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


                 AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
                                      among


                           FOSTER WHEELER CORPORATION,


                        THE GUARANTORS SIGNATORY HERETO,


                          THE LENDERS SIGNATORY HERETO,


                              BANK OF AMERICA, N.A.


                            as Administrative Agent,



                FIRST UNION NATIONAL BANK, as Syndication Agent,
                                       and


                   ABN AMRO Bank N.V., as Documentation Agent


                                   arranged by

       BANC OF AMERICA SECURITIES LLC, as Lead Arranger and Book Manager,


                                       and

                ABN AMRO BANK N.V., FIRST UNION CAPITAL MARKETS,


                    GREENWICH NATWEST STRUCTURED FINANCE INC.


                     AND TORONTO DOMINION BANK, as Arrangers


                        --------------------------------
                          DATED AS OF DECEMBER 1, 1999
                        --------------------------------
<PAGE>
                              TABLE OF CONTENTS

SECTION                            HEADING                                  PAGE

Recitals.......................................................................1

ARTICLE I                  DEFINITIONS; CONSTRUCTION...........................2

       Section 1.01.       Certain Definitions.................................2
       Section 1.02.       Construction ......................................21
       Section 1.03.       Accounting Principles..............................22
       Section 1.04.       Optional Increase of the Commitments...............23
       Section 1.05.       Utilization of Commitments in Foreign Currencies ..24

ARTICLE II                 THE CREDITS........................................24

       Section 2.01.       Revolving Credit Loans.............................24
       Section 2.02.       Fees; Reduction of the Committed Amounts ..........25
       Section 2.03.       Competitive Bid Loans..............................27
       Section 2.04.       Maximum Aggregate Amount of Loans and
                              Letters of Credit ..............................34
       Section 2.05.       Swingline Advances.................................34
       Section 2.06.       Letters of Credit..................................37
       Section 2.06.01.    Letter of Credit Sublimit..........................37
       Section 2.06.02.    Issuance, Amendment and Renewal of Letters
                              of Credit ......................................39
       Section 2.06.03.    Risk Participations, Drawings and Reimbursements...41
       Section 2.06.04.    Repayment of Participations .......................42
       Section 2.06.05.    Role of the LC Issuer..............................43
       Section 2.06.06.    Obligations Absolute...............................44
       Section 2.06.07.    Cash Collateral Pledge.............................44
       Section 2.06.08.    Uniform Customs and Practice.......................45
       Section 2.07.       Making of Loans....................................45
       Section 2.08.       Interest Rates.....................................46
       Section 2.09.       Conversion or Renewal of Interest Rate Options.....50
       Section 2.10.       Prepayments Generally..............................50
       Section 2.11.       Optional Prepayments; Mandatory Prepayments........51
       Section 2.12.       Interest Payment Dates.............................52
       Section 2.13.       Pro Rata Treatment.................................52
       Section 2.14.       Additional Compensation in Certain Circumstances...52
       Section 2.15.       Payments Generally; Interest on Overdue Amounts....55
       Section 2.16        Taxes..............................................56
       Section 2.17.       Funding by Branch, Subsidiary or Affiliate.........58
       Section 2.18.       Extension of Revolving Credit Maturity Date........59

ARTICLE III                REPRESENTATIONS AND WARRANTIES ....................60

       Section 3.01.       Corporate Status...................................60
       Section 3.02.       Corporate Power and Authorization..................60

                                      -i-
<PAGE>
       Section 3.03.       Execution and Binding Effect.......................61
       Section 3.04.       Governmental Approvals and Filings.................61
       Section 3.05.       Absence of Conflicts...............................61
       Section 3.06.       Audited Financial Statements.......................62
       Section 3.07.       Absence of Undisclosed Liabilities.................62
       Section 3.08.       Absence of Material Adverse Changes................62
       Section 3.09.       Accurate and Complete Disclosure...................62
       Section 3.10.       Margin Regulations.................................62
       Section 3.11.       Subsidiaries.......................................63
       Section 3.12.       Partnerships, etc..................................63
       Section 3.13.       Litigation.........................................63
       Section 3.14.       Absence of Events of Default.......................63
       Section 3.15.       Absence of Other Defaults..........................63
       Section 3.16.       Insurance..........................................64
       Section 3.17.       Title to Property..................................64
       Section 3.18.       Intellectual Property..............................64
       Section 3.19.       Taxes..............................................64
       Section 3.20.       Employee Benefits..................................65
       Section 3.21.       Environmental Matters..............................66
       Section 3.22.       Year 2000..........................................67

ARTICLE IV                 CONDITIONS OF LENDING..............................67

       Section 4.01.       Conditions to Initial Loans or Letter of Credit....67
       Section 4.02.       Conditions to All Loans and Letters of Credit......68

ARTICLE V                  AFFIRMATIVE COVENANTS..............................69

       Section 5.01.       Basic Reporting Requirements.......................69
       Section 5.02.       Insurance..........................................72
       Section 5.03.       Payment of Taxes and Other Potential Charges
                             and Priority Claims .............................72
       Section 5.04.       Preservation of Corporate Status...................73
       Section 5.05.       Governmental Approvals and Filings.................73
       Section 5.06.       Maintenance of Properties..........................73
       Section 5.07.       Avoidance of Other Conflicts.......................73
       Section 5.08.       Financial Accounting Practices.....................74
       Section 5.09.       Use of Proceeds....................................74
       Section 5.10.       Continuation of or Change in Business..............74
       Section 5.11.       Consolidated Tax Return............................74
       Section 5.12.       Fiscal Year........................................74
       Section 5.13.       ERISA..............................................74
       Section 5.14.       Ratings............................................75
       Section 5.15.       Subsidiary Guaranty................................75

ARTICLE VI                 NEGATIVE COVENANTS ................................76

                                      -ii-
<PAGE>

       Section 6.01.       Financial Covenants................................76
       Section 6.02.       Liens..............................................77
       Section 6.03.       Indebtedness.......................................78
       Section 6.04.       Loans, Advances and Certain Investments............79
       Section 6.05.       Changes in Business................................79
       Section 6.06.       Amendment of Certain Documents.....................79
       Section 6.07.       Mergers; Acquisitions..............................79
       Section 6.08.       ERISA Obligations..................................80
       Section 6.09.       Principal Foreign Affiliates.......................80
       Section 6.10.       Certain Agreements.................................80
       Section 6.11.       Restricted Payments................................81
       Section 6.12.       Transactions with Affiliates.......................81
       Section 6.13.       Capital Expenditures...............................82

ARTICLE VII                DEFAULTS...........................................82

       Section 7.01.       Events of Default..................................82
       Section 7.02.       Consequences of an Event of Default................85

ARTICLE VIII               THE AGENTS.........................................85

       Section 8.01.       Appointment........................................85
       Section 8.02.       General Nature of Agents' Duties...................86
       Section 8.03.       Exercise of Powers.................................86
       Section 8.04.       Certain Provisions.................................87
       Section 8.05.       Administration by the Agents.......................87
       Section 8.06.       Lender Not Relying on Agents or Other Lenders......88
       Section 8.07.       Indemnification....................................89
       Section 8.08.       Agents in their Individual Capacities..............89
       Section 8.09.       Holders of Notes...................................89
       Section 8.10.       Successor Agents...................................89
       Section 8.11.       Calculations.......................................90
       Section 8.12.       Funding by Administrative Agent....................90
       Section 8.13.       Syndication Agent and Documentation Agent..........90

ARTICLE IX                 GUARANTY...........................................91

       Section 9.01.       The Guaranty.......................................91
       Section 9.02.       Bankruptcy.........................................91
       Section 9.03.       Nature of Liability................................91
       Section 9.04.       Independent Obligation.............................91
       Section 9.05.       Authorization......................................92
       Section 9.06.       Reliance...........................................93
       Section 9.07.       Subordination......................................93
       Section 9.08.       Waiver.............................................93
       Section 9.09.       Nature of Liability................................94
       Section 9.10.       Judgments Binding..................................94

                                     -iii-
<PAGE>
ARTICLE X                  MISCELLANEOUS......................................94

       Section 10.01.      Holidays...........................................94
       Section 10.02.      Records............................................94
       Section 10.03.      Amendments and Waivers.............................95
       Section 10.04.      No Implied Waiver; Cumulative Remedies.............96
       Section 10.05.      Notices............................................96
       Section 10.06.      Expenses; Taxes; Indemnity.........................96
       Section 10.07.      Severability.......................................98
       Section 10.08.      Prior Understandings...............................98
       Section 10.09.      Duration; Survival.................................98
       Section 10.10.      Counterparts.......................................98
       Section 10.11.      Limitation on Payments.............................98
       Section 10.12.      Set-Off............................................98
       Section 10.13.      Sharing of Collections.............................99
       Section 10.14.      Successors and Assigns; Participations;
                              Assignments ....................................99
       Section 10.15.      Governing Law; Submission to Jurisdiction;
                              Waiver of Jury Trial ..........................104
       Section 10.16.      Confidentiality...................................105
       Section 10.17.      Replacement of Lenders............................105
       Section 10.18.      Judgment Currency.................................105
       Section 10.19.      Effectiveness.....................................106
       Section 10.20.      Entire Agreement - Construction...................106


EXHIBIT A                  Form of Revolving Credit Note
EXHIBIT B                  Form of Competitive Bid Loan Quote Request
EXHIBIT C                  Form of Competitive Bid Loan Quote
EXHIBIT D                  Form of Competitive Bid Note
EXHIBIT E                  Form of Swingline Advance Note
EXHIBIT F                  Form of Quarterly Compliance Certificate
EXHIBIT G                  Form of Transfer Supplement
EXHIBIT H                  Subsidiary Guaranty Agreement
EXHIBIT I                  Joinder to Revolving Credit Agreement
EXHIBIT J                  Pledge Agreement
EXHIBIT K                  Commitment Increase Supplement
EXHIBIT L                  Request for Extension of Credit

SCHEDULE 3.01              Corporate Status
SCHEDULE 3.02              Consents and Approvals
SCHEDULE 3.07              Indebtedness
SCHEDULE 3.11              Subsidiaries
SCHEDULE 3.12              Partnerships
SCHEDULE 3.21              Environmental Matters
SCHEDULE 6.02              Liens


                                        -iv-
<PAGE>
                 AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

         THIS  AMENDED AND  RESTATED  REVOLVING  CREDIT  AGREEMENT,  dated as of
December  [1],  1999,  by and  among  FOSTER  WHEELER  CORPORATION,  a New  York
corporation (the "BORROWER"), the guarantors party hereto from time to time (the
"GUARANTORS",  as defined further below),  the lenders party hereto from time to
time (the  "LENDERS",  as defined  further  below),  Bank of America,  N.A.,  as
Administrative  Agent for the Lenders  hereunder,  First Union National Bank, as
Syndication  Agent, ABN AMRO Bank N.V., as Documentation  Agent, Banc of America
Securities  LLC, as Lead  Arranger  and Book  Manager  and First  Union  Capital
Markets,  ABN AMRO Bank N.V.,  Greenwich  NatWest  Structured  Finance  Inc. and
Toronto Dominion Bank, as the Arrangers.


                                    RECITALS:

         (A) The  Borrower,  the Lenders and the Agents are  currently  party to
that  certain  Revolving  Credit  Agreement  dated as of  February  12, 1999 (as
amended,  the "PREVIOUS CREDIT AGREEMENT").  The Borrower has requested that the
Lenders  continue  to  extend  credit to the  Borrower.  The  Borrower  has also
requested that certain  amendments be made to the Previous Credit Agreement and,
for the sake of clarity and  convenience,  that the Previous Credit Agreement be
restated as so amended.  This Agreement shall become effective,  and shall amend
and restate the Previous Credit Agreement, on the execution of this Agreement by
the Credit Parties signatory hereto, the  Administrative  Agent and the Required
Lenders and the  satisfaction of the conditions  precedent  contained in Section
10.19 hereof;  and from and after the Effective Date, (i) all references made to
the Previous Credit  Agreement and the Loan Documents or in any other instrument
or document shall, without more, be deemed to refer to this Amended and Restated
Revolving  Credit  Agreement  and (ii) the Previous  Credit  Agreement  shall be
deemed amended and restated in its entirety hereby.

         (B) The Lenders,  upon the occurrence of the Effective Date and subject
to the  terms  hereof,  will  continue  to lend  monies  and/or  make  advances,
extensions of credit or other financial  accommodations  to, on behalf of or for
the benefit of the Borrower pursuant hereto.

         NOW, THEREFORE, in consideration of the recitals set forth above, which
by this reference are incorporated  into this Agreement set forth below, and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby  acknowledged  and subject to the terms and conditions  hereof and on the
basis of the representations and warranties herein set forth, the Borrower,  the
Guarantors, the Agents and the Lenders hereby agree to the following:
<PAGE>
                                    ARTICLE I

                            DEFINITIONS; CONSTRUCTION

        SECTION 1.01.   CERTAIN  DEFINITIONS.  In  addition  to other words and
terms defined  elsewhere in this  Agreement,  as used herein the following words
and terms shall have the following  meanings,  respectively,  unless the context
hereof otherwise clearly requires:

         "ABSOLUTE   RATE"   shall  have  the   meaning  set  forth  in  Section
2.03(d)(ii)(F) hereof.

         "ABSOLUTE RATE AUCTION" shall mean a  solicitation  of Competitive  Bid
Loan Quotes setting forth Absolute Rates pursuant to Section 2.03 hereof.

         "ABSOLUTE  RATE LOAN" or  "ABSOLUTE  RATE LOANS"  shall mean any or all
Competitive Bid Loans the interest rates of which are determined on the basis of
Absolute Rates pursuant to an Absolute Rate Auction.

         "ADMINISTRATIVE AGENT" shall mean, initially, Bank of America, N.A., in
its  capacity  as  Administrative  Agent  for  the  Lenders  hereunder,  and any
successor Administrative Agent appointed in accordance with Section 8.10 hereof.

         "AFFECTED  LENDER" shall have the meaning set forth in Section  2.08(e)
hereof.

         "AFFILIATE"  of a Person (the  "SPECIFIED  PERSON")  shall mean (a) any
Person which directly or indirectly  controls,  or is controlled by, or is under
common control with, the Specified Person,  and (b) any director or officer (or,
in the  case of a Person  which  is not a  corporation,  any  individual  having
analogous  powers) of the Specified Person or of a Person who is an Affiliate of
the  Specified  Person  within the  meaning of the  preceding  clause  (a).  For
purposes of the preceding sentence,  "control" of a Person means the possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management or policies of such Person,  whether  through the ownership of voting
securities, by contract or otherwise.

         "AGENTS"  shall  mean,  collectively,  the  Administrative  Agent,  the
Syndication Agent and the Documentation  Agent and "Agent" shall mean any of the
foregoing.

         "ANNIVERSARY  DATE" shall mean each February 12 during the term of this
Agreement.

         "APPLICABLE  MARGIN",  "FACILITY FEE" AND "UTILIZATION  FEE" each means
the  number  of basis  points  designated  below in the  applicable  column  and
appropriate grid:

                                      -2-
<PAGE>
================================================================================
                        LEVEL I     LEVEL II   LEVEL III   LEVEL IV    LEVEL V
                          DAY         DAY        DAY         DAY         DAY
--------------------------------------------------------------------------------
Applicable Margin for    0 bps      25.0 bps    62.5 bps    87.5 bps   137.5 bps
Base Rate Option
--------------------------------------------------------------------------------
Applicable Margin for   90.0 bps   110.0 bps   142.5 bps   162.5 bps   192.5 bps
CD Rate Option
--------------------------------------------------------------------------------
Applicable Margin for   77.5 bps    97.5 bps    130 bps     150 bps     180 bps
Euro Rate Option
--------------------------------------------------------------------------------
Facility Fee            22.5 bps    27.5 bps    32.5 bps    37.5 bps    57.5 bps
--------------------------------------------------------------------------------
Utilization Fee         12.5 bps    12.5 bps    12.5 bps    12.5 bps    12.5 bps
================================================================================

(bps = basis points per annum)


provided, however, that:

         (a) if on any day the  Dollar  Equivalent  of the sum of the  aggregate
principal  amount of  outstanding  Loans under this  Agreement and all Letter of
Credit  Obligations  exceeds 33% of the Total Revolving Credit  Commitment under
this Agreement,  an additional 0.125% per annum (the "UTILIZATION FEE") shall be
added to the Applicable  Margin for such day (and the term  "Applicable  Margin"
shall be deemed to include the Utilization Fee).

         "ASSESSMENT   RATE"  shall  have  the  meaning  set  forth  in  Section
2.08(a)(ii) hereof.

         "BANK OF  AMERICA"  means Bank of  America,  N.A.,  a national  banking
association.

         "BASE  RATE"  shall have the  meaning  set forth in Section  2.08(a)(i)
hereof.

         "BASE RATE AUCTION" shall mean a solicitation  of Competitive  Bid Loan
Quotes  setting  forth  Base Rate  Margins  based on the Base Rate  pursuant  to
Section 2.03 hereof.

         "BASE RATE LOANS" shall mean  Competitive  Bid Loans the interest rates
of which are  determined  on the basis of the Base Rate  pursuant to a Base Rate
Auction.

         "BASE  RATE  MARGIN"  shall  have the  meaning  set  forth  in  Section
2.03(d)(ii)(E) hereof.

         "BASE  RATE  OPTION"  shall  have the  meaning  set  forth  in  Section
2.08(a)(i) hereof.

                                      -3-
<PAGE>
         "BASE  RATE  PORTION"  of any Loan or Loans  shall mean at any time the
portion,  including the whole,  of such Loan or Loans  bearing  interest at such
time (i) under the Base Rate  Option or (ii) in  accordance  with  Section  2.15
hereof. If no Loan or Loans is specified, "Base Rate Portion" shall refer to the
Base Rate Portion of all Loans outstanding at such time.

         "BENEFIT  PLAN"  shall  mean  any  plan,   agreement,   arrangement  or
commitment   which  is  an  employment  or   consulting   agreement,   executive
compensation  plan,  bonus  plan,  deferred  compensation  agreement,   employee
pension,  profit-sharing,  savings or retirement plan,  employee stock option or
stock purchase plan,  retiree medical or life, group life,  health,  or accident
insurance  or  other  benefit  plan,   agreement,   arrangement  or  commitment,
including,  without limitation,  severance,  or other bonus practice (including,
but not  limited  to,  employee  benefit  plans,  as defined in section  3(3) of
ERISA), with respect to which the Borrower, any of its Significant Subsidiaries,
or a member of their respective Controlled Group, at any relevant time have some
liability or  obligation  to  contribute  or pay  benefits and which  relates to
current or former employees of the Borrower,  any Significant  Subsidiary or any
member of their respective Controlled Group.

         "BUSINESS  DAY"  shall  mean  (a)  with  respect  to  selection  of the
Euro-Rate  Option,  prepayment of any Euro-Rate  Portion of any Revolving Credit
Loans,  determining the first or last day of any Euro-Rate  Funding Period,  the
giving of notices or quotes in  connection  with a LIBOR Auction or a payment of
principal of or interest on, or the Interest  Period for, a LIBOR-based  Loan, a
day for  dealings  in  deposits  in  Dollars  by and among  banks in the  London
interbank  market  and on which  commercial  banks  are open  for  domestic  and
international business in Los Angeles, California and New York, New York and (b)
with respect to selection of any other  interest rate Option,  prepayment of any
part of any other Portion of any Revolving  Credit Loans,  determining the first
or last day of any other  Funding  Period,  the  giving of  notices or quotes in
connection with an Absolute Rate or a payment of principal of or interest on, or
the Interest  Period for, an Absolute Rate Loan and in every other context,  any
day other than a Saturday, Sunday or other day on which banking institutions are
authorized  or obligated to close in Los Angeles,  California  or New York,  New
York.

         "CAPITALIZED  LEASE"  shall mean at any time any lease  which is, or is
required  under GAAP to be,  capitalized  on the balance  sheet of the lessee at
such time, and  "CAPITALIZED  LEASE  OBLIGATION" of any Person at any time shall
mean the aggregate amount which is, or is required under GAAP to be, reported as
a liability  on the balance  sheet of such Person at such time as lessee under a
Capitalized Lease.

         "CASH COLLATERALIZE" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, the LC Issuer
and the Lenders,  as collateral for the applicable Letter of Credit Obligations,
cash or deposit account balances pursuant to documentation in form and substance
reasonably   satisfactory  to  the  Administrative  Agent  and  the  LC  Issuer.
Derivatives of such term shall have corresponding  meaning.  The Borrower hereby
grants the Administrative  Agent, for the benefit of the  Administrative  Agent,
the LC Issuer and the Lenders,  a security interest in all such cash and deposit
account  balances.  Cash  collateral  shall be  maintained  in blocked  interest
bearing (to the extent available) deposit accounts at Bank of America.

                                      -4-
<PAGE>

         "CD RATE"  shall  have the  meaning  set forth in  Section  2.08(a)(ii)
hereof.

         "CD RATE  FUNDING  PERIOD"  shall have the meaning set forth in Section
2.08(c) hereof.

         "CD  RATE  OPTION"   shall  have  the  meaning  set  forth  in  Section
2.08(a)(ii) hereof.

         "CD  RATE  PORTION"  of any Loan or  Loans  shall  mean at any time the
portion, including the whole, of such Loan or Loans bearing interest at any time
under the CD Rate Option or at a rate  calculated  by  reference  to the CD Rate
under Section 2.15 hereof.  If no Loan or Loans is specified,  "CD Rate Portion"
shall refer to the CD Rate Portion of all Loans outstanding at such time.

         "CD RATE  RESERVE  PERCENTAGE"  for any day and for any CD Rate Funding
Period shall mean the percentage (expressed as a decimal,  rounded upward to the
nearest 1/100 of 1%), as determined  in good faith by the  Administrative  Agent
(which  determination  shall be conclusive  absent manifest error),  which is in
effect  on such day as  prescribed  by the  Board of  Governors  of the  Federal
Reserve System (or any successor)  representing the maximum reserve  requirement
(including  without  limitation  supplemental,  marginal and  emergency  reserve
requirements)  for a member bank of such System in respect of  nonpersonal  time
deposits in Dollars in the United States having a maturity comparable to such CD
Rate Funding Period.

         "CHANGE OF  CONTROL"  shall mean (a) any Person or group of Persons (as
used in Sections 13 and 14 of the  Securities  Exchange Act of 1934,  as amended
(the  "EXCHANGE  ACT"),  and the rules and  regulations  thereunder)  shall have
become the beneficial owner (as defined in Rules 13d-3 and 13d-5  promulgated by
the  Securities and Exchange  Commission  (the "SEC") under the Exchange Act) of
20% or more of the Borrower's outstanding Voting Stock, unless a majority of the
Continuing  Directors approves the acquisition not later than 10 days after such
acquisition or (b) a change in the board of directors of the Borrower shall have
occurred  which  results  in  a  majority  of  directors  not  being  Continuing
Directors.

         "CLOSING  DATE" shall mean the date on which the last of the conditions
set forth in Section  4.01 hereof has been  satisfied in respect of the Previous
Credit Agreement.

         "CODE" means the Internal  Revenue  Code of 1986,  as amended,  and any
successor statute of similar import, and regulations thereunder, in each case as
in  effect  from  time to time.  References  to  sections  of the Code  shall be
construed also to refer to any successor sections.

         "COMMITMENTS" of a Lender shall mean the Revolving Credit Commitment of
such Lender.

         "COMMITMENT  PERCENTAGE"  of a  Lender  at  any  time  shall  mean  the
Commitment  Percentage for such Lender set forth below its name on the signature
page hereof, subject to adjustment as provided in Sections 1.04 and 10.17 hereof
and subject to transfer to another Lender as provided in Section 10.14 hereof.

         "COMPETITIVE BID BORROWING" shall have the meaning set forth in Section
2.03(b) hereof.

                                      -5-
<PAGE>

         "COMPETITIVE  BID EXPIRATION DATE" shall mean February 5, 2003, or such
later date as may be established as the Competitive Bid Expiration Date pursuant
to Section 2.18 hereof.

         "COMPETITIVE BID LOAN" or "COMPETITIVE BID LOANS" shall mean any or all
loans provided for by Section 2.03 hereof.

         "COMPETITIVE  BID LOAN MATURITY  DATE" shall have the meaning set forth
in Section 2.03(j) hereof.

         "COMPETITIVE  BID LOAN QUOTE"  shall mean an offer in  accordance  with
Section 2.03(d) hereof by a Lender to make a Competitive Bid Loan.

         "COMPETITIVE  BID LOAN QUOTE  REQUEST" shall have the meaning set forth
in Section 2.03(b) hereof.

         "COMPETITIVE  BID NOTE"  shall  have the  meaning  set forth in Section
2.03(p) hereof.

         "COMPETITIVE  BID  RECORD"  shall have the meaning set forth in Section
2.03(l) hereof.

         "CONSOLIDATED  ADJUSTED  EBITDAR"  for any period,  with respect to the
Borrower  and  its  consolidated  Subsidiaries,   shall  mean  the  sum  of  (a)
Consolidated  Net Income for such period,  (b)  Consolidated  Adjusted  Interest
Expense for such period, (c) charges against income for foreign,  federal, state
and local  income  taxes for such  period,  (d) the amount of all  expenses  for
depreciation  and  amortization  for such period and (e)  Consolidated  Adjusted
Rental  Expense for such period,  all as determined on a  consolidated  basis in
accordance with GAAP.

         "CONSOLIDATED  ADJUSTED INTEREST EXPENSE" for any period shall mean the
sum of (a) the total  interest  expense  of the  Borrower  and its  consolidated
Subsidiaries (other than Special Purpose Subsidiaries) and (b) any cash dividend
paid  on the  Borrower's  Trust  Preferred,  for  such  period  determined  on a
consolidated basis in accordance with GAAP.

         "CONSOLIDATED  ADJUSTED  RENTAL  EXPENSE"  for any  period  shall  mean
aggregate  rent and lease  payments made  pursuant to operating  leases for such
period by the Borrower  and its  consolidated  Subsidiaries  (other than Special
Purpose  Subsidiaries)  determined on a  consolidated  basis in accordance  with
GAAP.

         "CONSOLIDATED  CAPITALIZATION"  at  any  time  shall  mean  the  sum of
Consolidated Net Worth at such time and Consolidated Indebtedness at such time.

         "CONSOLIDATED  FIXED  CHARGES"  for any  period  shall  mean the sum of
Consolidated Adjusted Interest Expense for such period and Consolidated Adjusted
Rental Expense for such period.

         "CONSOLIDATED  FIXED CHARGES  COVERAGE RATIO" for any period shall mean
the ratio of the  Consolidated  Adjusted EBITDAR (less any cash dividend paid on
the Borrower's  common stock) for such period to the Consolidated  Fixed Charges
for such period.

                                      -6-
<PAGE>

         "CONSOLIDATED  INDEBTEDNESS" at any time shall mean the Indebtedness of
the Borrower and its  consolidated  Subsidiaries  at such time  determined  on a
consolidated basis in accordance with GAAP.

         "CONSOLIDATED  LEVERAGE  RATIO"  at any time  shall  mean the  ratio of
Consolidated Indebtedness to the Consolidated Capitalization at such time.

         "CONSOLIDATED  NET INCOME" for any period  shall mean the net  earnings
(or loss) after taxes of the Borrower and its consolidated Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.

         "CONSOLIDATED  NET WORTH" at any time  shall  mean the total  amount of
stockholders'  equity (including,  without  duplication,  the face amount of the
Borrower's  Trust Preferred issued and outstanding at such time) of the Borrower
and its  consolidated  Subsidiaries  at such time  determined on a  consolidated
basis in accordance with GAAP, provided, that in the calculation of Consolidated
Net  Worth  of  the  Borrower  solely  for  the  purposes  of  Section  6.01(b),
accumulated  translation  adjustments with respect to the Borrower's investments
in foreign entities shall be excluded.

         "CONTINUING  DIRECTORS" shall mean members of the board of directors of
the  Borrower  who (a) were  directors  on  January  1,  1999 or (b)  have  been
directors  for at least two years,  or (c) were  nominated  or elected  with the
affirmative vote of the greater of (x) a majority of the Continuing Directors on
the board or (y) three Continuing Directors.

         "CONTROLLED  GROUP" shall mean with respect to any Person,  all members
of a controlled group of corporations  and all trades or businesses  (whether or
not  incorporated)  under common control which,  together with such Person,  are
treated as a single employer under Section 414(b),  414(c),  414(m) or 414(o) of
the Code or Section 4001(a)(2) of ERISA.

         "CORRESPONDING SOURCE OF FUNDS" shall mean:

                   (a) In  the  case  of  any  Funding  Segment  of the CD  Rate
         Portion,  the proceeds of hypothetical  issuances by a Lender of one or
         more of its  certificates  of deposit at the  beginning  of the CD Rate
         Funding Period corresponding to such Funding Segment, having maturities
         approximately  equal to such CD Rate Funding Period and in an aggregate
         amount  approximately  equal to such  Lender's  Pro Rata  share of such
         Funding Segment; and

                   (b) In the  case  of any  Funding  Segment  of the  Euro-Rate
         Portion, the proceeds of hypothetical  receipts by a Notional Euro-Rate
         Funding  Office or by a Lender  through a  Notional  Euro-Rate  Funding
         Office  of one or more  Dollar  deposits  in the  interbank  eurodollar
         market at the beginning of the Euro-Rate  Funding Period  corresponding
         to such Funding Segment having maturities  approximately  equal to such
         Euro-Rate Funding Period and in an aggregate amount approximately equal
         to such Lender's Pro Rata share of such Funding Segment.

                                      -7-
<PAGE>

         "CREDITORS" shall mean the Lenders, the LC Issuer, the Swingline Lender
and the Agents.

         "CREDIT PARTY" shall mean each of the Borrower and the Guarantors.

         "DEBT  INSTRUMENT"  shall have the meaning set forth in Section 7.01(f)
hereof.

         "DOCUMENTATION AGENT" shall mean ABN AMRO Bank N.V., in its capacity as
documentation agent hereunder.

         "DOLLAR,"  "DOLLARS"  and the symbol "$" shall mean lawful money of the
United States of America.

         "DOLLAR  EQUIVALENT" shall mean, as of the date of  determination,  (a)
the amount  denominated  in  Dollars,  and (b) as to any amount  denominated  in
another  currency,  the  equivalent  amount  in  Dollars  as  determined  by the
Administrative  Agent on the basis of the Spot Rate for the  purchase of Dollars
with such currency;  provided, that with respect to Letter of Credit Obligations
in  Offshore  Currencies  that are  valued as of the last  Business  Day of each
month,  the equivalent  amount in Dollars shall be determined by Bank of America
in its capacity as LC Issuer instead of the Administrative Agent.

         "EFFECTIVE  DATE" shall have the meaning  given to that term in Section
10.19 hereof.

         "ELIGIBLE ASSIGNEE" means (a) a financial  institution  organized under
the laws of the  United  States,  or any state  thereof,  and  having a combined
capital and surplus of at least  $100,000,000;  (b) a commercial  bank organized
under the laws of any other  country which is a member of the  Organization  for
Economic  Cooperation and  Development,  or a political  subdivision of any such
country,  and having a combined  capital and  surplus of at least  $100,000,000,
PROVIDED  that  such bank is acting  through a branch or agency  located  in the
United  States;  (c) a Person  that is  primarily  engaged  in the  business  of
commercial  banking and that is (i) a Subsidiary of a Lender,  (ii) a Subsidiary
of a Person  of which a Lender  is a  Subsidiary,  or (iii) a Person  of which a
Lender is a Subsidiary or (d) another Lender.

         "ENVIRONMENTAL  CLAIM"  shall mean,  with  respect to any  Person,  any
action, suit,  proceeding,  investigation,  notice,  claim,  complaint,  demand,
request for  information or other  communication  (written or oral) by any other
Person (including but not limited to any Governmental Authority, citizens' group
or present or former  employee of such Person)  alleging,  asserting or claiming
any actual or potential (a) violation of any  Requirements of Law, (b) liability
under any Requirements of Law or (c) liability for investigatory  costs, cleanup
costs, governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
the presence, or release into the environment, of any Hazardous Materials at any
location, whether or not owned by such Person.

         "ENVIRONMENTAL  MATTERS" means any matter arising out of,  relating to,
or resulting from any emissions,  discharges, releases or threatened releases of
Hazardous  Materials  into the air,  surface  water,  groundwater,  or soil,  or
otherwise  arising  out of,  relating  to, or  resulting  from the  manufacture,

                                      -8-
<PAGE>
processing,  distribution,  use,  treatment,  storage,  disposal,  transport  or
handling of Hazardous Materials.

         "ENVIRONMENTAL  PERMITS" means all permits,  licenses,  authorizations,
registrations   and  other   governmental   consents   required  by   applicable
Requirements of Law for the use, storage,  treatment,  transportation,  release,
emission and disposal of raw materials, by-products, wastes and other substances
used or produced by or otherwise  relating to the operations of the Borrower and
any Significant Subsidiary of the Borrower.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as  amended,  and any  successor  statute of  similar  import,  and  regulations
thereunder,  in each case as in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor sections.

         "ERISA LIEN" shall mean a security interest or lien arising under or in
connection  with a  Pension  Plan or  Title  IV of  ERISA  or a  claim  asserted
(including for failure to withhold) by the government  which if successful would
result in such a lien; PROVIDED, HOWEVER, that any claim asserted, (a) for which
the  Borrower  has  reasonable  grounds to contest and (b) which the Borrower is
diligently contesting in good faith through appropriate proceedings with the IRS
or a court of law,  shall not be deemed an ERISA  Lien for so long as all of the
above conditions are met.

         "EUROCURRENCY  LIABILITIES"  shall  have the  meaning  set forth in the
definition of Euro-Rate Reserve Percentage set forth in Section 1.01 hereof.

         "EUROCURRENCY LOAN" shall have the meaning set forth in Section 2.03(r)
hereof.

         "EURO-RATE"  shall have the meaning  set forth in Section  2.08(a)(iii)
hereof.

         "EURO-RATE  FUNDING PERIOD" shall have the meaning set forth in Section
2.08(c) hereof.

         "EURO-RATE  OPTION"  shall  have  the  meaning  set  forth  in  Section
2.08(a)(iii) hereof.

         "EURO-RATE  PORTION"  of any Loan or Loans  shall  mean at any time the
portion, including the whole, of such Loan or Loans bearing interest at any time
under the Euro-Rate Option or at a rate calculated by reference to the Euro-Rate
under Section 2.15 hereof. If no Loan or Loans is specified, "Euro-Rate Portion"
shall refer to the Euro-Rate Portion of all Loans outstanding at such time.

         "EURO-RATE RESERVE PERCENTAGE" means for any day for any Lender for any
Funding  Segment or  Interest  Period the  reserve  percentage  (expressed  as a
decimal,  rounded  upward to the next  1/100th of 1%) in effect on such day,  as
determined in good faith by such Lender (which determination shall be conclusive
absent manifest error),  under regulations issued from time to time by the Board
of Governors of the Federal  Reserve System for  determining the maximum reserve
requirement  of such Lender  (including  any  emergency,  supplemental  or other
marginal

                                      -9-
<PAGE>
reserve requirement) with respect to eurocurrency funding (currently referred to
as "EUROCURRENCY LIABILITIES").

         "EVENT OF DEFAULT" shall mean any of the Events of Default described in
Section 7.01 hereof.

         "EXIT FUNDING AGREEMENT" shall mean that certain Exit Funding Agreement
dated as of October 15, 1999,  by and between the  Borrower  and SunTrust  Bank,
Central Florida,  National  Association  related to the restructuring of certain
indebtedness   originally  incurred  to  finance  a  portion  of  the  costs  of
constructing the Robbins Facility.

         "FACILITY FEE" is set forth in the definition of "APPLICABLE MARGIN."

         "FEDERAL  FUNDS  EFFECTIVE  RATE" for any day  shall  mean the rate per
annum   (rounded   upward  to  the  nearest  1/100  of  1%)  determined  by  the
Administrative  Agent (which  determination  shall be conclusive) to be the rate
per annum  announced by the Federal  Reserve Bank of New York (or any successor)
on such day as being the  weighted  average  of the rates on  overnight  Federal
funds  transactions  arranged by Federal funds  brokers on the previous  trading
day, as computed and announced by such Federal  Reserve Bank (or any  successor)
in  substantially  the same manner as such  Federal  Reserve  Bank  computes and
announces  the  weighted  average it refers to as the "Federal  Funds  Effective
Rate" as of the date of this Agreement;  PROVIDED,  that if such Federal Reserve
Bank (or its  successor)  does not  announce  such rate on any day, the "Federal
Funds Effective Rate" for such day shall be the Federal Funds Effective Rate for
the last day on which such rate was announced.

         "FINANCIAL  LETTER OF CREDIT"  means a Letter of Credit that is not, as
reasonably determined by the LC Issuer, a Performance Letter of Credit.

         "FINANCIAL LETTER OF CREDIT SUBLIMIT" shall mean $20,000,000.

         "FINANCIAL  PROVISIONS"  shall  have the  meaning  set forth in Section
1.03(d) hereof.

         "FUNDING  PERIODS" shall have the meaning set forth in Section  2.08(c)
hereof.

         "FUNDING SEGMENT" of the CD Rate Portion or the Euro-Rate  Portion,  as
the case may be, of the Revolving Credit Loans at any time shall mean the entire
principal  amount  of such  Portion  to which at the time in  question  there is
applicable a particular  Funding Period beginning on a particular day and ending
on a particular day. (By definition,  each such Portion is at all times composed
of an integral number of discrete  Funding Segments and the sum of the principal
amounts of all  Funding  Segments  of any such  Portion  at any time  equals the
principal amount of such Portion at such time.)

         "GAAP" shall have the meaning set forth in Section 1.03 hereof.

         "GOVERNMENTAL  ACTION" shall have the meaning set forth in Section 3.04
hereof.

                                      -10-
<PAGE>

         "GOVERNMENTAL   AUTHORITY"  shall  mean  any  government  or  political
subdivision  or  any  agency,  authority,   bureau,  central  bank,  commission,
department or instrumentality of either, or any court,  tribunal,  grand jury or
arbitrator, in each case whether foreign or domestic.

         "GUARANTEE"  shall mean the  guarantee  by any Person to pay or perform
the  obligations  of any other  Person,  including any  agreement,  whether such
agreement is on a  contingency  basis or otherwise,  to purchase,  repurchase or
otherwise  acquire  Indebtedness  of any other Person,  or to purchase,  sell or
lease, as lessee or lessor, property or services, in any such case primarily for
the purpose of enabling another Person to make payment of Indebtedness.

         "GUARANTEED  OBLIGATIONS"  shall mean the full and prompt  payment when
due  (whether at the stated  maturity,  by  acceleration  or  otherwise)  of the
principal  and interest on each Note and Loan made under this  Agreement  and of
the Letter of Credit  Obligations,  together with all the other  obligations and
liabilities  (including,  without  limitation,  indemnities,  fees and  interest
thereon) of the Borrower to the Agents,  the LC Issuer, the Swingline Lender and
the  Lenders now  existing or  hereafter  incurred  under,  arising out of or in
connection  with this Agreement or any other Loan Document to which the Borrower
is a party and the due performance and compliance with all the terms, conditions
and agreements contained in such Loan Documents by the Borrower.

         "GUARANTOR"  shall mean Foster Wheeler USA Corporation,  Foster Wheeler
Energy  International,  Inc.,  Foster Wheeler Energy  Corporation  and any other
domestic Subsidiary of the Borrower designated pursuant to Section 5.15 hereof.

         "GUARANTY" shall mean the Guaranty as set forth in Article IX hereof.

         "HAZARDOUS MATERIALS" means any pollutants,  contaminants, hazardous or
toxic   substances,   materials  or  wastes  (including   petroleum,   petroleum
by-products,  PCBs,  and friable  asbestos)  as those  concepts  are used in the
Comprehensive  Environmental  Response  Compensation and Liability Act (CERCLA),
the Resource  Conservation and Recovery Act (RCRA),  the Toxic Substance Control
Act (TSCA), the Clean Air Act, the Clean Water Act, and other similar federal or
state statutes or regulations.

         "INDEBTEDNESS"  of a Person  shall  mean with  respect  to any  Person,
without  duplication,  all (a) liabilities or obligations incurred in connection
with borrowings  (including  reimbursement  obligations in respect of letters of
credit or banker's  acceptances  which have been drawn and including the sale of
debt  securities)  of such Person which in accordance  with  generally  accepted
accounting  principles  would be included in  determining  total  liabilities as
shown on the liability  side of a balance sheet of such Person at the date as of
which  Indebtedness  is  to  be  determined,   including,   without  limitation,
Capitalized Lease Obligations of such Person;  (b) liabilities or obligations of
such  Person  issued,  incurred or assumed in respect of the  purchase  price of
property  except for trade accounts  payable  incurred in the ordinary course of
business on which interest is not being accrued;  (c) liabilities or obligations
of others of any of the types specified in the preceding clauses (a) and (b) for
which such Person is directly or indirectly  liable, by way of guaranty (whether
by direct guaranty, suretyship,  discount,  endorsement,  take-or-pay agreement,
agreement to purchase or advance or keep in funds or other agreement  having the
effect of a

                                      -11-
<PAGE>
guaranty) or otherwise;  (d)  liabilities or obligations of others of any of the
types specified in the preceding  clauses (a) and (b) which are secured by Liens
on any assets of such Person,  whether or not such  liabilities  or  obligations
shall  have been  assumed  by it;  and (e) to the  extent  not  included  in the
preceding  clauses (a) through (d), the excess over $10,000,000 of the aggregate
undrawn  amount of all  financial  letters  of credit  issued on account of such
Person.

         "INDEMNIFIED  PARTIES"  shall  mean  the  Agents,  the LC  Issuer,  the
Swingline Lender, the Lenders, their respective  affiliates,  and the directors,
officers, employees, attorneys and agents of each of the foregoing.

         "INDENTURE" shall have the meaning set forth in Section 6.10 hereof.

         "INITIAL  REVOLVING CREDIT COMMITTED AMOUNT" shall have the meaning set
forth in Section 2.01(a) hereof.

         "INTEREST  PERIOD" shall mean with respect to any Competitive Bid Loan,
the period  commencing on the date such  Competitive Bid Loan is made and ending
on a date not less  than  seven  days nor more  than 180 days  thereafter  (with
respect to any Absolute  Rate Loan) or 30, 60, 90 or 180 days  thereafter  (with
respect to any CD Rate Loan) or one,  two,  three or six months (with respect to
any LIBO-Rate Loan), as the Borrower may specify in the related  Competitive Bid
Loan Quote Request as provided in Section 2.03(b) hereof, PROVIDED that:

                   (a)     No Interest  Period may end after the Competitive Bid
         Expiration Date;

                   (b)     Each  Interest  Period that would  otherwise end on a
         day  that  is not a  Business  Day  shall  end on the  next  succeeding
         Business  Day or, in the case of an Interest  Period for a  LIBOR-based
         Loan, if such next succeeding Business Day falls in the next succeeding
         calendar  month,  then  such  Interest  Period  shall  end on the  next
         preceding Business Day; and

                   (c)     Notwithstanding   clauses  (a)  and  (b)  above,   no
         Interest  Period for any  Competitive Bid Loan shall have a duration of
         less than seven days and, if the  Interest  Period for any  Competitive
         Bid Loan would otherwise be a shorter period, such Competitive Bid Loan
         shall not be available hereunder.

         "INVESTMENT" by any Person in any other Person shall mean:

                   (a)     the amount paid, or the value of property or services
         contributed,  by such Person for or in connection  with the acquisition
         by  such  Person  of  any  stock,  bonds,  notes,  debentures,   option
         contracts,   investment  contracts,   partnership  or  other  ownership
         interests or other securities of any other Person;

                   (b)     the  amount  of any  advance,  loan or  extension  of
         credit to any other Person by such Person; and

                                      -12-
<PAGE>

                   (c)     the amount of any  Indebtedness  of any other  Person
         which  such  Person  has  guaranteed  and  which  by its  terms or as a
         consequence of any default  thereunder such Indebtedness has or may, at
         the  option  of  the  holder   thereof,   become  due  and  payable  by
         acceleration or otherwise.

         "IRS" shall mean the Internal Revenue Service.

         "ISSUANCE" means,  with respect to any Letter of Credit,  the issuance,
extension of the expiry of,  renewal or increase in the amount of such Letter of
Credit. "ISSUE," "ISSUED" and "ISSUING" have corresponding meanings.

         "LAW" shall mean any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.

         "LC ISSUER" means Bank of America or any other Lender replacing Bank of
America  as  LC  Issuer  upon  the  mutual  consent  of  the  Borrower  and  the
Administrative  Agent,  in each case not to be unreasonably  withheld,  and such
Lender.

         "LENDER"  shall mean any of the Lenders  listed on the signature  pages
hereof,  subject to the  provisions  of Sections  1.05,  10.14 and 10.17  hereof
pertaining to Persons becoming or ceasing to be Lenders.

         "LETTER OF CREDIT" means a Financial  Letter of Credit or a Performance
Letter of Credit issued hereunder.

         "LETTER OF CREDIT  ADVANCE"  means each Lender's  participation  in any
Letter of Credit Borrowing under Section 2.06.03.

         "LETTER OF CREDIT AMENDMENT  APPLICATION" means an application form for
amendment of outstanding Letters of Credit as shall at any time be in use by the
LC Issuer, as the LC Issuer shall request.

         "LETTER OF CREDIT  APPLICATION"  means an application form for issuance
of Letters of Credit as shall at any time be in use by the LC Issuer,  as the LC
Issuer shall request.

         "LETTER OF CREDIT  BORROWING"  means each  drawing  under any Letter of
Credit  that  is not  reimbursed  under  Section  2.06.03  or  converted  into a
borrowing of Revolving Credit Loans under Section 2.06.03.

         "LETTER  OF  CREDIT  OBLIGATIONS"  means  the sum of (a) the  aggregate
undrawn amount of all outstanding  Letter of Credit and (b) the aggregate amount
of all  unreimbursed  drawings  under all  Letters  of  Credit,  whether  or not
outstanding, including all outstanding Letter of Credit Borrowings.

                                      -13-
<PAGE>

         "LETTER OF CREDIT RELATED  DOCUMENT"  means the Letters of Credit,  the
Letter of Credit Applications,  the Letter of Credit Amendment  Applications and
any other  document  relating to any Letter of Credit,  including  any of the LC
Issuer's standard form documents for letter of credit Issuance.

         "LEVEL I DAY"  shall  mean a day on which  there is in effect a Moody's
Rating of Baa2 or better and an S&P Rating of BBB or better.

         "LEVEL II DAY" shall mean a day which is not a Level I Day and on which
there is in effect a Moody's  Rating of Baa3 or better and an S&P Rating of BBB-
or better.

         "LEVEL  III DAY" shall mean a day which is not a Level I Day or a Level
II Day and on which there is in effect a Moody's  Rating of Ba1 or better and an
S&P Rating of BB+ or better.

         "LEVEL IV DAY"  shall mean a day which is not a Level I Day, a Level II
Day or a Level III Day and on which  there is in effect a Moody's  Rating of Ba2
or better and an S&P Rating of BB or better.

         "LEVEL V DAY"  shall  mean a day which is not a Level I Day, a Level II
Day, a Level III Day or a Level IV Day.

         "LIBO-RATE"  for any day, as used  herein,  shall mean with  respect to
each proposed  LIBOR-based  Loan a rate of interest (which shall be the same for
each day in the  applicable  Interest  Period)  equal  to the  rate of  interest
determined  in good faith by the  Administrative  Agent in  accordance  with its
usual procedures from the Reuters Screen LIBO page (which determination shall be
conclusive  absent  manifest error) to be the average of the rates per annum for
deposits in Dollars offered to the leading banks in the London  interbank market
at approximately  11:00 a.m.,  London time, two Business Days prior to the first
day of such  Interest  Period  for  delivery  on the first day of such  Interest
Period in amounts  comparable to the amount of the LIBOR-based Loan to be funded
and having maturities comparable to such Interest Period.

         "LIBOR  AUCTION"  shall mean a  solicitation  of  Competitive  Bid Loan
Quotes  setting forth  LIBOR-based  Margins  based on the LIBO-Rate  pursuant to
Section 2.03 hereof.

         "LIBOR-BASED LOANS" shall mean Competitive Bid Loans the interest rates
of which  are  determined  on the  basis of the  LIBO-Rate  pursuant  to a LIBOR
Auction.

         "LIEN" shall mean any mortgage,  deed of trust,  pledge, lien, security
interest,  charge or other  encumbrance  or security  arrangement  of any nature
whatsoever, including but not limited to any conditional sale or title retention
arrangement,  and any assignment,  deposit  arrangement or lease intended as, or
having the effect of, security.

         "LOAN" shall mean any loan or advance by a Lender under this Agreement,
whether a Revolving  Credit Loan, a Competitive Bid Loan or a Swingline  Advance
and "Loans" shall mean all Revolving  Credit  Loans,  Competitive  Bid Loans and
Swingline Advances made by Lenders under this Agreement.

                                      -14-
<PAGE>

         "LOAN DOCUMENTS"  shall mean this Agreement,  the Notes, the Subsidiary
Guaranty  Agreements,  the  Pledge  Agreement,  the  Letter  of  Credit  Related
Documents and the Transfer Supplements, and all other agreements and instruments
extending or renewing any  indebtedness,  obligation or liability  arising under
any of the  foregoing,  and  any  certificate  or  instrument  delivered  by the
Borrower or the Guarantors in connection herewith or therewith,  in each case as
the same may be amended, modified or supplemented from time to time hereafter.

         "MATERIAL  ADVERSE EFFECT" shall mean a material  adverse effect on the
business,  operations,  properties, assets or condition (financial or otherwise)
of the Borrower and its Subsidiaries taken as a whole.

         "MATERIAL DOMESTIC  SUBSIDIARY" shall mean each Significant  Subsidiary
of the Borrower  (other than  Special  Purpose  Subsidiaries)  that is organized
under the laws of one of the States of the United States.

         "MOODY'S"  shall  mean  Moody's  Investor's  Services,   Inc.,  or  any
successor thereto.

         "MOODY'S  RATING"  shall mean the  rating  assigned  to the  Borrower's
senior unsecured long term debt by Moody's,  or in the event the Borrower has no
Moody's-rated  senior unsecured  long-term debt  outstanding,  the "hypothetical
senior long-term debt rating" most recently assigned to the Borrower by Moody's,
which  assignment shall have been made not more than fifteen months prior to the
time in question and not more than ninety (90) days after a request  therefor by
the Required Lenders pursuant to Section 5.14 hereof.

         "NONEXTENDING  LENDER" shall have the meaning set forth in Section 2.18
hereof.

         "NOTE"  or  "NOTES"  shall  mean  the  Revolving  Credit  Note(s),  the
Swingline Advance Note(s) or the Competitive Bid Note(s), as the case may be, of
the Borrower  executed and  delivered  under this  Agreement,  together with all
extensions,  renewals,  refinancings  or  refundings  of any thereof in whole or
part.

         "NOTIONAL  EURO-RATE  FUNDING  OFFICE"  shall have the meaning given to
that term in Section 2.17(a) hereof.

         "OBLIGATIONS" shall mean all indebtedness,  obligations and liabilities
of the  Borrower to any Lender or any Agent,  the  Swingline  Lender,  or the LC
Issuer from time to time arising  under or in  connection  with or related to or
evidenced by or secured by this  Agreement or any other Loan  Document,  and all
extensions  or renewals  thereof,  whether  such  indebtedness,  obligations  or
liabilities  are direct or indirect,  otherwise  secured or unsecured,  joint or
several,  absolute or contingent,  due or to become due,  whether for payment or
performance,  now  existing or  hereafter  arising.  Without  limitation  of the
foregoing, such indebtedness,  obligations and liabilities include the principal
amount of Loans, Letter of Credit Obligations,  interest,  fees,  indemnities or
expenses under or in connection  with this Agreement or any other Loan Document,
and all extensions and renewals thereof,  whether or not such Loans were made in
compliance  with the terms and  conditions of this Agreement or in excess of the
obligation  of  the  Lenders  to  lend.

                                      -15-
<PAGE>

Obligations shall remain Obligations  notwithstanding any assignment or transfer
or any  subsequent  assignment  or  transfer  of any of the  Obligations  or any
interest therein.

         "OFFICE," when used in connection with the Administrative  Agent, shall
mean  its  office  located  at  1850  Gateway  Boulevard,  5th  Floor,  Concord,
California 94520, or at such other office or offices of the Administrative Agent
or any branch,  subsidiary or affiliate  thereof as may be designated in writing
from time to time by the Administrative Agent to the Borrower.

         "OFFSHORE  CURRENCIES"  shall mean any lawful  currency  constituting a
eurocurrency  (other  than  Dollars),  that in the  opinion  of the LC Issuer is
freely traded in the offshore  interbank  foreign exchange markets and is freely
transferable and freely convertible into Dollars.

         "OPTION"  shall mean the Base Rate  Option,  the CD Rate  Option or the
Euro-Rate Option, as the case may be.

         "OTHER CREDIT AGREEMENT" shall mean the Amended and Restated Short Term
Revolving Credit Agreement dated as of December 1, 1999 among the Borrower,  the
guarantors  signatory thereto,  the lenders signatory thereto,  Bank of America,
N.A., as administrative  agent, and other agents party thereto,  as the same may
be amended, modified or supplemented from time to time.

         "PARTICIPANTS"  shall have the  meaning  set forth in Section  10.14(b)
hereof.

         "PBGC" means the Pension Benefit Guaranty Corporation established under
Title  IV  of  ERISA  or  any   other   governmental   agency,   department   or
instrumentality succeeding to the functions of said corporation.

         "PENSION PLAN" shall mean a single  employer plan as defined in Section
4001(a)(15)  of ERISA or an  individual  account  plan  which is  subject to the
funding  standards of Section 302 of ERISA with  respect to which the  Borrower,
any of its Significant  Subsidiaries,  or members of their respective Controlled
Groups,  at any relevant time have some liability or obligation to contribute or
pay benefits and which  relates to current or former  employees of the Borrower,
any of its Significant Subsidiaries or any member of their respective Controlled
Groups.

         "PERFORMANCE  LETTER  OF  CREDIT"  means a Letter of  Credit  that,  as
reasonably determined by the LC Issuer, assures that the Borrower will fulfill a
contractual nonfinancial obligation.

         "PERFORMANCE LETTER OF CREDIT SUBLIMIT" shall mean $100,000,000.

         "PERMITTED LIENS" shall mean (a) pledges or deposits by the Borrower or
any of its Subsidiaries under workers' compensation laws, unemployment insurance
laws,  social security laws, or similar  legislation,  or good faith deposits in
connection  with  bids,  tenders,  contracts  (other  than  for the  payment  of
Indebtedness of the Borrower or any of its Subsidiaries), or leases to which the
Borrower or any of its  Subsidiaries is a party, or deposits to secure public or
statutory  obligations of the Borrower or any of its Subsidiaries or deposits of
cash or U.S. governmental bonds to secure surety,  appeal,  performance or other
similar bonds to which the Borrower or any of its  Subsidiaries  is a party,  or
deposits as security for contested  taxes or import

                                      -16-
<PAGE>

duties or for the payment of rent;  (b) Liens  imposed by law such as carriers',
warehousemen's,  materialmen's  and mechanics' or other similar liens,  or Liens
arising  out  of  judgments  or  awards  against  the  Borrower  or  any  of its
Subsidiaries  with respect to which the Borrower or any of its  Subsidiaries  at
the time shall currently be prosecuting an appeal or proceedings for review; (c)
Liens for taxes,  assessments or governmental  charges or levies not yet subject
to penalties for  nonpayment and Liens for taxes,  assessments  or  governmental
charges  or levies the  payment  of which is being  contested  as  permitted  by
Section  5.03  hereof;  (d)  survey  exceptions,   encumbrances,   easements  or
reservations  of, or rights of others for rights of way,  highways  and railroad
crossings,  sewers,  electric  lines,  telephone and  telegraph  lines and other
similar  purposes,  or  zoning  or  other  restrictions  as to the  use of  real
property;  all of which  Liens  described  in  clause  (d)  hereof do not in the
aggregate  materially  detract  from the value of the  properties  to which they
relate or  materially  impair their use in the  operation of the business of the
Borrower and its  Subsidiaries  taken as a whole;  (e) Liens (i) in favor of the
United  States of America or any State  thereof,  or any  department,  agency or
instrumentality or political  subdivision of the United States of America or any
State  thereof,  or  (ii)  in  favor  of any  other  country,  or any  political
subdivision  thereof,  to secure  partial,  progress,  advance or other payments
pursuant to any  contract or  statute;  (f) Liens made in favor of any  customer
arising in the  ordinary  course of business of the  Borrower or any  Subsidiary
thereof in respect of payments  made by or on behalf of such  customer for goods
produced or services rendered to such customer;  (g) a security interest granted
to the Administrative Agent, for the benefit of the Administrative Agent, the LC
Issuer and the Lenders,  in Cash  Collateral;  and (h) Liens granted pursuant to
the Pledge Agreement.

         "PERSON" shall mean an  individual,  corporation,  partnership,  trust,
unincorporated  association,  joint venture,  joint-stock company,  Governmental
Authority or any other entity.

         "PORTION" shall mean the Base Rate Portion,  the CD Rate Portion or the
Euro-Rate Portion, as the case may be.

         "POTENTIAL DEFAULT" shall mean any event or condition which with notice
or passage of time, or any  combination  of the foregoing,  would  constitute an
Event of Default.

         "PLEDGE  AGREEMENT"  shall  mean the  pledge  agreement  in the form of
Exhibit J.

         "PREVIOUS  CREDIT  AGREEMENT"  shall have the  meaning set forth in the
Recitals hereto.

         "PRIME  RATE"  as used  herein,  shall  mean  for  any day the  rate of
interest in effect for such day as publicly  announced from time to time by Bank
of America  as its  "prime  rate."  (The  "prime  rate" is a rate set by Bank of
America based upon various factors including Bank of America's costs and desired
return,  general  economic  conditions  and  other  factors,  and is  used  as a
reference point for pricing some loans,  which may be priced at, above, or below
such announced  rate.) Any change in the prime rate announced by Bank of America
shall take effect at the opening of business on the day  specified in the public
announcement of such change.

         "PRINCIPAL  FOREIGN  AFFILIATES"  shall have the  meaning  set forth in
Section 6.09 hereof.

                                      -17-
<PAGE>

         "PROJECT"  shall mean any  municipal  solid waste  project or any other
project the assets of which are financed on a limited recourse basis.

         "PRO RATA" shall have the meaning set forth in Section 2.13 hereof.

         "PURCHASING  LENDER"  shall  have the  meaning  set  forth  in  Section
10.14(c) hereof.

         "REGISTER" shall have the meaning set forth in Section 10.14(d) hereof.

         "REGULAR  PAYMENT DATE" shall mean the last Business Day of each March,
June, September and December after the date hereof.

         "RELEVANT  DATE" shall have the  meaning  set forth in Section  1.03(a)
hereof.

         "REPLACEMENT  LENDER"  shall have the meaning set forth in Section 2.18
hereof.

         "REPORTABLE EVENT" means an event described in Section 4043 of ERISA or
in the  regulations  thereunder  with respect to which the 30-day  notice is not
waived or an event  described in Section 4043 or in the  regulations  thereunder
with  respect to which the 30-day  notice has been  waived and which  involves a
liability of  $1,000,000  or more or a material plan or a receipt of a notice of
withdrawal  liabilities  pursuant to Section 4202 of ERISA. For purposes of this
definition a material plan is a plan in which benefit  liabilities exceed assets
on a termination basis based on PBGC assumptions by $1,000,000.

         "REQUIRED  LENDERS" shall mean, at any time prior to the termination or
expiration of the Commitments,  Lenders which have Commitments constituting,  in
the aggregate, more than 50% of the total Commitments of all the Lenders at such
time and shall mean,  at any time  thereafter,  Lenders  which have  outstanding
Loans,   Swingline  Advance   Participating   Interests  and  Letter  of  Credit
Obligations (without duplication) constituting,  in the aggregate, more than 50%
of all Loans,  Swingline  Advance  Participating  Interests and Letter of Credit
Obligations (without duplication) outstanding at such time.

         "REQUIREMENTS  OF LAW" means all applicable  federal,  state, and local
laws,  statutes,  rules,  regulations,   codes,  ordinances,   orders,  decrees,
directives, permits, licenses and judgments relating to Environmental Matters in
effect from time to time.

         "RESPONSIBLE  OFFICER" of the Borrower  shall mean its Chief  Executive
Officer, its Chief Financial Officer,  its Executive Vice President,  any Senior
Vice  President,  any Vice  President,  the  Treasurer  or one of its  Assistant
Treasurers.

         "REVOLVING  CREDIT  COMMITMENT"  shall  have the  meaning  set forth in
Section 2.01(a) hereof.

         "REVOLVING CREDIT COMMITTED AMOUNT" shall have the meaning set forth in
Section 2.01(a) hereof.

                                      -18-
<PAGE>

         "REVOLVING  CREDIT  LOANS"  shall have the meaning set forth in Section
2.01(a) hereof.

         "REVOLVING  CREDIT MATURITY DATE" shall mean February 12, 2003, as such
date may be extended pursuant to Section 2.18 hereof.

         "REVOLVING  CREDIT NOTE" shall mean the promissory note of the Borrower
executed and delivered under Section 2.01(c) hereof,  any promissory note issued
in  substitution  therefor  pursuant  to Sections  2.17(b) or  10.14(c)  hereof,
together with all extensions,  renewals,  refinancings or refundings  thereof in
whole or part.

         "ROBBINS  FACILITY" means the  waste-to-energy  facility located in the
Village of Robbins, Illinois.

         "ROBBINS SUBSIDIARIES" shall mean,  collectively,  RRRP Illinois, Inc.,
RRRP Robbins,  Inc. RRRP Midwest,  LLC and Robbins Resources  Recovery Partners,
L.P. and their respective successors and assigns.

         "S&P" shall mean  Standard & Poor's Rating  Services,  or any successor
thereto.

         "S&P RATING" shall mean the rating  assigned to the  Borrower's  senior
unsecured  long term debt by S&P, or in the event the  Borrower has no S&P-rated
senior  unsecured  long-term debt  outstanding,  the "issuer credit rating" most
recently  assigned to the Borrower by S&P, which assignment shall have been made
not more than  fifteen  months  prior to the time in question  and not more than
ninety (90) days after a request  therefor by the Required  Lenders  pursuant to
Section 5.14 hereof.

         "SIGNIFICANT SUBSIDIARY" shall mean (a) each Special Purpose Subsidiary
and (b) each other  Subsidiary  of the Borrower  which in the most recent fiscal
year of the Borrower  accounted for more than 10% of the consolidated  assets of
the Borrower and its  Subsidiaries  or which  accounted for more than 10% of the
consolidated  income of the Borrower and its  Subsidiaries  for each of the most
recent three fiscal years of the Borrower;  PROVIDED, HOWEVER, that with respect
to  Subsidiaries  created or acquired after the date hereof,  if thereafter such
entity, in a fiscal year,  accounts for more than 10% of the consolidated assets
of the  Borrower  and its  Subsidiaries  or  accounts  for more  than 10% of the
consolidated income of the Borrower and its Subsidiaries in such fiscal year, it
shall be deemed to be a Significant Subsidiary for such fiscal year.

         "SPECIAL  PURPOSE  SUBSIDIARY"  shall mean a Subsidiary of the Borrower
formed with the express and sole purpose of, and which is engaged  solely in the
business of,  constructing or owning,  leasing or operating a specific  Project,
and with respect to which Subsidiary,  neither the Borrower nor any of its other
Subsidiaries is obligated  (except as guarantor of completion or performance) to
pay any Indebtedness  (including lease obligations) incurred to construct,  own,
lease or operate any such Project or any other  Indebtedness of such Subsidiary;
PROVIDED,  HOWEVER,  that each  Robbins  Subsidiary  shall be a Special  Purpose
Subsidiary  notwithstanding  the  obligations  of the  Borrower  under  the Exit
Funding  Agreement,  so long as such  companies  otherwise  qualify  under  this
definition.

                                      -19-
<PAGE>

         "SPOT  RATE" for a  currency  means  the rate  quoted  (expressed  as a
decimal, rounded to the fourth decimal place) to the Administrative Agent as the
spot rate for the purchase of such currency with another currency through the FX
Trading Office of Bank of America at  approximately  12:00 noon (London time) on
the date two  Business  Days prior to the date as of which the foreign  exchange
settlement is made.

         "STANDARD NOTICE" shall mean an irrevocable notice substantially in the
form of Exhibit L provided to the  Administrative  Agent on a Business Day which
is:

                   (a)     At least two  Business  Day in advance in the case of
         selection  of,  conversion  to or  renewal  of the CD  Rate  Option  or
         prepayment of CD Rate Portion;

                   (b)     At least three  Business  Days in advance in the case
         of selection of,  conversion  to or renewal of the Euro-Rate  Option or
         prepayment of any Euro-Rate Portion;

                   (c)     On the same Business Day in the case of selection of,
         conversion  to or renewal of the Base Rate Option or prepayment of Base
         Rate Portion; and

                   (d)     On the same  Business  Day in the  case of  Swingline
         Advances.

Standard  Notice must be provided no later than 9:00 a.m.,  Los Angeles time, on
the last day permitted for such notice in the case of notices given  pursuant to
clauses (c) and (d) above,  and no later than 10:00 a.m.,  Los Angeles  time, on
the last day permitted for such notice in the case of notices given  pursuant to
clauses (a) and (b) above.

         "STOCK PAYMENT" by any Person shall mean any dividend,  distribution or
payment  of any nature  (whether  in cash,  securities,  or other  property)  on
account  of or in  respect  of any  shares of the  capital  stock (or  warrants,
options or rights  therefor)  of such Person,  including  but not limited to any
payment  on account  of the  purchase,  redemption,  retirement,  defeasance  or
acquisition  of any shares of the capital stock (or warrants,  options or rights
therefor) of such Person,  in each case  regardless  of whether  required by the
terms of such  capital  stock (or  warrants,  options  or  rights)  or any other
agreement or instrument.

         "SUBSIDIARY"  of a Person at any time  shall  mean any  corporation  of
which a  majority  (by  number  of  shares  or  number of votes) of any class of
outstanding  capital stock normally  entitled to vote for the election of one or
more  directors  (regardless  of any  contingency  which does or may  suspend or
dilute  the  voting  rights of such  class) is at such time  owned  directly  or
indirectly,   beneficially  or  of  record,  by  such  Person  or  one  or  more
Subsidiaries of such Person, and any trust of which a majority of the beneficial
interest  is at such time  owned  directly  or  indirectly,  beneficially  or of
record, by such Person or one or more Subsidiaries of such Person.

         "SUBSIDIARY   GUARANTY   AGREEMENT"  shall  mean  the  agreement  of  a
Subsidiary in the form of Exhibit H hereof whereby it  acknowledges  to become a
party hereto as a Guarantor under Section 9 hereof.

                                      -20-
<PAGE>

         "SWINGLINE  ADVANCE"  shall have the meaning set forth in Section  2.05
hereof.

         "SWINGLINE  ADVANCE  COMMITMENT"  shall have the  meaning  set forth in
Section 2.05 hereof.

         "SWINGLINE  ADVANCE  COMMITTED AMOUNT" shall have the meaning set forth
in Section 2.05 hereof.

         "SWINGLINE  ADVANCE  MATURITY DATE" shall have the meaning set forth in
Section 2.05 hereof.

         "SWINGLINE ADVANCE  PARTICIPATING  INTEREST" shall have the meaning set
forth in Section 2.05 hereof.

         "SWINGLINE  LENDER"  shall mean Bank of America and any Lender which is
appointed as a successor Administrative Agent pursuant to Section 8.10 hereof.

         "SYNDICATION  AGENT"  shall  mean First  Union  National  Bank,  in its
capacity as Syndication Agent hereunder.

         "TAXES" shall have the meaning set forth in Section 2.16 hereof.

         "TOTAL  REVOLVING  CREDIT  COMMITMENT"  shall  mean  at any  time,  the
aggregate  Revolving Credit Committed  Amounts of all Lenders  hereunder at such
time.

         "TRANSFER  EFFECTIVE  DATE"  shall  have the  meaning  set forth in the
applicable Transfer Supplement.

         "TRANSFER  SUPPLEMENT"  shall  have the  meaning  set forth in  Section
10.14(c) hereof.

         "TRUST PREFERRED" shall mean 9% $175,000,000 Trust Preferred Securities
of the Borrower issued on or about January 13, 1999.

         "UTILIZATION  FEE"  is set  forth  in  the  definition  of  "APPLICABLE
MARGIN."

         "VOTING STOCK" shall mean, with respect to any corporation, the capital
stock of such  corporation  having the power to vote for a majority of the board
of directors of such corporation under ordinary circumstances.

        SECTION  1.02.  CONSTRUCTION.  Unless  the  context  of  this  Agreement
otherwise clearly requires,  references to the plural include the singular,  the
singular  the  plural  and the part the whole;  "or" has the  inclusive  meaning
represented by the phrase "and/or";  and "property"  includes all properties and
assets of any kind or nature,  tangible or intangible,  real, personal or mixed.
References in this Agreement to "determination" (and similar terms) by any Agent
or by any Lender include reasonable and good faith estimates by such Agent or by
such Lender (in the case of quantitative  determinations) and good faith beliefs
by such Agent or by such Lender (in

                                      -21-
<PAGE>

the  case  of  qualitative   determinations).   The  words  "hereof,"  "herein,"
"hereunder"  and similar terms in this  Agreement  refer to this  Agreement as a
whole and not to any  particular  provision of this  Agreement.  The section and
other headings  contained in this Agreement and the Table of Contents  preceding
this  Agreement are for reference  purposes only and shall not control or affect
the construction of this Agreement or the interpretation thereof in any respect.
Section,  subsection  and  exhibit  references  are  to  this  Agreement  unless
otherwise specified.

        SECTION 1.03.    ACCOUNTING PRINCIPLES. (a) As used herein, "GAAP" shall
mean generally  accepted  accounting  principles as such principles  shall be in
effect at the Relevant Date,  subject to the provisions of this Section 1.03. As
used  herein,  "Relevant  Date"  shall mean the date a relevant  computation  or
determination is to be made or the date of relevant financial statements, as the
case may be.

         (b) Except as otherwise  provided in this Agreement,  all  computations
and  determinations as to accounting or financial matters shall be made, and all
financial  statements  to be  delivered  pursuant  to this  Agreement  shall  be
prepared,  in accordance with GAAP (including  principles of consolidation where
appropriate),  and all  accounting  or  financial  terms shall have the meanings
ascribed to such terms by GAAP.

         (c) If any change in GAAP after the date of this  Agreement is or shall
be required to be applied to transactions then or thereafter in existence, and a
violation of one or more  provisions of this Agreement shall have occurred or in
the opinion of the Borrower  would likely occur which would not have occurred or
be likely to occur if no change in accounting principles had taken place,

                   (i) The  parties  agree  that  such  violation  shall  not be
         considered to constitute an Event of Default or a Potential Default for
         a  period  of  60  days  from  the  date  the  Borrower   notifies  the
         Administrative Agent of the application of this Section 1.03 (c);

                  (ii) The  parties  agree in such  event to  negotiate  in good
         faith an amendment of this  Agreement  which shall  approximate  to the
         extent  possible  the  financial  effect  of  the  original   financial
         covenants after taking into account such change in GAAP; and

                 (iii) If the parties are unable to negotiate  such an amendment
         within 60 days,  the Borrower  shall have the option of  prepaying  the
         Loans  (subject to Section  2.14(b)  hereof).  If the Borrower does not
         exercise  such  option  within  said  period,  then  as  used  in  this
         Agreement,  "GAAP" shall mean generally accepted accounting  principles
         in effect at the Relevant Date.

         (d) If any change in GAAP after the date of this  Agreement is required
to be applied to transactions or conditions then or thereafter in existence, and
the Administrative Agent shall assert that the effect of such change is or shall
likely  be to  distort  materially  the  effect  of any of  the  definitions  of
financial  terms in Article I hereof or any of the  covenants of the Borrower in
Article VI hereof (the "FINANCIAL  PROVISIONS"),  so that the intended financial
effect of any of the Financial Provisions will not in fact be accomplished,

                                      -22-
<PAGE>

                   (i) The  Administrative  Agent shall  notify the  Borrower of
         such assertion, specifying the change in GAAP which is objected to, and
         until otherwise  determined as provided below,  the specified change in
         GAAP shall not be made by the Borrower in its financial  statements for
         the purpose of applying the Financial Provisions; and

                  (ii) The  parties  shall  follow the  procedures  set forth in
         paragraph (ii) and the first sentence of paragraph  (iii) of subsection
         (c) of this Section. If the parties are unable to agree on an amendment
         as  provided  in said  paragraph  (ii)  and if the  Borrower  does  not
         exercise the option set forth in the first  sentence of said  paragraph
         (iii)  within  the  specified  period,  then as used in this  Agreement
         "GAAP" shall mean generally accepted accounting principles in effect at
         the Relevant  Date,  except that the specified  change in GAAP which is
         objected to by the  Administrative  Agent shall not be made in applying
         the Financial Provisions.

         (e) All expenses of compliance with this Section 1.03 shall be paid for
by the Borrower upon demand.

        SECTION 1.04.    OPTIONAL INCREASE OF THE COMMITMENTS.  (a) The Borrower
may from time to time  increase the Total  Revolving  Credit  Commitment  by the
addition of one or more new Lenders consented to by the Administrative Agent and
the LC Issuer or by the agreement of any existing  Lender (a "PROPOSED  COMBINED
COMMITMENTS INCREASE") in the manner set forth below; provided that (i) the then
Total  Revolving  Credit  Commitment  plus  the  Proposed  Combined  Commitments
Increase shall not be greater than the  $300,000,000;  (ii) immediately prior to
and after giving effect to the Proposed Combined  Commitments  Increase no event
has occurred and is continuing that constitutes an Event of Default or Potential
Default; (iii) the Borrower shall pay any costs payable under Section 2.14(b) if
and to the extent any Loans are prepaid on the  effective  date of such increase
(the  "INCREASE  DATE");  (iv) to the extent the Other  Credit  Agreement  is in
effect,  the Borrower  must request the increase of the Total  Revolving  Credit
Commitment  under the Other  Credit  Agreement  and such new or existing  Lender
consenting  to the  increase  under  this  Agreement  must also  consent  to the
increase under the Other Credit  Agreement at the same  percentage;  and (v) the
Borrower may not request the increase of the Total Revolving  Credit  Commitment
hereunder once the Borrower has reduced such  Commitment  under Section  2.02(c)
hereof.

         (b) The Total  Revolving  Credit  Commitment  shall be increased by the
Proposed  Combined  Commitments  Increase on the Increase Date provided (i) each
such new  Lender  shall  execute  and  deliver to the  Administrative  Agent the
Joinder to Revolving Credit Agreement (and by such execution and delivery,  each
such new Lender  shall be deemed to have  agreed  with the  matters set forth in
this  Agreement)  and/or  such  existing  Lender  shall  execute and deliver the
Commitment   Increase  Supplement  in  the  form  of  Exhibit  K  and  (ii)  the
Administrative  Agent  shall  have  received  on or  before  the  Increase  Date
certified  copies of the  resolutions  of the Board of Directors of the Borrower
approving such increase of the Total  Revolving  Credit  Commitment,  and of all
documents  evidencing other necessary  corporate action, if any, with respect to
such increase.  Upon satisfaction of the foregoing  conditions,  such new Lender
shall become a Lender hereunder and/or such existing  Lender's  Commitment shall
be  increased,  and the  Administrative  Agent  shall,  promptly  following  the
effective  date  thereof,  provide to the

                                      -23-
<PAGE>

Borrower and the Lenders a revised Pro Rata shares  giving effect  thereto.  The
Borrower  agrees that it shall  execute and deliver  upon request of such new or
existing Lender, one or more Notes evidencing that such new or existing Lender's
Pro Rata share.

         (c) If,  after  giving  effect  to the  Proposed  Combined  Commitments
Increase,  any  Lender's  revised Pro Rata share of the Total  Revolving  Credit
Commitment is different than its share of Obligations,  the Obligations shall be
reallocated  among the Lenders as follows.  On the  Increase  Date the  Borrower
shall be  deemed to have  prepaid  all  outstanding  Revolving  Credit  Loans in
accordance  with  Section  2.11 and  reborrowed  all  Revolving  Credit Loans in
accordance  with Section 2.01 from all Lenders  ratably in accordance with their
revised  Pro Rata  shares.  Each  Lender  having a  decreased  Pro Rata share (a
"SELLING LENDER") agrees to sell and assign to each other Lender (each a "BUYING
LENDER"),  and each Buying Lender hereby agrees to ratably  purchase and assume,
without  recourse,  from each Selling Lender,  a ratable portion of each Selling
Lender's  Letter of  Credit  Obligations  and  Swingline  Advance  Participating
Interest such that, after giving effect to such assignments, each Lender's share
of all  Obligations  (except  Competitive Bid Loans) equals its revised Pro Rata
share. On the Increase Date, the  Administrative  Agent shall distribute to each
Selling  Lender an amount equal to the difference  between its Revolving  Credit
Loans so prepaid and the new Revolving  Credit Loans deemed to have been made by
it (plus  interest  payable  hereunder).  Such payments  shall be deemed to be a
payment of the  Revolving  Credit Loans by the Borrower on the date such payment
is received.  The Selling Lender acknowledges and agrees to the maters set forth
in  Section  6(b)  of  the  Transfer  Supplement  as to  the  Letter  of  Credit
Obligations  and  Swingline  Advance  Participating  Interest  it has  acquired.
Interest and fees  accruing on the Letter of Credit  Obligations  and  Swingline
Advance  Participating  Interest for the period prior to the Increase Date shall
be for the account of each Selling Lender, and interest and fees accruing on the
Letter of Credit  Obligations and Swingline Advance  Participating  Interest for
the period  from and after the  Increase  Date shall be for the  account of each
Buying Lender.

        SECTION 1.05.    UTILIZATION OF COMMITMENTS IN FOREIGN  CURRENCIES.  The
Administrative  Agent will determine the Dollar  Equivalent  with respect to any
(i) borrowing of  Eurocurrency  Loans as of the requested  borrowing  date, (ii)
Letter of Credit  denominated  in an Offshore  Currency as of the Issuance Date,
and  (iii)  outstanding   Eurocurrency  Currency  Loans  and  Letter  of  Credit
Obligations as of the last Business Day of each month  provided,  however,  that
(i) upon the occurrence and during the continuation of any Potential  Default or
Event of Default or (ii) for the purpose of calculating  fees payable under this
Agreement or for other purposes,  such  determination  shall be made as often as
the Administrative Agent or the Required Lenders may reasonably deem necessary.


                                   ARTICLE II

                                   THE CREDITS

        SECTION 2.01.    REVOLVING    CREDIT   LOANS.   (a)   REVOLVING   CREDIT
COMMITMENTS.   Subject  to  the  terms  and  conditions  and  relying  upon  the
representations and warranties herein set forth, each Lender,  severally and not
jointly, agrees (such agreement being herein called such Lender's

                                      -24-
<PAGE>

"REVOLVING  CREDIT   COMMITMENT")  to  make  committed  loans  in  Dollars  (the
"REVOLVING CREDIT LOANS") to the Borrower from time to time on or after the date
hereof and to but not  including the Revolving  Credit  Maturity  Date. A Lender
shall have no obligation  to make any Revolving  Credit Loan to the extent that,
upon  the  making  of such  Revolving  Credit  Loan,  the  sum of the  aggregate
principal amount of (i) such Lender's  outstanding  Revolving Credit Loans, (ii)
such  Lender's Pro Rata share of all  outstanding  Swingline  Advances and (iii)
such  Lender's  Pro Rata  share of the  Dollar  Equivalent  of  Letter of Credit
Obligations  would exceed such Lender's  Revolving Credit Committed  Amount.  No
Revolving Credit Loans shall be made hereunder to the extent that such Revolving
Credit Loans would cause the Dollar  Equivalent  of the sum of (i) the aggregate
outstanding  principal  amount of all Loans  outstanding  hereunder and (ii) the
Letter of Credit  Obligations to exceed the Total Revolving  Credit  Commitment.
Each Lender's  "Revolving Credit Committed Amount" at any time shall be equal to
the amount set forth as its "Initial  Revolving Credit  Committed  Amount" below
its name on the  signature  pages  hereof,  as such amount may have been reduced
pursuant  to Section  2.02(c)  hereof at such time,  subject  to  adjustment  as
provided  in Sections  1.05 and 10.17  hereof and subject to transfer to another
Lender as provided in Section 10.14 hereof.

         (b) NATURE OF CREDIT. Within the limits of time and amount set forth in
this Section 2.01, and subject to the provisions of this Agreement, the Borrower
may borrow, repay and reborrow Revolving Credit Loans hereunder.

         (c) REVOLVING  CREDIT  NOTES.  To the extent so requested by any Lender
through the  Administrative  Agent,  the obligation of the Borrower to repay the
unpaid  principal amount of the Revolving Credit Loans made to it by such Lender
and to pay interest  thereon shall be evidenced in part by  promissory  notes of
the Borrower,  one to such Lender,  dated the date hereof (the "REVOLVING CREDIT
NOTES") in substantially  the form attached hereto as Exhibit A, with the blanks
appropriately filled, payable to the order of such Lender in a face amount equal
to such Lender's Initial Revolving Credit Committed Amount.

         (d) MATURITY.  To the extent not due and payable earlier, the Revolving
Credit Loans shall be due and payable on the Revolving Credit Maturity Date.

        SECTION 2.02.    FEES;  REDUCTION OF THE COMMITTED AMOUNTS. (a) FACILITY
FEE. The Borrower shall pay to the Administrative  Agent for the account of each
Lender a fee (the  "FACILITY  FEE")  for  each day from and  including  the date
hereof and to but not  including  the  Revolving  Credit  Maturity  Date, on the
amount of such  Lender's  Revolving  Credit  Committed  Amount  (whether used or
unused)  on such  day  (based  upon a year of 365 or 366 days  and  actual  days
elapsed) at a rate per annum equal to the rate in effect for such day determined
in accordance  with the pricing grid set forth in the  definition of "Applicable
Margin".  Facility  Fees shall be due and payable for the  preceding  period for
which  such  fees  have not been paid on each  Regular  Payment  Date and on the
Revolving Credit Maturity Date.

         (b) OTHER FEES.  The Borrower shall pay to each Agent an agency fee and
other  fees at the times and in the  amounts  previously  agreed  upon among the
Agents and the Borrower.

                                      -25-
<PAGE>

         (c) OPTIONAL REDUCTION OF THE REVOLVING CREDIT COMMITTED  AMOUNTS.  The
Borrower  may at any time or from  time to time  reduce  Pro Rata the  Revolving
Credit  Committed  Amounts of the Lenders to an aggregate  amount  (which may be
zero) not less than the Dollar  Equivalent  of the sum of the  unpaid  principal
amount of the Revolving  Credit Loans,  Swingline  Advances and  Competitive Bid
Loans then  outstanding plus the principal amount of all Revolving Credit Loans,
Swingline Advances and Competitive Bid Loans not yet made as to which notice has
been given by  Borrower  under  Section  2.07  hereof  plus all Letter of Credit
Obligations then outstanding plus the stated amount of all Letters of Credit not
yet issued as to which  notice has been given by  Borrower  under  Section  2.06
hereof.  Any reduction of the Revolving Credit Committed  Amounts shall be in an
aggregate  amount not less than  $10,000,000  which is an  integral  multiple of
$1,000,000. Reduction of the Revolving Credit Committed Amounts shall be made by
providing  not less  than two  Business  Days'  notice  (which  notice  shall be
irrevocable)  to  such  effect  to the  Administrative  Agent.  After  the  date
specified in such notice the Facility Fee shall be calculated upon the Revolving
Credit Committed Amounts as so reduced.  The Administrative  Agent will promptly
send copies of such notice to the Lenders.

         (d) BID FEES. In consideration of the Administrative Agent's management
of bidding  procedures for Competitive Bid Loans,  the Borrower shall pay to the
Administrative  Agent for the Administrative  Agent's own account on the date of
each LIBOR  Auction,  CD Rate  Auction,  Base Rate  Auction  and  Absolute  Rate
Auction,  bid agency  fees in the amount of $150 for each  Competitive  Bid Loan
Quote submitted by each Lender, but in no event less than $450 per auction.

         (e) LETTER  OF  CREDIT  FEE.  The   Borrower   agrees  to  pay  to  the
Administrative  Agent for Pro Rata  distribution to each Lender a fee in Dollars
in respect of each  Letter of Credit  Issued  hereunder  (the  "LETTER OF CREDIT
FEE") for the period from and  including  the date of Issuance of such Letter of
Credit to but not including the  termination of such Letter of Credit,  computed
at a rate per annum equal to (i) in the case of Financial Letters of Credit, the
Applicable Margin for the Euro-Rate Option,  and (ii) in the case of Performance
Letters of Credit,  one-half  (1/2) of the  Applicable  Margin for the Euro-Rate
Option,  as in effect from time to time on the Dollar  Equivalent  of the stated
amount of such Letter of Credit.  Accrued Letter of Credit Fees shall be due and
payable  in arrears on each  Regular  Payment  Date and upon the first day on or
after the  termination of the Total  Revolving  Credit  Commitment upon which no
Letters of Credit remain outstanding.

         (f) FRONTING FEE. The Borrower agrees to pay to the LC Issuer,  for its
account, a fronting fee in Dollars in respect of each Letter of Credit issued by
the LC Issuer  hereunder  for the period from and including the date of Issuance
of such Letter of Credit to but not including the  termination of such Letter of
Credit  computed  at a rate of 0.10% per annum on the Dollar  Equivalent  of the
stated amount of such Letter of Credit. Such fee shall be due and payable in the
same manner as the Letter of Credit Fee.

         (g) ADMINISTRATIVE CHARGE. The Borrower agrees to pay to the LC Issuer,
upon each drawing  under,  Issuance  of, or  amendment  to, any Letter of Credit
issued by the LC Issuer,  such  amount as shall at the time of such event be the
standard  administrative  charge  which the LC Issuer is  generally  imposing in
connection with such occurrence with respect to letters of credit.

                                      -26-
<PAGE>

        SECTION  2.03.   COMPETITIVE  BID LOANS.  (a) MAKING OF COMPETITIVE  BID
LOANS. In addition to Revolving  Credit Loans, the Borrower may, as set forth in
this  Section  2.03,  request  the  Lenders  to make  offers to make one or more
Competitive  Bid Loans to the  Borrower.  Each  Lender  may,  but shall  have no
obligation  to,  make one or more  such  offers  and,  subject  to the terms and
provisions hereof, the Borrower may, but shall have no obligation to, accept any
such offers in the manner set forth in this Section 2.03.  Competitive Bid Loans
may be Base Rate Loans, CD Rate Loans,  Absolute Rate Loans or LIBOR-based Loans
(each a "TYPE" of Competitive Bid Loan) and,  subject to Section 2.03(r) hereof,
may be in any freely  available  currency  agreed upon by the  Borrower and each
Lender.  Competitive  Bid Loans  shall be due and  payable on the earlier of the
Competitive Bid Expiration Date and the applicable Competitive Bid Loan Maturity
Date.  After giving effect to any borrowing of Competitive Bid Loans, the Dollar
Equivalent of the sum of the aggregate principal amount of all Loans outstanding
hereunder  and the  Letter of Credit  Obligations  shall  not  exceed  the Total
Revolving Credit Commitment at any time; PROVIDED, HOWEVER, that the outstanding
Competitive  Bid Loans  made by any  Lender  may  exceed  its  Revolving  Credit
Committed Amount. The Competitive Bid Loans shall be deemed to utilize the Total
Revolving Credit  Commitment by an amount equal to the Dollar  Equivalent of the
aggregate outstanding principal amount thereof.

         (b) COMPETITIVE  BID LOAN QUOTE  REQUESTS.  When the Borrower wishes to
request offers to make  Competitive  Bid Loans under this Section 2.03, it shall
transmit to the  Administrative  Agent by  telecopy,  at its  Office,  notice (a
"COMPETITIVE  BID LOAN QUOTE  REQUEST") so as to be received no later than 10:00
a.m.,  Los  Angeles  time on (x) the  fourth  Business  Day prior to the date of
borrowing  proposed  therein,  in the  case of a LIBOR  Auction,  (y) the  third
Business Day prior to the date of Borrowing  proposed therein,  in the case of a
CD Rate  Auction,  or (z) the Business Day next  preceding the date of borrowing
proposed  therein,  in the case of a Base Rate Auction or Absolute  Rate Auction
(or, in any case, such other time as the Borrower and  Administrative  Agent may
agree).  The  Borrower  may  request  offers to make  Competitive  Bid Loans for
different  Interest  Periods in a single  notice;  PROVIDED that the request for
each separate  Interest Period shall be deemed to be a separate  Competitive Bid
Loan Quote  Request for a separate  Competitive  Bid Loan (all  Competitive  Bid
Loans  proposed  to be made at one time  herein  collectively  referred  to as a
"COMPETITIVE  BID  BORROWING").  Each such notice shall be  substantially in the
form of Exhibit B hereto and in any case  shall  specify as to each  Competitive
Bid Borrowing:

                (i)   The proposed date of such Competitive Bid Borrowing, which
         shall be a Business Day;

                (ii)  The  currency  or  currencies  in which  such  Competitive
         Borrowing is to be made;

                (iii) The  aggregate  amount of such  Competitive  Bid Borrowing
         which shall be a Dollar  Equivalent of at least $5,000,000 (or a higher
         integral  multiple of $1,000,000) (to the extent  practical in the case
         of  Eurocurrency  Loans),  but shall not cause the limits  specified in
         Section 2.04 hereof to be violated;

                                      -27-
<PAGE>

                (iv)  The  duration  of the initial  Interest  Period or Periods
         applicable  thereto,  subject to the  provisions  of the  definition of
         "Interest Period"  (including  without limitation that no such Interest
         Period shall end after the Competitive Bid Expiration Date); and

                (v)   Whether the Competitive  Bid Loan Quotes  requested are to
         set forth a LIBOR-based Margin, a Base Rate Margin, a CD Rate Margin or
         an Absolute Rate.

         The Borrower may not request  Competitive  Bid Borrowings for more than
three  maturities  nor request more than one type of  Competitive  Bid Loan in a
single  Competitive  Bid Borrowing.  Unless the  Administrative  Agent otherwise
agrees,  in its sole and  absolute  discretion,  the  Borrower  may not submit a
request for a Competitive Bid Borrowing if it has submitted another such request
within the prior two Business Days.

         (c) INVITATION  FOR  COMPETITIVE  BID LOAN QUOTES.  The  Administrative
Agent  shall  promptly  transmit  to the  Lenders  by  telecopy  notice  of such
Competitive Bid Loan Request, which notice shall constitute an invitation by the
Borrower to each Lender to submit  Competitive  Bid Loan Quotes offering to make
Competitive  Bid  Loans in  accordance  with  such  Competitive  Bid Loan  Quote
Request.

         No  Competitive  Bid Loan Request  shall be given if such request could
result in more than six Competitive Bid Loans being  outstanding at any one time
unless otherwise permitted by the Administrative Agent.

         (d) SUBMISSION AND CONTENTS OF  COMPETITIVE  BID LOAN QUOTES.  (i) Each
Lender may submit one or more  Competitive  Bid Loan Quotes,  each containing an
offer to make a  Competitive  Bid Loan in response to any  Competitive  Bid Loan
Quote Request. Each Competitive Bid Loan Quote must comply with the requirements
of this Section  2.03(d) and must be submitted  to the  Administrative  Agent by
telecopy  at its Office not later than (x) 8:00 a.m.,  Los  Angeles  time on the
third  Business Day prior to the proposed  date of  borrowing,  in the case of a
LIBOR  Auction  or (y) 7:00  a.m.,  Los  Angeles  time on the  proposed  date of
borrowing,  in the case of a Base Rate  Auction,  CD Rate Auction or an Absolute
Rate Auction  (or, in either case upon  reasonable  notice to the Lenders,  such
other time and date as the  Borrower  and the  Administrative  Agent may agree);
PROVIDED that any  Competitive  Bid Loan Quote  submitted by the  Administrative
Agent (or an Affiliate of the Administrative  Agent) in the capacity of a Lender
may be submitted,  and may only be submitted,  if the  Administrative  Agent (or
such  Affiliate)  notifies  the  Borrower  of the  terms of the  offer or offers
contained  therein not later than (x) 7:30 a.m.,  Los Angeles  time on the third
Business Day prior to the  proposed  date of  borrowing,  in the case of a LIBOR
Auction or (y) 6:30 a.m., Los Angeles time on the proposed date of borrowing, in
the case of a Base Rate  Auction,  CD Rate Auction or an Absolute  Rate Auction.
Subject to Sections  2.14,  2.03(r) and 4.01 hereof,  any  Competitive  Bid Loan
Quote so made  shall be  irrevocable  except  with the  written  consent  of the
Administrative Agent given on the written instructions of the Borrower.

                (ii)  Each  Competitive Bid Loan Quote shall be substantially in
         the form of Exhibit C hereto and shall in any case specify:

                                      -28-
<PAGE>

                   (A)     The proposed date of borrowing, the proposed currency
         and the Interest Period therefor;

                   (B)     The principal  amount of the Competitive Bid Loan for
         which each such offer is being made,  which principal amount shall be a
         Dollar  Equivalent of at least $5,000,000 or a higher integral multiple
         of  $1,000,000;  PROVIDED  that the aggregate  principal  amount of all
         Competitive  Bid Loans for which a Lender submits  Competitive Bid Loan
         Quotes (x) may be  greater  than,  less than or equal to the  Revolving
         Credit  Committed  Amount of such  Lender  but (y) may not  exceed  the
         principal amount of the Competitive Bid Borrowing for which offers were
         requested in the related Competitive Bid Loan Quote Request;

                   (C)     In the case of a LIBOR Auction, the margin above (or,
         if a negative margin is offered,  below) the applicable LIBOR Rate (the
         "LIBOR-BASED  MARGIN")  offered  for each  such  Competitive  Bid Loan,
         expressed  as a  percentage  (rounded  upwards,  if  necessary,  to the
         nearest 1/10,000th of 1%) to be added to the applicable LIBOR Rate;

                   (D)     In the case of a CD Rate  Auction,  the margin  above
         (or, if a negative  margin is offered,  below) the  applicable  CD Rate
         (the "CD RATE  MARGIN")  offered  for each  such  Competitive  Bid Loan
         expressed as a percentage (rounded upward, if necessary, to the nearest
         1/10,000th of 1%) to be added to the applicable CD Rate;

                   (E)     In the case of a Base Rate Auction,  the margin above
         (or, if a negative  margin is offered,  below) the applicable Base Rate
         (the "BASE RATE MARGIN")  offered for each such  Competitive  Bid Loan,
         expressed as a percentage (rounded upward, if necessary, to the nearest
         1/10,000th of 1%) to be added to the applicable Base Rate;

                   (F)     In the case of an Absolute Rate Auction,  the rate of
         interest per annum,  calculated on the basis of a 360-day year (rounded
         upwards, if necessary,  to the nearest 1/10,000th of 1%) (the "ABSOLUTE
         RATE") offered for each such Competitive Bid Loan; and

                   (G)     The identity of the quoting Lender.

                (iii) No  Competitive  Bid Loan Quote shall contain  qualifying,
conditional  or similar  language or propose  terms other than or in addition to
those set forth in the  applicable  Competitive  Bid Loan Quote  Request and, in
particular,  no Competitive Bid Loan Quote may be conditioned upon acceptance by
the Borrower of all (or some specified  minimum) of the principal  amount of the
Competitive  Bid Loan for which such  Competitive  Bid Loan Quote is being made,
and the Administrative Agent shall disregard any Competitive Bid Loan Quote that
contains   such  language  or  terms  or  conditions  or  that  arrives  at  the
Administrative  Agent's  Office  after  the time set  forth  for  submission  of
Competitive Bid Loan Quotes in Section 2.03(d)(i) hereof.

                                      -29-
<PAGE>

         (e) NOTICE TO THE BORROWER.  The Administrative  Agent shall (x) in the
case of a LIBOR Auction,  by 9:00 a.m., Los Angeles time on the day (which shall
be a Business Day) a Competitive  Bid Loan Quote is submitted or (y) in the case
of a Base Rate Auction,  CD Rate Auction or an Absolute  Rate  Auction,  by 7:30
a.m.,  Los Angeles time on the day (which shall be a Business Day) a Competitive
Bid Loan Quote is submitted, notify the Borrower by telecopy of the terms (i) of
any  Competitive Bid Loan Quote submitted by a Lender that is in accordance with
Section  2.03(d) hereof and (ii) of any  Competitive Bid Loan Quote that amends,
modifies or is otherwise inconsistent with a previous Competitive Bid Loan Quote
submitted  by such Lender with  respect to the same  Competitive  Bid Loan Quote
Request. Any such subsequent  Competitive Bid Loan Quote shall be disregarded by
the  Administrative  Agent unless such subsequent  Competitive Bid Loan Quote is
submitted solely to correct a manifest error in such former Competitive Bid Loan
Quote. The  Administrative  Agent's notice to the Borrower shall specify (A) the
aggregate  principal amount of each  Competitive Bid Loan for which  Competitive
Bid Loan Quotes have been  received for each  Interest  Period  specified in the
related Competitive Bid Loan Quote Request, (B) the respective principal amounts
and LIBOR - based Margins, CD Rate Margins, Base Rate Margins or Absolute Rates,
as the case may be, so offered by each Lender,  identifying the Lender that made
each Competitive Bid Loan Quote and (C) if the Administrative Agent is notifying
the Borrower of more than one  Competitive  Bid Loan Quote for a single Interest
Period, the  Administrative  Agent shall arrange the Competitive Bid Loan Quotes
in ascending yield order.

         (f) ACCEPTANCE  AND  NOTICE BY THE  BORROWER.  Not later  than (x) 9:30
a.m.,  Los Angeles time on the third  Business Day prior to the proposed date of
the borrowing, in the case of a LIBOR Auction or (y) 8:00 a.m., Los Angeles time
on the proposed date of the  borrowing,  in the case of a Base Rate Auction,  CD
Rate Auction or an Absolute  Rate  Auction  (or, in either case upon  reasonable
prior  notice to the  Lenders,  such other time and date as the Borrower and the
Administrative  Agent may agree),  the Borrower shall notify the  Administrative
Agent by  telecopy  at its  Office of its  acceptance  or  nonacceptance  of the
Competitive Bid Loan Quotes so notified to it pursuant to Section 2.03(e) hereof
(and the  failure  of the  Borrower  to give  such  notice  by such  time  shall
constitute  nonacceptance)  and the  Administrative  Agent shall promptly notify
each affected Lender in accordance  with Section 2.03(h) hereof.  In the case of
acceptance,  such  notice  shall  specify  the  aggregate  principal  amount  of
Competitive  Bid Loan Quotes for each  Interest  Period that are  accepted.  The
Borrower may accept one or more  Competitive Bid Loan Quotes in whole or in part
(PROVIDED that any Competitive Bid Loan Quote accepted in part shall be a Dollar
Equivalent of at least  $5,000,000 or a higher integral  multiple of $1,000,000,
to the extent practical in the case of Eurocurrency Loans); PROVIDED that:

             (i)   The  aggregate  principal  amount  of  each  Competitive  Bid
         Borrowing may not exceed the applicable amount set forth in the related
         Competitive Bid Loan Quote Request;

             (ii)  The  aggregate  principal  amount  of  each  Competitive  Bid
         Borrowing  shall be a Dollar  Equivalent of at least  $5,000,000  (or a
         higher integral multiple of $1,000,000);

                                      -30-
<PAGE>

             (iii) Acceptance  of  offers  may be made only in  ascending  yield
         order of  LIBOR-based  Margins,  CD Rate Margins,  Base Rate Margins or
         Absolute Rates, as the case may be; and

             (iv)  The   Borrower   shall  not  accept   any  offer   where  the
         Administrative  Agent has advised the Borrower that such offer fails to
         comply with Section  2.03(d)(ii)  hereof or  otherwise  fails to comply
         with the requirements of this Agreement.

         (g) ALLOCATION BY ADMINISTRATIVE  AGENT. If Competitive Bid Loan Quotes
are made by two or more  Lenders  with the same LIBOR - based  Margins,  CD Rate
Margins,  Base Rate Margins or Absolute Rates, as the case may be, for a greater
aggregate  principal amount than the amount in respect of which  Competitive Bid
Loan Quotes are accepted for the related Interest  Period,  the principal amount
of Competitive  Bid Loans in respect of which such  Competitive  Bid Loan Quotes
are accepted shall be allocated by the  Administrative  Agent among such Lenders
as  nearly as  possible  (in such  multiples,  not less  than  $500,000,  as the
Administrative  Agent  may deem  appropriate)  in  proportion  to the  aggregate
principal amount of such offers. If two or more such Competitive Bid Loan Quotes
cannot be  allocated  evenly  within  the  limits  set forth in the  immediately
preceding sentence, the Administrative Agent shall have discretion to allocate a
larger  share of such  Competitive  Bid  Loans to one or more of the  successful
Lenders and in making such allocation shall use reasonable  efforts to take into
account previous allocations of unequal shares to one or more of such Lenders in
connection   with   other   Competitive   Bid  Loans.   Determinations   by  the
Administrative  Agent of the amounts of Competitive Bid Loans to be allocated to
each such Lender shall be conclusive absent manifest error.

         (h) NOTICE  TO  LENDERS.   On  the  date  the  Borrower   notifies  the
Administrative  Agent of its acceptance of one or more of the offers made by any
Lender or Lenders pursuant to Section 2.03(f) hereof, the  Administrative  Agent
shall  promptly  notify each Lender which has made an offer (i) of the aggregate
amount of each  Competitive  Bid  Borrowing  with  respect to which the Borrower
accepted one or more Competitive Bid Loan Quotes and such Lender's share of such
Competitive  Bid  Borrowing or (ii) that the Borrower  accepted no offers,  such
notice to be by telecopy.

         (i) FUNDING OF  COMPETITIVE  BID LOANS.  Any Lender whose offer to make
any Competitive Bid Loan has been accepted shall, not later than 11:00 a.m., Los
Angeles time, on the date  specified in the related  Competitive  Bid Loan Quote
Request  for the making of such  Competitive  Bid Loan,  make the amount of such
Competitive  Bid Loan  available to the Borrower at the  Administrative  Agent's
Office in immediately available funds. If any Lender makes a new Competitive Bid
Loan  hereunder on a day on which the Borrower is to repay all or any part of an
outstanding  Competitive Bid Loan from such Lender,  such Lender shall apply the
proceeds  of its new  Competitive  Bid Loan to make such  repayment  and only an
amount equal to the  difference  (if any) between the amount being  borrowed and
the amount being  repaid shall be made  available by such Lender to the Borrower
as  provided  by this  Section  2.03(i),  or  remitted  by the  Borrower  to the
Administrative Agent as provided in Section 2.14 hereof, as the case may be.

                                      -31-
<PAGE>

         (j) COMPETITIVE BID LOAN MATURITY DATES.  The principal  amount of each
Competitive  Bid Loan shall be due and payable on the last day of the applicable
Interest Period specified in the related Competitive Bid Loan Quote Request (the
"COMPETITIVE BID LOAN MATURITY DATE").

         (k) COMPETITIVE  BID LOAN  INTEREST  PAYMENT  DATES.  Interest  on each
Competitive  Bid  Loan  shall be due and  payable  on the  Competitive  Bid Loan
Maturity  Date  thereof and  thereafter  on demand at the rates  provided for in
Section 2.03(o), and if any Interest Period is longer than 90 days, also on each
90th day of such Interest Period.

         (1) COMPETITIVE BID RECORD. The  Administrative  Agent shall maintain a
record of the names and  addresses  of Lenders  that have made  Competitive  Bid
Loans and the principal amount of the Competitive Bid Loans owing to each Lender
from time to time together  with the  Competitive  Bid Loan  Maturity  Dates and
interest  rates  applicable to each such  Competitive  Bid Loan, and other terms
applicable   thereto  (the  "COMPETITIVE  BID  RECORD").   The  entries  in  the
Competitive Bid Record shall be prima facie evidence with respect to the entries
therein.

         (m) REVIEW OF COMPETITIVE BID RECORD.  The Competitive Bid Record shall
be available to the Borrower or any Lender at any reasonable  time and from time
to time upon reasonable prior notice.

         (n) INTEREST RATES FOR COMPETITIVE BID LOANS. The outstanding principal
amount of each  Competitive  Bid Loan shall bear interest for each day until due
at the following rate or rates per annum:

                (i)   For each  LIBOR-based  Loan, a rate per annum (computed on
         the basis of a year of 360 days and actual days  elapsed)  equal to the
         LIBO  Rate   applicable  to  the  Interest  Period  therefor  plus  the
         LIBOR-based Margin quoted by the Lender making such Loan in the related
         Competitive Bid Loan Quote submitted in accordance with Section 2.03(d)
         hereof;

                (ii)  For each Base Rate Loan, a rate per annum (computed on the
         basis of a year of 365 or 366 days and actual  days  elapsed)  equal to
         the Base Rate as in effect  from time to time plus the Base Rate Margin
         quoted by the Lender  making such Loan in the related  Competitive  Bid
         Loan Quote submitted in accordance with Section 2.03(d) hereof;

                (iii) For each CD Rate Loan,  a rate per annum  (computed on the
         basis of a year of 360 days and actual  days  elapsed)  equal to the CD
         Rate applicable to the Interest Period therefor plus the CD Rate Margin
         quoted by the Lender  making such Loan in the related  Competitive  Bid
         Loan Quote submitted in accordance with Section 2.03(d) hereof;

                (iv)  For each Absolute Rate Loan, a rate per annum (computed on
         the basis of a year of 360 days and actual days  elapsed)  equal to the
         Absolute  Rate  quoted by the Lender  making  such Loan in the  related
         Competitive Bid Loan Quote submitted in accordance with Section 2.03(d)
         hereof.

                                      -32-
<PAGE>

         (o) INTEREST  AFTER  MATURITY  FOR  COMPETITIVE  BID  LOANS.  After the
principal  amount  of any  Competitive  Bid  Loan  shall  have  become  due  (by
acceleration  or  otherwise),  such Loan shall bear  interest for each day until
paid (before and after  judgment)  (i) until the  Competitive  Bid Loan Maturity
Date of the  applicable  Interest  Period of such  Loan,  at a rate per annum 2%
above  the rate  applicable  to such  Loan  prior to such  Competitive  Bid Loan
Maturity Date and (ii)  thereafter at a rate per annum  determined in accordance
with Section 2.15(b).

         (p) COMPETITIVE  BID NOTES.  To the extent so  requested  by any Lender
through the  Administrative  Agent,  the obligation of the Borrower to repay the
unpaid  principal amount of any Competitive Bid Loans made by such Lender and to
pay  interest  thereon  shall be evidenced  by a single  promissory  note of the
Borrower (a "COMPETITIVE BID NOTE") in substantially the form attached hereto as
Exhibit  D, with the  blanks  appropriately  filled.  The  Competitive  Bid Note
payable to such Lender shall be dated the Closing  Date,  shall bear interest as
provided  in  Section  2.03(n) or as  otherwise  provided  herein,  and shall be
payable to the order of the  Lender  named as payee  therein  in a maximum  face
amount of the Total Revolving  Credit  Commitment.  The Competitive Bid Note for
such  Lender  shall  be  delivered,   duly  executed  by  the  Borrower  to  the
Administrative  Agent at or prior to the  funding of the first  Competitive  Bid
Loan made by such Lender hereunder and the  Administrative  Agent shall promptly
forward such Competitive Bid Note to such Lender.

         The outstanding principal amount of each Competitive Bid Loan evidenced
by each  Competitive  Bid Note  from  time to  time,  the  Competitive  Bid Loan
Maturity  Date of such  Competitive  Bid Loan and the rate of  interest  and the
amount of accrued  and unpaid  interest  payable  in  respect  thereof  shall be
determined from the records of the  Administrative  Agent,  which shall be prima
facie evidence with respect to the entries therein. In the event the holder of a
Competitive  Bid Note shall assign said  Competitive  Bid Note,  it shall attach
thereto a schedule, which shall be verified by the Administrative Agent, setting
forth  the  then  outstanding  principal  amount  of each  Competitive  Bid Loan
evidenced by such  Competitive  Bid Note and the  Competitive  Bid Loan Maturity
Date thereof.

         (q) PAYMENTS.  All  payments  to be made by the  Borrower in Dollars in
respect of any  Competitive Bid Loan shall be payable at 11:00 a.m., Los Angeles
time, on the day when due without presentment,  demand, protest or notice of any
kind, all of which are hereby  expressly  waived,  and an action  therefor shall
immediately accrue, without setoff, counterclaim, withholding or other deduction
of any kind or nature,  except for payments to a Lender subject to a withholding
deduction  under Section  2.16(c)  hereof.  Such  payments  shall be made to the
Administrative Agent at its Office in Dollars in funds immediately  available at
such Office.  Any payment  received by the  Administrative  Agent or such Lender
after 11:00  a.m.,  Los  Angeles  time,  on any day shall be deemed to have been
received on the next  succeeding  Business Day. The  Administrative  Agent shall
distribute to the Lenders all such payments  received by it from the Borrower as
promptly as practicable after receipt by the Administrative Agent. If and to the
extent  that the  Administrative  Agent has not  forwarded  to any  Lender  such
Lender's  share of any such payment on the same  Business Day as such payment is
received (or deemed received) from the Borrower,  the Administrative Agent shall
pay to such Lender  interest on such amount at the Federal Funds  Effective Rate
for each day until such  payment is made.  All payments of any  Competitive  Bid
Loans to be made in any currency  other than Dollars shall be made by payment

                                      -33-
<PAGE>

in that currency in immediately  available and freely  transferable funds by the
time  required by  relevant  local  regulation  and  practice  in the  principal
financial  center in the country of such  currency  for value on the  applicable
payment date and such payment shall be due without presentment,  demand, protest
or notice of any kind, all of which are hereby expressly  waived,  and an action
therefor shall immediately accrue, without setoff, counterclaim,  withholding or
other  deduction of any kind or nature,  except for payments to a Lender subject
to a withholding deduction under Section 2.16(c) hereof.

         (r) MULTIPLE CURRENCY OPTION.  (i) Competitive Bid Loans may be made in
any currency  requested by the Borrower and acceptable to the applicable  Lender
(each a "EUROCURRENCY  LOAN"). If Eurocurrency Loans are to be made or are made,
the amount of such  Loans  shall be deemed to be, for  purposes  of  determining
utilization of Commitments and other provisions of this Agreement,  equal to the
Dollar  Equivalent  thereof.  If the  Dollar  Equivalent  of the  sum of the all
Eurocurrency  Loans  outstanding on the day of any such  determination  plus the
outstanding  Loans made in Dollars plus the Dollar  Equivalent  of all Letter of
Credit  Obligations  exceeds the Total  Revolving  Credit  Commitment as then in
effect, the  Administrative  Agent shall immediately notify the Borrower and the
Borrower shall prepay on the Business Day following such day Base Rate Loans and
then,  if  necessary,  Eurocurrency  Loans to the extent  required  so that such
aggregate unpaid amount will not exceed the Total Revolving Credit Commitment as
then in effect; such prepayment being subject however to Section 2.14(b) hereof.
The  Borrower  may   designate  the  Loans  to  be  prepaid  by  notice  to  the
Administrative Agent before each such prepayment.

                (ii)  CHANGES IN LAW RENDERING  EUROCURRENCY LOANS UNLAWFUL.  In
the event that any change in Law or guideline or  interpretation  or application
thereof should at any time make it unlawful for any Lender to make,  maintain or
fund its Eurocurrency  Loans, such Lender shall promptly notify the Borrower and
the Administrative Agent thereof.  Thereupon,  (i) the obligation of such Lender
to make its  Eurocurrency  Loans shall,  upon the later of the  effectiveness of
such event and the receipt of such notice, be suspended for the duration of such
illegality,  and (ii) the Borrower shall, on the applicable Competitive Bid Loan
Maturity Date with respect to such Eurocurrency Loans (or, if later, on the last
Competitive  Bid Loan Maturity Date with respect to such  Eurocurrency  Loans to
end prior to the  effectiveness of such change) or, in any event, if such Lender
so requests, on such earlier date as may be required by the relevant Law, prepay
or repay such Eurocurrency Loans.

        SECTION 2.04.    MAXIMUM  AGGREGATE  AMOUNT  OF  LOANS  AND  LETTERS  OF
CREDIT.  No Revolving Credit Loan,  Competitive Bid Loan,  Swingline  Advance or
Letter of Credit  shall be made,  Issued or  requested  or  permitted  to remain
outstanding  hereunder if the making,  Issuance or  maintenance  of such Loan or
Letter of Credit would cause the Dollar  Equivalent  of the sum of the aggregate
amount of all Loans to the  Borrower  outstanding  hereunder  and all  Letter of
Credit  Obligations to exceed the Total Revolving  Credit  Commitment as then in
effect.

        SECTION 2.05.    SWINGLINE ADVANCES. (a) SWINGLINE ADVANCES.  Subject to
the terms  and  conditions  set forth in this  Agreement  and  relying  upon the
representations  and warranties  herein set forth,  the Swingline  Lender agrees
(such agreement being herein called the "SWINGLINE ADVANCE  COMMITMENT") to make
loans in Dollars (the "SWINGLINE ADVANCES") to the Borrower

                                      -34-
<PAGE>

from  time to time on or after  the date  hereof  and to but not  including  the
Revolving Credit Maturity Date. The Swingline Lender shall have no obligation to
make any Swingline Advance to the extent that (i) the aggregate principal amount
of Swingline Advances at any time outstanding would exceed the Swingline Advance
Committed  Amount at such time, or (ii) the Dollar  Equivalent of the sum of the
principal amount of all outstanding Loans plus all Letter of Credit  Obligations
would exceed the Total Revolving Credit Commitment, or (iii) an Event of Default
has  occurred  and is  continuing,  unless  otherwise  consented by the Required
Lenders.

         The Swingline  Lender's  "Swingline  Advance Committed Amount" shall be
equal to $10,000,000. Swingline Advances may be requested by the Borrower in any
principal amount up to the Swingline  Advance  Committed  Amount.  The Swingline
Lender shall have no obligation to make any Swingline Advance to the extent that
doing so would  cause  the  aggregate  amount of (i) its  outstanding  Revolving
Credit  Loans and (ii) its Pro Rata  share of (x) the Dollar  Equivalent  of the
Letter of Credit  Obligations and (y) Swingline Advances to exceed its Revolving
Credit Committed Amount.

         Unless notified to the contrary by the Swingline Lender,  borrowings of
the Swingline Advances may be made in a minimum amount of $100,000 and multiples
of $25,000 in excess  thereof  upon  telephonic  request  made to the  Swingline
Lender not later than 9:00 a.m.,  Los Angeles  time,  on the Business Day of the
requested borrowing. Promptly after receipt of such a request for borrowing, the
Swingline Lender shall obtain telephonic  verification  from the  Administrative
Agent that, giving effect to such request,  availability for Swingline  Advances
will exist  under  Section  2.05(a)  (and such  verification  shall be  promptly
confirmed  in writing by  telecopier).  Unless  notified to the  contrary by the
Swingline  Lender,  each repayment of a Swingline  Advance shall be in an amount
which  is an  integral  multiple  of  $25,000.  If the  Borrower  instructs  the
Swingline  Lender to debit its demand deposit account at the Swingline Lender in
the amount of any payment with respect to a Swingline Advance,  or the Swingline
Lender  otherwise  receives  repayment,  after 1:00 p.m., Los Angeles time, on a
Business Day,  such payment  shall be deemed  received on the next Business Day.
The  Swingline  Lender shall  promptly  notify the  Administrative  Agent of the
outstanding Swingline Advances each time there is a change therein.

         (b) NATURE OF CREDIT. Within the limits of time and amount set forth in
this Section 2.05, and subject to the provisions of this Agreement, the Borrower
may borrow, repay and reborrow Swingline Advances hereunder.

         (c) SWINGLINE  ADVANCE  NOTE. To the extent  requested by the Swingline
Lender,  the obligation of the Borrower to repay the unpaid  principal amount of
the Swingline  Advances  made to it by the Swingline  Lender and to pay interest
thereon  shall be evidenced in part by a promissory  note of the Borrower to the
Swingline  Lender,  dated the Closing Date (the  "SWINGLINE  ADVANCE  NOTES") in
substantially   the  form  attached   hereto  as  Exhibit  E,  with  the  blanks
appropriately  filled,  payable to the order of the  Swingline  Lender in a face
amount equal to $10,000,000.

                                      -35-
<PAGE>

         (d) MATURITY. To the extent not due and payable earlier, each Swingline
Advance  shall be due and  payable on the  earlier of (i) the  seventh day after
such Swingline  Advance is made to the Borrower  hereunder or (ii) the Revolving
Credit Maturity Date.

         (e) INTEREST  RATE.  The  Borrower  shall pay  interest  on the  unpaid
principal  amount of each Swingline  Advance from the date of such Advance until
such  principal  amount  is paid  in  full,  payable  on such  dates,  not  more
frequently than monthly,  as may be specified by the Swingline Lender and in any
event on the Revolving Credit Maturity Date, at a fluctuating  interest rate per
annum  equal to the Base Rate in effect  from time to time;  PROVIDED,  HOWEVER,
that  during  any  period  in  which an Event of  Default  has  occurred  and is
continuing  (but  only so long as such  Event of  Default  is  continuing),  the
Borrower  shall pay interest on the unpaid  principal  amount of each  Swingline
Advance made to it,  payable from the date such Event of Default occurs and upon
written demand by the Swingline  Lender to the Borrower,  at the rate determined
in  accordance  with  Section   2.15(b)(ii).   The  Swingline  Lender  shall  be
responsible for invoicing the Borrower for such interest.

         (f) SWINGLINE ADVANCE PARTICIPATING  INTERESTS.  (i) GENERALLY.  At the
discretion of the Swingline  Lender at any time, on one Business Day's notice to
each  Lender,  the  Swingline  Lender may require each other Lender to purchase,
acquire,  accept and assume from the Swingline  Lender,  without recourse to, or
representation or warranty by, the Swingline Lender, an undivided interest, in a
proportion  equal to such  Lender's  Pro  Rata  share,  in all of the  Swingline
Lender's  rights  and  obligations  in,  to  or  under  the  Swingline  Lender's
outstanding  Swingline  Advances,  together  with  accrued  and unpaid  interest
thereon (such  interest of each Lender being  referred to herein as a "SWINGLINE
ADVANCE PARTICIPATING INTEREST").

         On the  date  that  any  Purchasing  Lender  becomes  a  party  to this
Agreement  in  accordance   with  Section  10.14   hereof,   Swingline   Advance
Participating Interests in any outstanding Swingline Advances held by the Lender
from which such  Purchasing  Lender  acquired  its interest  hereunder  shall be
proportionately  reallotted  between such Purchasing  Lender and such transferor
Lender (and, to the extent such transferor Lender is the Swingline  Lender,  the
Purchasing  Lender  shall  be  deemed  to  have  acquired  a  Swingline  Advance
Participating Interest from such transferor Lender to such extent).

                (ii)  OBLIGATIONS ABSOLUTE.  Notwithstanding any other provision
hereof,  each Lender hereby agrees that its  obligation to  participate  in each
Swingline Advance issued in accordance herewith,  and its obligation to make the
payments   specified  in  Section   2.05(f)(iii)   hereof,  are  each  absolute,
irrevocable and unconditional and shall not be affected by any event,  condition
or  circumstance  whatever.  The failure of any Lender to make any such  payment
shall not relieve any other  Lender of its funding  obligation  hereunder on the
date due, but no Lender shall be responsible for the failure of any other Lender
to meet its funding obligations hereunder.

                (iii) PAYMENT BY LENDERS ON ACCOUNT OF  SWINGLINE  ADVANCES.  If
the Swingline Lender desires to sell Swingline Advance  Participating  Interests
to the Lenders,  the Swingline  Lender will promptly  notify the  Administrative
Agent thereof (which notice may be by telephone),  and the Administrative  Agent
shall  forthwith  notify each Lender (which notice may be by telephone  promptly
confirmed in writing) thereof. No later than the Administrative

                                      -36-
<PAGE>

Agent's close of business on the date such notice is given by the Administrative
Agent (if such notice is given by the Administrative Agent before 9:00 a.m., Los
Angeles  time on such date),  each such  Lender  will pay to the  Administrative
Agent, for the account of the Swingline Lender, in immediately  available funds,
an amount  equal to such  Lender's Pro Rata share of the  outstanding  principal
amount of the Swingline Advances and accrued and unpaid interest thereon. If and
to the extent that any Lender fails to make such payment to the Swingline Lender
on such  date,  such  Lender  shall pay such  amount on  demand,  together  with
interest,  for the  Swingline  Lender's  own  account,  for  each  day  from and
including the date of the Swingline  Lender's  payment to and including the date
of repayment to the Swingline Lender (before and after judgment) following rates
PER ANNUM:  (x) for each day from and  including the date of such payment by the
Swingline  Lender to and including the second  Business Day  thereafter,  at the
Federal Funds Effective Rate for such day, and (y) for each day  thereafter,  at
the rate applicable to the Swingline Advances for such day.

                (iv)  DISTRIBUTIONS TO PARTICIPANTS.  If, at any time, after the
Swingline  Lender has made a Swingline  Advance and has received from any Lender
such Lender's share of such Swingline Advance, and the Swingline Lender receives
any  payment or makes any  application  of funds on  account  of such  Swingline
Advance,  the Swingline Lender will pay on the same day as received or deemed to
be received to the  Administrative  Agent, for the account of such Lender,  such
Lender's ratable share of such payment.

                (v)   RESCISSION. If any amount received by the Swingline Lender
on account  of any  Swingline  Advance or  interest  thereon  shall be  avoided,
rescinded or  otherwise  returned or paid over by the  Swingline  Lender for any
reason at any time,  whether  before or after the  termination of this Agreement
(or the Swingline Lender believes in good faith that such avoidance, rescission,
return or payment is required, whether or not such matter has been adjudicated),
each such Lender will, promptly upon notice from the Administrative Agent or the
Swingline Lender,  pay over to the  Administrative  Agent for the account of the
Swingline Lender its ratable share of such amount.

                (vi)  EQUALIZATION.  If any Lender receives any payment or makes
any application on account of its Swingline Advance Participating Interest, such
Lender shall forthwith pay over to the Swingline  Lender, in Dollars and in like
kind of funds  received  or applied by it the amount in excess of such  Lender's
ratable share of the amount so received or applied.

        SECTION 2.06.    LETTERS OF CREDIT.

     Section 2.06.01. LETTER OF CREDIT SUBLIMIT. (a) On the terms and conditions
set forth herein (i) the LC Issuer agrees, (A) from time to time on any Business
Day during the period from the Closing Date to the Revolving Commitment Maturity
Date to Issue Letters of Credit for the account of the Borrower, and to amend or
renew Letters of Credit  previously  Issued by it, in  accordance  with Sections
2.06.02(c)  and  2.06.02(d),  and (B) to honor  properly  drawn drafts under the
Letters  of  Credit  Issued  by it;  and (ii)  the  Lenders  severally  agree to
participate  in  Letters  of Credit  Issued  for the  account  of the  Borrower;
PROVIDED that the LC Issuer shall not be obligated to Issue, and no Lender shall
be  obligated  to  participate  in,  any  Letter  of Credit if as of the date of
Issuance  of such  Letter  of  Credit  (the  "ISSUANCE  DATE")  (1)  the  Dollar
Equivalent of

                                      -37-
<PAGE>

the sum of (i) all Letter of Credit  Obligations  PLUS (ii) the principal amount
of all outstanding Loans exceeds the Total Revolving Credit Commitment or (2) if
such Letter of Credit is a Financial Letter of Credit,  the Dollar Equivalent of
all Letter of Credit Obligations with respect to the Financial Letters of Credit
exceed the Financial  Letter of Credit  Sublimit or (3) if such Letter of Credit
is a Performance Letter of Credit, the Dollar Equivalent of all Letter of Credit
Obligations  with  respect  to the  Performance  Letters  of Credit  exceed  the
Performance  Letter of Credit Sublimit or (4) the participation of any Lender in
all  Letter of  Credit  Obligations  (in the  amount  of the  Dollar  Equivalent
thereof) and in the Swingline  Advances plus the Revolving  Credit Loans made by
such Lender exceed such Lender's Revolving Credit Commitment.  Letters of Credit
may be Issued in Dollars or Offshore  Currencies.  Within the foregoing  limits,
and subject to the other terms and conditions  hereof, the Borrower's ability to
obtain  Letters  of  Credit  shall be fully  revolving,  and,  accordingly,  the
Borrower may, during the foregoing  period,  obtain Letters of Credit to replace
Letters  of  Credit  which  have  expired  or which  have  been  drawn  upon and
reimbursed.

         (b) The LC Issuer shall not be under any obligation to Issue any Letter
of Credit if:

                (i)   any  order,   judgment  or  decree  of  any   Governmental
         Authority  or  arbitrator  shall by its  terms  purport  to  enjoin  or
         restrain the LC Issuer from  Issuing such Letter of Credit,  or any Law
         applicable to the LC Issuer or any request or directive (whether or not
         having  the  force  of  law)  from  any  Governmental   Authority  with
         jurisdiction over the LC Issuer shall prohibit,  or request that the LC
         Issuer  refrain  from,  the Issuance of letters of credit  generally or
         such Letter of Credit in  particular or shall impose upon the LC Issuer
         with  respect  to such  Letter of Credit  any  restriction,  reserve or
         capital   requirement  (for  which  the  LC  Issuer  is  not  otherwise
         compensated  hereunder)  not in effect on the  Closing  Date,  or shall
         impose upon the LC Issuer any unreimbursed  loss, cost or expense which
         was not  applicable on the Closing Date and which the LC Issuer in good
         faith deems material to it and for which the LC Issuer is not otherwise
         compensated hereunder; or

                (ii)  such  Letter  of  Credit  is not  otherwise  in  form  and
         substance  reasonably  acceptable to the LC Issuer,  or the Issuance of
         such Letter of Credit shall violate any  applicable  policies of the LC
         Issuer.

         (c) The LC Issuer shall not Issue any Letter of Credit if:

                (i)   the LC Issuer has received written notice from any Lender,
         the Administrative  Agent or the Borrower,  on or prior to the Business
         Day prior to the  requested  date of Issuance of such Letter of Credit,
         that one or more of the applicable  conditions  contained in Article IV
         is not then satisfied;

                (ii)  the expiry date or any renewed or extended  expiry date of
         such  Letter  of Credit is later  than 25 days  prior to the  Revolving
         Commitment  Maturity Date, unless all of the Lenders have approved such
         expiry date in writing; or

                (iii) such Letter of Credit is  denominated  in a currency other
         than Dollars or an Offshore Currency.

                                      -38-
<PAGE>

        SECTION 2.06.02. ISSUANCE,  AMENDMENT  AND RENEWAL OF LETTERS OF CREDIT.
(a) Each  Letter  of Credit  shall be issued  upon the  written  request  of the
Borrower received by the LC Issuer and the Administrative  Agent at least (A) in
the case of an Offshore Currency denominated Letter of Credit, six Business Days
or (B) in the case of a Dollar denominated Letter of Credit,  four Business Days
(or, in either case,  such shorter time as the LC Issuer and the  Administrative
Agent may agree in a particular  instance in their sole discretion) prior to the
proposed  Issuance  Date.  Each such  request for issuance of a Letter of Credit
shall be by facsimile, confirmed promptly in an original writing, in the form of
a Letter of Credit Application,  and shall specify in form and detail reasonably
satisfactory to the LC Issuer: (i) the proposed date of issuance (which shall be
a Business Day), the face amount and currency of the Letter of Credit;  (ii) the
expiry  date of such  Letter  of  Credit;  (iii)  the  name and  address  of the
beneficiary  thereof;  (iv) the documents to be presented by the  beneficiary of
such  Letter of Credit in case of any drawing  thereunder;  (v) the full text of
any  certificate  to be  presented  by the  beneficiary  in case of any  drawing
thereunder;  and (vi) such  other  matters as the LC Issuer  may  require.  If a
Letter of Credit is requested to be  denominated  in an Offshore  Currency,  the
Administrative  Agent shall promptly notify each Lender thereof.  Such Letter of
Credit shall not be issued if the LC Issuer  notifies the  Administrative  Agent
that it has determined  that it cannot pay under a Letter of Credit  denominated
in such Offshore Currency.

         (b) At least two Business Days prior to the Issuance Date of any Letter
of  Credit,  the LC  Issuer  will  confirm  with the  Administrative  Agent  (by
telephone or in writing)  that the  Administrative  Agent has received a copy of
the Letter of Credit Application or Letter of Credit Amendment  Application from
the Borrower  and, if not, the LC Issuer will provide the  Administrative  Agent
with a copy thereof.  If and only if the  Administrative  Agent  notifies the LC
Issuer on or before the Business Day immediately  preceding the proposed date of
Issuance  of a Letter of  Credit  that the LC Issuer  may Issue  such  Letter of
Credit,  then,  subject to the terms and conditions hereof, the LC Issuer shall,
on the  requested  date,  Issue  such  Letter of Credit  for the  account of the
Borrower  in  accordance  with the LC  Issuer's  usual  and  customary  business
practices.   The  Administrative  Agent  shall  not  give  such  notice  if  the
Administrative  Agent has knowledge that (A) such Issuance is not then permitted
under Section 2.06.01(a) as a result of the limitations set forth in clause (1),
(2), (3) or (4) thereof or (B) the LC Issuer has received a notice  described in
Section 2.06.01(c)(i). The Administrative Agent will promptly notify the Lenders
of any Letter of Credit Issuance hereunder.

         (c) From time to time while a Letter of Credit is outstanding and prior
to the Revolving  Commitment Maturity Date, the LC Issuer will, upon the written
request  of the  Borrower  received  by the LC  Issuer  (with a copy sent by the
Borrower  to the  Administrative  Agent) at least  four  Business  Days (or such
shorter  time as the LC  Issuer  and the  Administrative  Agent  may  agree in a
particular  instance in their sole  discretion)  prior to the  proposed  date of
amendment,  amend any Letter of Credit issued by it, subject to approval thereof
by the  Administrative  Agent.  Each such  request for  amendment of a Letter of
Credit shall be made by facsimile,  confirmed  promptly in an original  writing,
made in the form of a Letter of Credit  Amendment  Application and shall specify
in form and detail reasonably  satisfactory to the LC Issuer:  (i) the Letter of
Credit to be amended;  (ii) the  proposed  date of  amendment  of such Letter of
Credit  (which  shall be a  Business  Day);  (iii) the  nature  of the  proposed
amendment;  and (iv) such other matters as the LC Issuer may reasonably require.
The LC Issuer shall have no  obligation  to amend any

                                      -39-
<PAGE>

Letter of Credit if the LC Issuer would have no obligation at such time to Issue
such Letter of Credit in its amended form under the terms of this Agreement. The
LC Issuer  shall not amend any Letter of Credit if: (A) the LC Issuer  would not
be  permitted to Issue such Letter of Credit in its amended form under the terms
of this  Agreement;  or (B) the  beneficiary  of such  Letter of Credit does not
accept the proposed amendment to such Letter of Credit.

         (d) The LC Issuer and the Lenders agree that,  while a Letter of Credit
is  outstanding  and prior to the  Revolving  Commitment  Maturity  Date, at the
option of the Borrower and upon the written request of the Borrower  received by
the LC Issuer (with a copy sent by the Borrower to the Administrative  Agent) at
least  four  Business  Days  (or  such  shorter  time as the LC  Issuer  and the
Administrative   Agent  may  agree  in  a  particular  instance  in  their  sole
discretion) prior to the proposed date of notification of renewal, the LC Issuer
shall be entitled,  with the approval of the Administrative  Agent, to authorize
the renewal of any Letter of Credit  issued by it. Each such request for renewal
of a Letter of  Credit  shall be made by  facsimile,  confirmed  promptly  in an
original writing, in the form of a Letter of Credit Amendment  Application,  and
shall specify in form and detail reasonably  satisfactory to the LC Issuer:  (i)
the Letter of Credit to be renewed;  (ii) the  proposed  date of renewal of such
Letter of Credit (which shall be a Business Day);  (iii) the revised expiry date
of such  Letter of Credit  (which,  unless  all  Lenders  otherwise  consent  in
writing,  shall be prior to the Revolving  Commitment  Maturity Date);  and (iv)
such other matters as the LC Issuer may reasonably require.  The LC Issuer shall
be under no obligation to renew any Letter of Credit if the LC Issuer would have
no  obligation  at such  time to Issue or amend  such  Letter  of  Credit in its
renewed  form under the terms of this  Agreement.  The LC Issuer shall not renew
any Letter of Credit if: (A) the LC Issuer  would not be  permitted  to Issue or
amend  such  Letter  of  Credit  in its  renewed  form  under  the terms of this
Agreement;  or (B) the  beneficiary of such Letter of Credit does not accept the
proposed renewal of such Letter of Credit.  If any outstanding  Letter of Credit
shall  provide that it shall be  automatically  renewed  unless the  beneficiary
thereof  receives notice from the LC Issuer that such Letter of Credit shall not
be  renewed,  and if at the time of renewal  the LC Issuer  would be entitled to
authorize the renewal of such Letter of Credit in  accordance  with this Section
2.06.02(d)  upon the request of the  Borrower  but the LC Issuer  shall not have
received  any Letter of Credit  Amendment  Application  from the  Borrower  with
respect to such renewal or other written  direction by the Borrower with respect
thereto,   and  the  LC  Issuer  shall  not  have   received   notice  from  the
Administrative  Agent that such Letter of Credit  shall not be  renewed,  the LC
Issuer  shall allow such  Letter of Credit to renew,  and the  Borrower  and the
Lenders hereby authorize such renewal, and, accordingly,  the LC Issuer shall be
deemed  to have  received  a Letter  of Credit  Amendment  Application  from the
Borrower requesting such renewal.

         (e) The  LC  Issuer  may,  at  its  election  (or  as  required  by the
Administrative  Agent at the  direction  of the Required  Lenders),  deliver any
notices of  termination  or other  communications  to any  applicable  Letter of
Credit  beneficiary  or  transferee,  and take any other  action as necessary or
appropriate,  at any time and from time to time,  in order to cause  the  expiry
date of such  Letter  of  Credit  to be a date  not  later  than  the  Revolving
Commitment Maturity Date.

         (f) This Agreement  shall control in the event of any conflict with any
Letter of Credit Related Document (other than any Letter of Credit).

                                      -40-
<PAGE>

         (g) The  LC  Issuer   will   deliver  to  the   Administrative   Agent,
concurrently  or  promptly  following  its  delivery  of a Letter of Credit,  or
amendment to or renewal of a Letter of Credit, to the Borrower, an advising bank
or a beneficiary, a true and complete copy of such Letter of Credit or amendment
to or renewal of a Letter of Credit.

        SECTION 2.06.03. RISK PARTICIPATIONS,  DRAWINGS AND REIMBURSEMENTS.  (a)
Immediately  upon the  Issuance of each Letter of Credit,  each Lender  shall be
deemed to, and hereby irrevocably and  unconditionally  agrees to, purchase from
the LC  Issuer a  participation  in such  Letter  of  Credit  and  each  drawing
thereunder in an amount equal to the product of (i) such Lender's Pro Rata share
times (ii) the maximum amount  available to be drawn under such Letter of Credit
and the amount of such drawing, respectively.

         (b) In the event of any request for a drawing  under a Letter of Credit
by the beneficiary or transferee thereof, the LC Issuer will promptly notify the
Borrower and the  Administrative  Agent.  The Borrower  shall  reimburse  the LC
Issuer  prior to 12:00 noon (Los  Angeles  time),  (i) on each date on which any
amount is paid by the LC Issuer under any applicable Letter of Credit (each such
date, an "HONOR DATE"),  in Dollars in the Dollar  Equivalent of an amount equal
to the amount so paid by the LC Issuer, if the Administrative Agent notifies the
Borrower  on or prior to the  Business  Day  preceding  the Honor  Date that the
payment  under such  Letter of Credit will be made on the Honor Date and (ii) on
the Business Day following  the Honor Date, in Dollars in the Dollar  Equivalent
of an amount equal to the amount so paid by the LC Issuer, plus interest thereon
at the Base Rate  (plus  Applicable  Margin for the Base Rate  Option)  from and
including the Honor Date to but excluding the date of such reimbursement, if the
Administrative  Agent  notifies  the Borrower on the Honor Date that the payment
under such Letter of Credit is required on the Honor Date. If the Borrower fails
to reimburse  the LC Issuer for the full amount of any drawing  under any Letter
of Credit by 12:00 noon (Los  Angeles  time) on the  Business  Day on which such
reimbursement is required as set forth above, the LC Issuer will promptly notify
the Administrative  Agent and the Administrative Agent will promptly notify each
Lender  and the  Borrower  thereof,  and the  Borrower  shall be  deemed to have
requested  that Revolving  Credit Loans bearing  interest at the Base Rate (plus
the Applicable Margin for Base Rate Option) in the principal amount equal to the
Dollar Equivalent of such drawing be made by the Lenders to be disbursed on such
Business Day,  subject to the amount of the unutilized  portion of the Revolving
Credit  Commitments  and  subject to the  conditions  set forth in Section  4.02
(other  than  clause  (a)  thereof).  Any  notice  given by the LC Issuer or the
Administrative Agent pursuant to this Section 2.06.03(b) may be oral if promptly
confirmed in writing  (including by  facsimile);  PROVIDED that the lack of such
prompt  confirmation  shall not affect the  conclusiveness  or binding effect of
such notice.

         (c) Each Lender  shall upon any notice  pursuant to Section  2.06.03(b)
make available to the  Administrative  Agent for the account of the LC Issuer an
amount in Dollars and in immediately available funds equal to its Pro Rata share
of the Dollar  Equivalent  of the amount of the drawing with respect to a Letter
of  Credit,  whereupon  the  participating  Lenders  shall  (subject  to Section
2.06.03(d)) each be deemed to have made a Revolving Credit Loan bearing interest
at the Base Rate  (plus the  Applicable  Margin  for Base  Rate  Option)  to the
Borrower in such amount.  If any Lender so notified  fails to make  available to
the  Administrative  Agent for the  account  of the LC Issuer the amount of such
Lender's Pro Rata share of the amount of such

                                      -41-
<PAGE>

drawing by no later than 3:00 p.m.  (Los  Angeles  time) on the  Business Day on
which it received  such notice  pursuant to Section  2.06.03(b),  then  interest
shall  accrue  on such  Lender's  obligation  to make  such  payment,  from such
Business  Day to the date such Lender  makes such  payment,  at a rate PER ANNUM
equal to the  Federal  Funds  Effective  Rate in effect from time to time during
such  period.  The  Administrative  Agent  will  promptly  give  notice  of  the
occurrence of the Honor Date,  but failure of the  Administrative  Agent to give
any such notice on the Honor Date or in sufficient  time to enable any Lender to
effect  such  payment  on such  date  shall not  relieve  such  Lender  from its
obligations under this Section 2.06.03.

         (d) With respect to any unreimbursed drawing that is not converted into
Revolving  Credit Loans bearing  interest at the Base Rate (plus the  Applicable
Margin  for Base Rate  Option) in whole or in part,  because  of the  Borrower's
failure to satisfy the  conditions  set forth in Section 4.02 (other than clause
(a)  thereof)  or for any other  reason,  the  Borrower  shall be deemed to have
incurred  from the LC Issuer a Letter  of Credit  Borrowing  in  Dollars  in the
Dollar  Equivalent  of the  amount  of such  drawing,  which  Letter  of  Credit
Borrowing shall be due and payable on demand  (together with interest) and shall
bear  interest  at a rate PER ANNUM  equal to the Base Rate PLUS the  Applicable
Margin for Base Rate  Option (and after  notice from the LC Issuer)  PLUS 2% PER
ANNUM, and each Lender's payment to the LC Issuer pursuant to Section 2.06.03(c)
with  respect  to a Letter of Credit  shall be deemed  payment in respect of its
participation  in such Letter of Credit  Borrowing and shall constitute a Letter
of  Credit  Advance  from  such  Lender  in  satisfaction  of its  participation
obligation under this Section 2.06.03.

         (e) Each Lender's  obligation in accordance with this Agreement to make
Revolving  Credit Loans or Letter of Credit  Advances,  as  contemplated by this
Section  2.06.03,  as a result of a drawing  under a Letter of Credit,  shall be
absolute and  unconditional  and without recourse to the LC Issuer and shall not
be  affected  by any  circumstance,  including  (i) any  set-off,  counterclaim,
recoupment,  defense or other right  which such  Lender may have  against the LC
Issuer,  the  Borrower or any other Person for any reason  whatsoever,  (ii) the
occurrence  or  continuance  of a  Potential  Default,  an Event of Default or a
Material  Adverse  Effect or (iii) any other  circumstance,  happening  or event
whatsoever,  whether or not similar to any of the foregoing;  PROVIDED that each
Lender's  obligation to make  Revolving  Credit Loans with respect to Letters of
Credit  under this  Section  2.06.03 is subject to the  conditions  set forth in
Section 4.02 (other than clause (a) thereof).

        SECTION 2.06.04. REPAYMENT OF  PARTICIPATIONS.  (a) Upon (and only upon)
receipt  by the  Administrative  Agent  for  the  account  of the LC  Issuer  of
immediately  available  funds  from the  Borrower  (i) in  reimbursement  of any
payment made by the LC Issuer under a Letter of Credit with respect to which any
Lender has paid the  Administrative  Agent for the  account of the LC Issuer for
such Lender's participation in such Letter of Credit pursuant to Section 2.06.03
or (ii) in payment of interest thereon,  the Administrative  Agent will promptly
pay to each Lender, in like funds as those received by the Administrative  Agent
for the account of the LC Issuer,  the amount of such Lender's Pro Rata share of
such funds,  and the LC Issuer shall receive the amount of the Pro Rata share of
such funds of any Lender  that did not so pay the  Administrative  Agent for the
account of the LC Issuer.

                                      -42-
<PAGE>

         (b) If the  Administrative  Agent or the LC Issuer is  required  at any
time to  return  to the  Borrower,  or to a  trustee,  receiver,  liquidator  or
custodian,  or to any official in any insolvency proceeding,  any portion of any
payment made by the Borrower to the Administrative  Agent for the account of the
LC Issuer  pursuant to Section  2.06.04(a)  in  reimbursement  of a payment made
under a Letter of Credit or  interest or fee  thereon,  to the extent any Lender
received its Pro Rata share of such amount pursuant to Section 2.06.04(a),  such
Lender shall, on demand of the  Administrative  Agent,  forthwith  return to the
Administrative  Agent or the LC Issuer  the  amount of its Pro Rata share of any
amount so returned by the  Administrative  Agent or the LC Issuer  together with
interest  thereon  from the date such  demand is made to the date such amount is
returned by such Lender to the Administrative  Agent or the LC Issuer, at a rate
PER ANNUM equal to the Federal Funds Effective Rate in effect from time to time.

        SECTION 2.06.05. ROLE OF THE LC ISSUER. (a) Each Lender and the Borrower
agree that, in paying any drawing under a Letter of Credit,  the LC Issuer shall
not have any  responsibility  to obtain any document (other than any sight draft
and certificate  expressly required by such Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such  document or the authority of
the Person executing or delivering any such document.

         (b) No Agent,  LC Issuer  nor any of their  respective  correspondents,
participants  or  assignees  shall be liable to any Lender  for:  (i) any action
taken or omitted in  connection  herewith at the request or with the approval of
the Lenders  (including the Required  Lenders,  as applicable);  (ii) any action
taken or omitted in the absence of gross  negligence or willful  misconduct;  or
(iii) the due execution, effectiveness, validity or enforceability of any Letter
of Credit Related Document.

         (c) The Borrower  hereby  assumes all risks of the acts or omissions of
any  beneficiary or transferee  with respect to its use of any Letter of Credit;
PROVIDED that this  assumption  is not intended to, and shall not,  preclude the
Borrower's  pursuing  such  rights  and  remedies  as it may  have  against  the
beneficiary or transferee at law or under this Agreement or any other agreement.
Neither  the  Agents,  LC  Issuer,  the  Lenders  nor  any of  their  respective
correspondents, participants or assignees shall be liable or responsible for any
of the  matters  described  in clauses  (i)  through  (vii) of Section  2.06.06;
PROVIDED  that,  anything in such clauses to the contrary  notwithstanding,  the
Borrower  may have a claim  against  the LC  Issuer,  and such LC Issuer  may be
liable to the Borrower, to the extent, but only to the extent, of any direct, as
opposed to  consequential  or exemplary,  damages suffered by the Borrower which
the Borrower  proves were caused by the LC Issuer's  willful  misconduct,  gross
negligence  or bad  faith or the LC  Issuer's  bad  faith,  willful  or  grossly
negligent failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and  certificate(s)  strictly complying with
the terms and  conditions of such Letter of Credit.  In  furtherance  and not in
limitation of the foregoing:  (i) the LC Issuer may accept documents that appear
on their face to be in order, without  responsibility for further investigation,
regardless of any notice or information to the contrary;  and (ii) the LC Issuer
shall not be  responsible  for the  validity or  sufficiency  of any  instrument
transferring or assigning or purporting to transfer or assign a 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.

                                      -43-
<PAGE>

        SECTION 2.06.06. OBLIGATIONS  ABSOLUTE.  The obligations of the Borrower
under this Agreement and any Letter of Credit Related  Document to reimburse the
LC Issuer  for a drawing  under a Letter of  Credit,  and to repay any Letter of
Credit  Borrowing  and any  drawing  under a Letter  of  Credit  converted  into
Revolving  Credit Loans,  shall be unconditional  and irrevocable,  and shall be
paid strictly in accordance with the terms of this Agreement and each such other
Letter  of  Credit  Related  Document  under all  circumstances,  including  the
following:

                (i)   any lack of validity or  enforceability  of this Agreement
         or any Letter of Credit Related Document;

                (ii)  any change in the time,  manner or place of payment of, or
         in any other term of, all or any of the  obligations of the Borrower in
         respect of any Letter of Credit or any other  amendment or waiver of or
         any  consent  to  departure  from all or any of the  Letter  of  Credit
         Related Documents;

                (iii) the  existence  of  any  claim,   counterclaim,   set-off,
         recoupment,  defense or other right that the  Borrower  may have at any
         time against any  beneficiary or any transferee of any Letter of Credit
         (or any Person for whom any such beneficiary or any such transferee may
         be acting),  the LC Issuer or any other  Person,  whether in connection
         with this Agreement,  the  transactions  contemplated  hereby or by the
         Letter of Credit Related Documents or any unrelated transaction;

                (iv)  any draft, demand, certificate or other document presented
         under any Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient  in any respect or any  statement  therein being untrue or
         inaccurate in any respect or any loss or delay in the  transmission  or
         otherwise of any document required in order to make a drawing under any
         Letter of Credit;

                (v)   any  payment  by the LC Issuer  under any Letter of Credit
         against  presentation of a draft or certificate  that does not strictly
         comply with the terms of such Letter of Credit;  or any payment made by
         the LC Issuer under any Letter of Credit to any Person purporting to be
         a trustee in bankruptcy, debtor-in-possession, assignee for the benefit
         of  creditors,  liquidator,  receiver  or  other  representative  of or
         successor to any beneficiary or any transferee of any Letter of Credit,
         including any arising in connection with any insolvency proceeding;

                (vi)  any exchange, release or non-perfection of any collateral,
         or any release or amendment  or waiver of or consent to departure  from
         any  guarantee,  for all or any of the  obligations  of the Borrower in
         respect of any Letter of Credit; or

                (vii) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing,  including any other  circumstance
         that might otherwise  constitute a defense available to, or a discharge
         of, the Borrower or a guarantor.

        SECTION 2.06.07. CASH COLLATERAL PLEDGE. If any Letter of Credit remains
outstanding and partially or wholly undrawn as of the Revolving  Credit Maturity
Date or the expiration or

                                      -44-
<PAGE>

termination of the Total Revolving  Credit  Commitment,  then the Borrower shall
immediately  Cash  Collateralize  the Letter of Credit  Obligations in an amount
equal to the  maximum  amount  then  available  to be drawn under all Letters of
Credit.

        SECTION 2.06.08. UNIFORM  CUSTOMS AND PRACTICE.  The Uniform Customs and
Practice for Documentary  Credits as published by the  International  Chamber of
Commerce  most  recently  at the time of Issuance of any Letter of Credit or the
International Standby Practice 1998 (selected by the LC Issuer at its discretion
at the time of Issuance thereof) shall (unless otherwise  expressly  provided in
such Letter of Credit) apply to each Letter of Credit.

        SECTION 2.07.    MAKING OF LOANS. Whenever the Borrower desires that the
Lenders make  Revolving  Credit  Loans or the  Swingline  Lender make  Swingline
Advances, the Borrower shall provide Standard Notice to the Administrative Agent
setting forth the following  information  (a separate  notice being required for
each such type of Loans):

                   (a)     Whether the proposed Loans are Revolving Credit Loans
         or Swingline Advances;

                   (b)     The date,  which  shall be a Business  Day,  on which
         such proposed Loans are to be made;

                   (c)     In the case of proposed  Revolving  Credit Loans, the
         aggregate  principal amount of such proposed Loans,  which shall be the
         sum of the principal  amounts  selected  pursuant to clause (e) of this
         Section 2.07, and, except as provided in Section  2.06.03,  which shall
         be at least  $5,000,000 and integral  multiples of $1,000,000 in excess
         thereof;

                   (d)     In the  case  of  proposed  Swingline  Advances,  the
         aggregate principal amount of such proposed Swingline  Advances,  which
         shall be at least $100,000 and integral  multiples of $25,000 in excess
         thereof;

                   (e)     In the case of proposed  Revolving  Credit Loans, the
         interest  rate Option or Options  selected in  accordance  with Section
         2.08(a) hereof and the principal  amounts  selected in accordance  with
         Section  2.08(d)  hereof  of the Base  Rate  Portion  and each  Funding
         Segment of the CD Rate Portion and the Euro-Rate  Portion,  as the case
         may be, of such proposed Loans; and

                   (f)     In the case of proposed  Revolving Credit Loans, with
         respect  to each such  Funding  Segment  of such  proposed  Loans,  the
         Funding Period to apply to such Funding Segment, selected in accordance
         with Section 2.08(c) hereof.

Standard Notice having been so provided, the Administrative Agent shall promptly
notify each  Lender of the  information  contained  therein and of the amount of
such  Lender's  Loan,  calculated in  accordance  with Section 2.13.  Unless any
applicable  condition specified in Article IV hereof has not been satisfied,  on
the date  specified in such Standard  Notice each Lender shall make the proceeds
of its Loan available to the Administrative Agent at the Administrative  Agent's
Office,  no later  than 11:00  a.m.,  Los  Angeles  time,  in funds  immediately
available  at such  Office.  The

                                      -45-
<PAGE>

Administrative  Agent will make the funds so received  available to the Borrower
in funds immediately  available at the Administrative  Agent's Office. If and to
the extent that the  Administrative  Agent does not make such funds available to
the Borrower on the date  specified in such Standard  Notice the  Administrative
Agent shall pay to each Lender  interest  on the amount made  available  by such
Lender at the Federal  Funds  Effective  Rate for each day until  either (i) the
date such funds are made available to the Borrower or (ii) the date such amounts
are returned to such Lender.

        SECTION 2.08.    INTEREST  RATES.  (a) OPTIONAL BASES OF BORROWING.  The
unpaid  principal  amount of the Revolving  Credit Loans shall bear interest for
each day from and  including  the date on which funds are made  available to the
Borrower by the Administrative  Agent and to but excluding the date of repayment
on one or more bases  selected  by the  Borrower  from among the  interest  rate
options  set forth  below.  Subject  to the  provisions  of this  Agreement  the
Borrower  may select  different  options to apply  simultaneously  to  different
Portions  of the  Loans  and may  select  different  Funding  Segments  to apply
simultaneously  to  different  parts  of the CD Rate  Portion  or the  Euro-Rate
Portion of the Loans. Each selection of a rate Option shall apply separately and
without overlap to the Revolving  Credit Loans as a class.  The aggregate number
of Funding Segments  applicable to the CD Rate Portion and the Euro-Rate Portion
of the Revolving  Credit Loans at any time shall not exceed ten unless otherwise
permitted by the Administrative Agent.

                (i)   BASE RATE OPTION:  A rate per annum (computed on the basis
         of a year of 365 or 366  days and  actual  days  elapsed)  for each day
         equal to the Base Rate for such day plus the Applicable Margin for such
         day.  The "BASE  RATE" for any day shall  mean the  greater  of (A) the
         Prime Rate for such day or (B) 0.50% plus the Federal  Funds  Effective
         Rate for such day, such interest rate to change automatically from time
         to time  effective as of the effective date of each change in the Prime
         Rate or the Federal Funds Effective Rate.

                (ii)  CD RATE  OPTION:  A rate per annum (based on a year of 360
         days and actual days  elapsed)  for each day during the  applicable  CD
         Rate  Funding  Period  equal  to the CD Rate  for  such  day  plus  the
         Applicable  Margin  for such day.  "CD RATE" for any day shall mean for
         each Funding Segment of the CD Rate Portion corresponding to a proposed
         or existing CD Rate Funding Period the rate per annum determined by the
         Administrative Agent by adding

                      (A) the rate per annum  (which  shall be the same for each
                  day in such CD Rate Funding  Period)  determined in good faith
                  by the  Administrative  Agent in  accordance  with  its  usual
                  procedures  (which  determination  shall be conclusive  absent
                  manifest error) to be the arithmetic  average of the secondary
                  market bid rates at or about 8:00 a.m.,  Los Angeles  time, on
                  the first day of such CD Rate  Funding  Period by  dealers  of
                  recognized standing in negotiable  certificates of deposit for
                  the  purchase  at face  value of  negotiable  certificates  of
                  deposit of major money  center  banks for delivery on such day
                  in  amounts  comparable  to such  Funding  Segment  and having
                  maturities comparable to such CD Rate Funding Period plus

                                      -46-
<PAGE>

                      (B)     the Assessment Rate.

                  "Assessment  Rate" for any day  shall  mean the rate per annum
         (rounded upward to the nearest 1/100 of 1%) determined in good faith by
         the Administrative Agent in accordance with its usual procedures (which
         determination  shall be  conclusive  absent  manifest  error) to be the
         maximum  effective  rate per annum payable by a depository  institution
         insured by the Federal Deposit Insurance Corporation (or any successor)
         for such day as an assessment  for  insurance on Dollar time  deposits,
         exclusive  of  any  credit  that  is or  may be  allowed  against  such
         assessment on account of assessment payments made or to be made by such
         depository institution.  The CD Rate shall be adjusted automatically as
         of the effective  date of each change in the  Assessment  Rate.  The CD
         Rate Option shall be calculated in accordance with the foregoing if any
         Lender is actually  required to pay FDIC assessments or, if required to
         pay  such  assessments,  is  required  to pay such  assessments  at the
         "Assessment Rate" as herein defined.

                  The  Administrative  Agent  shall  give  prompt  notice to the
         Borrower  and to the Lenders of the CD Rate  determined  or adjusted in
         accordance  with the  definition  of CD Rate,  which  determination  or
         adjustment shall be conclusive if made in good faith.

                  (iii) EURO-RATE  OPTION:  A rate per annum (based on a year of
         360 days and actual days  elapsed)  for each day during the  applicable
         Euro-Rate  Funding  Period equal to the Euro-Rate for such day plus, in
         each case,  the  Applicable  Margin for Euro-Rate  Option for such day.
         "EURO-RATE"  for any day, as used  herein,  shall mean for each Funding
         Segment  of  the  Euro-Rate  Portion  corresponding  to a  proposed  or
         existing  Euro-Rate Funding Period the rate per annum determined by the
         Administrative  Agent to be the rate of  interest  (which  shall be the
         same for each day in such Euro-Rate Funding Period)  determined in good
         faith  by  the  Administrative  Agent  in  accordance  with  its  usual
         procedures from the Reuters Screen LIBO page (which determination shall
         be conclusive absent manifest error) to be the average of the rates per
         annum for  deposits  in  Dollars  offered to the  leading  banks in the
         London interbank market at approximately  11:00 a.m.,  London time, two
         Business Days prior to the first day of such  Euro-Rate  Funding Period
         for  delivery  on the first  day of such  Euro-Rate  Funding  Period in
         amounts  comparable  to such  Funding  Segment  and  having  maturities
         comparable to such Funding Period.

                  The  Administrative  Agent  shall  give  prompt  notice to the
         Borrower and to the Lenders of the  Euro-Rate  determined in accordance
         with the  definition of the  Euro-Rate,  which  determination  shall be
         conclusive if made in good faith.

         (b) APPLICABLE  MARGINS.  The  "APPLICABLE  MARGIN" with respect to the
Base  Rate  Option,  the CD  Rate  Option  and the  Euro-Rate  Option  shall  be
determined  in accordance  with the pricing grid set forth in the  definition of
"Applicable Margin".

         (c) FUNDING  PERIODS.  At any time  when  the  Borrower  shall  select,
convert to or renew the CD Rate Option or the  Euro-Rate  Option to apply to any
part of the Loans,  the Borrower

                                      -47-
<PAGE>

shall specify one or more periods (the "FUNDING PERIODS") during which each such
Option shall apply, such Funding Periods being as set forth below:



        INTEREST RATE OPTION                       AVAILABLE FUNDING PERIODS

        CD Rate Option                          30,  60,  90 or 180 days or such
                                                longer  period as may be offered
                                                by all of the Lenders  ("CD RATE
                                                FUNDING Period"); and

        Euro-Rate Option                        One,  two,  three or six  months
                                                ("EURO-RATE FUNDING PERIOD");

  PROVIDED, that:

                (i)   Each CD Rate Funding Period which would otherwise end on a
         day  which  is not a  Business  Day  shall  be  extended  to  the  next
         succeeding Business Day;

                (ii)  Each  Euro-Rate  Funding  Period shall begin on a Business
         Day, and the term  "month",  when used in  connection  with a Euro-Rate
         Funding  Period,  shall be  construed  in  accordance  with  prevailing
         practices in the interbank  eurodollar  market at the  commencement  of
         such  Euro-Rate  Funding  Period,  as  determined  in good faith by the
         Administrative Agent (which determination shall be conclusive); and

                (iii) In the case of Revolving  Credit  Loans,  the Borrower may
         not select a Funding  Period that would end after the Revolving  Credit
         Maturity Date.

         (d) TRANSACTIONAL   AMOUNTS.   Every  selection  of,  conversion  from,
conversion  to or  renewal  of an  interest  rate  option  and every  payment or
prepayment  of any Loans shall be in a principal  amount such that after  giving
effect  thereto the aggregate  principal  amount of the Base Rate Portion of the
Revolving  Credit  Loans,  or the  aggregate  principal  amount of each  Funding
Segment of the CD Rate Portion or the Euro-Rate  Portion of the Revolving Credit
Loans,  shall be at least  $5,000,000  and integral  multiples of  $1,000,000 in
excess thereof.

         (e) CD RATE OR EURO-RATE UNASCERTAINABLE; IMPRACTICABILITY.  If

                (i)   on any  date  on  which a CD  Rate  or a  Euro-Rate  would
         otherwise be set, the  Administrative  Agent (in the case of clause (A)
         or (B) below) shall have determined in good faith (which  determination
         shall be conclusive absent manifest error) that:

                   (A)     adequate  and  reasonable  means  do  not  exist  for
                ascertaining such CD Rate or Euro-Rate, or

                                      -48-
<PAGE>

                   (B)     a  contingency  has  occurred  which  materially  and
                adversely   affects   the   secondary   market  for   negotiable
                certificates  of deposit  maintained  by  dealers of  recognized
                standing or the interbank eurodollar market, as the case may be,
                or

                (ii)  at any time any Lender shall have determined in good faith
         (which  determination  shall be conclusive  absent manifest error) that
         the making,  maintenance  or funding of any part of the CD Rate Portion
         or the  Euro-Rate  Portion has been made  impracticable  or unlawful by
         compliance  by such Lender or a Notional  Euro-Rate  Funding  Office in
         good   faith  with  any  Law  or   guideline   or   interpretation   or
         administration  thereof by any Governmental  Authority charged with the
         interpretation  or  administration  thereof  or  with  any  request  or
         directive of any such Governmental Authority (whether or not having the
         force of law);

then, and in any such event,  the  Administrative  Agent or such Lender,  as the
case may be, may  notify  the  Borrower  of such  determination  (and any Lender
giving such notice shall  notify the  Administrative  Agent).  Upon such date as
shall be specified in such notice (which shall not be earlier than the date such
notice is given),  the obligation of each of the Lenders,  in the case of clause
(i) above, or such Affected  Lender,  in the case of clause (ii) above, to allow
the  Borrower  to select,  convert to or renew the CD Rate  Option or  Euro-Rate
Option, as the case may be, shall be suspended until the Administrative Agent or
such Lender, as the case may be, shall have later notified the Borrower (and any
Lender  giving  such  notice  shall  notify  the  Administrative  Agent)  of the
Administrative  Agent's or such  Lender's  determination  in good  faith  (which
determination  shall be conclusive  absent manifest error) that the circumstance
giving rise to such previous determination no longer exist.

         If any Lender notifies the Borrower of a determination under subsection
(ii) of this Section 2.08(e),  the CD Rate Portion or the Euro-Rate Portion,  as
the case may be, of the Loans of such  Lender  (the  "AFFECTED  LENDER")  shall,
subject to Section 2.14(b) hereof,  automatically  be converted to the Base Rate
Option as of the last day of the then  current  Funding  Period with  respect to
such  Loans (in the case of a  determination  that the  making,  maintenance  or
funding  of  any  CD  Rate  Portion  or  Euro-Rate  Portion  of  such  Loans  is
impracticable)  and the last day on which the making,  maintenance or funding of
any CD Rate Portion or  Euro-Rate  Portion of such Loans is not unlawful (in the
case of a determination  that the making,  maintenance or funding of any CD Rate
Portion or  Euro-Rate  Portion of such Loans is unlawful)  and accrued  interest
thereon shall be due and payable on such date.

         If at the time the  Administrative  Agent or an Affected Lender makes a
determination  under subsection (i) or (ii) of this Section 2.08(e), as the case
may be, the Borrower  previously has notified the  Administrative  Agent that it
wishes  to  select,  convert  to or renew the CD Rate  Option  or the  Euro-Rate
Option,  as the case may be, with respect to any  proposed  Loans but such Loans
have not yet been  made,  such  notification  shall be  deemed  to  provide  for
selection of, conversion to or renewal of the Base Rate Option instead of the CD
Rate Option or the  Euro-Rate  Option,  as the case may be, with respect to such
Loans or, in the case of a determination by an Affected Lender,  such Loans only
of such Affected Lender.

                                      -49-
<PAGE>

        SECTION  2.09.   CONVERSION  OR RENEWAL OF INTEREST  RATE  OPTIONS.  (a)
CONVERSION OR RENEWAL.  Subject to the provisions of Section  2.14(b) hereof the
Borrower  may convert any part of its  Revolving  Credit Loans from any interest
rate Option or Options to one or more  different  interest  rate Options and may
renew the CD Rate Option or the  Euro-Rate  Option as to any Funding  Segment of
the CD Rate Portion or the Euro-Rate Portion:

                (i)   At any time with respect to conversion  from the Base Rate
         Option; or

                (ii)  At the  expiration  of any Funding  Period with respect to
         conversions  from or renewals  of the CD Rate  Option or the  Euro-Rate
         Option, as the case may be, as to the Funding Segment  corresponding to
         such expiring Funding Period.

         Whenever  the Borrower  desires to convert or renew any  interest  rate
Option or  Options,  the  Borrower  shall  provide to the  Administrative  Agent
Standard Notice setting forth the following information:

                (w)   The date,  which  shall be a  Business  Day,  on which the
         proposed conversion or renewal is to be made;

                (x)   The principal  amounts selected in accordance with Section
         2.08(d) hereof of the Base Rate Portion and each Funding Segment of the
         CD Rate Portion and the  Euro-Rate  Portion,  as the case may be, to be
         converted from or renewed;

                (y)   The interest rate Option or Options selected in accordance
         with  Section  2.08(a)  hereof and the  principal  amounts  selected in
         accordance  with  Section  2.08(d)  hereof of the Base Rate Portion and
         each Funding Segment of the CD Rate Portion and the Euro-Rate  Portion,
         as the case may be, to be converted to; and

                (z)   With respect to each Funding Segment to be converted to or
         renewed, the Funding Period selected in accordance with Section 2.08(c)
         hereof to apply to such Funding Segment.

         Standard  Notice having been so provided,  after the date  specified in
such Standard Notice,  interest shall be calculated upon the principal amount of
the Loans as so converted or renewed.

         (b) FAILURE TO CONVERT OR RENEW. Absent due notice from the Borrower of
conversion  or renewal in the  circumstances  described  in Section  2.09(a)(ii)
hereof,  any part of the CD Rate  Portion or  Euro-Rate  Portion  for which such
notice is not received shall be converted  automatically to the Base Rate Option
on the last day of the expiring Funding Period.

        SECTION 2.10.    PREPAYMENTS GENERALLY. Whenever the Borrower desires to
prepay  any  part  of  its  Loans,  it  shall  provide  Standard  Notice  to the
Administrative Agent setting forth the following information:

                                      -50-
<PAGE>

                   (a)     The date, which shall be a Business Day, on which the
         proposed prepayment is to be made;

                   (b)     The total principal amount of such prepayment,  which
         shall be the sum of the principal  amounts selected  pursuant to clause
         (c) of this Section 2.10; and

                   (c)     The principal  amounts  selected in  accordance  with
         Section  2.08(d)  hereof of the Base Rate Portion and each part of each
         Funding  Segment of the CD Rate Portion and the Euro-Rate  Portion,  as
         the case may be, to be prepaid.

        SECTION 2.11.    OPTIONAL  PREPAYMENTS;   MANDATORY   PREPAYMENTS.   (a)
OPTIONAL PREPAYMENTS.  The Borrower shall have the right at its option from time
to time to prepay its Revolving Credit Loans and Swingline  Advances in whole or
part without premium or penalty (subject, however, to Section 2.14(b) hereof).

         (b) MANDATORY  PREPAYMENTS.  (i) Unless the Required Lenders  otherwise
agree in writing,  the Borrower shall, within 15 days after a Change in Control,
prepay in full all  outstanding  Loans (subject to Section  2.14(b)  hereof) and
terminate,  permanently and irrevocably, all existing Commitments of the Lenders
hereunder, and Cash Collateralize the amount available for drawing under any and
all outstanding Letters of Credit.

         (ii) If,  on any  day,  the  Dollar  Equivalent  of the  sum of the all
Eurocurrency  Loans  outstanding on the day of any such  determination  plus the
outstanding  Loans made in Dollars plus the Dollar  Equivalent  of all Letter of
Credit  Obligations  exceeds the Total  Revolving  Credit  Commitment as then in
effect, the  Administrative  Agent shall immediately notify the Borrower and the
Borrower shall prepay on the Business Day following such day Base Rate Loans and
then,  if  necessary,  Eurocurrency  Loans to the extent  required  so that such
aggregate unpaid amount will not exceed the Total Revolving Credit Commitment as
then in effect; such prepayment being subject however to Section 2.14(b) hereof.
The  Borrower  may   designate  the  Loans  to  be  prepaid  by  notice  to  the
Administrative Agent before each such prepayment.

         (c) GENERAL.  All prepayments  shall be made in accordance with Section
2.10 hereof.  No prepayments  shall be permitted with respect to Competitive Bid
Loans except as required by Sections  2.18 and 10.17 or (ii) with the consent of
the Lender or Lenders that have made the same.

         Each Lender shall  maintain in  accordance  with its usual  practice an
account or  accounts  evidencing  indebtedness  of the  Borrower  to such Lender
resulting  from each Loan of such  Lender from time to time,  including  without
limitation,  the  amounts of  principal  and  interest  payable and paid to such
Lender from time to time under this Agreement.  The entries made in the accounts
of each Lender  maintained  pursuant  hereto shall,  to the extent  permitted by
applicable  law, be prima facie  evidence  of the  existence  and amounts of the
obligations of the Borrower therein  recorded;  provided that the failure of any
Lender to maintain  any such  account,  or any error  therein,  shall not in any
manner effect the obligation of the Borrower to repay (with applicable interest)
the Loans made to the  Borrower by such Lender in  accordance  with the terms of
this Agreement.

                                      -51-
<PAGE>

        SECTION 2.12.    INTEREST  PAYMENT  DATES.  Interest  on the  Base  Rate
Portion shall be due and payable on each Regular Payment Date.  Interest on each
Funding  Segment of the CD Rate Portion shall be due and payable on the last day
of the  corresponding CD Rate Funding Period and, if such CD Rate Funding Period
is longer than 90 days,  also every 90th day during such CD Rate Funding Period.
Interest  on each  Funding  Segment of the  Euro-Rate  Portion  shall be due and
payable on the last day of the  corresponding  Euro-Rate  Funding Period and, if
such Euro-Rate Funding Period is longer than three months,  also on the last day
of every third month during such Funding  Period.  After maturity of any part of
the Loans (by  acceleration  or  otherwise),  interest on such part of the Loans
shall be due and payable on demand.

        SECTION 2.13.    PRO RATA TREATMENT. (a) CERTAIN DEFINITIONS. As used in
this Agreement, the following term has the meaning indicated:

                  "PRO RATA"  means from or to each  Lender:  (i) in the case of
         payments of Facility Fee, reductions pursuant to Section 2.02(c) hereof
         of the  Revolving  Credit  Committed  Amounts,  payments  on account of
         Swingline Advance Participating Interests under Section 2.05(f) hereof,
         participations in the Letter of Credit Obligations  pursuant to Section
         2.06 hereof and  indemnification  payments  under  Section 8.07 hereof,
         ratably in accordance with such Lender's Commitment Percentage; (ii) in
         the case of payments of principal  of and interest on, and  conversions
         and renewals of interest  rate options with respect to, any  particular
         Funding Segments,  ratably in accordance with such Lender's  percentage
         share  of such  Funding  Segment;  (iii)  in the  case of  payments  of
         principal  and  conversions  and renewals of interest rate options with
         respect  to,  the Base  Rate  Portion  of some or all of the  Revolving
         Credit Loans, ratably in accordance with such Lender's percentage share
         of such Base Rate Portion; and (iv) in the case of payments of interest
         for any day with respect to the Base Rate Portion of some of all of the
         Revolving  Credit  Loans,  ratably  in  accordance  with such  Lender's
         percentage share of such Base Rate Portion on such day.

         (b) MAKING OF REVOLVING  CREDIT LOANS.  Revolving Credit Loans shall be
made by the  Lenders  ratably in  accordance  with their  respective  Commitment
Percentages.

         (c) SEVERAL OBLIGATIONS.  The failure of any Lender to make a Revolving
Credit  Loan  shall not  relieve  any other  Lender  of its  obligation  to lend
hereunder,  but neither any Agent nor any Lender  shall be  responsible  for the
failure of any other Lender to make a Revolving Credit Loan.

        SECTION 2.14.    ADDITIONAL  COMPENSATION IN CERTAIN CIRCUMSTANCES.  (a)
INCREASED  COSTS OR REDUCED  RETURN  RESULTING  FROM  TAXES,  RESERVES,  CAPITAL
ADEQUACY REQUIREMENTS,  EXPENSES, ETC. If any Law or change therein or guideline
or interpretation or application  thereof by any Governmental  Authority charged
with the interpretation or administration thereof or compliance with any request
or directive of any Governmental  Authority  (whether or not having the force of
law) adopted or made after the date hereof:

                (i)   subjects  any  Lender or any  Notional  Euro-Rate  Funding
         Office or the LC Issuer to any tax or changes the basis of taxation, to
         the extent such tax or change relates

                                      -52-
<PAGE>

         to the  Euro-Rate  Loans or the CD Rate  Loans,  with  respect  to this
         Agreement,  the Notes,  the Euro-Rate  Loans or the CD Rate Loans,  the
         Letters of Credit,  participations  therein or payments by the Borrower
         of  principal  of, or interest on, the  Euro-Rate  Loans or the CD Rate
         Loans, from the Borrower hereunder or under the Notes (except for taxes
         on the overall net income or overall  gross  receipts of such Lender or
         such Notional  Euro-Rate Funding Office or the LC Issuer imposed by the
         jurisdictions (federal, state, local and foreign) in which the Lender's
         principal office or Notional  Euro-Rate Funding Office or the LC Issuer
         is located),

                (ii)  imposes, modifies or deems applicable any reserve, special
         deposit or similar requirement against credits or commitments to extend
         credit  extended by, assets (funded or contingent) of, deposits with or
         for the account of, other  acquisitions of funds by, such Lender or any
         Notional  Euro-Rate  Funding Office (in  connection  with the Euro-Rate
         Loans or the CD Rate Loans) or the LC Issuer  (other than  requirements
         expressly  included herein in the  determination  of the CD Rate or the
         Euro-Rate, as the case may be, hereunder),

                (iii) imposes, modifies or deems applicable any capital adequacy
         or similar requirement (A) against assets (funded or contingent) of, or
         credits or commitments to extend credit  extended by, any Lender or any
         Notional  Euro-Rate  Funding Office or the LC Issuer,  or (B) otherwise
         applicable to the  obligations of any Lender or any Notional  Euro-Rate
         Funding Office or the LC Issuer under this Agreement, or

                (iv)  imposes upon any Lender or any Notional  Euro-Rate Funding
         Office or the LC Issuer any other  condition or expense,  to the extent
         such condition or expense relates to the Euro-Rate Loans or the CD Rate
         Loans,  directly  related to this  Agreement,  the Notes or its making,
         maintenance  or funding of any Euro-Rate or CD Rate Loan or the Letters
         of Credit or participations therein.

and the result of any of the foregoing is reasonably determined by any Lender or
the LC Issuer to  increase  the cost to,  reduce  the income  receivable  by, or
impose any expense  (excluding  loss of margin) upon such  Lender,  any Notional
Euro-Rate  Funding Office or the LC Issuer,  as  applicable,  or, in the case of
clause (iii)  hereof,  any Person  controlling  a Lender or the LC Issuer,  with
respect to this  Agreement,  the  Notes,  the  Letters of Credit or the  making,
maintenance  or  funding  of any Loan or  Letters  of Credit  or  participations
therein (or, in the case of any capital adequacy or similar requirement, to have
the effect of  reducing  the rate of return on such  Lender's  or LC Issuer's or
controlling  Person's  capital,  taking into  consideration  such Lender's or LC
Issuer's or controlling  Person's  policies with respect to capital adequacy) by
an amount  which such  Lender or the LC Issuer  reasonably  deems to be material
(such Lender being  deemed for this purpose to have made,  maintained  or funded
each  Funding  Segment of the CD Rate Portion and the  Euro-Rate  Portion from a
Corresponding  Source of Funds),  such  Lender or the LC Issuer may from time to
time promptly notify the Borrower of the amount  determined in good faith (using
any  reasonable  averaging  and  attribution  methods)  by such Lender or the LC
Issuer (which  determination  shall be conclusive  absent  manifest error) to be
necessary to compensate such Lender or such Notional Euro-Rate Funding Office or
the LC Issuer for such  increase,  reduction or  imposition.  The Borrower shall
have no  obligation  to  reimburse a Lender

                                      -53-
<PAGE>

or the LC Issuer under this  Section  2.14(a) for any amount with respect to any
such increase,  reduction or imposition which amount is attributable to a period
of more than 60 days  ending  prior to the date of such  Lender's or LC Issuer's
first notice to the Borrower of such  increase,  reduction or  imposition.  Each
Lender or the LC Issuer will notify the Borrower and the Administrative Agent of
any event  occurring  after the date of this  Agreement  which will entitle such
Lender  or the LC  Issuer  to  compensation  pursuant  to this  Section  2.14 as
promptly as  practicable  after it obtains  knowledge  thereof and determines to
request  such  compensation.  Each  Lender or the LC  Issuer  will  furnish  the
Borrower  and  the  Administrative  Agent  with a  statement  setting  forth  in
reasonable  detail the basis,  the manner of calculation  and the amount of each
request by such Lender or the LC Issuer for compensation from the Borrower under
this Section 2.14.  Such amount shall be due and payable by the Borrower to such
Lender or the LC Issuer five  Business  Days after such notice is given.  In the
event that after the Borrower shall have paid any  additional  amount under this
Section  2.14(a) with respect to any Loan or Letter of Credit or  participations
therein such Lender or the LC Issuer shall have successfully contested such law,
regulation, treaty, order, directive,  interpretation or condition, then, to the
extent  that  such  Lender  or the LC  Issuer  is or will be  placed in the same
position it was prior to the  incurrence  of the  additional  costs  received or
receivable  (on an after-tax  basis) and its contest of such law,  regulation or
other condition,  such Lender or the LC Issuer shall refund to the Borrower such
additional  amount or any portion  thereof  with respect to which such Lender or
the LC Issuer is or will be placed in such position.

         (b) FUNDING  BREAKAGE.  In addition to the compensation  required under
Section  2.14(a)  hereof,  the Borrower shall  indemnify each Lender against any
loss or expense  (excluding  loss of margin) which such Lender has incurred as a
consequence of:

                (i)   any payment,  prepayment  or conversion of any part of any
         Funding  Segment  of any CD Rate  Portion or  Euro-Rate  Portion of the
         Loans on a day  other  than the last day of the  corresponding  Funding
         Period  or any  prepayment  of any  Competitive  Bid Loan  prior to its
         maturity date (whether or not such payment, prepayment or conversion is
         mandatory or automatic and whether or not such payment or prepayment is
         then due),

                (ii)  any attempt by the Borrower to revoke (expressly, by later
         inconsistent  notices  or  otherwise)  in whole  or in part any  notice
         stated herein to be irrevocable (the Administrative Agent having in its
         sole  discretion  the  options  (A) to give  effect  to such  attempted
         revocation  provided  that  indemnity  under  this  Section  2.14(b) is
         obtained or (B) to treat such  attempted  revocation as having no force
         or effect, as if never made), or

                (iii) any   failure  of  the   Borrower  to  pay  when  due  (by
         acceleration or otherwise) any principal,  interest or any other amount
         due  hereunder or under any Note  relating to a Euro-Rate  Loan or a CD
         Rate Loan.

         If any Lender sustains or incurs any such loss or expense it shall from
time to time  promptly  notify  the  Borrower  and the  Administrative  Agent in
writing setting forth in reasonable  detail the amount  determined in good faith
by such Lender (which  determination  shall be conclusive absent manifest error)
to be necessary to indemnify  such Lender for such loss or

                                      -54-
<PAGE>

expense.  Such  amount  shall  be  due  and  payable  by  the  Borrower  to  the
Administrative  Agent for the account of such Lender,  five  Business Days after
such notice is given.

         (c) ADDITIONAL  INTEREST.  (i) So long as any Lender  shall be required
under  regulations  of the Board of Governors of the Federal  Reserve  System to
maintain  reserves  with  respect  to  liabilities  or assets  consisting  of or
including  loans made with reference to the CD Rate, such Lender may require the
Borrower to pay, but only in respect of any period  during  which such  reserves
shall actually be maintained by such Lender,  additional  interest on the unpaid
principal  amount of the CD Rate Portion of the Loans,  at an interest  rate per
annum equal at all times  during each CD Rate Funding  Period to the  difference
obtained by subtracting (A) the CD Rate for such CD Rate Funding Period from (B)
the rate  obtained by dividing  such CD Rate  referred to in clause (A) above by
that  percentage  equal to 100%  minus the CD Rate  Reserve  Percentage  of such
Lender for such CD Rate Funding  Period,  payable on each date on which interest
is payable on such CD Rate Portion.

                (ii)  So long as any Lender shall be required under  regulations
of the Board of Governors  of the Federal  Reserve  System to maintain  reserves
with respect to  liabilities or assets  consisting of or including  Eurocurrency
Liabilities, such Lender may require the Borrower to pay, but only in respect of
any period  during which such  reserves  shall  actually be  maintained  by such
Lender,  additional  interest on the unpaid  principal  amount of the  Euro-Rate
Portion of the Loans,  at an interest  rate per annum equal at all times  during
each Euro-Rate Funding Period to the difference  obtained by subtracting (A) the
Euro-Rate  for such  Euro-Rate  Funding  Period  from (B) the rate  obtained  by
dividing such Euro-Rate referred to in clause (A) above by that percentage equal
to 100% minus the Euro-Rate Reserve Percentage of such Lender for such Euro-Rate
Funding  Period,  payable  on each date on which  interest  is  payable  on such
Euro-Rate Portion.

                (iii) If any Lender shall claim  entitlement  to any  additional
amount pursuant to this Section  2.14(c),  then such Lender shall deliver to the
Borrower a certificate setting forth the basis for the determination  thereof as
promptly as  practicable.  More than one such  certificate  may be so delivered.
Each such certificate shall be conclusive and binding for all purposes as to the
amount due absent  manifest  error.  The  Borrower  shall pay to each Lender the
amount shown as due on any such certificate  within five Business Days after its
receipt of the same.

        SECTION  2.15.   PAYMENTS  GENERALLY;  INTEREST ON OVERDUE AMOUNTS.  (a)
PAYMENTS  GENERALLY.  All payments and prepayments to be made by the Borrower in
respect of principal,  interest, fees, indemnity,  expenses or other amounts due
from the Borrower hereunder or under any other Loan Document in Dollars shall be
payable  at  11:00  a.m.,  Los  Angeles  time,  on  the  day  when  due  without
presentment,  demand,  protest  or notice of any kind,  all of which are  hereby
expressly  waived,  and an action  therefor shall  immediately  accrue,  without
setoff,  counterclaim,  withholding  or other  deduction  of any kind or nature,
except for payments to a Lender subject to a withholding deduction under Section
2.16(c)  hereof.  Except for payments  under  Sections  2.03(q),  2.14 and 10.06
hereof,  such  payments  shall  be  made  for  the  account  of  Lenders  to the
Administrative  Agent's Bancontrol Account #12334-16521 at its Office in Dollars
in funds immediately  available at such Office, and payments under Sections 2.14
and 10.06 hereof shall be made to the applicable Lender at such domestic account
as it shall  specify  to the  Borrower  from  time to time in funds  immediately
available  at  such  account.   Any  payment  or

                                      -55-
<PAGE>

prepayment received by the Administrative Agent or such Lender after 11:00 a.m.,
Los Angeles  time,  on any day shall be deemed to have been received on the next
succeeding  Business  Day.  The  Administrative  Agent shall  distribute  to the
Lenders  all such  payments  received  by it from the  Borrower  as  promptly as
practicable after receipt by the Administrative Agent. If and to the extent that
the Administrative  Agent has not forwarded to any Lender such Lender's share of
any such payment on the same Business Day as such payment is received (or deemed
received) from the Borrower,  the Administrative  Agent shall pay to such Lender
interest on such amount at the Federal Funds  Effective  Rate for each day until
such payment is made. Upon  termination of this Agreement and payment in full of
all principal,  interest, fees, expenses and other amounts due from the Borrower
hereunder or under any other Loan  Document,  each Lender will promptly mark its
Notes "cancelled" and forward them to the  Administrative  Agent for delivery to
the Borrower.

         (b) INTEREST ON OVERDUE AMOUNTS.  To the extent permitted by law, after
there shall have become due (by acceleration or otherwise) principal,  interest,
fees,  indemnity,  expenses or any other amounts due from the Borrower hereunder
or under any other Loan Document,  such amounts shall bear interest for each day
until paid (before and after judgment),  payable on demand,  at a rate per annum
based on a year of 365 or 366 days,  as the case may be, and actual days elapsed
(in the case of any Portion of Loans  bearing  interest at the Base Rate Option)
and 360 days and  actual  days  elapsed  (in the  case of any  Portion  of Loans
bearing  interest at the CD Rate Option or the Euro-Rate  Option) which for each
day shall be equal to the following:

                (i)   In  the  case  of any  part  of the  CD  Rate  Portion  or
         Euro-Rate  Portion  of any Loans,  (A) until the end of the  applicable
         then-current  Funding  Period  at a rate per  annum  2% above  the rate
         otherwise  applicable  to such part,  and (B)  thereafter in accordance
         with the following clause (ii); and

                (ii)  In the case of any  other  amount  due  from the  Borrower
         hereunder or under any other Loan Document,  2% above the  then-current
         Base Rate plus the Applicable Margin for Base Rate Option.

        SECTION 2.16 TAXES.  (a) PAYMENTS NET OF TAXES. All payments made by the
Borrower  under  this  Agreement  shall be made free and clear of,  and  without
reduction  or  withholding  for or on account of, any present or future  income,
stamp or other taxes, levies,  imposts,  duties,  charges,  fees,  deductions or
withholdings,  now or hereafter imposed, levied, collected, withheld or assessed
by any  Governmental  Authority,  and  all  liabilities  with  respect  thereto,
excluding

               (i)    in the case of each Agent,  the LC Issuer and each Lender,
         income or franchise taxes imposed on such Agent,  the LC Issuer or such
         Lender by the  jurisdiction  under the laws of which such Agent, the LC
         Issuer or such Lender is  organized  or any  political  subdivision  or
         taxing  authority  thereof or  therein  or as a result of a  connection
         between such Agent,  the LC Issuer or such Lender and any  jurisdiction
         other than a connection  resulting  solely from this  Agreement and the
         transactions contemplated hereby, and

                                      -56-
<PAGE>

                (ii)  in the case of the LC Issuer  and each  Lender,  income or
         franchise  taxes imposed by any  jurisdiction in which the LC Issuer or
         such Lender's lending offices which issue or book Letters of Credit, or
         make or book Loans are located or any political  subdivision  or taxing
         authority thereof or therein

(all  such  non-excluded  taxes,  levies,   imposts,   deductions,   charges  or
withholdings being hereinafter called "TAXES").  If any Taxes are required to be
withheld or deducted from any amounts payable to any Agent, the LC Issuer or any
Lender under this Agreement or any other Loan  Document,  the Borrower shall pay
the relevant amount of such Taxes and the amounts so payable to such Agent,  the
LC Issuer or such Lender shall be increased to the extent  necessary to yield to
such Agent,  the LC Issuer or such Lender (after payment of all Taxes)  interest
or any such  other  amounts  payable  hereunder  at the rates or in the  amounts
specified in this Agreement and the other Loan Documents. Whenever any Taxes are
paid by the  Borrower  with  respect to payments  made in  connection  with this
Agreement,  as promptly as possible  thereafter,  the Borrower shall send to the
Administrative  Agent for its own account or for the account of the LC Issuer or
such  Lender,  as the case  may be, a  certified  copy of an  original  official
receipt  received by the Borrower  showing  payment  thereof.  In the event that
after the  Borrower  shall have paid any  additional  amount  under this Section
2.16(a)  with  respect  to any Loan or any letter of Credit the Lender or the LC
Issuer,  as the case may be, shall have received a refund or credit of any Taxes
paid by the  Borrower  with  respect to payments  made in  connection  with this
Agreement,  then,  to the extent  that such  Lender or the LC Issuer  receives a
refund  or  credit  of all or a  portion  of such  Taxes  from the  Governmental
Authority  to whom such Taxes were paid by the  Borrower,  such Lender or the LC
Issuer  shall  refund to the  Borrower  such  additional  amount or any  portion
thereof with respect to which such Lender or the LC Issuer  receives such refund
or credit. Nothing contained in this paragraph (a) shall require any Lender, the
LC Issuer or any Agent to make  available  any of its tax  returns (or any other
information relating to its taxes which it deems to be confidential).

         (b) INDEMNITY.  The  Borrower  hereby  indemnifies  each Agent,  the LC
Issuer and each of the Lenders for the full amount of all Taxes  attributable to
payments  by or on behalf of the  Borrower  hereunder  or under any of the other
Loan Documents, any such Taxes paid by such Agent, the LC Issuer or such Lender,
as the case may be, any  present or future  claims,  liabilities  or losses with
respect to or  resulting  from any  omission of the  Borrower to pay or delay in
paying any Taxes  (including any incremental  Taxes,  interest or penalties that
may become  payable by such  Agent,  the LC Issuer or such Lender as a result of
any failure of the Borrower to pay such  Taxes),  whether or not such Taxes were
correctly or legally asserted. Such indemnification shall be made within 30 days
from the date such  Lender,  the LC Issuer  or such  Agent,  as the case may be,
makes written demand therefor.

         (c) WITHHOLDING   AND  BACKUP   WITHHOLDING.   Each  Lender  that  is
incorporated  or  organized  under the laws of any  jurisdiction  other than the
United States or any State thereof  agrees that, on or prior to the Closing Date
(or, with respect to any Lender which becomes a party to this Agreement pursuant
to Section 10.14 hereof,  the Transfer  Effective  Date), it will furnish to the
Borrower and the Administrative Agent

                                      -57-
<PAGE>

                (i)   two valid, duly completed copies of United States Internal
         Revenue Service Form 4224 or United States  Internal  Revenue Form 1001
         or successor  applicable  form, as the case may be,  certifying in each
         case that such  Lender is  entitled  to  receive  payments  under  this
         Agreement and the other Loan Documents without deduction or withholding
         of any United States federal income taxes, and

                (ii)  a valid, duly completed  Internal Revenue Service Form W-8
         or W-9 or successor  applicable  form, as the case may be, to establish
         an exemption from United States backup withholding tax.

         Each Lender which so delivers to the  Borrower  and the  Administrative
Agent a Form 1001 or 4224 and Form W-8 or W-9  applicable  forms  (the  "FORMS")
agrees to deliver  to the  Borrower  and the  Administrative  Agent two  further
copies of the Forms, or other manner of certification, as the case may be, on or
before the date that any such form  expires or becomes  obsolete or otherwise is
required to be  resubmitted  as a  condition  to  obtaining  an  exemption  from
withholding  tax, or after the occurrence of any event requiring a change in the
most recent form  previously  delivered by it, and such  extensions  or renewals
thereof as may  reasonably  be requested by the Borrower and the  Administrative
Agent,  certifying  in the case of a Form 1001 or Form 4224 that such  Lender is
entitled to receive  payments  under this  Agreement or any other Loan  Document
without  deduction or  withholding  of any United States  federal  income taxes,
unless in any such cases an event  (including  any changes in Law) 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 letter or form with respect to it and such
Lender advises the Borrower and the Administrative  Agent that it is not capable
of receiving  payments  without any  deduction or  withholding  of United States
federal  income  tax,  and in the  case of a Form  W-8 or W-9,  establishing  an
exemption from United States backup withholding tax. Notwithstanding anything to
the contrary  contained  herein,  the Borrower  shall not be required to pay any
additional  amounts pursuant to this Section 2.16 or pursuant to Section 2.14 if
the obligation to pay such additional  amounts would not have arisen but for the
failure by any Agent or any Lender to comply with its obligations hereunder,  or
if such Agent or Lender  shall have  delivered  the  appropriate  Forms and such
Agent or Lender is not entitled to exemption  from  deduction or  withholding of
U.S.  federal  income tax in respect of payments made by the Borrower  hereunder
for any reason other than a change in U.S. law or regulations or in the official
interpretation thereof after the date of delivery of such Forms.

        SECTION 2.17.    FUNDING  BY  BRANCH,   SUBSIDIARY  OR  AFFILIATE.   (a)
NOTIONAL  FUNDING.  Each  Lender  shall  have  the  right  from  time  to  time,
prospectively or  retrospectively,  without notice to the Borrower,  to deem any
branch,  subsidiary  or  affiliate  of such Lender to have made,  maintained  or
funded any part of the Euro-Rate Portion at any time. Any branch,  subsidiary or
affiliate so deemed  shall be known as a "Notional  Euro-Rate  Funding  Office."
Such  Lender  shall deem any part of the  Euro-Rate  Portion of the Loans or the
funding  therefor to have been  transferred  to a different  Notional  Euro-Rate
Funding  Office  if such  transfer  would  avoid or cure an  event or  condition
described in Section 2.08(e)(ii) hereof or would lessen compensation  payable by
the Borrower under Sections  2.14(a),  2.16(a) or 2.16(b)  hereof,  and provided
that such Lender  determines  in its  reasonable  discretion  that such transfer
would be practicable  and

                                      -58-
<PAGE>

would not have a material adverse effect on such part of the Loans,  such Lender
or any Notional  Euro-Rate Funding Office (it being assumed for purposes of such
determination  that each  part of the  Euro-Rate  Portion  is  actually  made or
maintained by or funded through the  corresponding  Notional  Euro-Rate  Funding
Office).  Notional  Euro-Rate  Funding  Offices  may be  selected by such Lender
without regard to such Lender's actual methods of making, maintaining or funding
Loans or any sources of funding actually used by or available to such Lender.

         (b) ACTUAL FUNDING.  Each Lender shall have the right from time to time
to make or maintain any part of the Euro-Rate Portion by arranging for a branch,
subsidiary  or  affiliate  of such Lender to make or  maintain  such part of the
Euro-Rate Portion.  Such Lender shall have the right to hold any applicable Note
payable to its order for the benefit and account of such branch,  subsidiary  or
affiliate or (ii) request the Borrower to issue one or more promissory  notes in
the  principal  amount of such  Euro-Rate  Portion,  in  substantially  the form
attached hereto as Exhibit A with the blanks  appropriately  filled,  payable to
such branch,  subsidiary or affiliate and with  appropriate  changes  reflecting
that the holder  thereof is not  obligated to make any  additional  Loans to the
Borrower.  The  Borrower  agrees  to  comply  promptly  with any  request  under
subsection  (ii) of  this  Section  2.17(b).  If any  Lender  causes  a  branch,
subsidiary  or affiliate to make or maintain any part of the  Euro-Rate  Portion
hereunder,  all terms and conditions of this Agreement  shall,  except where the
context clearly requires otherwise,  be applicable to such part of the Euro-Rate
Portion  and to any note  payable  to the order of such  branch,  subsidiary  or
affiliate to the same extent as if such part of the Euro-Rate  Portion were made
or  maintained  and such note  were a  Revolving  Credit  Note  payable  to such
Lender's order.

        SECTION 2.18.    EXTENSION OF REVOLVING  CREDIT  MATURITY  DATE.  On and
after the first Anniversary Date hereof,  the Revolving Credit Maturity Date and
the  Competitive  Bid  Expiration  Date may be extended for  successive one year
periods at the request of the Borrower  with the express  consent of each Lender
(to be at such Lender's sole  discretion) as provided below.  Not later than the
date 60 days prior to each Anniversary  Date, the Borrower shall, at its option,
in a written notice to the Administrative Agent request (an "EXTENSION REQUEST")
that the  Revolving  Credit  Maturity  Date be extended for a period of one year
PROVIDED  that the Borrower  must also  request,  to the extent the Other Credit
Agreement is in effect,  the extension of the "REVOLVING  CREDIT  MATURITY DATE"
under the Other Credit Agreement. The Administrative Agent shall promptly inform
the  Lenders of such  Extension  Request.  Each  Lender  that  agrees  with such
Extension Request shall deliver to the Administrative  Agent its express written
consent thereto no later than such Anniversary  Date. If (i) any Lender notifies
the Administrative  Agent in writing prior to such Anniversary Date that it will
not consent to such  Extension  Request or (ii) all of the  Lenders  have not in
writing  expressly  consented to any such  Extension  Request as provided in the
preceding sentence,  then the Administrative  Agent shall so notify the Borrower
and the Borrower, at its option, may replace each Lender which has not agreed to
such Extension Request (a "NONEXTENDING LENDER") with another commercial lending
institution  reasonably  satisfactory  to the  Administrative  Agent  and the LC
Issuer (a  "REPLACEMENT  LENDER")  and/or with one or more  existing  Lenders by
giving (not later than 160 days after such Anniversary  Date) notice of the name
of such Replacement Lender or such existing Lenders to the Administrative Agent.
Unless the Administrative Agent or the LC Issuer shall object to the identity of
such proposed  Replacement Lender (in the case of a Replacement Lender) prior to
the  date  170  days  after  such   Anniversary   Date,  upon  notice  from  the
Administrative  Agent, each

                                      -59-
<PAGE>

Nonextending Lender shall promptly (but in no event later than the date which is
180 days after such Anniversary  Date) assign all of its interests  hereunder to
such  Replacement   Lender  and/or  existing  Lenders  in  accordance  with  the
provisions  of  Section  10.14(c)  hereof.  If all  Lenders  consent to any such
Extension  Request (or, if all  Nonextending  Lenders are replaced in accordance
with this Section),  then as of 2:00 p.m., Los Angeles time on the date which is
180 days after such  Anniversary  Date, the Revolving Credit Maturity Date shall
be deemed to have been extended  for, and shall be the date,  one year after the
then effective  Revolving  Credit  Maturity  Date,  and if the Revolving  Credit
Maturity Date is so extended, the Competitive Bid Expiration Date (as such dates
may have been previously  extended  pursuant to this Section) shall be deemed to
have been extended for, and shall be the date, one year after the then effective
Competitive  Bid Expiration  Date. If any Lender declines to consent to any such
Extension  Request  and such  Lender is not  replaced  in  accordance  with this
Section,  then  the  Revolving  Credit  Maturity  Date and the  Competitive  Bid
Expiration  Date then in effect shall not be  extended.  To the extent the Other
Credit Agreement is in effect,  the "REVOLVING  CREDIT  COMMITMENT  AMOUNT" of a
Nonextending  Lender  under the Other  Credit  Agreement  shall be  replaced  or
assumed at the same percentage by such  Replacement  Lender and/or such existing
Lenders.


                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

         The  Borrower  hereby  represents  and  warrants to each Agent and each
Lender as follows:

        SECTION  3.01.   CORPORATE  STATUS.  The Borrower  and each  Significant
Subsidiary thereof (a) is a corporation duly organized,  validly existing and in
good  standing  under the laws of its  jurisdiction  of  incorporation;  (b) has
corporate  power and  authority to own its property and to transact the business
in  which  it is  engaged  or  presently  proposes  to  engage;  and (c) is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions  in which the  ownership  of its  properties  or the nature of its
activities or both makes such qualification necessary;  except for matters that,
individually  or in the  aggregate,  could not  reasonably be expected to have a
Material Adverse Effect.

         Schedule 3.01 hereof states as of the date hereof the  jurisdiction  of
incorporation  of the Borrower,  each  Significant  Subsidiary  and each Special
Purpose Subsidiary.

        SECTION 3.02.    CORPORATE  POWER AND  AUTHORIZATION.  Each Credit Party
has the corporate power to execute, deliver and perform the Loan Documents to be
executed by it and has taken all necessary  action,  corporate or otherwise,  to
authorize the  execution,  delivery and  performance  of this  Agreement and the
other Loan  Documents to be executed by it. The Borrower has the power to borrow
and request the  Issuance of the Letters of Credit  hereunder  and has taken all
necessary  corporate action to authorize the borrowings and the requests for the
Issuance of the Letters of Credit  hereunder on the terms and conditions of this
Agreement. No consent or approval of any Person (including,  without limitation,
any stockholder of any Credit Party),  no consent or approval of any landlord or
mortgagee,  no waiver of any Lien of right or distraint or other  similar

                                      -60-
<PAGE>

right and no consent,  license,  approval,  authorization  or declaration of any
governmental  authority,  bureau or agency, is or will be required in connection
with the  execution,  delivery  or  performance  by each  Credit  Party,  or the
validity,  enforcement or priority,  of the Loan Documents to be executed by it,
except as set forth on  Schedule  3.02  hereto,  each of which has been duly and
validly  obtained  on or prior to the date  hereof  and is now in full force and
effect and is sufficient for its intended purpose.

        SECTION 3.03.    EXECUTION AND BINDING  EFFECT.  This Agreement and each
other Loan  Document to which each Credit Party is a party has been, or upon its
execution and delivery will be, duly executed and delivered by such Credit Party
and each  constitutes,  or upon its execution and delivery will constitute,  the
valid and legally  binding  obligation  of such  Credit  Party,  enforceable  in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
applicable bankruptcy, insolvency, reorganization,  moratorium, or other similar
laws,  now or hereafter in effect,  relating to or affecting the  enforcement of
creditors'  rights generally and except that the remedy of specific  performance
and other  equitable  remedies are subject to judicial  discretion.  There is no
action,  suit,  proceeding or investigation  pending or, to the knowledge of any
Credit  Party,  threatened  against  or  affecting  the  Borrower  or any of its
Subsidiaries  which questions the validity or the  enforceability  of any of the
Loan Documents.

        SECTION 3.04.    GOVERNMENTAL APPROVALS AND FILINGS. No approval, order,
consent,  authorization,  certificate,  license,  permit  or  validation  of, or
exemption or other  action by, or filing,  recording or  registration  with,  or
notice to, any Governmental Authority  (collectively,  "GOVERNMENTAL ACTION") is
or will be necessary in connection with execution and delivery of this Agreement
or  any  other  Loan  Document,  consummation  by  the  Credit  Parties  of  the
transactions  herein or therein  contemplated,  or  performance of or compliance
with the terms and  conditions  hereof or thereof.  Neither the Borrower nor any
Subsidiary  thereof is subject to regulation  under the Public  Utility  Holding
Company Act of 1935, the Federal Power Act, the  Interstate  Commerce Act or the
Investment  Company Act of 1940 or to any Federal or state statute or regulation
limiting the Borrower's  ability to incur  Indebtedness for money borrowed or to
request  the  Issuance of the Letters of Credit.  Neither the  Borrower  nor any
Subsidiary  thereof is an "investment  company" or a company  "controlled" by an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

        SECTION 3.05.    ABSENCE OF  CONFLICTS.  The  execution  and delivery by
each Credit Party of this  Agreement and each other Loan Document to which it is
a party and performance by it hereunder and thereunder, will not violate any Law
(including,  without  limitation,  Regulations U, T and X of the Federal Reserve
Board)  and will not  conflict  with or result in a breach of any  order,  writ,
injunction,   ordinance,  resolution,  decree,  or  other  similar  document  or
instrument of any court or governmental authority, bureau or agency, domestic or
foreign,  or  its  certificate  of  incorporation  or  by-laws  or  any  similar
constituent  documents  or create (with or without the giving of notice or lapse
of time,  or both) a default  under or breach of any material  agreement,  bond,
note  or  indenture  to  which  it is a  party  (by  successor  in  interest  or
otherwise),  or by  which  it is bound or any of its  properties  or  assets  is
affected,  or result in the imposition of any Lien of any nature whatsoever upon
any of the properties or assets owned by or used in connection with the business
of the Borrower or any of its Subsidiaries.

                                      -61-
<PAGE>

        SECTION 3.06.    AUDITED   FINANCIAL   STATEMENTS.   The   Borrower  has
heretofore  furnished to each Agent and each Lender consolidated  balance sheets
of the Borrower and its  consolidated  Subsidiaries  as of December 25, 1998 (as
such financial  statements  have been restated and filed with the Securities and
Exchange  Commission)  and  September  24,  1999  and the  related  consolidated
statements  of income,  cash flows and changes in  stockholders'  equity for the
fiscal year or three fiscal  quarters,  as the case may be, then ended, and with
respect to such information as of December 25, 1998, as examined and reported on
by Coopers & Lybrand, independent certified public accountants for the Borrower,
who  delivered  an  unqualified  opinion  in  respect  thereof.  Such  financial
statements (including the notes thereto) present fairly in all material respects
the financial condition of the Borrower and its consolidated  Subsidiaries as of
the end of each such fiscal year or nine month  period,  as the case may be, and
the results of their  operations  and their cash flows for the fiscal years then
ended, all in conformity with GAAP,  except for the absence of footnotes and for
normal year end audit adjustments in the case of the nine month statements.

        SECTION  3.07.   ABSENCE OF UNDISCLOSED  LIABILITIES.  As of the Closing
Date,  neither the Borrower nor any Subsidiary of the Borrower has any liability
or obligation of any nature whatever (whether absolute,  accrued,  contingent or
otherwise,  whether or not due), forward or long-term  commitments or unrealized
or anticipated losses from unfavorable  commitments,  except (a) as disclosed in
the financial  statements  referred to in Section 3.06 hereof, (b) matters that,
individually or in the aggregate,  in the Borrower's reasonable judgment,  could
not  reasonably  be  expected  to  have  a  Material   Adverse  Effect  and  (c)
liabilities,  obligations,  commitments  and losses incurred after September 24,
1999 otherwise permitted, or not restricted, by the Previous Credit Agreement or
this Agreement.  As of the Closing Date, neither the Borrower nor any Subsidiary
of the Borrower had any Indebtedness other than the Indebtedness of the Borrower
and its Subsidiaries set forth on Schedule 3.07 hereto.

        SECTION 3.08.    ABSENCE  OF  MATERIAL   ADVERSE   CHANGES.   Except  as
disclosed in the financial statements referred to in Section 3.06 hereof and for
matters  covered  by, or  referred  to in,  the Exit  Funding  Agreement,  since
September 24, 1999,  there has been no material  adverse change in the business,
operations,  properties,  assets or condition  (financial  or  otherwise) of the
Borrower and its Subsidiaries taken as a whole.

        SECTION  3.09.   ACCURATE  AND  COMPLETE   DISCLOSURE.   No  information
heretofore,  contemporaneously  or  hereafter  provided  by or on  behalf of the
Borrower  or any  Subsidiary  thereof  in  writing to any Agent or any Lender in
writing  pursuant to or in connection  with any Loan Document or any transaction
contemplated  hereby or thereby contains any untrue statement of a material fact
or omits to state any material fact necessary to make such information (taken as
a whole) not  misleading  in any  material  respect at such time in light of the
circumstances in which it was provided. The Borrower has disclosed to each Agent
and each  Lender in writing  every fact or  circumstance  known to the  Borrower
which has a Material Adverse Effect.

        SECTION 3.10.    MARGIN REGULATIONS. No part of the proceeds of any Loan
or any Letter of Credit issued  hereunder will be used for the purpose of buying
or carrying  any  "MARGIN  STOCK," as such term is used in  Regulation  U of the
Board of Governors of the Federal Reserve System,  as amended from time to time,
or to extend  credit to others for the purpose of buying or carrying

                                      -62-
<PAGE>

any "margin  stock," in either case in a manner which would  violate or conflict
with  Regulation  T, U, or X of the Board of  Governors  of the Federal  Reserve
System.  Neither  the  Borrower  nor any  Subsidiary  thereof  is engaged in the
business  of  extending  credit to others for the  purpose of buying or carrying
"margin  stock."  Neither the making of any Loan,  the issuance of any Letter of
Credit nor any use of proceeds of any such Loan or Letter of Credit will violate
or  conflict  with  the  provisions  of  Regulation  T, U or X of the  Board  of
Governors of the Federal Reserve System, as amended from time to time.

        SECTION  3.11.   SUBSIDIARIES.  Schedule  3.11  hereof  states as of the
Closing Date each  Significant  Subsidiary of the Borrower and the percentage of
outstanding shares owned by the Borrower and by each Significant Subsidiary. The
outstanding shares of each Significant Subsidiary of the Borrower have been duly
authorized and validly issued and are fully paid and nonassessable. The Borrower
and each Significant  Subsidiary thereof owns beneficially and of record and has
good title to all of the shares represented by the ownership percentage shown in
such Schedule 3.11, free and clear of any Lien. There are no options,  warrants,
calls,  subscriptions,  conversion rights, exchange rights, preemptive rights or
other rights,  agreements or arrangements (contingent or otherwise) which may in
any circumstances now or hereafter obligate any Significant  Subsidiary to issue
any shares of its capital stock or any other securities. As of the Closing Date,
no Significant  Subsidiary has  outstanding  any class of preferred stock or any
class of common stock with a prior right to dividends.

        SECTION 3.12.    PARTNERSHIPS,  ETC. As of the Closing Date, neither the
Borrower  nor any  Significant  Subsidiary  thereof  is a  partner  (general  or
limited)  of  any  partnership,  is  a  party  to  any  joint  venture  or  owns
(beneficially  or of  record)  any  equity or  similar  interest  in any  Person
(including  but not limited to any  interest  pursuant to which the  Borrower or
such Significant Subsidiary has or may in any circumstance have an obligation to
make capital  contributions  to, or be generally liable for or on account of the
liabilities, acts or omissions of such other Person), except for the partnership
interests and joint ventures set forth in Schedule 3.12 hereof.

        SECTION 3.13.    LITIGATION.  There is no pending or (to the  Borrower's
knowledge) threatened action, suit, proceeding or investigation by or before any
Governmental  Authority  against or affecting the Borrower or any  Subsidiary of
the  Borrower,  except for (a) matters  described  in the  financial  statements
referred to in Section 3.06 hereof, and (b) matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

        SECTION 3.14.    ABSENCE OF EVENTS OF DEFAULT. No event has occurred and
is continuing and no condition  exists which  constitutes an Event of Default or
Potential Default.

        SECTION 3.15.    ABSENCE OF OTHER DEFAULTS. Neither the Borrower nor any
Subsidiary  thereof is in default under any  agreement,  ordinance,  resolution,
decree,  bond,  note,  indenture,  order or  judgment to which it is a party (by
successor  in  interest  or  otherwise)  or by which it is  bound,  or any other
agreement or other  instrument by which any of the properties or assets owned by
it or used in the conduct of its business is affected,  which individually or in
the  aggregate,  would have a Material  Adverse  Effect.  The  Borrower and each
Subsidiary  thereof have complied and are in compliance in all respects with all
Laws, except for such instances of

                                      -63-
<PAGE>

non-compliance that,  individually or in the aggregate,  could not reasonably be
expected to have a Material Adverse Effect.

        SECTION  3.16.   INSURANCE.  The  policies,  binders  or  self-insurance
programs  for  fire,  liability,  product  liability,   workmen's  compensation,
vehicular and other insurance currently held by or on behalf of the Borrower and
each Subsidiary thereof insure its material  properties and business  activities
against  such  losses and risks as are  adequate to protect  its  properties  in
accordance with customary industry practice when entered into or renewed. To the
best  knowledge  of the  Borrower,  as of the date  hereof,  all such  policies,
binders and self-insurance programs are in full force and effect. As of the date
hereof,  neither the Borrower nor, to the best knowledge of the Borrower, any of
its  Subsidiaries  has received notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will have to be made
in order to continue such  insurance and, to the best knowledge of the Borrower,
no such  improvements  or  expenditures  are  required.  As of the date  hereof,
neither the  Borrower  nor, to the best  knowledge of the  Borrower,  any of its
Subsidiaries  has received  notice of  cancellation  of any  material  insurance
policy or binder.

        SECTION  3.17.   TITLE TO PROPERTY.  The  Borrower  and each  Subsidiary
thereof  has good  and  marketable  title in fee  simple  to all  material  real
property owned or purported to be owned by it and necessary for the operation of
its business and good title to all other  material  property of whatever  nature
owned or purported to be owned by it,  including but not limited to all property
reflected in the most recent  audited  balance sheet referred to in Section 3.06
hereof or  submitted  pursuant  to Section  5.01(a)  hereof,  as the case may be
(except as sold or  otherwise  disposed  of in the  ordinary  course of business
after the date of such  balance  sheet or the  Existing  Credit  Agreements  for
periods  prior  to the  Closing  Date  and  thereafter  as  otherwise  expressly
permitted by the Loan Documents) in each case free and clear of all Liens, other
than Permitted Liens or Liens permitted pursuant to Section 6.02 hereof.

        SECTION 3.18.    INTELLECTUAL PROPERTY. The Borrower and each Subsidiary
thereof owns, or is licensed or otherwise has the right to use, all the patents,
trademarks,  service  marks,  names (trade,  service,  fictitious or otherwise),
copyrights,  technology  (including  but not  limited to computer  programs  and
software),  processes,  data  bases  and  other  rights,  free  from  burdensome
restrictions,  necessary to own and operate its  properties  and to carry on its
business as presently  conducted and presently  planned to be conducted  without
conflict with the rights of others,  except for such instances of non-compliance
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.

        SECTION 3.19.    TAXES.  The Borrower and each  Subsidiary  thereof have
filed all Federal and other material tax returns  required to be filed by it and
has not failed to pay any material  taxes,  or interest and  penalties  relating
thereto,  on or before  the due dates  thereof  except for taxes not yet due and
except for those the amount or validity of which is currently being contested in
good  faith by  appropriate  proceedings.  Except to the  extent  that  reserves
therefor are reflected in the financial statements, to the best knowledge of the
Borrower (a) there are no material  Federal,  state or local tax  liabilities of
the  Borrower or any of its  Subsidiaries  due or to become due for any tax year
ended on or prior to the Closing  Date  relating  to the  Borrower or any of its
Subsidiaries,  whether  incurred  in respect of or measured by the income of the
Borrower or any of

                                      -64-
<PAGE>

its Subsidiaries,  which are not properly reflected in the financial  statements
delivered  pursuant  to  Section  3.06,  and (b)  there are no  material  claims
pending,  proposed or threatened against the Borrower or any of its Subsidiaries
for past Federal, state or local taxes, except those, if any, as to which proper
reserves in accordance with GAAP are reflected in such financial statements.

        SECTION 3.20.    EMPLOYEE  BENEFITS.  (a) No  borrowing  or  issuance of
Letters of Credit  contemplated  by this  Agreement  is a  transaction  which is
subject to the  prohibitions of Section 406 of ERISA or in connection with which
a tax could be imposed  pursuant to Section 4975 of the Code or a civil  penalty
assessed  pursuant to Section  502(i) of ERISA  (assuming that monies other than
monies representing plan assets are borrowed  hereunder).  Neither the Borrower,
any of its  Subsidiaries  nor any other  Person,  including any  fiduciary,  has
engaged in any prohibited transaction (as defined in Section 4975 of the Code or
Section  406 of  ERISA)  which  could  subject  any of the  Benefit  Plans,  the
Borrower,  or any  Subsidiary  (or any entity which they have an  obligation  to
indemnify)  to any tax or  penalty  imposed  under  4975 of the Code or  Section
502(i) of ERISA or any other material  liability  under a foreign law of similar
nature  which alone or together  with any other item  described  in this Section
3.20 would have a Material Adverse Effect.

         (b) Neither  the  Borrower  nor  any  of its  Significant  Subsidiaries
(including any member of their respective  Controlled Group) (i) has incurred or
expects to incur any  liability  under  Title IV of ERISA or  Section  502(g) of
ERISA or any  analogous  provision  relating to Section 515 of ERISA or (ii) has
become  subject or expects to be subject to the lien described in Section 412(n)
of the Code,  which  alone or  together  with any other item  described  in this
Section 3.20 would have a Material Adverse Effect.

         (c) The Pension Plans do not have an "accumulated  funding  deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA.  No Pension  Plan has  benefit  liabilities  as defined in Section
4001(a)(16)  of ERISA which  exceed the assets of such  Pension  Plan by such an
amount that the  termination  of such  Pension  Plan alone or together  with any
other item described in this Section would have a Material  Adverse Effect.  The
Borrower has received a favorable determination letter from the IRS with respect
to all Pension  Plans  except for such  Pension  Plans with respect to which the
failure to receive  such a favorable  determination  would not alone or together
with any other item  described  in this  Section  3.20 have a  Material  Adverse
Effect and nothing has happened since the date of such letter that has adversely
affected such  qualification.  There is no Lien outstanding or security interest
given in  connection  with a Pension Plan or under Title IV of ERISA which would
exceed the percentage  limitations  of Section  6.02(a)  hereof.  As of the date
hereof, the Borrower has received both IRS and PBGC approval with respect to any
terminated Benefit Plans subject to Title IV of ERISA.

         (d) Neither  the  Borrower  nor  any  of its  Significant  Subsidiaries
(including any member of their respective Controlled Group) is in default in any
material  respect under any Benefit Plan and all Benefit Plans are  administered
in  accordance  with their terms and are in all material  respects in compliance
with all  applicable  Laws,  except  where any such default or failure to comply
would not alone or together  with any other item  described in this Section 3.20
have a Material Adverse Effect.

                                      -65-
<PAGE>

        SECTION  3.21.   ENVIRONMENTAL   MATTERS.  (a)  The  Borrower  and  each
Significant  Subsidiary of the Borrower, to its knowledge,  has been operated in
compliance  with all applicable  Requirements of Law, except for (i) matters set
forth in Schedule 3.21(a) hereof and (ii) matters which,  individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

         (b) The Borrower and each  Significant  Subsidiary of the Borrower,  to
its knowledge,  has obtained all  Environmental  Permits  required by applicable
Requirements  of Law  for  the  ownership  and  operation  of  their  respective
properties,  and all such Environmental  Permits are in full force and effect or
the Borrower and each  Significant  Subsidiary of the Borrower,  as the case may
be,  has  made  all  appropriate   filings  for  issuance  or  renewal  of  such
Environmental  Permits,  except for (i) matters  set forth in  Schedule  3.21(b)
hereof,  and (ii) matters which,  individually  or in the  aggregate,  could not
reasonably be expected to have a Material Adverse Effect.

         (c) The Borrower and each  Significant  Subsidiary of the Borrower,  to
its knowledge, is not aware of any acts, omissions, events or circumstances that
may interfere with or prevent continued  compliance with the Requirements of Law
and  Environmental  Permits  referred  to in (a) and (b)  above,  except for (i)
matters  set  forth  in  Schedule  3.21(c)  hereof,   and  (ii)  matters  which,
individually  or in the  aggregate,  could not  reasonably be expected to have a
Material Adverse Effect.

         (d) The Borrower and each  Significant  Subsidiary of the Borrower will
use its best  efforts  to comply  with all  Requirements  of Law and  obtain all
Environmental   Permits   which  may  be  legally   imposed  in  the  future  in
jurisdictions in which the Borrower and each Significant Subsidiary, as the case
may be, may then be doing  business;  PROVIDED,  HOWEVER,  that the Borrower and
each  Significant  Subsidiary  shall not be deemed to be in violation of Section
3.21 of this  Agreement as a result of any failure to comply with any provisions
of such Requirements of Law and  Environmental  Permits (i) the applicability or
validity of which is being  contested by the Borrower or any of its  Significant
Subsidiaries  in  good  faith  and  by  appropriate  proceedings,  or  (ii)  the
noncompliance with which would not result in fines, penalties, injunctive relief
of other civil or criminal liabilities which,  individually or in the aggregate,
would have a Material Adverse Effect.

         (e) The Borrower and each  Significant  Subsidiary of the Borrower,  to
its  knowledge,  has not received  notice of any asserted or  threatened  claim,
action,  suit,  proceeding,  hearing,  investigation  or request for information
relating  to any  Environmental  Matter,  except  for (i)  matters  set forth in
Schedule  3.21(e)  hereof,  and  (ii)  matters  which,  individually  or in  the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

         (f) The Borrower and each  Significant  Subsidiary of the Borrower,  to
its knowledge,  has not received notice from any governmental authority that any
of them is a potentially  responsible party under any Requirements of Law at any
disposal site containing Hazardous  Materials,  nor received any notice that any
lien under any  Requirements  of Law  against any  property  of the  Borrower or
Significant  Subsidiary of the Borrower  exists,  except for (i) matters setting
forth in Schedule 3.21(f) hereof,  and (ii) matters,  which,  individually or in
the  aggregate,  could not  reasonably  be expected  to have a Material  Adverse
Effect.

                                      -66-
<PAGE>

        SECTION  3.22.   YEAR 2000.  The Borrower has (a) initiated a review and
assessment  of all areas within its and each of its  Subsidiaries'  business and
operations (including those affected by key suppliers and vendors) that could be
adversely  affected by the "Year 2000 Problem"  (that is, the risk that computer
applications  used  by the  Borrower  or any of its  Subsidiaries  (or  its  key
suppliers  and  vendors)  may  be  unable  to  recognize  and  perform  properly
date-sensitive  functions  involving  certain  dates prior to and any date after
December 31, 1999),  (ii)  developed a plan and timeline for addressing the Year
2000 Problem on a timely basis,  and (iii) to the date hereof,  implemented that
plan in accordance with the timetable. The Borrower reasonably believes that all
computer  applications  (including  those of its key suppliers and vendors) that
are material to its or any of its Subsidiaries'  business and operations will on
a timely  basis be able to perform  properly  date-sensitive  functions  for all
dates  before and after  January  1, 2000  (that is, be "Year 2000  compliant"),
except to the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect.


                                   ARTICLE IV

                              CONDITIONS OF LENDING

        SECTION  4.01.   CONDITIONS  TO INITIAL  LOANS OR LETTER OF CREDIT.  The
obligation  of each  Lender to make Loans (or of the LC Issuer to Issue a Letter
of Credit) on the Closing Date is subject to the satisfaction, immediately prior
to or concurrently  with the making of such Loan (or the Issuance of such Letter
of Credit), of the following conditions precedent, in addition to the conditions
precedent set forth in Section 4.02 hereof:

         (a) AGREEMENT;  NOTES.  The  Administrative  Agent shall have  received
executed  counterparts of this Agreement for each Lender,  duly executed by each
Credit Party, each Agent and each Lender,  and executed  Revolving Credit Notes,
Competitive  Bid Loan  Notes and a  Swingline  Advance  Note  conforming  to the
requirements  hereof,  duly  executed on behalf of the  Borrower for each Lender
requesting the same.

         (b) CORPORATE   PROCEEDINGS.   The  Administrative   Agent  shall  have
received,  with  copies  for  each  Lender,  certificates  by the  Secretary  or
Assistant  Secretary of each Credit Party dated as of the Closing Date as to (i)
true copies of the articles of incorporation  and by-laws (or other  constituent
documents) of such Credit Party in effect on such date,  (ii) true copies of all
corporate  action taken by such Credit Party  relative to this Agreement and the
other Loan  Documents and (iii) the  incumbency  and signature of the respective
officers  of such  Credit  Party  executing  this  Agreement  and the other Loan
Documents  to which such Credit  Party is a party,  together  with  satisfactory
evidence  of the  incumbency  of such  Secretary  or  Assistant  Secretary.  The
Administrative  Agent  shall  have  received,  with  a  copy  for  each  Lender,
certificates  from the  appropriate  Secretary  of  State  or  other  applicable
Governmental  Authority  dated not more than 30 days  before  the  Closing  Date
showing the good standing of each Credit Party in its state of incorporation.

                                      -67-
<PAGE>

         (c) FINANCIAL STATEMENTS. The Administrative Agent shall have received,
with a copy for each Lender,  copies of the  consolidated  financial  statements
referred to in Section 3.06 hereof.

         (d) LEGAL OPINION OF COUNSEL TO THE CREDIT PARTIES.  The Administrative
Agent  shall  have  received,  with an  executed  counterpart  for each  Lender,
opinions addressed to the Agents and each Lender, dated the Closing Date, of (i)
Thomas R. O'Brien,  Esquire,  Senior Vice  President and General  Counsel of the
Borrower,  and (ii)  White & Case LLP,  special  New York  counsel to the Credit
Parties, each in a form reasonably satisfactory to the Administrative Agent.

         (e) FEES, EXPENSES, ETC. All fees and other compensation required to be
paid to each  Agent or the  Lenders  pursuant  hereto or  pursuant  to any other
written  agreement  on or prior to the  Closing  Date  shall  have  been paid or
received.

         (f) YEAR 2000 REVIEW. The Administrative  Agent shall have received and
completed the review,  with results  reasonably  satisfactory  to the Agents and
Lenders,  of information  confirming that (a) the Borrower and its  Subsidiaries
are taking all necessary and  appropriate  steps to ascertain the extent of, and
successfully  address,  business and financial risks facing the Borrower and its
Subsidiaries  as a result of what is  commonly  referred  to as the  "Year  2000
Problem"  (i.e.,  the inability of certain  computer  applications  to recognize
correctly and perform date-sensitive  functions involving certain dates prior to
and after December 31, 1999),  including risks resulting from the failure of key
vendors and  customers  of the  Borrower and its  Subsidiaries  to  successfully
address the Year 2000  Problem,  and (b) the  Borrower's  and its  Subsidiaries'
material computer  applications and those of its key vendors and customers will,
on a timely  basis,  adequately  address the Year 2000  Problem in all  material
respects.

         (g) PLEDGE. The  Administrative  Agent shall have received (i) executed
counterparts  of the Pledge  Agreement,  duly executed by each Guarantor and the
collateral  agent thereunder and (ii) as the collateral  agent  thereunder,  the
collateral pledged thereunder.

         (h) ADDITIONAL  MATTERS.  All corporate and other proceedings,  and all
documents,  instruments  and other matters in connection  with the  transactions
contemplated  by this Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to each Agent.

        SECTION  4.02.   CONDITIONS  TO ALL LOANS AND  LETTERS  OF  CREDIT.  The
obligation of each Lender to make any Loan  (including the initial Loans) and of
the LC Issuer to Issue any Letter of Credit  (including  the  initial  Letter of
Credit)  is  subject  to  satisfaction  of  the  following  further   conditions
precedent:

         (a) NOTICE. Appropriate notice of such Loan or request for the Issuance
of such  Letter of  Credit,  as the case may be,  shall  have been  given by the
Borrower as provided in Article II hereof.

         (b) REPRESENTATIONS  AND WARRANTIES.  Each of the  representations  and
warranties made by the Borrower herein shall be true and correct in all material
respects on and as of such date as

                                      -68-
<PAGE>

if made on and as of such date  (except  with  respect  to  representations  and
warranties which  specifically refer to an earlier date, which shall be true and
correct in all material respects as of such earlier date), both before and after
giving  effect to the Loans or the  Letters  of Credit  requested  to be made or
Issued,  as the case may be, on such date,  except that the foregoing  shall not
apply to the  representations and warranties set forth in Section 3.08 hereof in
the case of any  Loans the  proceeds  of which  are used  solely to repay  Loans
maturing on such date.

         (c) NO DEFAULTS.  No Event of Default or Potential  Default  shall have
occurred and be  continuing  on such date or after giving effect to the Loans or
the  Letters of Credit  requested  to be made or Issued,  as the case may be, on
such date.

         (d) NO VIOLATIONS OF LAW, ETC.  Neither the making nor use of the Loans
shall cause any Lender to violate or conflict with any Law. Neither the issuance
nor use of the  Letters  of Credit  shall  cause the LC  Issuer  to  violate  or
conflict with any Law.

Each  request by the Borrower  for any Loan or Letter of Credit  (including  the
initial  Loans and Letter of  Credit)  shall  constitute  a  representation  and
warranty by the Borrower that the conditions set forth in this Section 4.02 have
been  satisfied as of the date of such  request.  Failure of the  Administrative
Agent to receive  notice from the Borrower to the  contrary  before such Loan is
made  or  such  Letter  of  Credit  is  issued   shall   constitute   a  further
representation  and warranty by the Borrower that the conditions  referred to in
this Section  4.02 have been  satisfied as of the date such Loan is made or such
Letter of Credit is Issued.


                                    ARTICLE V

                              AFFIRMATIVE COVENANTS

         The Borrower hereby covenants to each Agent and each Lender as follows:

        SECTION 5.01.    BASIC REPORTING REQUIREMENTS. (a) ANNUAL AUDIT REPORTS.
The Borrower  shall deliver to the  Administrative  Agent,  with a copy for each
Lender, as soon as available, but in any event within 90 days after the last day
of each of its fiscal years, a consolidated  balance sheet of the Borrower as at
such last day of the fiscal  year,  and the related  consolidated  statement  of
income and retained earnings and changes in financial position,  for such fiscal
year, each prepared in accordance with GAAP (except as required by any change in
accounting  principles or concurred in by the Borrower's  independent  certified
public accountants),  in reasonable detail, and, as to the financial statements,
certified without  qualification  (other than relating to a change in accounting
principles  with  which  such  accountants  concur  and  other  than  any  other
qualification  which the Administrative  Agent and the Required Lenders deem, in
their reasonable judgment,  to be immaterial) by  PriceWaterhouseCoopers  LLP or
another firm of independent certified public accountants reasonably satisfactory
to the  Administrative  Agent as fairly  presenting in all material respects the
financial  position and the results of  operations of the Borrower as at and for
the year ending on such date and as having  been  prepared  in  accordance  with
GAAP.

                                      -69-
<PAGE>

         (b) QUARTERLY  CONSOLIDATED  REPORTS. The Borrower shall deliver to the
Administrative Agent, with a copy for each Lender, as soon as available,  but in
any event  within 45 days after the end of each of the  Borrower's  first  three
fiscal quarterly periods, a consolidated balance sheet of the Borrower as of the
last day of such  quarter  and  consolidated  statement  of income and  retained
earnings  and  changes  in  financial  position,  for  such  quarter,  and  on a
comparative  basis  figures  for the  corresponding  period  of the  immediately
preceding  fiscal year,  all in  reasonable  detail,  each such  statement to be
certified in a certificate of a Responsible  Officer of the Borrower,  as fairly
presenting in all material  respects the  financial  position and the results of
operations  of the  Borrower as at such date and for such  quarter and as having
been  prepared in  accordance  with GAAP  (subject to customary  year-end  audit
adjustments  and the absence of  footnotes).  Such  financial  statement and the
financial  statement  provided  under  clause  (a)  above  shall (so long as the
Borrower has not received a clean audit with respect to the Year 2000 Problem on
or after the end of the first  fiscal  quarter  of the  Borrower  in 2000):  (i)
include, or be accompanied by, a progress report as to the Year 2000 remediation
efforts of the  Borrower  and its  Subsidiaries;  and (ii)  indicate  whether an
auditor,  regulator, or third party consultant has issued a management letter or
other communication  indicating the Borrower's and/or its Subsidiaries inability
to remedy the Year 2000  Problem (to the extent not  included in the  Borrower's
financial statements).

         (c) QUARTERLY  COMPLIANCE  CERTIFICATES.  The Borrower shall deliver to
the  Administrative  Agent, with a copy for each Lender, a Quarterly  Compliance
Certificate  in  substantially  the form set forth as  Exhibit  F  hereto,  duly
completed and signed by a Responsible Officer of the Borrower  concurrently with
the delivery of the financial  statements referred to in subsections (a) and (b)
of this  Section  5.01.  Each such  Quarterly  Compliance  Certificate  shall in
addition include a listing,  as of the end of the most recently completed fiscal
quarter,  showing the respective  amounts of Indebtedness  for borrowed money of
each  Subsidiary  (other than any Special  Purpose  Subsidiary)  of the Borrower
which is organized  under the laws of a jurisdiction  outside the United States.
To the extent  such  information  is not  included in the  financial  statements
delivered  pursuant  to  Section  5.01(a)  hereof,  each  Quarterly   Compliance
Certificate  with respect to the last quarter of a fiscal year shall in addition
include a listing,  as of the end of such quarter,  of the respective amounts of
Indebtedness  for  borrowed  money of each  Special  Purpose  Subsidiary  of the
Borrower which is organized under the laws of a jurisdiction  outside the United
States.

         (d) CERTAIN OTHER REPORTS AND INFORMATION. Promptly upon their becoming
available to the  Borrower,  the Borrower  shall  deliver to the  Administrative
Agent,  with a copy  for  each  Lender,  a copy of (i) all  regular  or  special
reports,  registration  statements  and  amendments to the  foregoing  which the
Borrower  or  any  Subsidiary  shall  file  with  the  Securities  and  Exchange
Commission (or any successor thereto) or any securities  exchange,  and (ii) all
reports,   proxy   statements,   financial   statements  and  other  information
distributed by the Borrower to its stockholders or bondholders.

         (e) FURTHER  INFORMATION.  The Borrower  will  promptly  furnish to the
Administrative  Agent,  with a copy for each Lender that has requested the same,
such  other  information  and in  such  form  as any  Agent  or any  Lender  may
reasonably request from time to time.

                                      -70-
<PAGE>

         (f) NOTICE OF CERTAIN  EVENTS.  Promptly upon becoming  aware of any of
the following,  the Borrower shall give the Administrative Agent notice thereof,
together  with a written  statement  of a  Responsible  Officer of the  Borrower
setting forth the details  thereof and any action with respect  thereto taken or
proposed to be taken by the Borrower:

                (i)   Any  Event of  Default  or  Potential  Default;  PROVIDED,
         HOWEVER,  that the Borrower  shall not be required to deliver notice of
         any violation of any covenant contained in Article V hereof (other than
         Section 5.01 hereof) during the 30 days immediately following the first
         occurrence of such violation if the Borrower  reasonably  believes that
         such violation  will be cured within such 30-day period;  and PROVIDED,
         FURTHER,  that the Borrower  shall not be required to deliver notice of
         any  violation of any covenant  contained in Section 5.01 hereof (other
         than  subparagraph  (f)(i)  thereof) during the first 10 days after the
         first occurrence of such violation if the Borrower  reasonably believes
         that such violation will be cured within such 10-day period.

                (ii)  Any  change  in  the  business,  operations  or  condition
         (financial or otherwise) of the Borrower and its Subsidiaries  taken as
         a whole which could  reasonably be expected to have a Material  Adverse
         Effect.

                (iii) Any pending or  threatened  action,  suit,  proceeding  or
         investigation  by or before  any  Governmental  Authority  against  the
         Borrower or any  Subsidiary,  except for  matters  that,  if  adversely
         decided,  individually  or in the  aggregate,  could not  reasonably be
         expected to have a Material Adverse Effect.

                (iv)  Any  violation,  breach or default by the  Borrower or any
         Subsidiary  of the  Borrower of or under any  agreement  or  instrument
         material  to  the  business,  operations  or  condition  (financial  or
         otherwise) of the Borrower and its Subsidiaries  taken as a whole which
         could  in the  reasonable  judgment  of the  Borrower  have a  Material
         Adverse Effect.

                (v)   Any material  correspondence  with the PBGC, the Secretary
         of Labor or any  representative  of the IRS with respect to any Benefit
         Plan or Pension  Plan,  relating to an actual or  threatened  change or
         development  which would  materially and adversely affect the financial
         condition of the Borrower and its  Subsidiaries  taken as a whole;  and
         copies of any notices from the PBGC to the Borrower with respect to the
         intent of the PBGC to institute involuntary proceedings.

                (vi)  Any Environmental  Claim pending or threatened against the
         Borrower or any Significant  Subsidiary of the Borrower, or any past or
         present acts,  omissions,  events or  circumstances  (including but not
         limited to any dumping,  leaching,  deposition,  removal,  abandonment,
         escape, emission, discharge or release of any Hazardous Material at, on
         or under any facility or property now or previously owned,  operated or
         leased by the Borrower or any  Significant  Subsidiary of the Borrower)
         that  could  form  the  basis  of  such   Environmental   Claim,  which
         Environmental Claim, individually or in the aggregate, could reasonably
         be expected to have a Material Adverse Effect.

                                      -71-
<PAGE>

                (vii) Any  discovery  or  determination  by the  Borrower or its
         Subsidiary  that  any  computer  application  (including  those  of its
         suppliers  and vendors)  that is material to the Borrower or any of its
         Subsidiaries'  business and operations  will not be Year 2000 compliant
         on a timely  basis,  except to the extent that such  failure  could not
         reasonably be expected to have a Material Adverse Effect.

         (g) VISITATION;  VERIFICATION. The Borrower shall, and shall cause each
of its Subsidiaries to, permit the Lenders to make or cause to be made, at their
own  expense  (and with  respect  to the  Administrative  Agent on behalf of the
Lenders,  after the  occurrence  of and  during the  continuance  of an Event of
Default, at the Borrower's expense), inspections and audits of any of its books,
records and papers and to make extracts therefrom and copies thereof, or to make
inspections and examinations of any of its properties and facilities (including,
without  limitation,  any Project  sites),  on  reasonable  notice,  at all such
reasonable times and as often as any Lender may reasonably  require, in order to
assure that the Borrower and its Subsidiaries are and will be in compliance with
their  respective  obligations  under  the Loan  Documents  or to  evaluate  the
Lenders'  investment in the then outstanding  Notes. The Borrower shall have the
right to have an authorized  representative  present  during the  inspection and
examination of any of the Borrower's or any of its Subsidiaries'  properties and
facilities;  PROVIDED,  HOWEVER, that the exercise of such right shall not delay
or hinder the Lenders' right to such inspection and examination.

         The  Administrative  Agent shall promptly deliver to each Lender copies
of all notices received pursuant to this Section 5.01.

        SECTION 5.02.    INSURANCE.  The Borrower shall, and shall cause each of
its  Subsidiaries  to,  maintain,  at its  expense,  and  keep  in  effect  with
responsible insurance companies,  such liability insurance for bodily injury and
third party property damage as is customary in the case of corporations  engaged
in the  same  or  similar  business  or  having  similar  properties,  similarly
situated,  PROVIDED,  HOWEVER,  that the  Borrower  may  maintain  a  system  of
self-insurance  in accordance  with sound business  practice as is customary for
corporations having a similar net worth as the Borrower. The Borrower shall, and
shall cause each of its Subsidiaries to, keep and maintain,  at its expense, its
material  real and  personal  property  insured  against loss or damage by fire,
theft,  explosion,  spoilage,  and all other risks ordinarily insured against by
other  owners or users of such  properties  in similar  businesses  in an amount
equal to the full  replacement  or cash value  thereof,  subject  to  deductible
amounts which the Borrower,  in its  reasonable  judgment,  deems  prudent.  The
Borrower shall, and shall cause each of its Subsidiaries to, carry all insurance
required by Law to cover its obligations to the PBGC.

        SECTION 5.03.    PAYMENT  OF  TAXES  AND  OTHER  POTENTIAL  CHARGES  AND
PRIORITY CLAIMS.  The Borrower shall, and shall cause each Subsidiary to, pay or
discharge

                   (a)     on or  prior  to the  date  on  which  penalties  are
         imposed by a taxing authority with respect thereto, all material taxes,
         assessments  and other  governmental  charges imposed upon it or any of
         its properties;

                                      -72-
<PAGE>

                   (b)     on or prior to the date when due, all material lawful
         claims of materialmen, mechanics, carriers, warehousemen, landlords and
         other like Persons which, if unpaid,  might result in the creation of a
         Lien upon any such property; and

                   (c)     on or prior to the date when due, all other  material
         lawful claims which, if unpaid,  might result in the creation of a Lien
         upon any such property or which, if unpaid,  might give rise to a claim
         entitled to priority  over  general  creditors  of the Borrower or such
         Subsidiary in a case under Title 11  (Bankruptcy)  of the United States
         Code, as amended;

PROVIDED,  that unless and until foreclosure,  distraint,  levy, sale or similar
proceedings  shall have been commenced the Borrower or such  Subsidiary need not
pay or discharge  any such tax,  assessment,  charge or claim so long as (x) the
validity  thereof  is  contested  in good faith and by  appropriate  proceedings
diligently  conducted and (y) such reserves or other  appropriate  provisions as
may be required by GAAP shall have been made therefor.

        SECTION 5.04.    PRESERVATION OF CORPORATE  STATUS.  The Borrower shall,
and shall  cause  each of its  Significant  Subsidiaries  to, do, or cause to be
done,  all things  necessary  to preserve  and keep in full force and effect its
corporate  existence and all permits,  rights and  privileges  necessary for the
proper conduct of its business;  PROVIDED, HOWEVER, that nothing in this Section
5.04 shall  prevent the  withdrawal  by the  Borrower or any of its  Significant
Subsidiaries of its  qualification as a foreign  corporation in any jurisdiction
where  such  withdrawal  could not  reasonably  be  expected  to have a Material
Adverse Effect;  and PROVIDED  FURTHER,  that nothing in this Section 5.04 shall
prevent the  Borrower or any of its  Significant  Subsidiaries  from  failing to
maintain or  terminating  any right,  privilege  or permit,  if such  failure or
termination, is not in violation of or will not cause an Event of Default under,
any provision of this Agreement and does not have a Material Adverse Effect.

        SECTION 5.05.    GOVERNMENTAL APPROVALS AND FILINGS. The Borrower shall,
and shall cause each  Subsidiary  to, keep and maintain in full force and effect
all Governmental  Actions necessary in connection with execution and delivery of
any  Loan  Document,   consummation  of  the  transactions   hereon  or  therein
contemplated,  performance of or compliance with the terms and conditions hereof
or thereof or to ensure the legality,  validity, binding effect,  enforceability
or admissibility in evidence hereof or thereof.

        SECTION 5.06.    MAINTENANCE  OF  PROPERTIES.  The Borrower  shall,  and
shall  cause each  Subsidiary  to,  maintain or cause to be  maintained  in good
repair,  working  order and  condition the  properties  now or hereafter  owned,
leased  or  otherwise  possessed  by it and  shall  make or cause to be made all
needful and proper repairs,  renewals,  replacements and improvements thereto so
that they are able to serve the  functions  for which they are  currently  being
used,  except to the extent  that the failure to do so would not have a Material
Adverse Effect.

        SECTION 5.07.    AVOIDANCE OF OTHER  CONFLICTS.  The Borrower shall not,
and shall not permit any of its Subsidiaries to, violate or conflict with, be in
violation  of or  conflict  with,  or be or  remain  subject  to  any  liability
(contingent or otherwise) on account of any violation or conflict with:

                                      -73-
<PAGE>

                   (a)     any Law,

                   (b)     its  articles of  incorporation  or by-laws (or other
         constituent documents), or

                   (c)     any  agreement or  instrument to which it is party or
         by which any of them or any of their respective Subsidiaries is a party
         or by which  any of them or any of  their  respective  properties  (now
         owned or hereafter acquired) may be subject or bound),

except for matters which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.

        SECTION 5.08.    FINANCIAL ACCOUNTING PRACTICES. The Borrower shall, and
shall cause each of its Subsidiaries to, keep proper books of record and account
in  accordance  with  normal  business  practice  in which full and  appropriate
entries  shall  be made of all  dealings  or  transactions  in  relation  to its
business and activities.

        SECTION 5.09.    USE OF PROCEEDS.  The Borrower shall apply the proceeds
of Loans and Letters of Credit  hereunder for payment of all  obligations of the
Borrower under the Existing  Credit  Agreements,  and for the general  corporate
purposes of the Borrower and its  Subsidiaries.  The Borrower  shall not use the
proceeds of any Loans and Letters of Credit hereunder directly or indirectly for
any unlawful purpose or in any manner  inconsistent  with any other provision of
any Loan Document.

        SECTION 5.10.    CONTINUATION OF OR CHANGE IN BUSINESS. The Borrower and
each of its Significant  Subsidiaries  shall continue to engage in substantially
the same  lines of  business  conducted  and  operated  during the  present  and
preceding  fiscal  year  and  reasonably  related  extensions  thereof,  and the
Borrower  shall  not,  and shall  not  permit  any  Significant  Subsidiary  to,
substantially engage in any other unrelated businesses.

        SECTION 5.11.    CONSOLIDATED  TAX RETURN.  The Borrower  shall not, and
shall not suffer any of its  Subsidiaries  to,  file or consent to the filing of
any  consolidated  income tax return with any Person other than the Borrower and
its Subsidiaries.

        SECTION 5.12.    FISCAL  YEAR.  The  Borrower  shall not,  and shall not
suffer any of its  Subsidiaries  to,  change its fiscal  year or fiscal  quarter
except in accordance with GAAP.

        SECTION 5.13.    ERISA.  The Borrower shall, and shall cause each of its
Subsidiaries to, as soon as possible and, in any event, within 10 days after the
Borrower  knows or has reason to know that a Reportable  Event has occurred with
respect to a Pension Plan, that a transaction  prohibited  under ERISA, the Code
or a  foreign  law of  similar  nature  has  occurred  resulting  in a  material
liability to a Benefit  Plan,  the Borrower or any of its  Subsidiaries  (or any
entity which they have an obligation to indemnify),  that an accumulated funding
deficiency  has been incurred or an application is to be or has been made to the
Secretary  of the  Treasury for a waiver of the minimum  funding  standard  with
respect to an  accumulation  funding  deficiency of  $1,000,000 or more,  that a
failure to make  timely  contributions  to a Pension  Plan may give or has given
rise to a lien in a material  amount,  that an  amendment  to a Pension Plan may
require or requires  the

                                      -74-
<PAGE>

granting  of a security  interest in a material  amount,  that  proceedings  are
likely to be or have been  instituted  to terminate a Pension  Plan, or that the
Borrower,  any of its Significant  Subsidiaries or a member of their  respective
Controlled  Group will or may incur any material  liability under Section 502(g)
or any  analogous  provision  relating to Section 515 or Title IV of ERISA,  the
Borrower will deliver to the Administrative Agent a certificate of a Responsible
Officer  setting forth details as to such  occurrence and action,  if any, which
the Borrower, such Subsidiary or the respective member of their Controlled Group
is required or proposes to take,  together with any notices required or proposed
to be filed  with or by the  Borrower,  such  Subsidiary  or the member of their
respective  Controlled  Group, the PBGC or the plan  administrator  with respect
thereto.  For  purposes of this  Section,  an item is material if alone or taken
with any other item in this Section,  it results in a liability of $1,000,000 or
more. Copies of any notices required to be delivered to the Administrative Agent
hereunder  shall be delivered not later than 10 days after the later of the date
such notice has been filed with the IRS or the PBGC or received by the Borrower,
any of its Subsidiaries or members of their respective  Controlled  Group.  Upon
the request of the Administrative  Agent or any of the Lenders made from time to
time, the Borrower will deliver a copy of the most recent  actuarial  report and
annual report completed with respect to any Benefit Plan and any other financial
information the Borrower has with respect to the Benefit Plan.

        SECTION 5.14.    RATINGS.  In the event that the  Borrower  has no rated
senior unsecured  long-term debt outstanding,  the Borrower will request Moody's
to assign the Borrower a  "hypothetical  senior  long-term debt rating" and will
request S&P to assign the Borrower an "issuer credit rating," such request to be
made (i) not later than thirty days after delivery to the  Administrative  Agent
of the  financial  statements  called  for by Section  5.01(a)  hereof  and,  in
addition,  (ii) not later than thirty days after  instructions  by the  Required
Lenders to make such request, which instructions may be given no more frequently
than once during any six-month period.

        SECTION 5.15.    SUBSIDIARY GUARANTY. Obligations hereunder shall at all
times be guaranteed by Foster  Wheeler USA  Corporation,  Foster  Wheeler Energy
International,  Inc. and Foster Wheeler Energy  Corporation by the execution and
delivery of this  Agreement  by such  Subsidiaries.  If at the end of any fiscal
quarter of the Borrower,  (i) the unconsolidated assets of the Borrower plus the
assets of the Guarantors  constitute less than 90% of the consolidated  domestic
total  assets of the  Borrower  and its  consolidated  Subsidiaries  or (ii) the
unconsolidated  net income for such fiscal  quarter of the Borrower plus the net
income for such fiscal quarter of the Guarantors constitute less than 90% of the
consolidated   domestic  net  income  of  the  Borrower  and  its   consolidated
Subsidiaries for such quarter, then the Borrower shall designate (x) one or more
Material Domestic Subsidiaries and (y) to the extent the designation provided in
clause (x) does not make up the  short-fall in clause (i) or (ii) above,  one or
more other domestic  Subsidiaries,  so that assets and net income of such one or
more  Material  Domestic  Subsidiaries  and  such  one or  more  other  domestic
Subsidiaries, together with such item of the existing Guarantors, constitute 90%
of the  consolidated  domestic total assets and net income,  respectively of the
Borrower and its  consolidated  Subsidiaries.  The Borrower shall deliver to the
Administrative  Agent,  together  with  the  Quarterly  Compliance   Certificate
required  under  Section  5.01(c),  a schedule  setting forth the assets and net
income  of  each  Guarantor  and  the  consolidated   domestic  assets  and  the
consolidated   domestic  net  income  of  the  Borrower  and  its

                                      -75-
<PAGE>

consolidated  Subsidiaries.  If a  Material  Domestic  Subsidiary  or any  other
domestic  Subsidiary  is required  to become a  Guarantor,  unless the  Required
Lenders otherwise agree, the Borrower shall,  promptly (i) cause such Subsidiary
to execute a  Subsidiary  Guaranty  Agreement,  (ii) cause  such  Subsidiary  to
deliver  documentation  similar to that  described  in Sections  4.01(b) and (d)
relating to the  authorization  for,  execution and delivery of, and validity of
such  Subsidiary's  obligations  as a Guarantor  under the  Guaranty in form and
substance satisfactory to the Administrative Agent. Except as otherwise required
or permitted by the Indenture,  the Guarantors'  obligations  under the Guaranty
shall at all times be secured by the pledge of the  "Collateral"  (as defined in
the Pledge  Agreement)  pursuant to the Pledge  Agreement.  Without limiting the
restrictions  set  forth in  Section  6.07,  a merger  of a  Guarantor  into the
Borrower or into  another  Guarantor  shall not  constitute  a violation of this
Section 5.15 so long as the Guaranty of the surviving  entity,  in the case of a
merger into another Guarantor, remains in effect.


                                   ARTICLE VI

                               NEGATIVE COVENANTS

         The Borrower hereby covenants to each Agent and each Lender as follows:

        SECTION  6.01.   FINANCIAL  COVENANTS.  (a)  CONSOLIDATED  FIXED CHARGES
COVERAGE RATIO. The  Consolidated  Fixed Charges Coverage Ratio shall be greater
than (i) 2.25 to 1 for each period of four  consecutive  fiscal  quarters of the
Borrower  ending  after the  Closing  Date and prior to January 1, 2001 and (ii)
thereafter  2.40 to 1;  PROVIDED,  HOWEVER,  for the period of four  consecutive
fiscal  quarters of the Borrower  ending  September 24, 1999,  the  Consolidated
Fixed Charges  Coverage Ratio shall be greater than 1.75 to 1.0 rather than 2.25
to 1 for  such  period.  For the  purpose  of this  Section  6.01(a)  only,  all
calculations of the Consolidated  Fixed Charges Coverage Ratio shall exclude all
interest  expense  associated with the obligations of the Borrower in respect of
the $95,000,000  Series 1999C Bonds and $18,000,000 Series 1999D Bonds under the
Exit  Funding  Agreement  for the periods  occurring  after the date of the Exit
Funding Agreement and through the end of the Borrower's second fiscal quarter in
its fiscal year 2001 to the extent that such interest would  otherwise have been
included as Consolidated Adjusted Interest Expense.

         (b) CONSOLIDATED  LEVERAGE RATIO. The Consolidated Leverage Ratio shall
not at the end of any fiscal  quarter of the  Borrower  ending after the Closing
Date  exceed  0.50  to  1.00  PROVIDED,  HOWEVER,  that  in the  calculation  of
Indebtedness  solely for  purposes of this  Section  6.01(b),  (i)  Consolidated
Indebtedness  shall not  include  (to the  extent  otherwise  included  therein)
indebtedness  for money  borrowed  incurred  solely  for the  purpose of hedging
foreign currency  exchange risk for which the sole source of repayment is a cash
collateral   deposit,   (ii)   Consolidated   Indebtedness   shall  not  include
Indebtedness of any Special Purpose Subsidiary, (iii) with respect to Guarantees
of obligations of any Special Purpose  Subsidiary  other than Guarantees  solely
for completion or operation of the related Project,  an amount shall be included
in  Consolidated  Indebtedness  of  the  Borrower  equal  to the  lesser  of the
Indebtedness of such Special Purpose  Subsidiary so Guaranteed and the amount of
such  Guarantee,  (iv) with respect to

                                      -76-
<PAGE>

Guarantees  of  completion  or  operation  obligations  of any  Special  Purpose
Subsidiary,  an amount  shall be included in  Consolidated  Indebtedness  of the
Borrower  equal  to  25%  of  the  lesser  of  the  outstanding  amount  of  the
Indebtedness  of such Special  Purpose  Subsidiary so Guaranteed and the maximum
amount payable by the Borrower  pursuant to such Guarantee  (after giving effect
to (and without  duplication  of) any Guarantee of  obligations  of such Special
Purpose  Subsidiaries  included in clause (iii) above) until  completion  of the
Project and operation  thereof in accord with the operating  standards  required
under the terms of the financing  agreement of the  Indebtedness of such Special
Purpose  Subsidiary,  after  which  time no  amount  shall be  included  in such
calculation,  except that if at any time such Special  Purpose  Subsidiary is in
default of its  obligations  (until such default is remedied or cured) under the
financing  agreement of such  Indebtedness and the Borrower is obligated to make
payments  pursuant to such Guarantee,  the amount to be included shall be 25% of
the outstanding  amount of the Indebtedness of such Special Purpose  Subsidiary,
and (v) Consolidated  Indebtedness shall be calculated as if the Trust Preferred
was  not  outstanding;  and  PROVIDED,  FURTHER,  that  in  the  calculation  of
Consolidated  Indebtedness  of the  Borrower  solely  for the  purposes  of this
Section  6.01(b),  an amount  shall be  included on account of Letters of Credit
equal to monetary  damages,  if any,  which are due but unpaid  according to the
terms of any Project documents to which the beneficiary of such Letter of Credit
is entitled.  For the purpose of this Section 6.01(b) only, all  calculations of
the   Consolidated   Leverage   Ratio  shall  exclude  from  the  definition  of
Consolidated  Indebtedness  the  obligations  of the  Borrower in respect of the
$95,000,000 Series 1999C Bonds and $18,000,000 Series 1999D Bonds under the Exit
Funding Agreement for the periods prior to and through the end of the Borrower's
second fiscal quarter of 2001.

         (c) For the purpose of Sections  6.01(a) and (b) only, all calculations
of the Consolidated  Fixed Charges Coverage Ratio and the Consolidated  Leverage
Ratio shall  exclude up to  $37,652,000  pre-tax  charges to earnings  that were
taken by the Borrower in its third fiscal  quarter of 1999 for cost  realignment
and up to $227,200,000  pre-tax charges to earnings taken by the Borrower in its
third  fiscal  quarter  and to be taken in its  fourth  fiscal  quarter  of 1999
associated with the Robbins Facility.

        SECTION 6.02.    LIENS.  The Borrower shall not and shall not permit any
of its Subsidiaries to create,  or assume or permit to exist, any Lien on any of
the properties or assets of the Borrower or any of its Subsidiaries  (other than
any Special Purpose Subsidiary), whether now owned or hereafter acquired except:

                   (a)     ERISA Liens and Liens not otherwise  permitted  under
         this Section 6.02 securing  Indebtedness  and other  obligations of the
         Borrower  or any of  its  Subsidiaries  which  Indebtedness  and  other
         obligations  and, in the case of ERISA  Liens,  the amount of the ERISA
         Liens, in the aggregate at any time outstanding, does not exceed 15% of
         the Consolidated Net Worth of the Borrower;

                   (b)     Liens by the  Borrower  or a  Subsidiary  thereof  on
         property  or  assets  securing  all or part of the  purchase  price  or
         construction  cost thereof  (hereinafter  referred to individually as a
         "PURCHASE MONEY SECURITY INTEREST"); PROVIDED, HOWEVER, that:

                                      -77-
<PAGE>

                          (i)    Such  Purchase  Money   Security   Interest  is
                  created  before or within 180 days after the  purchase  of, or
                  the completion of construction  of, such property or assets by
                  the Borrower or such Subsidiary;

                          (ii)   The  transaction  in which any  Purchase  Money
                  Security  Interest  is  proposed  to be  created  is not  then
                  prohibited by this Agreement;

                          (iii)  Any  Purchase  Money  Security  Interest  shall
                  attach   only  to  the   property  or  asset  so  acquired  or
                  constructed in such transaction (and the proceeds  thereof) or
                  any  addition  thereto or  replacement  thereof  and shall not
                  extend  to or cover  any other  assets  or  properties  of the
                  Borrower or any of its Subsidiaries; and

                          (iv)   The  Indebtedness  secured  or  covered  by any
                  Purchase  Money  Security  Interest  together  with any  other
                  Indebtedness  secured by the property or asset  acquired shall
                  not exceed 100% of the lesser of the cost or fair market value
                  of the property or asset acquired or constructed and shall not
                  be  renewed,  extended  or prepaid  from the  proceeds  of any
                  borrowing by the Borrower or any of its Subsidiaries;

                   (c)     Liens on the  property or assets of the  Borrower and
         its Subsidiaries in existence  immediately prior to the Closing Date as
         listed on Schedule 6.02 hereto, PROVIDED that no such Lien is spread to
         cover any additional  property after the Closing Date and the amount of
         Indebtedness  secured  thereby  is not  increased,  PROVIDED  that  the
         maturity of such Indebtedness may be extended or renewed;

                   (d)     Liens  on all  or any  part  of the  property  or the
         assets  of any  Subsidiary  in  favor  of  the  Borrower  or any  other
         Subsidiary  (other than a Special  Purpose  Subsidiary) as security for
         the Indebtedness owing to the Borrower or such other Subsidiary;

                   (e)     Liens  (whether or not assumed)  existing on property
         or  assets  at the time of  purchase  thereof  by the  Borrower  or any
         Subsidiary,   PROVIDED   that:   (i)  such  Lien  is  not   created  in
         contemplation  of the purchase of such property by the Borrower or such
         Subsidiary,  (ii)  such Lien is  confined  solely  to the  property  so
         purchased,  improvements  thereto  and  proceeds  thereof and (iii) the
         aggregate amount secured by all Liens permitted by this Section 6.02(e)
         shall not at any time exceed $10,000,000; and

                   (f)     Permitted Liens.

        SECTION 6.03.    INDEBTEDNESS.  The  Borrower  shall not,  and shall not
permit any Subsidiary to, at any time create,  incur,  assume or suffer to exist
or have outstanding any Indebtedness if, immediately after giving effect to such
Indebtedness  and the receipt and  application  of any proceeds  thereof,  there
would  exist  an  Event  of  Default  or  Potential  Default  hereunder,  or any
Indebtedness  of  any  domestic   Subsidiary   (other  than  a  Special  Purpose
Subsidiary)  other than (i)  Indebtedness  set forth on Schedule 3.07 hereof and
refinancings and renewals thereof (provided that the amount of such Indebtedness
so  refinanced  or renewed shall not exceed the lesser of (x) the amount of such
Indebtedness as of the date hereof or (y) the amount of such

                                      -78-
<PAGE>

Indebtedness  at  the  time  of  refinancing  or  renewal),   (ii)  intercompany
Indebtedness  between  or  among  the  Borrower  and  its  Subsidiaries,   (iii)
Indebtedness of domestic  Subsidiaries (other than Special Purpose Subsidiaries)
not otherwise  permitted  under clauses (i) or (ii) above which in the aggregate
at any time does not exceed  $20,000,000  and (iv) the Guaranty  hereunder,  the
"Guaranty"  under the Other Credit Agreement and the Guarantee of the Borrower's
obligations  in  connection   with   securities   issued  under  the  Indenture.
Notwithstanding the foregoing,  the Borrower may create, incur, assume or suffer
to exist  obligations  with regard to  $95,000,000  1999C Bonds and  $18,000,000
1999D Bonds under the Exit Funding Agreement.

        SECTION  6.04.   LOANS,  ADVANCES AND CERTAIN INVESTMENTS.  The Borrower
shall not, and shall not permit any Subsidiary to, at any time make or suffer to
exist or remain  outstanding  any Investment in any Special  Purpose  Subsidiary
other than  Investments by the Borrower and its  Subsidiaries in Special Purpose
Subsidiaries  which do not  exceed,  in the  aggregate  at any time,  50% of the
Borrower's  Consolidated  Net Worth.  For the purposes of this Section 6.04, the
Borrower's Consolidated Net Worth shall not include any amount on account of the
Borrower's Trust Preferred.

        SECTION 6.05.    CHANGES IN BUSINESS.  The Borrower shall not, and shall
not permit any  Significant  Subsidiary to, (a) liquidate or dissolve itself (or
suffer any  liquidation  or  dissolution)  (other than into the  Borrower or any
other  Significant  Subsidiary),  or  (b)  convey,  sell,  assign,  transfer  or
otherwise  dispose of any capital  stock of or other  ownership  interest in any
Significant  Subsidiaries  (other than Special Purpose  Subsidiaries) held by it
(other than to the Borrower or any other Significant Subsidiary),  PROVIDED that
(i) so long as no Default or Event of Default has occurred and is  continuing or
would  result  therefrom,  the  Borrower  may in any fiscal year  convey,  sell,
assign,  transfer  or  otherwise  dispose  of capital  stock or other  ownership
interest in one or more  Significant  Subsidiaries  which did not account for an
aggregate  of 10% of the  consolidated  assets of the Borrower at the end of the
prior  fiscal year and (ii)  notwithstanding  anything  to the  contrary in this
Section 6.05, the Borrower may dispose of its ownership  interest in the Robbins
Subsidiaries.

        SECTION 6.06.    AMENDMENT OF CERTAIN DOCUMENTS. The Borrower shall not,
and shall not permit any Significant Subsidiary to, modify, amend, supplement or
terminate, or agree to modify, amend, supplement or terminate its certificate of
incorporation or by-laws or any other constituent documents, in any manner which
would  materially  and  adversely  affect the  interests  of any of the  Lenders
hereunder.

        SECTION 6.07.    MERGERS;  ACQUISITIONS.  The  Borrower  shall not,  and
shall not permit any of its  Significant  Subsidiaries  to, merge or consolidate
with any  Person;  PROVIDED,  HOWEVER,  that  the  Borrower  or any  Significant
Subsidiary  thereof may merge with another Person if (i) in the case of a merger
involving the Borrower, the Borrower is the surviving  corporation,  (ii) in the
case of a  merger  involving  a  Significant  Subsidiary,  a  Subsidiary  of the
Borrower or, if the Borrower is also party to such merger, the Borrower,  is the
surviving corporation, and (iii) after giving effect to such merger no Potential
Default  or Event of  Default  would  then  exist;  and  PROVIDED  FURTHER  that
notwithstanding  anything to the contrary in this Section 6.07, the Borrower may
dispose of its ownership interest in the Robbins Subsidiaries.

                                      -79-
<PAGE>

        SECTION 6.08.    ERISA  OBLIGATIONS.  The Borrower  shall not, and shall
not permit any of its  Subsidiaries  to, engage in a  transaction  in connection
with which the Benefit  Plans,  the  Borrower,  any of its  Subsidiaries  or any
entity which they have an obligation to indemnify  could be subject to liability
for either a civil  penalty  assessed  pursuant  to Section  502(i) or 502(1) of
ERISA  or a tax  imposed  by  Section  4975 of the  Code or any  other  material
liability  Plan or Benefit Plan,  take any other action with respect to any such
Pension Plan or Benefit Plan if such termination or other action could result in
liability,  or take any action or fail to take any action  which could result in
withdrawal liabilities under Title IV of ERISA or liability under Section 502(g)
of ERISA or any analogous  provision  relating to Section 515 of ERISA;  fail to
make any  payments on a timely  basis which are required  under  applicable  Law
(including  Section  412 of the  Code) to be paid as  contributions  to  Pension
Plans;  incur an  accumulated  funding  deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code),  whether or not waived,  with respect to any
Pension  Plan;  amend any  Pension  Plan in a manner  which  would  require  the
granting of a security interest to maintain the continued  qualification of such
Pension Plan under  Section  401(a)(29) of the Code,  if, in any case  described
herein, or together with any other event described herein, such action,  failure
to act,  event or  transaction  would (i) result in an ERISA Lien  exceeding the
percentage  limitations  of  Section  6.02(a)  or (ii) have a  Material  Adverse
Effect.

        SECTION  6.09.   PRINCIPAL  FOREIGN  AFFILIATES.  The Borrower shall not
permit any of its Principal  Foreign  Affiliates to create,  assume or permit to
exist  any  Indebtedness  the  terms  of  which,  prior  to  a  payment  default
thereunder, would restrict dividends to be paid with respect to the consolidated
net  income  of such  Affiliate  for any  fiscal  year by more  than  40% of the
consolidated  net income of such Affiliate for such fiscal year. For purposes of
this Section,  "Principal Foreign  Affiliates" shall mean Foster Wheeler Limited
(Reading),  Foster Wheeler France, S.A., Foster Wheeler Italiana, S.p.A., Foster
Wheeler  Iberia,  S.A.,  Foster  Wheeler  Energia,  S.A.  and  their  respective
successors  and any other  foreign  Affiliate of the Borrower  which in the most
recent  fiscal  year  of  the  Borrower  accounted  for  more  than  10%  of the
consolidated  assets of the Borrower and its Subsidiaries or which accounted for
more than 5% of the consolidated income of the Borrower and its Subsidiaries for
the most  recent  fiscal  year of the  Borrower;  PROVIDED,  HOWEVER,  that with
respect to such foreign  Affiliate created or acquired after the date hereof, if
thereafter  such  entity,  in a fiscal  year,  accounts for more than 10% of the
consolidated  assets of the Borrower and its  Subsidiaries  or accounts for more
than 5% of the consolidated  income of the Borrower and its Subsidiaries in such
fiscal year,  it shall be deemed to be a Principal  Foreign  Affiliate  for such
fiscal year.

        SECTION 6.10.    CERTAIN AGREEMENTS.  The Borrower will not become or be
a party to any agreement or  instrument  relating to  Indebtedness  for borrowed
money (other than the Exit Funding  Agreement  and  agreements  and  instruments
relating to Indebtedness for borrowed money in an aggregate principal amount not
exceeding  $15,000,000  (individually  or in the aggregate  with respect to such
agreements and instruments) at any time outstanding and other than (with respect
to debt securities  offered and sold in a public offering in a principal  amount
not  exceeding  $500,000,000  ($175,000,000  of which is  outstanding  under the
Borrower's Trust Preferred)) the Indenture between the Borrower and Harris Trust
and Savings Bank, as Trustee, as amended and supplemented from time to time (the
"INDENTURE"),  filed as an exhibit to the Borrower's  Registration  Statement on
Form S-3  (registration  no.  33-61809)) which contains any

                                      -80-
<PAGE>

covenant or event of default which could result in such Indebtedness becoming or
being declared to be due and payable prior to its stated maturity  (including by
a requirement  for purchase or  prepayment)  upon the  occurrence of an event or
condition which is not an event or condition the occurrence of which could cause
the Loans to become or be declared to be (other than pursuant to Section 7.01(f)
hereto) due and payable  prior to their  stated  maturity,  unless the  Borrower
shall make an "Amendment  Offer" (as  hereinafter  defined);  PROVIDED that this
covenant  shall not be violated by (i) an agreement to pay the  principal of and
interest on such  Indebtedness in accordance with its terms or to provide to the
holders  of such  Indebtedness  or an agent or  trustee  for  such  holders  any
information which the Borrower is obligated to provide to the Lender or an Agent
hereunder  or (ii) any  agreement  or  instrument  relating to  Indebtedness  on
account of Capitalized Lease or secured by Purchase Money Security Interest, any
covenant or event of default of which principally  relates to the use, condition
or  disposition of the property  financed or acquired or  constructed  with such
Indebtedness.  As used herein, an "Amendment Offer" is an effective offer by the
Borrower to the Administrative Agent to amend this Agreement,  which offer shall
be made no later than ten days after the Borrower becoming party to an agreement
or instrument  referred to in the first  sentence of this Section 6.10, to amend
this  Agreement  (without  deleting or overriding  any term or provision of this
Section  6.10)  in a way that the  first  sentence  of this  Section  would  not
otherwise be  applicable to such  agreement or  instrument.  The  Administrative
Agent,  if so instructed by the Required  Lenders,  shall accept or decline such
Amendment Offer within thirty days thereof, and a failure to so respond shall be
deemed a declination of such Amendment Offer.

        SECTION 6.11.    RESTRICTED PAYMENTS.  The Borrower shall not, and shall
not  suffer or permit any  Subsidiary  to,  declare  or make any Stock  Payment;
except  that (i) any  wholly-owned  Subsidiary  may  declare  and make  dividend
payments  or other  distributions  to the  Borrower  or to another  wholly-owned
Subsidiary;  (ii) any non-wholly-owned  Subsidiary may declare and make dividend
payments or other  distribution  to its  shareholders  or other  equity  holders
generally so long as the Borrower or its  respective  Subsidiary  which owns the
equity interest in the Subsidiary  paying such dividends or other  distributions
receives at least its  proportionate  share  thereof  (based  upon its  relative
holdings of the equity interest in the Subsidiary paying such dividends or other
distributions and taking into account the relative  preferences,  if any, of the
various classes of equity interest of such  Subsidiary);  (iii) the Borrower and
any Subsidiary may declare and make dividend payments or other distributions, in
each case, payable solely in its stock; and (iv) the Borrower and any Subsidiary
may declare, pay or make cash Stock Payments so long as no Event of Default then
exist or would result therefrom.

        SECTION 6.12.    TRANSACTIONS  WITH  AFFILIATES.  The Borrower will not,
and will not permit any of its  Subsidiaries  to, enter into any  transaction or
series  of  related  transactions,  whether  or not in the  ordinary  course  of
business,  with any Affiliate of the Borrower or any of its Subsidiaries,  other
than on terms and conditions  substantially as favorable to the Borrower or such
Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time
in a comparable arm's-length  transaction with a Person other than an Affiliate.
Notwithstanding  the  foregoing,  the  provisions of this Section 6.12 shall not
prohibit (i) Stock Payments permitted under Section 6.11 hereof,  (ii) loans and
other advances that may from time to time be made to directors,  officers and/or
employees of the Borrower or any of its  Subsidiaries  in the ordinary course of
business,  (iii)  customary  fees  paid to  directors  of the  Borrower  and its
Subsidiaries,

                                      -81-
<PAGE>

(iv) the  entering  into,  and making  payments  under,  employment  agreements,
employee   benefit   plans,   indemnification   provisions   and  other  similar
compensatory  arrangements  with  directors,  officers  and/or  employees of the
Borrower  and its  Subsidiaries  in the  ordinary  course  of  business  and (v)
transactions  between or among the Borrower and its  Subsidiaries  to the extent
that  such  transactions  are not  otherwise  prohibited  by the  terms  of this
Agreement.

        SECTION 6.13.    CAPITAL EXPENDITURES. The Borrower shall not, and shall
not permit any of its Subsidiaries (other than Special Purpose Subsidiaries) to,
make any  Capital  Expenditures,  except  that  during  any  fiscal  year of the
Borrower,  the  Borrower  and  its  Subsidiaries  (other  than  Special  Purpose
Subsidiaries)  may make Capital  Expenditures so long as the aggregate amount of
such  Capital  Expenditures  does not exceed  $75,000,000  in such fiscal  year.
"CAPITAL  EXPENDITURES"  shall mean any  expenditure for fixed or capital assets
(including,  without limitation,  expenditures for maintenance and repairs which
are capitalized in accordance with GAAP and Capitalized Lease Obligations).


                                   ARTICLE VII

                                    DEFAULTS

        SECTION 7.01.    EVENTS OF DEFAULT.  An Event of Default  shall mean the
occurrence  or existence of one or more of the  following  events or  conditions
(for any reason, whether voluntary, involuntary or effected or required by Law):

         (a) The Borrower shall fail to pay when due principal of any Loan or of
any Letter of Credit Obligation.

         (b) The Borrower  shall fail to pay when due interest on any Loan,  any
fees,  indemnity  or expenses,  or any other  amount due  hereunder or under any
other Loan Document and such failure  shall have  continued for a period of five
Business Days.

         (c) Any  representation or warranty made or deemed made by the Borrower
or any  Subsidiary of the Borrower in or pursuant to any Loan Document or in any
certificate delivered  thereunder,  or any statement made by the Borrower or any
Subsidiary  of the Borrower in any  financial  statement,  certificate,  report,
exhibit or document  furnished by the Borrower or any Subsidiary of the Borrower
to any Agent or any Lender  pursuant to or in connection with any Loan Document,
shall prove to have been false or misleading  in any material  respect as of the
time when made or deemed made  (including  by  omission of material  information
necessary to make such representation, warranty or statement not misleading).

         (d) The Borrower shall default in the  performance or observance of any
covenant  contained  in Article VI hereof which shall  remain  unremedied  for a
period of five days after the  occurrence  thereof or the Borrower shall default
in the observance of any covenant contained in Section 5.01(f) hereof.

                                      -82-
<PAGE>

         (e) The Borrower shall default in the  performance or observance of any
other  covenant,  agreement  or duty  under  this  Agreement  or any other  Loan
Document and such  default  shall have  continued  for a period of 30 days after
notice of such default from the Administrative Agent to the Borrower.

         (f) (i) The  Borrower or any  Guarantor  (other than a Special  Purpose
Subsidiary)  or  any  Significant  Subsidiary  (other  than  a  Special  Purpose
Subsidiary) of the Borrower shall fail to perform or observe any term, condition
or covenant of any bond, note,  debenture,  loan or letter of credit  agreement,
indenture,  guaranty,  trust agreement,  mortgage or similar instrument to which
the Borrower or any such Guarantor  (other than Special  Purpose  Subsidiary) or
any such Significant  Subsidiary (other than a Special Purpose  Subsidiary) is a
party or by which it is bound,  or by which any of its  properties or assets may
be affected (a "DEBT  INSTRUMENT"),  so that, as a result of any such failure to
perform, the Indebtedness  included therein or secured or covered thereby may at
the  time  be  declared  due  and  payable  prior  to the  date  on  which  such
Indebtedness  would  otherwise  become  due and  payable;  or (ii) any  event or
condition  referred to in any Debt  Instrument  shall occur or fail to occur, so
that,  as a result  thereof,  the  Indebtedness  included  therein or secured or
covered  thereby may at such time be declared due and payable  prior to the date
on which such Indebtedness would otherwise become due and payable;  or (iii) the
Borrower  or any  Guarantor  (other  than  Special  Purpose  Subsidiary)  or any
Significant   Subsidiary  of  the  Borrower  (other  than  any  Special  Purpose
Subsidiary)  shall fail to pay any  Indebtedness  when due,  pursuant  to demand
under any Debt Instrument or otherwise,  subject to any applicable  grace period
or shall fail to make any  payment  required  to be made under the Exit  Funding
Agreement  when due;  PROVIDED,  HOWEVER,  that the  provisions  of this Section
7.01(f) shall not be applicable to  Indebtedness  or any Debt Instrument or Debt
Instruments  which relate to or evidence  Indebtedness  which,  on the date this
Section  7.01(f)  would  otherwise be  applicable  thereto,  is in the principal
amount of less than $10,000,000 (or its equivalent in any foreign currencies) in
the aggregate.

         (g) One or more  final,  non-appealable  judgments  for the  payment of
money shall have been entered against the Borrower or any Significant Subsidiary
(other than a Special Purpose  Subsidiary),  which judgment or judgments  exceed
$15,000,000 (or its equivalent in any foreign currencies) in the aggregate,  and
such judgment or judgments shall have remained unpaid, undischarged and unstayed
for a period of sixty consecutive days.

         (h) One or more final,  non-appealable writs or warrants of attachment,
garnishment,  execution,  distraint  or similar  process  exceeding in value the
aggregate  amount of $15,000,000  (or its equivalent in any foreign  currencies)
shall have been issued against the Borrower or any Significant Subsidiary (other
than a Special  Purpose  Subsidiary) or any of their  respective  properties and
shall have remained  undischarged and unstayed for a period of sixty consecutive
days.

         (i) This Agreement or any term or provision hereof shall cease to be in
full  force  and  effect,  or any  Credit  Party  shall,  or shall  purport  to,
terminate,  repudiate,  declare  voidable  or void or  otherwise  contest,  this
Agreement or any term or provision thereof or any obligation or liability of the
Credit Parties hereunder.

                                      -83-
<PAGE>

         (j) (i) Any Pension Plan is terminated pursuant to Section 4041 or 4042
of  ERISA  and  the  benefit  liabilities  exceed  the  assets  based  upon  the
assumptions  used by the PBGC on plan  termination  by an  amount  such that the
termination of such Pension Plan would have a Material Adverse Effect;  (ii) the
Borrower or any of its Subsidiaries (or a member of their respective  Controlled
Group) incur a liability under Section 4062, 4063 or 4064 of ERISA for an amount
that  such  liability  would  materially  and  adversely  affect  the  financial
condition of the Borrower and its  Subsidiaries  taken as a whole;  or (iii) any
other event or events  shall occur with  respect to any  employee  benefit  plan
whether or not subject to ERISA which  individually or in the aggregate  results
in a Material Adverse Effect.

         (k) The  obligations of the Borrower  hereunder shall at any time cease
to be "Senior Debt" as defined in the Exit Funding Agreement.

         (l) A proceeding  shall have been instituted in respect of the Borrower
or any Significant Subsidiary (other than a Special Purpose Subsidiary)

                (i)   seeking to have an order for relief  entered in respect of
         such Person,  or seeking a declaration or entailing a finding that such
         Person is insolvent  or a similar  declaration  or finding,  or seeking
         dissolution, winding-up, charter revocation or forfeiture, liquidation,
         reorganization,  arrangement,  adjustment, composition or other similar
         relief with respect to such  Person,  its assets or its debts under any
         Law relating to bankruptcy, insolvency, relief of debtors or protection
         of creditors,  termination  of legal  entities or any other similar Law
         now or hereafter in effect, or

                (ii)  seeking  appointment of a receiver,  trustee,  liquidator,
         assignee, sequestrator or other custodian for such Person or for all or
         any substantial part of its property

and such proceeding shall result in the entry, making or grant of any such order
for relief,  declaration,  finding,  relief or  appointment,  or such proceeding
shall remain undismissed and unstayed for a period of 60 consecutive days.

         (m) The Borrower or any  Significant  Subsidiary  (other than a Special
Purpose Subsidiary) shall voluntarily suspend transaction of its business; shall
make a general assignment for the benefit of creditors; shall institute (or fail
to  controvert  in a timely and  appropriate  manner) a proceeding  described in
Section  7.01(l)(i)  hereof,  or  (whether or not any such  proceeding  has been
instituted)  shall  consent  to or  acquiesce  in any  such  order  for  relief,
declaration,  finding or relief described  therein;  shall institute (or fail to
controvert in a timely and appropriate manner) a proceeding described in Section
7.01(l)(ii)  hereof, or (whether or not any such proceeding has been instituted)
shall  consent  to or  acquiesce  in any such  appointment  or to the  taking of
possession by any such  custodian of all or any  substantial  part of its or his
property;  shall  dissolve,  wind-up,  revoke or forfeit  its  charter (or other
constituent  documents)  or  liquidate  itself  or any  substantial  part of its
property; or shall take any corporate or similar action in furtherance of any of
the foregoing.

                                      -84-
<PAGE>

        SECTION 7.02.    CONSEQUENCES OF AN EVENT OF DEFAULT. (a) If an Event of
Default  specified in subsections (a) through (k) of Section 7.01 hereof,  or in
subsections  (l) and (m) with respect to a Significant  Subsidiary,  shall occur
and be  continuing  or shall  exist,  then,  in addition to all other rights and
remedies  which any Agent or any  Lender may have  hereunder  or under any other
Loan  Document,  at law, in equity or  otherwise,  the Lenders shall be under no
further  obligation to make Loans  hereunder and the LC Issuer shall be under no
further obligation to Issue Letters of Credit hereunder,  and the Administrative
Agent may, and upon the written request of the Required Lenders shall, by notice
to the Borrower, from time to time do any or all of the following:

                (i)   Declare  the   Commitments   terminated,   whereupon   the
         Commitments  will terminate and any fees hereunder shall be immediately
         due and payable without presentment,  demand, protest or further notice
         of any kind,  all of which are hereby  waived,  and an action  therefor
         shall immediately accrue.

                (ii)  Declare the unpaid principal amount of the Loans, interest
         accrued  thereon and all other  Obligations to be  immediately  due and
         payable without presentment,  demand,  protest or further notice of any
         kind,  all of which are hereby  waived,  and an action  therefor  shall
         immediately  accrue  and  demand  the  Borrower   immediately  to  Cash
         Collateralize  the full amount then available for drawing under any and
         all outstanding Letters of Credit.

         (b) If an  Event  of  Default  specified  in  subsection  (l) or (m) of
Section 7.01 hereof shall occur or exist with respect to the Borrower,  then, in
addition to all other rights and remedies which any Agent or any Lender may have
hereunder or under any other Loan Document, at law, in equity or otherwise,  the
Commitments  shall  automatically  terminate  and the Lenders  shall be under no
further  obligation  to make  Loans and the LC Issuer  shall be under no further
obligation to Issue Letters of Credit,  and the unpaid  principal  amount of the
Loans,   interest  accrued  thereon  and  all  other  Obligations  shall  become
immediately   due  and  payable  and  the  Borrower   shall   immediately   Cash
Collateralize  the full amount then available for drawing under all  outstanding
Letters of Credit,  without presentment,  demand, protest or notice of any kind,
all of which are hereby waived, and an action therefor shall immediately accrue.


                                  ARTICLE VIII

                                   THE AGENTS

        SECTION 8.01.    APPOINTMENT.  Each Lender hereby  irrevocably  appoints
Bank of America National Trust and Savings  Association to act as Administrative
Agent for such Lender under this  Agreement and the other Loan  Documents.  Each
Lender  hereby  irrevocably  authorizes  the  Administrative  Agent to take such
action on behalf of such Lender under the  provisions of this  Agreement and the
other Loan Documents, and to exercise such powers and to perform such duties, as
are expressly delegated to or required of the Administrative  Agent by the terms
hereof or  thereof,  together  with such  powers  as are  reasonably  incidental
thereto. Bank of America National Trust and Savings Association hereby agrees to
act as Administrative Agent on behalf

                                      -85-
<PAGE>

of the Lenders on the terms and  conditions  set forth in this Agreement and the
other Loan Documents, subject to its right to resign as provided in Section 8.10
hereof.  Each Lender hereby irrevocably  authorizes the Administrative  Agent to
execute and deliver each of the Loan Documents and to accept delivery of such of
the other Loan  Documents  as may not require  execution  by the  Administrative
Agent.  Each  Lender  agrees  that  the  rights  and  remedies  granted  to  the
Administrative Agent under the Loan Documents shall be exercised  exclusively by
the  Administrative  Agent, and that no Lender shall have any right individually
to exercise any such right or remedy,  except to the extent  expressly  provided
herein or therein.

        SECTION 8.02.    GENERAL  NATURE  OF  AGENTS'  DUTIES.   Notwithstanding
anything  to the  contrary  elsewhere  in this  Agreement  or in any other  Loan
Document:

                   (a)     No Agent shall have duties or responsibilities except
         those  expressly  set  forth  in  this  Agreement  and the  other  Loan
         Documents, and no implied duties or responsibilities on the part of any
         Agent shall be read into this  Agreement or any Loan  Document or shall
         otherwise exist.

                   (b)     The duties and  responsibilities  of each Agent under
         this  Agreement and the other Loan  Documents  shall be mechanical  and
         administrative  in  nature,   and  no  Agent  shall  have  a  fiduciary
         relationship in respect of any Lender.

                   (c)     Each  Agent is and shall be  solely  the agent of the
         Lenders. No Agent assumes, and shall not at any time be deemed to have,
         any  relationship  of agency or trust with or for, or any other duty or
         responsibility to, the Borrower,  any Subsidiary of the Borrower or any
         other Person  (except only for its  relationship  as agent for, and its
         express duties and responsibilities to, the Lenders as provided in this
         Agreement and the other Loan Documents).

                   (d)     No Agent  shall be under any  obligation  to take any
         action  hereunder  or under  any  other  Loan  Document  if such  Agent
         believes in good faith after consultation with counsel that taking such
         action may conflict with any Law or any provision of this  Agreement or
         any other Loan  Document,  or may  require  such Agent to qualify to do
         business in any jurisdiction where it is not then so qualified.

        SECTION  8.03.   EXERCISE OF POWERS. Each Agent shall take any action of
the type  specified in this Agreement or any other Loan Document as being within
such Agent's rights, powers or discretion in accordance with directions from the
Required  Lenders  (or,  to the  extent  this  Agreement  or such Loan  Document
expressly  requires  the  direction  or consent  of some other  Person or set of
Persons,  then instead in accordance with the directions of such other Person or
set of Persons).  In the absence of such  directions,  each Agent shall have the
authority  (but  under  no  circumstances  shall  be  obligated),  in  its  sole
discretion, to take any such action, except to the extent this Agreement or such
Loan  Document  expressly  requires  the  direction  or consent of the  Required
Lenders (or some other Person or set of Persons), in which case such Agent shall
not take such action  absent such  direction or consent.  Any action or inaction
pursuant to such  direction,  discretion  or consent shall be binding on all the
Lenders.  No Agent shall have any liability to any Person as a result of (x) any
Agent acting or refraining  from acting in accordance

                                      -86-
<PAGE>

with the directions of the Required Lenders (or other  applicable  Person or set
of Persons), (y) any Agent refraining from acting in the absence of instructions
to act from the Required Lenders (or other applicable Person or set of Persons),
whether or not such Agent has  discretionary  power to take such action,  or (z)
any Agent  taking  discretionary  action it is  authorized  to take  under  this
Section.

        SECTION 8.04.    CERTAIN  PROVISIONS.  Notwithstanding  anything  to the
contrary elsewhere in this Agreement or any other Loan Document:

                   (a)     No Agent  shall be  liable  for any  action  taken or
         omitted to be taken by it under or in connection with this Agreement or
         any other Loan Document,  unless caused by its own gross  negligence or
         willful misconduct.

                   (b)     No Agent shall be responsible  for (i) the execution,
         delivery,  effectiveness,   enforceability,  genuineness,  validity  or
         adequacy  of this  Agreement  or any  other  Loan  Document,  (ii)  any
         recital,  representation,  warranty, document,  certificate,  report or
         statement in, provided for in, or received under or in connection with,
         this  Agreement or any other Loan  Document or (iii) any failure of the
         Borrower or any  Subsidiary of the Borrower or Lender to perform any of
         their  respective  obligations  under this  Agreement or any other Loan
         Document.

                   (c)     No Agent shall be under any  obligation to ascertain,
         inquire  or  give  any  notice  relating  to  (i)  the  performance  or
         observance of any of the terms or  conditions of this  Agreement or any
         other Loan  Document on the part of the Borrower or any  Subsidiary  of
         the Borrower,  (ii) the business,  operations,  condition (financial or
         otherwise) or prospects of the Borrower or any other  Person,  or (iii)
         except to the extent set forth in Section 8.05(f) hereof, the existence
         of any Event of Default or Potential Default.

                   (d)     No  Agent  shall  be  under  any  obligation,  either
         initially  or on a  continuing  basis,  to provide  any Lender with any
         notices,   reports  or  information  of  any  nature,  whether  in  its
         possession presently or hereafter, except for such notices, reports and
         other  information  expressly  required by this  Agreement or any other
         Loan Document to be furnished by such Agent to such Lender.

        SECTION 8.05.    ADMINISTRATION BY THE AGENTS. (a) Any Agent may rely in
good faith  upon any notice or other  communication  of any nature  (written  or
oral, including but not limited to telephone conversations,  whether or not such
notice or other  communication is made in a manner permitted or required by this
Agreement or any Loan Document)  purportedly  made by or on behalf of the proper
party or  parties,  and no Agent  shall have any duty to verify the  identity or
authority of any Person giving such notice or other communication.

         (b) Each Agent may  consult  with  legal  counsel  (including,  without
limitation, in-house counsel for such Agent or in-house or other counsel for the
Borrower),  independent  public accountants and any other experts selected by it
from time to time,  and such Agent  shall not be

                                      -87-
<PAGE>

liable  for any  action  taken or  omitted  to be  taken in good  faith by it in
accordance with the advice of such counsel, accountants or experts.

         (c) Each Agent may  conclusively  rely upon the truth of the statements
and the  correctness of the opinions  expressed in any  certificates or opinions
furnished to such Agent in accordance with the requirements of this Agreement or
any other Loan Document. Whenever any Agent shall deem it necessary or desirable
that a matter be proved or  established  with  respect  to the  Borrower  or any
Lender,  such matter may be  established  by a  certificate  of the  Borrower or
Lender,  as the case may be,  and such  Agent  may  conclusively  rely upon such
certificate  (unless other evidence with respect to such matter is  specifically
prescribed in this Agreement or another Loan Document).

         (d) Any Agent may fail or refuse to take any action  unless it shall be
indemnified to its reasonable satisfaction from time to time against any and all
amounts,   liabilities,   obligations,   losses,  damages,  penalties,  actions,
judgments,  suits, costs,  expenses or disbursements of any kind or nature which
may be imposed  on,  incurred  by or  asserted  against  such Agent by reason of
taking or continuing to take any such action.

         (e) Any Agent may perform any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact. No Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-in  fact
selected by it with reasonable care.

         (f) No Agent  shall be  deemed to have any  knowledge  or notice of the
occurrence  of any Event of Default or Potential  Default  unless such Agent has
actual knowledge or has received notice from a Lender or the Borrower  referring
to this Agreement,  describing such Event of Default or Potential  Default,  and
stating that such notice is a "notice of default." If any Agent  receives such a
notice,  such Agent shall give prompt notice thereof to the other Agent and each
Lender.

        SECTION 8.06.    LENDER  NOT  RELYING ON AGENTS OR OTHER  LENDERS.  Each
Lender acknowledges as follows:

                   (a)     No  Agent   nor  any  other   Lender   has  made  any
         representations  or warranties to it, and no act taken hereafter by any
         Agent  or  any  other  Lender  shall  be  deemed  to   constitute   any
         representation or warranty by such Agent or such other Lender to it.

                   (b)     It has,  independently  and without reliance upon any
         Agent  or  any  other  Lender,   and  based  upon  such  documents  and
         information as it has deemed appropriate, made its own credit and legal
         analysis and decision to enter into this  Agreement  and the other Loan
         Documents.

                   (c)     It will,  independently and without reliance upon any
         Agent  or  any  other  Lender,   and  based  upon  such  documents  and
         information  as it shall  deem  appropriate  at the time,  make its own
         decisions to take or not take action under or in  connection  with this
         Agreement and the other Loan Documents.

                                      -88-
<PAGE>

        SECTION 8.07.    INDEMNIFICATION.  Each Lender  agrees to reimburse  and
indemnify each Agent and its directors,  officers,  employees and agents (to the
extent not reimbursed by the Borrower and without  limitation of the obligations
of the  Borrower to do so),  Pro Rata,  from and  against  any and all  amounts,
losses, liabilities, claims, damages, expenses, obligations, penalties, actions,
judgments,  suits,  costs or  disbursements  of any kind or  nature  (including,
without limitation, the fees and disbursements of counsel for such Agent or such
other Person in connection with any  investigative,  administrative  or judicial
proceeding  commenced  or  threatened,  whether  or not such Agent or such other
Person shall be designated a party  thereto) that may at any time be imposed on,
incurred by or asserted  against such Agent or such other Person as a result of,
or arising out of, or in any way related to or by reason of, this Agreement, any
other Loan Document,  any transaction from time to time  contemplated  hereby or
thereby,  or any  transaction  financed  in  whole  or in  part or  directly  or
indirectly  with the proceeds of any Loan or Letter of Credit,  PROVIDED that no
Lender  shall be liable for any portion of such  amounts,  losses,  liabilities,
claims, damages, expenses,  obligations,  penalties,  actions, judgments, suits,
costs or  disbursements  resulting  solely from the gross  negligence or willful
misconduct of such Agent or such other Person, as finally  determined by a court
of competent jurisdiction.

        SECTION 8.08.    AGENTS IN THEIR INDIVIDUAL CAPACITIES.  With respect to
its Commitments and the obligations  owing to it, each Agent shall have the same
rights and powers under this Agreement and each other Loan Document as any other
Lender and may exercise  the same as though it were not an Agent,  and the terms
"Lenders,"  "holders  of Notes" and like terms shall  include  each Agent in its
individual  capacity  as  such.  Each  Agent  and its  affiliates  may,  without
liability  to account,  make loans to,  accept  deposits  from,  acquire debt or
equity interests in, act as trustee under indentures of, and engage in any other
business with, the Borrower and any stockholder,  Subsidiary or Affiliate of the
Borrower, as though such Agent were not an Agent hereunder.

        SECTION 8.09.    HOLDERS  OF  NOTES.  Each  Agent may deem and treat the
Lender  which is payee of a Note as the  owner  and  holder of such Note for all
purposes  hereof  unless and until a  Transfer  Supplement  with  respect to the
assignment  or transfer  thereof  shall have been filed with the  Administrative
Agent in  accordance  with Section  10.14 hereof.  Any  authority,  direction or
consent of any Person who at the time of giving  such  authority,  direction  or
consent  is shown in the  Register  as being a Lender  shall be  conclusive  and
binding on each present and  subsequent  holder,  transferee  or assignee of any
Note or Notes  payable to such Lender or of any Note or Notes issued in exchange
therefor.

        SECTION  8.10.   SUCCESSOR  AGENTS.  Any Agent may resign at any time by
giving 30 days'  written  notice  thereof to the Lenders and the  Borrower.  Any
Agent may be  removed  by the  Required  Lenders  at any time by giving 10 days'
prior written notice thereof to such Agent,  the other Lenders and the Borrower.
Upon any such  resignation  or  removal,  the  Borrower  shall have the right to
appoint a successor Agent; PROVIDED,  that the Required Lenders or the remaining
Agents shall have the right,  acting  reasonably,  to disapprove  such successor
Agent.  If no successor Agent shall have been so appointed and consented to, and
shall have  accepted  such  appointment,  within 30 days  after  such  notice of
resignation  or removal,  then any of the remaining  Agents shall succeed to the
obligations of such Agent hereunder.  Each successor Agent shall be a commercial
bank or trust company  organized or licensed under the laws of the

                                      -89-
<PAGE>

United States of America or any State thereof and having a combined  capital and
surplus of at least $1,000,000,000.  Upon the acceptance by a successor Agent of
its appointment as Agent hereunder, such successor Agent shall thereupon succeed
to and become vested with all the  properties,  rights,  powers,  privileges and
duties of the former Agent,  without  further act, deed or conveyance.  Upon the
effective date of resignation or removal of a retiring  Agent,  such Agent shall
be discharged from its duties under this Agreement and the other Loan Documents,
but the  provisions  of this  Agreement  shall  inure to its  benefit  as to any
actions taken or omitted by it while it was Agent under this  Agreement.  If and
so long as no  successor  Agent  shall have been  appointed,  then any notice or
other  communication  required or permitted  to be given by the  retiring  Agent
shall be  sufficiently  given if given by the Required  Lenders,  all notices or
other  communications  required or  permitted  to be given to the Agent shall be
given to each Lender, and all payments to be made to the retiring Agent shall be
made directly to the Borrower or Lender for whose account such payment is made.

        SECTION 8.11.    CALCULATIONS.   No  Agent   shall  be  liable  for  any
calculation, apportionment or distribution of payments made by it in good faith.
If such calculation, apportionment or distribution is subsequently determined to
have been made in error, the sole recourse of any Lender to whom payment was due
but not made shall be to recover from the other Lenders any payment in excess of
the amount to which they are determined to be entitled or, if the amount due was
not paid by the Borrower, to recover such amount from the Borrower.

        SECTION 8.12.    FUNDING   BY   ADMINISTRATIVE    AGENT.    Unless   the
Administrative Agent shall have been notified in writing by any Lender not later
than  the  close of  business  on the day  before  the day on  which  Loans  are
requested  by the Borrower to be made that such Lender will not make its ratable
share of such Loans, the  Administrative  Agent may assume that such Lender will
make its ratable share of the Loans,  and in reliance upon such  assumption  the
Administrative  Agent may (but in no  circumstances  shall be required  to) make
available to the Borrower a corresponding  amount. If and to the extent that any
Lender fails to make such payment to the Administrative Agent on such date, such
Lender  shall pay such amount on demand  (or,  if such Lender  fails to pay such
amount on demand,  the Borrower shall pay such amount on demand),  together with
interest,  for the  Administrative  Agent's own  account,  for each day from and
including the date of the  Administrative  Agent's  payment to and including the
date of repayment to the Administrative Agent (before and after judgment) at the
Federal  Funds  Effective  Rate for the first day and  thereafter at the rate or
rates per annum  applicable  to such Loans.  All payments to the  Administrative
Agent under this Section shall be made to the Administrative Agent at its Office
in Dollars in funds  immediately  available  at such  Office,  without  set-off,
withholding, counterclaim or other deduction of any nature.

        SECTION 8.13.    SYNDICATION AGENT AND DOCUMENTATION  AGENT.  Nothing in
this  Agreement  shall impose upon the  Syndication  Agent or the  Documentation
Agent,  in  their  respective  capacities  as such,  any duty or  responsibility
whatsoever.

                                      -90-
<PAGE>
                                   ARTICLE IX

                                    GUARANTY

        SECTION 9.01.    THE  GUARANTY.  In order to induce the Lenders to enter
into this  Agreement  and to extend  credit  hereunder  to the  Borrower  and in
recognition  of the direct  benefits  to be received  by the  Borrower  and each
Guarantor  from the  proceeds  of the  Loans  and the  Letters  of Credit to the
Borrower,  each  Guarantor  hereby  agrees  with the  Lenders as  follows:  each
Guarantor hereby  unconditionally and irrevocably  guarantees as primary obligor
and not merely as surety  the full and prompt  payment  when due,  whether  upon
maturity,  by  acceleration  or  otherwise,  of any  and  all of the  Guaranteed
Obligations to the Creditors. If any or all of the Guaranteed Obligations to the
Creditors  becomes due and payable  hereunder,  each  Guarantor  unconditionally
promises  to pay  such  Guaranteed  Obligations  to the  Creditors  in the  same
currency in which such  Guaranteed  Obligations  are  denominated,  or order, on
demand,  together with any and all reasonable  expenses which may be incurred by
the  Administrative  Agent or the Creditors in collecting  any of the Guaranteed
Obligations.

        SECTION 9.02.    BANKRUPTCY.      Additionally,      each      Guarantor
unconditionally  and  irrevocably  guarantees  the payment of any and all of the
Guaranteed  Obligations  to the Creditors  whether or not then due or payable by
the Borrower upon the occurrence in respect of the Borrower of any of the events
specified  in  Section  7.01(l)  or (m),  and  unconditionally  and  irrevocably
promises to pay such  Guaranteed  Obligations  to the  Creditors,  or order,  on
demand,  in  the  same  currency  in  which  such  Guaranteed   Obligations  are
denominated.

        SECTION  9.03.   NATURE OF LIABILITY.  The  liability of each  Guarantor
hereunder is exclusive and  independent of any security for or other guaranty of
the  Guaranteed  Obligations  whether  executed  by such  Guarantor,  any  other
guarantor or by any other party,  and the liability of each Guarantor  hereunder
shall not be  affected or impaired by (a) any  direction  as to  application  of
payment by the Borrower or by any other party,  or (b) any other  continuing  or
other guaranty,  undertaking or maximum liability of a guarantor or of any other
party as to the Guaranteed Obligations of the Borrower, or (c) any payment on or
in reduction of any such other guaranty or undertaking,  or (d) any dissolution,
termination or increase, decrease or change in personnel by any Borrower, or (e)
any  payment  made to the  Administrative  Agent or the other  Creditors  on the
indebtedness  which the  Administrative  Agent or such other Creditors repay the
Borrower pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief  proceeding  (the Guaranty shall be reinstated
in the case of any such  disgorgement),  and each Guarantor  waives any right to
the deferral or modification of its obligations  hereunder by reason of any such
proceeding.

        SECTION 9.04.    INDEPENDENT   OBLIGATION.   The   obligations  of  each
Guarantor hereunder are independent of the obligations of any other guarantor or
the  Borrower,  and a separate  action or actions may be brought and  prosecuted
against  each  Guarantor  whether  or not action is  brought  against  any other
guarantor or the Borrower and whether or not any other Guarantor or the Borrower
be joined in any such action or actions.  Each Guarantor  waives, to the fullest
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement  thereof.  Any payment by the Borrower or
other  circumstance  which operates to toll

                                      -91-
<PAGE>

any statute of  limitations as to the Borrower shall operate to toll the statute
of limitations as to each Guarantor.

        SECTION 9.05.    AUTHORIZATION.  Each Guarantor authorizes the Creditors
without  notice or demand  (except as shall be  required by  applicable  law and
cannot be waived),  and without affecting or impairing its liability  hereunder,
from time to time to:

                   (a)     change  the  manner,  place or terms of  payment  of,
         and/or  change or  extend  the time of  payment  of,  renew,  increase,
         accelerate or alter, any of the Guaranteed  Obligations  (including any
         increase or decrease in the rate of  interest  thereon),  any  security
         therefor,  or any liability  incurred directly or indirectly in respect
         thereof,  and the  guaranty  herein made shall apply to the  Guaranteed
         Obligations as so changed, extended, renewed or altered;

                   (b)     take  and  hold  security  for  the  payment  of  the
         Guaranteed Obligations and sell, exchange, release, surrender,  realize
         upon or otherwise deal with in any manner and in any order any property
         by whomsoever at any time pledged or mortgaged to secure,  or howsoever
         securing,  the Guaranteed Obligations or any liabilities (including any
         of those hereunder)  incurred directly or indirectly in respect thereof
         or hereof, and/or any offset there against;

                   (c)     exercise  or  refrain  from   exercising  any  rights
         against the Borrower or others or otherwise act or refrain from acting;

                   (d)     release  or  substitute  any one or  more  endorsers,
         guarantors, the Borrower or other obligors;

                   (e)     settle   or   compromise   any  of   the   Guaranteed
         Obligations,  any security therefor or any liability  (including any of
         those hereunder)  incurred directly or indirectly in respect thereof or
         hereof,  and may  subordinate the payment of all or any part thereof to
         the payment of any  liability  (whether  due or not) of the Borrower to
         its creditors other than the Creditors;

                   (f)     apply  any  sums  by  whomsoever  paid  or  howsoever
         realized  to  any  liability  or  liabilities  of the  Borrower  to the
         Creditors  regardless of what  liability or liabilities of the Borrower
         remain unpaid;

                   (g)     consent  to or  waive  any  breach  of,  or any  act,
         omission or default under,  this Agreement or any of the instruments or
         agreements referred to herein, or otherwise amend, modify or supplement
         this Agreement or any of such other instruments or agreements; and/or

                   (h)     take any other action which  would,  under  otherwise
         applicable  principles of common law, give rise to a legal or equitable
         discharge of such Guarantor from its liabilities under this Section 9.

                                      -92-
<PAGE>

        SECTION 9.06.    RELIANCE.  It is not  necessary  for the  Creditors  to
inquire into the capacity or powers of the Borrower or the officers,  directors,
partners or agents acting or purporting to act on its behalf, and any Guaranteed
Obligations  made or created in  reliance  upon the  professed  exercise of such
powers shall be guaranteed hereunder.

        SECTION 9.07.    SUBORDINATION.  Any of the indebtedness of the Borrower
now or hereafter  owing to a Guarantor is hereby  subordinated to the Guaranteed
Obligations of the Borrower owing to the  Creditors;  and if the  Administrative
Agent  so  requests  at a time  when  an  Event  of  Default  exists,  all  such
indebtedness  of the Borrower to a Guarantor  shall be  collected,  enforced and
received by the  Borrower for the benefit of the  Creditors  and be paid over to
the Administrative Agent on behalf of the Creditors on account of the Guaranteed
Obligations of the Borrower to the Creditors, but without affecting or impairing
in any manner the liability of such Guarantor under the other provisions of this
Guaranty.  Prior to the  transfer  by any  Guarantor  of any note or  negotiable
instrument evidencing any of the indebtedness of the Borrower to such Guarantor,
such Guarantor shall mark such note or negotiable  instrument with a legend that
the same is subject to this  subordination.  Without  limiting the generality of
the foregoing,  each Guarantor hereby agrees with the Creditors that it will not
exercise  any  right of  subrogation  or  contribution  which it may at any time
otherwise have as a result of this Guaranty (whether contractual,  under Section
509 of the  Bankruptcy  Code or  otherwise)  against  the  Borrower or any other
Guarantor until all Guaranteed Obligations have been irrevocably paid in full in
cash. The Guaranteed  Obligations  shall not be deemed to be paid in full unless
the  Creditors  shall have  received all amounts set forth in the  definition of
"Guaranteed  Obligations",  including,  in the event of a bankruptcy proceeding,
all  interest,  fees and expenses  accruing and arising  after the filing of the
bankruptcy petition.

        SECTION 9.08.    WAIVER.  (a) Each Guarantor waives any right (except as
shall be  required  by  applicable  law and cannot be  waived)  to  require  the
Creditors to (i) proceed  against the Borrower or any other party,  (ii) proceed
against or exhaust  any  security  held from the  Borrower or any other party or
(iii)  pursue  any  other  remedy  in the  Administrative  Agent's  or any other
Creditors'  power  whatsoever.  Each  Guarantor  waives any defense  based on or
arising  out of any  defense  of the  Borrower  or any other  party,  other than
payment in full of the  Guaranteed  Obligations,  based on or arising out of the
disability  of the  Borrower,  any other  guarantor or any other  party,  or the
unenforceability  of the  Guaranteed  Obligations  or any part  thereof from any
cause,  or the cessation  from any cause of the liability of the Borrower  other
than  payment in full of the  Guaranteed  Obligations.  To the  greatest  extent
permitted by law the Creditors may, at their election, foreclose on any security
held by the Administrative  Agent or any other Creditors by one or more judicial
or  nonjudicial  sales,  whether  or not  every  aspect  of  any  such  sale  is
commercially  reasonable  (to the extent such sale is  permitted  by  applicable
law),  or exercise  any other right or remedy the  Administrative  Agent and any
other  Creditors  may have  against  the  Borrower  or any other  party,  or any
security,  without  affecting  or  impairing  in any  way the  liability  of any
Guarantor  hereunder  except to the extent the Guaranteed  Obligations have been
paid. Each Guarantor  waives any defense arising out of any such election by the
Creditors,  even though such election operates to impair or extinguish any right
of  reimbursement  or  subrogation  or other  right or remedy of such  Guarantor
against the Borrower or any other Guarantor or any other party or any security.

                                      -93-
<PAGE>

         (b) Each Guarantor  waives all  presentments,  demands for performance,
protests  and notices  (except as  otherwise  expressly  provided  for  herein),
including  without  limitation  notices of  nonperformance,  notices of protest,
notices of dishonor,  notices of acceptance of this Guaranty, and notices of the
existence,  creation or incurring of new or additional  Guaranteed  Obligations.
Each Guarantor assumes all  responsibility for being and keeping itself informed
of the  Borrower's  financial  condition  and assets,  and of all  circumstances
bearing  upon the  risk of  nonpayment  of the  Guaranteed  Obligations  and the
nature,  scope and extent of the risks which each  Guarantor  assumes and incurs
hereunder,  and  agrees  that the  Creditors  shall  have no duty to advise  any
Guarantor of information known to them regarding such circumstances or risks.

        SECTION 9.09.    NATURE OF LIABILITY. It is the desire and intent of the
Guarantors and the Creditors  that this Guaranty shall be enforced  against each
Guarantor to the fullest extent  permissible  under the laws and public policies
applied in each jurisdiction in which enforcement is sought. If, however, and to
the extent that, the  obligations of any Guarantor  under this Guaranty shall be
adjudicated to be invalid or unenforceable  for any reason  (including,  without
limitation,  because  of  any  applicable  state  or  federal  law  relating  to
fraudulent  conveyances  or  transfers),  then  the  amount  of  the  Guaranteed
Obligations of such  Guarantor  shall be deemed to be reduced and such Guarantor
shall  pay the  maximum  amount of the  Guaranteed  Obligations  which  would be
permissible under applicable law.

        SECTION 9.10.    JUDGMENTS  BINDING.  If  claim  is ever  made  upon any
Creditor or any  subsequent  holder of a Note of the Borrower  for  repayment or
recovery  of any amount or amounts  received  in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said  amount  by  reason  of (a) any  judgment,  decree or order of any court or
administrative  body having jurisdiction over such payee or any of its property,
or (b) any  settlement or  compromise  of any such claim  effected by such payee
with any such claimant,  then and in such event each  Guarantor  agrees that any
such judgment,  decree,  order,  settlement or compromise  shall be binding upon
each Guarantor, notwithstanding any revocation hereof or the cancellation of any
Note or other  instrument  evidencing  any liability of any  Borrower,  and each
Guarantor shall be and remain liable to the aforesaid  payees  hereunder for the
amount so repaid or  recovered  to the same  extent as if such  amount had never
originally been received by any such payee.


                                    ARTICLE X

                                  MISCELLANEOUS

       SECTION 10.01.    HOLIDAYS.  Whenever any payment or action to be made or
taken  hereunder or under any other Loan Document shall be stated to be due on a
day which is not a Business  Day,  such payment or action shall be made or taken
on the next following  Business Day and such extension of time shall be included
in  computing  interest or fees,  if any,  in  connection  with such  payment or
action.

       SECTION 10.02.    RECORDS. The unpaid principal amount of the Loans owing
to each Lender, the unpaid interest accrued thereon,  the interest rate or rates
applicable to such unpaid principal

                                      -94-
<PAGE>

amount,  the duration of such  applicability,  each  Lender's  Revolving  Credit
Committed  Amount  shall at all times be  ascertained  from the  records  of the
Administrative Agent, which shall be conclusive absent manifest error.

        SECTION  10.03.  AMENDMENTS AND WAIVERS.  Neither this Agreement nor any
other  Loan  Document  may  be  amended,  modified  or  supplemented  except  in
accordance  with the  provisions of this Section.  The Required  Lenders and the
Borrower may from time to time amend,  modify or  supplement  the  provisions of
this  Agreement or any other Loan  Document for the purpose of amending,  adding
to, or waiving any provisions or changing in any manner the rights and duties of
the  Borrower,  any  Agent,  the LC Issuer or any  Lender.  Any such  amendment,
modification  or supplement  made by the Borrower and the Required  Lenders,  in
accordance  with  the  provisions  of this  Section  shall be  binding  upon the
Borrower, each Lender, the LC Issuer and each Agent. The Agents shall enter into
such  amendments,  modifications,  supplements  or waivers  from time to time as
directed by the Required  Lenders,  and only as so directed,  PROVIDED,  that no
such amendment, modification, waiver or supplement may be made which will:

                   (a)     Increase the Revolving Credit Committed Amount of any
         Lender over the amount thereof then in effect,  or extend the Revolving
         Credit  Maturity  Date or the  Competitive  Bid  Loan  Expiration  Date
         without  the  written  consent  of each  Lender  affected  thereby,  or
         increase the Total Revolving Commitment Amount to exceed $300,000,000;

                   (b)     Reduce the principal amount of or extend the time for
         any payment of any Loan, or reduce the amount of or rate of interest or
         extend the time for payment of interest borne by any Loan or extend the
         time for payment of or reduce the amount of any  Facility Fee or reduce
         or  postpone  the  date  for  payment  of  any  other  fees,  expenses,
         indemnities  or amounts  payable under any Loan  Document,  without the
         written consent of each Lender affected thereby;

                   (c)     Change the definition of "Required  Lenders" or amend
         this  Section  10.03,  Section  10.13  hereof or any  provision of this
         Agreement that states a requirement for the consent of all the Lenders,
         without the written consent of all the Lenders;

                   (d)     Release  any of the  Guarantors  without  the written
         consent of all the Lenders;

                   (e)     Amend or waive any of the  provisions of Article VIII
         hereof,  or  impose  additional  duties  upon any  Agent  or  otherwise
         adversely  affect the rights,  interests or  obligations  of any Agent,
         without the written consent of such Agent; or

                   (f)     Amend or waive any of the  provisions of Section 2.06
         hereof or the Letters of Credit Related Documents, or impose additional
         duties  upon the LC Issuer or  otherwise  adversely  affect the rights,
         interests or obligations of the LC Issuer,  without the written consent
         of the LC Issuer,

                                      -95-
<PAGE>

and  PROVIDED  FURTHER,  that  Transfer  Supplements  may be entered into in the
manner  provided in Section 10.14 hereof.  Any such  amendment,  modification or
supplement  must be in  writing  and shall be  effective  only to the extent set
forth in such  writing.  Any Event of Default  or  Potential  Default  waived or
consented to in any such amendment,  modification or supplement  shall be deemed
to be cured and not  continuing  to the  extent  and for the period set forth in
such waiver or consent,  but no such waiver or consent shall extend to any other
or  subsequent  Event of  Default  or  Potential  Default  or  impair  any right
consequent thereto.

        SECTION  10.04.  NO IMPLIED WAIVER;  CUMULATIVE  REMEDIES.  No course of
dealing  and no delay or failure of any Agent or any  Lender in  exercising  any
right,  power or privilege under this Agreement or any other Loan Document shall
affect any other or future  exercise  thereof or  exercise  of any other  right,
power or privilege;  nor shall any single or partial exercise of any such right,
power or privilege or any abandonment or discontinuance of steps to enforce such
a right,  power or  privilege  preclude any further  exercise  thereof or of any
other right,  power or privilege.  The rights and remedies of the Agents and the
Lenders under this  Agreement and any other Loan Document are cumulative and not
exclusive  of any  rights  or  remedies  which  any  Agent or any  Lender  would
otherwise have hereunder or thereunder, at law, in equity or otherwise.

        SECTION  10.05.  NOTICES.  (a) Except to the extent otherwise  expressly
permitted hereunder or thereunder,  all notices, requests,  demands,  directions
and other  communications  (collectively  "NOTICES") under this Agreement or any
other  Loan  Document  shall be in writing  (including  telexed  and  telecopied
communication)    and   shall   be   sent   by    first-class    mail,   or   by
nationally-recognized  overnight  courier,  or  by  telex  or  telecopier  (with
confirmation  in  writing  mailed  first-class  or sent  by  such  an  overnight
courier),  or by personal delivery.  All notices shall be sent to the applicable
party at the address stated on the signature  pages hereof or in accordance with
the last  unrevoked  written  direction  from such  party to the  other  parties
hereto,  in all cases with postage or other charges  prepaid.  Any such properly
given notice  shall be effective on the earliest to occur of receipt,  telephone
confirmation  of receipt of telex or telecopy  communication,  one  Business Day
after delivery to a  nationally-recognized  overnight courier, or three Business
Days after deposit in the mail.

         (b) Any Lender giving any notice to the Borrower  shall  simultaneously
send a copy  thereof to each  Agent,  and each Agent shall  promptly  notify the
other Lenders of the receipt by it of any such notice.

         (c) Each Agent and each  Lender may rely on any notice  (whether or not
such notice is made in a manner  permitted or required by this  Agreement or any
Loan  Document)  purportedly  made by or on behalf of the Borrower,  and neither
Agent nor any Lender  shall have any duty to verify the identity or authority of
any Person giving such notice.

        SECTION 10.06.   EXPENSES;  TAXES; INDEMNITY. (a) The Borrower agrees to
pay or cause to be paid and to save each  Agent,  the LC Issuer and, in the case
of clause (iii) below,  each of the Lenders harmless  against  liability for the
payment of all reasonable  out-of-pocket  costs and expenses  (including but not
limited  to  reasonable  fees and  expenses  of one  counsel  to the  Agents and
auditors,   consulting  engineers,   appraisers,  and  all  other  professional,
accounting,  evaluation and consulting  costs approved by the Borrower and, with
respect to costs incurred by the Agents,

                                      -96-
<PAGE>

or any Lender or the LC Issuer  pursuant to clause (iii) below,  reasonable fees
and expenses of counsel  (including  allocated costs of in-house  counsel to the
extent that outside  counsel has not been retained by such Lender))  incurred by
the  Agents  or, in the case of clause  (iii)  below any Lender or the LC Issuer
from time to time arising from or relating to (i) the negotiation,  preparation,
execution,  delivery,  administration  and performance of this Agreement and the
other Loan Documents, (ii) any requested amendments, modifications, supplements,
waivers or consents (whether or not ultimately  entered into or granted) to this
Agreement or any other Loan Document,  and (iii)  following the occurrence of an
Event of Default, the enforcement or preservation of rights under this Agreement
or any other  Loan  Document  (including  but not  limited  to any such costs or
expenses  arising  from or  relating  to (A)  collection  or  enforcement  of an
outstanding Loan or any other amount owing hereunder or thereunder by any Agent,
the LC  Issuer  or any  Lender,  and (B) any  litigation,  proceeding,  dispute,
work-out,  restructuring or rescheduling related in any way to this Agreement or
the other Loan Documents).

         (b) The Borrower  hereby agrees to pay all stamp,  document,  transfer,
recording, filing, registration, search, sales and excise fees and taxes and all
similar  impositions now or hereafter  determined by any Agent, the LC Issuer or
any Lender to be payable in  connection  with this  Agreement  or any other Loan
Documents or any other documents,  instruments or transactions pursuant to or in
connection  herewith or therewith,  and the Borrower  agrees to save each Agent,
the LC Issuer and each Lender  harmless  from and against any and all present or
future  claims,  liabilities  or losses with  respect to or  resulting  from any
omission to pay or delay in paying any such fees, taxes or impositions.

         (c) The Borrower  hereby agrees to reimburse and indemnify  each of the
Indemnified  Parties from and against any and all losses,  liabilities,  claims,
damages, expenses,  obligations,  penalties, actions, judgments, suits, costs or
disbursements of any kind or nature whatsoever  (including,  without limitation,
the  reasonable  fees  and   disbursements   of  counsel   (including,   without
duplication,  allocated costs of in-house counsel) for such Indemnified Party in
connection  with  any  investigative,   administrative  or  judicial  proceeding
commenced  or  threatened,  whether  or not  such  Indemnified  Party  shall  be
designated a party thereto) that may at any time be imposed on, asserted against
or incurred by such  Indemnified  Party as a result of, or arising out of, or in
any way related to or by reason of, this  Agreement or any other Loan  Document,
any  transaction  from  time to time  contemplated  hereby  or  thereby,  or any
transaction  financed  in whole or in part or directly  or  indirectly  with the
proceeds of any Loan or Letter of Credit (and  without in any way  limiting  the
generality  of  the  foregoing,   including  any  violation  or  breach  of  any
Requirement of Law or any other Law by the Borrower or any  Subsidiary);  or any
exercise by any Agent or any Lender of any of its rights or remedies  under this
Agreement  or  any  other  Loan  Document);   but  excluding  any  such  losses,
liabilities,   claims,  damages,  expenses,  obligations,   penalties,  actions,
judgments,  suits,  costs or  disbursements  resulting  primarily from the gross
negligence or willful misconduct of such Indemnified Party. If and to the extent
that the foregoing obligations of the Borrower under this subsection (c), or any
other  indemnification  obligation of the Borrower  hereunder or under any other
Loan Document,  are unenforceable for any reason,  the Borrower hereby agrees to
make  the  maximum   contribution  to  the  payment  and  satisfaction  of  such
obligations which is permissible under applicable Law.

                                      -97-
<PAGE>

        SECTION 10.07.   SEVERABILITY.  The  provisions  of this  Agreement  are
intended to be  severable.  If any  provision  of this  Agreement  shall be held
invalid or unenforceable in whole or in part in any jurisdiction  such provision
shall, as to such jurisdiction,  be ineffective to the extent of such invalidity
or   unenforceability   without  in  any  manner   affecting   the  validity  or
enforceability  thereof in any other  jurisdiction  or the remaining  provisions
hereof in any jurisdiction.

        SECTION 10.08.   PRIOR UNDERSTANDINGS. This Agreement and the other Loan
Documents supersede all prior and contemporaneous  understandings and agreements
other than with regard to any upfront fees,  whether written or oral,  among the
parties hereto relating to the transactions provided for herein and therein.

        SECTION 10.09.   DURATION;  SURVIVAL. All representations and warranties
of the  Borrower  contained  herein or in any  other  Loan  Document  or made in
connection  herewith shall survive the making of, and shall not be waived by the
execution  and  delivery,  of this  Agreement  or any other Loan  Document,  any
investigation  by or  knowledge  of any Agent or any  Lender,  the making of any
Loan, or any other event or condition whatever.  All covenants and agreements of
the Credit Parties contained herein or in any other Loan Document shall continue
in full force and effect from and after the date hereof so long as the  Borrower
may borrow  hereunder  or request the  Issuances  of Letters of Credit and until
payment in full of all Obligations other than indemnity  obligations not yet due
and payable.  Without  limitation,  all obligations of the Borrower hereunder or
under any other Loan Document to make payments to or indemnify each Agent or any
Lender shall survive the payment in full of all other  obligations,  termination
of the Borrower's right to borrow hereunder, and all other events and conditions
whatever.  In addition,  all  obligations  of each Lender to make payments to or
indemnify  the Agents  shall  survive the payment in full by the Borrower of all
Obligations,  termination of the Borrower's right to borrow  hereunder,  and all
other events or conditions whatever.

        SECTION 10.10.   COUNTERPARTS.  This  Agreement  may be  executed in any
number  of  counterparts  and  by  the  different  parties  hereto  on  separate
counterparts each of which, when so executed,  shall be deemed an original,  but
all such counterparts shall constitute but one and the same instrument.

        SECTION  10.11.  LIMITATION  ON PAYMENTS.  The parties  hereto intend to
conform to all applicable  Laws in effect from time to time limiting the maximum
rate of interest that may be charged or collected. Accordingly,  notwithstanding
any other provision hereof or of any other Loan Document, the Borrower shall not
be required  to make any  payment to or for the account of any Lender,  and each
Lender shall refund any payment  made by the  Borrower,  to the extent that such
requirement or such failure to refund would violate or conflict with nonwaivable
provisions of applicable  Laws limiting the maximum amount of interest which may
be charged or collected by such Lender.

        SECTION 10.12.   SET-OFF.  Each Credit Party hereby  agrees that, to the
fullest extent  permitted by law, if any Obligation of the Borrower shall be due
and payable (by acceleration or otherwise),  each Lender and the LC Issuer shall
have the right,  without notice to the Borrower,  such Credit Party or any other
Person,  to set-off  against and to appropriate  and apply to the Obligation any
indebtedness,  liability or  obligation of any nature owing to such Credit Party
by

                                      -98-
<PAGE>

such Lender or the LC Issuer, including but not limited to all deposits (whether
time or demand, general or special,  provisionally credited or finally credited,
whether or not  evidenced by a certificate  of deposit and in whatever  currency
denominated)  now or hereafter  maintained by such Credit Party with such Lender
or the LC  Issuer,  as the  case  may be.  Such  right  shall  be  absolute  and
unconditional in all circumstances and, without limitation,  shall exist whether
or not such Lender or the LC Issuer or any other  Person shall have given notice
or made any demand to the Borrower, such other Credit Party or any other Person,
whether such indebtedness,  obligation or liability owed to such Credit Party is
contingent,  absolute, matured or unmatured (it being agreed that such Lender or
the LC Issuer may deem such indebtedness, obligation or liability to be then due
and payable at the time of such  setoff),  and  regardless  of the  existence or
adequacy  of any  collateral,  guaranty or any other  security,  right or remedy
available to any Lender or the LC Issuer or any other Person.  Each Credit Party
hereby agrees that, to the fullest extent  permitted by law, any Participant and
any branch,  subsidiary or affiliate of any Lender or any Participant shall have
the same rights of set-off as a Lender as provided in this  Section  (regardless
of whether such Participant,  branch, subsidiary or affiliate would otherwise be
deemed  in  privity  with or a direct  creditor  of the  Borrower).  The  rights
provided by this  Section  are in  addition  to all other  rights of set-off and
banker's  lien and all other rights and  remedies  which any Lender (or any such
Participant,  branch,  subsidiary  or affiliate)  may otherwise  have under this
Agreement,  any other Loan  Document,  at law or in equity,  or  otherwise,  and
nothing  in this  Agreement  or any Loan  Document  shall be  deemed a waiver or
prohibition  of or  restriction on the rights of set-off or bankers' lien of any
such Person.

        SECTION  10.13.  SHARING OF COLLECTIONS.  The Lenders hereby agree among
themselves that if any Lender shall receive (by voluntary  payment,  realization
upon  security,  set-off or from any other  source) any amount on account of the
Loans, interest thereon, or any other Obligation  contemplated by this Agreement
or the other Loan  Documents  to be made by the Borrower pro rata to all Lenders
in greater  proportion than any such amount  received by any other Lender,  then
the Lender  receiving  such  proportionately  greater  payment shall notify each
other Lender and the Agents of such receipt,  and equitable  adjustment  will be
made in the manner  stated in this Section so that,  in effect,  all such excess
amounts will be shared  ratably among all of the Lenders.  The Lender  receiving
such  excess  amount  shall  purchase  (which  it shall be  deemed  to have done
simultaneously  upon the receipt of such excess  amount) for cash from the other
Lenders a participation in the applicable Obligations owed to such other Lenders
in such  amount as shall  result in a ratable  sharing  by all  Lenders  of such
excess amount (and to such extent the receiving  Lender shall be a Participant).
If all or any portion of such excess  amount is  thereafter  recovered  from the
Lender making such  purchase,  such purchase shall be rescinded and the purchase
price restored to the extent of such  recovery,  together with interest or other
amounts,  if any, required by Law to be paid by the Lender making such purchase.
The Borrower  hereby consents to and confirms the foregoing  arrangements.  Each
Participant  shall  be  bound  by this  Section  as fully as if it were a Lender
hereunder.

        SECTION 10.14.   SUCCESSORS  AND ASSIGNS;  PARTICIPATIONS;  ASSIGNMENTS.
(a)  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon and inure to
the benefit of the Borrower,  the LC Issuer, the Lenders,  all future holders of
the Notes, each Agent and their respective  successors and assigns,  except that
the Borrower may not assign or transfer any of its rights hereunder or

                                      -99-
<PAGE>

interests  herein without the prior written  consent of all the Lenders and each
Agent, and any purported assignment without such consent shall be void.

         (b) PARTICIPATIONS.  Any Lender may, in accordance with applicable Law,
at any time sell participations to one or more commercial banks or other Persons
(each a "PARTICIPANT")  in all or a portion of its rights and obligations  under
this Agreement and the other Loan Documents (including,  without limitation, all
or a portion of its  Commitments  and the Loans owing to it and any Note held by
it); PROVIDED, that

                (i)   any such Lender's obligations under this Agreement and the
         other Loan Documents shall remain unchanged,

                (ii)  such Lender shall remain solely  responsible  to the other
         parties hereto for the performance of such obligations,

                (iii) the  parties  hereto  shall  continue  to deal  solely and
         directly with such Lender in connection  with such Lender's  rights and
         obligations under this Agreement and each of the other Loan Documents,

                (iv)  such  Participant  shall  be bound  by the  provisions  of
         Sections   10.13  and  10.16  hereof,   and  the  Lender  selling  such
         participation shall obtain from such Participant a written confirmation
         of its agreement to be so bound,

                (v)   no Participant (unless such Participant is an affiliate of
         such Lender,  or is itself a Lender)  shall be entitled to require such
         Lender to take or refrain from taking  action  under this  Agreement or
         under any other Loan  Document,  except that such Lender may agree with
         such Participant that such Lender will not, without such  Participant's
         consent, take action of the type described in subsections (a), (b), (c)
         or (d)  of  Section  10.03  hereof  to  the  extent  relating  to  such
         Participant's participation; notwithstanding the foregoing, in no event
         shall any participation by any Lender have the effect of releasing such
         Lenders from its obligations hereunder, and

                (vi)  no Participant shall be an Affiliate of any Credit Party.

The Borrower agrees that any such Participant  shall be entitled to the benefits
of  Sections  2.14,  2.16 and 10.06  with  respect to its  participation  in the
Commitments and the Loans  outstanding  from time to time but only to the extent
such Participant sustains such losses;  PROVIDED, that no such Participant shall
be entitled to receive any greater  amount  pursuant to such  Sections  than the
transferor  Lender would have been  entitled to receive in respect of the amount
of the  participation  transferred  to such  Participant  had no  such  transfer
occurred and nothing in this Section shall relieve such  transferor  Lender from
its obligations under Section 2.17 hereof.

         (c) ASSIGNMENTS.  Any  Lender  may,  in  the  ordinary  course  of  its
commercial  banking  business and in accordance with applicable Law, at any time
assign all or a portion of its rights and  obligations  under this Agreement and
the other Loan Documents (including,  without

                                     -100-
<PAGE>

limitation,  all or any portion of its Commitments and Loans owing to it and any
Note  held  by  it) to any  Eligible  Assignee  (each  a  "PURCHASING  LENDER");
PROVIDED, that

                (i)   any such assignment to a Purchasing  Lender which is not a
         Lender  shall be made only with the consent of the  Borrower  (provided
         that such  consent of the  Borrower  shall not be  required  during the
         occurrence of and  continuation  of an Event of Default) and each Agent
         which with respect to each Agent shall not be unreasonably withheld,

                (ii)  if a Lender makes such an  assignment  of less than all of
         its then remaining rights and obligations  under this Agreement and the
         other Loan Documents,  such transferor Lender shall retain,  after such
         assignment, a minimum principal amount of $5,000,000 of the Commitments
         and Loans then  outstanding,  and such assignment shall be in a minimum
         aggregate  principal  amount of $5,000,000 of the Commitments and Loans
         then outstanding,

                (iii) each such  assignment  shall be of a  constant,  and not a
         varying,  percentage of each Commitment of the transferor Lender and of
         all of the  transferor  Lender's  rights  and  obligations  under  this
         Agreement and the other Loan Documents,

                (iv)  each such assignment  shall be made pursuant to a Transfer
         Supplement in  substantially  the form of Exhibit G to this  Agreement,
         duly completed (a "TRANSFER SUPPLEMENT"); and

                (v)   to the extent the Other Credit Agreement is in effect, the
         assigning  Lender shall assign the same percentage of its  "COMMITMENT"
         under the Other Credit Agreement concurrently with such assignment.

In order to effect any such assignment, the transferor Lender and the Purchasing
Lender shall execute and deliver to the  Administrative  Agent a duly  completed
Transfer  Supplement  (including  the  consents  required  by clause  (i) of the
preceding  sentence) with respect to such assignment,  together with any Note or
Notes subject to such assignment (the "TRANSFEROR  LENDER NOTES") and (except in
the case of a transfer  required by the Borrower  under  Section 10.17 hereof) a
processing  and  recording  fee  of  $3,500;  and,  upon  receipt  thereof,  the
Administrative Agent shall accept such Transfer Supplement.  Notwithstanding the
foregoing,  no such processing and recording fee shall be payable in the case of
a replacement of a Lender pursuant to Section 2.18 or 10.17. Upon receipt of the
Purchase  Price  Receipt  Notice  pursuant  to  such  Transfer  Supplement,  the
Administrative  Agent shall record such  acceptance in the  Register.  Upon such
execution,  delivery,  acceptance  and  recording,  from and after the  Transfer
Effective Date specified in such Transfer Supplement

                   (x)     the Purchasing Lender shall be a party hereto and, to
         the extent provided in such Transfer Supplement,  shall have the rights
         and obligations of a Lender hereunder, and

                   (y)     the transferor  Lender  thereunder  shall be released
         from its obligations  under this Agreement to the extent so transferred
         (and,  in  the  case  of an  Transfer

                                     -101-
<PAGE>

         Supplement  covering  all  or the  remaining  portion  of a  transferor
         Lender's rights and obligations  under this Agreement,  such transferor
         Lender shall cease to be a party to this  Agreement) from and after the
         Transfer Effective Date.

To the extent  requested by the Purchasing  Lender,  on or prior to the Transfer
Effective  Date  specified  in an  Transfer  Supplement,  the  Borrower,  at its
expense,  shall execute and deliver to the Administrative Agent (for delivery to
the Purchasing  Lender) new Notes evidencing such Purchasing  Lender's  assigned
Commitments  or Loans and (for delivery to the  transferor  Lender)  replacement
Notes in the  principal  amount  of the  Loans or  Commitments  retained  by the
transferor  Lender  (such  Notes to be in exchange  for,  but not in payment of,
those Notes then held by such transferor Lender).  Each such Note shall be dated
the  date  and  be  substantially  in the  form  of the  predecessor  Note.  The
Administrative  Agent shall mark the predecessor Notes, if any,  "exchanged" and
deliver them to the Borrower. Accrued interest and accrued fees shall be paid to
the  Purchasing  Lender at the same time or times  provided  in the  predecessor
Notes and this Agreement.

         A transfer by a Lender of its rights under this  Agreement  from one of
such Lender's  branches to another of its branches shall not be considered to be
an  assignment  for the  purposes of this  Section  10.14 and shall be permitted
without the  consent of the  Borrower  or of the  Agents,  PROVIDED  that to the
extent such transfer  would,  at the time of such transfer,  result in increased
costs under  Section 2.14 or 2.16 from those being  charged by the  transferring
branch,  the  Borrower  shall  not be  obligated  to pay  such  increased  costs
(although the Borrower  shall be obligated to pay any other  increased  costs of
the type described above resulting from changes after the date of the respective
transfer). The foregoing proviso shall also apply to such transfer from a Lender
to another Lender or any affiliate thereof or of an affiliate of such transferor
Lender or to a Person which will become a Lender.

         (d) REGISTER.  The Administrative  Agent shall maintain at its office a
copy of each Transfer Supplement delivered to it and a register (the "REGISTER")
for the recordation of the names and addresses of the Lenders and the Commitment
of, and  principal  amount of the Loans owing to, each Lender from time to time.
The entries in the Register  shall be conclusive  absent  manifest error and the
Borrower,  the  Agents  and the  Lenders  may treat  each  Person  whose name is
recorded  in  the  Register  as a  Lender  hereunder  for  all  purposes  of the
Agreement. The Register shall be available for inspection by the Borrower or any
Lender  at any  reasonable  time and from  time to time  upon  reasonable  prior
notice.

         (e) FINANCIAL AND OTHER INFORMATION. The Borrower authorizes each Agent
and each Lender to disclose to any  Participant  or Purchasing  Lender (each,  a
"TRANSFEREE")  and any  prospective  transferee  any and all financial and other
information  in  such  Person's  possession  concerning  the  Borrower  and  its
Subsidiaries and Affiliates which has been or may be delivered to such Person by
or on behalf of the Borrower in connection with this Agreement or any other Loan
Document or such Person's credit evaluation of the Borrower and its Subsidiaries
and Affiliates; subject, however, to the provisions of Section 10.16 hereof.

         (f) Notwithstanding  anything to the  contrary  contained  herein,  any
Lender (a "GRANTING  LENDER") may grant to a special purpose funding vehicle (an
"SPC") of such

                                     -102-
<PAGE>

Granting Lender, identified as such in writing from time to time by the Granting
Lender to the  Administrative  Agent and the Borrower,  the option to provide to
the  Borrower  all or any part of any  Loan  that  such  Granting  Lender  would
otherwise  be  obligated  to make to the  Borrower  pursuant to this  Agreement;
PROVIDED  that (i) nothing  herein shall  constitute a commitment  by any SPC to
make any Loan,  (ii) if an SPC elects not to exercise  such option or  otherwise
fails to provide  all or any part of such Loan,  the  Granting  Lender  shall be
obligated  to make such Loan  pursuant  to the terms  hereof and (iii) no SPC or
Granting  Lender  shall be entitled to receive  any greater  amount  pursuant to
Section  2.14 or 2.16 than the  Granting  Lender  would  have been  entitled  to
receive had the  Granting  Lender not  otherwise  granted such SPC the option to
provide any Loan to the Borrower.  The making of any Revolving Credit Loan by an
SPC  hereunder  shall utilize the  Revolving  Credit  Commitment of the Granting
Lender (and, if such Loan is a Competitive Bid Loan,  shall be deemed to utilize
the Total  Revolving  Credit  Commitment of all the Lenders) to the same extent,
and as if, such Loan were made by the Granting Lender.  Each party hereto hereby
agrees that no SPC shall be liable for any  obligation  of any kind with respect
to  this  Agreement  under  any  circumstances  whatsoever,   including  without
limitation  whether or not the related  Granting Lender makes such payment.  The
foregoing shall not release the Granting  Lender from any obligation  hereunder;
and the Granting Lender's liability shall be determined as if no grant to an SPC
had been made by it. Each party hereto  hereby  acknowledges  and agrees that no
SPC  shall  have  any  voting  rights  hereunder  and  that  the  voting  rights
attributable  to any extensions of credit made by an SPC shall be exercised only
by the  relevant  Granting  Lender.  Each  Granting  Lender  shall  serve as the
administrative agent and attorney-in-fact for its SPC and shall on behalf of its
SPC: (i) receive any and all payments  made for the benefit of such SPC and (ii)
give and receive all  communications  and notices and take all actions hereunder
to the extent, if any, such SPC shall have any rights  hereunder.  To the extent
an SPC shall have the right to receive or give any such  notice or take any such
action in writing,  it shall be signed by its Granting Lender as  administrative
agent  and  attorney-in-fact  for such SPC and need not be signed by such SPC on
its own behalf. The Borrower,  the Guarantors,  the Administrative Agent and the
Lenders  may  rely  thereon  without  any  requirement  that  the  SPC  sign  or
acknowledge  the same.  In  addition,  notwithstanding  anything to the contrary
contained in this Section 10.14, any SPC may (i) with notice to, but without the
prior written consent of, the Borrower or the  Administrative  Agent and without
paying any processing fee therefor,  assign all or a portion of its interests in
any Loans to its  Granting  Lender or to any  financial  institutions  providing
liquidity and/or credit facilities to or for the account of such SPC to fund the
Loans made by such SPC or to support the  securities (if any) issued by such SPC
to fund such Loans and (ii)  disclose  on a  confidential  basis any  non-public
information relating to its Loans to any rating agency,  commercial paper dealer
or provider or a surety,  guarantee or credit or liquidity  enhancement  to such
SPC.  In the event that an SPC extends a Loan to the  Borrower  as  contemplated
above, the Borrower shall repay such Loan to the SPC through the  Administrative
Agent in full on the maturity  date thereof,  notwithstanding  any provision for
repayments being affected on a basis of  re-borrowings.  The foregoing shall not
release the Granting Lender from any obligation hereunder, the Granting Lender's
liability to be determined as if no grant to an SPC had been made by it.

         Each  party  hereto  agrees  that  until the 369th  day  following  the
maturity of the last maturing commercial paper note issued or to be issued by an
SPC, it will not institute, or join with others in instituting,  against the SPC
any  involuntary  bankruptcy  or  insolvency  proceeding

                                     -103-
<PAGE>

under any applicable  bankruptcy  reorganization,  insolvency or similar law, as
now or hereafter in effect.

         In the event that an SPC makes a Loan  hereunder,  the  Borrower  shall
repay the full amount of such Loan to the SPC through the  Administrative  Agent
on the maturity date thereof,  notwithstanding  any provision  contained in this
Agreement  with respect to netting of amounts  payable by the  Borrower  against
amounts being borrowed by the Borrower on the same day.

        SECTION 10.15.   GOVERNING LAW;  SUBMISSION TO  JURISDICTION;  WAIVER OF
JURY TRIAL.  (a)  GOVERNING  LAW. THIS  AGREEMENT  AND ALL OTHER LOAN  DOCUMENTS
(EXCEPT TO THE EXTENT,  IF ANY,  OTHERWISE  EXPRESSLY  STATED IN SUCH OTHER LOAN
DOCUMENTS)  SHALL BE GOVERNED BY,  CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES.

         (b) CERTAIN    WAIVERS.    THE   BORROWER   HEREBY    IRREVOCABLY   AND
UNCONDITIONALLY:

                (i)   AGREES THAT ANY ACTION,  SUIT OR  PROCEEDING BY ANY PERSON
         ARISING FROM OR RELATING TO THIS  AGREEMENT OR ANY OTHER LOAN  DOCUMENT
         OR ANY STATEMENT,  COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING
         IN   CONNECTION   HEREWITH   OR   THEREWITH   (COLLECTIVELY,   "RELATED
         LITIGATION")  MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
         JURISDICTION  SITTING  IN THE CITY AND  COUNTY OF NEW  YORK,  NEW YORK,
         SUBMITS TO THE  JURISDICTION OF SUCH COURTS,  AND TO THE FULLEST EXTENT
         PERMITTED  BY LAW AGREES THAT IT WILL NOT BRING ANY RELATED  LITIGATION
         IN ANY OTHER FORUM (BUT  NOTHING  HEREIN  SHALL AFFECT THE RIGHT OF THE
         AGENT OR ANY  LENDER TO BRING ANY  ACTION,  SUIT OR  PROCEEDING  IN ANY
         OTHER FORUM);

                (ii)  WAIVES ANY OBJECTION  WHICH IT MAY HAVE AT ANY TIME TO THE
         LAYING OF VENUE OF ANY  RELATED  LITIGATION  BROUGHT IN ANY SUCH COURT,
         WAIVES ANY CLAIM THAT ANY SUCH RELATED  LITIGATION  HAS BEEN BROUGHT IN
         AN INCONVENIENT  FORUM, AND WAIVES ANY RIGHT TO OBJECT, WITH RESPECT TO
         ANY RELATED  LITIGATION BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES
         NOT HAVE JURISDICTION OVER THE BORROWER;

                (iii) CONSENTS AND AGREES TO SERVICE OF ANY  SUMMONS,  COMPLAINT
         OR OTHER  LEGAL  PROCESS IN ANY RELATED  LITIGATION  BY  REGISTERED  OR
         CERTIFIED U.S. MAIL,  POSTAGE  PREPAID,  TO THE BORROWER AT THE ADDRESS
         FOR NOTICES DESCRIBED IN SECTION 10.05 HEREOF,  AND CONSENTS AND AGREES
         THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE
         SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR  EFFECTIVENESS
         OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW); AND

                (iv)  WAIVES  THE  RIGHT  TO  TRIAL  BY  JURY  IN  ANY   RELATED
         LITIGATION.

                                     -104-
<PAGE>

        SECTION 10.16.   CONFIDENTIALITY. Except as may be required by Law, each
Lender and each Agent covenants and agrees to use its best efforts not to permit
any data or information  relating to the Borrower or any of its  Subsidiaries or
the business of the Borrower or any of its Subsidiaries  (other than any data or
information  which is otherwise  publicly  available or which is received by any
such party in a capacity in which such party is not bound by any  restriction of
a  nature  similar  to  that  imposed  by this  Section  10.16),  which  data or
information  such Lender or any Agent possesses due to such party's  relation to
the transactions  contemplated by the Loan Documents,  to be out of such party's
possession or the contents thereof to be divulged to any other Person; PROVIDED,
HOWEVER,  that such data or  information  may be  disclosed  to the  lawyers  or
accountants  of such Lender or any Agent and to any Person  empowered  by Law to
examine the records of any such Person and to any potential  participant  in, or
assignee or transferee of, its rights under any Loan Documents  which  potential
participant,  assignee or transferee shall have, in each case,  agreed with such
party to comply with the terms of this Section 10.16.

        SECTION 10.17.   REPLACEMENT OF LENDERS. If (a) the Borrower is required
to make a payment to a  particular  Lender  pursuant  to  Sections  2.14 or 2.16
hereof (or pursuant to a comparable  provision in any agreement  with respect to
the Borrower's Indebtedness for borrowed money between the Borrower, such Lender
and at  least  five  other  lenders)  or (b)  the  Borrower  is  precluded  from
requesting  Loans of any type  from a  particular  Lender  pursuant  to  Section
2.08(e) hereof, the Borrower may, upon not less than 15 Business Days' notice to
the Administrative  Agent,  either (x) immediately  terminate the Commitments of
such Lender,  prepay  (subject to Section  2.14(b)  hereof) such Lender's Loans,
together  with  interest  accrued  thereon and all other  amounts  payable  with
respect thereto, and pay all other amounts then due and owing to such Lender (in
which event the Total Revolving Credit Commitment shall be reduced by the amount
of such Lender's  Revolving Credit Committed  Amount) or (y) cause a Replacement
Lender reasonably  satisfactory to the Administrative Agent (which may be one of
the other Lenders) to purchase all of such Lender's interests in accordance with
the  provisions of Section  10.14(c)  hereof.  In such event,  to the extent the
Other Credit  Agreement  is in effect,  the Borrower  must also  terminate  such
Lender's  "COMMITMENT"  under the Other Credit  Agreement  and such  Replacement
Lender must purchase such Lender's interest under the Other Credit Agreement.

        SECTION 10.18.   JUDGMENT  CURRENCY.   (a)  The  Borrower's   obligation
hereunder and under the other Loan  Documents to make payments in Dollars or any
other currency (the "OBLIGATION  CURRENCY") shall not be discharged or satisfied
by any tender or recovery  pursuant to any  judgment  expressed  in or converted
into any currency other than the Obligation Currency,  except to the extent that
such tender or recovery results in the effective  receipt by the  Administrative
Agent,  the LC  Issuer  or the  respective  Lender  of the  full  amount  of the
Obligation Currency expressed to be payable to the Administrative  Agent, the LC
Issuer or such Lender under this Agreement or the other Loan  Documents.  If for
the purpose of obtaining or enforcing judgment against the Borrower in any court
or in any  jurisdiction,  it  becomes  necessary  to  convert  into or from  any
currency  other  than  the  Obligation   Currency  (such  other  currency  being
hereinafter  referred  to as  the  "JUDGMENT  CURRENCY")  an  amount  due in the
Obligation  Currency,  the conversion shall be made, at the rate of exchange (as
quoted by the Administrative Agent or if the Administrative Agent does not quote
a rate  of  exchange  on  such  currency,  by a known  dealer  in such  currency
designated by the Administrative Agent) determined,  in each case, as of the day

                                     -105-
<PAGE>

immediately  preceding the day on which the judgment is given (such Business Day
being hereinafter referred to as the "JUDGMENT CURRENCY CONVERSION DATE").

         (b) If there is a change in the rate of exchange prevailing between the
Judgment  Currency  Conversion Date and the date of actual payment of the amount
due,  the  Borrower  covenants  and  agrees  to pay,  or cause to be paid,  such
additional  amounts,  if any (but in any  event not a lesser  amount)  as may be
necessary  to  ensure  that  the  amount  paid in the  Judgment  Currency,  when
converted  at the  rate of  exchange  prevailing  on the date of  payment,  will
produce the amount of the  Obligation  Currency  which could have been purchased
with the amount of  Judgment  Currency  stipulated  in the  judgment or judicial
award at the rate or exchange  prevailing  on the Judgment  Currency  Conversion
Date.

         (c) For purposes of  determining  any rate of exchange for this Section
10.18,  such amounts  shall  include any premium and costs payable in connection
with the purchase of the Obligation Currency.

        SECTION 10.19.   EFFECTIVENESS.  The Previous  Credit  Agreement  became
effective on February 12, 1999 (the "ORIGINAL  EFFECTIVE DATE").  This Agreement
shall become effective on December 1, 1999 (the "EFFECTIVE  DATE") PROVIDED that
the  following  conditions  precedent  shall  occur:  (i) the  Borrower  and the
Required  Lenders  shall  have  signed a copy of this  Agreement  and shall have
delivered executed counterparts of this Agreement to the Administrative Agent at
its  Notice  Office  or,  in the case of any  Lender,  shall  have  given to the
Administrative  Agent  telephonic  (confirmed  in  writing),  written  telex  or
facsimile  transmission  notice (actually received) at such office that the same
has been  signed  and sent to such  Administrative  Agent  and (ii) all fees and
expenses (including, without limitation, all legal fees and expenses) due to the
Agent and the  Lenders and  special  legal  counsel to the Agent shall have been
paid.

        SECTION 10.20.   ENTIRE AGREEMENT - CONSTRUCTION. This Agreement and the
other  Loan  Documents,  taken  together,  constitute  and  contain  the  entire
agreement among the Borrower, the Lenders and Administrative Agent and supercede
any and all prior agreements, negotiations,  correspondence,  understandings and
communications  among the  parties,  whether  written  or oral,  respecting  the
subject matter hereof. To the extent of any inconsistency between this Agreement
and any  other  Loan  Document,  the  terms  and  conditions  contained  in this
Agreement shall govern.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                     -106-
<PAGE>

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

ATTEST:                                  FOSTER WHEELER CORPORATION, as Borrower


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


                                         Address for Notices:

                                         Perryville Corporate Park
                                         Clinton, NJ 08809-4000
                                         Attn:  Vice President and Treasurer

                                         Telephone:  908-713-2945
                                         Telecopier: 908-713-2953





                                       S-1
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                         FOSTER WHEELER USA CORPORATION, as
                                           Guarantor


                                         By

                                           Title:


                                         Address for Notices:

                                         Perryville Corporate Park
                                         Clinton, NJ  08809-4000
                                         Attn:  Vice President and Treasurer

                                         Telephone:  908-713-2945
                                         Telecopier: 908-713-2953





                                       S-2
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                         FOSTER WHEELER ENERGY INTERNATIONAL,
                                           INC., as Guarantor


                                         By

                                           Title:


                                         Address for Notices:

                                         Perryville Corporate Park
                                         Clinton, NJ  08809-4000
                                         Attn:  Vice President and Treasurer

                                         Telephone:  908-713-2945
                                         Telecopier: 908-713-2953





                                       S-3
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                         FOSTER WHEELER ENERGY CORPORATION, as
                                           Guarantor


                                         By

                                           Title:


                                         Address for Notices:

                                         Perryville Corporate Park
                                         Clinton, NJ  08809-4000
                                         Attn:  Vice President and Treasurer

                                         Telephone:  908-713-2945
                                         Telecopier: 908-713-2953





                                       S-4
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                         BANK OF AMERICA, N.A., individually and
                                           as Administrative Agent, LC Issuer
                                           and Swingline Lender


                                         By

                                           Title:


                                         Initial Revolving Credit
                                         Committed Amount:  $30,000,000

                                         Commitment Percentage:  11.111%

                                         Address for Notices:

                                         1850 Gateway Boulevard
                                         CA4-706-05-09
                                         Concord, CA  94520
                                         Attn:  Glenis Croucher

                                         Telephone:  (925) 675-8447
                                         Telecopier: (925) 969-2807

                                         With a copy to:

                                         555 South Flower Street, 11th Floor
                                         CA9-706-11-07
                                         Los Angeles, CA  90071
                                         Attn: Bob Troutman

                                         Telephone:  (213) 228-3866
                                         Telecopier: (213) 623-1959





                                       S-5
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                         FIRST UNION NATIONAL BANK, individually
                                           and as Syndication Agent


                                         By

                                           Title:


                                         Initial Revolving Credit
                                         Committed Amount:  $30,000,000

                                         Commitment Percentage:  11.111%

                                         Address for Notices:

                                         190 River Road, NJ 3130
                                         Summit, New Jersey  07901
                                         Attn: Robert K. Strunk II
                                               Vice President

                                         Telephone:  (908) 598-3080
                                         Telecopier: (908) 598-3085

                                         With a copy to:

                                         190 River Road, NJ 3166
                                         Summit, New Jersey  07901
                                         Attn: John P. Longhine
                                               Senior Vice President

                                         Telephone:  (908) 598-3029
                                         Telecopier: (908) 598-3800





                                       S-6
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          ABN AMRO BANK N.V., individually and
                                            as Documentation Agent


                                          By

                                            Title:



                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $30,000,000

                                          Commitment Percentage:  11.111%

                                          Address for Notices:

                                          208 South LaSalle Street, Suite 1500
                                          Chicago, IL  60604
                                          Attn:  Credit Administration

                                          Telephone:  (312) 992-5110
                                          Telecopier: (312) 992-5111

                                          With a copy to:

                                          500 Park Avenue
                                          New York, NY  10022
                                          Attn:  John Hennessy

                                          Telephone:  (212) 446-4233
                                          Telecopier: (212) 446-4237





                                       S-7
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          TORONTO DOMINION (TEXAS),  INC.

                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $30,000,000

                                          Commitment Percentage:  11.111%

                                          Address for Notices:

                                          31 West 52nd Street
                                          New York, NY  10019-6101
                                          Attn: Hermann Mazard
                                                Energy Group

                                          Telephone:  (212) 827-7531
                                          Telecopier: (212) 262-1926

                                          With a copy to:

                                          The Toronto Dominion Bank
                                          909 Fannin Street, 17th Floor
                                          Houston, Texas  77010
                                          Attn: Jimmy Simien
                                                Manager, Credit Administration

                                          Telephone:  (713) 653-8239
                                          Telecopier: (713) 951-9921





                                       S-8
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          NATIONAL WESTMINSTER BANK PLC, NEW
                                            YORK BRANCH


                                          By

                                            Title:


                                          NATIONAL WESTMINSTER BANK PLC, NASSAU
                                            BRANCH


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


                                          Initial Revolving Credit
                                          Committed Amount:  $30,000,000

                                          Commitment Percentage:  11.111%

                                          Address for Notices:

                                          1 Princes Street, 6th Floor
                                          London, U.K.  EC2R8PB
                                          Attn:  Richard Freedman
                                                 Director

                                          Telephone:  (44) (171) 390-1100
                                          Telecopier: (44) (171) 390-1108

                                          With a copy to:

                                          65 East 55th Street
                                          New York, NY  10022
                                          Attn:  Commercial Loans Associate

                                          Telephone:  (212) 401-1407
                                          Telecopier: (212) 401-1494





                                       S-9
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          THE BANK OF NOVA SCOTIA


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $7,500,000

                                          Commitment Percentage:  2.778%

                                          Address for Notices:

                                          One Liberty Plaza
                                          New York, NY  10006
                                          Attn: Peter Colletta
                                                Senior Loan Administration
                                                Officer

                                          Telephone:  (212) 225-5069
                                          Telecopier: (212) 225-5145





                                       S-10
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          BANK OF TOKYO-MITSUBISHI TRUST
                                            COMPANY


                                          By

                                            Title:


                                         Initial Revolving Credit
                                         Committed Amount:  $15,000,000

                                         Commitment Percentage:  5.556%

                                         Address for Notices:

                                         1251 Avenue of the Americas, 12th Floor
                                         New York, NY  10020
                                         Attn: Bill Derasmo

                                         Telephone:  (212) 782-4359
                                         Telecopier: (212) 782-6445





                                       S-11
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          CITIBANK, N.A.


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $15,000,000

                                          Commitment Percentage:  5.556%

                                          Address for Notices:

                                          399 Park Avenue, 8th Floor
                                          New York, NY  10043
                                          Attn: Bill Martens
                                                Rene Tidwell

                                          Telephone:  (212) 559-3895
                                          Telecopier: (212) 793-0289

                                          With a copy to:

                                          2 Penns Way
                                          New Castle, DE  19720
                                          Attn: Suzanne Scott
                                                Loan Administrator

                                          Telephone:  (302) 894-6060
                                          Telecopier: (302) 894-6120





                                       S-12
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          DEUTSCHE BANK AG, NEW YORK BRANCH
                                          a/o CAYMAN ISLANDS BRANCH


                                          By

                                            Title:


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $15,000,000

                                          Commitment Percentage:  5.556%

                                          Address for Notices:

                                          31 West 52nd Street
                                          New York, NY  10019
                                          Attn: Alexander Karow
                                                Assistant Vice President

                                          Telephone:  (212) 469-8532
                                          Telecopier: (212) 469-8212

                                          With a copy to:

                                          31 West 52nd Street
                                          New York, NY  10019
                                          Attn: Joe Gyurindak
                                                Associate

                                          Telephone:  (212) 469-4107
                                          Telecopier: (212) 469-4138/4139





                                       S-13
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          PARIBAS


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $15,000,000

                                          Commitment Percentage:  5.556%

                                          Address for Notices:

                                          787 7th Avenue
                                          New York, NY  10019
                                          Attn:  Dan Cozine
                                                 Director

                                          Telephone:  (212) 841-2678
                                          Telecopier: (212) 841-2555

                                          With a copy to:

                                          787 7th Avenue
                                          New York, NY  10019
                                          Attn:  Tecla Hurley

                                          Telephone:  (212) 841-2624
                                          Telecopier: (212) 841-2555





                                       S-14
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          PNC BANK, NATIONAL ASSOCIATION


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $15,000,000

                                          Commitment Percentage:  5.556%

                                          Address for Notices:

                                          2 Tower Center Blvd.
                                          Floor 16-2
                                          East Brunswick, NJ  08816
                                          Attn: Michael Nardo
                                                Vice President

                                          Telephone:  (732) 220-3229
                                          Telecopier: (732) 220-3231

                                          With a copy to:

                                          2 Tower Center Blvd.
                                          Floor 16-2
                                          East Brunswick, NJ  08816
                                          Attn: Joan O'Kelly

                                          Telephone:  (732) 220-3223
                                          Telecopier: (732) 220-3231





                                       S-15
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          SOCIETE GENERALE, NEW YORK BRANCH


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $26,250,000

                                          Commitment Percentage:  9.722%

                                          Address for Notices:

                                          1221 Avenue of the Americas
                                          New York, NY  10020
                                          Attn:  Bruce T. Spector
                                                 Vice President

                                          Telephone:  (212) 278-6149
                                          Telecopier: (212) 278-7434

                                          With a copy to:

                                          1221 Avenue of the Americas
                                          New York, NY  10020
                                          Attn:  Debbie Napoli
                                                 Corporate Assistant

                                          Telephone:  (212) 278-7598
                                          Telecopier: (212) 278-7434





                                       S-16
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)

<PAGE>
                                          STANDARD CHARTERED BANK


                                          By

                                            Title:


                                          Initial Revolving Credit
                                          Committed Amount:  $11,250,000

                                          Commitment Percentage:  4.167%

                                          Address for Notices:

                                          1 World Trade Center
                                          New York, NY  10048
                                          Attn: Jacob H. Yahiayan
                                                Vice President

                                          Telephone:  (212) 664-0219
                                          Telecopier: (212) 667-0225

                                          With a copy to:

                                          1 World Trade Center
                                          New York, NY  10048
                                          Attn:  Y. Rodriguez

                                          Telephone:  (212) 667-0435
                                          Telecopier: (212) 667-0568





                                       S-17
                           (Foster Wheeler Corporation
                Amended and Restated Revolving Credit Agreement)
++++++++++++++++++++++++++

                                    EXHIBIT A
                                       TO
                                CREDIT AGREEMENT


                           FOSTER WHEELER CORPORATION


                              REVOLVING CREDIT NOTE

  $                                                           New York, New York
   ---------------------                                  ----------------, ----

         FOR VALUED RECEIVED, the undersigned, FOSTER WHEELER CORPORATION, a New
York  corporation,  (the  "Borrower"),  promises to pay to the order of [NAME OF
LENDER] (the "LENDER") on or before the Revolving  Credit  Maturity Date, and at
such earlier dates as may be required by the Agreement (as defined  below),  the
lesser of (i) the  principal  sum of ________  ($_______)  or (ii) the aggregate
unpaid  principal amount of all Revolving Credit Loans made by the Lender to the
Borrower  from time to time  pursuant to the  Agreement.  The  Borrower  further
promises  to pay to the order of the Lender  interest  on the  unpaid  principal
amount  hereof  from  time to time  outstanding  at the rate or rates  per annum
determined  pursuant  to the  Agreement,  payable  on the dates set forth in the
Agreement.

         This Note is one of the "REVOLVING CREDIT NOTES" as referred to in, and
is  entitled to the  benefits  of, the Amended  and  Restated  Revolving  Credit
Agreement,  dated as of  December  1,  1999,  by and  among  the  Borrower,  the
Guarantors  party thereto from time to time, the Lenders party thereto from time
to time  and  Bank  of  America  National  Trust  and  Savings  Association,  as
Administrative Agent (as the same may be amended,  modified or supplemented from
time to time,  the  "AGREEMENT"),  which among  other  things  provides  for the
acceleration  of the maturity  hereof upon the  occurrence of certain events and
for prepayments in certain  circumstances and upon certain terms and conditions.
Terms defined in the Agreement have the same meanings herein.

         Except as otherwise  set forth in the  Agreement,  the Borrower  hereby
expressly waives presentment,  demand, notice, protest and all other demands and
notices in connection  with the delivery,  acceptance,  performance,  default or
enforcement  of this Note and the  Agreement,  and an  action  for  amounts  due
hereunder or thereunder shall immediately accrue.

         This Note shall be governed by,  construed  and enforced in  accordance
with the laws of the State of New York,  without  regard to principles of choice
of law.

                                          FOSTER WHEELER CORPORATION


                                          By:

                                             Title:
                                                   -----------------------------

<PAGE>
                                    EXHIBIT B
                                       TO
                                CREDIT AGREEMENT


                  [Form of Competitive Bid Loan Quote Request]



                                                          ----------------, ----

        To:   Bank of America National Trust and Savings Association, as
              Administrative Agent

      From:   Foster Wheeler Corporation

        Re:   Competitive Bid Loan Quote Request

              Pursuant  to Section  2.03(b) of the  Revolving  Credit  Agreement
dated as of February 12,  1999,  by and among FOSTER  WHEELER  CORPORATION,  the
guarantors party thereto, the lenders party thereto and Bank of America National
Trust and Savings  Association,  as  Administrative  Agent (as the same may from
time to time be amended or  modified,  the  "AGREEMENT"),  we hereby give notice
that  we  request  Competitive  Bid  Loan  Quotes  for  the  following  proposed
Competitive Bid Borrowing(s):

--------------------------------------------------------------------------------
     Borrowing       Principal
       Date           Amount1        Type2      Interest Period3     Currency
--------------------------------------------------------------------------------


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

         Terms used herein have the meanings assigned to them in the Agreement.

                                          FOSTER WHEELER CORPORATION


                                          By:

                                             Title:
                                                   -----------------------------

--------------------------------
1    Each amount must be a Dollar  Equivalent of $5,000,000 or a higher integral
     multiple of $1,000,000 (to the extent practical in the case of Eurocurrency
     Loans).

2    Insert either "LIBOR-based  Margin" (in the case of LIBOR-based Loans), "CD
     Rate  Margin" (in the case of CD Rate  Loans),  "Base Rate  Margin" (in the
     case of Base Rate Loans) or "Absolute  Rate" (in the case of Absolute  Rate
     Loans).

3    Each  Interest  Period  must be not less than  seven  days or more than 180
     days.

<PAGE>
                                    EXHIBIT C
                                       TO
                                CREDIT AGREEMENT


                      [Form of Competitive Bid Loan Quote]


  Bank of America National Trust and
     Savings Association, as Administrative Agent
  1850 Gateway Boulevard, 5th Floor
  Concord, California  94520


 ATTENTION:
           ---------------------------


         RE:              COMPETITIVE BID LOAN QUOTE TO
                   FOSTER WHEELER CORPORATION (THE "BORROWER")
                   -------------------------------------------


         This  Competitive  Bid Loan Quote is given in  accordance  with Section
2.03(d) of the Revolving  Credit Agreement dated as of February 12, 1999, by and
among Foster Wheeler Corporation,  a New York corporation (the "BORROWER"),  the
guarantors party thereto, the lenders party thereto and Bank of America National
Trust and Savings  Association,  as  Administrative  Agent (as the same may from
time to time be amended or  modified,  the  "AGREEMENT").  Terms  defined in the
Agreement are used herein as defined therein.

         In response to the Borrower's  invitation  dated  ___________,  ___, we
hereby make the following Competitive Bid Loan Quote(s) on the following terms:

         1.  Quoting Bank:

         2.  Person to contact at Quoting Bank:

         3.  We hereby offer to make  Competitive  Bid Loan(s) in the  following
             principal  amounts,  for the following  Interest Periods and at the
             following  rates:

<PAGE>
--------------------------------------------------------------------------------
   Borrowing     Principal
     Date1        Amount2      Type3     Interest Period4     Rate5     Currency
--------------------------------------------------------------------------------


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


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

         We understand  and agree that the offer(s) set forth above,  subject to
the  satisfaction  of the  applicable  conditions  set  forth in the  Agreement,
irrevocably  obligate(s)  us to make the  Competitive  Bid Loan(s) for which any
offer(s) [is] [are] accepted, in whole or in part (subject to Section 2.03(g) of
the Agreement).

                                          Very truly yours,

                                          [LENDER]


                                          By

                                            Authorized Officer

Dated:
      ---------------------


--------------------------------
1    As specified in the related Competitive Bid Loan Quote Request.

2    The  principal  amount  bid for each  Interest  Period  may not  exceed the
     principal amount of Competitive Bid Loans requested.  Bids must be made for
     a Dollar Equivalent of at least $5,000,000 or a higher integral multiple of
     $1,000,000.

3    Indicate  "LIBOR-based Margin" (in the case of LIBOR-based Loans), "CD Rate
     Margin" (in the case of CD Rate Loans),  "Base Rate Margin" (in the case of
     Base Rate Loans) or "Absolute Rate" (in the case of Absolute Rate Loans).

4    Must be not less than seven days or more than 180 days, as specified in the
     related Competitive Bid Loan Quote Request

5    For a  LIBOR-based  Loan,  specify  margin  over or  under  the  LIBOR-Rate
     determined for the applicable  Interest Period. For a CD Rate Loan, specify
     margin over or under the CD Rate  determined  for the  applicable  Interest
     Period.  For a Base Rate Loan,  specify  margin over or under the Base Rate
     determined  for the  applicable  Interest  Period.  In each  case,  specify
     percentage  (rounded  to the nearest  1/10,000  of 1%) and specify  whether
     "PLUS" or "MINUS".  For an Absolute Rate Loan, specify rate of interest per
     annum (rounded to the nearest 1/10,000 of 1%).

                                      -2-
<PAGE>
                                    EXHIBIT D
                                       TO
                                CREDIT AGREEMENT

                         [Form of Competitive Bid Note]

                           FOSTER WHEELER CORPORATION

                                 PROMISSORY NOTE



$
 -------------------                                          ------------, ----

         FOR VALUE RECEIVED, the undersigned,  FOSTER WHEELER CORPORATION, a New
York  corporation  (the  "Borrower"),  hereby  promises  to pay to the  order of
__________________  (the "LENDER") on the  Competitive Bid Loan Maturity Date of
each  Competitive  Bid Loan made by the Lender to the  Borrower  pursuant to the
Agreement   described   below,   the  lesser  of  (i)  the   principal   sum  of
____________________________________________  Dollars ($___________) or (ii) the
unpaid  principal  amount of all such  Competitive  Bid Loans made by the Lender
maturing on such  Competitive  Bid Loan  Maturity  Date.  The  Borrower  further
promises  to pay to the order of the Lender  interest  on the  unpaid  principal
amount of each such  Competitive  Bid Loan from time to time  outstanding at the
rate or rates per annum determined  pursuant to Section 2.03 of, or as otherwise
provided in, the Agreement,  payable on the dates set forth in Sections 2.03 (k)
and 2.15 of, or as otherwise provided in, the Agreement.

         This  Competitive  Bid  Note  is  one of the  "COMPETITIVE  BID  NOTES"
referred to in, and is  entitled  to the  benefits  provided  by, the  Revolving
Credit  Agreement dated as of February 12, 1999, by and among the Borrower,  the
guarantors party thereto, the lenders party thereto and Bank of America National
Trust and Savings  Association,  as Administrative Agent for the lenders (as the
same may from  time to time be  amended  or  modified,  the  "AGREEMENT").  Said
Agreement,  among other things,  contains  provisions  for  acceleration  of the
maturity of Competitive Bid Loans evidenced hereby upon the happening of certain
stated events, upon the terms and conditions therein specified. Terms defined in
the Agreement shall have the same meanings herein.

         Subject to the provisions of the Agreement,  payments of both principal
and interest  shall be made at the office of Bank of America  National Trust and
Savings  Association  located at 1850  Gateway  Boulevard,  5th Floor,  Concord,
California 94520, in lawful money of the United States of America in immediately
available funds.

         Except as otherwise  set forth in the  Agreement,  the Borrower  hereby
expressly waives presentment,  demand, notice, protest and all other demands and
notices in connection  with the delivery,  acceptance,  performance,  default or
enforcement of this  Competitive  Bid Note and the Agreement,  and an action for
amounts due hereunder or thereunder shall immediately accrue.

<PAGE>

         This  Competitive  Bid Note  shall be  governed  by and  construed  and
enforced in accordance with the laws of the State of New York.

                                          FOSTER WHEELER CORPORATION


                                          By

                                            Title:
                                                  ------------------------------


                                      -2-
<PAGE>
                                    EXHIBIT E
                                       TO
                                CREDIT AGREEMENT

                           FOSTER WHEELER CORPORATION

                             SWINGLINE ADVANCE NOTE


$                                                             New York, New York
 ----------------------                                 ------------------, ----

         FOR VALUE RECEIVED, the undersigned,  FOSTER WHEELER CORPORATION, a New
York  corporation  (the  "Borrower"),  promises  to pay to the order of [NAME OF
LENDER] (the "LENDER") on or before the Revolving  Credit  Maturity Date, and at
such earlier dates as may be required by the Agreement (as defined  below),  the
lesser of (i) the principal sum of TEN MILLION DOLLARS ($10,000,000) or (ii) the
aggregate unpaid  principal amount of all Swingline  Advances made by the Lender
to the  Borrower  from time to time  pursuant  to the  Agreement.  The  Borrower
further  promises  to pay to the  order of the  Lender  interest  on the  unpaid
principal  amount hereof from time to time  outstanding at the rate or rates per
annum  determined  pursuant to the Agreement,  payable on the dates set forth in
the Agreement.

         This Note is one of the  "SWINGLINE  ADVANCE  NOTES" as referred to in,
and is entitled to the benefits of, the Revolving Credit Agreement,  dated as of
February 12, 1999, by and among the Borrower,  the Guarantors party thereto from
time to time,  the Lenders  party  thereto from time to time and Bank of America
National Trust and Savings Association, as Administrative Agent (as the same may
be amended, modified or supplemented from time to time, the "AGREEMENT"),  which
among other things provides for the acceleration of the maturity hereof upon the
occurrence of certain events and for  prepayments in certain  circumstances  and
upon certain terms and conditions.  Terms defined in the Agreement have the same
meanings herein.

         Except as otherwise  set forth in the  Agreement,  the Borrower  hereby
expressly waives presentment,  demand, notice, protest and all other demands and
notices in connection  with the delivery,  acceptance,  performance,  default or
enforcement  of this Note and the  Agreement,  and an  action  for  amounts  due
hereunder or thereunder shall immediately accrue.

         This Note shall be governed by,  construed  and enforced in  accordance
with the laws of the State of New York,  without  regard to principles of choice
of law.

                                          FOSTER WHEELER CORPORATION


                                          By

                                            Title;
                                                  ------------------------------

<PAGE>
                                    EXHIBIT F
                                       TO
                                CREDIT AGREEMENT

                        QUARTERLY COMPLIANCE CERTIFICATE

         I have  conducted a review of the terms and conditions of the Revolving
Credit Agreement dated as of February 12, 1999, (the "AGREEMENT"), the Notes and
the other Loan Documents, and the financial statements of the Borrower.  Defined
terms used herein without definition are used as defined in the Agreement.  Such
review has not disclosed nor does the signer have any knowledge of the existence
as of the date of this certificate of any condition or event which constitutes a
Potential Default or Event of Default.

         I further certify that all representations and warranties  contained in
the Agreement are true and correct in all material respects with the same effect
as though  such  representations  and  warranties  were made on the date of this
certificate.

         Attached  are  Schedules  1, 2 and 3 which  are  detailed  calculations
indicating  compliance  with the covenants  contained in Sections 6.01, 6.02 and
6.03 of the Agreement as of the date of this certificate.



Date:                                     By

                                            Title:
                                                  ------------------------------

<PAGE>
                                    EXHIBIT G
                                       TO
                                CREDIT AGREEMENT

                               TRANSFER SUPPLEMENT

         THIS TRANSFER  SUPPLEMENT,  dated as of the date specified in Item 1 of
Schedule I hereto, among the Transferor Lender specified in Item 2 of Schedule I
hereto (the "TRANSFEROR LENDER"),  each Purchasing Lender specified in Item 3 of
Schedule I hereto  (each a  "PURCHASING  LENDER")  and Bank of America  National
Trust and Savings Association, as Administrative Agent for the Lenders under the
Revolving Credit Agreement described below.


                                    RECITALS:

         A.  This  Transfer  Supplement  is  being  executed  and  delivered  in
accordance with Section 10.14(c) of the Revolving Credit Agreement,  dated as of
February  12,  1999,  by  and  among  FOSTER  WHEELER  CORPORATION,  a New  York
corporation  (the  "BORROWER"),  the Guarantors party thereto from time to time,
the Lenders party thereto from time to time and Bank of America  National  Trust
and Savings  Association,  as Administrative  Agent for the Lenders (as the same
may be  amended,  modified  or  supplemented  from  time to  time,  the  "CREDIT
AGREEMENT").  Capitalized terms used herein without  definition have the meaning
specified in the Credit Agreement.

         B.  Each  Purchasing  Lender (if it is not already a Lender)  wishes to
become a Lender party to the Credit Agreement.

         C.  The Transferor  Lender is selling and assigning to each  Purchasing
Lender, and each Purchasing Lender is purchasing and assuming, a certain portion
of the Transferor  Lender's rights and obligations  under the Credit  Agreement,
including, without limitation, the Transferor Lender's Commitments,  Loans owing
to it, Swingline Advance  Participating  Interest,  Letter of Credit Obligations
owing to it and any Notes held by it (the "TRANSFEROR LENDER'S INTERESTS").

         NOW,  THEREFORE,  the parties  hereto,  intending to be legally  bound,
hereby agree as follows:

         1.  TRANSFER EFFECTIVE NOTICE. Upon receipt by the Administrative Agent
of five counterparts of this Transfer Supplement (to each of which is attached a
fully completed Schedule I and Schedule II), and each of which has been executed
by the  Transferor  Lender,  by each  Purchasing  Lender and by any other Person
required by Section  10.14(c) of the Credit  Agreement to execute this  Transfer
Supplement,  the  Administrative  Agent  will  transmit  to  the  Borrower,  the
Transferor  Lender  and each  Purchasing  Lender a  transfer  effective  notice,
substantially  in the  form of  Schedule  III to  this  Transfer  Supplement  (a
"TRANSFER  EFFECTIVE  NOTICE").  The date  specified in such Transfer  Effective
Notice as the date on which the transfer  effected by this  Transfer  Supplement
shall  become  effective  (the  "TRANSFER  EFFECTIVE  DATE")  shall be the fifth
Business Day following the date of such Transfer  Effective Notice or such other

<PAGE>
date as shall be agreed upon among the Transfer Lender,  the Purchasing  Lender,
the Administrative Agent and the Borrower. From and after the Transfer Effective
Date  each  Purchasing  Lender  (if not  already  a Lender  party to the  Credit
Agreement)  shall be a Lender  party to the Credit  Agreement  for all  purposes
thereof having the respective  interests in the  Transferor  Lender's  interests
reflected in this Transfer Supplement.

         2.  PURCHASE  PRICE;  SALE. At or before 12:00 Noon,  local time at the
Transferor  Lender's office specified in Schedule III, on the Transfer Effective
Date, each Purchasing Lender shall pay to the Transferor  Lender, in immediately
available  funds,  an amount equal to the purchase  price, as agreed between the
Transferor  Lender and such  Purchasing  Lender (the "PURCHASE  PRICE"),  of the
portion being  purchased by such  Purchasing  Lender (such  Purchasing  Lender's
"PURCHASED  PERCENTAGE") of the Transferor  Lender's  Interests.  Effective upon
receipt by the Transferor Lender of the Purchase Price from a Purchasing Lender,
the Transferor Lender hereby  irrevocably  sells,  assigns and transfers to such
Purchasing  Lender,  without  recourse,  representation  or warranty (express or
implied)  except as set forth in Section 6 hereof,  and each  Purchasing  Lender
hereby irrevocably purchases,  takes and assumes from the Transferor Lender such
Purchasing  Lender's Purchased  Percentage of the Transferor Lender's Interests.
The Transferor  Lender shall  promptly  notify the  Administrative  Agent of the
receipt of the Purchase Price from a Purchasing  Lender ("PURCHASE PRICE RECEIPT
NOTICE").  Upon  receipt  by the  Administrative  Agent of such  Purchase  Price
Receipt  Notice,  the  Administrative  Agent shall  record in the  Register  the
information  with respect to such sale and purchase as  contemplated  by Section
10.14(d) of the Credit Agreement.

         3.  PRINCIPAL,  INTEREST AND FEES.  All principal  payments,  interest,
fees and other  amounts  that  would  otherwise  be  payable  from and after the
Transfer  Effective  Date to or for the  account  of the  Transferor  Lender  in
respect of the Transferor  Lender's Interests shall,  instead,  be payable to or
for the account of the Transferor Lender and the Purchasing Lenders, as the case
may be, in  accordance  with their  respective  interests  as  reflected in this
Transfer Supplement.

         4.  CLOSING  DOCUMENTS.  Concurrently  with the  execution and delivery
hereof, the Transferor Lender will request that the Administrative Agent provide
to each  Purchasing  Lender (if it is not  already a Lender  party to the Credit
Agreement) conformed copies of all documents delivered to such Transferor Lender
on the Closing Date in  satisfaction  of  conditions  precedent set forth in the
Credit Agreement.

         5.  FURTHER ASSURANCES. Each of the parties to this Transfer Supplement
agrees  that at any time and from time to time upon the  written  request of any
other party,  it will execute and deliver  such  further  documents  and do such
further acts and things as such other party may  reasonably  request in order to
effect the purposes of this Transfer Supplement.

         6.  CERTAIN REPRESENTATIONS AND AGREEMENTS. By executing and delivering
this Transfer  Supplement,  the  Transferor  Lender and each  Purchasing  Lender
confirm  to and agree  with  each  other  and the  Administrative  Agent and the
Lenders as follows:

                   (a)     Other than the representation and warranty that it is
         the legal and beneficial  owner of the interest  being assigned  hereby
         free and clear of any adverse  claim,

                                      -2-
<PAGE>

         the Transferor  Lender makes no  representation or warranty and assumes
         no  responsibility  with  respect  to  (i)  the  execution,   delivery,
         effectiveness, enforceability, genuineness, validity or adequacy of the
         Credit  Agreement  or  any  other  Loan  Document,  (ii)  any  recital,
         representation,  warranty, document,  certificate,  report or statement
         in, provided for in,  received under or in connection  with, the Credit
         Agreement or any other Loan Document, or (iii) the existence, validity,
         enforceability,  perfection,  recordation, priority, adequacy or value,
         now or  hereafter,  of any Lien or other  direct or  indirect  security
         afforded or  purported  to be afforded by any of the Loan  Documents or
         otherwise from time to time.

                   (b)     The  Transferor  Lender  makes no  representation  or
         warranty  and  assumes  no  responsibility  with  respect  to  (i)  the
         performance  or  observance  of any of the terms or  conditions  of the
         Credit Agreement or any other Loan Document on the part of the Borrower
         or  any  other  Person,  (ii)  the  business,   operations,   condition
         (financial  or  otherwise)  or  prospects  of the Borrower or any other
         Person,  or (iii) the  existence  of any Event of Default or  Potential
         Default.

                   (c)     Each Purchasing  Lender confirms that it has received
         a copy of the Credit  Agreement  and each of the other Loan  Documents,
         together with copies of the financial statements referred to in Section
         3.06 thereof,  the most recent financial  statements delivered pursuant
         to  Section  5.01  thereof,  if  any,  and  such  other  documents  and
         information  as it has  deemed  appropriate  to make its own credit and
         legal  analysis  and decision to enter into this  Transfer  Supplement.
         Each  Purchasing  Lender  confirms  that it has made such  analysis and
         decision  independently  and without  reliance upon the  Administrative
         Agent, the other Agents, the Transferor Lender or any other Lender.

                   (d)     Each  Purchasing  Lender,  independently  and without
         reliance  upon  the   Administrative   Agent,  the  other  Agents,  the
         Transferor Lender or any other Lender,  and based on such documents and
         information as it shall deem appropriate at the time, will make its own
         decisions  to take or not take action under or in  connection  with the
         Credit Agreement or any other Loan Document.

                   (e)     Each  Purchasing  Lender  irrevocably   appoints  the
         Administrative Agent to act as Administrative Agent for such Purchasing
         Lender  under  the  Agreement  and the  other  Loan  Documents,  all in
         accordance  with  Article  VIII of the Credit  Agreement  and the other
         provisions of the Credit Agreement and the other Loan Documents.

                   (f)     Each Purchasing Lender agrees that it will perform in
         accordance with their terms all of the  obligations  which by the terms
         of the Credit Agreement and the other Loan Documents are required to be
         performed by it as a Lender.

          7.  SCHEDULE II. Schedule II hereto sets forth the revised Commitments
of the Transferor  Lender and each Purchasing  Lender as well as  administrative
information with respect to each Purchasing Lender.

                                      -3-
<PAGE>

          8.  GOVERNING  LAW.  This  Transfer  Supplement  shall be governed by,
construed  and  enforced in  accordance  with the laws of the State of New York,
without regard to principles of choice of law.

          9.  COUNTERPARTS.  This  Transfer  Supplement  may be  executed on any
number  of  counterparts  and  by  the  different  parties  hereto  on  separate
counterparts each of which, when so executed,  shall be deemed an original,  but
all such counterparts shall constitute but one and the same instrument.

         IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Transfer
Supplement  to be  executed  by their  respective  duly  authorized  officers on
Schedule I hereto as of the date set forth in Item I of Schedule I hereto.


                                      -4-
<PAGE>
                                   SCHEDULE I
                                       TO
                               TRANSFER SUPPLEMENT

                          COMPLETION OF INFORMATION AND
                       SIGNATURES FOR TRANSFER SUPPLEMENT

Re:      Revolving Credit Agreement, dated as of February 12, 1999, by and among
         Foster Wheeler  Corporation,  a New York corporation (the  "BORROWER"),
         the  Guarantors  party  thereto  from time to time,  the Lenders  party
         thereto  from  time to time  and Bank of  America  National  Trust  and
         Savings  Association,  as  Administrative  Agent  for the  Lenders  (as
         amended,  modified  or  supplemented  from  time to time,  the  "CREDIT
         AGREEMENT")

Item I     (Date of                                   [INSERT DATE OF
           Assignment Supplement):                    ASSIGNMENT SUPPLEMENT]

Item 2     (Transferor Lender):                       [INSERT NAME OF TRANSFEROR
                                                      LENDER]

Item 3     (Purchasing Lender[s]):                    [INSERT NAME[S] OF
                                                      PURCHASING LENDER[S]]

Item 4     (Signatures of Parties
           to Transfer Supplement):

                                                 [NAME OF TRANSFEROR LENDER]   ,
                                             ----------------------------------
                                                     as Transferor Lender


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


                                                  [NAME OF PURCHASING LENDER]  ,
                                             ----------------------------------
                                                     as Purchasing Lender


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


                                                  [NAME OF PURCHASING LENDER]  ,
                                             ----------------------------------
                                                     as Purchasing Lender


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


<PAGE>
  [FOLLOWING TWO CONSENTS REQUIRED ONLY WHEN PURCHASING
  LENDER IS NOT ALREADY A LENDER [OR AN AFFILIATE OF A
  LENDER]]

CONSENTED TO AND ACKNOWLEDGED:

FOSTER WHEELER CORPORATION


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


BANK OF AMERICA NATIONAL TRUST AND
  SAVINGS ASSOCIATION,
  as Administrative Agent


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


ACCEPTED FOR RECORDATION IN
  PURCHASING LENDER REGISTER:

BANK OF AMERICA NATIONAL TRUST AND
  SAVINGS ASSOCIATION,
  as Administrative Agent


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


                                      -2-
<PAGE>
                                   SCHEDULE II
                                       TO
                               TRANSFER SUPPLEMENT

                       LIST OF LENDING OFFICES, ADDRESSES
                        FOR NOTICES AND COMMITTED AMOUNTS


[NAME OF TRANSFEROR LENDER]    REVISED COMMITMENT AND LOAN AMOUNTS:

                               Revolving Credit Committed Amount     $__________

                               Additional Committed Amount           $__________

                               Swingline Advance Committed Amount    $__________

                               REVISED COMMITMENT PERCENTAGE:         __________

[NAME OF PURCHASING LENDER]    NEW COMMITMENT AND LOAN AMOUNTS:

                               Revolving Credit Committed Amount     $__________

                               Additional Committed Amount           $__________

                               Swingline Advance Committed Amount    $__________

                               NEW COMMITMENT PERCENTAGE:             __________

Administrative Information
  For Purchasing Lender:

Address:
           -------------------------
           -------------------------
Attention:
           -------------------------

Telephone:
           -------------------------

Telex:
        ----------------------------
  (Answerback:                       )
              ----------------------

Telecopier:
            ------------------------

<PAGE>
                                  SCHEDULE III
                                       TO
                               TRANSFER SUPPLEMENT

                            TRANSFER EFFECTIVE NOTICE

To:      [INSERT NAME OF BORROWER, TRANSFEROR
         LENDER AND EACH PURCHASING LENDER]

         The  undersigned,  as  Administrative  Agent under the Revolving Credit
Agreement,  dated  as  of  February  12,  1999,  by  and  among  Foster  Wheeler
Corporation,  a New York  corporation  (the  "BORROWER"),  the Guarantors  party
thereto from time to time,  the Lenders party thereto from time to time and Bank
of America National Trust and Savings  Association,  as Administrative Agent for
the Lenders (as amended, modified or supplemented from time to time, the "CREDIT
AGREEMENT"),  acknowledges receipt of five executed  counterparts of a completed
Transfer Supplement,  dated _________, ____, from [NAME OF TRANSFEROR LENDER] to
[NAME OF EACH PURCHASING LENDER] (the "TRANSFER  SUPPLEMENT").  Terms defined in
the Transfer Supplement are used herein as therein defined.

          1.  Pursuant to the  Transfer  Supplement,  you are  advised  that the
Transfer  Effective  Date will be _________,  ____.  [INSERT FIFTH  BUSINESS DAY
FOLLOWING  DATE OF TRANSFER  EFFECTIVE  NOTICE OR OTHER DATE AGREED TO AMONG THE
TRANSFEROR  LENDER,  THE PURCHASING  LENDER,  THE  ADMINISTRATIVE  AGENT AND THE
BORROWER.]

          2.  Pursuant  to  Section  10.14(c)  of  the  Credit  Agreement,   the
Transferor  Lender has  delivered  to the  Administrative  Agent the  Transferor
Lender Notes.

          3.  Section  10.14(c) of the Credit  Agreement  provides  that, to the
extent  requested by the  Purchasing  Lender,  the Borrower is to deliver to the
Administrative  Agent on or before the  Assignment  Effective Date the following
Notes, each dated the date of the Note it replaces.

          [DESCRIBE EACH NEW REVOLVING CREDIT NOTE,  SWINGLINE  ADVANCE NOTE AND
COMPETITIVE BID NOTE FOR TRANSFEROR  LENDER AND PURCHASING LENDER AS TO DATE (AS
REQUIRED BY THE CREDIT AGREEMENT), PRINCIPAL AMOUNT AND PAYEE.]

          4.  The Transfer Supplement provides that each Purchasing Lender is to
pay its Purchase Price to the Transferor Lender at or before 12:00 o'clock Noon,
local time at the Transferor Lender's lending office specified in Schedule II to
the Transfer Supplement, on the Transfer Effective Date in immediately available
funds.

                                        Very truly yours,

                                        BANK OF AMERICA NATIONAL TRUST AND
                                          SAVINGS ASSOCIATION, as Administrative
                                          Agent


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

<PAGE>
                                    EXHIBIT H

                          SUBSIDIARY GUARANTY AGREEMENT

                                                           ------------ --, ----

Bank of America National Trust and Savings
  Association, as Administrative Agent for
  the Lenders party to the Revolving Credit
  Agreement dated as of February 12, 1999
  among Foster Wheeler Corporation (the
  "BORROWER"), the Guarantors party thereto
  from time to time, the Lenders party
  thereto from time to time, and Bank of
  America National Trust and Savings
  Association, as Administrative Agent (the
  "CREDIT AGREEMENT")

Ladies and Gentlemen:

         Reference is made to the Credit Agreement  described  above.  Terms not
defined  herein  which are  defined in the Credit  Agreement  shall have for the
purposes hereof the meaning provided therein.

         The  undersigned,  [NAME OF SUBSIDIARY  GUARANTOR],  a [JURISDICTION OF
INCORPORATION] corporation, hereby acknowledges that it is a "GUARANTOR" for all
purposes  of  the  Credit  Agreement,   effective  from  the  date  hereof.  The
undersigned  confirms  that the  representations  and  warranties  set  forth in
Section 3 of the Credit  Agreement are true and correct as to the undersigned as
of the date hereof (it being  understood and agreed that any  representation  or
warranty  which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).

         Without  limiting the  generality  of the  foregoing,  the  undersigned
hereby agrees to perform all the  obligations  of a Guarantor  under,  and to be
bound in all respects by the terms of, the Credit  Agreement,  including without
limitation  Article IX  thereof,  to the same extent and with the same force and
effect as if the undersigned were a direct signatory thereto.

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

                                        Very truly yours,

                                        [NAME OF SUBSIDIARY GUARANTOR]


                                        By:

                                           Title:
                                                 -------------------------------
<PAGE>
                                    EXHIBIT I

                      JOINDER TO REVOLVING CREDIT AGREEMENT



                                                           ------------ --, ----

Bank of America National Trust and Savings
  Association, as Administrative Agent for
  the Lenders party to the Short Term
  Revolving Credit Agreement dated as of
  February 12, 1999 among Foster Wheeler
  Corporation (the "BORROWER"), the
  Guarantors party thereto from time to time,
  the Lenders party thereto from time to
  time, and Bank of America National Trust
  and Savings Association, as Administrative
  Agent (the "CREDIT AGREEMENT")
Ladies and Gentlemen:

         Reference is made to the Credit Agreement  described  above.  Terms not
defined  herein  which are  defined in the Credit  Agreement  shall have for the
purposes hereof the meaning provided therein.

         Pursuant  to Section  1.04 of the  Credit  Agreement,  the  undersigned
hereby  joins in the  Credit  Agreement  for the  purposes  of  becoming a party
thereto as one of the  "Lenders"  and agrees to comply with all of the terms and
conditions of the Credit Agreement.  The undersigned agrees (i) to undertake all
of the  obligations  of a Lender under the Credit  Agreement and (ii) to provide
the  Revolving  Credit  Commitment in the amount set forth below under the terms
and  conditions in the Credit  Agreement.  The  undersigned  hereby  irrevocably
appoints  the  Administrative  Agent  to act as  Administrative  Agent  for  the
undersigned  under the Credit  Agreement  and the other Loan  Documents,  all in
accordance with Article VIII of the Credit Agreement and the other provisions of
the Credit Agreement and the other Loan Documents.


<PAGE>
         IN WITNESS WHEREOF,  the undersigned has executed this Supplement as of
the date first above written.


                                          --------------------------------------
                                           as Lender



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

                                          Revolving Credit
                                          Commitment Amount:  $
                                                               -----------------


                                          Address for Notices:

                                          --------------------------------------
                                          --------------------------------------
                                          --------------------------------------
                                          Attention:
                                                     ---------------------------
                                          Telephone:
                                                     ---------------------------
                                          Telecopier:
                                                     ---------------------------


<PAGE>

                                    EXHIBIT J

                                PLEDGE AGREEMENT

         PLEDGE AGREEMENT,  dated as of February 12, 1999 (as amended,  modified
or  supplemented  from  time to  time,  this  "AGREEMENT"),  made by each of the
undersigned  pledgors  (each a  "PLEDGOR",  and  together  with any entity  that
becomes a party hereto pursuant to Section 19 hereof, the "PLEDGORS"),  in favor
of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,  as collateral agent,
for the benefit of the Secured  Creditors  (as defined  below) (in such capacity
and together with any successor  thereto,  the  "PLEDGEE").  Except as otherwise
defined  herein,  terms used  herein and  defined in the Credit  Agreements  (as
defined below) shall be used herein as therein defined.


                                   WITNESSETH:

         WHEREAS,  Foster Wheeler  Corporation (the "BORROWER"),  the Guarantors
from time to time party thereto, various lenders from time to time party thereto
(the   "BANKS"),   ABN  AMRO  Bank  N.V.  and  First  Union  National  Bank,  as
Documentation Agent and Syndication Agent,  respectively (in such capacity,  the
"DOCUMENTATION  AGENT" and the "SYNDICATION AGENT",  respectively),  and Bank of
America National Trust and Savings Association, as Administrative Agent (in such
capacity and together with any successor  thereto,  the  "ADMINISTRATIVE  AGENT"
and, together with the Pledgee,  the Documentation  Agent, the Syndication Agent
and  the  Banks  and  their  respective   successors  and  assigns,   the  "BANK
CREDITORS"),  have entered into a Revolving  Credit  Agreement  and a Short Term
Revolving Credit  Agreement,  each dated as of February 12, 1999,  providing for
the  extensions  of credit to the  Borrower  as  contemplated  therein  (as used
herein, the term "CREDIT AGREEMENTS" means the Credit Agreements described above
in this  paragraph,  as the same may be amended,  modified,  extended,  renewed,
replaced, restated,  supplemented or refinanced from time to time, and including
any  agreement  extending  the  maturity  of, or  refinancing  or  restructuring
(including,  but not  limited  to, the  inclusion  of  additional  borrowers  or
guarantors thereunder or any increase in the amount borrowed) all or any portion
of, the indebtedness under such agreement or any successor agreement, whether or
not with the same agent, trustee, representative, lenders or holders;

         WHEREAS,  pursuant to the  Guaranty,  the  Guarantors  have jointly and
severally  guaranteed  to  the  Bank  Creditors  the  payment  when  due  of all
obligations  and  liabilities  of the Borrower under or with respect to the Loan
Documents;

         WHEREAS,  the  Borrower on November  15,  1995 issued  $200,000,000  in
aggregate  principal  amount of its  6-3/4%  Notes due  November  15,  2005 (the
"6-3/4%  NOTES")  (with the holders from time to time of such 6-3/4% Notes being
herein called the "NOTEHOLDERS") pursuant to an Indenture,  dated as of November
15, 1995,  by and between the Borrower  and Harris  Trust and Savings  Bank,  as
trustee  (together with any successor  thereto,  the "TRUSTEE") on behalf of the
Noteholders  (as  amended,  modified  or  supplemented  from  time to time,  the
"INDENTURE");

<PAGE>
         WHEREAS, the Pledgors have issued guarantees of the payment when due of
all of the  obligations and liabilities of the Borrower under or with respect to
the 6-3/4% Notes and the Indenture (with any such guarantees,  together with the
6-3/4%  Notes  and  Indenture  being  herein   collectively   called  the  "NOTE
DOCUMENTS");

         WHEREAS,  it is a condition precedent to the extensions of credit under
the  Credit  Agreements,  and the  Indenture  requires,  concurrently  with  the
execution  and delivery of the Credit  Agreements by the  Guarantors,  that each
Pledgor shall have executed and delivered to the Pledgee this Agreement;

         WHEREAS,  it is contemplated  that the Pledged  Instruments (as defined
below) will be pledged to secure the "CREDIT DOCUMENT OBLIGATIONS" and the "NOTE
OBLIGATIONS" and all other amounts  comprising  "Obligations" (as each such term
is hereinafter  defined) on an equal and ratable basis, as contemplated  hereby,
and that in connection  therewith,  the Pledgee,  as collateral agent hereunder,
shall act as the "Collateral  Agent" for the benefit of the Bank Creditors,  the
Noteholders and the other Secured Creditors; and

         WHEREAS,  each Pledgor desires to execute this Agreement to satisfy the
conditions described in the second preceding paragraph;

         NOW,  THEREFORE,  in  consideration  of the  benefits  accruing to each
Pledgor,  the receipt and  sufficiency  of which are hereby  acknowledged,  each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:

SECTION 1.          SECURITY FOR OBLIGATIONS; DEFINITIONS.

         (a) This  Agreement is made by each Pledgor in favor of the Pledgee for
the  benefit  of  the  Bank   Creditors,   the   Noteholders   and  the  Trustee
(collectively, together with the Pledgee, the "SECURED CREDITORS"), to secure on
an equal and ratable basis:

                (i)   the full and  prompt  payment  when  due  (whether  at the
         stated  maturity,  by  acceleration  or otherwise)  of all  obligations
         (including  obligations which, but for the automatic stay under Section
         362(a) of the Bankruptcy Code, would become due (the "BANKRUPTCY  CODE"
         as used herein shall mean Title 11 of the United  States Code  entitled
         "BANKRUPTCY" as now or hereafter in effect,  or any successor  thereto)
         and liabilities (including,  without limitation,  indemnities, fees and
         interest  thereon) of such Pledgor to the Bank  Creditors,  whether now
         existing or hereafter  incurred under,  arising out of or in connection
         with the Credit  Agreements and all other Loan Documents to which it is
         at  any  time  a  party  (including,   without  limitation,   all  such
         obligations and liabilities of such Pledgor under the Credit Agreements
         (if a party  thereto) and under any  guaranty by it of the  obligations
         under the Credit  Agreements) and the due performance and compliance by
         such  Pledgor  with the  terms of each  such  Loan  Document  (all such
         obligations  and  liabilities   under  this  clause  (i)  being  herein
         collectively called the "CREDIT DOCUMENT OBLIGATIONS");

                                      -2-
<PAGE>

                (ii)  the full and  prompt  payment  when  due  (whether  at the
         stated  maturity,  by  acceleration  or otherwise)  of all  obligations
         (including  obligations which, but for the automatic stay under Section
         362(a)  of the  Bankruptcy  Code,  would  become  due) and  liabilities
         (including, without limitation, indemnities, fees and interest thereon)
         of such  Pledgor  to the  Noteholders  and  the  Trustee,  whether  now
         existing or hereafter  incurred under,  arising out of or in connection
         with the Note  Documents  to which such  Pledgor is at any time a party
         (including, without limitation, all such obligations and liabilities of
         such  Pledgor  under  the  Indenture  or  any  guaranty  by it  of  the
         obligations under the Indenture) and the due performance and compliance
         by such Pledgor with all of the terms, conditions and agreements on its
         part  contained in each such Note  Document (all such  obligations  and
         liabilities under this clause (ii) being herein collectively called the
         "NOTE OBLIGATIONS");

                (iii) any and all  sums  advanced  by the  Pledgee  in  order to
         preserve  the  Collateral  (as  hereinafter  defined) or  preserve  its
         security interest in the Collateral;

                (iv)  in the  event  of any  proceeding  for the  collection  or
         enforcement of any indebtedness,  obligations,  or liabilities referred
         to in clauses (i) through (iii) above,  after an Event of Default (such
         term, as used in this Agreement,  shall mean (a) any "Event of Default"
         at any time under, and as defined in, either of the Credit  Agreements,
         and (b) any payment  default  (after the  expiration of any  applicable
         grace period) on any of the Obligations secured hereunder at such time)
         shall have  occurred  and be  continuing,  the  reasonable  expenses of
         retaking,  holding,  preparing  for  sale  or  otherwise  disposing  or
         realizing on the  Collateral,  or of any exercise by the Pledgee of its
         rights  hereunder,  together with reasonable  attorneys' fees and court
         costs; and

                (v)   all amounts paid by any Secured  Creditor as to which such
         Secured Creditor has the right to reimbursement under Section 9 of this
         Agreement;

all such  obligations,  liabilities,  sums and expenses set forth in clauses (i)
through  (v)  of  this   Section  1,  being  herein   collectively   called  the
"Obligations,"  it being  acknowledged and agreed that the  "Obligations"  shall
include extensions of credit of the type described above, whether outstanding on
the date of this  Agreement or extended from time to time after the date of this
Agreement.

         (b) As used herein, the term "Instruments"  shall mean (i) a promissory
note  dated   February   10,   1999  of  Foster   Wheeler   Constructors,   Inc.
("CONSTRUCTORS")  in the  amount of  $10,000,000  payable to the order of Foster
Wheeler USA  Corporation;  (ii) a  promissory  note dated  February  10, 1999 of
Constructors in the amount of $10,000,000 payable to the order of Foster Wheeler
Energy  International,  Inc. and (iii) a promissory note dated February 10, 1999
of  Constructors  in the  amount of  $10,000,000  payable to the order of Foster
Wheeler Energy Corporation.

         (c) All  Instruments  at any time  pledged  or  required  to be pledged
hereunder is hereinafter called the "Pledged  Instruments,"  which together with
(i) all proceeds  thereof,  including  any  instruments,  securities  and moneys
received and at the time held by the Pledgee

                                      -3-
<PAGE>

hereunder, and (ii) all principal, interest, cash, rights, instruments and other
property  or  proceeds  from  time to time  received,  receivable  or  otherwise
distributed  in  respect  of or in  exchange  for  any or  all  of  the  Pledged
Instruments are hereinafter called the "Collateral".

SECTION 2.          PLEDGE OF INSTRUMENTS.

         To secure all  Obligations  of such  Pledgor and for the  purposes  set
forth in Section 1 hereof,  each  Pledgor  hereby:  (i) grants to the  Pledgee a
first priority security interest in all of the Collateral owned by such Pledgor;
(ii) pledges and deposits as security  with the Pledgee the Pledged  Instruments
owned by such  Pledgor on the date  hereof,  and  delivers to the  Pledgee  such
Pledged  Instruments,  duly  endorsed  in blank by such  Pledgor,  or such other
instruments of transfer as are reasonably  acceptable to the Pledgee;  and (iii)
assigns,  transfers,  hypothecates,  mortgages,  charges  and  sets  over to the
Pledgee all of such Pledgor's  right,  title and interest in and to such Pledged
Instrument,  to be held by the Pledgee,  upon the terms and conditions set forth
in this Agreement.

SECTION 3.          RIGHTS, ETC., WHILE NO EVENT OF DEFAULT.

         Unless  and  until an Event  of  Default  shall  have  occurred  and be
continuing,  each  Pledgor  shall be  entitled  to  exercise  any and all rights
pertaining to the Pledged Instruments;  PROVIDED,  that no action shall be taken
which would violate or be  inconsistent  with any of the terms of this Agreement
or any other Secured Debt Agreement (as hereinafter defined). All such rights of
such  Pledgor  shall  cease in case an  Event  of  Default  shall  occur  and be
continuing, and Section 5 hereof shall become applicable.

SECTION 4.          INTEREST AND OTHER DISTRIBUTIONS.

         Except as provided in Section 5 hereof,  all payments in respect of the
Pledged Instruments shall be paid to the respective Pledgor.

SECTION 5.          REMEDIES IN CASE OF EVENT OF DEFAULT.

         In case an Event of Default shall have occurred and be continuing,  the
Pledgee  shall be entitled to exercise  all of its rights,  powers and  remedies
(whether vested in it by this Agreement,  by any other Loan Document,  or by any
Note Document (with all of the Documents listed above being herein  collectively
called  the  "SECURED  DEBT  AGREEMENTS")  or by  law)  for the  protection  and
enforcement of its rights in respect of the Collateral, and the Pledgee shall be
entitled to exercise  all the rights and  remedies of a secured  party under the
Uniform  Commercial  Code and also shall be  entitled,  without  limitation,  to
exercise  the  following  rights,   which  each  Pledgor  hereby  agrees  to  be
commercially reasonable:

                (i)  to  receive  all   amounts   payable  in  respect  of  the
         Collateral otherwise payable to such Pledgor under Section 4 hereof;

                                      -4-
<PAGE>

                (ii)  to instruct makers of the Pledged  Instruments to make any
         and all payments in respect of the Pledged Instruments  directly to the
         Pledgee;

                (iii) to  transfer  all or any part of the  Pledged  Instruments
         into the Pledgee's name or the name of its nominee or nominees;

                (iv)  to take  any  action  in  respect  of the  Collateral  and
         otherwise act with respect thereto as though it were the outright owner
         thereof; and

                (v)   at any  time or from  time to  time to  sell,  assign  and
         deliver,  or  grant  options  to  purchase,  all  or  any  part  of the
         Collateral,  or any interest  therein,  at any public or private  sale,
         without demand of performance,  advertisement or notice of intention to
         sell or of the  time or  place  of sale or  adjournment  thereof  or to
         redeem or otherwise  (all of which are hereby waived by each  Pledgor),
         for cash,  on credit or for other  property,  for  immediate  or future
         delivery  without any  assumption of credit risk, and for such price or
         prices and on such terms as the Pledgee in its absolute  discretion may
         determine; PROVIDED, that at least 10 Business Days' notice of the time
         and place of any such sale shall be given to such Pledgor. Each Pledgor
         hereby waives and releases to the fullest  extent  permitted by law any
         right or equity of redemption with respect to the  Collateral,  whether
         before or after sale hereunder,  and all rights, if any, of marshalling
         the Collateral and any other security for the Obligations or otherwise.
         At any such sale,  unless  prohibited by applicable law, the Pledgee on
         behalf of the Secured  Creditors  may bid for and  purchase  all or any
         part of the  Collateral  so sold free from any such  right or equity of
         redemption.  Each  purchaser  at any such sale shall hold the  property
         sold  absolutely  free  from  any  claim  or  right  on the part of any
         Pledgor,  and each Pledgor  hereby  waives (to the extent  permitted by
         law) all rights of redemption,  stay and/or  appraisal which it now has
         or may at any time in the future  have under any rule of law or statute
         now existing or hereafter  enacted.  The Pledgee may adjourn any public
         or private sale from time to time by announcement at the time and place
         fixed therefor,  and such sale may, without further notice,  be made at
         the time and place to which it was so  adjourned.  Each Pledgor  hereby
         waives any claims  against  the  Pledgee  arising by reason of the fact
         that the  price at which  any  Collateral  may have been sold at such a
         private sale was less than the price which might have been  obtained at
         a public sale, even if the Pledgee accepts the first offer received and
         does  not  offer  such  Collateral  to more  than one  offeree.  If the
         proceeds  of any  sale  or  other  disposition  of the  Collateral  are
         insufficient to pay all the  Obligations,  the Pledgors shall be liable
         for the  deficiency  and  the  fees of any  attorneys  employed  by the
         Pledgee to collect such  deficiency.  Neither the Pledgee nor any other
         Secured Creditor shall be liable for failure to collect or realize upon
         any or all of the Collateral or for any delay in so doing nor shall any
         of them be under any  obligation  to take any  action  whatsoever  with
         regard thereto.

SECTION 6.          REMEDIES, ETC., CUMULATIVE.

         Each  right,  power and  remedy  of the  Pledgee  provided  for in this
Agreement or in any other Secured Debt Agreement or now or hereafter existing at
law or in equity or by statute shall be cumulative  and  concurrent and shall be
in  addition  to every  other such  right,  power or  remedy.

                                      -5-
<PAGE>

The exercise or  beginning  of the exercise by the Pledgee or any other  Secured
Creditor of any one or more of the rights,  powers or remedies  provided  for in
this  Agreement  or in any other  Secured  Debt  Agreement  or now or  hereafter
existing at law or in equity or by statute or  otherwise  shall not preclude the
simultaneous  or later exercise by the Pledgee or any other Secured  Creditor of
all such other rights,  powers or remedies,  and no failure or delay on the part
of the Pledgee or any other Secured  Creditor to exercise any such right,  power
or remedy shall operate as a waiver  thereof.  The Secured  Creditors agree that
this Agreement may be enforced only by the Pledgee acting upon the  instructions
of the  Required  Secured  Creditors  (as defined in Annex A hereto) and that no
other Secured  Creditor shall have any right  individually to seek to enforce or
to enforce this Agreement or to realize upon the security to be granted  hereby,
it being understood and agreed that such rights and remedies may be exercised by
the  Pledgee for the  benefit of the  Secured  Creditors  upon the terms of this
Agreement.

SECTION 7.          APPLICATION OF PROCEEDS.

         (a) All  moneys  collected  by the  Pledgee  upon  any  sale  or  other
disposition  of the  Collateral of each Pledgor,  together with all other moneys
received by the Pledgee hereunder, shall be applied as follows:

                (i)   first,  to the  payment  of all  Obligations  owing to the
         Pledgee  of the type  provided  in clauses  (iii),  (iv) and (v) of the
         definition of Obligations in Section 1 hereof;

                (ii)  second,   to  the  extent   proceeds   remain   after  the
         application  pursuant to the  preceding  clause (i), an amount equal to
         the outstanding  Obligations  shall be paid to the Secured Creditors as
         provided in Section 7(d) hereof,  with each Secured Creditor  receiving
         an amount equal to its  outstanding  Obligations of such Pledgor or, if
         the proceeds are insufficient to pay in full all such Obligations,  its
         Pro Rata Share (as hereinafter  defined) of the amount  remaining to be
         distributed; and

                (iii) third, to the extent proceeds remain after the application
         pursuant  to  the  preceding  clauses  (i)  and  (ii),  inclusive,  and
         following  the  termination  of this  Agreement  pursuant to Section 15
         hereof, to the relevant Pledgor or to whomever may be lawfully entitled
         to receive such surplus.

         (b) For purposes of this  Agreement,  "Pro Rata Share" shall mean, when
calculating a Secured  Creditor's  portion of any  distribution or amount,  that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the  then  unpaid  amount  of  such  Secured  Creditor's   Obligations  and  the
denominator of which is the then outstanding amount of all Obligations.

         (c) If the Bank Creditors are to receive a  distribution  in accordance
with the  procedures  set forth  above in this  Section 7 on  account of undrawn
amounts  with respect to letters of credit  issued under the Credit  Agreements,
such  amounts  shall  be paid  to the  Administrative  Agent  under  the  Credit
Agreements  and  held by it,  for the  equal  and  ratable  benefit  of the Bank
Creditors  as such.  If any  amounts are held as cash  security  pursuant to the
immediately  preceding  sentence,  then upon the  termination of all outstanding
letters of credit,  and after the

                                      -6-
<PAGE>

application of all such cash security to the repayment of all Obligations  owing
to the Bank Creditors after giving effect to the termination of all such letters
of credit,  if there remains any excess cash, such excess cash shall be returned
by the  Administrative  Agent to the Pledgee for distribution in accordance with
Section 7(a) hereof.

         (d) Except as set forth in Section 7(c) hereof,  all payments  required
to be  made  hereunder  shall  be  made  (i) if to the  Bank  Creditors,  to the
Administrative  Agent  under the Credit  Agreements  for the account of the Bank
Creditors,  and (ii) if to any other Secured Creditors (other than the Pledgee),
to the  Trustee  or paying  agent  (each a  "REPRESENTATIVE")  for such  Secured
Creditors  or, in the  absence of such a  Representative,  directly to the other
Secured Creditors.

         (e) For purposes of applying  payments received in accordance with this
Section 7, the Pledgee  shall be  entitled  to rely upon (i) the  Administrative
Agent  under the Credit  Agreements  and (ii) the  Representative  for any other
Secured  Creditors  or,  in the  absence  of  such a  Representative,  upon  the
respective  Secured  Creditors  for a  determination  (which the  Administrative
Agent,  each  Representative  for any other  Secured  Creditors  and the Secured
Creditors  agree (or shall agree) to provide upon request of the Pledgee) of the
outstanding  Primary  Obligations and Secondary  Obligations owed to the Secured
Creditors.

         (f) It is  understood  and agreed that each Pledgor shall remain liable
to the  extent of any  deficiency  between  the  amount of the  proceeds  of the
Collateral  pledged by it hereunder and the aggregate  amount of the Obligations
of such Pledgor.

SECTION 8.          PURCHASERS OF COLLATERAL.

         Upon any sale of the  Collateral by the Pledgee  hereunder  (whether by
virtue of the power of sale herein  granted,  pursuant  to  judicial  process or
otherwise), the receipt of the Pledgee or the officer making the sale shall be a
sufficient  discharge to the purchaser or purchasers of the  Collateral so sold,
and  such  purchaser  or  purchasers  shall  not  be  obligated  to  see  to the
application  of any part of the purchase  money paid over to the Pledgee or such
officer or be answerable  in any way for the  misapplication  or  nonapplication
thereof.

SECTION 9.          INDEMNITY.

         Each Pledgor  jointly and  severally  agrees (i) to indemnify  and hold
harmless  the  Pledgee in such  capacity  and each  Representative  of a Secured
Creditor in its  capacity as such from and against any and all claims,  demands,
losses,  judgments and  liabilities  of whatsoever  kind or nature,  and (ii) to
reimburse  the Pledgee in such  capacity  and each  Representative  of a Secured
Creditor  in its  capacity  as  such  for all  reasonable  costs  and  expenses,
including reasonable  attorneys' fees, in each case to the extent growing out of
or resulting  from the exercise by the Pledgee of any right or remedy granted to
it hereunder  except,  with respect to clauses (i) and (ii) above, to the extent
arising from the Pledgee's or such other Secured  Creditor's gross negligence or
willful  misconduct.  In no event shall the Pledgee be liable, in the absence of
gross  negligence or willful  misconduct on its part, for any matter or thing in
connection  with this  Agreement  other

                                      -7-
<PAGE>

than to account for moneys actually  received by it in accordance with the terms
hereof.  If and to the extent that the  obligations  of the Pledgors  under this
Section 9 are unenforceable  for any reason,  each Pledgor hereby agrees to make
the maximum  contribution to the payment and  satisfaction  of such  obligations
which is permissible under applicable law.

SECTION 10.         FURTHER ASSURANCES; POWER OF ATTORNEY.

         (a) Each Pledgor agrees that it will join with the Pledgee in executing
and, at such Pledgor's own expense, file and refile under the applicable Uniform
Commercial  Code or such  other  law  such  financing  statements,  continuation
statements  and other  documents in such  offices as the Pledgee may  reasonably
deem necessary or appropriate and wherever required or permitted by law in order
to perfect and preserve the Pledgee's  security  interest in the  Collateral and
hereby  authorizes  the  Pledgee to file  financing  statements  and  amendments
thereto  relative to all or any part of the Collateral  without the signature of
such  Pledgor  where  permitted  by law,  and agrees to do such further acts and
things and to execute and deliver to the Pledgee  such  additional  conveyances,
assignments,  agreements  and  instruments  as the Pledgee may  reasonably  deem
necessary or advisable to carry into effect the purposes of this Agreement or to
further  assure and confirm  unto the Pledgee  its rights,  powers and  remedies
hereunder.

         (b) Each  Pledgor   hereby   appoints   the  Pledgee   such   Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor and
in the name of such  Pledgor  or  otherwise,  to act from time to time after the
occurrence  and during the  continuance  of an Event of Default in the Pledgee's
reasonable discretion to take any action and to execute any instrument which the
Pledgee may deem  necessary  or  advisable  to  accomplish  the purposes of this
Section 10.

SECTION 11.         THE PLEDGEE AS AGENT.

         The Pledgee will hold in  accordance  with this  Agreement all items of
the  Collateral  at any time  received  under this  Agreement.  It is  expressly
understood  and  agreed  that the  obligations  of the  Pledgee as holder of the
Collateral and interests  therein and with respect to the  disposition  thereof,
and otherwise under this  Agreement,  are only those expressly set forth in this
Agreement. The Pledgee shall act hereunder on the terms and conditions set forth
herein and in Annex A hereto,  the terms of which  shall be deemed  incorporated
herein by reference as fully as if same were set forth herein in their entirety.

SECTION 12.         TRANSFER BY PLEDGORS.

         No Pledgor  will sell or  otherwise  dispose of,  grant any option with
respect to, or mortgage,  pledge or otherwise  encumber any of the Collateral or
any interest  therein (except in accordance with the terms of this Agreement and
as permitted by the terms of the Secured Debt Agreements).

SECTION 13.         REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS.

         (a) Each Pledgor represents, warrants and covenants that:

                                      -8-
<PAGE>

                (i)   it is the legal,  record and beneficial  owner of, and has
         good title to, all Pledged  Instruments  purported  to be owned by such
         Pledgor,  subject  to  no  Lien,  except  the  Liens  created  by  this
         Agreement;

                (ii)  it has full power, authority and legal right to pledge all
         the Pledged Instruments;

                (iii) this  Agreement  has been duly  authorized,  executed  and
         delivered by such Pledgor and constitutes the legal,  valid and binding
         obligation of such Pledgor  enforceable  in accordance  with its terms,
         except to the extent that the  enforceability  hereof may be limited by
         applicable bankruptcy, insolvency, reorganization,  moratorium or other
         similar laws  affecting  creditors'  rights  generally and by equitable
         principles (regardless of whether enforcement is sought in equity or at
         law);

                (iv)  no  consent  of  any  other  party   (including,   without
         limitation,  any  stockholder or creditor of such Pledgor or any of its
         Subsidiaries)   and  no   consent,   license,   permit,   approval   or
         authorization  of,  exemption by, notice or report to, or registration,
         filing or declaration  with, any governmental  authority is required to
         be obtained by such Pledgor in connection with the execution,  delivery
         or performance of this Agreement, or in connection with the exercise of
         its rights and remedies pursuant to this Agreement, in each case except
         those  which have been  obtained  or made or as may be required by laws
         affecting the offer and sale of securities generally in connection with
         the exercise by the Pledgee of certain of its remedies hereunder;

                (v)   the execution,  delivery and performance of this Agreement
         by such Pledgor does not violate any provision of any applicable law or
         regulation  or of any  order,  judgment,  writ,  award or decree of any
         court, arbitrator or governmental authority, domestic or foreign, or of
         the   certificate   of   incorporation   or   by-laws   (or   analogous
         organizational  documents) of such Pledgor or of any securities  issued
         by  such  Pledgor  or  any  of its  Subsidiaries,  or of any  mortgage,
         indenture, lease, deed of trust, credit agreement or loan agreement, or
         any other  material  agreement,  contract or  instrument  to which such
         Pledgor or any of its  Subsidiaries  is a party or which purports to be
         binding  upon such  Pledgor or any of its  Subsidiaries  or upon any of
         their  respective  assets  and  will  not  result  in the  creation  or
         imposition  (or the  obligation  to  create or  impose)  of any lien or
         encumbrance  on  any  of  the  assets  of  such  Pledgor  or any of its
         Subsidiaries except as contemplated by this Agreement;

                (vi)  all Pledged Instruments have been duly and validly issued;
         and

                (vii) the pledge,  assignment and delivery  (which  delivery has
         been made) to the  Pledgee of the Pledged  Instruments  creates a valid
         and  perfected  first  priority   security  interest  in  such  Pledged
         Instruments,  subject  to no  prior  lien  or  encumbrance  or  to  any
         agreement  purporting  to grant to any third party  (except the Secured
         Creditors)  a lien or  encumbrance  on the  property  or assets of such
         Pledgor which would include the Instruments.

                                      -9-
<PAGE>

         Each  Pledgor  covenants  and agrees that it will defend the  Pledgee's
right,  title and security  interest in and to the  Collateral  and the proceeds
thereof  against  the claims and  demands of all  persons  whomsoever;  and such
Pledgor covenants and agrees that it will have like title to and right to pledge
any other  property at any time  hereafter  pledged to the Pledgee as Collateral
hereunder  and will  likewise  defend the right  thereto and  security  interest
therein of the Pledgee and the other Secured Creditors.

         (b) The  Pledgors   hereby  agree  that  the  rights   created  by  the
subordinated  provisions of the guarantees  executed by the Pledgors  related to
the Note Documents and the  subordination  provisions of the Guaranty which each
provide for the  subordination  of the indebtedness of the Borrower owing to any
Pledgor to the Obligations of the Borrower owing to the Secured  Creditors shall
be on a parity basis for the equal and ratable benefit of the Secured Creditors.

SECTION 14.         PLEDGORS' OBLIGATIONS ABSOLUTE, ETC.

         The  obligations of each Pledgor under this Agreement shall be absolute
and  unconditional  and shall remain in full force and effect without regard to,
and  shall not be  released,  suspended,  discharged,  terminated  or  otherwise
affected by, any  circumstance  or  occurrence  whatsoever,  including,  without
limitation: (i) any renewal, extension, amendment or modification of or addition
or  supplement  to or deletion  from any  Secured  Debt  Agreement  or any other
instrument or agreement  referred to therein,  or any  assignment or transfer of
any thereof; (ii) any waiver, consent, extension,  indulgence or other action or
inaction  under  or in  respect  of any such  agreement  or  instrument  or this
Agreement; (iii) any furnishing of any additional security to the Pledgee or its
assignee or any acceptance thereof or any release of any security by the Pledgee
or its assignee;  (iv) any  limitation on any party's  liability or  obligations
under any such instrument or agreement or any invalidity or unenforceability, in
whole or in part, of any such  instrument or agreement or any term thereof;  (v)
any  limitation  on any other  Pledgor's  liability  or  obligations  under this
Agreement  or under  any other  Secured  Debt  Agreement  or any  invalidity  or
unenforceability,  in whole or in part,  of this  Agreement or any other Secured
Debt  Agreement  or any  term  thereof;  or  (vi)  any  bankruptcy,  insolvency,
reorganization,  composition, adjustment, dissolution, liquidation or other like
proceeding  relating to such Pledgor or any  Subsidiary of such Pledgor,  or any
action  taken with respect to this  Agreement by any trustee or receiver,  or by
any court, in any such proceeding, whether or not such Pledgor shall have notice
or knowledge of any of the foregoing.

SECTION 15.         TERMINATION, RELEASE.

         (a) After the Termination Date (as defined below), this Agreement shall
terminate  (provided that all  indemnities set forth herein  including,  without
limitation,  in Section 9 hereof  shall  survive any such  termination)  and the
Pledgee,  at the request and expense of the  respective  Pledgor,  will promptly
execute  and  deliver  to  such  Pledgor  a  proper  instrument  or  instruments
acknowledging the satisfaction and termination of this Agreement,  and will duly
assign,  transfer and deliver to such Pledgor (without  recourse and without any
representation  or warranty)  such of the Collateral as may be in the possession
of the  Pledgee and as has not  theretofore  been sold or  otherwise  applied or
released  pursuant to this Agreement.  As used in this  Agreement,

                                      -10-
<PAGE>

"Termination  Date" shall mean the earliest of (i) the date upon which the Total
Revolving  Credit  Commitment  has been  terminated,  no Note  under the  Credit
Agreements is outstanding and all other Credit Document  Obligations  (excluding
normal continuing  indemnity  obligations which survive in accordance with their
terms,  so long as no amounts are then due and payable in respect  thereof) have
been  indefeasibly  paid in full, (ii) the date upon which the Credit  Documents
are amended to release all  Collateral  subject to this  Agreement and (iii) the
date on which the Indenture no longer requires equal and ratable security or the
6-3/4% Notes have been paid in full.

         (b) In the event that any part of the Collateral is sold (other than to
any Credit  Party) in  connection  with a sale  permitted  by the  Secured  Debt
Agreements  or is otherwise  released at the  direction of the Required  Secured
Creditors, the Pledgee, at the request and expense of such Pledgor will promptly
execute  and  deliver  to  such  Pledgor  a  proper  instrument  or  instruments
acknowledging such release,  and will duly assign,  transfer and deliver to such
Pledgor (without  recourse and without any  representation  or warranty) such of
the  Collateral as is then being (or has been) so sold,  distributed or released
and as may be in possession of the Pledgee and has not theretofore been released
pursuant to this Agreement.

         (c) At any time that a Pledgor  desires that  Collateral be released as
provided in the foregoing  Section 15(a) or (b), it shall deliver to the Pledgee
a certificate  signed by an authorized  officer of such Pledgor stating that the
release of the respective  Collateral is permitted  pursuant to Section 15(a) or
(b), and the Pledgee shall be entitled (but not required) to  conclusively  rely
thereon.

SECTION 16.         NOTICES, ETC.

         Except as otherwise specified herein, all notices, requests, demands or
other communications to or upon the respective parties hereto shall be deemed to
have  been  given or made when  delivered  to the  party to which  such  notice,
request,  demand or other  communication is required or permitted to be given or
made under this Agreement, addressed as follows:

         (a) if to any Pledgor, at:

                    Perryville Corporate Park
                    Clinton, New Jersey  08809-4000
                    Attention:  Vice President and Treasurer
                    Telephone No.:  (908) 713-2945
                    Telecopier No.:  (908) 713-2953


         (b) if to the Pledgee, at:

                    Bank of America National Trust and Savings Association
                    1850 Gateway Boulevard, 5th Floor
                    Concord, California  94520
                    Attention:  Glenis Croucher

                                      -11-
<PAGE>


                    Telephone No.:  (925) 675-8447
                    Telecopier No.:  (925) 675-8500

         (c) if to any  Bank  Creditor  (other  than  the  Pledgee),  (x) to the
Administrative  Agent, at the address of the  Administrative  Agent specified in
the Credit  Agreements or (y) at such address as such Bank  Creditor  shall have
specified in the Credit Agreements;

         (d) if to any other Secured  Creditor,  (x) to the  Representative  for
such Secured Creditor or (y) if there is no such Representative, at such address
as such Secured Creditor shall have specified in writing to each Pledgor and the
Pledgee;

or at such other  address as shall have been  furnished in writing by any Person
described above to the party required to give notice hereunder.

SECTION 17.         WAIVER; AMENDMENT.

         None of the terms and  conditions  of this  Agreement  may be  changed,
waived,  modified  or varied in any manner  whatsoever  unless in  writing  duly
signed by each  Pledgor  directly  affected  thereby (it being  understood  that
additional  Pledgors  may be  added  as  parties  hereto  from  time  to time in
accordance with Section 19 hereof and Pledgors may be released as parties hereto
in  accordance  with  Sections 15 and 18 hereof and that no consent of any other
Pledgor or of the Secured  Creditors shall be required in connection  therewith)
and the Pledgee  (with the written  consent of the Required  Lenders (or all the
Lenders if required by Section 10.03 of the Credit Agreements);  PROVIDED,  that
the Borrower certifies that any such change, waiver, modification or variance is
otherwise  permitted by the terms of the respective  Secured Debt Agreements or,
if not so permitted,  that the requisite  consents  therefor have been obtained.
Notwithstanding  anything to the contrary  contained above, it is understood and
agreed that the Required  Lenders may agree to  modifications  to this Agreement
for the purpose, among other things, of securing additional extensions of credit
(including,  without  limitation,  pursuant  to  the  Credit  Agreements  or any
refinancing  or extension  thereof),  with such changes not being subject to the
proviso to the immediately preceding sentence.  Furthermore,  the proviso to the
second preceding sentence shall not apply to any release of Collateral  effected
in accordance  with the  requirements  of Section 18 of this  Agreement,  or any
other  release of  Collateral or  termination  of this  Agreement so long as the
Borrower  certifies  that such actions will not violate the terms of any Secured
Debt Agreement then in effect.

SECTION 18.         RELEASE OF GUARANTORS.

         In the event any Pledgor  party to the  Guaranty  is released  from the
Guaranty,  such Pledgor shall be released from this Agreement and this Agreement
shall, as to such Pledgor only, have no further force or effect.

                                      -12-
<PAGE>

SECTION 19.         ADDITIONAL PLEDGORS.

         Pursuant to Section 5.15 of the Credit Agreements, certain Subsidiaries
of the  Borrower  may  after  the date  hereof be  required  to enter  into this
Agreement as a Pledgor.  Upon execution and delivery,  after the date hereof, by
the Pledgee and such  Subsidiary  of an  instrument  in the form of Exhibit A-2,
such Subsidiary shall become a Pledgor  hereunder with the same force and effect
as if originally named as a Pledgor hereunder. Each Subsidiary which is required
to  become a party to this  Agreement  shall so  execute  and  deliver a copy of
Exhibit  A-2 to the  Pledgee  and,  at such  time,  shall  execute a Pledge  and
Security Agreement  Supplement in the form of Exhibit A-1 to this Agreement with
respect to all  Collateral  of such  Pledgor  required to be pledged  hereunder,
which  Supplement  shall be  completed  in  accordance  with  Exhibit  A-1.  The
execution and delivery of any such  instrument  shall not require the consent of
any other Pledgor hereunder.  Upon the execution and delivery by the Pledgee and
such  Subsidiary of an instrument in the form of Exhibit A-2 as provided  above,
it is  understood  and agreed that the pledge and security  interests  hereunder
shall apply to all Collateral of such additional  Pledgor as provided in Section
2 hereof regardless of any failure of any additional Pledgor to deliver,  or any
inaccurate information stated in, the Pledge and Security Agreement Supplement.

SECTION 20.         RECOURSE.

         This  Agreement is made with full recourse to the Pledgors and pursuant
to and upon all  representations,  warranties,  covenants and  agreements on the
part of the Pledgors  contained  herein and  otherwise in writing in  connection
herewith.

SECTION 21.         PLEDGEE NOT BOUND.

         (a) The Pledgee  shall not be  obligated  to perform or  discharge  any
obligation  of any  Pledgor  as a result  of the  collateral  assignment  hereby
effected.

         (b) The  acceptance  by the  Pledgee  of this  Agreement,  with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event  obligate the Pledgee to appear in or defend any action or  proceeding
relating  to the  Collateral  to which it is not a party,  or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation, duty or liability under the Collateral.

SECTION 22.         CONTINUING PLEDGORS.

         The rights and  obligations  of each Pledgor (other than the respective
released  Pledgor in the case of following clause (y)) hereunder shall remain in
full force and effect  notwithstanding  (x) the addition of any new Pledgor as a
party to this Agreement as contemplated by Section 19 hereof or otherwise and/or
(y) the release of any Pledgor under this Agreement as  contemplated  by Section
18 hereof or otherwise.

                                      -13-
<PAGE>

SECTION 23.         NO FRAUDULENT CONVEYANCE.

         Each  Pledgor  hereby  confirms  that  it is its  intention  that  this
Agreement not constitute a fraudulent transfer or conveyance for purposes of any
bankruptcy,  insolvency or similar law, the Uniform Fraudulent Conveyance Act or
any  similar  Federal,  state  or  foreign  law.  To  effectuate  the  foregoing
intention,  each Pledgor  hereby  irrevocably  agrees that its  obligations  and
liabilities  hereunder  shall be limited to the  maximum  amount as will,  after
giving  effect to such maximum  amount and all other  (contingent  or otherwise)
liabilities  of such Pledgor that are  relevant  under such laws,  result in the
obligations and liabilities of such Pledgor hereunder in respect of such maximum
amount not constituting a fraudulent transfer or conveyance.

SECTION 24.         MISCELLANEOUS.

         This Agreement shall be binding upon the successors and assigns of each
Pledgor and shall inure to the benefit of and be  enforceable by the Pledgee and
its  successors  and  assigns;  provided  that no Pledgor  may assign any of its
rights or obligations hereunder without the prior written consent of the Pledgee
(with the consent of the Required  Lenders and, if required by Section  10.03 of
the Credit  Agreement,  all  Lenders).  THIS  AGREEMENT  SHALL BE CONSTRUED  AND
ENFORCED  IN  ACCORDANCE  WITH AND  GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(WITHOUT  REGARD TO  PRINCIPLES  OF  CONFLICT  OF LAWS).  The  headings  in this
Agreement  are for purposes of reference  only and shall not limit or define the
meaning  hereof.  This Agreement may be executed in any number of  counterparts,
each of  which  shall be an  original,  but all of which  shall  constitute  one
instrument.

                                      -14-
<PAGE>

         IN WITNESS  WHEREOF,  each Pledgor has caused this Agreement to be duly
executed and  delivered by its duly  authorized  officer on the date first above
written.

                                          FOSTER WHEELER USA CORPORATION


                                          BY:
                                             -----------------------------------
                                             TITLE:

                                          FOSTER WHEELER ENERGY INTERNATIONAL,
                                             INC.


                                          BY:
                                             -----------------------------------
                                             TITLE:

                                          FOSTER WHEELER ENERGY CORPORATION


                                          BY:
                                             -----------------------------------
                                             TITLE:

                                          ACCEPTED AND AGREED TO:

                                          BANK OF AMERICA NATIONAL TRUST AND
                                             SAVINGS ASSOCIATION, as Collateral
                                             Agent and Pledgee


                                          BY:
                                             -----------------------------------
                                             TITLE:

                                      -15-
<PAGE>
                                     ANNEX A
                                       TO
                          PLEDGE AND SECURITY AGREEMENT

                                   THE PLEDGEE

          1.  APPOINTMENT.  The Secured  Creditors,  by their  acceptance of the
benefits of the Pledge  Agreement to which this Annex A is attached (the "Pledge
Agreement")  hereby  irrevocably  designate  Bank of America  National Trust and
Savings  Association (and any successor  Pledgee) to act as specified herein and
therein.  Unless otherwise defined herein, all capitalized terms used herein (x)
and defined in the Pledge Agreement,  are used herein as therein defined and (y)
not  defined in the Pledge  Agreement,  are used herein as defined in the Credit
Agreements  referenced in the Pledge  Agreement.  Each Secured  Creditor  hereby
irrevocably  authorizes,  and each holder of any Obligation by the acceptance of
such  Obligation and by the  acceptance of the benefits of the Pledge  Agreement
shall be deemed irrevocably to authorize, the Pledgee to take such action on its
behalf under the  provisions  of the Pledge  Agreement and any  instruments  and
agreements  referred to therein and to exercise  such powers and to perform such
duties  thereunder  as are  specifically  delegated to or required of the Pledge
Agreement  by the  terms  thereof  and  such  other  powers  as  are  reasonably
incidental  thereto.  The Pledgee may  perform  any of its duties  hereunder  or
thereunder by or through its authorized agents, sub-agents or employees.

          2.  NATURE  OF  DUTIES.  (a)  The  Pledgee  shall  have no  duties  or
responsibilities  except  those  expressly  set forth  herein  or in the  Pledge
Agreement.  The duties of the Pledgee shall be mechanical and  administrative in
nature;  the  Pledgee  shall not have by reason of the Pledge  Agreement  or any
other Secured Debt Agreement a fiduciary  relationship in respect of any Secured
Creditor;  and  nothing  in the  Pledge  Agreement  or any  other  Secured  Debt
Agreement,  expressed or implied,  is intended to or shall be so construed as to
impose  upon the  Pledgee  any  obligations  in respect of the Pledge  Agreement
except as expressly set forth herein and therein.

         (b) The Pledgee shall not be responsible for insuring the Collateral or
for the payment of taxes,  charges or  assessments  or discharging of Liens upon
the Collateral or otherwise as to the maintenance of the Collateral.

         (c) The Pledgee shall not be required to ascertain or inquire as to the
performance  by any Pledgor of any of the covenants or  agreements  contained in
the Pledge Agreement or any other Secured Debt Agreement.

         (d) The Pledgee shall be under no obligation or duty to take any action
under, or with respect to, the Pledge  Agreement if taking such action (i) would
subject the Pledgee to a tax in any jurisdiction where it is not then subject to
a tax or (ii) would require the Pledgee to qualify to do business, or obtain any
license,  in any  jurisdiction  where it is not then so qualified or licensed or
(iii) would  subject the Pledgee to in personam  jurisdiction  in any  locations
where it is not then so subject.

<PAGE>

                                                                         ANNEX A
                                                                          Page 2

         (e)  Notwithstanding  any other  provision of this Annex A, neither the
Pledgee nor any of its  officers,  directors,  employees,  affiliates  or agents
shall, in its individual capacity,  be personally liable for any action taken or
omitted to be taken by it in accordance with, or pursuant to this Annex A or the
Pledge Agreement except for its own gross negligence or willful misconduct.

          3.  LACK  OF  RELIANCE  ON  THE  PLEDGEE.  Independently  and  without
reliance  upon the  Pledgee,  each  Secured  Creditor,  to the  extent  it deems
appropriate,  has  made  and  shall  continue  to make  (i) its own  independent
investigation  of the  financial  condition  and affairs of each Pledgor and its
Subsidiaries   in  connection  with  the  making  and  the  continuance  of  the
Obligations and the taking or not taking of any action in connection  therewith,
and (ii) its own  appraisal  of the  creditworthiness  of each  Pledgor  and its
Subsidiaries,  and the  Pledgee  shall  have no duty or  responsibility,  either
initially or on a continuing  basis,  to provide any Secured  Creditor  with any
credit or other  information  with  respect  thereto,  whether  coming  into its
possession  before the extension of any Obligations or the purchase of any notes
or at any time or times thereafter.  The Pledgee shall not be responsible in any
manner  whatsoever to any Secured  Creditor for the correctness of any recitals,
statements,  information,   representations  or  warranties  herein  or  in  any
document,  certificate or other writing delivered in connection  herewith or for
the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility,  priority or sufficiency of the Pledge Agreement or the security
interests  granted  hereunder or the  financial  condition of any Pledgor or any
Subsidiary of any Pledgor or be required to make any inquiry  concerning  either
the  performance or observance of any of the terms,  provisions or conditions of
the  Pledge  Agreement,  or  the  financial  condition  of  any  Pledgor  or any
Subsidiary of any Pledgor, or the existence or possible existence of any default
or Event of Default.  The Pledgee  makes no  representations  as to the value or
condition  of the  Collateral  or any part  thereof,  or as to the  title of any
Pledgor thereto or as to the security afforded by the Pledge Agreement.

          4.  CERTAIN RIGHTS OF THE PLEDGEE.  (a) No Secured Creditor shall have
the  right  to  cause  the  Pledgee  to take  any  action  with  respect  to the
Collateral,  with only the Required Secured Creditors having the right to direct
the Pledgee to take any such action.  If the Pledgee shall request  instructions
from  the  Required  Secured  Creditors,  with  respect  to any  act  or  action
(including failure to act) in connection with the Pledge Agreement,  the Pledgee
shall be  entitled to refrain  from such act or taking  such  action  unless and
until it shall have received  instructions  from the Required Secured  Creditors
and to the extent requested,  appropriate  indemnification in respect of actions
to be taken,  and the Pledgee shall not incur  liability to any Person by reason
of so refraining. Without limiting the foregoing, no Secured Creditor shall have
any right of action  whatsoever  against  the Pledgee as a result of the Pledgee
acting or refraining from acting  hereunder in accordance with the  instructions
of the Required Secured  Creditors.  As used herein,  the term "Required Secured
Creditors" shall mean the holders of at least a majority of the then outstanding
Credit Document Obligations.

         (b) Notwithstanding  anything to the  contrary  contained  herein,  the
Pledgee is  authorized,  but not  obligated,  (i) to take any action  reasonably
required to perfect or continue the

                                      -2-
<PAGE>

                                                                         ANNEX A
                                                                          Page 3

perfection  of the  liens  on the  Collateral  for the  benefit  of the  Secured
Creditors and (ii) when  instructions  from the Required Secured  Creditors have
been requested by the Pledgee but have not yet been received, to take any action
which the Pledgee, in good faith,  believes to be reasonably required to promote
and protect the interests of the Secured  Creditors in the Collateral;  PROVIDED
that once instructions  have been received,  the actions of the Pledgee shall be
governed  thereby and the Pledgee shall not take any further  action which would
be contrary thereto.

         (c) Notwithstanding anything to the contrary contained herein or in the
Pledge  Agreement,  the  Pledgee  shall not be  required to take any action that
exposes or, in the good faith judgment of the Pledgee may expose, the Pledgee or
its officers,  directors,  agents or employees to personal liability, unless the
Pledgee shall be adequately  indemnified as provided  herein,  or that is, or in
the good faith judgment of the Pledgee may be, contrary to the Pledge Agreement,
any Secured Debt Agreement or applicable law.

          5.  RELIANCE.  The Pledgee  shall be  entitled  to rely,  and shall be
fully  protected  in  relying,  upon,  any note,  writing,  resolution,  notice,
statement,  certificate,  telex,  teletype  or  telescopes  message,  cablegram,
radiogram,  order or other document or telephone message signed, sent or made by
the proper Person or entity,  and, with respect to all legal matters  pertaining
hereto or to the Pledge Agreement and its duties thereunder and hereunder,  upon
advice of counsel selected by it.

          6.  INDEMNIFICATION.  To the extent the Pledgee is not  reimbursed and
indemnified by the Pledgors under the Pledge Agreement,  the Bank Creditors will
reimburse  and  indemnify  the  Pledgee,   in  proportion  to  their  respective
outstanding  principal  amounts  of  Obligations,  for and  against  any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses or disbursements of any kind or nature  whatsoever which may be
imposed on, incurred by or asserted against the Pledgee in performing its duties
hereunder, or in any way relating to or arising out of its actions as Pledgee in
respect  of the Pledge  Agreement  except for those  resulting  solely  from the
Pledgee's own gross negligence or willful misconduct.  The indemnities set forth
in this  Section 6 shall  survive the  repayment  of all  Obligations,  with the
respective  indemnification  at  such  time to be  based  upon  the  outstanding
principal amounts  (determined as described above) of Obligations at the time of
the respective  occurrence upon which the claim against the Pledgee is based or,
if same is not reasonably  determinable,  based upon the  outstanding  principal
amounts  (determined as described above) of Obligations as in effect immediately
prior to the termination of the Pledge  Agreement.  The indemnities set forth in
this Section 6 are in addition to any  indemnities  provided by the Banks to the
Pledgee pursuant to the Credit Agreements.

          7.  THE  PLEDGEE  IN ITS  INDIVIDUAL  CAPACITY.  With  respect  to its
obligations as a lender under the Credit Agreements and any other Loan Documents
to which the  Pledgee is a party,  and to act as agent under one or more of such
Loan Documents,  the Pledgee shall have the rights and powers specified  therein
and herein for a "Lender",  or the  "Administrative  Agent", as the case may be,
and may exercise the same rights and powers as though it were not performing the
duties

                                      -3-
<PAGE>

                                                                         ANNEX A
                                                                          Page 4

specified herein; and the terms "Banks," "Required Lenders," "holders of Notes,"
or any similar  terms shall,  unless the context  clearly  otherwise  indicates,
include the Pledgee in its individual  capacity.  The Pledgee and its affiliates
may accept  deposits  from,  lend money to, and generally  engage in any kind of
banking,  investment  banking,  trust or other  business with any Pledgor or any
Affiliate or Subsidiary of any Pledgor as if it were not  performing  the duties
specified  herein or in the other Loan Documents,  and may accept fees and other
consideration  from the  Pledgors  for  services in  connection  with the Credit
Agreements, the other Loan Documents and otherwise without having to account for
the same to the Secured Creditors.

          8.  HOLDERS.  The  Pledgee may deem and treat the payee of any note as
the owner thereof for all purposes hereof unless and until written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed  with the  Pledgee.  Any  request,  authority  or consent of any person or
entity  who,  at the time of making such  request or giving  such  authority  or
consent, is the holder of any note, shall be final and conclusive and binding on
any subsequent holder, transferee,  assignee or endorsee, as the case may be, of
such note or of any note or notes issued in exchange therefor.

          9.  RESIGNATION  BY THE  PLEDGEE.  (a) The Pledgee may resign from the
performance  of all of its functions  and duties  hereunder and under the Pledge
Agreement at any time by giving 15 Business Days' prior or written notice to the
Borrower,  the Banks and  Representatives for the other Secured Creditors or, if
there  is no such  Representative,  directly  to such  Secured  Creditors.  Such
resignation  shall take  effect  upon the  appointment  of a  successor  Pledgee
pursuant to clause (b) or (c) below.

         (b) If a successor Pledgee shall not have been appointed within said 15
Business Day period by the Required  Secured  Creditors,  the Pledgee,  with the
consent of the Borrower,  which consent  shall not be  unreasonably  withheld or
delayed,  shall then  appoint a  successor  Pledgee  who shall  serve as Pledgee
hereunder  or  thereunder  until  such time,  if any,  as the  Required  Secured
Creditors appoint a successor Pledgee as provided above.

         (c) If no successor  Pledgee has been appointed  pursuant to clause (b)
above by the 20th Business Day after the date of such notice of resignation  was
given by the Pledgee, as a result of a failure by the Borrower to consent to the
appointment of such a successor  Pledgee,  the Required Secured  Creditors shall
then  appoint a  successor  Pledgee  who shall  serve as  Pledgee  hereunder  or
thereunder until such time, if any, as the Required Secured  Creditors appoint a
successor Pledgee as provided above.

                                      -4-

<PAGE>
                                EXHIBIT A-1
                                       TO
                          PLEDGE AND SECURITY AGREEMENT

                                     FORM OF
                    PLEDGE AND SECURITY AGREEMENT SUPPLEMENT

         PLEDGE  AND  SECURITY   SUPPLEMENT,   dated  as  of  __________   (this
"SUPPLEMENT"),  made by _________,  a ___________ (the  "PLEDGOR"),  in favor of
BANK OF AMERICA  NATIONAL  TRUST AND  SAVINGS  ASSOCIATION,  as  Pledgee  and as
collateral agent (in such capacities,  the "PLEDGEE") for the Secured  Creditors
(such  term and each  other  capitalized  term used but not  defined  having the
meaning given in the Pledge Agreement referred to below).

          1.  Reference is hereby made to that certain Pledge  Agreement,  dated
as of February 12, 1999 (as amended,  supplemented  or otherwise  modified as of
the date hereof, the "PLEDGE AGREEMENT"),  made by the Pledgors party thereto in
favor of the Pledgee for the benefit of the Secured Creditors described therein.

          2.  The Pledgor hereby confirms and reaffirms the security interest in
the Collateral  granted to the Pledgee for the benefit of the Secured  Creditors
under the Pledge  Agreement,  and, as  additional  collateral  security  for the
prompt  and  complete  payment  when  due  (whether  at  stated   maturity,   by
acceleration or otherwise) of the Obligations and in order to induce the Secured
Creditors to make loans and other extensions of credit constituting Obligations,
the  Pledgor  hereby  delivers  to the  Pledgee,  for the benefit of the Secured
Creditors,  all of the  property  listed in Schedule I hereto  (the  "ADDITIONAL
COLLATERAL"; as used in the Pledge Agreement as supplemented by this Supplement,
"COLLATERAL" shall be deemed to include the Additional  Collateral),  and hereby
grants  to the  Pledgee,  for the  benefit  of the  Secured  Creditors,  a first
priority  security  interest  in the  Additional  Collateral  and  all  proceeds
thereof.

          3.  The   Pledgor   hereby    represents   and   warrants   that   the
representations  and warranties  contained in Section 13 of the Pledge Agreement
are true and correct on the date of this Supplement  with references  therein to
the  "Collateral"  to include  the  Additional  Collateral  and with  references
therein to the "Pledge  Agreement" to mean the Pledge  Agreement as supplemented
by this Supplement.

          4.  This Supplement is supplemental to the Pledge  Agreement,  forms a
part  thereof and is subject to the terms  thereof and the Pledge  Agreement  is
hereby  supplemented  as  provided  herein.   Without  limiting  the  foregoing,
"Collateral"  subject to the Pledge  Agreement shall hereby be deemed to include
each item listed on Schedule I to this Supplement.

         IN WITNESS  WHEREOF,  the  Pledgor  and the  Pledgee  have  caused this
Supplement to be duly executed and delivered on the date first set forth above.

<PAGE>
                                          [PLEDGOR]


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

                                          BANK OF AMERICA NATIONAL TRUST AND
                                             SAVINGS ASSOCIATION, as Pledgee


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

                                      -2-

<PAGE>
                                   SCHEDULE I
                                       TO
                    PLEDGE AND SECURITY AGREEMENT SUPPLEMENT

                              ADDITIONAL COLLATERAL

<PAGE>
                                   EXHIBIT A-2
                                       TO
                                PLEDGE AGREEMENT

                           SUPPLEMENT   NO.   _______   dated   as  of
                  __________,  to the  Pledge  Agreement  dated  as of
                  February  12, 1999 (the "PLEDGE  AGREEMENT"),  among
                  the  Pledgors  party  thereto   (immediately  before
                  giving  effect  to  this  Supplement)  and  BANK  OF
                  AMERICA  NATIONAL  TRUST AND SAVINGS  ASSOCIATION as
                  collateral agent and as pledgee (in such capacities,
                  the "Pledgee") for the Secured  Creditors (such term
                  and each other capitalized term used but not defined
                  having the meaning given it in the Pledge  Agreement
                  referred to below).

          A.  The Pledgors  have  entered into the Pledge  Agreement in order to
induce  the  Secured  Creditors  to make  loans and other  extensions  of credit
constituting Obligations as defined in the Pledge Agreement. Pursuant to Section
5.15 of the Credit Agreements,  certain  Subsidiaries of the Borrower are, after
the date of the Pledge Agreement, required to enter into the Pledge Agreement as
a  Pledgor.  Section  19  of  the  Pledge  Agreement  provides  that  additional
Subsidiaries  may become  Pledgors  under the Pledge  Agreement by execution and
delivery of an instrument in the form of this  Supplement.  The undersigned (the
"NEW PLEDGOR") is a Subsidiary of the Borrower and is executing this  Supplement
in accordance with the requirements of the Credit  Agreements  and/or the Pledge
Agreement to become a Pledgor under the Pledge  Agreement in order to induce the
Secured Creditors to extend, or maintain, Obligations.

         Accordingly, the Pledgee and the New Pledgor agree as follows:

         SECTION 1. The New  Pledgor by its  signature  below  becomes a Pledgor
under the Pledge Agreement with the same force and effect as if originally named
therein  as a Pledgor  and the New  Pledgor  hereby  agrees to all the terms and
provisions of the Pledge  Agreement  applicable  to it as a Pledgor  thereunder.
Each reference to a "Pledgor" in the Pledge Agreement shall be deemed to include
the  New  Pledgor.  The  Pledge  Agreement  is  hereby  incorporated  herein  by
reference.

         SECTION 2. The New  Pledgor  represents  and  warrants  to the  Secured
Creditors that this Supplement has been duly authorized,  executed and delivered
by it and  constitutes  its legal,  valid and  binding  obligation,  enforceable
against it in  accordance  with its terms,  subject to the effects of applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
equitable principles of general applicability.

         SECTION 3. This Supplement may be executed in two or more counterparts,
each of which  shall  constitute  an  original,  but all of  which,  when  taken
together,  shall  constitute but one instrument.  This  Supplement  shall become
effective when the Pledgee shall have received  counterparts  of this Supplement
that,  when taken  together,  bear the  signatures  of the New  Pledgor  and the
Pledgee.

<PAGE>
         SECTION 4. Except  as  expressly   supplemented   hereby,   the  Pledge
Agreement shall remain in full force and effect.

         SECTION 5. THIS  SUPPLEMENT  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

         SECTION 6. In case any one or more of the provisions  contained in this
Supplement  should be held  invalid,  illegal or  unenforceable  in any respect,
neither party hereto shall be required to comply with such provision for so long
as such  provision  is held to be  invalid,  illegal or  unenforceable,  but the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein and in the Pledge Agreement shall not in any way be affected or impaired.
The parties  hereto shall  endeavor in  good-faith  negotiations  to replace the
invalid,  illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible  to that of the  invalid,  illegal or
unenforceable provisions.

         SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in the Pledge Agreement.  All  communications  and notices
hereunder to the New Pledgor shall be given to it at the address set forth under
its signature, with a copy to the Borrower.

         IN WITNESS WHEREOF,  the New Pledgor and the Pledgee have duly executed
this  Supplement  to the Pledge  Agreement  as of the day and year  first  above
written.

                                          [NAME OF NEW PLEDGOR]


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

                                             Address:


                                          BANK OF AMERICA NATIONAL TRUST AND
                                             SAVINGS ASSOCIATION, as Pledgee


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

                                      -2-
<PAGE>
                                    EXHIBIT K

                         COMMITMENT INCREASE SUPPLEMENT



                                                           ------------ --, ----

Bank of America National Trust and Savings
  Association, as Administrative Agent for
  the Lenders party to the Short Term
  Revolving Credit Agreement dated as of
  February 12, 1999 among Foster Wheeler
  Corporation (the "BORROWER"), the
  Guarantors party thereto from time to time,
  the Lenders party thereto from time to
  time, and Bank of America National Trust
  and Savings Association, as Administrative
  Agent (the "CREDIT AGREEMENT")

Ladies and Gentlemen:

         Reference is made to the Credit Agreement  described  above.  Terms not
defined  herein  which are  defined in the Credit  Agreement  shall have for the
purposes hereof the meaning provided therein.

         Pursuant  to Section  1.04 of the  Credit  Agreement,  the  undersigned
hereby agrees to increase,  as of  ______________,  ______, its Revolving Credit
Commitment  to the amount set forth  below and agrees  that all of the terms and
conditions  of the Credit  Agreement  are equally  applicable  to its  Revolving
Credit Commitment as so increased.

<PAGE>
         IN WITNESS WHEREOF,  the undersigned has executed this Supplement as of
the date first above written.


                                          --------------------------------------
                                           as Lender



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

                                          Revolving Credit
                                          Commitment Amount:  $
                                                               -----------------


                                          Address for Notices:

                                          --------------------------------------
                                          --------------------------------------
                                          --------------------------------------
                                          Attention:
                                                     ---------------------------
                                          Telephone:
                                                     ---------------------------
                                          Telecopier:
                                                     ---------------------------

<PAGE>
                                    EXHIBIT L

                         REQUEST FOR EXTENSION OF CREDIT



Date:
     --------------, -----


To:      Bank of America National Trust and
         Savings Association, as Administrative Agent

Ladies and Gentlemen:

         Reference is made to that certain Short Term Revolving Credit Agreement
dated as of February 12, 1999 among Foster Wheeler Corporation (the "BORROWER"),
the Guarantors  from time to time party  thereto,  the Lenders from time to time
party thereto and Bank of America  National  Trust and Savings  Association,  as
Administrative  Agent (as  extended,  renewed,  amended or restated from time to
time, the  "AGREEMENT;"  the terms defined  therein being used herein as therein
defined).

         The undersigned hereby request (select one):

         [  ] a borrowing of Revolving Credit Loans

         [  ] a conversion or renewal of Loans

         1.   On
                 ---------------, ------.

         2.   In the amount of $
                                ---------------.

         3.       Borrowing of Loans comprised of
              ---                                 ---------------------------.
                                        [type of interest rate Option requested]
                  Conversion of Loans comprised of              to
              ---                                  ------------    ------------.
                  Renewal of Loans comprised of
              ---                               --------------.

         4.   If applicable:  with Funding Period of            months/days.
                                                     ----------

         The foregoing request complies with the requirements of Section 2.07 or
2.09, as applicable, of the Agreement. The undersigned hereby certifies that the
following  statements are true on the date hereof,  and will be rue on the above
date,  before and after  giving  effect and to the  application  of the proceeds
therefrom:

                   (a)     the  representations  and  warranties of the Borrower
         contained  in the  Agreement  are  true  and  correct  in all  material
         respects as though made on and as of the above date  (except (i) to the
         extent that such representations and warranties expressly relate solely
         to an  earlier  date and then shall be correct as of such date and (ii)
         that the

<PAGE>
         representation  and warranty set forth in Section 3.08 of the Agreement
         in the case of any Loans the proceeds of which are used solely to repay
         Loans  maturing on such date)  before and after  giving  effect to this
         extension of credit and to the  application of the proceeds  therefrom,
         as though made on and as of this date; and

                   (b)     no Potential Default or Event of Default has occurred
         and is  continuing,  or would  result form such  proposed  extension of
         credit.


                                          FOSTER WHEELER CORPORATION



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

                                      -2-