  Conversion  and  Continuation  of   Outstanding  Advances.
Floating Rate Advances shall continue as Floating Rate Advances unless and
until such Floating Rate Advances are converted into  Eurodollar Advances.
Each Eurodollar Advance shall continue as a  Eurodollar  Advance until the
end of the then  applicable  Interest Period   therefor,   at  which  time
such Eurodollar Advance shall be automatically converted into a Floating
Rate  Advance  unless  the  Borrower  shall   have  given  the  Agent  a 
Conversion/Continuation Notice requesting that, at the end of such Interest
Period,  such Eurodollar  Advance  either continue as a Eurodollar Advance
for the same or another Interest Period or be repaid. Subject to the terms
of Section 2.6, the Borrower may elect from time to time to convert all or
any part of an Advance of any Type into any other Type or Types of Advances;
provided  that  any  conversion  of any Eurodollar Advance may be made on,
and  only  on,  the  last day of the Interest Period  applicable  thereto.
The  Borrower  shall  give  the  Agent  irrevocable notice (a "Conversion/
Continuation  Notice") of each conversion of an Advance or continuation of
a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least one
Business Day, in the case of a conversion into a  Floating  Rate  Advance,
or three  Business  Days, in the case of a conversion into or continuation
of a Eurodollar Advance,  prior to the date of the requested conversion or
continuation, specifying:

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

     (ii)    the aggregate amount and Type of the Advance which is to be
             converted or continued; and

    (iii)    the amount  and  Type(s)  of  Advance(s)  into which such
             Advance is to be converted or continued  and, in the case
             of a  conversion  into or  continuation  of a  Eurodollar
             Advance,  the duration of the Interest Period  applicable
             thereto.


<PAGE> 53

         2.10.  Changes in Interest Rate, etc. Each Floating Rate Advance
shall bear interest on the outstanding principal amount thereof, for each
day from and including  the date such Advance is made or is converted  from
a Eurodollar Advance  into a  Floating  Rate  Advance  pursuant to  Section
2.9 to but excluding the date it becomes due or is converted into a
Eurodollar Advance pursuant to Section 2.9 hereof,  at a rate per annum
equal to the  Floating Rate for such day.  Changes in the rate of interest
on that portion of any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Alternate Base Rate or
in the Applicable Floating Rate Margin.  Each Eurodollar Advance shall bear
interest from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest  Period at the
interest  rate  determined as applicable  to such  Eurodollar  Advance.  No
Interest Period may end after the Facility Termination Date.

         2.11.    Determination of Applicable Margins and Applicable
Commitment Rate.  (a)  The Applicable Margins and the Applicable Commitment
Rate shall be determined by reference to the Senior Debt Rating in accordance
with the following table:

                Applicable   Applicable
Senior Debt     Eurodollar   Floating Rate       Applicable
  Rating        Margin (%)   Margin (%)      Commitment Rate (%)
-----------     ----------   ------------    -------------------

BBB-/Baa3 or      0.75           0                  0.200
 higher
BB+/Ba1           0.95           0                  0.250
BB/Ba2            1.15           0                  0.300
BB-/Ba3           1.35         0.10                 0.350
Lower or no       1.55         0.30                 0.400
 Senior Debt
 Rating

                  (b)  The   Applicable   Floating   Rate  Margin  and  the
Applicable  Commitment  Rate shall be adjusted,  as applicable from time to
time,  effective  on the first  Business Day after any change in the Senior
Debt  Rating to the  extent  that such  change in the  Senior  Debt  Rating
requires a corresponding change in the Applicable Floating Rate Margin. The
Applicable  Eurodollar Margin in respect of any Eurodollar Advance shall be
adjusted,  as applicable  from time to time,  effective on the first day of
the  Interest  Period for any  Eurodollar  Advance  after any change in the
Senior Debt Rating to the extent that such change in the Senior Debt Rating
requires a corresponding change in the Applicable Eurodollar Margin.

         2.12. Rates Applicable  After  Default. Notwithstanding anything
to  the  contrary  contained  in  Section  2.8,  2.9 or 2.10, during  the
continuance of a Default  the  Required  Lenders  may,  at their  option,
by  notice to the Borrower (which notice may be  revoked at the option of
the Required  Lenders  notwithstanding  any  provision  of  Section 11.2 
Requiring unanimous consent of the Lenders to changes in interest  rates),
declare  that no Advance may be made as, converted into or continued as a

<PAGE> 54

Eurodollar Advance.  Notwithstanding anything to the contrary contained in
Section 2.8, 2.9 or 2.10, during the continuance of an Unmatured  Default
the Required  Lenders may,  at their  option,  by notice to the  Borrower
(which  notice   may  be  revoked  at  the option of the Required Lenders
notwithstanding any provision of Section 11.2 requiring unanimous consent
of the Lenders to changes in interest rates), declare that no Advance may
be made as or converted into a Eurodollar Advance. During the continuance
of a Default,  the  Required Lenders may, at their option,  by  notice to
the Borrower  (which notice may be revoked at the option of the  Required
Lenders notwithstanding any provision of Section 11.2 requiring unanimous
consent   of  the Lenders to changes in interest rates),  declare that (i)
each  Eurodollar  Advance  shall  bear  interest for the remainder of the
applicable  Interest  Period at the rate  otherwise  applicable  to  such
Interest  Period plus 2% per annum and (ii) each  Floating  Rate  Advance
shall bear  interest at a rate  per annum  equal  to  the  Floating  Rate
otherwise  applicable  to the  Floating  Rate Advance plus 2% per annum.

         2.13.  Method of Payment.  All payments of the Obligations hereunder
shall be  made,  without  setoff, deduction, or counterclaim,  in immediately
available  funds  to the Agent at the Agent's  address  specified pursuant to
Article  XVI, or  at  any other Lending  Installation of the Agent specified 
in writing by the Agent  to the Borrower,  by noon  (local  time at the place
of  receipt) on the date when due, and shall be applied  ratably by the Agent
among the  Lenders,  except that  payments  of Swing Line Loans shall be made
solely to the Swing  Line Bank.  Each  payment  delivered  to the  Agent  for
the account of any  Lender  shall  be delivered promptly by the Agent to such
Lender in the same type  of funds that  the  Agent  received  at  its address
specified  pursuant  to  Article XVI or at any Lending Installation specified
in a notice  received by the Agent from  such  Lender. If the Agent receives,
for the account of a Lender, a payment  from the  Borrower and fails to remit
such payment to the  Lender on  the  Business  Day such  payment  is received
(if received by noon by the Agent) or on the next  Business Day (if received 
after  noon  by  the  Agent), the Agent shall pay to such Lender  interest on
such  payment at a  rate per annum equal to the Federal Funds Effective Rate 
for  each  day  for  which  such  payment  is so delayed. The Agent is hereby
authorized to charge the  account  of  the  Borrower  maintained  with  First
Chicago  for  each  payment  of  principal,  interest  and fees as it becomes
due hereunder.

         2.14.  Notes; Telephonic Notices. Each Lender is hereby authorized
to record the principal amount of  each  of its Loans and each repayment on
the schedule attached to its Note, provided,  however,  that the failure to
so record shall not affect the Borrower's obligations under such Note.  The
Borrower hereby authorizes the Lenders and the Agent to extend,  convert or
continue  Advances,  effect selections of Types of Advances and to transfer
funds based on  telephonic  notices made by any person or persons the Agent
or any  Lender  in good  faith  believes  to be  acting  on  behalf  of the
Borrower.  The Borrower  agrees to deliver  promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender,
of each telephonic notice signed by an Authorized  Officer.  If the written
confirmation  differs in any material  respect from the action taken by the
Agent and the  Lenders,  the  records  of the Agent and the  Lenders  shall
govern absent manifest error.


<PAGE> 55

         2.15. Interest Payment Dates; Interest and Fee Basis.  Interest
accrued on each Advance shall be payable on each Payment Date,  commencing
with the first such date to occur after the date hereof,  and on any date
on which the  Advance is  prepaid,  whether due to acceleration or otherwise.
Interest and commitment fees shall be calculated for actual days elapsed on
the basis of a 360-day year.  Interest  shall be payable  for the day an
Advance is made but not for the day of any  payment on the amount paid if
payment is received  prior to noon (local time at the place of receipt).
If any payment of principal of or interest on an Advance shall become due
on a day which is not a Business  Day,  such payment shall be made on the
next succeeding Business Day, and such extension of time shall be included
in computing interest in connection with such payment.

         2.16.  Notification of Advances,  Interest Rates,  Prepayments and
Commitment  Reductions  and  Increases.  Promptly  after  receipt  thereof,
the Agent will  notify each Lender of the contents of each Aggregate
Commitment  reduction  notice, Borrowing Notice,  Conversion/Continuation
Notice, Facility Increase Notice and repayment  notice received by it
hereunder.  The Agent will notify each Lender of the interest rate applicable
to each Eurodollar  Advance promptly upon  determination  of such interest
rate and will give each Lender prompt notice of each change in the Alternate
Base Rate.

         2.17.  Lending  Installations.  Each Lender may book its Loans at
any Lending  Installation selected by such Lender and may change its Lending
Installation from time to  time.  All terms of this  Agreement shall  apply to
any such  Lending Installation  and the Notes  shall be deemed  held by each
Lender  for the benefit of such Lending Installation.  Each Lender may, by
written or telex notice to the Agent and the Borrower,  designate a Lending
Installation through which Loans will be made by it and for whose account
Loan payments are to be made.

         2.18.  Non-Receipt of Funds by the Agent.  Unless the Borrower or a
Lender,  as the case may be,  notifies the Agent prior to the date on which
it is  scheduled  to make  payment  to the  Agent  of (i) in the  case of a
Lender,  the  proceeds  of a Loan or (ii) in the  case of the  Borrower,  a
payment of principal,  interest or fees to the Agent for the account of the
Lenders, that it does not intend to make such payment, the Agent may assume
that such payment has been made.  The Agent may, but shall not be obligated
to, make the amount of such payment available to the intended  recipient in
reliance upon such assumption.  If the Borrower or such Lender, as the case
may be, has not in fact made such  payment to the Agent,  the  recipient of
such payment shall,  on demand by the Agent,  repay to the Agent the amount
so made  available  together with  interest  thereon in respect of each day
during the period  commencing on the date such amount was so made available
by the Agent  until the date the Agent  recovers  such amount at a rate per
annum equal to (a) in the case of payment by a Lender,  the  Federal  Funds
Effective  Rate for such day or (b) in the case of payment by the Borrower,
the interest rate applicable to the relevant Advance.


<PAGE> 56

         2.19.   Withholding Tax Exemption.  At least five Business Days
prior to the first date on which  interest  or fees are  payable  hereunder
for the account of any Lender,  each Lender (if any) that is not incorporated
under the laws of the United States of America,  or a state thereof,  agrees
that it will deliver to each of the Borrower and the Agent two duly completed
copies  of  United  States  Internal  Revenue  Service  Form  1001 or 4224,
certifying in either case that such Lender is entitled to receive  payments
under this Agreement and the Notes without  deduction or withholding of any
United States federal taxes and an Internal Revenue Service Form W-8 or W-9
entitling  such Lender to receive a complete  exemption  from United States
tax backup  withholding.  Each Lender which so delivers a Form 1001 or 4224
further  undertakes  to deliver to each of the  Borrower  and the Agent two
additional  copies of such form (or a successor form) on or before the date
that such form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes  obsolete or after the
occurrence  of any event  requiring  a change in the most  recent  forms so
delivered  by it, and such  amendments  thereto or  extensions  or renewals
thereof as may be  reasonably  requested by the  Borrower or the Agent,  in
each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any United
States federal taxes,  unless an event  (including  without  limitation any
change in treaty,  law or  regulation)  has  occurred  prior to the date on
which any such delivery would  otherwise be required which renders all such
forms  inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal tax. If a Lender does
not provide  duly  executed  forms to the Borrower and the Agent within the
time  periods set forth in the  preceding  paragraph,  the  Borrower or the
Agent shall  withhold  taxes from payments to such Lender at the applicable
statutory  rates  and  the  Borrower  shall  not be  required  to  pay  any
additional  amounts as a result of such  withholding.  Upon the  reasonable
request of the Borrower or the Agent, each Lender that has not provided the
forms  or other  documents,  as  provided  above,  on the  basis of being a
"United  States   person,"  shall  submit  to  Borrower  and  the  Agent  a
certificate  or other  evidence  to the  effect  that it is such a  "United
States person."

         2.20.   Extension  of  Facility  Termination  Date.  (a)  The
Borrower may request a one-year extension of the Facility  Termination Date
by  submitting  a request  for an  extension  to the  Agent (an  "Extension
Request")  no more than 27 months nor less than 25 months prior to the then
scheduled Facility Termination Date. Promptly upon (but not later than five
Business  Days after)  receipt of the  Extension  Request,  the Agent shall
notify each Lender of the contents thereof and shall request each Lender to
approve the Extension Request.  Each Lender approving the Extension Request
shall  deliver  its  written  approval no later than 30 days later than the
date of the  Extension  Request.  If the approval of each of the Lenders is
received by the Agent within 30 days of the date of the  Extension  Request
(or as otherwise provided in Section 2.20(b)),  the Agent shall promptly so
notify the  Borrower,  each Lender and the Issuing  Bank,  and the Facility
Termination  Date  shall be  extended  by one year,  and in such  event the

<PAGE> 57

Borrower may thereafter request further  extension(s) of the then scheduled
Facility  Termination  Date in accordance with this Section 2.20. If any of
the Lenders does not deliver to the Agent such Lender's written approval to
any  Extension  Request  within  the 30 days of the date of such  Extension
Request,  the Facility  Termination  Date shall not be extended,  except as
otherwise provided in Section 2.20(b).

                  (b) If (i) any  Lenders  whose  pro  rata  shares  of the
Aggregate  Commitment do not exceed (in the aggregate) 20% of the Aggregate
Commitment  ("Rejecting  Lenders") shall not approve an Extension  Request,
(ii) all  rights  and  obligations  of such  Rejecting  Lenders  under this
Agreement  and  under  the  other  Loan   Documents   (including,   without
limitation,  their  Commitment and all Loans owing to them) shall have been
assigned,  within 90 days following such Extension  Request,  in accordance
with  Section  2.21,  to one or more  Replacement  Lenders  who shall  have
approved in writing such Extension  Request at the time of such assignment,
and (iii) no other Lender shall have given  written  notice to the Agent of
such  Lender's  withdrawal of its approval of the  Extension  Request,  the
Agent shall  promptly so notify the  Borrower,  each Lender and the Issuing
Bank and the Facility  Termination  Date shall be extended by one year, and
in such event the Borrower may thereafter  request further  extension(s) as
provided in Section 2.20(a).

                  (c) Within ten days of the Agent's notice to the Borrower
that  all of the  Lenders  have  approved  an  Extension  Request  (whether
pursuant to Section  2.20(a) or  2.20(b)),  the  Borrower  shall pay to the
Agent for the account of each Lender an extension  fee equal to the product
of (i) such Lender's  Commitment  and (ii)(A) the fee set forth in Schedule
2.20   hereto   with   respect   to   such   Lender   (or   such   Lender's
predecessor-in-interest if such Lender acquires its interest by assignment)
or (B) if such  Lender is an  Additional  Lender,  the fee agreed to by the
Borrower and such Additional Lender.

         2.21.  Replacement of Certain Lenders.  In the event a Lender (the
"Affected  Lender")  shall have  requested  compensation  from the Borrower
under Sections 3.1 or 3.2 to cover additional costs incurred by such Lender
that are not being  incurred  generally by the other  Lenders or shall have
delivered a notice  pursuant to Section  3.3 that such  Affected  Lender is
unable to extend  Eurodollar Loans for reasons not generally  applicable to
the other Lenders or such Affected Lender is a Rejecting Lender pursuant to
Section 2.20,  then,  in any such case,  the Borrower or the Agent may make
written  demands on such  Affected  Lender (with a copy to the Agent in the
case of a demand by the  Borrower and a copy to the Borrower in the case of
a demand by the Agent) for the Affected Lender to assign, and such Affected
Lender shall use its best  efforts to assign,  pursuant to one or more duly
executed  assignment  agreements in substantially  the form provided for in
Section 15.3.1, within five Business Days after the date of such demand, to
one or more  financial  institutions  that  comply with the  provisions  of
Section  15.3,  and  if  selected  by the  Borrower,  that  are  reasonably
acceptable  to the Agent,  that the Borrower or the Agent,  as the case may
be, shall have engaged for such purpose (the "Replacement  Lender"), all of
such Affected  Lender's rights and obligations under this Agreement and the

<PAGE> 58

other Loan Documents (including, without limitation, its Commitment and all
Loans owing to it) in accordance with Section 15.3. The Agent agrees,  upon
the  occurrence of such events with respect to an Affected  Lender and upon
written  request of the Borrower,  to use its reasonable  efforts to obtain
the  commitments  from  one  or  more  financial  institutions  to act as a
Replacement Lender. Further, with respect to such assignment,  the Affected
Lender shall have concurrently received, in cash, all amounts due and owing
to the  Affected  Lender  hereunder  or  under  any  other  Loan  Document,
including without limitation the aggregate  outstanding principal amount of
the Loans owed to such  Lender,  together  with  accrued  interest  thereon
through the date of such assignment, amounts payable under Sections 3.1 and
3.2 with  respect  to such  Affected  Lender  and all fees  payable to such
Affected  Lender  hereunder;  provided  that,  upon such Affected  Lender's
replacement,  such  Affected  Lender  shall cease to be a party  hereto but
shall  continue to be  entitled to the  benefits of Article III and Section
12.7, as well as to any fees accrued  hereunder and not yet paid, and shall
continue to be obligated under Section 13.8 with respect to obligations and
liabilities accruing prior to the replacement of such Affected Lender.

         2.22. Swing Line. (a) The Swing Line Bank agrees, on the terms and
conditions hereinafter set forth, to make loans ("Swing Line Loans") to the
Borrower  from  time  to time  during  the  period  from  the  date of this
Agreement,  up to but not  including  the  fifth  (5th)  day  prior  to the
Facility  Termination Date, in an aggregate  principal amount not to exceed
at any time outstanding the lesser of (i) the Swing Line Commitment or (ii)
the Swing Line Bank's Available Credit.

                  (b) Each  Swing  Line Loan shall be in an amount not less
than One  Million  Dollars  ($1,000,000)  and,  if in  excess  thereof,  in
integral multiples of One Million Dollars  ($1,000,000).  Within the limits
of the Swing Line Commitment,  the Borrower may borrow,  repay and reborrow
under this Section 2.22.

                  (c) The  Borrower  shall give the Swing Line Bank (and if
the Swing Line Bank is not also the Agent,  the Agent) a  Borrowing  Notice
requesting a Swing Line Loan not later than 1:00 p.m. (Chicago time) on the
Business  Day of such  Swing  Line  Loan,  specifying  the  amount  of such
requested Swing Line Loan. Each such Borrowing  Notice shall be accompanied
by a  Borrowing  Base  Certificate  dated as of the date of such  Borrowing
Notice (and by the Borrowing Notice provided for in Section  2.22(d)).  All
Borrowing Notices given by the Borrower under this Section 2.22(c) shall be
irrevocable.  Upon  satisfaction of the applicable  conditions set forth in
Section 5.2, the Swing Line Bank will make the Swing Line Loan available to
the Borrower in immediately available funds by crediting the amount thereof
to the Borrower's  account with the Swing Line Bank. If the Swing Line Bank
is not also the Agent, the Swing Line Bank shall not advance the Swing Line
Loan unless and until the Agent shall have confirmed (by telephonic notice)
that such applicable conditions have been satisfied.


<PAGE> 59

                  (d)  Each  Swing  Line  Loan  shall be paid in full on or
before the third  Business Day following the making of such Swing Line Loan
and,  if not so paid by the  Borrower,  shall  be  paid  in full  from  the
proceeds of an Advance made  pursuant to Section 2.1 on the third  Business
Day following  the making of such Swing Line Loan.  Each  Borrowing  Notice
given by the Borrower under Section  2.22(c) shall  include,  or if it does
not include,  shall be deemed to include an  irrevocable  Borrowing  Notice
under Section 2.8 requesting  the Lenders to make an Advance,  on or before
the third Business Day following the making of such Swing Line Loan, of the
full amount of such Swing Line Loan,  unless such Swing Line Loan is sooner
paid in full by the Borrower.

                  (e) Provided that the applicable  conditions set forth in
Section  5.2 shall  have been  satisfied  at the time of the making of such
Swing Line Loan, the Lenders irrevocably agree to make the Advance provided
for in Section 2.22(d),  notwithstanding  any subsequent failure to satisfy
such  conditions  or any other facts or  circumstances  including  (without
limitation) the existence of a Default.


                                ARTICLE III

                          CHANGE IN CIRCUMSTANCES

          3.1.    Yield  Protection.  If  any  law  or  any governmental or
quasi-governmental  rule, regulation,  policy,  guideline  or  directive
(whether or not having the force of law), or any interpretation thereof,
or the compliance of any Lender therewith,

         (i)      subjects   any   Lender   or   any   applicable   Lending
                  Installation  to any tax, duty,  charge or withholding on
                  or from  payments  due from the Borrower  (excluding  any
                  taxes imposed on, or based on, or determined by reference
                  to the net  income of any  Lender or  applicable  Lending
                  Installation,  including,  without limitation,  franchise
                  taxes,  alternative  minimum taxes and any branch profits
                  tax (collectively,  "Excluded Taxes")), any taxes imposed
                  on, or based on, or determined by reference to or changes
                  the  basis of  taxation  of  payments  to any  Lender  in
                  respect of its Loans or other  amounts  due it  hereunder
                  (except for Excluded Taxes),

    (ii)          imposes or  increases  or deems  applicable  any reserve,
                  assessment,  insurance charge, special deposit or similar
                  requirement  against assets of,  deposits with or for the
                  account  of, or credit  extended  by,  any  Lender or any
                  applicable Lending  Installation (other than reserves and
                  assessments   taken  into  account  in  determining   the
                  interest rate applicable to Eurodollar Rates), or


<PAGE> 60

   (iii)          imposes  any other  condition  the  result of which is to
                  increase the cost to any Lender or any applicable Lending
                  Installation of making,  funding or maintaining  loans or
                  reduces  any  amount  receivable  by  any  Lender  or any
                  applicable Lending Installation in connection with loans,
                  or  requires  any  Lender  or  any   applicable   Lending
                  Installation to make any payment  calculated by reference
                  to the amount of loans held or  interest  received by it,
                  by an amount deemed material by such Lender,

then, within 15 days of demand by such Lender,  the Borrower shall pay such
Lender that portion of such increased  expense  incurred or reduction in an
amount  received which such Lender  determines is  attributable  to making,
funding and maintaining its Loans and its  Commitment;  provided,  however,
that the  Borrower  shall not be  required  to  increase  any such  amounts
payable  to any  Lender  (i) if  such  Lender  fails  to  comply  with  the
requirements  of Section  2.19 hereof or (2) to the extent that such Lender
determines,  in its sole reasonable  discretion,  that it can, after notice
from the  Borrower,  through  reasonable  efforts,  eliminate or reduce the
amount of tax liabilities  payable  (without  additional  costs or expenses
unless  the  Borrower  agrees  to bear  such  costs or  expenses)  or other
disadvantages or risks (economic or otherwise) to such Lender or the Agent.
If any Lender receives a refund in respect of any tax for which such Lender
has  received  payment  from the  Borrower  hereunder,  such  Lender  shall
promptly notify the Borrower of such refund and such Lender shall repay the
amount of such refund to the Borrower, provided that the Borrower, upon the
request of such Lender,  agrees to return such refund (plus any  penalties,
interest  or other  charges)  to such  Lender in the event  such  Lender is
required to repay such refund.  The  determination as to whether any Lender
has received a refund  shall be made by such Lender and such  determination
shall be conclusive absent manifest error.

          3.2.  Changes in Capital Adequacy Regulations.  If  a  Lender or
Issuing Bank determines the amount of capital required or expected  to  be
maintained  by  such Lender, any  Lending  Installation of such Lender  or
Issuing Bank or any corporation controlling such Lender or Issuing Bank is
increased as a result of a Change,  then, within 15 days of demand by such
Lender or Issuing Bank,  the Borrower shall pay such Lender or Issuing Bank
the amount necessary to compensate for any shortfall in the rate of return
on the portion of such increased capital which such Lender or Issuing Bank
determines is attributable to this Agreement,  its Loans or its obligation
to make Loans  hereunder, or its issuance or maintenance of or participation
in, or commitment to issue, to maintain or to participate in, the Facility
Letters of Credit  hereunder  (after  taking into account such Lender's or
Issuing Bank's policies as to capital adequacy).  "Change" means (i) any 
change after the date of this Agreement in the Risk-Based Capital Guidelines
or (ii) any  adoption  of or change in any other  law, governmental or
quasi-governmental  rule,  regulation,  policy,  guideline, interpretation,
or directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital  required or expected to be
maintained  by  any  Lender,  Issuing Bank,  Lending  Installation or any
corporation controlling any Lender or Issuing  Bank.  "Risk-Based Capital
Guidelines" means (i) the risk-based  capital guidelines in effect in the

<PAGE> 61
United States on the date of this  Agreement,  including  transition rules, 
and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report  of
the  Basle  Committee  on  Banking  Regulation  and  Supervisory Practices
Entitled  "International  Convergence of Capital Measurements and Capital
Standards,"  including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

         3.3.  Availability of Types of Advances.  If any Lender determines
and notifies the Agent that maintenance of any of such Lender's  Eurodollar
Loans at a suitable Lending  Installation would violate any applicable law,
rule, regulation or directive,  whether or not having the force of law, the
Agent shall  suspend the  availability  of the affected Type of Advance and
require any  Eurodollar  Advances of the affected Type to be repaid;  or if
the Required Lenders  determine and notify the Agent that (i) deposits of a
type or maturity  appropriate  to match fund  Eurodollar  Advances  are not
available, the Agent shall suspend the availability of the affected Type of
Advance with respect to any Eurodollar  Advances made after the date of any
such  determination,  or  (ii) an  interest  rate  applicable  to a Type of
Advance does not accurately reflect the cost of making a Eurodollar Advance
of such Type, then, if for any reason  whatsoever the provisions of Section
3.1 are  inapplicable,  the Agent  shall  suspend the  availability  of the
affected Type of Advance with respect to any Eurodollar  Advance made after
the date of any such determination.

          3.4. Funding Indemnification.   If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period,  whether because of acceleration,  prepayment or otherwise,  or a 
Eurodollar Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders,  the Borrower  will  indemnify
each Lender for any loss  or  cost  incurred  by it  resulting  therefrom, 
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Advance.

     3.5. Lender Statements; Survival of Indemnity.  To the extent reasonably
possible,  each Lender shall  designate an alternate  Lending  Installation
with  respect to its  Eurodollar  Advances to reduce any  liability  of the
Borrower  to  such  Lender  under  Sections  3.1 and  3.2 or to  avoid  the
unavailability  of a Type of Advance  under  Section  3.3,  so long as such
designation is not  disadvantageous to such Lender.  Each Lender or Issuing
Bank shall deliver a written statement of such Lender or Issuing Bank as to
the amount  due, if any,  under  Sections  3.1,  3.2 or 3.4.  Such  written
statement shall set forth in reasonable  detail the calculations upon which
such  Lender or Issuing  Bank  determined  such  amount and shall be final,
conclusive  and binding on the  Borrower in the absence of manifest  error.
Determination  of amounts  payable under such Sections in connection with a
Eurodollar  Advance  shall be  calculated  as though each Lender funded its
Eurodollar  Advance  through  the  purchase  of a  deposit  of the type and
maturity  corresponding  to the deposit used as a reference in  determining
the Eurodollar Advance applicable to such Loan, whether in fact that is the
case or not. Unless otherwise  provided herein, the amount specified in the
written  statement shall be payable on demand after receipt by the Borrower
of the written  statement.  The  obligations of the Borrower under Sections
3.1, 3.2 and 3.4 shall survive  payment of the  Obligations and termination
of this Agreement.
<PAGE> 62

                                 ARTICLE IV

                       THE LETTER OF CREDIT FACILITY


         4.1.  Facility Letters of Credit.  The Issuing Bank agrees, on the
terms and  conditions  set forth in this  Agreement,  to issue from time to
time for the account of the  Borrower,  through such offices or branches as
it and the  Borrower may jointly  agree,  one or more  Facility  Letters of
Credit in accordance with this Article IV, during the period  commencing on
the date of the Original  Agreement and ending on the Business Day prior to
the Facility Termination Date.

         4.2.     Limitations.  No Issuing Bank shall issue, amend or extend,
at any time, any Facility Letter of Credit:

                  (i) if the aggregate  maximum  amount then  available for
         drawing under Letters of Credit issued by such Issuing Bank, after
         giving  effect to the  Facility  Letter of Credit or  amendment or
         extension  thereof  requested  hereunder,  shall  exceed any limit
         imposed by law or regulation upon such Issuing Bank;

             (ii) if, after giving effect to the Facility  Letter of Credit
         or  amendment  or  extension  thereof  requested  hereunder,   the
         aggregate  principal  amount  of the  Facility  Letter  of  Credit
         Obligations would exceed $20,000,000;

            (iii) that, in the case of the issuance of a Facility Letter of
         Credit, is in, or in the case of an amendment of a Facility Letter
         of Credit,  increases  the face  amount  thereof  by, an amount in
         excess of the then Aggregate Available Credit;

             (iv) if, after giving effect to the Facility  Letter of Credit
         or   amendment   or   extension   thereof   requested   hereunder,
         Consolidated  Senior Debt  Borrowings  would exceed the  Borrowing
         Base as of the most recent Inventory Valuation Date;

                  (v) if such Issuing Bank receives written notice from the
         Agent at or before noon  (Chicago  time) on the proposed  Issuance
         Date of such  Facility  Letter of  Credit  that one or more of the
         conditions   precedent  contained  in  Sections  5.1  or  5.2,  as
         applicable,  would not on such Issuance Date be satisfied,  unless
         such  conditions  are  thereafter  satisfied and written notice of
         such satisfaction is given to such Issuing Bank by the Agent;

             (vi) that has an  expiration  date  (taking  into  account any
         automatic renewal provisions  thereof) later than the Business Day
         preceding the scheduled Facility Termination Date; or

            (vii) that is in a currency other than U.S. Dollars.


<PAGE> 63

         4.3.  Conditions.  In addition to being subject to the satisfaction
of the conditions  contained  in  Sections 5.1  and  5.2, as applicable, the
issuance of any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:

                  (i) the Borrower shall have delivered to the Issuing Bank
         at  such  times  and in  such  manner  as  the  Issuing  Bank  may
         reasonably  prescribe  a  Reimbursement  Agreement  and such other
         documents and materials as may be reasonably  required pursuant to
         the terms  thereof,  and the  proposed  Facility  Letter of Credit
         shall be reasonably  satisfactory to such Issuing Bank in form and
         content; and

                 (ii) as of the Issuance Date no order,  judgment or decree
         of any court, arbitrator or governmental authority shall enjoin or
         restrain  such Issuing  Bank from  issuing the Facility  Letter of
         Credit and no law, rule or  regulation  applicable to such Issuing
         Bank  and  no  directive  from  and  governmental  authority  with
         jurisdiction  over the Issuing  Bank shall  prohibit  such Issuing
         Bank from issuing Letters of Credit generally or from issuing that
         Facility Letter or Credit.

         4.4. Procedure for Issuance of Facility Letters of Credit. (a) The
Borrower  shall give the Issuing  Bank and the Agent not less than 15 days'
prior  written  notice of any  requested  issuance of a Facility  Letter of
Credit  under this  Agreement.  Such  notice  shall  specify (i) the stated
amount  of the  Facility  Letter of Credit  requested,  (ii) the  requested
Issuance Date,  which shall be a Business Day, (iii) the date on which such
requested  Facility  Letter of Credit is to expire,  which date shall be in
compliance with the requirements of Section  4.2(vi),  (iv) the purpose for
which such  Facility  Letter of Credit is to be issued,  and (v) the Person
for whose benefit the requested  Facility Letter of Credit is to be issued.
At the time such request is made, the Borrower shall also provide the Agent
with a copy of the form of the Facility  Letter of Credit it is  requesting
be issued.
 
        (b) Upon receipt of a request for issuance of a Facility Letter of
Credit in accordance with Section 4.4(a),  the Agent shall promptly deliver
a copy of such  request  to the Lender  then  designated  as  Issuing  Bank
pursuant to Section  4.10.  Within 10 days after  receipt of such  request,
such  Issuing  Bank  shall  approve  or   disapprove,   in  its  reasonable
discretion,  the issuance of such requested  Facility Letter of Credit, but
the issuance of such approved  Facility  Letter of Credit shall continue to
be subject to the provisions of this Article IV. The Issuing Bank shall use
reasonable  efforts to notify the  Borrower  of any  changes in the Issuing
Bank's policies or procedures  that could  reasonably be expected to affect
adversely  the Issuing  Bank's  approval of requested  Facility  Letters of
Credit.


<PAGE> 64

         (c) Not less than three nor more than five  Business Days prior to
the issuance of a Facility Letter of Credit approved by the Issuing Bank as
provided in Section  4.4(b),  the Borrower  shall confirm in writing to the
Agent and to the Issuing Bank the intended Issuance Date and amount of such
Facility Letter of Credit.  The Agent shall  determine,  as of the close of
business  on  the  day it  receives  such  written  confirmation  from  the
Borrower,  whether the issuance of such Facility  Letter of Credit would be
permitted under the provisions of Sections  4.2(iii) and (iv) and, prior to
the close of business on the second  Business Day after the Agent  received
such written confirmation from the Borrower under Section 4.4(a), the Agent
shall notify the Issuing Bank and the Borrower (in writing or by telephonic
notice  confirmed  promptly  thereafter in writing) whether issuance of the
requested Facility Letter of Credit would be permitted under the provisions
of Sections  4.2(iii) and (iv). If the Agent  notifies the Issuing Bank and
the Borrower that such issuance would be so permitted, then, subject to the
terms and  conditions of this Article IV and provided  that the  applicable
conditions  set  forth in  Sections  5.1 and 5.2 have been  satisfied,  the
Issuing Bank shall,  on the requested  Issuance  Date,  issue the requested
Facility  Letter of Credit in accordance  with the Issuing Bank's usual and
customary business practices. The Issuing Bank shall give the Agent written
notice, or telephonic notice confirmed promptly  thereafter in writing,  of
the issuance of a Facility Letter of Credit.

         (d) An Issuing Bank shall not extend or amend any Facility  Letter
of Credit unless the  requirements  of this Section 4.4 are met as though a
new Facility Letter of Credit were being requested and issued.

         (e) Any Lender may,  but shall not be  obligated  to, issue to the
Borrower or any Subsidiary Letters of Credit (that are not Facility Letters
of Credit) for its own account, and at its own risk. None of the provisions
of this  Article  IV shall  apply to any  Letter  of  Credit  that is not a
Facility Letter of Credit.

         4.5.  Duties of Issuing  Bank.  Any action  taken or omitted to be
taken by an Issuing Bank under or in connection with any Facility Letter of
Credit,  if taken or omitted in the absence of willful  misconduct or gross
negligence,  shall not put such Issuing Bank under any resulting  liability
to any Lender or,  assuming  that such Issuing  Bank has complied  with the
procedures  specified in Section 4.4, relieve any Lender of its obligations
hereunder to such Issuing  Bank.  In  determining  whether to pay under any
Facility  Letter of Credit,  the  Issuing  Bank  shall  have no  obligation
relative to the Lenders other than to confirm that any  documents  required
to be delivered  under such  Facility  Letter of Credit appear to have been
delivered in  compliance  and that they appear to comply on their face with
the requirements of such Facility Letter of Credit.

         4.6.  Participation.  (a) Immediately  upon issuance by an Issuing
Bank of any Facility  Letter of Credit in accordance with Section 4.4, each
Lender shall be deemed to have  irrevocably and  unconditionally  purchased
and  received  from such Issuing  Bank,  without  recourse or warranty,  an
undivided  interest and  participation  (ratably in proportion to the ratio

<PAGE> 65

that such Lender's  Commitment  bears to the Aggregate  Commitment) in such
Facility Letter of Credit (including,  without limitation,  all obligations
of the Borrower  with  respect  thereto  other than  amounts  owing to such
Issuing Bank under Section 3.2).

         (b) In the event that an Issuing Bank makes any payment  under any
Facility  Letter of Credit  and the  Borrower  shall not have  repaid  such
amount to such  Issuing  Bank on or before the date of such payment by such
Issuing Bank,  such Issuing Bank shall promptly so notify the Agent,  which
shall  promptly so notify each Lender.  Upon  receipt of such notice,  each
Lender shall promptly and  unconditionally pay to the Agent for the account
of such  Issuing  Bank  the  amount  of such  Lender's  share  (ratably  in
proportion  to  the  ratio  that  such  Lender's  Commitment  bears  to the
Aggregate  Commitment)  of such  payment in same day  funds,  and the Agent
shall promptly pay such amount, and any other amounts received by the Agent
for such Issuing Bank's account  pursuant to this Section  4.6(b),  to such
Issuing  Bank.  If the Agent so notifies  such  Lender  prior to 10:00 a.m.
(Chicago time) on any Business Day, such Lender shall make available to the
Agent for the  account  of such  Issuing  Bank such  Lender's  share of the
amount of such payment on such  Business  Day in same day funds.  If and to
the extent  such  Lender  shall not have so made its share of the amount of
such payment  available to the Agent for the account of such Issuing  Bank,
such Lender agrees to pay to the Agent for the account of such Issuing Bank
forthwith on demand such amount,  together with interest thereon,  for each
day from the date such  payment was first due until the date such amount is
paid to the Agent for the  account of such  Issuing  Bank,  at the  Federal
Funds  Effective  Rate.  The failure of any Lender to make available to the
Agent for the account of such Issuing Bank such Lender's  share of any such
payment shall not relieve any other Lender of its  obligation  hereunder to
make  available to the Agent for the account of such Issuing Bank its share
of any payment on the date such payment is to be made.

         (c)  The  payments  made  by the  Lenders  to an  Issuing  Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit shall
constitute,  and the Borrower hereby expressly acknowledges and agrees that
such payments shall constitute,  Advances hereunder and such payments shall
for all purposes be treated as Advances  (notwithstanding  that the amounts
thereof may not comply with the  provisions of Section 2.6).  Such Advances
shall be Floating Rate  Advances,  subject to the  Borrower's  rights under
Article II hereof.

         (d) Upon the request of the Agent or any Lender,  an Issuing  Bank
shall  furnish to the  requesting  Agent or Lender  copies of any  Facility
Letter of Credit or  Reimbursement  Agreement to which such Issuing Bank is
party and such other  documentation  as may  reasonably be requested by the
Agent or the Lender.


<PAGE> 66

         (e) The  obligations  of the Lenders to make payments to the Agent
for the  account of an Issuing  Bank with  respect to a Facility  Letter of
Credit shall be irrevocable,  not subject to any qualification or exception
whatsoever  and shall be made in accordance  with,  but not subject to, the
terms and conditions of this Agreement under all  circumstances,  including
without limitation the following:

                  (i)  any lack of validity or enforceability of this
         Agreement or any of the other Loan Documents;

             (ii) the  existence  of any  claim,  setoff,  defense or other
         right  which  the   Borrower  may  have  at  any  time  against  a
         beneficiary named in a Facility Letter of Credit or any transferee
         of any Facility  Letter of Credit (or any Person for whom any such
         transferee  may be acting),  such  Issuing  Bank,  the Agent,  any
         Lender,  or any other  Person,  whether  in  connection  with this
         Agreement,   any  Facility  Letter  of  Credit,  the  transactions
         contemplated herein or any unrelated  transactions  (including any
         underlying transactions between the Borrower or any Subsidiary and
         the beneficiary named in any Facility Letter of Credit);

            (iii) any draft,  certificate or any other  document  presented
         under  the  Facility  Letter  of  Credit  proving  to  be  forged,
         fraudulent,   invalid  or  insufficient  in  any  respect  of  any
         statement therein being untrue or inaccurate in any respect;

             (iv)  the surrender or impairment of any security for the
         performance or observance of any of the terms of any of the Loan
         Documents;

              (v)  any failure by the Agent or the Issuing Bank to make
         any reports required pursuant to Section 4.8; or

             (vi)  the occurrence of any Default or Unmatured Default.

         4.7. Compensation for Facility Letters of Credit. (a) The Borrower
agrees to pay to the Agent, in the case of each outstanding Facility Letter
of Credit,  the Facility Letter of Credit Fee therefor,  payable in monthly
installments in advance on the Issuance Date (which  installment shall be a
pro rata portion of the annual Facility Letter of Credit Fee for the period
commencing on the Issuance Date and ending on the day preceding the Payment
Date next  following the Issuance  Date) and on each Payment Date after the
Issuance Date (which  installment shall be a pro rata portion of the annual
Facility  Letter of Credit  Fee for the month in which  such  Payment  Date
occurs).  Facility Letter of Credit Fees shall be calculated, on a pro rata
basis for the period to which such  payment  applies,  for actual days that
will elapse during such period,  on the basis of a 360-day year.  The Agent
shall promptly remit such Facility Letter of Credit Fees, when paid, to the
Lenders  (ratably in the proportion that each Lender's  Commitment bears to
the Aggregate Commitment).


<PAGE> 67

         (b) An Issuing Bank shall have the right to receive solely for its
own account such amounts as the Borrower may agree,  in writing,  to pay to
such Issuing Bank with respect to issuance fees and for such Issuing Bank's
out-of-pocket costs of issuing and servicing Facility Letters of Credit.

         4.8. Issuing Bank Reporting Requirements. Each Issuing Bank shall,
no later than the tenth day following  the last day of each month,  provide
to the Agent a schedule of the Facility  Letters of Credit issued by it, in
form and  substance  reasonably  satisfactory  to the  Agent,  showing  the
Issuance Date,  account party,  original face amount,  amount (if any) paid
thereunder,  expiration  date and the  reference  number  of each  Facility
Letter  of  Credit  outstanding  at any  time  during  such  month  and the
aggregate  amount (if any)  payable by the  Borrower to such  Issuing  Bank
during the month  pursuant to Section 3.2.  Copies of such reports shall be
provided promptly to each Lender by the Agent.

         4.9.  Indemnification;  Nature of Issuing  Bank's  Duties.  (a) In
addition to amounts  payable as elsewhere  provided in this Article IV, the
Borrower  hereby agrees to protect,  indemnify,  pay and save the Agent and
each Lender and Issuing Bank  harmless from and against any and all claims,
demands,   liabilities,   damages,  losses,  costs,  charges  and  expenses
(including  reasonable  attorneys'  fees)  arising from the claims of third
parties against the Agent, Issuing Bank or Lender as a consequence,  direct
or indirect,  of (i) the  issuance of any  Facility  Letter of Credit other
than, in the case of an Issuing Bank, as a result of its willful misconduct
or gross  negligence,  or (ii) the  failure  of an Issuing  Bank  issuing a
Facility  Letter of Credit to honor a drawing under such Facility Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of
any  present  or  future  de jure or de facto  government  or  governmental
authority.


         (b) As among the Borrower,  the Lenders, the Agent and the Issuing
Bank,  the  Borrower  assumes  all risks of the acts and  omissions  of, or
misuse of Facility  Letters of Credit by, the respective  beneficiaries  of
such Facility  Letters of Credit.  In furtherance  and not in limitation of
the foregoing,  neither the Issuing Bank nor the Agent nor any Lender shall
be  responsible:  (i)  for  the  form,  validity,  sufficiency,   accuracy,
genuineness  or legal  effect  of any  document  submitted  by any party in
connection with the application for and issuance of the Facility Letters of
Credit,  even if it  should  in  fact  prove  to be in any or all  respects
invalid,  insufficient,  inaccurate,  fraudulent  or  forged;  (ii) for the
validity or  sufficiency  of any  instrument  transferring  or assigning or
purporting to transfer or assign a Facility  Letter of Credit or the rights
or benefits  thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of a Facility  Letter of Credit to comply fully with conditions
required  in order to draw upon such  Facility  Letter of Credit;  (iv) for
errors,  omissions,  interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher;  (v) for errors in  interpretation  of technical  terms;

<PAGE> 68

(vi) for any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Facility  Letter of Credit or
of the proceeds thereof; (vii) for the misapplication by the beneficiary of
a  Facility  Letter of Credit of the  proceeds  of any  drawing  under such
Facility  Letter of Credit;  and (viii) for any  consequences  arising from
causes  beyond the control of the Agent,  the Issuing  Bank and the Lenders
including,  without  limitation,  any act or omission,  whether rightful or
wrongful,  of any  present  or  future  de jure or de facto  government  or
governmental authority.  None of the above shall affect, impair, or prevent
the  vesting  of any of the  Issuing  Bank's  rights or powers  under  this
subsection 4.9.

         (c) In  furtherance  and  extension  and not in  limitation of the
specific  provisions  hereinabove set forth, any action taken or omitted by
an Issuing Bank under or in connection with the Facility  Letters of Credit
or any related  certificates,  if taken or omitted in good faith, shall not
put  such  Issuing  Bank,  the  Agent or any  Lender  under  any  resulting
liability to the Borrower or relieve the Borrower of any of its obligations
hereunder to any such Person.

         (d)  Notwithstanding  anything to the  contrary  contained in this
Section 4.9, the Borrower  shall have no obligation to indemnify an Issuing
Bank under this  Section 4.9 in respect of any  liability  incurred by such
Issuing  Bank  arising  primarily  out of the willful  misconduct  or gross
negligence  of such Issuing  Bank,  as  determined  by a court of competent
jurisdiction,  or out of the  wrongful  dishonor by such  Issuing Bank of a
proper demand for payment made under the Facility  Letters of Credit issued
by such Issuing  Bank,  unless such dishonor was made at the request of the
Borrower.

         4.10. Resignation of Issuing Bank. The Issuing Bank shall continue
to be the  Issuing  Bank  unless  and  until  (i) it shall  have  given the
Borrower and the Agent notice that it has elected to resign as Issuing Bank
and (ii) a replacement Issuing Bank shall have been designated and approved
in writing by the Agent and the Borrower.  The resigning Issuing Bank shall
continue to have the rights and  obligations  of an Issuing Bank  hereunder
solely with respect to Facility Letters of Credit  theretofore issued by it
notwithstanding  the designation of a replacement  Issuing Bank hereunder),
but upon such  designation  of a replacement  Issuing  Bank,  the resigning
Issuing  Bank shall not  thereafter  issue any  Facility  Letters of Credit
(unless such Lender shall again thereafter be designated as Issuing Bank in
accordance with the provisions of this Section 4.10).

         4.11. Obligations of Issuing Bank and Other Lenders. Except to the
extent that a Lender shall have agreed to be designated as an Issuing Bank,
no Lender shall have any  obligation  to accept or approve any request for,
or to issue,  amend or extend, any Letter of Credit, and the obligations of
the Issuing Bank to issue,  amend or extend any  Facility  Letter of Credit
are expressly limited by and subject to the provisions of this Article IV.

<PAGE> 69

                                 ARTICLE V

                            CONDITIONS PRECEDENT


     5.1.  Effective  Date.  The Effective Date of this Agreement shall not
occur,  the Lenders  shall not be required to make any  additional  Advance
hereunder,  and the  Issuing  Bank  shall  not be  required  to  issue  any
additional  Facility  Letter of Credit  hereunder,  unless the Borrower has
paid to the Agent the fees set forth in the letter  agreement  dated  April
25, 1997,  among the Agent,  FCCM and the Borrower,  and from which payment
the Agent  and FCCM  shall  have paid to the  Lenders  the  extension  fees
provided to be paid to them in accordance  with the Agent's  letters to the
Lenders  dated April 23, 1997,  and the Borrower has furnished to the Agent
with sufficient copies for the Lenders:

      (i)         A  copy  of  the  certificate  of  incorporation  of  the
                  Borrower, together with all amendments, and a certificate
                  of  good  standing,  all  certified  by  the  appropriate
                  governmental    officer    in   the    jurisdiction    of
                  incorporation.

    (ii)          A copy, certified by the Secretary or Assistant Secretary
                  of the  Borrower,  of the  Borrower's  by-laws and of its
                  Board of Directors' resolutions authorizing the execution
                  of this Agreement.

   (iii)          Incumbency  certificates,  executed by the  Secretary  or
                  Assistant Secretary of the Borrower, which shall identify
                  by name and title and bear the  signature of the officers
                  of the Borrower authorized to sign this Agreement.

    (iv)          A  written  opinion  of Kaye,  Scholer,  Fierman,  Hays &
                  Handler,  LLP, counsel to the Borrower,  addressed to the
                  Agent and  Lenders in  substantially  the form of Exhibit
                  "C" hereto.

     (v)          A written  opinion  of Lord,  Bissell  & Brook,  Illinois
                  counsel to the  Borrower,  addressed to the Agent and the
                  Lenders in substantially the form of Exhibit "E" hereto.

    (vi)          An  Amended  and  Restated  Contribution  Agreement  duly
                  executed  by the  Guarantors  in the form of Exhibit  "G"
                  hereto (the "Contribution Agreement").

   (vii)          An Amended  and  Restated  Subordination  Agreement  duly
                  executed by the Non-Borrowing Subsidiaries in the form of
                  Exhibit "H" hereto (the "Subordination Agreement").

  (viii)          Such other documents as any Lender or Issuing Bank or
                  their respective counsel may have reasonably requested.


<PAGE> 70

     5.2.  Each  Advance.  The  Lenders  shall not be  required  (except as
otherwise  provided in Section 2.22(e) and except for Loans made by the New
Lenders  pursuant to Section  2.5(c)) to make any  Advance  (other than the
conversion  of an Advance  of one Type to an  Advance of another  Type that
does not increase the  aggregate  amount of  outstanding  Advances) and the
Swing Line Bank shall not be obligated to make a Swing Line Loan, unless on
the applicable Borrowing Date, and an Issuing Bank shall not be required to
issue,  amend  or  extend  a  Facility  Letter  of  Credit,  unless  on the
applicable Issuance Date:
   (i)            There exists no Default or Unmatured Default.

  (ii)            The representations  and warranties  contained in Article
                  VI are true and  correct in all  material  respects as of
                  such Borrowing Date or Issuance Date except to the extent
                  any such  representation  or warranty is stated to relate
                  solely  to  an   earlier   date,   in  which   case  such
                  representation  or warranty  shall be true and correct in
                  all material  respects on and as of such earlier date and
                  except  to the  extent  that any such  representation  or
                  warranty relates to changes  otherwise  permitted by this
                  Agreement.

 (iii)            After the  making of such  Advance  or  issuance  of such
                  Facility  Letter  of  Credit,  Consolidated  Senior  Debt
                  Borrowings   shall  not   exceed   the   Borrowing   Base
                  (determined  as of the most  recent  Inventory  Valuation
                  Date).

  (iv)            The Borrower shall have delivered to the Agent,  not more
                  than  three (3)  Business  Days  prior to the  applicable
                  Borrowing  Date or  Issuance  Date  or,  in the case of a
                  Swing Line Loan, on the Borrowing  Date, a duly completed
                  certificate  in  substantially  the form of  Exhibit  "I"
                  hereto.

   (v)            All  legal  matters  incident  to (A) the  making of such
                  Advance shall be reasonably  satisfactory  to the Lenders
                  and their  counsel and (B) the issuance of such  Facility
                  Letter of Credit shall be reasonably  satisfactory to the
                  Agent, such Issuing Bank and their respective counsel.

         Each  Borrowing  Notice with respect to each such Advance and each
request for a Facility Letter of Credit shall  constitute a  representation
and  warranty by the  Borrower  that the  conditions  contained in Sections
5.2(i) and (ii) have been satisfied.



<PAGE> 71

                                 ARTICLE VI

                       REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Lenders that:

     6.1.  Existence  and  Standing.  The  Borrower is a  corporation  duly
incorporated,  validly  existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted (except to
the extent  that a failure to maintain  such  existence,  good  standing or
authority  would not  reasonably  be  expected  to have and does not have a
Material  Adverse  Effect).  Each  of  the  Significant   Guarantors  is  a
corporation duly incorporated,  validly existing and in good standing under
the  laws of its  jurisdiction  of  incorporation  and  has  all  requisite
authority  to  conduct  its  business  in each  jurisdiction  in which  its
business is conducted (except to the extent that a failure to maintain such
existence,  good standing or authority  would not reasonably be expected to
have and does not have a Material Adverse Effect).

     6.2.  Authorization and Validity. The Borrower has the corporate power
and authority to execute and deliver the Loan  Documents and to perform its
obligations  hereunder  and  thereunder.  The execution and delivery by the
Borrower  of the Loan  Documents  and the  performance  of its  obligations
thereunder  have been duly  authorized  and the Loan  Documents  constitute
legal, valid and binding  obligations of the Borrower  enforceable  against
the  Borrower  in  accordance  with their  terms,  subject  to  bankruptcy,
insolvency or similar laws affecting the  enforcement of creditors'  rights
generally and general principles of equity.  Each of the Guarantors has the
corporate  power and  authority  to execute and deliver the Guaranty and to
perform its  obligations  thereunder.  The  execution  and  delivery by the
Guarantors  of the  Guaranty  and  the  performance  of  their  obligations
thereunder  have been duly  authorized,  and the Guaranty  constitutes  the
legal, valid and binding obligations of the Guarantors  enforceable against
the  Guarantors  in  accordance  with its  terms,  subject  to  bankruptcy,
insolvency or similar laws affecting the  enforcement of creditors'  rights
generally and general principles of equity.

     6.3.  No  Conflict;  Government  Consent.  Neither the  execution  and
delivery  by the  Borrower  of the  Loan  Documents  or by the  Significant
Guarantors of the Guaranty, nor the consummation of the transactions herein
contemplated,  nor compliance  with the  provisions  hereof or thereof will
violate in any material  respect any law, rule,  regulation,  order,  writ,
judgment, injunction, decree or award binding on the Borrower or any of the
Significant  Guarantors or the  Borrower's or any  Significant  Guarantor's
certificate of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any Significant  Guarantor
is a party or is subject,  or by which it, or its  Property,  is bound,  or
conflict with or constitute a default thereunder, or result in the creation
or  imposition of any Lien in, of or on the Property of the Borrower or any
Significant  Guarantor  pursuant  to  the  terms  of  any  such  indenture,
instrument or agreement.  Except as set forth on Schedule "6.3" hereto,  no

<PAGE> 72

order,  consent,  approval,  license,  authorization,  or validation of, or
filing,  recording or registration  with, or exemption by, any governmental
or public body or authority,  or any  subdivision  thereof,  is required to
authorize,  or is required in connection  with the execution,  delivery and
performance of, or the legality, validity, binding effect or enforceability
of, any of the Loan Documents or the Guaranty.

     6.4.  Financial  Statements.  The March 31, 1997  unaudited  condensed
consolidated  financial  statements  of the Borrower  and its  Subsidiaries
delivered  to  the  Lenders  were  prepared   pursuant  to  the  rules  and
regulations of the Securities and Exchange Commission.  Certain information
and footnotes normally included in annual financial  statements prepared in
accordance with GAAP have been condensed or omitted pursuant to those rules
and regulations.  Such statements fairly present, in all material respects,
the consolidated financial condition and operations of the Borrower and its
Subsidiaries at such date and the consolidated  results of their operations
for the period then ended, subject to normal adjustments and the absence of
footnotes.

     6.5.  Material  Adverse  Change.  Since  the  date  of  the  financial
statements  (whether  quarterly or annual) of the  Borrower  that have most
recently  been  delivered by the  Borrower to the Agent,  there has been no
change in the  business,  Property,  condition  (financial or otherwise) or
results of operations of the Borrower and the Significant Guarantors (taken
as a whole) that has had or would reasonably be expected to have a Material
Adverse Effect.

     6.6. Taxes. The Borrower and the Significant Guarantors have filed all
United States federal income tax returns and all other material tax returns
which are required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment  received by the Borrower or any such
Significant Guarantor, except such taxes, if any, as are being contested in
good faith and as to which  adequate  reserves have been  provided.  No tax
Liens have been filed and no claims are being  asserted with respect to any
such taxes. The charges, accruals and reserves on the books of the Borrower
and  the   Significant   Guarantors  in  respect  of  any  taxes  or  other
governmental charges are adequate in accordance with GAAP.

     6.7.  Litigation  and Contingent  Obligations.  Except as set forth on
Schedule "6.7" hereto,  there is no litigation,  arbitration,  governmental
investigation,  proceeding  or inquiry  pending or, to the knowledge of any
Authorized  Officer,  threatened  against or affecting  the Borrower or any
Significant  Guarantor that has had or would reasonably be expected to have
a Material  Adverse  Effect.  Other  than any  liability  incident  to such
litigation,  arbitration or  proceedings,  the Borrower and the Significant
Guarantors  have no material  contingent  obligations  not  provided for or
disclosed in the financial  statements (whether quarterly or annual) of the
Borrower  that have been most  recently  delivered  by the  Borrower to the
Agent  that has had or would  reasonably  be  expected  to have a  Material
Adverse Effect.


<PAGE> 73

     6.8. Subsidiaries.  Schedule "6.8" hereto contains an accurate list of
all of the  Subsidiaries  of the Borrower,  setting forth their  respective
jurisdictions  of  incorporation  or formation and the  percentage of their
respective capital stock or partnership  interests owned by the Borrower or
its Subsidiaries. All of the issued and outstanding shares of capital stock
of such  Subsidiaries  that are corporations  have been duly authorized and
validly issued and are fully paid and non-assessable.
 
     6.9. ERISA.  The Unfunded  Liabilities of all Single Employer Plans do
not in the aggregate exceed $5,000,000.  Neither the Borrower nor any other
member of the Controlled Group has incurred,  or is reasonably  expected to
incur,  any  withdrawal  liability  to  Multiemployer  Plans in  excess  of
$5,000,000 in the  aggregate.  Each Plan complies in all material  respects
with all  applicable  requirements  of law and  regulations,  no Reportable
Event has occurred  with respect to any Plan,  neither the Borrower nor any
other member of the Controlled  Group has withdrawn from any  Multiemployer
Plan or initiated steps to do so, and no steps have been taken to terminate
any Plan.

     6.10. Accuracy of Information.  All factual information  heretofore or
contemporaneously  furnished  by  or on  behalf  of  the  Borrower  or  any
Guarantor to the Agent or any Lender for purposes of or in connection  with
this  Agreement or any  transaction  contemplated  hereby is, and all other
such  factual  information  hereafter  furnished  by or on  behalf  of  the
Borrower  or any  Guarantor  to the Agent or any Lender  will be,  true and
accurate (taken as a whole),  in all material  respects,  on the date as of
which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such  information  (taken as a
whole) not misleading at such time.

     6.11.  Regulation  U.11.  Margin  stock (as defined in  Regulation  U)
constitutes  less  than  25% of  those  assets  of  the  Borrower  and  its
Subsidiaries  which are subject to any limitation on sale, pledge, or other
restriction hereunder.

     6.12.  Material  Agreements.  Neither the Borrower nor any Significant
Guarantor  is in  default,  which  default has had or would  reasonably  be
expected to have a Material Adverse Effect, in the performance,  observance
or fulfillment of any of the obligations, covenants or conditions contained
in (i) any  agreement  to  which it is a party,  or (ii) any  agreement  or
instrument evidencing or governing Indebtedness.

     6.13.  Labor  Disputes  and Acts of God.  Neither the business nor the
Property of the Borrower or of any Significant Guarantor is affected by any
fire,  explosion,  accident,  strike,  lockout,  or  other  labor  dispute,
drought,  storm,  hail,  earthquake,  embargo,  act of God or of the public
enemy, or other casualty  (whether or not covered by insurance),  which has
had or would  reasonably  be  expected to have a Material  Adverse  Effect.


<PAGE> 74

     6.14.  Ownership and Liens.  The Borrower and each of the  Significant
Guarantors  have title to, or valid  leasehold  interests  in, all of their
respective  properties  and  assets,  real  and  personal,   including  the
properties  and assets and leasehold  interests  reflected in the financial
statements  referred  to in Section 6.4 (except to the extent that (i) such
properties  or  assets  have been  disposed  of in the  ordinary  course of
business  or (ii) the  failure to have such title has not had and would not
reasonably be expected to have a Material  Adverse  Effect) and none of the
properties  and assets owned by the Borrower or any  Significant  Guarantor
and none of their leasehold interests is subject to any Lien, except as may
be permitted pursuant to Section 8.8.

     6.15. Operation of Business.  The Borrower and each of the Significant
Guarantors possess all licenses, permits, franchises,  patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct their respective
businesses  substantially as now conducted, and as presently proposed to be
conducted, with such exceptions as have not had and would not reasonably be
expected to have a Material Adverse Effect.

     6.16.  Laws;  Environment.  Except  as set  forth on  Schedule  "6.16"
hereto,  the  Borrower  and each of the  Significant  Guarantors  have duly
complied, and their businesses,  operations and Property are in compliance,
in all material  respects,  with the provisions of all federal,  state, and
local statutes,  laws,  codes, and ordinances and all rules and regulations
promulgated  thereunder (including without limitation those relating to the
environment,  health and  safety).  Except as set forth on Schedule  "6.16"
hereto,  the  Borrower  and each of the  Significant  Guarantors  have been
issued  all  required   federal,   state,  and  local  permits,   licenses,
certificates,  and approvals relating to (1) air emissions;  (2) discharges
to surface water or groundwater;  (3) solid or liquid waste  disposal;  (4)
the use,  generation,  storage,  transportation,  or  disposal  of toxic or
hazardous  substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials  listed in any federal,  state, or local
law,  code,  or  ordinance  and  all  rules  and  regulations   promulgated
thereunder  as  hazardous);  or (5) other  environmental,  health or safety
matters.  Except in accordance with a valid governmental  permit,  license,
certificate or approval or as set forth on Schedule  "6.16" hereto,  to the
best knowledge of the Borrower, there has been no material emission, spill,
release,  or  discharge  into  or upon  (1)  the  air;  (2)  soils,  or any
improvements located thereon; (3) surface water or groundwater;  or (4) the
sewer,  septic  system  or waste  treatment,  storage  or  disposal  system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint,  order, directive, claim, citation, or
notice by any  governmental  authority or any person or entity with respect
to  violations  of  law or  damage  by  reason  of  the  Borrower's  or any
Significant  Guarantor's  (1)  air  emissions;  (2)  spills,  releases,  or
discharges  to  soils  or  improvements  located  thereon,  surface  water,
groundwater  or the sewer,  septic  system or waste  treatment,  storage or
disposal  systems  servicing  any  Property;  (3)  solid  or  liquid  waste
disposal;  (4) use,  generation,  storage,  transportation,  or disposal of

<PAGE> 75

toxic  or  hazardous   substances   or  hazardous   waste;   or  (5)  other
environmental,  health or safety  matters  affecting  the  Borrower  or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule  "6.16" hereto,  neither the Borrower nor any Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or  contingent,  matured  or not  matured,  with  respect  to the  storage,
treatment,  cleanup, or disposal of any solid wastes,  hazardous wastes, or
other toxic or hazardous substances  (including without limitation any such
indebtedness,   obligation,  or  liability  with  respect  to  any  current
regulation, law or statute regarding such storage,  treatment,  cleanup, or
disposal).  A matter  will not  constitute  a breach of this  Section  6.16
unless it is  reasonably  likely to result in costs or  liabilities  to the
Borrower  or a  Significant  Guarantor  in  excess  of  $2,500,000  in  the
aggregate.  .13. Labor  Disputes and Acts of God.  Neither the business nor
the Property of the Borrower or of any Significant Guarantor is affected by
any fire,  explosion,  accident,  strike,  lockout, or other labor dispute,
drought,  storm,  hail,  earthquake,  embargo,  act of God or of the public
enemy, or other casualty  (whether or not covered by insurance),  which has
had or would reasonably be expected to have a Material Adverse Effect.6.14.
Ownership and Liens.  The Borrower and each of the  Significant  Guarantors
have title to, or valid  leasehold  interests  in, all of their  respective
properties  and assets,  real and personal,  including the  properties  and
assets  and  leasehold  interests  reflected  in the  financial  statements
referred to in Section  6.4 (except to the extent that (i) such  properties
or assets have been disposed of in the ordinary  course of business or (ii)
the  failure  to have such  title has not had and would not  reasonably  be
expected to have a Material  Adverse Effect) and none of the properties and
assets owned by the Borrower or any Significant Guarantor and none of their
leasehold  interests  is  subject to any Lien,  except as may be  permitted
pursuant to Section 8.8.6.15.  Operation of Business. The Borrower and each
of the Significant  Guarantors possess all licenses,  permits,  franchises,
patents,  copyrights,  trademarks,  and trade names, or rights thereto,  to
conduct their respective businesses  substantially as now conducted, and as
presently  proposed to be conducted,  with such  exceptions as have not had
and  would  not   reasonably  be  expected  to  have  a  Material   Adverse
Effect.6.16.  Laws;  Environment.  Except  as set  forth on  Schedule  6.16
hereto,  the  Borrower  and each of the  Significant  Guarantors  have duly
complied, and their businesses,  operations and Property are in compliance,
in all material  respects,  with the provisions of all federal,  state, and
local statutes,  laws,  codes, and ordinances and all rules and regulations
promulgated  thereunder (including without limitation those relating to the
environment,  health  and  safety).  Except as set forth on  Schedule  6.16
hereto,  the  Borrower  and each of the  Significant  Guarantors  have been
issued  all  required   federal,   state,  and  local  permits,   licenses,
certificates,  and approvals relating to (1) air emissions;  (2) discharges
to surface water or groundwater;  (3) solid or liquid waste  disposal;  (4)
the use,  generation,  storage,  transportation,  or  disposal  of toxic or
hazardous  substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials  listed in any federal,  state, or local
law,  code,  or  ordinance  and  all  rules  and  regulations   promulgated
thereunder  as  hazardous);  or (5) other  environmental,  health or safety
matters.  Except in accordance with a valid governmental  permit,  license,

<PAGE> 76

certificate  or approval or as set forth on Schedule  6.16  hereto,  to the
best knowledge of the Borrower, there has been no material emission, spill,
release,  or  discharge  into  or upon  (1)  the  air;  (2)  soils,  or any
improvements located thereon; (3) surface water or groundwater;  or (4) the
sewer,  septic  system  or waste  treatment,  storage  or  disposal  system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint,  order, directive, claim, citation, or
notice by any  governmental  authority or any person or entity with respect
to  violations  of  law or  damage  by  reason  of  the  Borrower's  or any
Significant  Guarantor's  (1)  air  emissions;  (2)  spills,  releases,  or
discharges  to  soils  or  improvements  located  thereon,  surface  water,
groundwater  or the sewer,  septic  system or waste  treatment,  storage or
disposal  systems  servicing  any  Property;  (3)  solid  or  liquid  waste
disposal;  (4) use,  generation,  storage,  transportation,  or disposal of
toxic  or  hazardous   substances   or  hazardous   waste;   or  (5)  other
environmental,  health or safety  matters  affecting  the  Borrower  or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule  6.16 hereto,  neither the  Borrower nor any  Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or  contingent,  matured  or not  matured,  with  respect  to the  storage,
treatment,  cleanup, or disposal of any solid wastes,  hazardous wastes, or
other toxic or hazardous substances  (including without limitation any such
indebtedness,   obligation,  or  liability  with  respect  to  any  current
regulation, law or statute regarding such storage,  treatment,  cleanup, or
disposal).  A matter  will not  constitute  a breach of this  Section  6.16
unless it is  reasonably  likely to result in costs or  liabilities  to the
Borrower  or a  Significant  Guarantor  in  excess  of  $2,500,000  in  the
aggregate.  Labor  Disputes  and Acts of God.  Neither the  business  nor the
Property of the Borrower or of any Significant Guarantor is affected by any
fire,  explosion,  accident,  strike,  lockout,  or  other  labor  dispute,
drought,  storm,  hail,  earthquake,  embargo,  act of God or of the public
enemy, or other casualty  (whether or not covered by insurance),  which has
had or would reasonably be expected to have a Material Adverse Effect.6.14.
Ownership and Liens.  The Borrower and each of the  Significant  Guarantors
have title to, or valid  leasehold  interests  in, all of their  respective
properties  and assets,  real and personal,  including the  properties  and
assets  and  leasehold  interests  reflected  in the  financial  statements
referred to in Section  6.4 (except to the extent that (i) such  properties
or assets have been disposed of in the ordinary  course of business or (ii)
the  failure  to have such  title has not had and would not  reasonably  be
expected to have a Material  Adverse Effect) and none of the properties and
assets owned by the Borrower or any Significant Guarantor and none of their
leasehold  interests  is  subject to any Lien,  except as may be  permitted
pursuant to Section 8.8.6.15.  Operation of Business. The Borrower and each
of the Significant  Guarantors possess all licenses,  permits,  franchises,
patents,  copyrights,  trademarks,  and trade names, or rights thereto,  to
conduct their respective businesses  substantially as now conducted, and as
presently  proposed to be conducted,  with such  exceptions as have not had
and  would  not   reasonably  be  expected  to  have  a  Material   Adverse

<PAGE> 77

Effect.6.16.  Laws;  Environment.  Except  as set  forth on  Schedule  6.16
hereto,  the  Borrower  and each of the  Significant  Guarantors  have duly
complied, and their businesses,  operations and Property are in compliance,
in all material  respects,  with the provisions of all federal,  state, and
local statutes,  laws,  codes, and ordinances and all rules and regulations
promulgated  thereunder (including without limitation those relating to the
environment,  health  and  safety).  Except as set forth on  Schedule  6.16
hereto,  the  Borrower  and each of the  Significant  Guarantors  have been
issued  all  required   federal,   state,  and  local  permits,   licenses,
certificates,  and approvals relating to (1) air emissions;  (2) discharges
to surface water or groundwater;  (3) solid or liquid waste  disposal;  (4)
the use,  generation,  storage,  transportation,  or  disposal  of toxic or
hazardous  substances or hazardous wastes (intended hereby and hereafter to
include any and all such materials  listed in any federal,  state, or local
law,  code,  or  ordinance  and  all  rules  and  regulations   promulgated
thereunder  as  hazardous);  or (5) other  environmental,  health or safety
matters.  Except in accordance with a valid governmental  permit,  license,
certificate  or approval or as set forth on Schedule  6.16  hereto,  to the
best knowledge of the Borrower, there has been no material emission, spill,
release,  or  discharge  into  or upon  (1)  the  air;  (2)  soils,  or any
improvements located thereon; (3) surface water or groundwater;  or (4) the
sewer,  septic  system  or waste  treatment,  storage  or  disposal  system
servicing any Property of the Borrower or any Significant Guarantor, of any
toxic or hazardous substances or hazardous wastes at or from such Property.
There has been no written complaint,  order, directive, claim, citation, or
notice by any  governmental  authority or any person or entity with respect
to  violations  of  law or  damage  by  reason  of  the  Borrower's  or any
Significant  Guarantor's  (1)  air  emissions;  (2)  spills,  releases,  or
discharges  to  soils  or  improvements  located  thereon,  surface  water,
groundwater  or the sewer,  septic  system or waste  treatment,  storage or
disposal  systems  servicing  any  Property;  (3)  solid  or  liquid  waste
disposal;  (4) use,  generation,  storage,  transportation,  or disposal of
toxic  or  hazardous   substances   or  hazardous   waste;   or  (5)  other
environmental,  health or safety  matters  affecting  the  Borrower  or any
Significant Guarantor or its business, operation or Property. Except as set
forth on Schedule  6.16 hereto,  neither the  Borrower nor any  Significant
Guarantor has any material Indebtedness, obligation, or liability, absolute
or  contingent,  matured  or not  matured,  with  respect  to the  storage,
treatment,  cleanup, or disposal of any solid wastes,  hazardous wastes, or
other toxic or hazardous substances  (including without limitation any such
indebtedness,   obligation,  or  liability  with  respect  to  any  current
regulation, law or statute regarding such storage,  treatment,  cleanup, or
disposal).  A matter  will not  constitute  a breach of this  Section  6.16
unless it is  reasonably  likely to result in costs or  liabilities  to the
Borrower  or a  Significant  Guarantor  in  excess  of  $2,500,000  in  the
aggregate.

     6.17.  Investment Company Act. Neither the Borrower nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended.


<PAGE> 78

     6.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding  company" or a "subsidiary  company" of a "holding
company",  or an  "affiliate"  of a "holding  company" or of a  "subsidiary
company" of a "holding  company",  within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

     6.19.  Subordinated  Indebtedness.  The Obligations  constitute senior
indebtedness  which  is  entitled  to the  benefits  of  the  subordination
provisions of the Convertible  Subordinated Notes and all other outstanding
Subordinated Indebtedness.

                                ARTICLE VII

                           AFFIRMATIVE COVENANTS

         During the term of this  Agreement,  unless the  Required  Lenders
shall otherwise consent in writing:

     7.1. Financial Reporting.  The Borrower will maintain,  for itself and
each  Subsidiary,  a system of accounting  established and  administered in
accordance with GAAP, and furnish to the Lenders:

     (i)  Within  90  days  after  the  close  of  each  fiscal  year,   an
          unqualified  audit  report  certified  by  nationally  recognized
          independent  certified public accountants,  reasonably acceptable
          to  the  Lenders,   prepared  in   accordance   with  GAAP  on  a
          consolidated   basis  for  the  Borrower  and  its  Subsidiaries,
          including  balance  sheets as of the end of such period,  related
          profit and loss and reconciliation of surplus  statements,  and a
          statement of cash flows, accompanied by (a) any management letter
          prepared  by  said  accountants,  and (b) a  certificate  of said
          accountants  that, in the course of their  examination  necessary
          for their  certification of the foregoing,  they have obtained no
          knowledge  of any  Default or  Unmatured  Default,  or if, in the
          opinion of such accountants, any Default or Unmatured Default shall
          exist, stating the nature and status thereof.

    (ii)  Within  90 days  after  the  close of each  fiscal  year,
          unaudited  balance  sheets  as of the end of such  fiscal
          year for each of the operating  divisions of the Borrower
          and  a  related   profit  and  loss  statement  for  each
          Subsidiary, all certified by an Authorized Officer.

   (iii)  Within  45  days  after  the  close  of the  first  three
          quarterly  periods of each fiscal year,  for the Borrower
          and its Subsidiaries,  on a consolidated condensed basis,
          unaudited  balance  sheets  as at the  close of each such
          period and a related  profit and loss  statement  for the
          period from the  beginning of such fiscal year to the end
          of such quarter, all certified by an Authorized Officer.


<PAGE> 79

    (iv)  As soon as available,  but in any event not later than 10
          days prior to the  beginning  of each fiscal year, a copy
          of the business plan  (including a  consolidated  balance
          sheet,  income  statement and cash flow statement) of the
          Borrower and its Subsidiaries for such fiscal year.

     (v)  Within  45 days of the end of each of the first  three  quarterly
          periods  of each  fiscal  year,  a  quarterly  variance  analysis
          comparing  actual quarterly  results versus  projected  quarterly
          results for the fiscal  quarter most  recently  ended  (including
          consolidated   income   statements   of  the   Borrower  and  its
          Subsidiaries,  an analysis of revenues, Housing Unit Closings and
          operating  profits  on a  consolidated  basis,  unaudited  income
          statements  and balance  sheets (by operating  division) for such
          quarter,  and such other items as are reasonably requested by any
          of the Lenders),  together with a written explanation of material
          variances.

     (vi) Within 90 days  after the end of each  fiscal  year,  a  variance
          analysis comparing actual annual results versus the business plan
          for the fiscal year most recently ended  (including  consolidated
          income  statements  of the  Borrower  and  its  Subsidiaries,  an
          analysis of revenues, Housing Unit Closings and operating profits
          on a consolidated basis,  unaudited income statements and balance
          sheets (by  operating  division)  for such fiscal year,  and such
          other items as are  reasonably  requested by any of the Lenders),
          together with a written explanation of material variances.
  
   (vii)  Within 10 Business Days after the end of each calendar  month,  a
          Borrowing Base Certificate of an Authorized Officer, with respect
          to the Inventory Valuation Date occurring on the last day of such
          calendar month.

  (viii)  Within 45 days after the end of each  quarterly  period of each
          fiscal year, a certificate  of an Authorized  Officer  certifying
          the  Housing  Units as at such date,  which  lists (by  operating
          division) the Housing Units, designated in the same categories as
          are identified in the Borrower's report dated June 30, 1995; such
          summary shall  include a  delineation  of sold or unsold items in
          each category.

   (ix)   Within  45 days  after the end of each  quarterly  period of each
          fiscal year, a certificate of an Authorized Officer certifying as
          of such date (by operating  division) the book values of raw land
          held for  development or sale, land under  development,  Finished
          Lots,  Finished  Lots on the  books  in  excess  of nine  months,
          Housing Units, Housing Units Under Contract and Inventory Housing
          Units.

<PAGE> 80

     (x)  Within 45 days after the end of each of the first three quarterly
          periods,  and  within  ninety  (90) days  after the end,  of each
          fiscal  year,  a  certificate  of an  Authorized  Officer  of the
          Borrower in the form of Exhibit "J" hereto.

     (xi) Within 270 days after the close of each fiscal  year, a statement
          of  the  Unfunded  Liabilities  of  each  Single  Employer  Plan,
          certified  as correct by an actuary  enrolled  under ERISA (which
          requirement  may be  satisfied by the delivery of the most recent
          actuarial valuation of each such Single Employer Plan).

   (xii)  As soon as  possible  and in any event  within ten days after the
          Borrower  knows  that any  Reportable  Event  has  occurred  with
          respect  to  any  Plan,  a  statement,  signed  by an  Authorized
          Officer,  describing said  Reportable  Event and the action which
          the Borrower proposes to take with respect thereto.

  (xiii)  As soon as possible,  and in any event within  thirty (30) days
          after  the  Borrower  knows  or  has  reason  to  know  that  any
          circumstances exist that constitute grounds entitling the PBGC to
          institute  proceedings  to terminate a Plan subject to ERISA with
          respect to the Borrower or any member of the Controlled Group and
          promptly but in any event within two (2) Business Days of receipt
          by the Borrower or any member of the  Controlled  Group of notice
          that the PBGC intends to terminate a Plan or appoint a trustee to
          administer  the same,  and  promptly but in any event within five
          (5)  Business  Days  of the  receipt  of  notice  concerning  the
          imposition  of  withdrawal  liability in excess of $500,000  with
          respect to the Borrower or any member of the Controlled  Group, a
          certificate of an Authorized  Officer  setting forth all relevant
          details of such event and the action which the Borrower  proposes
          to take with respect thereto.

   (xiv)  Promptly after the furnishing  thereof,  copies of any statement,
          report,  document,   notice,   certificate,   and  correspondence
          furnished  to  any  other  party  pursuant  to the  terms  of any
          indenture   (including   the  First   Indenture  and  the  Second
          Indenture),  loan,  credit,  or similar agreement with respect to
          any  Indebtedness in excess of $1,000,000 or to any rating agency
          and  not  otherwise  required  to be  furnished  to  the  Lenders
          pursuant to any other provision of this Section 7.1.

    (xv)  Promptly after the sending or filing thereof, copies of all proxy
          statements,  financial statements, and reports which the Borrower
          or any  Significant  Guarantor  sends  to its  stockholders,  and
          copies of all regular,  periodic,  and special  reports,  and all
          registration  statements  which the  Borrower or any  Significant
          Guarantor  files with the Securities  and Exchange  Commission or
          any governmental  authority which may be substituted therefor, or
          with any national securities exchange.


<PAGE> 81

   (xvi)  Promptly after the commencement  thereof,  notice of all actions,
          suits,   and   proceedings   before  any  court  or  governmental
          department,     commission,    board,    bureau,    agency,    or
          instrumentality,  domestic or foreign,  affecting the Borrower or
          any Significant  Guarantor (a) which, if determined  adversely to
          the Borrower or such Significant  Guarantor,  could reasonably be
          expected  to  have a  Material  Adverse  Effect  or (b) in  which
          liability in excess of $2,500,000  (in the aggregate with respect
          to any  action,  suit or  proceeding)  is  asserted  against  the
          Borrower or any Significant Guarantor. 

  (xvii)  As soon as  possible  and in any event  within  ten days  after
          receipt by the Borrower or any Significant  Guarantor,  a copy of
          (a) any written  notice or claim to the effect that the  Borrower
          or any Significant Guarantor is or may be liable to any Person as
          a  result  of the  release  of any  toxic or  hazardous  waste or
          substance into the  environment,  and (b) any notice alleging any
          violation of any federal, state or local environmental, health or
          safety law or regulation by the Borrower or any Guarantor  which,
          in the case of either (a) or (b), could reasonably be expected to
          have a Material  Adverse  Effect or could  result in liability to
          the Borrower or any Significant Guarantor in excess of $2,500,000
          (in the aggregate with respect to any notice or claim).

 (xviii)  Such other information (including  non-financial  information)
          as the Agent may from time to time reasonably request.

     7.2. Use of Proceeds. Subject to the provisions of this Agreement, the
Borrower  will use the  proceeds  of the  Advances  for  general  corporate
purposes  (including  payment of reimbursement  obligations with respect to
Facility  Letters of  Credit),  to repay  outstanding  Swing Line Loans and
other  Advances and to engage in the  transactions  otherwise  permitted by
this  Agreement.  Except as  permitted  by Sections  8.6,  8.9 and 8.11 and
otherwise  permitted by this Agreement,  the Borrower will not, nor will it
permit  any  Subsidiary  to, use any of the  proceeds  of the  Advances  to
purchase  or carry any  "margin  stock" (as  defined in  Regulation  U) or,
except as otherwise permitted by this Agreement, to purchase any securities
in any transaction  that is subject to Sections 13 and 14 of the Securities
Exchange  Act of  1934,  as  amended.  The  Borrower  will not  permit  any
Non-Borrowing Subsidiaries to receive, whether by loan or other Investment,
or  otherwise  to use any  proceeds  of, any Advance if the effect  thereof
would be to increase the  Investments  of the Borrower or any  Guarantor in
any Non-Borrowing Subsidiaries to an amount (in the aggregate) in excess of
such Investments as of August 31, 1995;  provided that the Borrower and the
Guarantors  may (i) make  advances  or loans  to or  other  Investments  in
Non-Borrowing  Subsidiaries in an amount not to exceed the aggregate amount
of all  advances,  loans or  other  Investments  made by the  Non-Borrowing
Subsidiaries to the Borrower and the Guarantors after August 31, 1995 which
have not been  repaid  to such  Non-Borrowing  Subsidiaries  and (ii)  make
Investments in the Non-Borrowing Subsidiaries permitted under Section 8.6.


<PAGE> 82

     7.3.  Notice of  Default.  The  Borrower  will,  and will  cause  each
Significant  Guarantor  to, give prompt notice in writing to the Lenders of
the  occurrence of (i) any Default or Unmatured  Default and (ii) any other
development,  financial or  otherwise,  that has had or would be reasonably
expected to have a Material Adverse Effect.

     7.4.  Conduct of Business.  Except as otherwise  permitted  under this
Agreement, the Borrower will, and will cause each Significant Guarantor to,
carry  on  and  conduct   business  in  the  same  general  manner  and  in
substantially  the same fields of enterprise as presently  conducted and to
do all things necessary to remain duly  incorporated,  validly existing and
in  good   standing  as  a  domestic   corporation   in  their   respective
jurisdictions of incorporation  (or, in the case of any Guarantors that are
partnerships  or other  non-corporate  entities,  duly  formed and  validly
existing in their  respective  jurisdictions of formation) and maintain all
requisite  authority  to conduct  business  in each  jurisdiction  in which
business is conducted;  provided,  however,  that nothing  contained herein
shall prohibit the  dissolution of any Guarantor as long as the Borrower or
another Guarantor  succeeds to the assets,  liabilities and business of the
dissolved Guarantor.

     7.5.  Taxes.  The  Borrower  will,  and will  cause  each  Significant
Guarantor to, pay when due all taxes,  assessments and governmental charges
and levies upon them or their  income,  profits or  Property,  except those
that are being contested in good faith by appropriate  proceedings and with
respect to which adequate  reserves have been set aside in accordance  with
GAAP.

     7.6.  Insurance.  The Borrower will,  and will cause each  Significant
Guarantor to,  maintain  with  financially  sound and  reputable  insurance
companies insurance on all their Property in such amounts and covering such
risks as is consistent with sound business practice,  and the Borrower will
furnish to any Lender upon request  full  information  as to the  insurance
carried.

     7.7.  Compliance  with Laws.  The Borrower  will,  and will cause each
Significant Guarantor to, comply with all laws, rules, regulations, orders,
writs,  judgments,  injunctions,  decrees  or  awards  to  which  it may be
subject,  except  to  the  extent  that  the  failure  to do so  would  not
reasonably be expected to have and does not have a Material Adverse Effect.

     7.8. Maintenance of Properties. The Borrower will, and will cause each
Significant  Guarantor to, do all things  necessary to maintain,  preserve,
protect and keep its Property in good repair,  working order and condition,
except to the  extent  that the  failure to do so would not  reasonably  be
expected  to have  and  does  not  have a  Material  Adverse  Effect.  


<PAGE> 83

     7.9. Inspection.  The Borrower will, and will cause each Guarantor to,
permit the Lenders,  by their  respective  representatives  and agents,  to
inspect any of the Property, corporate (or partnership) books and financial
records of the  Borrower and the  Guarantors  to examine and make copies of
the books of accounts and other  financial  records of the Borrower and the
Guarantors,  and to discuss  the  affairs,  finances  and  accounts  of the
Borrower  and the  Guarantors  with,  and to be  advised as to the same by,
their  respective  officers at such  reasonable  times and intervals as the
Lenders may designate.

     7.10.  Environment.  The Borrower will, and will cause the Significant
Guarantors to, (i) comply, in all material respects, with the provisions of
all federal, state, and local environmental, health, and safety laws, codes
and  ordinances,  and all rules and  regulations  issued  thereunder;  (ii)
promptly  contain and remove any hazardous  discharge from or affecting the
Property  of the  Borrower  or such  Significant  Guarantor,  to the extent
required by and in compliance with all applicable  laws; (iii) promptly pay
any fine or penalty assessed in connection therewith or contest the same in
good faith; and (iv) permit the Agent to inspect such Property,  to conduct
tests  thereon,  and to inspect  all  books,  correspondence,  and  records
pertaining  thereto at reasonable hours and places;  and (v) at the request
of the Required Lenders, and at the Borrower's expense, provide a report of
a  qualified  environmental  engineer,  satisfactory  in scope,  form,  and
content to the  Required  Lenders,  and such other and  further  assurances
reasonably  satisfactory to the Required  Lenders that any new condition or
occurrence   hereafter  identified  in  any  revision  of  Schedule  "6.16"
delivered  by the  Borrower  pursuant to Section  7.12 has been  corrected;
provided  that a failure to comply with the  foregoing  provisions  of this
Section 7.10 shall not constitute a Default or an Unmatured  Default unless
such  noncompliance  has resulted in or is  reasonably  likely to result in
costs or liabilities  to the Borrower or a Significant  Guarantor in excess
of $2,500,000.

     7.11.  New  Subsidiary.  In the event that  Borrower  shall  hereafter
create a new Subsidiary or a Person shall hereafter  become a Subsidiary of
the Borrower,  the Borrower shall (i) cause such  Subsidiary to execute and
deliver  to the  Agent  (a) in  the  case  of a  Subsidiary  that  is not a
Non-Borrowing  Subsidiary,  a Guaranty and an amendment to the Contribution
Agreement  pursuant to which such Guarantor shall become a party thereunder
and  (b)  in  the  case  of a  Non-Borrowing  Subsidiary,  a  Subordination
Agreement,  and (ii) deliver or cause to be delivered,  by and with respect
to  such   Subsidiary,   certificates,   opinions   and   other   documents
substantially   similar  to  those  required  to  be  delivered  under  the
provisions of Sections 5.1(i),  (ii), (iii), (vi) and (vii) of the Original
Agreement  and such other  documents as any Lender or Issuing Bank or their
respective counsel may reasonably request; all of the foregoing shall be in
form and substance satisfactory to the Required Lenders.


<PAGE> 84

     7.12.  Change in Schedules.  Promptly  following the occurrence of any
event or  circumstance  as a result of which any of  Schedules  6.7, 6.8 or
6.16 ceases to be accurate in all material  respects,  the  Borrower  shall
furnish to the Agent the applicable revised Schedule and shall certify that
such  revised  Schedule  is true,  correct  and  complete  in all  material
respects, and such revised Schedule shall be substituted for the applicable
Schedule hereunder.

                                ARTICLE VIII

                             NEGATIVE COVENANTS

       

     During the term of the  Agreement,  unless the Required  Lenders shall
otherwise consent in writing:

     8.1.  Dividends.  The  Borrower  will  not,  nor  will it  permit  any
Significant  Guarantor  to,  declare  or pay any  dividends  on its  Equity
Securities  (other than dividends  payable in (a) its own Equity Securities
or (b) rights to acquire its own Equity Securities or the Equity Securities
of another Person),  except that any Significant  Guarantor may declare and
pay dividends to the Borrower or to a Wholly-Owned Subsidiary.

     8.2.Indebtedness.  The  Borrower  will  not,  nor will it  permit  any
Significant   Guarantor   to,   create,   incur  or  suffer  to  exist  any
Indebtedness, except:
     (i)      The Loans and the Guaranties.

    (ii)      Indebtedness described in Schedule "8.2" hereto and
              Refinancing Indebtedness.

   (iii)      Rate Hedging Obligations related to the Loans or otherwise
              required pursuant to Section 9.5 hereof.

    (iv)      Indebtedness  of the  Borrower  to a  Subsidiary  or of a
              Subsidiary  to the  Borrower  or to  another  Subsidiary,
              provided the same is permitted under Section 7.2.

     (v)      Trade accounts payable and accruals arising or occurring in
              the ordinary course of business.

    (vi)      Indebtedness with respect to Letters of Credit (including
              Facility  Letters  of  Credit)  in  an  aggregate  amount
              outstanding at any time not to exceed $25,000,000.

   (vii)      Indebtedness secured by purchase-money Liens permitted under
              Section 8.8(ii).

  (viii)      Subordinated Indebtedness.


<PAGE> 85

    (ix)      Non-Recourse Indebtedness in an aggregate amount outstanding
              at any time not to exceed $50,000,000.

     (x)      Performance bonds, completion bonds, and guarantees of
              performance.

    (xi)      Indebtedness or other liabilities incurred in transactions
              permitted pursuant to Section 8.5.

   (xii)      Indebtedness  of a Person  existing as of the time of the
              Acquisition  of  such  Person  by  the  Borrower  or  any
              Guarantor,  provided  that,  after giving  effect to such
              Acquisition, the Borrower is in compliance with the terms
              of this Agreement  (including  without limitation Section
              7.11 and Article IX).

  (xiii)      Indebtedness not otherwise permitted by this Section 8.2 in
              an aggregate amount outstanding at any time not to exceed
              $25,000,000.

     8.3.  Merger.  The Borrower will not, nor will it permit any Guarantor
to, merge or consolidate  with or into any other Person,  except (i) that a
Guarantor may merge with any other  Guarantor or with the Borrower and (ii)
for transactions permitted under Section 8.4 or Section 8.6(vii).

     8.4.  Sale of Assets.  The  Borrower  will not, nor will it permit any
Significant Guarantor to, lease, sell or otherwise dispose of its Property,
to any other Person  except (i) for sales or leases in the ordinary  course
of business,  (ii) for leases,  sales or other dispositions of its Property
that,  together with all other Property of the Borrower and the Significant
Guarantors  previously  leased,  sold or  disposed  of  (other  than in the
ordinary  course of  business)  as  permitted  by this  Section  during the
twelve-month  period ending with the month in which any such lease, sale or
other disposition  occurs,  do not constitute a Substantial  Portion of the
Property  of the  Borrower  and the  Significant  Guarantors  and  (iii) as
permitted in Section 8.5.

     8.5. Sale and Leaseback. The Borrower will not, nor will it permit any
Significant  Guarantor to, sell or transfer any of its Property in order to
concurrently  or  subsequently  lease as lessee  such or similar  Property,
except for model homes that do not at any time exceed  $10,000,000  in book
value, in the aggregate for the Borrower and the Significant Guarantors.


<PAGE> 86

     8.6. Investments and Acquisitions.  The Borrower will not, nor will it
permit  any  Significant   Guarantor  to,  make  or  suffer  to  exist  any
Investments (including without limitation, loans and advances to, and other
Investments in,  Subsidiaries),  or commitments  therefor, or to create any
Subsidiary  or to become or remain a partner  in any  partnership  or joint
venture, or to make any Acquisition of any Person, except:

         (i)      Obligations of, or fully guaranteed by, the United States
                  of America or any agency thereof,  which obligations have
                  maturities of one year or less.

        (ii)      Commercial paper rated A-l or better by S&P or P-l or 
                  better by Moody's.

       (iii)      Demand deposit accounts maintained in the ordinary course
                  of business.

        (iv)      Certificates  of deposit issued by and time deposits with
                  commercial  banks  (whether  domestic or foreign)  having
                  capital and surplus in excess of $100,000,000.

         (v)      Existing Investments in Subsidiaries and other Investments
                  described in Schedule "8.6" hereto.

        (vi)      Investments  in  joint  ventures,  partnerships,  limited
                  liability  companies or other business  organizations  in
                  which any Person other than the Borrower or a Significant
                  Guarantor has an interest,  provided that the outstanding
                  amount  of  such  Investments  of the  Borrower  and  the
                  Significant   Guarantors   do  not  at  any  time  exceed
                  $35,000,000 in the aggregate.

       (vii)      The Acquisition of a business or entity engaged primarily
                  in the business of home building,  provided that (a) the
                  Investment (exclusive of the issuance of Equity Securities
                  of the Borrower or its Subsidiaries in connection therewith)
                  in any single Acquisition after the date hereof does not
                  exceed $10,000,000 and in all such Acquisitions after the
                  date hereof does not exceed $25,000,000 in the aggregate,
                  (b) immediately upon the consummation of any such 
                  Acquisition the Borrower is in compliance with the terms,
                  covenants and conditions of this Agreement (including
                  without limitation Section 7.11 and Article IX) and (c) the
                  Borrower shall deliver to the Agent a certificate, signed
                  by an Authorized Officer, certifying that, on the date of,
                  and taking into account, the consummation of such 
                  Acquisition, no Default or Unmatured Default has occurred
                  and is continuing.

      (viii)      Investment of the Borrower in a Guarantor or of a Guarantor
                  in the Borrower or another Guarantor.


<PAGE> 87

        (ix)      Investments in  Non-Borrowing  Subsidiaries to the extent
                  permitted  under the  provisions of Section 7.2 and other
                  loans or advances to Non-Borrowing  Subsidiaries that are
                  neither  made nor  outstanding  at any time at which  any
                  Loans   (excluding   Facility   Letters  of  Credit)  are
                  outstanding hereunder.

         (x)      Stock, obligations or securities received in satisfaction
                  of debts owing to the Borrower or any Guarantor.

        (xi)      Pledges  or  deposits  in  cash  by  the  Borrower  or  a
                  Guarantor to support surety bonds,  performance  bonds or
                  guarantees  of  completion  in  the  ordinary  course  of
                  business.

       (xii)      The creation of new (A) Subsidiaries engaged primarily in
                  the home  building  business  (or the purpose of which is
                  principally  to preserve  the use of a name in which such
                  business is conducted) or (B) Non-Borrowing Subsidiaries.

      (xiii)      Investments pursuant to the Borrower's or a Significant
                  Guarantor's employment compensation plans or agreements.

       (xiv)      Investments,  in  addition  to those  enumerated  in this
                  Section 8.6, in an aggregate  amount  outstanding  at any
                  time not to exceed $5,000,000.

        (xv)      The purchase, repurchase, repayment, prepayment, redemption
                  or other acquisition of (i) any of the Borrower's Equity
                  Securities and Convertible Subordinated Notes involving
                  cash expenditures (from and after September 29, 1995, not
                  to exceed, in the aggregate, the sum of $30,000,000,
                  plus the amount of cash proceeds received by the Borrower
                  or a Guarantor after the date hereof (A) from the sale of
                  Equity Securities of the Borrower or any Guarantor and (B)
                  in connection with the exercise of any convertible security
                  (including, without limitation, the Borrower's  Class B
                  Warrants) entitling the holder thereof to acquire any
                  Equity Securities of the Borrower or a Guarantor (provided,
                  however, the cash expenditures by the Borrower or the
                  Guarantors from and after September 29, 1995 to purchase,
                  repurchase, repay, prepay, redeem or acquire the
                  Convertible Subordinated Notes shall not exceed $30,000,000
                  in the aggregate), or as otherwise permitted under Sections
                  8.9 and 8.11 hereof; and (ii) rights issued by the Borrower
                  under the Rights Plan.

       (xvi)      Investments permitted under Section 8.9 hereof.


<PAGE> 88

     8.7. Contingent Obligations. The Borrower will not, nor will it permit
any  Significant  Guarantor  to,  make or suffer  to exist  any  Contingent
Obligation (including,  without limitation,  any Contingent Obligation with
respect to the obligations of a Subsidiary),  except (i) the Guaranty,  and
(ii) to the extent permitted by Section 8.2.

     8.8. Liens.  The Borrower will not, nor will it permit any Significant
Guarantor to, create,  incur,  or suffer to exist any Lien in, of or on the
Property of the Borrower or any of the Significant Guarantors, except:

     (i)          Permitted Encumbrances.

    (ii)          Purchase-money  Liens on any Property  hereafter acquired
                  or the assumption of any Lien on Property existing at the
                  time  of   such   acquisition   (and   not   created   in
                  contemplation of such acquisition), or a Lien incurred in
                  connection  with  any  conditional  sale or  other  title
                  retention or a Capitalized Lease; provided that

                  (a)      Any Property  subject to any of the foregoing is
                           acquired  by the  Borrower  or  any  Significant
                           Guarantor   in  the   ordinary   course  of  its
                           respective  business  and the  Lien on any  such
                           Property attaches to such asset  concurrently or
                           within 90 days after the acquisition thereof;

                  (b)      The  obligation  secured by any Lien so created,
                           assumed,  or  existing  shall not exceed  ninety
                           percent  (90%) of the  lesser of the cost or the
                           fair market value as of the time of  acquisition
                           of the Property  covered thereby by the Borrower
                           or the Significant Guarantor acquiring the same;
                           and

                  (c)      Each Lien shall attach only to the Property so
                           acquired.

   (iii)          Liens  existing  on the  date  hereof  and  described  in
                  Schedule  "8.2"  hereto  and Liens  securing  Refinancing
                  Indebtedness with respect thereto.

    (iv)          Liens  incurred in the  ordinary  course of business  not
                  otherwise  permitted by this covenant,  provided that the
                  aggregate  amount of  Indebtedness  secured by such Liens
                  outstanding at any time shall not exceed $25,000,000.

     (v)          Judgments and similar  Liens  arising in connection  with
                  court proceedings;  provided the execution or enforcement
                  thereof  is stayed  and the claim is being  contested  in
                  good faith.


<PAGE> 89

    (vi)          Liens securing Non-Recourse Indebtedness.

   (vii)          Liens existing with respect to Indebtedness of a Person
                  acquired in an Acquisition permitted by this Agreement.

     8.9.  Redemption.  The Borrower will not purchase or redeem any of its
Equity Securities  heretofore or hereafter issued, except that the Borrower
may (x) purchase or redeem its Equity Securities (i) to the extent that the
consideration  for  such  redemption  or  purchase  is  limited  to  Equity
Securities of the Borrower or (ii) if the  consideration  for such purchase
or redemption  (A) is other than Equity  Securities of the Borrower and (B)
is otherwise  permitted under Section  8.6(xv),  and (y) purchase or redeem
the rights issued under the Rights Plan.

     8.10.  Affiliates.  The  Borrower  will not,  nor will it  permit  any
Significant  Guarantor to, enter into any transaction  (including,  without
limitation,  the purchase or sale of any Property or service) with, or make
any payment or transfer to, any Affiliate except (i) in the ordinary course
of business and pursuant to the reasonable  requirements  of the Borrower's
or such  Guarantor's  business and upon fair and  reasonable  terms no less
favorable to the Borrower or such  Significant  Guarantor than the Borrower
or such  Significant  Guarantor  would obtain in a  comparable  arms-length
transaction,  (ii)  Investments  permitted  under  Section  8.6  and  (iii)
pursuant to employment and director compensation plans and agreements.

     8.11.  Subordinated  Indebtedness.  The Borrower will not, nor will it
permit any Significant  Guarantor to, make any amendment or modification to
the  subordination  provisions of any  indenture,  note or other  agreement
evidencing  or  governing  any  Subordinated  Indebtedness,  or directly or
indirectly voluntarily prepay,  defease or in substance defease,  purchase,
redeem,  retire  or  otherwise  acquire,  any  Subordinated   Indebtedness;
provided, however, that the foregoing shall not prohibit (i) the conversion
of the  Convertible  Subordinated  Notes in  accordance  with the Indenture
dated as of November 3, 1993, between the Borrower and Marine Midland Bank,
N.A., as Trustee,  relating to the  Convertible  Subordinated  Notes, or an
amendment  thereto  permitting such conversion at a lower  conversion price
than is therein provided,  (ii) the repayment or prepayment of Subordinated
Indebtedness   solely  from  the  net   proceeds   of  other   Subordinated
Indebtedness or from Equity  Securities or (iii) the purchase,  repurchase,
repayment,  prepayment,  redemption or other  acquisition of the Borrower's
Equity  Securities  and  Convertible   Subordinated  Notes  to  the  extent
permitted under Section 8.6(xv) or Section 8.9.

     8.12. Amendments.  The Borrower will not (i) amend or modify the First
Indenture,  the Senior  Notes,  the  Second  Indenture  or the Senior  Debt
Securities,  except for amendments or modifications  that do not (a) impose
upon the Borrower  obligations not contained therein as of the date of this
Agreement, (b) accelerate any of the tax obligations of the Borrower or (c)
otherwise  adversely  affect the Borrower;  or (ii) permit any Guarantor to
amend or modify the Contribution  Agreement,  except as provided in Section
7.11.

    8.13.  Financial  Undertakings.  The  Borrower  will not,  nor will it
permit any  Significant  Guarantor to, enter into or remain liable upon any
Financial Undertaking, except as permitted under this Agreement.

<PAGE> 90

                                 ARTICLE IX

                            FINANCIAL COVENANTS


      During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

     9.1.  Minimum  Consolidated  Tangible  Net Worth.  The  Borrower  will
maintain at all times a  Consolidated  Tangible  Net Worth of not less than
(i)  $250,000,000  plus (ii) fifty  percent (50%) of the  Consolidated  Net
Income earned after March 31, 1995 (excluding any quarter in which there is
a loss) plus (iii) one hundred  percent  (100%) of the net cash proceeds of
Equity  Securities  issued by the Borrower after March 31, 1995, minus (iv)
the amount (not to exceed, in the aggregate, the net cash proceeds (if any)
received by the Borrower in connection with the exercise, after the date of
this Agreement,  of any of the Borrower's Class B Warrants) expended by the
Borrower  after the date of this Agreement to purchase or redeem any of the
Borrower's Equity Securities.

     9.2.  Permitted  Indebtedness  Ratio. (a) The Borrower will not at any
time permit  Consolidated  Funded Indebtedness to exceed the product of (i)
the then applicable PIR and (ii) Consolidated Tangible Net Worth.
 
                 (b) If at any time the Borrower  shall fail to maintain a
ratio,  determined  as of the  last  day of  each  fiscal  quarter  for the
four-quarter  period ending on such day, of (i) EBITDA to (ii) Consolidated
Interest Incurred,  of at least 1.75 to 1.0 (the "Coverage Test"), then the
PIR,  effective  as of the  first  day of the  fiscal  quarter  immediately
following the four-quarter  period with respect to which the Borrower shall
have so failed the Coverage  Test,  shall be decreased to the extent herein
provided. Upon the first failure to satisfy the Coverage Test, or any other
failure to satisfy the Coverage Test that occurs on a date on which the PIR
is 1.75,  the PIR shall be decreased  by 0.25 to 1.50.  Upon any failure to
satisfy  the  Coverage  Test that occurs on a date on which the PIR is less
than 1.75, the PIR shall be decreased by 0.10.

                  (c) If at any time at which  the PIR is less  than  1.75,
the Borrower  shall  satisfy the Coverage  Test (which for purposes of this
Section 9.2(c) shall be deemed  satisfied only if, on the same day on which
the Borrower  maintains the ratio set forth in Section 9.2(b), the Borrower
is also in compliance with the covenant set forth in Section 9.2(a)),  then
the PIR,  effective as of the first day of the fiscal  quarter  immediately
following the four-quarter  period with respect to which the Borrower shall
have so  satisfied  the  Coverage  Test,  shall be  increased to the extent
herein provided.  Upon satisfaction of the Coverage Test on a date on which
the PIR is 1.50, the PIR shall be increased to 1.75.  Upon  satisfaction of
the  Coverage  Test on a date on which the PIR is less than  1.50,  the PIR
shall be increased by 0.10. In no event shall the PIR exceed 1.75.


<PAGE> 91

                  (d) Any  increase or decrease of the PIR  provided for in
this Section 9.2 shall be effective as of the first day of a fiscal quarter
as  provided  in  Section  9.2(b) or (c) (as  applicable),  and the PIR (as
adjusted)  shall  remain  in  effect  for the  entire  fiscal  quarter  and
thereafter  unless and until adjusted as of the first day of any subsequent
fiscal quarter as provided in this Section 9.2(b) or (c) (as applicable).

                  (e) A failure  to  satisfy  the  Coverage  Test shall not
constitute a Default or an  Unmatured  Default but a failure at any time to
comply with the  covenant set forth in Section  9.2(a)  shall  constitute a
Default under Section 10.3.

     9.3. Land Owned.  The Borrower will not at any time permit (a) the sum
of (i) the  book  value  of all  raw  land  owned  by the  Borrower  or any
Guarantor  for  development  or sale,  plus (ii) the book value of all land
under  development  owned by the Borrower or any Guarantor,  plus (iii) the
book  value of all lots  that have  been  Finished  Lots for more than nine
months,  to exceed (b) the sum of (i) Consolidated  Tangible Net Worth plus
(ii)  forty  percent  (40%)  of the  outstanding  principal  amount  of the
Convertible  Subordinated  Notes or Refinancing  Indebtedness  with respect
thereto.

     9.4. Housing  Inventory.  The Borrower will not at any time permit the
number of Inventory  Housing Units to exceed  twenty-five  percent (25%) of
the number of  Housing  Unit  Closings  during the  preceding  twelve  (12)
months.

     9.5.  Rate  Protection.  The Borrower will not at any time permit less
than  fifty  percent  (50%)  of the  obligations  of the  Borrower  and the
Guarantors  described in clauses (i), (iv) and (viii) of the  definition of
"Indebtedness," on a consolidated basis, to be Fixed Rate Debt.

                                 ARTICLE X

                                  DEFAULTS


      The  occurrence  of any  one or  more  of the following events shall 
constitute a Default:

     10.1.  Any  representation  or  warranty  made or deemed made by or on
behalf of the Borrower or any  Significant  Guarantor  to the Lenders,  the
Issuing Bank or the Agent under or in connection with this  Agreement,  any
Loan Document,  or any  certificate or information  delivered in connection
with  this  Agreement  or any  other  Loan  Document  shall not be true and
correct in any material respect on the date as of which made.

     10.2.  Nonpayment  of principal of any Note when due, or nonpayment of
interest upon any Note or of any commitment fee or other  obligations under
any of the Loan Documents within five days after the same becomes due.


<PAGE> 92

     10.3.  The  breach  by  the  Borrower   (other  than  a  breach  which
constitutes  a Default  under  Section 10.1 or 10.2) of any of the terms or
provisions of this Agreement which is not remedied within 30 days after the
occurrence of such breach.

     10.4. Failure of the Borrower or any Significant Guarantor to pay when
due (after any applicable grace or notice period) any  Indebtedness  (other
than Non-Recourse  Indebtedness)  equal to or exceeding  $5,000,000 (in the
aggregate);  or the default by the Borrower or any Significant Guarantor in
the  performance  of any term,  provision  or  condition  contained  in any
agreement   under  which  any   Indebtedness   (other   than   Non-Recourse
Indebtedness)  equal to or  exceeding  $5,000,000  (in the  aggregate)  was
created or is governed,  or any other event shall occur or condition exist,
the effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause,  such Indebtedness to become due prior to its stated
maturity; or any Indebtedness (other than Non-Recourse Indebtedness) of the
Borrower or any Significant  Guarantor equal to or exceeding $5,000,000 (in
the  aggregate)  shall be  declared to be due and payable or required to be
prepaid (other than by a regularly  scheduled  payment) prior to the stated
maturity  thereof;  or the Borrower or any Significant  Guarantor shall not
pay, or shall admit in writing its inability to pay, its debts generally as
they become due.

     10.5.  The  Borrower or any  Significant  Guarantor  shall (i) have an
order for relief  entered with  respect to it under the Federal  bankruptcy
laws as now or hereafter in effect, (ii) make an assignment for the benefit
of  creditors,  (iii) apply for,  seek,  consent to, or  acquiesce  in, the
appointment  of a receiver,  custodian,  trustee,  examiner,  liquidator or
similar  official for it or any Substantial  Portion of its Property,  (iv)
institute  any  proceeding  seeking an order for relief  under the  Federal
bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent,  or seeking  dissolution,  winding up,  liquidation,
reorganization,  arrangement,  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,  within the  applicable  time period for
the  filing  thereof,  an answer or other  pleading  denying  the  material
allegations of any such proceeding filed against it, (v) take any corporate
action to  authorize  or effect any of the  foregoing  actions set forth in
this Section 10.5 or (vi) fail to contest in good faith any  appointment or
proceeding described in Section 10.6.

     10.6. A receiver,  trustee,  examiner,  liquidator or similar official
shall be  appointed  for the Borrower or any  Significant  Guarantor or any
Substantial  Portion of its Property without the  application,  approval or
consent of the  Borrower or such  Significant  Guarantor,  or a  proceeding
described in Section  10.5(iv) shall be instituted  against the Borrower or
any Significant  Guarantor and such appointment  continues  undischarged or
such  proceeding  continues  undismissed  or  unstayed  for a period  of 60
consecutive days.


<PAGE> 93

     10.7. The Borrower or any  Significant  Guarantor shall fail within 30
days to pay,  bond or  otherwise  discharge  any  judgment or order for the
payment  of money in excess  of  $10,000,000  which has not been  stayed on
appeal or is not otherwise being appropriately contested in good faith.

     10.8.  The Unfunded  Liabilities  of all Single  Employer  Plans shall
exceed in the aggregate  $5,000,000 or any Reportable  Event shall occur in
connection  with  any  Plan,  which  Reportable  Event  has  had  or  would
reasonably be expected to have a Material Adverse Effect.

     10.9.  The Borrower or any member of the  Controlled  Group shall have
been notified by the sponsor of a  Multiemployer  Plan that it has incurred
withdrawal  liability to such  Multiemployer  Plan in an amount which, when
aggregated  with all other  amounts  required  to be paid to  Multiemployer
Plans by the  Borrower  or any  other  member  of the  Controlled  Group as
withdrawal  liability  (determined  as of the  date of such  notification),
exceeds  $5,000,000 or requires  payments  exceeding  $2,000,000 per annum;
provided,  however,  that such event shall not constitute a Default as long
as  the  Borrower  or  the  Controlled  Group  member,  as  applicable,  is
contesting in good faith the imposition of withdrawal liability.


     10.10.  The Borrower or any other member of the Controlled Group shall
have  been  notified  by the  sponsor  of a  Multiemployer  Plan  that such
Multiemployer  Plan  is  in   reorganization,   if  as  a  result  of  such
reorganization  the aggregate annual  contributions of the Borrower and the
other  members  of  the  Controlled   Group  (taken  as  a  whole)  to  all
Multiemployer  Plans which are then in reorganization  have been or will be
increased over the amounts  contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding
the plan year in which  the  reorganization  occurs by an amount  exceeding
$5,000,000.

     10.11. Any Change in Control shall occur.

     10.12.  Any Guaranty shall fail to remain in full force or effect with
respect to any one or more of the Significant  Guarantors (except by reason
of a merger  of a  Significant  Guarantor  with  the  Borrower  or  another
Guarantor or the  dissolution  of a Guarantor  permitted  hereunder or as a
result of a sale permitted  under Section 8.4) or any action shall be taken
by any one or more  of the  Significant  Guarantors  to  discontinue  or to
assert  the  invalidity  or  unenforceability  of  any  Guaranty,   or  any
Significant  Guarantor  shall  fail to  comply  with  any of the  terms  or
provisions of any Guaranty, or any Significant Guarantor denies that it has
any further  liability  under any  Guaranty or gives  notice to such effect
(except by reason of a merger of a Significant  Guarantor with the Borrower
or another Guarantor or the dissolution of a Guarantor  permitted hereunder
or as a result of a sale permitted under Section 8.4).


<PAGE> 94

                                ARTICLE XI

              ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
     11.1.  Acceleration.  If any Default described in Section 10.5 or 10.6
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans (including, in the case of the Swing Line Bank, Swing Line Loans) and
of the Issuing Bank to issue  Facility  Letters of Credit  hereunder  shall
automatically  terminate and the Obligations shall  immediately  become due
and payable  without any  election or action on the part of the Agent,  the
Issuing  Bank or any Lender.  If any other  Default  occurs,  the  Required
Lenders may  terminate  or suspend the  obligations  of the Lenders to make
Loans (including, in the case of the Swing Line Bank, Swing Line Loans) and
of the  Issuing  Bank to issue  Facility  Letters of Credit  hereunder,  or
declare the  Obligations  to be due and  payable,  or both,  whereupon  the
Obligations shall become immediately due and payable,  without presentment,
demand,  protest or notice of any kind,  all of which the  Borrower  hereby
expressly waives.  If, within five days after  acceleration of the maturity
of the Obligations or termination of the obligations of the Lenders to make
Loans  (including,  in the case of the Swing Line Bank,  Swing Line  Loans)
hereunder  as a result of any Default  (other than any Default as described
in  Section  10.5 or 10.6 with  respect  to the  Borrower)  and  before any
judgment or decree for the payment of the  Obligations  due shall have been
obtained or entered,  the Required Lenders (in their sole discretion) shall
so direct,  the Agent shall,  by notice to the Borrower,  rescind and annul
such acceleration and/or termination.

     11.2.  Amendments.  Subject to the  provisions of this Article XI, the
Required  Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for
the purpose of adding or modifying any  provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower  hereunder
or  waiving  any  Default  hereunder;   provided,  however,  that  no  such
supplemental  agreement  shall,  without  the  consent  of each  Lender and
Issuing Bank affected thereby:

         (i)      Extend the maturity of any Loan or Note or forgive all or
                  any portion of the principal  amount  thereof,  or reduce
                  the rate of, or extend the time of payment  of,  interest
                  or fees thereon;

        (ii)      Reduce the percentage specified in the definition of
                  Required Lenders;

       (iii)      Increase  the  amount  of the  Commitment  of any  Lender
                  hereunder  (other than as  contemplated by Section 2.5(b)
                  or Section  2.5(c)  hereof),  or permit the  Borrower  to
                  assign its rights under this Agreement; or

        (iv)      Amend this Section 11.2.


<PAGE> 95

No amendment of any provision of this Agreement relating to the Agent shall
be effective  without the written consent of the Agent. The Agent may waive
payment or reduce the amount of the fees  referred  to in Section  13.12 or
the fee required under Section 15.3.2 without  obtaining the consent of any
other party to this Agreement.

     11.3.  Preservation  of Rights.  No delay or omission of any Lender or
Issuing  Bank or the Agent to exercise  any right under the Loan  Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence  therein,  and the  making of a Loan  (including  a Swing Line
Loan) or the  issuance,  amendment  or  extension  of a Facility  Letter of
Credit  notwithstanding  the existence of a Default or the inability of the
Borrower  to satisfy  the  conditions  precedent  to such Loan or  Facility
Letter of Credit  shall not  constitute  any  waiver or  acquiescence.  Any
single or partial  exercise of any such right shall not  preclude  other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms,  conditions or provisions of the
Loan  Documents  whatsoever  shall be valid unless in writing signed by the
Lenders (and, if applicable,  the Agent) required pursuant to Section 11.2,
and then only to the extent in such  writing  specifically  set forth.  All
remedies  contained  in the  Loan  Documents  or by law  afforded  shall be
cumulative  and all shall be available  to the Agent,  the Issuing Bank and
the Lenders until the Obligations have been paid in full.


                                ARTICLE XII

                             GENERAL PROVISIONS

     12.1. Survival of Representations.  All representations and warranties
of the Borrower  contained in this Agreement shall survive  delivery of the
Notes and the making of the Loans and the issuance,  amendment or extension
of any Facility Letter of Credit herein contemplated.

     12.2. Governmental  Regulation.  Anything contained in this Agreement
to the contrary notwithstanding, no Lender or Issuing Bank shall be obligated
to extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.

     12.3. Taxes. Any recording, intangible, filing or stamp fees or taxes
or other similar  assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by the Borrower,
together with interest and penalties, if any.

     12.4.  Headings.  Section  headings  in the  Loan  Documents  are  for
convenience of reference only, and shall not govern the  interpretation  of
any of the provisions of the Loan Documents.

     12.5. Entire Agreement. The Loan Documents embody the entire agreement
and  understanding  among  the  Borrower,  the Agent  and the  Lenders  and
supersede all prior  agreements and  understandings  among the Borrower and
the Agent, the Lenders relating to the subject matter thereof.


<PAGE> 96

     12.6.  Nature of  Obligations;  Benefits  of this  Agreement.  (a) The
respective obligations of the Lenders hereunder  are several and not joint 
and no Lender  shall be the partner or agent of any other  (except to the
extent to which the Agent is  authorized to  act  as  such).  The  failure
of  any  Lender  to  perform  any of its obligations  hereunder  shall not
relieve any other  Lender from any of its obligations hereunder.

         (b)    This Agreement shall not be construed so as to confer
any  right or  benefit  upon any  Person  other  than the  parties  to this
Agreement and their respective successors and assigns.

     12.7.  Expenses;  Indemnification.  The Borrower  shall  reimburse the
Agent for any reasonable costs, internal charges and out-of-pocket expenses
(including reasonable attorneys' fees and time charges of attorneys for the
Agent,  which  attorneys may be employees of the Agent) paid or incurred by
the  Agent in  connection  with the  preparation,  negotiation,  execution,
delivery, review, amendment,  modification,  and administration of the Loan
Documents. The Borrower also agrees to reimburse the Agent, the Lenders and
each  Issuing  Bank  for  any  reasonable   costs,   internal  charges  and
out-of-pocket  expenses  (including  reasonable  attorneys'  fees  and time
charges of  attorneys  for the Agent,  the Lenders and such  Issuing  Bank,
which attorneys may be employees of the Agent,  the Lenders or such Issuing
Bank) paid or incurred  by the Agent,  any Lender or such  Issuing  Bank in
connection with the collection and  enforcement of the Loan Documents.  The
Borrower  further  agrees to indemnify the Agent and each Lender or Issuing
Bank, its  directors,  officers and employees  against all losses,  claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation,  all expenses of litigation or preparation  therefor whether or
not the Agent or any Lender or Issuing Bank is a party  thereto)  which any
of them may pay or incur arising out of or relating to this Agreement,  the
other Loan Documents, the transactions contemplated hereby or the direct or
indirect  application  or proposed  application of the proceeds of any Loan
hereunder  (except to the extent  arising  due to the gross  negligence  or
willful  misconduct of the  indemnified  Person).  The  obligations  of the
Borrower  under  this  Section  shall  survive  the   termination  of  this
Agreement.

     12.8.  Numbers  of  Documents.   All  statements,   notices,   closing
documents,  and  requests  hereunder  shall be  furnished to the Agent with
sufficient  counterparts  so that the Agent may  furnish one to each of the
Lenders.

     12.9.  Accounting.  Except as provided  to the  contrary  herein,  all
accounting  terms  used  herein  shall be  interpreted  and all  accounting
determinations hereunder shall be made in accordance with GAAP applied on a
basis consistent with the audited  financial  statements of the Borrower as
of December 31, 1996 ("Agreement Accounting Principles").  If any change in
GAAP from the  principles  used in preparing such  statements  would have a
material  effect  upon  the  results  of  any  calculation  required  by or
compliance  with any  provision of this  Agreement,  then such  calculation
shall be made or calculated  and compliance  with such  provision  shall be
determined  using  accounting  principles  used in  preparing  the  audited
financial statements of the Borrower as of December 31, 1996.


<PAGE> 97

     12.10. Severability of Provisions.  Any provision in any Loan Document
that  is  held  to  be  inoperative,   unenforceable,  or  invalid  in  any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining  provisions in that jurisdiction
or the  operation,  enforceability,  or validity of that  provision  in any
other  jurisdiction,  and to this end the  provisions of all Loan Documents
are declared to be severable.

     12.11.  Nonliability  of Lenders and Issuing  Bank.  The  relationship
between the  Borrower and the Lenders and the Agent shall be solely that of
borrower and lender. Neither the Agent nor any Lender or Issuing Bank shall
have any fiduciary  responsibilities to the Borrower. Neither the Agent nor
any Lender or Issuing Bank undertakes any responsibility to the Borrower to
review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations.

     12.12.  CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A  CONTRARY  EXPRESS  CHOICE  OF  LAW  PROVISION)  SHALL  BE  CONSTRUED  IN
ACCORDANCE  WITH THE INTERNAL  LAWS (AND NOT THE LAW OF  CONFLICTS)  OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.

     12.13.  CONSENT  TO  JURISDICTION.  THE  BORROWER  HEREBY  IRREVOCABLY
SUBMITS TO THE  NON-EXCLUSIVE  JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING
OUT  OF  OR  RELATING  TO  ANY  LOAN  DOCUMENTS  AND  THE  BORROWER  HEREBY
IRREVOCABLY  AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND  DETERMINED IN ANY SUCH COURT AND  IRREVOCABLY  WAIVES ANY
OBJECTION  IT MAY NOW OR  HEREAFTER  HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION  OR  PROCEEDING  BROUGHT  IN SUCH A COURT OR THAT  SUCH  COURT IS AN
INCONVENIENT  FORUM.  NOTHING  HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER OR ISSUING BANK TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER  JURISDICTION.  ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST  THE AGENT OR ANY LENDER OR ISSUING  BANK OR ANY  AFFILIATE  OF THE
AGENT OR ANY LENDER OR ISSUING BANK INVOLVING,  DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF,  RELATED TO, OR  CONNECTED  WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.

     12.14. WAIVER OF JURY TRIAL. THE BORROWER,  THE AGENT, AND EACH LENDER
AND ISSUING  BANK HEREBY  WAIVE  TRIAL BY JURY IN ANY  JUDICIAL  PROCEEDING
INVOLVING,  DIRECTLY OR INDIRECTLY,  ANY MATTER (WHETHER  SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,  RELATED TO, OR CONNECTED
WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

     12.15.  Confidentiality.  Each  Lender  and  the  Agent  agree  to use
commercially  reasonable efforts to keep confidential any financial reports
and other  information  from time to time  supplied to them by the Borrower
hereunder  to the extent that such  information  is not and does not become
publicly  available  through  or with the  consent or  acquiescence  of the
Borrower,  except for  disclosure (i) to the Agent and the other Lenders or
to a Transferee, (ii) to legal counsel, accountants, and other professional
advisors  to a  Lender,  the  Agent or a  Transferee,  (iii) to  regulatory

<PAGE> 98

officials,  (iv) to any Person as  required  by law,  regulation,  or legal
process, (v) to any Person in connection with any legal proceeding to which
that Lender is a party,  and (vi)  permitted by Section 15.4. Any Lender or
Agent disclosing such information shall use commercially reasonable efforts
to advise the Person to whom such information is disclosed of the foregoing
confidentiality agreement and to direct such Person to comply therewith.


                                ARTICLE XIII

                                 THE AGENT

     13.1.  Appointment.  The  First  National  Bank of  Chicago  is hereby
appointed Agent  hereunder and under each other Loan Document,  and each of
the Lenders  irrevocably  authorizes  the Agent to act as the agent of such
Lender.  The  Agent  agrees  to act as such  upon  the  express  conditions
contained  in this  Article  XIII.  The Agent  shall  not have a  fiduciary
relationship in respect of the Borrower,  any Lender or the Issuing Bank by
reason of this Agreement.

     13.2.  Powers. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically  delegated to the Agent by the terms
of each  thereof,  together with such powers as are  reasonably  incidental
thereto.  The Agent  shall have no implied  duties to the  Lenders,  or any
obligation to the Lenders to take any action  thereunder  except any action
specifically provided by the Loan Documents to be taken by the Agent.

     13.3.  General  Immunity.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower or any Lender
for action  taken or omitted to be taken by it or them  hereunder  or under
any other Loan Document or in connection  herewith or therewith  except for
its or their own gross negligence or willful misconduct.

     13.4.  No Responsibility for Loans, Recitals,  etc.  Neither the Agent
nor  any  of  its  directors,   officers,  agents  or  employees  shall  be
responsible for or have any duty to ascertain,  inquire into, or verify (i)
any statement,  warranty or representation made in connection with any Loan
Document or any  borrowing  or any request for the  issuance,  amendment or
extension of any Facility Letter of Credit hereunder;  (ii) the performance
or  observance  of any of the  covenants or agreements of any obligor under
any  Loan  Document  or   Reimbursement   Agreement,   including,   without
limitation,  any agreement by an obligor to furnish information directly to
each Lender;  (iii) the satisfaction of any condition  specified in Article
IV or V, except receipt of items required to be delivered to the Agent;  or
(iv) the validity,  effectiveness  or  genuineness  of any Loan Document or
Reimbursement  Agreement or any other  instrument  or writing  furnished in


                                    
<PAGE> 99

connection  with any of the  foregoing.  The  Agent  shall  have no duty to
disclose to the Lenders information that is not required to be furnished by
the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual
capacity).

     13.5. Action on Instructions of Lenders.  The Agent shall in all cases
be fully protected in acting,  or in refraining from acting,  hereunder and
under any other Loan  Document  in  accordance  with  written  instructions
signed by the Required  Lenders  (except as  otherwise  provided in Section
11.2),  and  such  instructions  and any  action  taken or  failure  to act
pursuant  thereto shall be binding on all of the Lenders and on all holders
of Notes. The Agent shall be fully justified in failing or refusing to take
any  action  hereunder  and under any other Loan  Document  unless it shall
first be  indemnified to its  satisfaction  by the Lenders pro rata against
any and all  liability,  cost and  expense  that it may  incur by reason of
taking or continuing to take any such action.

     13.6.  Employment of Agents and Counsel.  The Agent may execute any of
its  duties as Agent  hereunder  and under any other  Loan  Document  by or
through  employees,   agents,  and   attorneys-in-fact  and  shall  not  be
answerable to the Lenders,  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 with reasonable care. The Agent shall
be entitled to advice of counsel  concerning all matters  pertaining to the
agency  hereby  created and its duties  hereunder  and under any other Loan
Document.

     13.7. Reliance on Documents;  Counsel.  The Agent shall be entitled to
rely  upon any  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 counsel  selected by
the Agent, which counsel may be employees of the Agent.

     13.8. Agent's Reimbursement and Indemnification.  The Lenders agree to
reimburse and indemnify the Agent ratably in proportion to their respective
Commitments  (i) for any amounts not  reimbursed  by the Borrower for which
the Agent is  entitled  to  reimbursement  by the  Borrower  under the Loan
Documents,  (ii) for any other expenses  incurred by the Agent on behalf of
the Lenders,  in  connection  with the  preparation,  execution,  delivery,
administration  and  enforcement  of the Loan  Documents  and (iii) for any
liabilities,  obligations,  losses, damages, penalties, actions, judgments,
suits,  costs,  expenses or disbursements of any kind and nature whatsoever
which may be imposed on,  incurred by or asserted  against the Agent in any
way relating to or arising out of the Loan  Documents or any other document
delivered in connection therewith or the transactions contemplated thereby,
or the  enforcement  of  any of the  terms  thereof  or of any  such  other
documents, provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the Agent.  The  obligations  of the Lenders  under this Section 13.8 shall
survive payment of the Obligations and termination of this Agreement.
<PAGE> 100



     13.9.  Rights as a Lender or Issuing Bank. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder and under
any other Loan  Document as any Lender and may  exercise the same as though
it were not the Agent,  and the term  "Lender" or "Lenders"  shall,  at any
time when the Agent is a Lender,  unless the context  otherwise  indicates,
include the Agent in its individual capacity.  In the event the Agent is an
Issuing  Bank,  the Agent  shall have the rights and powers of the  Issuing
Bank  hereunder  and may exercise the same as though it were not the Agent,
and the  term  "Issuing  Bank"  shall,  at any time  when the  Agent is the
Issuing Bank, unless the context otherwise indicates,  include and mean the
Agent in its  capacity  as the  Issuing  Bank.  In the event the Agent is a
Swing  Line Bank,  the Agent  shall have the rights and powers of the Swing
Line Bank  hereunder  and may  exercise  the same as though it were not the
Agent,  and the term "Swing Line Bank" shall, at any time when the Agent is
the Swing Line Bank,  unless the context otherwise  indicates,  include and
mean the Agent in its capacity as the Swing Line Bank. The Agent may accept
deposits  from,  lend money to, and generally  engage in any kind of trust,
debt,  equity or other  transaction,  in addition to those  contemplated by
this Agreement or any other Loan Document,  with the Borrower or any of its
Subsidiaries  in which the Borrower or such  Subsidiary  is not  restricted
hereby from engaging with any other Person.  The Agent,  in its  individual
capacity, is not obligated to remain a Lender.


     13.l0.  Lender Credit Decision.  Each Lender acknowledges that it has,
independently  and without  reliance upon the Agent or any other Lender and
based on the financial  statements  prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis  and  decision  to enter  into this  Agreement  and the other Loan
Documents.  Each Lender also acknowledges  that it will,  independently and
without  reliance  upon the  Agent or any  other  Lender  and based on such
documents  and  information  as it  shall  deem  appropriate  at the  time,
continue to make its own credit  decisions  in taking or not taking  action
under this Agreement and the other Loan Documents.

     13.11.  Successor  Agent.  The Agent may  resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to
be effective upon the  appointment of a successor Agent or, if no successor
Agent has been appointed,  45 days after the retiring Agent gives notice of
its  intention  to  resign.  The Agent may be  removed  at any time with or
without  cause by written  notice  received by the Agent from the  Required
Lenders, such removal to be effective on the date specified by the Required
Lenders.  Upon any such resignation or removal,  the Required Lenders shall
have the right to appoint,  on behalf of the Borrower  and the  Lenders,  a
successor  Agent. If no successor Agent shall have been so appointed by the
Required  Lenders  within  thirty days after the resigning  Agent's  giving
notice of its intention to resign, then the resigning Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Agent. If the Agent has
resigned or been removed and no  successor  Agent has been  appointed,  the

<PAGE> 101

Lenders may perform all the duties of the Agent  hereunder and the Borrower
shall make all  payments in respect of the  Obligations  to the  applicable
Lender and for all other purposes shall deal directly with the Lenders.  No
successor  Agent  shall be  deemed to be  appointed  hereunder  until  such
successor  Agent has accepted the  appointment.  Any such  successor  Agent
shall be a commercial bank having capital and retained earnings of at least
$50,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers,  privileges and duties of the resigning
or removed Agent.  Upon the  effectiveness of the resignation or removal of
the Agent,  the  resigning or removed  Agent shall be  discharged  from its
duties and obligations  hereunder and under the Loan  Documents.  After the
effectiveness  of the resignation or removal of an Agent, the provisions of
this Article XIII shall continue in effect for the benefit of such Agent in
respect  of any  actions  taken or  omitted  to be taken by it while it was
acting as the Agent hereunder and under the other Loan Documents.

     13.12.  Agent's Fee.  The  Borrower  agrees to pay to the Agent and/or
FCCM (as applicable),  each for its own account,  the fees agreed to by the
Borrower and the Agent in Section 2 of that certain letter  agreement dated
July 31, 1995, and that certain letter agreement dated April 25, 1997 or as
otherwise agreed from time to time.

                                ARTICLE XIV

                         SETOFF; RATABLE PAYMENTS

     14.1. Setoff. In addition to, and without limitation of, any rights of
the Lenders,  Swing Line Bank or Issuing Bank under  applicable law, if the
Borrower becomes insolvent,  however evidenced,  or any Default occurs, any
and all deposits  (including all account balances,  whether  provisional or
final and whether or not collected or available) and any other Indebtedness
at any time held or owing by any Lender , Swing  Line Bank or Issuing  Bank
to or for the credit or account of the  Borrower  may be offset and applied
toward the payment of the Obligations owing to such Lender, Swing Line Bank
or Issuing Bank, whether or not the Obligations,  or any part hereof, shall
then be due.

     14.2. Ratable Payments. If any Lender, whether by setoff or otherwise,
has  payment  made to it upon  its  Loans  (other  than  payments  received
pursuant to Sections  3.1, 3.2 or 3.4 and other than  payments  received by
the  Swing  Line  Bank  with  respect  to Swing  Line  Loans)  in a greater
proportion  than that  received by any other  Lender,  such Lender  agrees,
promptly  upon  demand,  to purchase a portion of the Loans (other than the
Swing Line  Loans)  held by the other  Lenders so that after such  purchase
each  Lender will hold its ratable  proportion  of Loans  (other than Swing
Line Loans).  If any Lender,  whether in connection  with setoff or amounts
which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations (other than the Swing Line Bank with respect
to the Swing Line  Loans) or such  amounts  which may be subject to setoff,
such Lender  agrees,  promptly upon demand,  to take such action  necessary

<PAGE> 102

such that all Lenders share in the benefits of such  collateral  ratably in
proportion  to their Loans (other than Swing Line Loans).  In case any such
payment is disturbed by legal process,  or otherwise,  appropriate  further
adjustments shall be made.

                                 ARTICLE XV

             BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     15.1.  Successors  and Assigns.  The terms and  provisions of the Loan
Documents  shall be binding upon and inure to the benefit of the  Borrower,
the  Lenders  and the  Issuing  Bank and their  respective  successors  and
assigns,  except that (i) the  Borrower  shall not have the right to assign
its rights or obligations under the Loan Documents, and (ii) any assignment
by any Lender must be made in compliance with Section 15.3. Notwithstanding
clause  (ii) of this  Section,  any  Lender  may at any time,  without  the
consent  of the  Borrower  or the Agent,  assign all or any  portion of its
rights  under  this  Agreement  and its  Notes to a Federal  Reserve  Bank;
provided,  however,  that no such  assignment  shall release the transferor
Lender from its obligations hereunder. The Agent may treat the payee of any
Note as the owner  thereof for all  purposes  hereof  unless and until such
payee  complies with Section 15.3 in the case of an assignment  thereof or,
in the case of any other  transfer,  a written  notice of the  transfer  is
filed  with the Agent.  Any  assignee  or  transferee  of a Note  agrees by
acceptance  thereof to be bound by all the terms and provisions of the Loan
Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the holder of
any  Note,  shall be  conclusive  and  binding  on any  subsequent  holder,
transferee  or  assignee  of such  Note or of any Note or Notes  issued  in
exchange therefor.

     15.2. Participations.

               15.2.1. Permitted Participants; Effect. Any Lender may,
               in  the   ordinary   course  of  its  business  and  in
               accordance with applicable law, at any time sell to one
               or more banks or other  Persons  that are not, and that
               are not  Affiliates  of a Person,  in the home building
               business  ("Participants")  participating  interests in
               any Loan owing to such Lender  (which may  include,  in
               the case of the Swing Line Bank,  any Swing Line Loan),
               any Note held by such Lender,  any  Commitment  of such
               Lender  (or in the case of the  Swing  Line  Bank,  any
               Swing Line  Commitment)  or any other  interest of such
               Lender  under  the Loan  Documents  in an amount of not
               less than $5,000,000.  In the event of any such sale by
               a Lender of  participating  interests to a Participant,
               such  Lender's  obligations  under  the Loan  Documents
               shall remain unchanged, such Lender shall remain solely
               responsible   to  the  other  parties  hereto  for  the
               performance  of such  obligations,  such  Lender  shall

<PAGE> 103

               remain  the  holder of any such  Note for all  purposes
               under the Loan  Documents,  all amounts  payable by the
               Borrower under this Agreement shall be determined as if
               such Lender had not sold such participating  interests,
               and the Borrower,  the Agent and the Issuing Bank shall
               continue to deal solely and  directly  with such Lender
               in connection with such Lender's rights and obligations
               under the Loan Documents.

               15.2.2.  Voting  Rights.  Each Lender  shall retain the sole
               right to approve,  without  the consent of any  Participant,
               any  amendment,  modification  or waiver of any provision of
               the Loan Documents other than any amendment, modification or
               waiver with respect to any Loan or Commitment  (or any Swing
               Line Loan or Swing Line Commitment,  if applicable) in which
               such  Participant has an interest which forgives  principal,
               interest or fees (other  than  Agent's  fees) or reduces the
               interest rate or fees (other than Agent's fees) payable with
               respect  to any such Loan or  Commitment  (or any Swing Line
               Loan or Swing Line Commitment, if applicable),  or postpones
               any  date  fixed  for  any  regularly-scheduled  payment  of
               principal  of, or interest or fees (other than Agent's fees)
               on, any such Loan or  Commitment  (or any Swing Line Loan or
               Swing Line Commitment, if applicable).

               15.2.3.  Benefit of Setoff.  The  Borrower  agrees that
               each  Participant  shall be deemed to have the right of
               setoff  provided  in  Section  14.1 in  respect  of its
               participating  interest in amounts owing under the Loan
               Documents  to the same  extent as if the  amount of its
               participating  interest were owing  directly to it as a
               Lender  under the Loan  Documents,  provided  that each
               Lender  shall  retain the right of setoff  provided  in
               Section   15.1   with   respect   to  the   amount   of
               participating  interests sold to each Participant.  The
               Lenders agree to share with each Participant,  and each
               Participant, by exercising the right of setoff provided
               in Section 14.1, agrees to share with each Lender,  any
               amount  received  pursuant to the exercise of its right
               of setoff, such amounts to be shared in accordance with
               Section 14.2 as if each Participant were a Lender.

     15.3. Assignments.

               15.3.1. Premitted Assignments.  Any Lender may, in the
               ordinary  course of its business and in accordance with
               applicable law, at any time assign to one or more banks
               or  other  Persons  that  are  not,  and  that  are not
               Affiliates of a Person,  in the home building  business
               ("Purchasers")  all  or any  part  of  its  rights  and
               obligations   under  the  Loan  Documents   (which  may
               include, in the case of a Purchaser of an interest from

<PAGE> 104

               the Swing Line  Bank,  the Swing  Line  Commitment  and
               Swing  Line  Loans)  in the  amount  of not  less  than
               $5,000,000,  provided that,  immediately following such
               assignment,  the  assigning  Lender  either  (i)  shall
               retain a  Commitment  of not less than  $10,000,000  or
               (ii) shall have assigned all of its Commitment and have
               no remaining  interest in the Obligations and provided,
               further,  that First  Chicago  may not assign the Swing
               Line   Commitment  or  Swing  Line  Loan  except  to  a
               Purchaser  that is,  or at the time of such  assignment
               becomes, the Agent in accordance with the provisions of
               this Agreement.  Such assignment shall be substantially
               in the form of Exhibit "K" hereto or in such other form
               as may be agreed to by the parties thereto. In the case
               of an assignment of a Commitment or any portion thereof
               (excluding,  however,  the Swing Line Commitment or any
               portion thereof) other than to a Lender or an Affiliate
               thereof and in the case of any  assignment of the Swing
               Line Commitment or any portion thereof,  the consent of
               the Borrower  and the Agent shall be required  prior to
               such assignment becoming effective;  provided, however,
               that if a Default has occurred and is  continuing,  the
               consent of the  Borrower  shall not be  required.  Such
               consents shall not be unreasonably withheld.

               15.3.2.  Effect;  Effective  Date. Upon (i) delivery to
               the Agent of a notice of assignment,  substantially  in
               the form  attached as Exhibit "I" to Exhibit "K" hereto
               (a "Notice of Assignment"),  together with any consents
               required  by Section  15.3.1,  and (ii)  payment by the
               Lender of a $4,000 fee to the Agent for processing such
               assignment,  such assignment  shall become effective on
               the  effective   date   specified  in  such  Notice  of
               Assignment.  The Notice of  Assignment  shall contain a
               representation by the Purchaser to the effect that none
               of the  consideration  used to make the purchase of the
               Commitment and Loans (and if applicable, the Swing Line
               Commitment  and Swing Line Loans) under the  applicable
               assignment agreement are "plan assets" as defined under
               ERISA  and  that  the  rights  and   interests  of  the
               Purchaser in and under the Loan  Documents  will not be
               "plan assets"  under ERISA.  On and after the effective
               date of such  assignment,  such Purchaser shall for all
               purposes be a Lender  party to this  Agreement  and any
               other Loan  Document  executed by the Lenders and shall
               have all the rights and  obligations  of a Lender under
               the Loan Documents, to the same extent as if it were an
               original party hereto, and no further consent or action
               by the  Borrower,  the  Lenders  or the Agent  shall be
               required to release the transferor  Lender with respect
               to the percentage of the Aggregate Commitment and Loans

<PAGE> 105

               (and any Swing  Line  Commitment  or Swing  Line  Loan)
               assigned to such  Purchaser.  Upon the  consummation of
               any assignment to a Purchaser  pursuant to this Section
               15.3.2,  the  transferor  Lender,  the  Agent  and  the
               Borrower shall make  appropriate  arrangements  so that
               replacement  Notes are issued to such transferor Lender
               and new Notes or, as  appropriate,  replacement  Notes,
               are issued to such Purchaser, in each case in principal
               amounts   reflecting  their  Commitment,   as  adjusted
               pursuant to such assignment.

     15.4.  Dissemination  of  Information.  The Borrower  authorizes  each
Lender to disclose to any  Participant  or  Purchaser  or any other  Person
acquiring  an interest in the Loan  Documents  by  operation of law (each a
"Transferee")  and any  prospective  Transferee any and all  information in
such Lender's  possession  concerning the  creditworthiness of the Borrower
and  its  Subsidiaries;  provided  that  each  Transferee  and  prospective
Transferee agrees to be bound by Section 12.15 of this Agreement. 

     15.5.  Tax  Treatment.  If  any  interest  in  any  Loan  Document  is
transferred  to any  Transferee  which is  organized  under the laws of any
jurisdiction  other  than the  United  States  or any  State  thereof,  the
transferor  Lender  shall  cause  such  Transferee,  concurrently  with the
effectiveness  of such  transfer,  to comply with the provisions of Section
2.19.

                                ARTICLE XVI

                                  NOTICES

     16.1.  Giving  Notice.  Except as otherwise  permitted by Section 2.14
with respect to  borrowing  notices,  all notices and other  communications
provided  to any party  hereto  under  this  Agreement  or any  other  Loan
Document  shall be in writing or by telex or by facsimile  and addressed or
delivered to such party at its address set forth below its signature hereto
or at such other  address as may be designated by such party in a notice to
the other  parties.  Any  notice,  if mailed and  properly  addressed  with
postage  prepaid,  shall be deemed  given when  received;  any  notice,  if
transmitted by telex or facsimile,  shall be deemed given when  transmitted
(answerback confirmed in the case of telexes).

     16.2. Change of Address.  The Borrower,  the Agent, any Lender and the
Issuing Bank may each change the address for service of notice upon it by a
notice in writing to the other parties hereto.



<PAGE> 106

                                ARTICLE XVII

                                COUNTERPARTS

This  Agreement may be executed in any number of  counterparts,  all of 
which taken together shall  constitute one agreement,  and any of the parties
hereto may execute  this  Agreement  by signing any such counterpart.



<PAGE> 107

         IN WITNESS WHEREOF, the Borrower,  the Lenders, and the Agent have
executed this Agreement as of the date first above written.

                                            BORROWER:

                                    U.S. HOME CORPORATION

                                    By:  /s/  Thomas A. Napoli
                                         __________________________
                                         Name: Thomas A. Napoli,
                                         Vice President

                                         1800 West Loop South
                                         Houston, TX 77252
                                         Attention: Thomas A. Napoli

                                  LENDERS:
         Commitments

         $30,000,000                THE FIRST NATIONAL BANK OF CHICAGO,
                                      Individually and as Agent

                                    By:  /s/  Gregory A. Gilbert
                                         _________________________
                                         Name: Gregory A. Gilbert,
                                         Vice President

                                         One First National Plaza
                                         Chicago, Illinois  60670
                                         Attention: Gregory A. Gilbert

         $30,000,000                GUARANTY FEDERAL BANK, F.S.B.

                                    By:  /s/  Richard V. Thompson
                                         _______________________
                                         Name:  Richard V. Thompson,
                                         Vice President

                                         8333 Douglas Avenue
                                         Dallas, TX 75225
                                         Attention: Richard V. Thompson

         $30,000,000                CREDIT LYONNAIS NEW YORK BRANCH

                                    By:  /s/  Jacques-Yves Mulliez
                                         _________________________
                                         Name:  Jacques-Yves Mulliez
                                         Senior Vice President

                                         1301 Avenue of the Americas
                                         New York, New York 10019
                                         Attention:  Loan Servicing Dept.


<PAGE> 108

                                         with a copy to:
                                         Lincoln Plaza
                                         2200 Ross Avenue - Suite 4400W
                                         Dallas, Texas 75201    
                                         Attention:  Blake Wright
                                    
         $25,000,000                BANK ONE, ARIZONA, NA

                                    By:  /s/  Rhonda R. Williams
                                         _______________________
                                         Name: Rhonda R. Williams,
                                         Vice President

                                         201 N. Central
                                         Phoenix, AZ 85004
                                         Attention: Rhonda R. Williams


         $15,000,000                COMERICA BANK, a Michigan corporation

                                    By:  /s/  David J. Campbell
                                         ___________________________
                                         Name: David J. Campbell,
                                         Vice President

                                         500 Woodward Avenue, M/C 3256
                                         Detroit, MI 48226
                                         Attention: David J. Campbell


<PAGE> 109

                                Exhibit "A"

                                  GUARANTY

                  This GUARANTY  ("Guaranty")  is made as of the ___ day of
_____________,   _____,   by   _________________________,    a   __________
corporation (the "Guarantor"), in favor of the "Lenders" under that certain
Amended and Restated  Credit  Agreement,  dated as of May 28, 1997,  by and
among U.S. Home Corporation (the  "Borrower"),  the financial  institutions
from time to time parties thereto (collectively,  and including the Issuing
Bank  (as  defined  in the  Amended  and  Restated  Credit  Agreement)  the
"Lenders")  and The First  National  Bank of  Chicago,  in its  capacity as
Agent.  Such Amended and Restated Credit  Agreement,  as it may be amended,
modified or supplemented  from time to time, is hereinafter  referred to as
the "Credit Agreement".  Unless otherwise defined herein, capitalized terms
used  herein  shall  have  the  meanings  ascribed  to them  in the  Credit
Agreement.

                  1. Guaranty.  (i) For value received and in consideration
of any loan,  advance or  financial  accommodation  of any kind  whatsoever
heretofore,  now or hereafter made, given or granted to the Borrower by the
Lenders, the Guarantor  unconditionally  guarantees for the benefit of each
of the Lenders the full and prompt payment when due, whether at maturity or
earlier,  by  reason  of  acceleration  or  otherwise,  and  at  all  times
thereafter,  of all  of the  Obligations  (including,  without  limitation,
interest  accruing  following  the filing of a  bankruptcy  petition  by or
against  the  Borrower,  at the  applicable  rate  specified  in the Credit
Agreement,  whether  or  not  such  interest  is  allowed  as  a  claim  in
bankruptcy).

                  (ii) At any time after the  occurrence of a Default,  the
Guarantor shall pay to the Agent, for the benefit of the Lenders, on demand
and in immediately available funds, the full amount of the Obligations. The
Guarantor  further  agrees to pay to the Agent and reimburse the Agent for,
on demand  and in  immediately  available  funds,  (a) all fees,  costs and
expenses (including, without limitation, all court costs and attorneys' and
paralegals'  fees, costs and expenses) paid or incurred by the Agent or any
of the  Lenders  in:  (1)  endeavoring  to  collect  all or any part of the
Obligations  from,  or in  prosecuting  any action  against,  the Guarantor
relating  to this  Guaranty;  (2)  taking any  action  with  respect to any
security or collateral securing the Guarantor's obligations hereunder;  and
(3)  preserving,   protecting  or  defending  the   enforceability  of,  or
enforcing,  this Guaranty or their  respective  rights  hereunder (all such
costs and  expenses are  hereinafter  referred to as the  "Expenses").  The
Guarantor  hereby  agrees that this  Guaranty  is an  absolute  guaranty of
payment and is not a guaranty of collection.

                  2. Obligations Unconditional.  Subject to Section 10, the
Guarantor  hereby agrees that its obligations  under this Guaranty shall be
unconditional,   irrespective   of:  (i)  the   validity,   enforceability,
avoidance,  novation or  subordination  of any of the Obligations or any of
the Loan  Documents;  (ii) the  absence of any attempt by, or on behalf of,

<PAGE> 110

any Lender or the Agent to collect, or to take any other action to enforce,
all or any part of the  Obligations  whether from or against the  Borrower,
any other  guarantor  of the  Obligations  or any other  Person;  (iii) the
election  of any  remedy  by, or on behalf of, any Lender or the Agent with
respect to all or any part of the  Obligations;  (iv) the waiver,  consent,
extension,  forbearance  or granting of any indulgence by, or on behalf of,
any Lender or the Agent with  respect to any  provision  of any of the Loan
Documents;  (v) the  election  by, or on behalf  of, any one or more of the
Lenders,  in any proceeding  instituted under Chapter 11 of Title 11 of the
United States Code (11 U.S.C. 101 et seq.) (the "Bankruptcy  Code"), of the
application  of  Section  1111(b)(2)  of  the  Bankruptcy  Code;  (vi)  any
borrowing   or  grant  of  a  security   interest  by  the   Borrower,   as
debtor-in-possession,  under Section 364 of the Bankruptcy  Code; (vii) the
disallowance,  under  Section  502 of the  Bankruptcy  Code,  of all or any
portion of the claims of any of the Lenders or the Agent for  repayment  of
all or any part of the  Obligations  or any  Expenses;  or (viii) any other
circumstance  which  might  otherwise   constitute  a  legal  or  equitable
discharge or defense of the Borrower or the Guarantor.

                  3.  Enforcement;   Application  of  Payments.   Upon  the
occurrence  of a  Default,  the Agent  may  proceed  directly  and at once,
without  notice,  against the  Guarantor  to obtain  performance  of and to
collect and recover the full amount,  or any portion,  of the  Obligations,
without  first  proceeding  against the  Borrower or any other  Person,  or
against any security or collateral for the Obligations. Subject only to the
terms and  provisions  of the Credit  Agreement,  the Agent  shall have the
exclusive  right to determine the  application of payments and credits,  if
any, from the  Guarantor,  the Borrower or from any other Person on account
of the Obligations or any other liability of the Guarantor to any Lender.

                  4. Waivers.  (a) The Guarantor  hereby waives  diligence,
presentment,  demand of payment, filing of claims with a court in the event
of  receivership  or  bankruptcy  of the  Borrower,  protest or notice with
respect  to  the  Obligations,   all  setoffs  and  counterclaims  and  all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest,  notices of dishonor and notices of  acceptance of this
Guaranty, the benefits of all statutes of limitation, and all other demands
whatsoever  (and shall not require that the same be made on the Borrower as
a  condition  precedent  to the  Guarantor's  obligations  hereunder),  and
covenants  that this  Guaranty will not be  discharged,  except by complete
payment  (in  cash)  and  performance  of the  Obligations  and  any  other
obligations  contained herein.  The Guarantor further waives all notices of
the  existence,  creation or incurring of new or  additional  indebtedness,
arising either from additional loans extended to the Borrower or otherwise,
and also  waives all  notices  that the  principal  amount,  or any portion
thereof,  and/or any interest on any instrument or document  evidencing all
or any part of the  Obligations is due,  notices of any and all proceedings
to collect from the maker,  any  endorser or any other  guarantor of all or
any part of the Obligations,  or from any other Person,  and, to the extent
permitted by law, notices of exchange, sale, surrender or other handling of
any security or collateral  given to the Agent to secure  payment of all or
any part of the Obligations.


<PAGE> 111

                  (b) The Guarantor understands that it shall be liable for
the full amount of its liability under this Guaranty,  notwithstanding  the
occurrence of any event impairing the right of the Guarantor,  the Agent or
any of the Lenders to proceed against the Borrower,  any other guarantor or
the Borrower's or such guarantor's property.  The Guarantor agrees that all
of its obligations under this Guaranty  (including its obligation to pay in
full all indebtedness  evidenced by or arising under the Credit  Agreement)
shall  remain  in  full  force  and  effect  without  defense,   offset  or
counterclaim  of any  kind,  notwithstanding  that the  Guarantor's  rights
against the Borrower may be  impaired,  destroyed or otherwise  affected by
reason of any action or inaction on the part of the Agent or any Lender.

                  (c) The Lenders,  either themselves or acting through the
Agent,  are  hereby  authorized,  without  notice  or  demand  and  without
affecting the liability of the Guarantor hereunder,  from time to time, (i)
to renew,  extend,  accelerate or otherwise change the time for payment of,
or other  terms  relating  to,  all or any part of the  Obligations,  or to
otherwise  modify,  amend or change the terms of any of the Loan Documents;
(ii) to  accept  partial  payments  on all or any part of the  Obligations;
(iii) to take and hold security or collateral for the payment of all or any
part of the Obligations,  this Guaranty,  or any other guaranties of all or
any part of the Obligations or other  liabilities of the Borrower,  (iv) to
exchange,  enforce, waive and release any such security or collateral;  (v)
to apply such security or collateral and direct the order or manner of sale
thereof  as in their  discretion  they may  determine;  and (vi) to settle,
release,  exchange,  enforce,  waive,  compromise  or collect or  otherwise
liquidate  all or any part of the  Obligations,  this  Guaranty,  any other
guaranty  of all or any  part  of the  Obligations,  and  any  security  or
collateral  for  the  Obligations  or for  any  such  guaranty.  Any of the
foregoing  may be done in any manner,  without  affecting or impairing  the
obligations of the Guarantor hereunder.

                  5.  Setoff.  At any  time  after  all or any  part of the
Obligations  have  become due and payable (by  acceleration  or  otherwise)
following  the  occurrence  of a  Default,  each  Lender and the Agent may,
without  notice to the  Guarantor and  regardless of the  acceptance of any
security or collateral for the payment hereof, appropriate and apply toward
the payment of all or any part of the Obligations (i) any  indebtedness due
or to become due from such Lender or the Agent to the  Guarantor,  and (ii)
any moneys,  credits or other property  belonging to the Guarantor,  at any
time held by or coming into the  possession  of such Lender or the Agent or
any of their respective affiliates.

                  6. Financial  Information.  The Guarantor  hereby assumes
responsibility  for keeping itself  informed of the financial  condition of
the Borrower and any and all  endorsers  and/or other  guarantors of all or
any part of the Obligations,  and of all other  circumstances  bearing upon
the  risk of  nonpayment  of the  Obligations,  or any part  thereof,  that
diligent inquiry would reveal, and the Guarantor hereby agrees that none of
the Lenders nor the Agent  shall have any duty to advise the  Guarantor  of
information  known  to any of them  regarding  such  condition  or any such

<PAGE> 112

circumstances. In the event any Lender, in its sole discretion,  undertakes
at any time or from time to time to  provide  any such  information  to the
Guarantor,  such Lender shall be under no  obligation  (i) to undertake any
investigation not a part of its regular business routine,  (ii) to disclose
any  information  which such  Lender,  pursuant to  accepted or  reasonable
commercial finance or banking practices, wishes to maintain confidential or
(iii) to make any other or future  disclosures  of such  information or any
other information to the Guarantor.

                  7. No Marshalling;  Reinstatement. The Guarantor consents
and agrees that none of the Lenders nor the Agent nor any Person acting for
or on behalf of the Lenders or the Agent shall be under any  obligation  to
marshall  any assets in favor of the  Guarantor or against or in payment of
any or all of the  Obligations.  The Guarantor  further agrees that, to the
extent that the Borrower,  the  Guarantor or any other  guarantor of all or
any part of the  Obligations  makes a payment or  payments to any Lender or
the Agent,  which payment or payments or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside and/or
required to be repaid to the Borrower, the Guarantor,  such other guarantor
or any other Person, or their respective  estates,  trustees,  receivers or
any other party, including,  without limitation,  the Guarantor,  under any
bankruptcy law, state or federal law, common law or equitable cause,  then,
to the extent of such  payment or  repayment,  the part of the  Obligations
which  has  been  paid,  reduced  or  satisfied  by such  amount  shall  be
reinstated  and  continued  in  full  force  and  effect  as  of  the  time
immediately preceding such initial payment, reduction or satisfaction.

                  8.  Subrogation.  Until the Obligations have been paid in
full, the Guarantor (i) shall have no right of subrogation  with respect to
such  Obligations and (ii) waives any right to enforce any remedy which the
Lenders  or the  Agent  (or any of  them)  now have or may  hereafter  have
against the  Borrower,  any endorser or any guarantor of all or any part of
the Obligations or any other Person,  and the Guarantor  waives any benefit
of, and any right to  participate  in, any security or collateral  given to
the  Lenders  and the  Agent  (or any of them) to  secure  the  payment  or
performance of all or any part of the Obligations or any other liability of
the Borrower to the Lenders.

                  9. Enforcement; Amendments; Waivers. No delay on the part
of any of the  Lenders or the Agent in the  exercise of any right or remedy
arising under this Guaranty,  the Credit  Agreement,  any of the other Loan
Documents or otherwise  with respect to all or any part of the  Obligations
or any other guaranty of or security for all or any part of the Obligations
shall operate as a waiver thereof, and no single or partial exercise by any
such Person of any such right or remedy shall preclude any further exercise
thereof.  No  modification  or  waiver  of any of the  provisions  of  this
Guaranty  shall be  binding  upon  the  Lenders  or the  Agent,  except  as
expressly  set forth in a writing  duly signed and  delivered  by the party
making such  modification  or waiver.  Failure by any of the Lenders or the
Agent at any time or times  hereafter to require strict  performance by the
Borrower,  the  Guarantor,  any other  guarantor  of all or any part of the
Obligations or any other Person of any of the provisions, warranties, terms
and conditions contained in any of the Loan Documents now or at any time or

<PAGE> 113

times hereafter  executed by such Persons and delivered to the Agent or any
Lender  shall not waive,  affect or diminish any right of the Agent or such
Lender at any time or times hereafter to demand strict performance  thereof
and such  right  shall  not be  deemed  to have  been  waived by any act or
knowledge of the Agent or any Lender, or their respective agents,  officers
or employees,  unless such waiver is contained in an instrument in writing,
directed and  delivered to the Borrower or the  Guarantor,  as  applicable,
specifying such waiver,  and is signed by the party or parties necessary to
give such waiver  under the Credit  Agreement.  No waiver of any Default by
the Agent or any Lender shall  operate as a waiver of any other  Default or
the same  Default on a future  occasion,  and no action by the Agent or any
Lender permitted hereunder shall in any way affect or impair the Agent's or
any Lender's  rights and remedies or the obligations of the Guarantor under
this Guaranty.  Any  determination by a court of competent  jurisdiction of
the amount of any principal and/or interest owing by the Borrower to any of
the Lenders shall be conclusive  and binding on the Guarantor  irrespective
of whether  the  Guarantor  was a party to the suit or action in which such
determination was made.

                  10.  Effectiveness;   Termination.  This  Guaranty  shall
become  effective upon its execution by the Guarantor and shall continue in
full force and effect and may not be terminated or otherwise  revoked until
the Obligations shall have been fully paid (in cash) and discharged and the
Credit  Agreement and all financing  arrangements  between the Borrower and
the Lenders shall have been terminated.  If, notwithstanding the foregoing,
the  Guarantor  shall have any right under  applicable  law to terminate or
revoke  this  Guaranty,  the  Guarantor  agrees  that such  termination  or
revocation shall not be effective until a written notice of such revocation
or termination,  specifically referring hereto, signed by the Guarantor, is
actually  received by the Agent. Such notice shall not affect the right and
power of any of the Lenders or the Agent to enforce rights arising prior to
receipt  thereof by the Agent.  If any Lender  grants  loans or takes other
action after the  Guarantor  terminates or revokes this Guaranty but before
the Agent  receives  such  written  notice,  the rights of such Lender with
respect thereto shall be the same as if such  termination or revocation had
not occurred.

                  11.  Successors  and  Assigns.  This  Guaranty  shall  be
binding upon the  Guarantor and upon its  successors  and assigns and shall
inure to the  benefit  of the  Lender  and the Agent  and their  respective
successors and assigns;  all  references  herein to the Borrower and to the
Guarantor  shall be deemed  to  include  their  respective  successors  and
assigns. The successors and assigns of the Guarantor and the Borrower shall
include,  without  limitation,  their  respective  receivers,  trustees  or
debtors-in-possession.  All  references to the singular  shall be deemed to
include the plural where the context so requires.


<PAGE> 114

                  12.  Officer  Authority.  The  Guarantor  authorizes  its
Chairman,  President, and each of its Vice Presidents,  respectively,  from
time to time,  severally and not jointly,  on behalf and in the name of the
Guarantor from time to time in the  discretion of such officer,  to take or
omit to take any and all  action  and to execute  and  deliver  any and all
documents and instruments  which such officer may determine to be necessary
or  desirable  in  relation  to, and  perform  any  obligations  arising in
connection  with,  this Guaranty and any of the  transactions  contemplated
hereby, and, without limiting the generality of the foregoing, hereby gives
to each  such  officer  severally  the  power  and  right on  behalf of the
Guarantor,  without  notice  to or  assent  by  the  Guarantor,  to do  the
following:  (i) to execute  and  deliver any  amendment,  waiver,  consent,
supplement,  other  modification or  reaffirmation  of this Guaranty or any
document  relating  hereto,  and  to  perform  any  obligation  arising  in
connection herewith or therewith; (ii) to sell, transfer,  assign, encumber
or otherwise  deal in or with any  security  for this  Guaranty or any part
thereof;  (iii) to grant liens, security interests or other encumbrances on
or in respect of any property or assets of the Guarantor, whether now owned
or hereafter acquired,  in favor of the Lenders and the Agent; (iv) to send
notices, directions, orders and other communications to any Person relating
to this Guaranty,  or any security for all or any part of the  Obligations;
(v) to take or omit to take any other action contemplated by or referred to
in this Guaranty or any document  covering any security for all or any part
of the  Obligations;  and  (vi) to take or  omit to take  any  action  with
respect  to  this  Guaranty,  any  security  for  all  or any  part  of the
Obligations or any document covering any such security, all as such officer
may  determine  in his or  her  sole  discretion.  The  undersigned  hereby
certifies that he/she has all necessary authority to grant and execute this
Guaranty on behalf of the Guarantor.

                  13.  Governing  Law. This Guaranty has been  delivered by
the parties hereto in Chicago,  Illinois. Any dispute between the Guarantor
and the Lenders or the Agent arising out of or related to the  relationship
established  between them in  connection  with this  Guaranty,  and whether
arising in  contract,  tort,  equity,  or  otherwise,  shall be resolved in
accordance with the internal laws, and not the conflicts of law provisions,
of the State of Illinois.

                  14.  Consent to Jurisdiction; Counterclaims; Forum Non
Conveniens.  (a) Exclusive Jurisdiction.  Except as provided in subsection
(b) of this Section 14, the Agent, on behalf of itself and the Lenders, and
the Guarantor agree that all disputes between them arising out of or related
to the relationship established between them in connection with this Guaranty,
whether arising in contract, tort, equity, or otherwise, shall be resolved
only by state or federal courts located in Chicago, Illinois, but the parties
acknowledge that any appeals from those courts may have to be heard by a court
located outside of Chicago, Illinois.


<PAGE> 115

                  (b) Other Jurisdictions. The Lenders and Agent shall have
the right to proceed against the Guarantor or its real or personal property
in a court in any  location  to enable  the Agent or the  Lenders to obtain
personal  jurisdiction over the Guarantor or to enforce a judgment or other
court order entered in favor of the Agent or the Lenders.

                  (c) Venue;  Forum Non  Conveniens.  Each of the Guarantor
and the Agent,  on behalf of itself and the Lenders,  waives any  objection
that it may have  (including,  without  limitation,  any  objection  to the
laying of venue or based on forum non  conveniens)  to the  location of the
court in which any proceeding is commenced in accordance  with this Section
14.

                  15.  Waiver of Jury Trial.  Each of the Guarantor and the
Agent waives any right to trial by jury in any dispute, whether sounding in
contract, tort, or otherwise,  between the Guarantor and the Lenders or the
Agent arising out of or related to the  transactions  contemplated  by this
Guaranty  or any  other  instrument,  document  or  agreement  executed  or
delivered in  connection  herewith.  Either the  Guarantor or the Agent may
file an original  counterpart  or a copy of this Guaranty with any court as
written  evidence  of the  consent of the  parties  hereto to the waiver of
their right to trial by jury.

                  16. Waiver of Bond.  The Guarantor  waives the posting of
any bond  otherwise  required of the Agent in connection  with any judicial
process or  proceeding to enforce any judgment or other court order entered
in favor of the Agent,  or to enforce by  specific  performance,  temporary
restraining order, or preliminary or permanent injunction, this Guaranty or
any other agreement or document between the Agent and the Guarantor.

                  17.  Advice of  Counsel.  The  Guarantor  represents  and
warrants that it has consulted with its legal counsel regarding all waivers
under this Guaranty, including without limitation those under Section 4 and
Sections 14 through 17 hereof,  that it believes that it fully  understands
all rights  that it is  waiving  and the  effect of such  waivers,  that it
assumes the risk of any misunderstanding  that it may have regarding any of
the  foregoing,  and that it intends that such waivers  shall be a material
inducement  to the  Agent  and  the  Lenders  to  extend  the  indebtedness
guaranteed hereby.

                  18.  Notices.   All  notices  and  other   communications
provided  to any party  hereto  shall be in  writing  or by  facsimile  and
addressed  to such party at its  address  set forth  below or at such other
address as may be  designated by such party in a notice to the other party.
Any notice, if mailed and properly addressed with postage prepaid, shall be
deemed given when received; any notice, if transmitted by facsimile,  shall
be deemed given when transmitted. The addresses for notices are as follows:



<PAGE> 116

         if to the Guarantor, at:

                  ========================
                  ========================

         if to the Agent, at

                  The First National Bank of Chicago
                  One First National Plaza
                  Chicago, Illinois  60670
                  Attention:  Gregory A. Gilbert
                  Telecopy:  312/732-1117

                  19.  Severability.  Wherever possible,  each provision of
this Guaranty  shall be  interpreted  in such manner as to be effective and
valid under  applicable law, but if any provision of this Guaranty shall be
prohibited  by  or  invalid  under  such  law,  such  provision   shall  be
ineffective  to the  extent  of  such  prohibition  or  invalidity  without
invalidating the remainder of such provision or the remaining provisions of
this Guaranty.

                  20.  Merger.  This Guaranty represents the final agreement
of the Guarantor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between the Guarantor and the Agent or any Lender.

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

                  IN WITNESS WHEREOF,  this Guaranty has been duly executed
by the Guarantor as of the day and year first set forth above.


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


                                      By: __________________________
                                      Name: ____________________
                                      Title:


Acknowledged and agreed to as of the ___ day of __________, ____.

THE FIRST NATIONAL BANK OF CHICAGO,
         as Agent


By:___________________________
   Name: Gregory A. Gilbert
   Title:  Vice President


<PAGE> 117

                                EXHIBIT "B"

                                    NOTE
$_________________________                        ____________________, l9

          The undersigned (the "Borrower")  promises to pay to the order of
(the  "Lender") the lesser of the principal sum of Dollars or the aggregate
unpaid  principal  amount of all Loans made by the  Lender to the  Borrower
pursuant to the Credit  Agreement  (as the same may be amended or modified,
the "Agreement") hereinafter referred to, in immediately available funds at
the main office of The First National Bank of Chicago in Chicago, Illinois,
as Agent,  together with interest on the unpaid  principal amount hereof at
the rates and on the dates set forth in the  Agreement.  The Borrower shall
pay the  principal of and accrued and unpaid  interest on the Loans in full
on the Facility Termination Date.

         The  Lender  shall,  and is hereby  authorized  to,  record on the
schedule  attached  hereto,  or to otherwise  record in accordance with its
usual practice, the date and amount of each Loan and the date and amount of
each principal payment hereunder.

         This Note is one of the Notes issued  pursuant to, and is entitled
to the benefits of, the Amended and Restated Credit Agreement,  dated as of
May 28,  1997,  among the  Borrower,  The First  National  Bank of Chicago,
individually  and as Agent,  and the lenders named  therein,  including the
Lender,  to  which  Agreement,  as it may be  amended  from  time to  time,
reference  is hereby  made for a  statement  of the  terms  and  conditions
governing this Note,  including the terms and  conditions  under which this
Note may be prepaid or its maturity  date  accelerated.  Capitalized  terms
used herein and not  otherwise  defined  herein are used with the  meanings
attributed to them in the Agreement.

                           U.S. HOME CORPORATION

                           By:__________________________________
                           Print Name:__________________________
                           Title:_______________________________





<PAGE> 118


                SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                     TO
                       NOTE OF U.S. HOME CORPORATION
                          DATED ____________, 199_


         Principal           Maturity           Principal
         Amount of          of Interest           Amount         Unpaid
Date        Loan              Period               Paid          Balance






<PAGE> 119

                                 Exhibit C


KSFH&H Draft 5-19-97

                                                 (212)-836-8000
May _____,1997

To each of the lenders party to the 
Amended and Restated Credit Agreement
referred to below and The First National Bank
of Chicago, as Agent
c/o The First National Bank of Chicago
One First National Plaza
Chicago, Illinois  60670

Ladies and Gentlemen:

     We have acted as counsel to U.S. Home Corporation, a Delaware corporation
(the "Borrower"), in connection with the preparation, execution and delivery
of the Amended and Restated Credit Agreement, dated as of May ___, 1997 (the
"Amended and Restated Credit Agreement"), among the Borrower, the lenders
names therein and The First National Bank of Chicago, as Agent.

     We have examined such documents, instruments, records and certificates of
public officials and officers of the Borrower, and have reviewed such questions
of law, as we have deemed necessary or appropriate as a basis for the opinions,
we have relied upon such documents, instruments, certificates and records

     Based on the foregoing, and subject to the limitations, qualifications
and exceptions set forth herein, we are of the opinion that:

     1.   The Borrower has the requisite corporate power and authority to
execute and deliver the Amended and Restated Credit Agreement and has taken
all necessary corporate action to authorize the execution and delivery of
the Amended and Restated Credit Agreement.

     2.   The Borrower has duly executed and delivered the Amended and
Restated Credit Agreement.

     The opinions set forth above are subject to the following assumptions and
qualifications:

     We have assumed the Borrower is a corporation validly existing and in
good standing under the laws of Delaware.  We have also assumed the 
genuineness of all signatures, other than those of officers of the Borrower,
the authenticity of all documents submitted to us as originials, and the
conformity with the original documents of all documents submitted to us as
reproduced copies, and the authenticity of all such latter documents.

     Our opinions are limited to the General Corporation Law of the State
of Delaware.

     Our opinions are rendered solely for your information in connection
with the foregoing, and may not be relied upon by any other persons or for
any other purpose without our prior written consent.

                              Yours truly,




<PAGE> 120

                                EXHIBIT "D"
                           INTENTIONALLY DELETED


<PAGE> 121
                                EXHIBIT "E"


May _______, 1997

The First National Bank of Chicago, as
    Agent for itself and various Lenders
One First National Plaza
Chicago, Illinois   60670

               Re:  Loan to U.S. Home Corporation by First National Bank
                    of Chicago and other lenders (collectively "Lenders")

Gentlemen/Ladies:

          We have served as special local counsel to U.S. Home Corporation,
a Delaware corporation ("Borrower"), in connection with it entering into an
amended and restated credit agreement with Lenders.

          We have examined an executed copy of the Amended and Restated
Credit Agreement with Borrower and Lenders dated as of May _____, 1997
(the "Amended and Restated Credit Agreement").

          In rendering this opinion, we have examined no other documents
or instruments other than the Amended and Restated Credit Agreement and
have undertaken no investigation (and disclaim any duty to investigate)
and have relied on the accuracy of the representations and warranties
contained in the Amended and Restated Credit Agreement.

          For the Purposes of this opinion we have assumed that:

          (a)  Borrower has been duly formed and is validly existing in its
state of incorporation.

          (b)  The execution and delivery of the Amended and Restated
Credit Agreement and the performance by Borrower of its obligations thereunder
and the transactions contemplated therein are within the authority of Borrower
and have been duly authorized by all necessary or appropriate action.

          (c)  The Amended and Restated Credit Agreement has been duly
executed and delivered by Borrower.

          (d)  The execution and delivery of the Amended and Restated Credit
Agreement by the Lenders and the performance by the Lenders of their
obligations thereunder, are within the powers of the Lenders, have been
duly authorized by all necessary or appropriate action, and are in compliance
with all laws and regulations to which the Lenders are subject.

          (e)  Lenders are duly organized, validly existing and are either
(i) in good standing in the State of Illinois, or (ii) are not requited to
be so qualified, in the State of Illinois.


<PAGE> 122

          (f)  The Amended and Restated Credit Agreement will be governed
by and construed in accordance with the internal laws (as distinguished
from the choices of law rules) of the State of Illinois.

          (g)  All signatures of the Amended and Restated Credit Agreement
are genuine.

          (h)  Full and adequate consideration has been extended to Borrower
for the execution, delivery and performance of the Amended and Restated
Credit Agreement.

          (i)  All material terms and conditions of the relationship
between Lenders and the Borrower are correctly and completely reflected in
the Amended and Restated Credit Agreement.

          We understand the foregoing assumptions are acceptable to you
and to the other Lenders.  Based upon the foregoing, but subject to the    
assumptions, qualifications and limitations set forth herein, we are of the
opinion that the Amended and Restated Credit Agreement is the valid and
binding obligation of Borrower enforceable against Borrower in accordance
with its terms.

          Our opinion is qualified as follows:

          A.  Your ability to enforce the Amended and Restated Credit
Agreement may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws now or 
hereafter in effect relating to or affecting creditors' rights generally.

          B.  Enforcement of your rights and remedies may be limited by
general principles of equity, regardless of whether such enforcement is
considered in a proceeding at law or in equity, and in this regard we have 
assumed that Lenders at all times will exercise their rights and remedies
under the Amended and Restated Credit Agreement in good faith and in
circumstances and a manner which are commercially reasonable.

          C.  We do not hereby express an opinion as to the strict
enforceability of each and every remedy and provision of the Amended and
Restated Credit Agreement in accordance with its terms under any or all
facts and circumstances.  It is our opinion, however, that the remedies
and provisions contained in the Amended and Restated Credit Agreement
that would be enforceable are sufficient as a whole, subject to the
qualifications and limitations elsewhere herein stated, for the practical
realization of the essential legal benefits intended thereby.


<PAGE> 123

          D.  If, and to the extent, the Amended and Restated Credit
Agreement is construed to provide or permit the payment of interest on
interest, such provisions may be unenforceable under Bowman v. Neely,
137 Ill. 443 (1891) and other cases to the same effect. While such cases
have not been overruled and it is possible that a court would follow such
precedent, we believe that such cases are unlikely to be held applicable
today in a commercial loan transaction, but we render no opinion with 
respect to such issue.

          E.  We render no opinion whatever as to the adequacy of 
consideration extended to Borrower for the execution and delivery of the
Amended and Restated Credit Agreement and the effects thereof, whether under
Illinois common law, or any state or federal fraudulent transfer statutes.

          F.  We express no opinion as to the rights of the Agent and other
Lenders inter se.

          G.  We express no opinion as to provisions in the Amended and 
Restated Credit Agreement which: (l) waive the right to a jury trial; (2)
purport to establish nonculpability for disbursement on a letter of credit
upon a nonconforming documentary draw; (3) broadly waive any and all
suretyship defenses, including the defense of the statute of limitations;
or (4) attempt to provide for the right of the Lenders to recover lost
profits.

          Our opinion is limited to the laws of the United States and the
laws of the State of Illinois in effect on the date hereof as they presently
apply.  We shall have no continuing obligations to inform you of changes
in law or fact subsequent to the date hereof or of facts of which we become
aware after the date hereof.

          This opinion is limited to the matters set forth herein.  No
opinion may be inferred or implied beyond those expressly contained herein.
This opinion is rendered solely for your benefit and that of the other
Lenders.  No other person or entity shall be entitled to rely on any
matter set forth herein without the express written consent of the 
undersigned.

                         Very truly yours,



                         LORD, BISSELL & BROCK


<PAGE> 124

                                EXHIBIT "F"


                           INTENTIONALLY DELETED


<PAGE> 125

                                EXHIBIT "G"

         AMENDED AND RESTATED CONTRIBUTION AND INDEMNITY AGREEMENT


                  THIS  AMENDED AND  RESTATED  CONTRIBUTION  AND  INDEMNITY
AGREEMENT  (the  "Agreement")  is made as of May 28, 1997, by and among the
undersigned (collectively, the "Guarantors").

                            W I T N E S S E T H:

                  WHEREAS,  concurrently  with the  execution  and delivery
hereof,  U.S. Home  Corporation (the "Borrower") has executed and delivered
that certain Amended and Restated Credit Agreement (as such document may be
modified and amended from time to time, the "Credit  Agreement"),  dated as
of the date hereof, providing for Loans to be made from time to time by the
Lenders  identified in the Credit  Agreement to the Borrower in a principal
amount not to exceed  $180,000,000  (capitalized terms used herein, but not
defined  herein,  shall have the  meanings  provided  for such terms in the
Credit Agreement);

                  WHEREAS,  the Guarantors have each executed and delivered
a Guaranty,  pursuant to which the  Guarantors  guaranty the payment of all
Obligations; and

                  WHEREAS,  the  Guarantors  are  parties  to that  certain
Contribution  and  Indemnity  Agreement  dated as of September 29, 1995, as
amended by First Amendment to Contribution and Indemnity Agreement dated as
of September 25, 1996, by Second  Amendment to  Contribution  and Indemnity
Agreement  dated  as  of  December  6,  1996  and  by  Third  Amendment  to
Contribution  and  Indemnity  Agreement  dated as of April  30,  1997  (the
"Original Contribution Agreement"); and

                  WHEREAS, the Lenders have required as a condition,  among
others, to the making of the Loans, that the Guarantors execute and deliver
this  Agreement  for the purpose of amending  and  restating  the  Original
Contribution Agreement in its entirety.

                  NOW THEREFORE,  for good and valuable consideration,  the
receipt and  sufficiency of which are hereby  acknowledged,  the Guarantors
hereby  covenant  and agree that the  Original  Contribution  Agreement  is
amended and restated in its entirety as follows:


                  1.  Allocable Amount.  As used in this Agreement, the
"Allocable Amount" of any Guarantor, as of any date of determination, shall
be determined to be an amount equal to ninety-five percent (95%) of the
maximum amount which could then be claimed against such Guarantor without
rendering such claim voidable or avoidable under Section 548of Chapter 11
of the United States Federal Bankruptcy Code (11 U.S.C. Sec. 101 et seq.)
or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.


<PAGE> 126

                  2.  Allocable Share. As used in this Agreement,  the term
"Allocable  Share" means, at the relevant time of calculation  with respect
to  any  Guarantor,   a  fraction,  the  numerator  of  which  equals  such
Guarantor's  Allocable  Amount  and the  denominator  of which  equals  the
Allocable Amounts of all the Guarantors.

                  3.  Contribution and  Indemnification.  (a) To the extent
that a payment is made on the  Obligations  by a  Guarantor  (a  "Guarantor
Payment")  which,  taking into account all other  Guarantor  Payments  then
previously or concurrently  made by or attributable to any other Guarantor,
exceeds such Guarantor's Allocable Share of all such Guarantor Payments (as
such share would then be  calculated  immediately  prior to such  Guarantor
Payment),  then  such  Guarantor  shall be  entitled  to  contribution  and
indemnification from, and to be reimbursed by, each of the other Guarantors
for the  amount  of such  excess,  pro rata  based  upon  their  respective
Allocable Shares as in effect immediately prior to such Guarantor Payment.

                  (b) Notwithstanding the foregoing, the Guarantors may, as
among themselves,  provide for an allocation  consistent with the foregoing
which requires the Guarantors that received a direct financial benefit from
the  Obligations in respect of which a payment by a Guarantor has been made
and for which  contribution is sought to make contribution  payments before
the  Guarantors  that  did not  receive  a  direct  financial  benefit  are
obligated to make contribution payments.

                  (c)  The  Guarantors   acknowledge  that  the  rights  of
contribution  and  indemnification  hereunder shall  constitute an asset in
favor of any Guarantor to which such  contribution and  indemnification  is
owing.

                  4.  Purpose of Agreement.  This Agreement is intended only
to define the relative rights of the Guarantors, and nothing set forth in
this Agreement is intended to or shall impair the obligations of any of the
Guarantors with respect to the Obligations, the Guaranty or any of the other
Loan Documents.

                  5.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.


<PAGE> 127

                  IN WITNESS WHEREOF, the Guarantors have executed this
Agreement as of the day and year first above written.

                           CANTERBURY CORPORATION
                           COUNTRYPLACE GOLF COURSE, INC.
                           E.M.J.V. CORP.
                           HOMECRAFT CORPORATION
                           IMPERIAL HOMES CORPORATION
                           LODGE HOLDINGS CORP.
                           OCEANPOINTE DEVELOPMENT CORPORATION
                           ORRIN THOMPSON CONSTRUCTION COMPANY
                           ORRIN THOMPSON HOMES CORP.
                           PAPARONE CONSTRUCTION COMPANY
                           PRAIRIE LAKE CORPORATION
                           RUTTENBERG HOMES, INC. (Florida)
                           RUTTENBERG HOMES, INC. (Texas)
                           STONEY CORPORATION
                           USH CAPITAL CORPORATION
                           USH EQUITY CORPORATION
                           USH (WEST LAKE), INC.
                           U.S. HOME CORPORATION OF NEW YORK
                           U.S. HOME OF ARIZONA CONSTRUCTION CO.
                           U.S. HOME OF COLORADO REAL ESTATE, INC.
                           U.S. HOME REALTY CORPORATION
                           U.S. HOME REALTY, INC. (Maryland)
                           U.S. HOME REALTY, INC. (Texas)
                           U.S. HOME AND DEVELOPMENT CORPORATION
                           U.S.H. CORPORATION OF NEW YORK
                           U.S.H. LOS PRADOS, INC.


                           By:      ______________________________
                                    Thomas A. Napoli
                                    Vice President




<PAGE> 128


                                Exhibit "H"

                AMENDED AND RESTATED SUBORDINATION AGREEMENT

         This Amended and Restated Subordination Agreement (as the same may
from  time to time be  amended,  modified  or  restated,  the  "Agreement")
entered  into by and  between  the  parties  listed  on  Schedule  I hereto
(together with their successors and assigns,  individually,  a "Noteholder"
and  collectively,  the  "Noteholders"),  and The  First  National  Bank of
Chicago,  as agent (the "Agent") for itself and the other "Senior  Lenders"
(as defined below).

                            W I T N E S S E T H:

         WHEREAS,  the  Noteholders  are  subsidiaries  of  Borrower,   and
Borrower  may now or  hereafter  be indebted to the  Noteholders  (all such
indebtedness or any notes or other instruments evidencing such indebtedness
being herein referred to as the "Subordinated Notes");

         WHEREAS,  the Borrower  has entered into that certain  Amended and
Restated Credit  Agreement of even date herewith (as the same may from time
to time be amended, modified, supplemented or restated, in whole or in part
and without limitation as to amount,  terms,  conditions or covenants,  the
"Credit Agreement") with the Agent and the Senior Lenders;

         WHEREAS, Borrower is presently indebted to the Senior Lenders as a
result of the  advance  of monies  and  other  extensions  of credit by the
Senior Lenders to Borrower pursuant to the Credit Agreement;

         WHEREAS,  the Noteholders  acknowledge that the loan or advance of
monies or other  extensions  of any  financial  accommodation  or credit to
Borrower by the Senior Lenders is of value to the Noteholders; and

         WHEREAS,  the Noteholders  have heretofore  executed and delivered
that certain Subordination  Agreement,  dated as of September 29, 1995 (the
"Original Subordination Agreement").

         NOW, THEREFORE,  for good and valuable  consideration,  receipt of
which is hereby acknowledged by the Noteholders, and in order to induce the
Senior Lenders, now or from time to time hereafter, to make loans or extend
credit  or any  other  financial  accommodation  to or for the  benefit  of
Borrower; or to grant such renewals, increases or extensions thereof as the
Senior Lenders may deem advisable;  and to better secure the Senior Lenders
in respect of the foregoing, each of the Noteholders hereby agrees with the
Agent and the Senior Lenders that the Original  Subordination  Agreement is
hereby amended and restated in its entirety as hereinafter set forth.


<PAGE> 129

         1. Certain  Defined Terms.  In addition to the terms defined above
and elsewhere in this Agreement, the following terms used in this Agreement
shall have the following meanings,  applicable both to the singular and the
plural forms of the terms defined:

         As used in this Agreement:

         "Borrower" shall mean U.S. Home Corporation,  a corporation or any
successor or assign, including,  without limitation, a receiver, trustee or
debtor-in-possession.

         "Senior  Debt"  shall mean all  "Obligations"  (as  defined in the
Credit  Agreement).  Senior  Debt  shall be  considered  to be  outstanding
whenever any Senior Lender has an outstanding commitment therefor.

         "Senior  Lenders"  shall mean each of the  financial  institutions
from time to time party to the Credit  Agreement  and each other  holder of
the Senior  Debt and shall  include  the  "Issuing  Bank"  under the Credit
Agreement.

         "Subordinated  Debt"  shall  mean all (a) all  principal  of,  and
premium,  if any, and interest on, the Subordinated Notes and (b) all other
indebtedness,  fees, expenses,  obligations and liabilities of the Borrower
(or any other person,  firm,  partnership or corporation for the benefit of
Borrower) to any Noteholders, whether now existing or hereafter incurred or
created,  in each case,  whether such amounts are due or not due, direct or
indirect,  absolute or contingent;  provided,  however,  Subordinated  Debt
shall  include  only such  amounts  in excess  of  $10,000,000  at any time
outstanding.

         2.   Standby;   Subordination;   Subrogation.   The   payment  and
performance of the Subordinated  Debt is hereby  subordinated to the Senior
Debt  and,  except  as set  forth in  Sections  3 and 4 below,  none of the
Noteholders  will accelerate,  ask,  demand,  sue for, take or receive from
Borrower,  by setoff or in any other  manner,  the whole or any part of the
Subordinated  Debt,  including,  without  limitation,  the  taking  of  any
negotiable instruments evidencing such amounts, nor any security for any of
the Subordinated  Debt,  unless and until all of the Senior Debt shall have
been fully and  indefeasibly  paid and  satisfied in cash and all financing
arrangements  among  Borrower,  the Agent and the Senior  Lenders have been
terminated.  Each of the Noteholders also hereby agrees that, regardless of
whether the Senior Debt is secured or unsecured,  the Senior  Lenders shall
be subrogated for the Noteholders with respect to the  Noteholders'  claims
against Borrower and the Noteholders' rights, liens and security interests,
if any, in any of Borrower's assets or any other assets securing the Senior
Debt and the proceeds  thereof  until all of the Senior Debt has been fully
and indefeasibly paid and satisfied in cash and all financing  arrangements
among Borrower, the Agent and the Senior Lenders have been terminated.


<PAGE> 130

         3. Permitted Payments. Notwithstanding the provisions of Section 2
of this  Agreement,  until the occurrence of a "Default" (as defined in the
Credit  Agreement),  and  provided  that (i) there shall not then exist any
breach  of this  Agreement  by any of the  Noteholders  which  has not been
waived, in writing,  by the Agent, and (ii) the payment described below, if
made,  would not give rise to the  occurrence  of a Default  or the  Senior
Lenders' making an advance to Borrower in excess of amounts  otherwise then
available to Borrower under the terms of the Credit Agreement, Borrower may
pay to the Noteholders,  and the Noteholders may accept from Borrower,  any
and all payments of the Subordinated Debt ("Permitted Payments"),  it being
understood and agreed by the Noteholders that  Subordinated Debt may not be
modified or amended in a manner that  adversely  affects the Senior Lenders
without  the prior  written  consent  of the Agent on behalf of the  Senior
Lenders.

         4.  Enforcement  Rights.  Each of the  Noteholders,  prior  to the
indefeasible  payment in full of the Senior Debt and the termination of all
financing arrangements among Borrower and the Senior Lenders, shall have no
right  to  enforce  any  claim  with  respect  to  the  Subordinated  Debt,
including,  without limitation, any Permitted Payment, or otherwise to take
any action  against  Borrower  or  Borrower's  property  without the Senior
Lenders' prior written consent.

         5. Liens;  Permitted Transfers;  Permitted Change of Control. Each
of the Noteholders  hereby represents as of the date hereof that it has not
been granted or obtained  any liens or security  interests in any assets of
the  Borrower or any other assets  securing  the Senior  Debt.  Each of the
Noteholders agrees that, without the prior written consent of the Agent and
each of the  Senior  Lenders,  no  Noteholder  shall  take any  liens on or
security  interests  in  any  assets  of  the  Borrower.   The  Noteholders
acknowledge  and agree that, to the extent the terms and provisions of this
Agreement are inconsistent  with the  Subordinated  Notes, the Subordinated
Notes shall be deemed to be subject to this Agreement.  Notwithstanding any
provision contained in the Subordinated Notes accelerating the Subordinated
Debt or requiring a mandatory  prepayment  or put of all or any part of the
Subordinated  Debt upon the occurrence of a default or other event, no such
default  or  other  event  shall  result  in any such  acceleration  of the
Subordinated  Debt,  mandatory  prepayment with respect to the Subordinated
Debt or put of any  portion  of the  Subordinated  Debt,  all of which  are
hereby waived by the  Noteholders,  unless and until all of the Senior Debt
shall have been fully and  indefeasibly  paid and satisfied in cash and all
financing  arrangements  among  Borrower,  the Agent and the Senior Lenders
have been terminated.

         6. Subordinated Debt Owed Only to the Noteholders. The Noteholders
warrant and represent that (a) the Noteholders have not previously assigned
any  interest  in  the  Subordinated  Debt  or  any  security  interest  in
connection  therewith,  if any;  (b) no other party owns an interest in the
Subordinated Debt or security therefor other than the Noteholders  (whether
as joint holders of the Subordinated Debt, participants or otherwise);  and
(c) the entire Subordinated Debt is owing only to the Noteholders.  Each of
the Noteholders  covenants that the entire Subordinated Debt shall continue
to be  owing  only to the  Noteholders  and  all  security  therefor  shall
continue  to be held  solely  for the  benefit  of the  Noteholders  unless
assigned in accordance with the terms of this Agreement.


<PAGE> 131

         7. Senior  Lender  Priority.  In the event of the  occurrence of a
Default (as defined in the Credit  Agreement)  (i) the Agent and the Senior
Lenders shall be entitled to receive  indefeasible  payment in full in cash
of any and all of the Senior  Debt prior to the  payment of all or any part
of the Subordinated  Debt, and (ii) any payment or distribution of any kind
or character, whether in cash, securities or other property, which shall be
payable  or  deliverable  upon  or  with  respect  to  any  or  all  of the
Subordinated  Debt  shall  be paid  or  delivered  directly  to  Agent  for
application  on any of the Senior  Debt,  due or not due,  until the Senior
Debt shall have first been fully and  indefeasibly  paid and  satisfied  in
cash.

         8. Grant of Authority to Agent.  In the event of the occurrence of
any event  described  in Section 7 above,  and in order to enable the Agent
and the Senior  Lenders to enforce  their  rights  hereunder  in any of the
aforesaid actions or proceedings,  Agent is hereby  irrevocably  authorized
and empowered, in the Agent's discretion, to file, make and present for and
on behalf of the  Noteholders  such  proofs of claims  against  Borrower on
account of the Subordinated Debt or other motions or pleadings as the Agent
may deem  expedient or proper and to vote such proofs of claims in any such
proceeding  and to  receive  and  collect  any and all  dividends  or other
payments or  disbursements  made  thereon in whatever  form the same may be
paid or  issued  and to apply the same on  account  of any  portion  of the
Senior Debt.  In voting such proofs of claim in any  proceeding,  the Agent
may act in a manner consistent with the sole interest of the Senior Lenders
and the Agent shall have no duty to take any action to optimize or maximize
the  Noteholders'  recovery  with  respect  to its claim.  The  Noteholders
irrevocably authorize and empower the Agent to demand, sue for, collect and
receive  each of the  aforesaid  payments  and  distributions  described in
Section 7 above and give  acquittance  therefor and to file claims and take
such  other  actions,  in  the  Agent's  own  name  or in the  name  of the
Noteholders or otherwise,  as the Agent may deem necessary or advisable for
the enforcement of this Agreement. Each of the Noteholders will execute and
deliver  to the  Agent  such  powers  of  attorney,  assignments  and other
instruments or documents,  including notes and stock certificates (together
with such  assignments or endorsements as the Agent shall deem  necessary),
as may be  requested  by the  Agent in order to  enable  the  Agent  and to
enforce any and all claims of the Agent and the Senior Lenders upon or with
respect to any or all of the  Subordinated  Debt and to collect and receive
any and all payments and distributions  which may be payable or deliverable
at any time upon or with  respect  to the  Subordinated  Debt,  all for the
Agent's and the Senior Lenders' own benefit.

         9.  Payments  Received by the  Noteholders.  Except for  Permitted
Payments  received by the Noteholders  prior to the occurrence of a Default
as  provided  in Section 3 above,  should any  payment or  distribution  or
security or  instrument or proceeds  thereof be received by any  Noteholder
upon or with respect to the Subordinated  Debt or any other  obligations of
Borrower to any  Noteholder  prior to the  indefeasible  payment in full in
cash  of  all  of  the  Senior  Debt  and   termination  of  all  financing
arrangements  among  Borrower,  the  Agent  and  the  Senior  Lenders,  the
Noteholders  shall receive and hold the same in trust, as trustee,  for the
benefit of the Agent and the Senior Lenders,  and shall  forthwith  deliver

<PAGE> 132

the same to the Agent,  in  precisely  the form  received  (except  for the
endorsement  or  assignment  of  the  Noteholders  where  necessary),   for
application on any of Senior Debt, due or not due, and, until so delivered,
the same shall be held in trust by such  Noteholder  as the property of the
Agent and the Senior Lenders. In the event of the failure of any Noteholder
to make any such  endorsement or assignment to the Agent, the Agent, or any
of its officers or employees,  is hereby irrevocably authorized to make the
same.

         10. Continuing  Nature of  Subordination.  This Agreement shall be
effective and may not be terminated or otherwise  revoked by any Noteholder
until the Senior Debt shall have been indefeasibly paid in full in cash and
satisfied and all financing  arrangements among Borrower, the Agent and the
Senior Lenders have been  terminated.  In the event the  Noteholders  shall
have any right under  applicable  law otherwise to terminate or revoke this
Agreement  which right cannot be waived,  such  termination  or  revocation
shall  not be  effective  until  written  notice  of  such  termination  or
revocation,  signed by any such  Noteholder,  is  actually  received by the
Agent's  officer  responsible  for  such  matters.  In the  absence  of the
circumstances  described in the immediately  preceding sentence,  this is a
continuing  agreement of subordination and the Agent and the Senior Lenders
may continue, at any time and without notice to the Noteholders,  to extend
credit  or other  financial  accommodations  and loan  monies to or for the
benefit of Borrower on the faith  hereof.  Any  termination  or  revocation
described  hereinabove  shall not affect this  Agreement in relation to (a)
any of the Senior  Debt which  arose or was  committed  to prior to receipt
thereof or (b) any of the Senior Debt created  after  receipt  thereof,  if
such Senior Debt was  incurred  through  readvances  by the Senior  Lenders
pursuant  to the Senior  Lenders'  financing  arrangements  with  Borrower,
including,  without  limitation,  advances or  readvances,  in an aggregate
outstanding  amount not to exceed the sum of the Aggregate  Commitment  (as
defined in the Credit  Agreement as in effect on the date of receipt of any
such  notice and as may be  increased  pursuant  to the  provisions  of the
Credit  Agreement).  If, in reliance on this  Agreement,  any Senior Lender
makes  loans or other  advances  to or for the benefit of Borrower or takes
other action under the Credit Agreement after such aforesaid termination or
revocation by the  Noteholder but prior to the receipt by the Agent of said
written  notice as set forth above,  the rights of the Senior Lenders shall
be the same as if such termination or revocation had not occurred.

         11.  Additional  Agreements  between the Agent, the Senior Lenders
and Borrower.  The Agent or any Senior Lender, at any time and from time to
time,  either before or after any such  aforesaid  notice of termination or
revocation,  may enter into such  agreement or agreements  with Borrower as
the Agent or any  Senior  Lender  may deem  proper,  extending  the time of
payment of or renewing or otherwise altering the terms, including,  without
limitation  increasing the principal amount thereof,  of all or any portion
of the Senior Debt or obtaining security for any or all of the Senior Debt,
and may exchange, sell, release,  surrender or otherwise deal with any such
security, without in any way thereby impairing or affecting this Agreement.


<PAGE> 133

         12. Noteholders'  Waivers.  All of the Senior Debt shall be deemed
to have  been  made or  incurred  in  reliance  upon  this  Agreement.  The
Noteholders  expressly  waive all notice of the  acceptance by the Agent or
any  Senior  Lender  of the  subordination  and  other  provisions  of this
Agreement and all other notices not specifically  required  pursuant to the
terms of this Agreement  whatsoever,  and the  Noteholders  expressly waive
reliance by the Agent and the Senior  Lenders  upon the  subordination  and
other agreements as herein provided.  The Noteholders further agree that in
the event Borrower  consents or fails to object to a proposed  retention of
such assets (or a portion  thereof)  by the Agent or the Senior  Lenders in
satisfaction  of the Senior Debt (or a portion  thereof),  the  Noteholders
hereby  consent  to such  proposed  retention  regardless  of  whether  the
Noteholders  are  provided  with  notice of such  proposed  retention.  The
Noteholders  agree that the  Noteholders  will not interfere with or in any
manner oppose a disposition  of any assets  securing the Senior Debt by the
Agent or any Senior Lender.  The  Noteholders  agree that neither the Agent
nor any  Senior  Lender has made any  warranties  or  representations  with
respect  to  the  due  execution,   legality,  validity,   completeness  or
enforceability of the Credit Agreement, or the collectibility of the Senior
Debt, that the Agent and the Senior Lenders shall be entitled to manage and
supervise  their loans to Borrower in accordance  with  applicable  law and
their usual  practices,  modified  from time to time as deemed  appropriate
under the circumstances, without regard to the existence of any rights that
any  Noteholder  may now or  hereafter  have in or to any of the  assets of
Borrower,  and that Agent and the Senior Lenders shall have no liability to
the  Noteholders  for, and waive any claim which the Noteholders may now or
hereafter  have against,  the Agent or any Senior Lender arising out of any
and all actions which the Agent or any Senior Lender, in good faith,  takes
or  omits  to take  with  respect  to the  Credit  Agreement  or any  other
agreement  related  thereto or to the  collection of the Senior Debt or the
valuation, use, protection or release of any security for the Senior Debt.

         13.  Invalidated  Payments.  To the extent that the Senior Lenders
receive  payments on, or proceeds of collateral  for, the Senior Debt which
are  subsequently  invalidated,  declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee,  receiver or any other
party  under any  bankruptcy  law,  state or federal  law,  common  law, or
equitable cause,  then, to the extent of such payment or proceeds received,
the Senior Debt, or part thereof, intended to be satisfied shall be revived
and  continue in full force and effect as if such  payments or proceeds had
not been received by the Senior Lenders.

         14.  Bankruptcy  Issues.  Each of the Noteholders  agrees that the
Senior  Lenders,  or any  one of  them  may  consent  to  the  use of  cash
collateral  or  provide  financing  to  the  Borrower  on  such  terms  and
conditions  and in such  amounts  as the  Senior  Lenders,  in  their  sole
discretion,  may decide and that, in connection  with such cash  collateral
usage or such  financing,  the  Borrower  (or a trustee  appointed  for the
estate of Borrower) may grant to the Agent or the Senior  Lenders liens and
security  interests  upon all  assets  of the  Borrower,  which  liens  and

<PAGE> 134

security  interests  (i) shall secure  payment of all Senior Debt  (whether
such Senior Debt arose  prior to the filing of the  petition  for relief or
arise thereafter);  and (ii) shall be superior in priority to the liens and
security  interests,  if any,  held by the  Noteholders  on the  assets  of
Borrower.  All  allocations of payments  between the Senior Lenders and the
Noteholders  shall,  subject to any court order,  continue to be made after
the filing of a petition under the  Bankruptcy  Code on the same basis that
the payments were to be allocated prior to the date of such filing. Each of
the Noteholders agrees that it will not object to or oppose a sale or other
disposition of any assets securing the Senior Debt (or any portion thereof)
free and  clear  of  security  interests,  liens  or  other  claims  of the
Noteholders,  if any, under Section 363 of the Bankruptcy Code or any other
provision of the  Bankruptcy  Code if the Senior  Lenders have consented to
such sale or disposition of such assets.  In the event that the Noteholders
have or at any time acquire any security for the Subordinated Debt, each of
the  Noteholders  agrees not to assert  any right it may have to  "adequate
protection" of its interest in such security in any  bankruptcy  proceeding
and agrees  that it will not seek to have the  automatic  stay  lifted with
respect to such security,  without the prior written  consent of the Senior
Lenders.  Each of the Noteholders  waives any claim it may now or hereafter
have  arising  out of  the  Senior  Lender's  election,  in any  proceeding
instituted  under Chapter 11 of the Bankruptcy  Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing or grant of
a security  interest under Section 364 of the Bankruptcy  Code by Borrower,
as debtor in possession.  Each of the Noteholders agrees not to initiate or
prosecute or encourage any other person to initiate or prosecute any claim,
action or other proceeding (i) challenging the enforceability of any Senior
Lender's  claim,  (ii)  challenging  the  enforceability  of any  liens  or
security  interests in assets  securing the Senior Debt or (iii)  asserting
any claims which the Borrower may hold with respect to the Lender.

         15. Agent's and Senior Lenders' Waivers. No waiver shall be deemed
to be made by the Agent or any Senior  Lender of any of the  Agent's or the
Senior  Lenders'  rights  hereunder,  unless  the same  shall be in writing
signed on behalf of the Agent or the Senior  Lenders,  as  applicable,  and
each  waiver,  if any,  shall be a waiver only with respect to the specific
instance involved and shall in no way impair the rights of the Agent or any
Senior Lender or the  obligations  of the  Noteholders to the Agent and the
Senior Lenders in any other respect at any other time.

         16. Information  Concerning  Financial Condition of Borrower.  The
Noteholders  hereby  assume  responsibility  for  keeping  informed  of the
financial  condition of  Borrower,  any and all  endorsers  and any and all
guarantors of the Senior Debt and of all other  circumstances  bearing upon
the risk of  nonpayment  of the Senior Debt and/or  Subordinated  Debt that
diligent  inquiry  would  reveal,  and the  Noteholders  hereby  agree that
neither the Agent nor any Senior  Lender  shall have any duty to advise the
Noteholders  of  information  known  to  the  Agent  or any  Senior  Lender
regarding such condition or any such circumstances.  The Noteholders hereby
agree  that all  payments  received  by any Senior  Lender may be  applied,
reversed, and reapplied,  in whole or in part, to any portion of the Senior
Debt, as the Senior Lenders, in their sole discretion, deem appropriate and

<PAGE> 135

assent to any  extension  or  postponement  of the time of  payment  of the
Senior  Debt  or to any  other  indulgence  with  respect  thereto,  to any
substitution,  exchange  or  release  of  collateral  which may at any time
secure the Senior Debt and to the addition or release of any other party or
person primarily or secondarily liable therefor.

         17. CONSENT TO JURISDICTION;  WAIVERS.  THE NOTEHOLDERS CONSENT TO
THE  JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN COOK COUNTY,
ILLINOIS,  AND WAIVE  PERSONAL  SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENT  THAT  ALL SUCH  SERVICE  OF  PROCESS  BE MADE BY  REGISTERED  MAIL
DIRECTED TO THE NOTEHOLDERS AT THE ADDRESS STATED BELOW AND SERVICE SO MADE
SHALL BE DEEMED TO BE  COMPLETED  THREE (3) DAYS  AFTER THE SAME SHALL HAVE
BEEN POSTED AS AFORESAID.  THE  NOTEHOLDERS  WAIVE ANY OBJECTION BASED UPON
FORUM NON CONVENIENS,  AND ANY OBJECTION TO VENUE OF ANY ACTION  INSTITUTED
HEREUNDER.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,  WHETHER SOUNDING IN CONTRACT,
TORT,  OR  OTHERWISE,  ARISING  OUT  OF,  CONNECTED  WITH,  RELATED  TO  OR
INCIDENTAL TO THE  RELATIONSHIP  ESTABLISHED  AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER INSTRUMENT,  DOCUMENT OR AGREEMENT  EXECUTED OR
DELIVERED IN  CONNECTION  HEREWITH.  EACH OF THE PARTIES  HERETO AGREES AND
CONSENTS  THAT ANY SUCH CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL  COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES  HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.  NOTHING IN THIS SECTION 17 SHALL AFFECT THE RIGHT OF THE
AGENT OR ANY  SENIOR  LENDER TO SERVE  LEGAL  PROCESS  IN ANY OTHER  MANNER
PERMITTED  BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY SENIOR  LENDER TO
BRING ANY ACTION OR PROCEEDING  AGAINST THE  NOTEHOLDERS OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION.

         18. Notices. All notices and other communications  provided to any
party hereto shall be in writing or by facsimile and addressed or delivered
to such party at its address  set forth  below or at such other  address as
may be designated by such party in a notice to the other party. Any notice,
if mailed and  property  addressed  with postage  prepaid,  shall be deemed
given when received;  any notice,  if  transmitted  by facsimile,  shall be
deemed given when transmitted. The addresses are as follows:

         (i)  If to the Agent or any Senior Lender at:

                  The First National Bank of Chicago
                  One First National Plaza
                  Chicago, IL  60670
                  Attn:  Gregory A. Gilbert
                  Telecopy: (312) 732-1117

         (ii)  If to any Noteholder at:

                  c/o U.S. Home Corporation
                  1800 West Loop South
                  Houston, TX  77252
                  Attn:  Thomas A. Napoli
                  Telecopy: (713) 877-2451


<PAGE> 136

         19.  Governing Law. This Agreement has been delivered and accepted
at and shall be deemed to have been made at Chicago, Illinois, and shall be
interpreted,   and  the  rights  and  obligations  of  the  parties  hereto
determined,  in  accordance  with the laws and  decisions  of the  State of
Illinois,  shall be  immediately  binding  upon the  Noteholders  and their
successors  and assigns,  and shall inure to the benefit of the  successors
and assigns of the Agent and the Senior Lenders.

         20.  Severability.  Wherever  possible,  each  provision  of  this
Agreement  shall be interpreted in such manner as to be effective and valid
under  applicable  law,  but if any  provision of this  Agreement  shall be
prohibited by or invalid under  applicable  law,  such  provision  shall be
ineffective  to the  extent  of such  prohibition  or  invalidity,  without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

         21.  Section Titles.  The section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.

         22.  Authority.  The signatories to this Agreement on behalf of the
Noteholders hereby certify that they have all necessary authority to grant
the subordination evidenced hereby and execute this Agreement on behalf of
the Noteholders.

         23.  Full  Agreement.  This  Agreement  constitutes  the  complete
agreement  between the parties with respect to the subject  matter  hereof.
Any document,  instrument or agreement  executed by the parties hereto with
respect to the financing  which is the subject of this Agreement  predating
this  Agreement  shall be  merged  with and  into  and  superseded  by this
Agreement.


<PAGE> 137






         IN WITNESS WHEREOF,  this Subordination  Agreement has been signed
this 28th day of May, 1997.

                       NOTEHOLDERS:

                       U.S. HOME MORTGAGE CORPORATION
                       C.M. CORP.
                       USH II CORPORATION
                       USHAC, INC.
                       FIDELITY GUARANTY AND ACCEPTANCE
                       CORPORATION
                       U.S. HOME ACCEPTANCE CORPORATION
                       U.S. INSURORS, INC.
                       SAN FELIPE INDEMNITY CO., LTD.
                       U.S.H. INDEMNITY CO., LTD.
                       TEXAS-WIDE GENERAL AGENCY, INC.

                       By: ___________________________
                           Name:
                           Title:




Acknowledged and accepted in
Chicago, Illinois this
28th day of May, 1997

The First National Bank of Chicago,
as Agent

By:  ____________________________
     Gregory A. Gilbert
     Vice President


<PAGE> 138

                                                     EXHIBIT "J"

                                               COMPLIANCE CERTIFICATE


To:      The Lender parties to the
         Agreement Described Below

         This Compliance  Certificate is furnished pursuant to that certain
Amended and Restated Credit Agreement dated as of May 28, 1997 (as amended,
modified,  renewed or extended from time to time,  the  "Agreement")  among
U.S. Home Corporation, and the Lenders party thereto and The First National
Bank of Chicago, as Agent for the Lenders. Unless otherwise defined herein,
capitalized  terms used in this  Compliance  Certificate  have the meanings
ascribed thereto in the Agreement.

         THE UNDERSIGNED HEREBY CERTIFIES THAT:

         1.  I am the duly elected                       of the Borrower;

         2. I have  reviewed the terms of the Agreement and I have made, or
have  caused to be made  under my  supervision,  a  detailed  review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;

         3. The examinations described in paragraph 2 did not disclose, and
I have no  knowledge  of, the  existence  of any  condition  or event which
constitutes  a Default  or  Unmatured  Default  during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below; and

         4.  Schedule  I attached  hereto  sets  forth  financial  data and
computations evidencing compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.

         Described  below are the  exceptions,  if any,  to  paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has  existed  and the action  which the  Borrower  has  taken,  is
taking, or proposes to take with respect to each such condition or event:



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




<PAGE> 139

         The foregoing  certifications,  together with the computations set
forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this day of , 19 .






<PAGE> 140

                                  [SAMPLE]

      SCHEDULE I TO COMPLIANCE CERTIFICATE TO COMPLIANCE CERTIFICATE

                     Schedule of Compliance as of                 with
                            Provisions _________ of and of____________
                               the Agreement


<PAGE> 141

                                EXHIBIT "K"

                            ASSIGNMENT AGREEMENT
This  Assignment Agreement  (this  "Assignment   Agreement") between 
_______________________________(the  "Assignor") _______________________
and (the  "Assignee") is dated___________________________ as of , 19 . 
The parties hereto agree as follows:


         1.  PRELIMINARY  STATEMENT.  The Assignor is a party to an Amended
and  Restated  Credit  Agreement  (which,  as it may be amended,  modified,
renewed  or  extended  from  time to  time is  herein  called  the  "Credit
Agreement")  described in Item 1 of Schedule 1 attached  hereto  ("Schedule
1").  Capitalized  terms used herein and not otherwise defined herein shall
have the meanings attributed to them in the Credit Agreement.


         2.  ASSIGNMENT  AND  ASSUMPTION.  The  Assignor  hereby  sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor,  an interest in and to the Assignor's  rights and obligations
under the Credit Agreement such that after giving effect to such assignment
the Assignee shall have purchased pursuant to this Assignment Agreement the
percentage  interest  specified in Item 3 of Schedule 1 of all  outstanding
rights  and  obligations  under  the  Credit  Agreement   relating  to  the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents. The
aggregate  Commitment  (or Loans,  if the  applicable  Commitment  has been
terminated)  purchased by the Assignee  hereunder is set forth in Item 4 of
Schedule 1.


         3. EFFECTIVE DATE. The effective date of this Assignment Agreement
(the  "Effective  Date") shall be the later of the date specified in Item 5
of Schedule 1 or two Business Days (or such shorter period agreed to by the
Agent) after a Notice of  Assignment  substantially  in the form of Exhibit
"I"  attached  hereto  has been  delivered  to the  Agent.  Such  Notice of
Assignment must include any consents  required to be delivered to the Agent
by Section 15.3.1 of the Credit  Agreement.  In no event will the Effective
Date  occur if the  payments  required  to be made by the  Assignee  to the
Assignor on the Effective  Date under  Sections 4 and 5 hereof are not made
on the proposed  Effective  Date.  The Assignor will notify the Assignee of
the  proposed  Effective  Date no later than the  Business Day prior to the
proposed  Effective  Date. As of the Effective Date, (i) the Assignee shall
have the rights and  obligations  of a Lender under the Loan Documents with
respect to the rights and  obligations  assigned to the Assignee  hereunder
and (ii) the Assignor shall  relinquish its rights and be released from its
corresponding  obligations  under the Loan  Documents  with  respect to the
rights and obligations assigned to the Assignee hereunder.



<PAGE> 142

         4.  PAYMENTS  OBLIGATIONS.  On and after the Effective  Date,  the
Assignee  shall be  entitled  to  receive  from the Agent all  payments  of
principal,  interest and fees with respect to the interest assigned hereby.
The Assignee  shall advance funds directly to the Agent with respect to all
Loans and  reimbursement  payments made on or after the Effective Date with
respect to the interest assigned hereby. [In consideration for the sale and
assignment of Loans hereunder,  (i) the Assignee shall pay the Assignor, on
the Effective Date, an amount equal to the principal  amount of the portion
of all Floating Rate Loans assigned to the Assignee hereunder and (ii) with
respect to each  Eurodollar  Loan made by the  Assignor and assigned to the
Assignee  hereunder  which is outstanding on the Effective Date, (a) on the
last day of the Interest Period therefor or (b) on such earlier date agreed
to by the  Assignor  and the  Assignee or (c) on the date on which any such
Eurodollar  Loan becomes due (by  acceleration  or  otherwise) (the  date as
described  in the  foregoing  clauses  (a),  (b) or (c)  being  hereinafter
referred to as the "Payment Date"),  the Assignee shall pay the Assignor an
amount equal to the principal amount of the portion of such Eurodollar Loan
assigned to the Assignee  which is  outstanding on the Payment Date. If the
Assignor and the Assignee  agree that the Payment Date for such  Eurodollar
Loan shall be the  Effective  Date,  they shall agree to the interest  rate
applicable  to the portion of such Loan  assigned  hereunder for the period
from  the  Effective  Date  to  the  end of the  existing  Interest  Period
applicable to such  Eurodollar  Loan (the "Agreed  Interest  Rate") and any
interest  received by the  Assignee in excess of the Agreed  Interest  Rate
shall be remitted to the  Assignor.  In the event  interest  for the period
from the  Effective  Date to but not including the Payment Date is not paid
by the Borrower with respect to any Eurodollar Loan sold by the Assignor to
the Assignee hereunder, the Assignee shall pay to the Assignor interest for
such period on the portion of such  Eurodollar Loan sold by the Assignor to
the  Assignee  hereunder  at the  applicable  rate  provided  by the Credit
Agreement.  In the  event a  prepayment  of any  Eurodollar  Loan  which is
existing on the Payment  Date and  assigned by the Assignor to the Assignee
hereunder  occurs after the Payment Date but before the end of the Interest
Period  applicable to such Eurodollar Loan, the Assignee shall remit to the
Assignor  the excess of the  prepayment  penalty  paid with  respect to the
portion of such Eurodollar Loan assigned to the Assignee hereunder over the
amount which would have been paid if such prepayment penalty was calculated
based on the Agreed Interest Rate. The Assignee will also promptly remit to
the  Assignor  (i) any  principal  payments  received  from the Agent  with
respect to Eurodollar  Loans prior to the Payment Date and (ii) any amounts
of interest on Loans and fees  received  from the Agent which relate to the
portion of the Loans  assigned to the Assignee  hereunder for periods prior
to the  Effective  Date, in the case of Floating Rate Loans or fees, or the
Payment Date, in the case of Eurodollar  Loans,  and not previously paid by
the  Assignee  to the  Assignor.]*  In the event that either  party  hereto
receives any payment to which the other party hereto is entitled under this
Assignment  Agreement,  then the party receiving such amount shall promptly
remit it to the other party hereto.

*Each  Assignor may insert its standard  payment  provisions in lieu of the
payment terms included in this Exhibit.
<PAGE> 143

         5. FEES PAYABLE BY THE ASSIGNEE.  [The  Assignee  shall pay to the
Assignor a fee on each day on which a payment of interest  or  [commitment]
fees is made  under  the  Credit  Agreement  with  respect  to the  amounts
assigned  to the  Assignee  hereunder  (other than a payment of interest or
commitment  fees for the period prior to the Effective Date or, in the case
of Eurodollar  Loans,  the Payment Date, which the Assignee is obligated to
deliver to the Assignor  pursuant to Section 4 hereof).  The amount of such
fee shall be the difference between (i) the interest or fee, as applicable,
paid with  respect to the amounts  assigned to the Assignee  hereunder  and
(ii) the  interest or fee, as  applicable,  which would have been paid with
respect to the amounts assigned to the Assignee  hereunder if each interest
rate was of 1% less than the  interest  rate paid by the Borrower or if the
commitment fee was of 1% less than the commitment fee paid by the Borrower,
as applicable. In addition, the Assignee agrees to pay % of the recordation
fee  required to be paid to the Agent in  connection  with this  Assignment
Agreement.]**

**The parties may substitute other terms with respect to fees.


         6. REPRESENTATIONS OF THE ASSIGNOR;  LIMITATIONS ON THE ASSIGNOR'S
LIABILITY.  The Assignor  represents  and warrants that it is the legal and
beneficial  owner of the interest  being  assigned by it hereunder and that
such  interest  is free  and  clear of any  adverse  claim  created  by the
Assignor.  It is understood  and agreed that the  assignment and assumption
hereunder  are made without  recourse to the Assignor and that the Assignor
makes no other  representation  or  warranty  of any kind to the  Assignee.
Neither the Assignor nor any of its officers, directors,  employees, agents
or attorneys  shall be  responsible  for (i) the due  execution,  legality,
validity, enforceability, genuineness, sufficiency or collectability of any
Loan  Document,  including  without  limitation,   documents  granting  the
Assignor  and the  other  Lenders  a  security  interest  in  assets of the
Borrower or any Guarantor,  (ii) any representation,  warranty or statement
made  in or in  connection  with  any  of the  Loan  Documents,  (iii)  the
financial  condition or  creditworthiness of the Borrower or any Guarantor,
(iv) the  performance of or compliance  with any of the terms or provisions
of any of the Loan Documents,  (v) inspecting any of the Property, books or
records  of the  Borrower  or any  Guarantor,  (vi) any  mistake,  error of
judgment,  or action  taken or omitted to be taken in  connection  with the
Loans or the Loan Documents.

         7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that
it has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed  appropriate  to make its own credit  analysis
and decision to enter into this Assignment  Agreement,  (ii) agrees that it
will,  independently  and without  reliance upon the Agent, the Assignor or
any other Lender and based on such  documents and  information  as it shall
deem appropriate at the time,  continue to make its own credit decisions in
taking or not taking action under the Loan  Documents,  (iii)  appoints and
authorizes  the Agent to take such  action  as agent on its  behalf  and to
exercise such powers under the Loan Documents as are delegated to the Agent

<PAGE> 144

by  the  terms  thereof,  together  with  such  powers  as  are  reasonably
incidental  thereto,  (iv) agrees that it will perform in  accordance  with
their terms all of the obligations which by the terms of the Loan Documents
are required to be performed by it as a Lender, (v) agrees that its payment
instructions and notice  instructions are as set forth in the attachment to
Schedule 1, (vi) confirms that none of the funds,  monies,  assets or other
consideration being used to make the purchase and assumption  hereunder are
"plan  assets" as defined  under  ERISA and that its rights,  benefits  and
interests in and under the Loan  Documents  will not be "plan assets" under
ERISA,  [and (vii)  attaches the forms  prescribed by the Internal  Revenue
Service of the United  States  certifying  that the Assignee is entitled to
receive payments under the Loan Documents  without deduction or withholding
of any United States federal income taxes].*


*to be inserted if the Assignee is not  incorporated  under the laws of the
United States, or a state thereof.

         8.  INDEMNITY.  The  Assignee  agrees  to  indemnify  and hold the
Assignor   harmless  against  any  and  all  losses,   costs  and  expenses
(including, without limitation, reasonable attorneys' fees) and liabilities
incurred by the Assignor in  connection  with or arising in any manner from
the  Assignee's  non-performance  of the  obligations  assumed  under  this
Assignment Agreement.

         9. SUBSEQUENT ASSIGNMENTS.  After the Effective Date, the Assignee
shall have the right pursuant to Section 14.3.1 of the Credit  Agreement to
assign the rights  which are  assigned  to the  Assignee  hereunder  to any
entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms and  conditions of the Loan  Documents or any law,
rule, regulation,  order, writ, judgment, injunction or decree and that any
consent  required  under the terms of the Loan  Documents has been obtained
and (ii) unless the prior written consent of the Assignor is obtained,  the
Assignee is not  thereby  released  from its  obligations  to the  Assignor
hereunder, if any remain unsatisfied,  including,  without limitation,  its
obligations under [Sections 4, 5 and 8] hereof.

         10.  CHANGES  IN  AGGREGATE  COMMITMENT.  If any  reduction  in or
increase  of the  Aggregate  Commitment  occurs  between  the  date of this
Assignment  Agreement  and the  Effective  Date,  the  percentage  interest
specified  in Item 3 of  Schedule 1 shall  remain the same,  but the dollar
amount  purchased shall be  recalculated  based on the reduced or increased
Aggregate Commitment.

         11.  ENTIRE AGREEMENT.  This Assignment Agreement and the attached
Notice of Assignment embody the entire agreement and understanding between
the parties hereto and supersede all prior agreements and understandings
between the parties hereto relating to the subject matter hereof.


<PAGE> 145

         12.  GOVERNING LAW.  This Assignment Agreement shall be governed by
the internal law, and not the law of conflicts, of the State of Illinois.

         13.  NOTICES.  Notices shall be given under this Assignment Agreement
in the manner set forth in the Credit Agreement.  For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.


         IN  WITNESS  WHEREOF,   the  parties  hereto  have  executed  this
Assignment Agreement by their duly authorized officers as of the date first
above written.

                             [NAME OF ASSIGNOR]

                              By:

                              Title:




                             [NAME OF ASSIGNEE]

                              By:
                              Title:




<PAGE> 146

                                 SCHEDULE 1
                          to Assignment Agreement

1.       Description and Date of Credit Agreement:

2.       Date of Assignment Agreement:               , 19

3.       Amounts (As of Date of Item 2 above):


         a.       Total of Commitment
                  under Credit
                  Agreement

         b.       Assignee's Percentage
                  purchased under the
                  Assignment
                  Agreement*

         c.       Amount of Assigned Share
                  purchased under the
                  the Assignment
                  Agreement


4.       Assignee's Aggregate
         Commitment Amount
         Purchased Hereunder:             $__________

5.       Proposed Effective Date:                             _____________


Accepted and Agreed:

[NAME OF ASSIGNOR]                                [NAME OF ASSIGNEE]
 By:                                               By:
 Title:                                            Title:




 *                Percentage taken to 10 decimal places


<PAGE> 147

              Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

                Attach Assignor's Administrative Information
                Sheet, which must include notice address for
                       the Assignor and the Assignee



<PAGE> 148

                                EXHIBIT "I"
                          to Assignment Agreement

                                   NOTICE
                               OF ASSIGNMENT

                                                __________________ , 19__


To:             [NAME OF BORROWER]*



                [NAME OF AGENT]




From:    [NAME OF ASSIGNOR] (the "Assignor")

         [NAME OF ASSIGNEE] (the "Assignee")


                1.  We  refer  to  that  Credit   Agreement   (the  "Credit
Agreement")  described in Item 1 of Schedule 1 attached  hereto  ("Schedule
1").  Capitalized  terms used herein and not otherwise defined herein shall
have the meanings attributed to them in the Credit Agreement.

                2. This Notice of Assignment  (this  "Notice") is given and
delivered  to  ****[the  Borrower  and]****  the Agent  pursuant to Section
15.3.2 of the Credit Agreement.

                3. The  Assignor  and the  Assignee  have  entered  into an
Assignment  Agreement,  dated as of , 19 (the  "Assignment"),  pursuant  to
which, among other things, the Assignor has sold,  assigned,  delegated and
transferred to the Assignee,  and the Assignee has purchased,  accepted and
assumed from the Assignor the  percentage  interest  specified in Item 3 of
Schedule 1 of all  outstandings,  rights and  obligations  under the Credit
Agreement  relating to the  facilities  listed in Item 3 of Schedule 1. The
Effective Date of the  Assignment  shall be the later of the date specified
in Item 5 of Schedule 1 or two  Business  Days (or such  shorter  period as
agreed to by the Agent)  after this Notice of  Assignment  and any consents
and fees  required  by Sections  15.3.1 and 15.3.2 of the Credit  Agreement
have been  delivered to the Agent,  provided that the Effective  Date shall
not occur if any  condition  precedent  agreed to by the  Assignor  and the
Assignee has not been satisfied.



<PAGE> 149

                4.  The  Assignor  and  the  Assignee  hereby  give  to the
Borrower and the Agent notice of the assignment and delegation  referred to
herein.  The Assignor will confer with the Agent before the date  specified
in Item 5 of  Schedule 1 to  determine  if the  Assignment  Agreement  will
become effective on such date pursuant to Section 3 hereof, and will confer
with the Agent to determine the Effective Date pursuant to Section 3 hereof
if it  occurs  thereafter.  The  Assignor  shall  notify  the  Agent if the
Assignment  Agreement does not become  effective on any proposed  Effective
Date as a result of the failure to satisfy the conditions  precedent agreed
to by the  Assignor  and the  Assignee.  At the  request of the Agent,  the
Assignor will give the Agent written  confirmation  of the  satisfaction of
the conditions precedent.

                5. The Assignor or the Assignee shall pay to the Agent on
or before the Effective Date the processing fee of $4,000 required by
Section 15.3.2 of the Credit Agreement.

                6. If Notes are  outstanding  on the  Effective  Date,  the
Assignor  and the  Assignee  request and direct that the Agent  prepare and
request the  Borrower to execute and deliver new Notes or, as  appropriate,
replacements notes, to the Assignor and the Assignee.  The Assignor and, if
applicable,  the  Assignee  each agree to deliver to the Agent the original
Note received by it from the Borrower upon its receipt of a new Note in the
appropriate amount.

                7. The Assignee advises the Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.

                8. The Assignee hereby represents and warrants that none of
the funds,  monies,  assets or other  consideration  being used to make the
purchase  pursuant to the  Assignment  are "plan  assets" as defined  under
ERISA and that its rights,  benefits,  and  interests in and under the Loan
Documents will not be "plan assets" under ERISA.

                9. The  Assignee  authorizes  the Agent to act as its Agent
under the Loan Documents in accordance with the terms thereof. The Assignee
acknowledges that the Agent has no duty to supply  information with respect
to the Borrower or the Loan  Documents  to the Assignee  until the Assignee
becomes a party to the Credit Agreement.*

*May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.

NAME OF ASSIGNOR                               NAME OF ASSIGNEE

By:                                            By:


Title:                                         Title:



<PAGE> 150


ACKNOWLEDGED [AND CONSENTED TO]      ACKNOWLEDGED [AND CONSENTED TO]
 BY [NAME OF AGENT]                  BY [NAME OF BORROWER]

By:                                  By:

Title:                               Title:


               [Attach photocopy of Schedule 1 to Assignment]


<PAGE> 151

                                EXHIBIT "L"

                         COMMITMENT AND ACCEPTANCE


         This Commitment and Acceptance (this  "Commitment and Acceptance")
dated  as of , 19 , is  entered  into  among  the  parties  listed  on  the
signature  pages  hereof.  Capitalized  terms used herein and not otherwise
defined  herein  shall have the meanings  attributed  to them in the Credit
Agreement (as defined below).

                           PRELIMINARY STATEMENTS

         Reference  is made to that  certain  Amended and  Restated  Credit
Agreement dated as of May 28, 1997, by and among U.S. Home Corporation,  as
Borrower,  The First  National Bank of Chicago,  as Agent,  and the Lenders
that are  parties  thereto  (as the same may from time to time be  amended,
modified,  supplemented  or  restated,  in  whole  or in part  and  without
limitation  as to amount,  terms,  conditions  or  covenants,  the  "Credit
Agreement").

         Pursuant to Section 2.5(b) of the Credit  Agreement,  the Borrower
has requested an increase in the Aggregate Commitment from $_______________
to  $__________________.  Such increase in the  Aggregate  Commitment is to
become  effective on  _______________  __, ____ (the "Increase Date") [THIS
DATE IS TO BE MUTUALLY  AGREED UPON BY THE BORROWER,  THE ACCEPTING  LENDER
AND THE AGENT IN ACCORDANCE  WITH THE  PROVISIONS OF SECTION  2.5(d) OF THE
CREDIT  AGREEMENT].  In  connection  with such  requested  increase  in the
Aggregate Commitment,  the Borrower,  the Agent and _________________  (the
"Accepting Lender") hereby agree as follows:

         1.  ACCEPTING  LENDER'S  COMMITMENT.  Effective as of the Increase
Date, [the Accepting Lender shall become a party to the Credit Agreement as
a  Lender,  shall  have  all of the  rights  and  obligations  of a  Lender
thereunder,  shall  agree to be bound  Lender by the  terms and  provisions
thereof and shall thereupon have a Commitment under and for purposes of the
Credit  Agreement  in and  amount  equal  to the]  [the  Commitment  of the
Accepting  Lender  under  the  Credit  Agreement  shall be  increased  from
$___________________  to the]  amount  set  forth  opposite  the  Accepting
Lender's name on the signature pages hereof.



<PAGE> 152
                                   

         2.  REPRESENTATIONS  AND  AGREEMENTS  OF  ACCEPTING  LENDER.  The
Accepting  Lender (i)  confirms  that it has  received a copy of the Credit
Agreement,  together with copies of the financial  statements  requested by
the Accepting  Lender and such other  documents and  information  as it has
deemed  appropriate  to make its own credit  analysis and decision to enter
into  this   Commitment   and   Acceptance,   (ii)  agrees  that  it  will,
independently  and without  reliance upon the Agent or any Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit  decisions  in taking or not taking  action
under the Loan  Documents,  (iii) appoints and authorizes the Agent to take
such  action as agent on its behalf and to exercise  such powers  under the
Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably  incidental thereto, (iv) agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of the Loan  Documents  are  required to be  performed by it as a
Lender,  (v) agrees that its payment  instructions and notice  instructions
are as set forth in the  attachment  to Schedule 1, (vi) confirms that none
of the funds, monies,  assets or other consideration being used to make the
commitment  and  acceptance  hereunder  are "plan  assets" as defined under
ERISA and that its rights,  benefits  and  interests  in and under the Loan
Documents  will not be "plan assets" under ERISA,  [and (vii)  attaches the
forms  prescribed  by the  Internal  Revenue  Service of the United  States
certifying that the Accepting  Lender is entitled to receive payments under
the Loan  Documents  without  deduction or withholding of any United States
federal income taxes].*

*Paragraph 2 to be inserted only if the Accepting Lender
is not already a party to the Credit  Agreement prior to the Increase Date,
and subparagraph 2(vii) to be inserted only if such Accepting Lender is not
incorporated under the laws of the United States, or a state thereof.]

         3.  REPRESENTATION OF BORROWER.  The Borrower hereby represents and
warrants that as of the date hereof and as of the Increase Date, no event or
condition shall have occurred and then be continuing which constitutes a 
Default or Unmatured Default.

         4.  GOVERNING LAW.  This Commitment and Acceptance shall be governed
by the internal law, and not the law of conflicts, of the State of Illinois.

         5.  NOTICES.  For the purpose of notices to be given under the Credit
Agreement, the address of the Accepting Lender (until notice of a change is
delivered) shall be the address set forth in Schedule 1.


<PAGE> 153



         IN  WITNESS  WHEREOF,   the  parties  hereto  have  executed  this
Assignment Agreement by their duly authorized officers as of the date first
above written.


                                               BORROWER:

                                               U.S. HOME CORPORATION

                                               By:
                                               Name:
                                               Title:

                                               AGENT:

                                               [NAME OF AGENT],
                                                 as Agent

                                               By:
                                               Name:
                                               Title:

                                               ACCEPTING LENDER:

                                               [NAME OF ACCEPTING LENDER]

                                               By:
                                               Name:
                                               Title:



<PAGE> 154





                                 SCHEDULE 1
                        to Commitment and Acceptance

1.       Attach Accepting Lender's Administrative Information Sheet, 
         which must include its payment instructions and notice
         address.



<PAGE> 155

                               SCHEDULE I-A
                                GUARANTORS

                           CANTERBURY CORPORATION
                           COUNTRYPLACE GOLF COURSE, INC.
                           E.M.J.V. CORP.
                           HOMECRAFT CORPORATION
                           IMPERIAL HOMES CORPORATION
                           LODGE HOLDINGS CORP.
                           OCEANPOINTE DEVELOPMENT CORPORATION
                           ORRIN THOMPSON CONSTRUCTION COMPANY
                           ORRIN THOMPSON HOMES CORP.
                           PAPARONE CONSTRUCTION COMPANY
                           PRAIRIE LAKE CORPORATION
                           RUTTENBERG HOMES, INC. (Florida)
                           RUTTENBERG HOMES, INC. (Texas)
                           STONEY CORPORATION
                           USH CAPITAL CORPORATION
                           USH EQUITY CORPORATION
                           USH (WEST LAKE), INC.
                           U.S. HOME CORPORATION OF NEW YORK
                           U.S. HOME OF ARIZONA CONSTRUCTION CO.
                           U.S. HOME OF COLORADO REAL ESTATE, INC.
                           U.S. HOME REALTY CORPORATION
                           U.S. HOME REALTY, INC. (Maryland)
                           U.S. HOME REALTY, INC. (Texas)
                           U.S. HOME AND DEVELOPMENT CORPORATION
                           U.S.H. CORPORATION OF NEW YORK
                           U.S.H. LOS PRADOS, INC.
<PAGE> 156
                               SCHEDULE I-B
                        NON-BORROWING SUBSIDIARIES

                       U.S. HOME MORTGAGE CORPORATION
                       C.M. CORP.
                       USH II CORPORATION
                       USHAC, INC.
                       FIDELITY GUARANTY AND ACCEPTANCE
                       CORPORATION
                       U.S. HOME ACCEPTANCE CORPORATION
                       U.S. INSURORS, INC.
                       SAN FELIPE INDEMNITY CO., LTD.
                       U.S.H. INDEMNITY CO., LTD.
                       TEXAS-WIDE GENERAL AGENCY, INC.


<PAGE> 157

                               SCHEDULE 2.20


                           Fees Payable Pursuant
                             to Section 2.20(b)



Lender                                                      Fee

The First National Bank of Chicago                        0.0011667

Credit Lyonnais New York Branch                           0.0011667

Guaranty Federal Bank, F.S.B.                             0.0011667

Bank One, Arizona, NA                                     0.0008333

Comerica Bank                                             0.0005