EXHIBIT 10 (ee)


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                                CREDIT AGREEMENT



                                  by and among



                            DATA GENERAL CORPORATION
                                  as Borrower,


                   NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
                             as Agent and as Lender,


                              THE BANK OF NEW YORK

                                       and

                               FLEET NATIONAL BANK
                           as Co-Agents and as Lenders

                                       and

                   THE LENDERS PARTY HERETO FROM TIME TO TIME


                               September 30, 1997



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                                TABLE OF CONTENTS


                                    ARTICLE I

                              Definitions and Terms

     1.1. Definitions.....................................................1
     1.2. Rules of Interpretation........................................24

                                   ARTICLE II

                          The Revolving Credit Facility

     2.1. Revolving Loans................................................26
     2.2. Payment of Interest............................................28
     2.3. Payment of Principal...........................................28
     2.4. Manner of Payments.............................................29
     2.5. Notes..........................................................29
     2.6. Pro Rata Payments..............................................30
     2.7. Reductions.....................................................30
     2.8. Conversions and Elections of Subsequent Interest Periods.......30
     2.9. Increase and Decrease in Amounts...............................31
     2.10. Commitment Fee................................................31
     2.11. Deficiency Advances...........................................31
     2.12. Use of Proceeds...............................................32
     2.13. Swing Line....................................................32

                                   ARTICLE III

                                Letters of Credit

     3.1. Letters of Credit..............................................33
     3.2. Reimbursement..................................................34
     3.3. Letter of Credit Facility Fees.................................37
     3.4. Administrative Fees............................................37


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                                   ARTICLE IV

                             Change in Circumstances

     4.1. Increased Cost and Reduced Return..............................38
     4.2. Limitation on Types of Loans...................................39
     4.3. Illegality.....................................................39
     4.4. Treatment of Affected Loans....................................40
     4.5. Compensation...................................................40
     4.6. Taxes..........................................................41

                                    ARTICLE V

            Conditions to Making Loans and Issuing Letters of Credit

     5.1. Conditions of Initial Advance of Revolving Loans and Initial Issuance
          of Letters of Credit...........................................44
     5.2. Conditions of Revolving Loans and Letter of Credit.............46


                                   ARTICLE VI

                         Representations and Warranties

     6.1. Organization and Authority.....................................48
     6.2. Loan Documents.................................................48
     6.3. Solvency.......................................................49
     6.4. Ownership of the Borrower and its Subsidiaries.................49
     6.5. Borrower Ownership Interests...................................49
     6.6. Financial Condition............................................49
     6.7. Title to Properties............................................50
     6.8. Taxes..........................................................50
     6.9. Other Agreements...............................................50
     6.10. Litigation....................................................51
     6.11. Margin Stock..................................................51
     6.12. Investment Company; Public Utility Holding Company............51
     6.13. Intellectual Property.........................................51
     6.14. No Untrue Statement...........................................52
     6.15. No Consents, Etc..............................................52
     6.16. Employee Benefit Plans........................................52
     6.17. No Default....................................................53
     6.18. Hazardous Materials...........................................53
     6.19. Employment Matters............................................54


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                                   ARTICLE VII

                              Affirmative Covenants

     7.1.  Financial Reports, Etc........................................55
     7.2.  Maintain Properties...........................................56
     7.3.  Existence, Qualification, Etc.................................56
     7.4.  Regulations and Taxes.........................................56
     7.5.  Insurance.....................................................56
     7.6.  True Books....................................................57
     7.7.  Right of Inspection...........................................57
     7.8.  Observe all Laws..............................................57
     7.9.  Governmental Licenses.........................................57
     7.10. Covenants Extending to Subsidiaries...........................57
     7.11. Officer's Knowledge of Default................................57
     7.12. Suits or Other Proceedings....................................58
     7.13. Notice of Discharge of Hazardous Material or Environmental
           Complaint.....................................................58
     7.14. Environmental Compliance......................................58
     7.15. Indemnification...............................................58
     7.16. Further Assurances............................................59
     7.17. Employee Benefit Plans........................................59
     7.18. Continued Operations..........................................60
     7.19. New Material Subsidiaries.....................................60

                                  ARTICLE VIII

                               Negative Covenants

     8.1.  Financial Covenants...........................................61
     8.2.  Acquisitions..................................................61
     8.3.  Liens.........................................................62
     8.4.  Indebtedness..................................................63
     8.5.  Transfer of Assets; Issuance of Capital Stock.................65
     8.6.  Investments...................................................65
     8.7.  Merger or Consolidation.......................................66
     8.8.  Restricted Payments...........................................67
     8.9.  Transactions with Affiliates..................................67
     8.10. Compliance with ERISA.........................................67
     8.11. Fiscal Year...................................................68
     8.12. Dissolution, etc..............................................68
     8.13. Limitations on Sales and Leasebacks...........................68
     8.14. Hedging Obligations...........................................68
     8.15. Negative Pledge Clauses.......................................68
     8.16. Change in Accountants.........................................69


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     8.17.  Limitations on Certain Restrictive Covenants..................69
     8.18.  Payment of Indebtedness.......................................69

                                   ARTICLE IX

                       Events of Default and Acceleration

      9.1.  Events of Default.............................................70
      9.2.  Agent to Act..................................................73
      9.3.  Cumulative Rights.............................................73
      9.4.  No Waiver.....................................................73
      9.5.  Allocation of Proceeds........................................73

                                    ARTICLE X

                                    The Agent

     10.1.  Appointment, Powers, and Immunities...........................75
     10.2.  Reliance by Agent.............................................75
     10.3.  Defaults......................................................76
     10.4.  Rights as Lender..............................................76
     10.5.  Indemnification...............................................76
     10.6.  Non-Reliance on Agent and Other Lenders.......................77
     10.7.  Resignation of Agent..........................................77
     10.8.  Sharing of Payments, etc......................................77
     10.9.  Fees..........................................................78

                                   ARTICLE XI

                                  Miscellaneous

     11.1.  Assignments and Participations...............................79
     11.2.  Notices......................................................80
     11.3.  Right of Set-off; Adjustments................................82
     11.4.  Survival.....................................................82
     11.5.  Expenses.....................................................82
     11.6.  Amendments and Waivers.......................................83
     11.7.  Counterparts.................................................83
     11.8.  Termination..................................................83
     11.9.  Indemnification; Limitation of Liability.....................84
     11.10. Severability.................................................85
     11.11. Entire Agreement.............................................85
     11.12. Agreement Controls...........................................86
     11.13. Usury Savings Clause.........................................86

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     11.14. Governing Law; Waiver of Jury Trial..........................86
     11.15. Status of Debt...............................................87
     11.16. Existing Letters of Credit...................................87



     EXHIBIT A     Applicable Commitment Percentages.....................A-1
     EXHIBIT B     Form of Assignment and Acceptance.....................B-1
     EXHIBIT C     Notice of Appointment (or Revocation) of Authorized
                   Representative........................................C-1
     EXHIBIT D-1   Form of Borrowing Notice--Revolving Credit Loans......D-1-1
     EXHIBIT D-2   Form of Borrowing Notice--Swing Line Loans............D-2-1
     EXHIBIT E     Form of Interest Rate Selection Notice................E-1
     EXHIBIT F-1   Form of Revolving Note................................F-1-1
     EXHIBIT F-2   Form of Swing Line Note...............................F-2-1
     EXHIBIT G     Form of Opinion of Borrower's Counsel.................G-1
     EXHIBIT H     Compliance Certificate................................H-1
     EXHIBIT I     Form of Subsidiary Guaranty...........................I-1
     EXHIBIT J     Terms of Subordination................................J-1
     EXHIBIT K     Form of Cash Collateral Account Agreement.............K-1
     EXHIBIT L     Confidentiality Agreement.............................L-1

     Schedule 6.4  Subsidiaries and Investments in Other Persons.........S-1
     Schedule 6.6  Indebtedness..........................................S-2
     Schedule 8    Investment Guidelines.................................S-4


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                                CREDIT AGREEMENT


         THIS  CREDIT   AGREEMENT,   dated  as  of   September   30,  1997  (the
"Agreement"),  is  made  by and  among  DATA  GENERAL  CORPORATION,  a  Delaware
corporation (the  "Borrower"),  NATIONSBANK OF TEXAS,  NATIONAL  ASSOCIATION,  a
national banking association organized and existing under the laws of the United
States,  in its capacity as a Lender  ("NationsBank"),  and each other financial
institution  executing  and  delivering  a signature  page hereto and each other
financial  institution  which may hereafter execute and deliver an instrument of
assignment with respect to this Agreement  pursuant to Section 11.1 (hereinafter
such financial  institutions  may be referred to  individually  as a "Lender" or
collectively as the "Lenders"), the BANK OF NEW YORK, a New York chartered bank,
and FLEET NATIONAL BANK, a national banking  association  organized and existing
under the laws of the United States, each in their capacity as Co-agents for the
Lenders,  and NATIONSBANK OF TEXAS,  NATIONAL  ASSOCIATION,  a national  banking
association  organized and existing under the laws of the United States,  in its
capacity as agent for the  Lenders  (in such  capacity,  and  together  with any
successor  agent  appointed in accordance with the terms of Section 10.7 hereof,
the "Agent");

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

         WHEREAS,  the Borrower has requested that the Lenders make available to
the  Borrower a  Revolving  Credit  Facility  (as  hereafter  defined)  of up to
$110,000,000,  the proceeds of which are to be used to redeem  certain  existing
indebtedness  and  for  working   capital,   capital   expenditures,   permitted
acquisitions and general corporate  purposes and which shall include a letter of
credit  subfacility  of up to  $15,000,000  for  the  issuance  of  standby  and
commercial  letters of credit and a swing line  subfacility of up to $5,000,000;
and

         WHEREAS,  the  Lenders are  willing to make such  revolving  credit and
letter of credit facilities available to the Borrower and NationsBank is willing
to make the swing line facility  available to the  Borrower,  all upon the terms
and conditions set forth herein;

         NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:

                                    ARTICLE I

                              Definitions and Terms
                              ---------------------

1.1. Definitions.
     ------------

For the purposes of this Agreement, in additionto the
definitions  set forth  above,  the  following  terms shall have the  respective
meanings set forth below:

                  "Acquisition"  means  the  acquisition  of  (i) a  controlling
         equity  interest in another  Person  (including  an option,  warrant or
         convertible  or similar  type  security to acquire  such a  controlling
         interest  at the time it becomes  exercisable  by the holder  thereof),
         whether  by  purchase  of  such  controlling  equity  interest  or upon
         exercise of an option or warrant for,


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         or conversion of securities into, such equity interest,  or (ii) all or
         substantially all the assets of another Person or a line of business or
         business segment of another Person.

                  "Advance" means any of a borrowing under the Revolving  Credit
         Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.

                  "Affiliate"  means any Person (i) which directly or indirectly
         through one or more intermediaries controls, or is controlled by, or is
         under common control with the Borrower; or (ii) which beneficially owns
         or holds 10% or more of any class of the  outstanding  voting stock (or
         in the case of a Person which is not a corporation,  10% or more of the
         equity  interest) of the  Borrower;  or 10% or more of any class of the
         outstanding  voting  stock  (or in the case of a Person  which is not a
         corporation,   10%  or  more  of  the  equity  interest)  of  which  is
         beneficially  owned or held by the Borrower.  The term "control"  means
         the possession, directly or indirectly, of the power to direct or cause
         the  direction  of the  management  and  policies of a Person,  whether
         through ownership of voting stock, by contract or otherwise.

                  "Applicable Commitment Percentage" means, with respect to each
         Lender at any time,  a fraction,  the  numerator of which shall be such
         Lender's Revolving Credit Commitment and the denominator of which shall
         be the Total Revolving Credit Commitment,  which Applicable  Commitment
         Percentage  for each Lender as of the  Closing  Date is as set forth in
         Exhibit A; provided that the Applicable  Commitment  Percentage of each
         Lender shall be increased or decreased to reflect any assignments to or
         by such Lender effected in accordance with Section 11.1 hereof.

                  "Applicable  Lending  Office"  means,  for each Lender and for
         each  Type of Loan,  the  "Lending  Office"  of such  Lender  (or of an
         affiliate  of such  Lender)  designated  for  such  Type of Loan on the
         signature  pages  hereof or such  other  office of such  Lender  (or an
         affiliate  of such Lender) as such Lender may from time to time specify
         to the Agent and the Borrower by written notice in accordance  with the
         terms  hereof  as the  office by which its Loans of such Type are to be
         made and maintained.

                  "Applicable  Margin"  means that  percent  per annum set forth
         below,  which shall be based upon the  Consolidated  Leverage Ratio for
         the Four-Quarter Period most recently ended as specified below:


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                                Applicable Margin
                                -----------------

     Consolidated          Eurodollar Rate and
     Leverage Ratio        Letter of Credit Fee     Base Rate   Commitment Fee
--------------------------------------------------------------------------------
 (a) Less than .75 to 1.00         .875%                0%            .250%

 (b) Less than 1.50 to 1.00
     but greater than or equal
     to .75 to 1.00               1.1250%               0%            .350%

 (c) Less than 2.25 to 1.00
     but greater than or equal
     to 1.50 to 1.00              1.250%                0%            .375%

 (d) Greater than or equal
      to 2.25 to 1.00             1.375%             .250%            .500%


         The  Applicable  Margin shall be  established at the end of each fiscal
         quarter of the Borrower (each, a "Determination  Date").  Any change in
         the  Applicable  Margin  following  each  Determination  Date  shall be
         determined  based upon the  computations  set forth in the  certificate
         furnished  to the Agent  pursuant  to Section  7.1(a)(ii)  and  Section
         7.1(b)(ii) hereof,  subject to review and approval of such computations
         by the  Agent,  and  shall be  effective  commencing  on the date  such
         certificate  is received  until the date on which a new  certificate is
         delivered;  provided however, if the Borrower shall fail to deliver any
         such certificate within the time period required by Section 7.1 hereof,
         then the Applicable  Margin shall be 1.375% for  Eurodollar  Rate Loans
         and the fee for Letters of Credit under  Section 4.3 hereof,  .250% for
         Base Rate Loans and .500% for the  Commitment  Fee, in each case,  from
         the date such  certificate  was  required  to be  delivered,  until the
         appropriate  certificate  is so delivered.  From the Closing Date until
         the date on which the  certificate  for the period ending  December 31,
         1997 is delivered, the Applicable Margin shall be 1.250% for Eurodollar
         Rate Loans and the fee for  Letters  of Credit,  0% for Base Rate Loans
         and .375% for the Commitment Fee.

                  "Applications  and  Agreements  for Letters of Credit"  means,
         collectively, the Applications and Agreements for Letters of Credit, or
         similar  documentation,  executed by the Borrower from time to time and
         delivered  to the Issuing  Bank to support  the  issuance of Letters of
         Credit.

                  "Assignment  and  Acceptance"  shall  mean an  Assignment  and
         Acceptance in the form of Exhibit B (with blanks  appropriately  filled
         in) delivered to the Agent in connection

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<PAGE>
         with an assignment of a Lender's interest under this Agreement pursuant
         to Section 11.1 hereof.

                  "Authorized  Representative"  means any of the President,  the
         Chief  Executive  Officer,  any Vice  President,  the  Chief  Financial
         Officer,  Treasurer and  Controller of the Borrower or any other Person
         expressly  designated by the Board of Directors of the Borrower (or the
         appropriate  committee thereof) as an Authorized  Representative of the
         Borrower,  as set forth from time to time in a certificate  in the form
         of Exhibit C.

                  "Available  Revolving Credit Commitment" means an amount equal
         to the excess,  if any, of (a) the Total  Revolving  Credit  Commitment
         over (b) the aggregate Revolving Credit Outstandings.

                  "Base Rate"  means,  for any day,  the rate per annum equal to
         the sum of (a) the  higher of (i) the  Federal  Funds Rate for such day
         plus  one-half of one  percent  (0.5%) and (ii) the Prime Rate for such
         day plus (b) the Applicable  Margin. Any change in the Base Rate due to
         a change in the Prime Rate or the Federal Funds Rate shall be effective
         on the effective date of such change in the Prime Rate or Federal Funds
         Rate.

                  "Base Rate Loan" means a Revolving  Loan for which the rate of
         interest is determined by reference to the Base Rate.

                  "Base Rate  Refunding  Loan" means either (i) a Base Rate Loan
         made to satisfy Reimbursement  Obligations arising from a drawing under
         a Letter of  Credit  or (ii) a Base  Rate Loan made to pay  NationsBank
         with respect to Swing Line Outstandings;

                  "Board" means the Board of Governors of the Federal Reserve
         System (or any successor body).

                  "Borrowing Notice" means the notice delivered by an Authorized
         Representative in connection with an Advance under the Revolving Credit
         Facility or a Swing Line Loan, in the forms attached hereto as Exhibits
         D-1 and D-2, respectively;

                  "Business Day" means,  (i) with respect to any Base Rate Loan,
         any day which is not a Saturday,  Sunday or a day on which banks in the
         States  of New York and  Texas  are  authorized  or  obligated  by law,
         executive  order or  governmental  decree to be closed  and,  (ii) with
         respect to any  Eurodollar  Rate Loan, any day which is a Business Day,
         as described above, and on which the relevant  international  financial
         markets are open for the  transaction of business  contemplated by this
         Agreement in London, England, New York, New York and Dallas, Texas.

                  "Capital Expenditures" means, with respect to the Borrower and
         its Subsidiaries,  for any period the sum of (without  duplication) (i)
         all  expenditures  (whether paid in cash or accrued as  liabilities) by
         the Borrower or any Subsidiary during such period for items


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<PAGE>

         that  would  be  classified  as  "property,   plant  or  equipment"  or
         comparable items on the consolidated  balance sheet of the Borrower and
         its Subsidiaries,  including without limitation all transactional costs
         incurred in connection  with such  expenditures  provided the same have
         been  capitalized,  excluding,  however,  the  amount  of  any  Capital
         Expenditures paid for with proceeds of casualty  insurance as evidenced
         in writing and  submitted  to the Agent  together  with any  compliance
         certificate  delivered  pursuant to Section  7.1(a) or (b) hereof,  and
         (ii) with respect to any Capital  Lease entered into by the Borrower or
         its  Subsidiaries  during such period,  the present  value of the lease
         payments  due under such  Capital  Lease over the term of such  Capital
         Lease  applying a discount  rate equal to the interest rate provided in
         such lease (or in the absence of a stated interest rate, that rate used
         in the  preparation  of the financial  statements  described in Section
         7.1(a)),  all the  foregoing  in  accordance  with  GAAP  applied  on a
         Consistent Basis.

                  "Capital Leases" means all leases which have been or should be
         capitalized  in  accordance  with GAAP as in  effect  from time to time
         including Statement No. 13 of the Financial  Accounting Standards Board
         and any successor thereof.

                  "Cash  Collateral  Account  Agreement" means a Cash Collateral
         Account  Agreement  between the  Borrower  and the Agent in the form of
         Exhibit K hereto,  as amended,  modified or  supplemented  from time to
         time.

                  "Change of Control" means, at any time:

                           (i) any "person" or "group" (each as used in Sections
                  13(d)(3) and 14(d)(2) of the Exchange  Act) either (A) becomes
                  the  "beneficial  owner"  (as  defined  in Rule  13d-3  of the
                  Exchange Act), directly or indirectly,  of Voting Stock of the
                  Borrower (or securities  convertible  into or exchangeable for
                  such Voting  Stock)  representing  20% or more of the combined
                  voting  power of all Voting  Stock of the Borrower (on a fully
                  diluted  basis) or (B) otherwise has the ability,  directly or
                  indirectly,  to elect a majority of the board of  directors of
                  the Borrower; or

                           (ii)  during  any  period  of up  to  24  consecutive
                  months, commencing on the Closing Date, individuals who at the
                  beginning  of  such  24-month  period  were  directors  of the
                  Borrower shall cease for any reason (other than (A) the death,
                  disability  or  retirement  of a  director  or (B) the  death,
                  disability or retirement of an officer of the Borrower that is
                  serving as a director at such time so long as another  officer
                  of  the  Borrower  replaces  such  Person  as a  director)  to
                  constitute  a  majority  of  the  board  of  directors  of the
                  Borrower; or

                           (iii)  any  Person or two or more  Persons  acting in
                  concert shall have acquired by contract or otherwise, or shall
                  have  entered  into  a  contract  or  arrangement  that,  upon
                  consummation  thereof, will result in its or their acquisition
                  of  the  power  to  exercise,   directly  or   indirectly,   a
                  controlling  influence  on the  management  or policies of the
                  Borrower.


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<PAGE>

                  "Closing  Date" means the date as of which this  Agreement  is
         executed  by the  Borrower,  the Lenders and the Agent and on which the
         conditions set forth in Section 4.1 have been satisfied.

                  "Code"  means the Internal  Revenue Code of 1986,  as amended,
         and any regulations promulgated thereunder.

                  "Confidentiality Agreement" means a Confidentiality Agreement
         in the form of Exhibit L hereto;

                  "Consistent  Basis" in  reference to the  application  of GAAP
         means the accounting  principles observed in the period referred to are
         comparable in all material respects to those applied in the preparation
         of the audited  financial  statements  of the  Borrower  referred to in
         Section 6.6(a);

                  "Consolidated  Accounts  Receivable"  means the  amount of all
         accounts  receivable  of the  Borrower  and its  Subsidiaries  less all
         reserves with respect thereto,  including without  limitation  reserves
         for past due and doubtful accounts,  determined on a consolidated basis
         in accordance with GAAP applied on a Consistent Basis.

                  "Consolidated Accounts Payable" means the amount of all unpaid
         obligations of the Borrower and its Subsidiaries for the payment of the
         price of goods  purchased or leased  (other than  pursuant to a Capital
         Lease) by or services  rendered to the Borrower or the Subsidiaries and
         determined on a consolidated basis in accordance with GAAP applied on a
         Consistent Basis.

                  "Consolidated  EBIT"  means,  with respect to the Borrower and
         its  Subsidiaries  for any  Four-Quarter  Period  ending on the date of
         computation,  the difference of Consolidated  EBITDA less  amortization
         and depreciation,  all determined on a consolidated basis in accordance
         with GAAP applied on a Consistent Basis.

                  "Consolidated  EBITDA" means, with respect to the Borrower and
         its  Subsidiaries  for any  Four-Quarter  Period  ending on the date of
         computation thereof, the sum of, without duplication,  (i) Consolidated
         Net Income, (ii) Consolidated Interest Expense,  (iii) taxes on income,
         (iv)   amortization,   and  (v)  depreciation,   all  determined  on  a
         consolidated  basis in  accordance  with GAAP  applied on a  Consistent
         Basis;  provided,  however,  that for  each of the  first  four  fiscal
         quarters  following any  Acquisition,  the  calculation of Consolidated
         EBITDA for each Four-Quarter Period ending on the last day of each such
         fiscal  quarter shall include the historical  financial  performance of
         the  acquired  business for that  portion of such  Four-Quarter  Period
         occurring prior to such Acquisition.

                  "Consolidated  Fixed Charge Ratio" means,  with respect to the
         Borrower and its Subsidiaries for any Four-Quarter Period ending on the
         date of computation thereof, the


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<PAGE>

         ratio of (i)  Consolidated  EBIT plus  Consolidated  Lease Payments for
         such period, to (ii) Consolidated Fixed Charges for such period.

                  "Consolidated  Fixed Charges" means,  with respect to Borrower
         and its Subsidiaries for any Four-Quarter  Period ending on the date of
         computation thereof, the sum of, without duplication,  (i) Consolidated
         Interest Expense, and (ii) Consolidated Lease Payments for such period,
         all determined on a consolidated  basis in accordance with GAAP applied
         on a Consistent Basis.

                  "Consolidated  Funded Indebtedness" means, with respect to the
         Borrower  and its  Subsidiaries,  at any  time as of which  the  amount
         thereof  is to be  determined,  the sum of (i)  Indebtedness  for Money
         Borrowed of the Borrower and its  Subsidiaries  at such time,  (ii) all
         direct  Guaranties of Indebtedness for Money Borrowed of a Person other
         than a  Consolidated  Subsidiary at such time and (iii) the face amount
         of all  outstanding  letters of credit  issued  for the  account of the
         Borrower or any of its  Subsidiaries and all obligations (to the extent
         not duplicative)  arising under such letters of credit,  all determined
         on  a  consolidated   basis  in  accordance  with  Generally   Accepted
         Accounting  Principles  applied  on a  Consistent  Basis,  less  up  to
         $10,000,000  in  aggregate  face amount of letters of credit  issued in
         support of performance of Subsidiaries under agreements entered into in
         the ordinary course of business.

                  "Consolidated  Interest  Expense"  means,  with respect to any
         period of  computation  thereof,  the  gross  interest  expense  of the
         Borrower  and its  Subsidiaries  for  such  period,  including  without
         limitation (i) the current  amortized  portion of debt discounts to the
         extent included in gross interest  expense,  (ii) the current amortized
         portion  of all fees  (including  fees  payable  in respect of any Swap
         Agreement) payable in connection with the incurrence of Indebtedness to
         the extent included in gross interest  expense and (iii) the portion of
         any  payments  made in  connection  with  Capital  Leases  allocable to
         interest expense,  all determined on a consolidated basis in accordance
         with GAAP applied on a Consistent Basis.

                  "Consolidated  Lease  Payments"  means the gross amount of all
         lease or rental payments,  whether or not characterized as rent, of the
         Borrower and its Subsidiaries, excluding payments in respect of Capital
         Leases  constituting  Indebtedness,  all  determined on a  consolidated
         basis in accordance with GAAP applied on a Consistent Basis.

                  "Consolidated  Leverage  Ratio"  means,  as  of  the  date  of
         computation  thereof, the ratio of (i) Consolidated Funded Indebtedness
         (as  determined as at such date) to (ii)  Consolidated  EBITDA (for the
         Four-Quarter Period ending on (or most recently prior to) such date).

                  "Consolidated  Liquidity  Ratio"  means,  as of  the  date  of
         computation  thereof,  the ratio of (i) the sum of cash  plus  Eligible
         Securities  of the  Borrower  and its  Subsidiaries  plus  Consolidated
         Accounts Receivable to (ii) the sum of Consolidated Funded

                                        7

<PAGE>

         Indebtedness less the principal amount of all Indebtedness  outstanding
         under the Indenture plus Consolidated Accounts Payable.

                  "Consolidated Net Income" means, for any period of computation
         thereof,  the gross revenues from operations and income of the Borrower
         and its Subsidiaries  (including  payments received by the Borrower and
         its  Subsidiaries  of interest  income and dividends and  distributions
         made in the  ordinary  course of their  businesses  by Persons in which
         investment is permitted  pursuant to this  Agreement and not related to
         an extraordinary event), less all operating and non-operating  expenses
         of the Borrower and its  Subsidiaries  including  taxes on income,  all
         determined on a consolidated basis in accordance with GAAP applied on a
         Consistent Basis; but excluding (for all purposes other than compliance
         with  Section  8.1(c)  hereof)  as  income:  (i) net gains on the sale,
         conversion or other  disposition of capital  assets,  (ii) net gains on
         the acquisition, retirement, sale or other disposition of capital stock
         and other  securities  of the Borrower or its  Subsidiaries,  (iii) net
         gains on the  collection of proceeds of life insurance  policies,  (iv)
         any  write-up of any asset,  and (v) any other net gain or credit of an
         extraordinary nature as determined in accordance with GAAP applied on a
         Consistent Basis.

                  "Consolidated  Shareholders'  Equity" means, as of any date on
         which the amount thereof is to be determined,  the sum of the following
         in  respect  of the  Borrower  and its  Subsidiaries  (determined  on a
         consolidated  basis  and  excluding  any  upward  adjustment  after the
         Closing Date due to  revaluation  of assets):  (i) the amount of issued
         and  outstanding  share  capital,  plus (ii) the  amount of  additional
         paid-in  capital and retained  earnings  (or, in the case of a deficit,
         minus the amount of such deficit), plus (iii) the amount of any foreign
         currency translation  adjustment (if positive,  or, if negative,  minus
         the  amount of such  translation  adjustment),  plus (iv) the amount of
         unrealized  gain  (or if a  loss,  minus  such  amount)  on  marketable
         securities plus (v) software research and development costs required to
         be  capitalized,  minus (v) the amount of any  treasury  stock,  all as
         determined in accordance with GAAP applied on a Consistent Basis.

                  "Consolidated Subsidiary" means any Subsidiary of the Borrower
         whose   financial   information  and  operations  are  required  to  be
         consolidated  in the financial  statements of the Borrower  pursuant to
         GAAP.

                  "Consolidated  Tangible  Net Worth"  means,  as of any date on
         which  the   amount   thereof   is  to  be   determined,   Consolidated
         Shareholders'  Equity  minus  (without  duplication  of  deductions  in
         respect  of  items  already   deducted  in  arriving  at   Consolidated
         Shareholders' Equity) (i) all reserves (other than contingency reserves
         not allocated to any particular purpose),  including without limitation
         reserves  for  depreciation,  depletion,  amortization,   obsolescence,
         deferred income taxes, insurance and inventory valuation,  and (ii) the
         net book value of all  assets  which  would be  treated  as  intangible
         assets, such as (without limitation) goodwill (whether representing the
         excess of cost  over  book  value of  assets  acquired  or  otherwise),
         unamortized debt discount and expense, patents, trademarks,


                                        8

<PAGE>

         trade names, copyrights,  franchises and licenses, all as determined on
         a  consolidated  basis in accordance  with GAAP applied on a Consistent
         Basis.

                  "Consolidated Total Assets" means, as of any date on which the
         amount thereof is to be determined, the net book value of all assets of
         the Borrower and its Subsidiaries as determined on a consolidated basis
         in accordance with GAAP applied on a Consistent Basis.

                  "Contingent Obligation" of any Person means all Guaranties and
         other contingent  liabilities  required (or which, upon the creation or
         incurring  thereof,  would be required) to be included in the financial
         statements  (including  footnotes)  of such  Person in accord ance with
         GAAP applied on a Consistent  Basis,  including  Statement No. 5 of the
         Financial  Accounting  Standards Board, all Hedging Obligations and any
         obligation of such Person  guaranteeing or in effect  guaranteeing  any
         Indebtedness,  dividend or other  obligation  of any other  Person (the
         "primary  obligor")  in any manner,  whether  directly  or  indirectly,
         including obligations of such Person however incurred:

                           (1) to purchase such Indebtedness or other obligation
                  or any property or assets constituting security therefor;

                           (2) to advance or supply  funds in any manner (i) for
                  the  purchase  or  payment  of  such   Indebtedness  or  other
                  obligation, or (ii) to maintain a minimum working capital, net
                  worth or other balance sheet condition or any income statement
                  condition of the primary obligor;

                           (3) to grant or convey any lien,  security  interest,
                  pledge,  charge or other encumbrance on any property or assets
                  of such Person to secure payment of such Indebtedness or other
                  obligation;

                           (4) to lease  property or to purchase  securities  or
                  other  property  or  services  primarily  for the  purpose  of
                  assuring  the  owner  or  holder  of  such   Indebtedness   or
                  obligation  of the  ability  of the  primary  obligor  to make
                  payment of such Indebtedness or other obligation; or

                           (5) otherwise to assure the owner of the Indebtedness
                  or such  obligation  of the primary  obligor  against  loss in
                  respect thereof.

                  "Continue", "Continuation", and "Continued" shall refer to the
         continuation  pursuant to Section 2.8 hereof of a Eurodollar  Rate Loan
         of one  Type as a  Eurodollar  Rate  Loan of the  same  Type  from  one
         Interest Period to the next Interest Period.

                  "Convert",  "Conversion",  and  "Converted"  shall  refer to a
         conversion  pursuant to Section 2.8 or Article IV hereof of one Type of
         Loan into another Type of Loan.


                                       9

<PAGE>

                  "Cost of Acquisition"  means, with respect to any Acquisition,
         as at the date of entering into any agreement therefor,  the sum of the
         following  (without  duplication):  (i) the value of the capital stock,
         warrants  or  options  to  acquire  capital  stock of  Borrower  or any
         Subsidiary to be transferred in connection  therewith,  (ii) the amount
         of any cash and fair market value of other property (excluding property
         described  in clause  (i) and the unpaid  principal  amount of any debt
         instrument)  given as  consideration,  (iii) the amount  (determined by
         using the face amount or the amount  payable at maturity,  whichever is
         greater)  of any  Indebtedness  incurred,  assumed or  acquired  by the
         Borrower or any Subsidiary in connection  with such  Acquisition,  (iv)
         all additional purchase price amounts in the form of earnouts and other
         contingent  obligations  that  should  be  recorded  on  the  financial
         statements  of the Borrower and its  Subsidiaries  in  accordance  with
         GAAP,  (v) all  amounts  paid in respect of  covenants  not to compete,
         consulting  agreements that should be recorded on financial  statements
         of the Borrower and its Subsidiaries in accordance with GAAP, and other
         affiliated  contracts in  connection  with such  Acquisition,  (vi) the
         aggregate  fair market  value of all other  consideration  given by the
         Borrower or any  Subsidiary in connection  with such  Acquisition,  and
         (vii) out of pocket  transaction costs for the services and expenses of
         attorneys, accountants and other consultants incurred in effecting such
         transaction,  and other  similar  transaction  costs so  incurred.  For
         purposes of determining  the Cost of Acquisition  for any  transaction,
         (A) the capital stock of the Borrower shall be valued (I) at its market
         value  as  reported  on the New York  Stock  Exchange  or any  national
         securities exchange or automated national market system with respect to
         shares that are freely tradeable,  and (II) with respect to shares that
         are not freely tradeable,  as determined by a committee composed of the
         disinterested members of the Board of Directors of the Borrower and, if
         requested by the Agent,  determined to be a reasonable valuation by the
         independent  public  accountants  referred to in Section 7.1(a) hereof,
         (B) the capital stock of any  Subsidiary  shall be valued as determined
         by a committee  composed of the  disinterested  members of the Board of
         Directors of such Subsidiary and, if requested by the Agent, determined
         to be a reasonable  valuation  by the  independent  public  accountants
         referred  to in  Section  7.1(a)  hereof,  and (C) with  respect to any
         Acquisition  accomplished  pursuant  to  the  exercise  of  options  or
         warrants or the conversion of securities, the Cost of Acquisition shall
         include both the cost of acquiring such option,  warrant or convertible
         security as well as the cost of exercise or conversion.

                  "Credit Facilities" means, collectively, the Revolving Credit
         Facility and the Letter of Credit Facility.

                  "Credit  Party" means,  collectively  or  individually  as the
         context may indicate, the Borrower, and each Guarantor.

                  "Default" means any event or condition which,  with the giving
         or  receipt  of notice or lapse of time or both,  would  constitute  an
         Event of Default hereunder.

                  "Default Rate" means (i) with respect to each  Eurodollar Rate
         Loan, until the end of the Interest Period applicable  thereto,  a rate
         of two percent (2%) above the Eurodollar rate applicable to such Loan,

                                       10

<PAGE>

         and  thereafter a rate of interest  perannum which shall be two percent
         (2%) above the Base Rate,  (ii) with respect to each Base Rate Loan and
         Reimbursement  Obligations, a rate of interest per annum which shall be
         two percent (2%) above the Base Rate and (iii) in any case, the maximum
         rate permitted by applicable law, if lower.

                  "Dollars" and the symbol "$" means dollars  constituting legal
         tender for the payment of public and private debts in the United States
         of America.

                  "Domestic"  means,  with respect to any Subsidiary,  an entity
         which is organized under the laws of the District of Columbia or one of
         the states comprising the United States of America.

                  "Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
         Lender, and (iii) any other Person approved by the Agent and, unless an
         Event  of  Default  has  occurred  and is  continuing  at the  time any
         assignment  is effected in  accordance  with Section  11.1 hereof,  the
         Borrower,  such approval not to be unreasonably  withheld or delayed by
         the  Borrower,  provided,  however,  that  neither the  Borrower nor an
         Affiliate shall qualify as an Eligible Assignee.

                  "Eligible  Securities" means the following obligations and any
         other obligations previously approved in writing by the Agent:

                           (a)  Government Securities maturing no later than two
                  years from the date of purchase thereof;

                           (b)  obligations of any  corporation  organized under
                  the laws of any state of the United States of America or under
                  the laws of any other nation,  payable in the United States of
                  America,  having a  maturity  and  rating  complying  with the
                  investment  guidelines  for  such  obligations  set  forth  on
                  Schedule 8 hereto;

                           (c) interest  bearing demand or time deposits  issued
                  by any Lender or certificates  of deposit  maturing within one
                  year from the date of issuance thereof and issued by a bank or
                  trust company organized under the laws of the United States or
                  of any state  thereof  having  capital  surplus and  undivided
                  profits  aggregating at least $400,000,000 and having a rating
                  complying with the investment guidelines for such deposits set
                  forth on Schedule 8 hereto;

                           (d) Municipal Obligations maturing no later than one
                  year from the date of issuance thereof;

                           (e) Money  Market  Funds with  minimum  net assets of
                  $300,000,000  and a dollar weighted  portfolio  maturity of 90
                  days  or  less  as  stated  in  the  most  recent   report  to
                  shareholders of such Money Market Funds.


                                       11

<PAGE>

                  "Employee Benefit Plan" means any employee benefit plan within
         the  meaning  of  Section  3(3) of ERISA  which (i) is  maintained  for
         employees of the Borrower or any of its ERISA  Affiliates or is assumed
         by the Borrower or any of its ERISA  Affiliates in connection  with any
         Acquisition  or (ii) has at any time  within the last six (6)  calendar
         years been  maintained for the employees of the Borrower or any current
         or former ERISA Affiliate.

                  "Environmental  Laws"  means  any  federal,   state  or  local
         statute, law, ordinance, code, rule, regulation,  order, decree, permit
         or license regulating,  relating to, or imposing liability or standards
         of  conduct  concerning,   any  environmental  matters  or  conditions,
         environmental protection or conservation, including without limitation,
         the Comprehensive  Environmental  Response,  Compensation and Liability
         Act of 1980, as amended;  the Superfund  Amendments and Reauthorization
         Act of 1986, as amended; the Resource Conservation and Recovery Act, as
         amended;  the Toxic Substances  Control Act, as amended;  the Clean Air
         Act, as amended;  the Clean  Water Act, as amended;  together  with all
         regulations  promulgated  thereunder,  and  any  other  "Superfund"  or
         "Superlien" law.

                  "Equity Offering" means a public or private offering of equity
         securities (including,  without limitation,  any security or investment
         not constituting Indebtedness exchangeable,  exercisable or convertible
         for or into,  or  otherwise  entitling  the holder to  receive,  equity
         securities)  of the Borrower or any Subsidiary  (other than  securities
         issued to the Borrower or another Subsidiary).

                  "ERISA" means the Employee  Retirement  Income Security Act of
         1974, as amended from time to time,  and any successor  statute and all
         rules and regulations promulgated thereunder.

                  "ERISA  Affiliate",  as  applied  to the  Borrower,  means any
         Person or trade or business which is a member of a group which is under
         common  control with the Borrower,  who together with the Borrower,  is
         treated as a single  employer  within the meaning of Section 414(b) and
         (c) of the Code.

                  "Eurodollar  Rate  Loan"  means a Loan for  which  the rate of
         interest is determined by reference to the Eurodollar Rate.

                  "Eurodollar Rate" means the interest rate per annum calculated
         according to the following formula:

                                     Interbank Offered Rate
                   Eurodollar Rate = ----------------------  + Applicable Margin
                                     1 - Reserve Requirement

                 "Event of Default" means any of the occurrences set forth as
         such in Section 9.1.


                                       12

<PAGE>

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
         amended, and the regulations promulgated thereunder.

                  "Existing  Letters  of  Credit"  means all  letters  of credit
         issued and outstanding under the Existing Letter of Credit Agreement.

                  "Existing  Letter  of Credit  Agreement"  means  that  certain
         Letter of Credit and  Reimbursement  Agreement dated as of December 21,
         1994 by and among the Agent,  the  Borrower and certain  lenders  party
         thereto under which the Existing Letters of Credit were issued.

                  "Facility  Termination  Date"  means  such  date as all of the
         following shall have occurred:  (a) the Borrower shall have permanently
         terminated  the  Revolving  Credit  Facility  by payment in full of all
         Revolving Credit  Outstandings,  Swing Line  Outstandings and Letter of
         Credit  Outstandings,  together  with all accrued  and unpaid  interest
         thereon,  except for such issued and undrawn  Letters of Credit as have
         been fully cash collateralized in a manner consistent with the terms of
         Section  9.1(l)(B)  hereof,  (b) all Swap  Agreements  shall  have been
         terminated,  expired or cash  collateralized in a manner  substantially
         similar to the terms of the Cash Collateral Account Agreement,  (c) all
         Revolving  Credit  Commitments and Letter of Credit  Commitments  shall
         have  terminated  or expired  and (d) the  Borrower  shall have  fully,
         finally and  irrevocably  paid and  satisfied  in full all  Obligations
         (other than Obligations  consisting of continuing indemnities and other
         contingent  Obligations  of the Borrower or any  Guarantor  that may be
         owing to the  Lenders  pursuant  to the Loan  Documents  and  expressly
         survive termination of this Agreement).

                  "Federal  Funds Rate"  means,  for any day, the rate per annum
         (rounded  upwards,  if necessary,  to the nearest 1/100 of 1%) equal to
         the  weighted   average  of  the  rates  on  overnight   Federal  funds
         transactions  with members of the Federal  Reserve  System  arranged by
         Federal funds brokers on such day, as published by the Federal  Reserve
         Bank of New York on the Business Day next succeeding such day; provided
         that (a) if such day is not a Business  Day, the Federal Funds Rate for
         such day shall be such rate on such  transactions on the next preceding
         Business Day as so published on the next  succeeding  Business Day, and
         (b) if no such rate is so  published on such next  succeeding  Business
         Day,  the  Federal  Funds Rate for such day shall be the  average  rate
         charged to the Agent (in its  individual  capacity) on such day on such
         transactions as determined by the Agent.

                  "Fiscal  Year" means the annual  fiscal period of the Borrower
         ending on the last Saturday in each September.

                  "Foreign  Benefit  Law"  means any  applicable  statute,  law,
         ordinance,  code,  rule,  regulation,  order or decree  of any  foreign
         nation  or  any  province,  state,  territory,  protectorate  or  other
         political  subdivision  thereof  regulating,  relating  to, or imposing
         liability  or  standards of conduct  concerning,  any Employee  Benefit
         Plan.


                                       13

<PAGE>

                  "Four-Quarter  Period" means a period of four full consecutive
         fiscal quarters of the Borrower and its Subsidiaries, taken together as
         one accounting period.

                  "GAAP" or "Generally  Accepted  Accounting  Principles"  means
         generally  accepted  accounting  principles,  being those principles of
         accounting  set forth in  pronouncements  of the  Financial  Accounting
         Standards Board, the American Institute of Certified Public Accountants
         or  which  have  other  substantial   authoritative   support  and  are
         applicable in the circumstances as of the date of a report.

                  "Government   Securities"  means  direct  obligations  of,  or
         obligations  the timely  payment of principal and interest on which are
         fully and  unconditionally  guaranteed by, the United States of America
         or any federal department or agency thereof.

                  "Governmental   Authority"  shall  mean  any  Federal,  state,
         municipal,  national  or  other  governmental  department,  commission,
         board,   bureau,   court,   agency  or   instrumentality  or  political
         subdivision  thereof  or any entity or  officer  exercising  executive,
         legislative,  judicial,  regulatory or  administrative  functions of or
         pertaining  to any  government  or any  court,  in  each  case  whether
         associated with a state of the United States,  the United States,  or a
         foreign entity or government.

                  "Guaranties"  means all  obligations  of the  Borrower  or any
         Subsidiary   directly  or   indirectly   guaranteeing,   or  in  effect
         guaranteeing, any Indebtedness or other obligation of any other Person.

                  "Guarantors"  means,  at any date,  all Domestic  Subsidiaries
         that are  Material  Subsidiaries  on the  Closing  Date and all further
         Domestic  Subsidiaries  who are  required to be parties to a Subsidiary
         Guaranty at such date pursuant to Section 7.19 hereof.

                  "Hazardous   Material"   means  and  includes  any  pollutant,
         contaminant,  or  hazardous,  toxic or  dangerous  waste,  substance or
         material    (including   without   limitation    petroleum    products,
         asbestos-containing  materials  and lead),  the  generation,  handling,
         storage,  transportation,  disposal,  treatment,  release, discharge or
         emission of which is subject to any Environmental Law.

                  "Hedging  Obligations"  means any and all  obligations  of the
         Borrower  or  any  Subsidiary,   whether  absolute  or  contingent  and
         howsoever  and  whensoever  created,  arising,  evidenced  or  acquired
         (including  all  renewals,  extensions  and  modifications  thereof and
         substitutions therefor),  under (i) any and all agreements,  devices or
         arrangements  designed to protect at least one of the  parties  thereto
         from the  fluctuations  of interest  rates,  exchange  rates or forward
         rates  applicable  to such  party's  assets,  liabilities  or  currency
         exchange   transactions,   including,   but  not  limited  to,  Dollar-
         denominated  or  cross-currency   interest  rate  exchange  agreements,
         forward  currency  exchange  agreements,  interest  rate cap or  collar
         protection agreements,  forward rate currency or interest rate options,
         puts, warrants and those commonly known as interest rate


                                       14

<PAGE>

         "swap" agreements; and (ii) any and all cancellations, buybacks,
         reversals, terminations or assignments of any of the foregoing.

                  "Indebtedness"  means  with  respect  to any  Person,  without
         duplication,  all Indebtedness for Money Borrowed,  all indebtedness of
         such Person for the acquisition of property,  all executory obligations
         arising under Hedging Obligations, all indebtedness secured by any Lien
         on the  property of such  Person  whether or not such  indebtedness  is
         assumed,  all  liability of such Person by way of  endorsements  (other
         than for collection or deposit in the ordinary course of business), all
         Guaranties,  that portion of obligations with respect to Capital Leases
         and  other  items  which in  accordance  with  GAAP is  required  to be
         classified  as a  liability  on a  balance  sheet;  but  excluding  all
         accounts  payable in the ordinary course of business so long as payment
         therefor  is due within one year;  provided  that in no event shall the
         term  Indebtedness   include  surplus  and  retained  earnings,   lease
         obligations  (other than  pursuant  to Capital  Leases),  reserves  for
         deferred income taxes and investment credits, other deferred credits or
         reserves.

                  "Indebtedness  for Money  Borrowed"  means with respect to any
         Person,  without  duplication,  all  indebtedness  in  respect of money
         borrowed,  including  without  limitation  all  Capital  Leases and the
         deferred  purchase  price of any  property  or  asset,  evidenced  by a
         promissory note, bond,  debenture or similar written obligation for the
         payment  of  money  (including   conditional  sales  or  similar  title
         retention  agreements),  other  than  trade  payables  incurred  in the
         ordinary course of business.

                  "Indenture"  means that certain  Indenture dated as of May 21,
         1997  pursuant to which the Borrower  has issued its 6.0%  subordinated
         convertible  debentures  due 2004 in an  original  aggregate  principal
         amount of $212,750,000.

                  "Interbank Offered Rate" means, with respect to any Eurodollar
         Rate Loan for the  Interest  Period  applicable  thereto,  the rate per
         annum  (rounded  upwards,  if  necessary),  to the nearest 1/100 of 1%)
         appearing on Telerate Page 3750 (or any  successor  page) as the London
         interbank  offered rate for deposits in Dollars at approximately  11:00
         A.M.  (London  time) two  Business  Days prior to the first day of such
         Interest Period for a term comparable to such Interest  Period.  If for
         any reason  such rate is not  available,  the term  "Interbank  Offered
         Rate"  shall mean,  with  respect to any  Eurodollar  Rate Loan for the
         Interest  Period  applicable  thereto,  the  rate  per  annum  (rounded
         upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
         Screen LIBO Page as the London  interbank  offered rate for deposits in
         Dollars at  approximately  11:00 A.M.  (London  time) two Business Days
         prior to the first day of such Interest Period for a term comparable to
         such  Interest  Period,  provided,  however;  if more  than one rate is
         specified on Reuters Screen LIBO Page, the applicable rate shall be the
         arithmetic mean of all such rates.

                  "Interest  Period"  means,  for each  Eurodollar  Rate Loan, a
         period  commencing  on the date  such  Eurodollar  Rate Loan is made or
         Converted and ending,  at the Borrower's  option, on the date one, two,
         three or six months thereafter as notified to the Agent by the


                                       15

<PAGE>

         Authorized   Representative  three  (3)  Business  Days  prior  to  the
         beginning of such Interest Period; provided, that,

                            (i) if the Authorized Representative fails to notify
                  the  Agent of the  length  of an  Interest  Period  three  (3)
                  Business Days prior to the first day of such Interest  Period,
                  the Loan for which such  Interest  Period was to be determined
                  shall be  deemed  to be a Base  Rate  Loan as of the first day
                  thereof;

                           (ii) if an Interest Period for a Eurodollar Rate Loan
                  would end on a day which is not a Business  Day, such Interest
                  Period shall be extended to the next Business Day (unless such
                  extension would cause the applicable Interest Period to end in
                  the  succeeding  calendar  month,  in which case such Interest
                  Period shall end on the next preceding Business Day);

                           (iii) any  Interest  Period  which begins on the last
                  Business Day of a calendar  month (or on a day for which there
                  is no numerically  corresponding  day in the calendar month at
                  the  end of  such  Interest  Period)  shall  end  on the  last
                  Business Day of a calendar month;

                           (iv)  no Interest Period shall extend past the Stated
                  Termination Date; and

                            (v)  there shall not be more than six (6) Interest
                  Periods in effect on any day.

                  "Interest  Rate  Selection  Notice"  means the written  notice
         delivered  by an  Authorized  Representative  in  connection  with  the
         election of a subsequent  Interest  Period for any Eurodollar Rate Loan
         or the Conversion of any Eurodollar  Rate Loan into a Base Rate Loan or
         the  Conversion  of any Base Rate Loan into a Eurodollar  Rate Loan, in
         the form of Exhibit E.

                  "Issuing  Bank"  means  NationsBank  as issuer of  Letters  of
         Credit  under  Article III hereof and any  successor  thereto that is a
         Lender.

                  "Letter of Credit"  means a standby  or  commercial  letter of
         credit  issued by the Issuing  Bank  pursuant to Article III hereof for
         the account of the Borrower in favor of a Person advancing credit to or
         securing  an  obligation  for  the  benefit  of  the  Borrower  or  its
         Subsidiaries.

                  "Letter  of Credit  Commitment"  means,  with  respect to each
         Lender,  the  obligation  of such Lender to acquire  Participations  in
         respect of Letters of Credit  and  Reimbursement  Obligations  up to an
         aggregate  amount at any one time  outstanding  equal to such  Lender's
         Applicable   Commitment  Percentage  of  the  Total  Letter  of  Credit
         Commitment as the same may be increased or decreased  from time to time
         pursuant to this Agreement.


                                       16

<PAGE>

                  "Letter of Credit  Facility"  means the facility  described in
         Article III hereof  providing  for the issuance by the Issuing Bank for
         the account of the Borrower of Letters of Credit in an aggregate stated
         amount at any time outstanding not exceeding the Total Letter of Credit
         Commitment.

                  "Letter  of  Credit  Outstandings"  means,  as of any  date of
         determination,  the  aggregate  amount  available to be drawn under all
         Letters of Credit plus any Reimbursement Obligations then outstanding.

                  "Lien" means any interest in property  securing any obligation
         owed to, or a claim by, a Person other than the owner of the  property,
         whether such interest is based on the common law,  statute or contract,
         and including but not limited to the lien or security  interest arising
         from a mortgage, encumbrance,  pledge, security agreement,  conditional
         sale or trust receipt or a lease,  consignment or bailment for security
         purposes.  For the  purposes of this  Agreement,  the  Borrower and any
         Subsidiary shall be deemed to be the owner of any property which it has
         acquired or holds subject to a conditional  sale  agreement,  financing
         lease, or other arrangement pursuant to which title to the property has
         been retained by or vested in some other Person for security purposes.

                  "Loan" or "Loans" means any of the Revolving Loans.

                  "Loan  Documents"   means  this  Agreement,   the  Notes,  the
         Subsidiary  Guaranties,  the Cash  Collateral  Account  Agreement,  the
         Applications  and  Agreements  for  Letter  of  Credit,  and all  other
         instruments  and  documents   heretofore  or  hereafter   executed  and
         delivered  in favor of any Lender or the Agent in  connection  with the
         Loans made and transactions  contemplated under this Agreement,  as the
         same may be amended, supplemented or replaced from the time to time.

                  "Material  Adverse Effect" means a material  adverse effect on
         (i) the business,  properties,  operations  or condition,  financial or
         otherwise, or prospects of the Borrower and its Subsidiaries,  taken as
         a whole,  (ii) the  ability of any Credit  Party to pay or perform  its
         respective  obligations,  liabilities and  indebtedness  under the Loan
         Documents as such payment or performance becomes due in accordance with
         the terms  thereof,  or (iii) the  rights,  powers and  remedies of the
         Agent or any Lender under any Loan Document or the  validity,  legality
         or enforceability thereof.

                  "Material  Subsidiary"  means any direct or indirect  Domestic
         Subsidiary  of the  Borrower  which  (i) has total  assets  equal to or
         greater than 5% of Consolidated Total Assets (calculated as of the most
         recent  fiscal  period  with  respect  to which  the Agent  shall  have
         received  financial  statements  required to be  delivered  pursuant to
         Sections  7.1(a)  or (b) (or if  prior  to  delivery  of any  financial
         statements  pursuant to such Sections,  then calculated with respect to
         the Fiscal Year end  financial  statements  referenced  in Section 6.6)
         (the "Required Financial  Information")) or (ii) has income equal to or
         greater than 5% of  Consolidated  Net Income  (calculated  for the most
         recent period for which the Agent has


                                       17

<PAGE>

         received the Required Financial Information);  provided,  however, that
         notwithstanding the foregoing,  the term "Material  Subsidiaries" shall
         mean  Domestic  Subsidiaries  of the Borrower  that  together  with the
         Borrower  account for not less than 70% of  Consolidated  Total  Assets
         (calculated  as described  above) and 90% of  Consolidated  Net Income;
         provided  further  that  if  more  than  one  combination  of  Domestic
         Subsidiaries satisfies such threshold, then those Domestic Subsidiaries
         so determined to be "Material  Subsidiaries"  shall be specified by the
         Borrower.

                  "Money  Market Funds" means  open-ended  mutual funds that (i)
         invest in first tier commercial paper, banker's acceptances, repurchase
         agreements,  government  securities,  certificates of deposit and other
         highly liquid  securities  paying money market rates of interest,  (ii)
         seek to  maintain  a  constant  net asset  value of $1.00 per share and
         (iii) are rated AAA or better by S&P.

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

                  "Multiemployer  Plan" means a "multiemployer  plan" as defined
         in  Section  4001(a)(3)  of ERISA to which  the  Borrower  or any ERISA
         Affiliate   is  making,   or  is  accruing  an   obligation   to  make,
         contributions  or has made,  or been  obligated to make,  contributions
         within the preceding six (6) Fiscal Years.

                  "Municipal  Obligations" means general  obligations issued by,
         and supported by the full taxing  authority of, any state of the United
         States of America or of any municipal  corporation or other public body
         organized  under the laws of any such state  which are rated A-1 or AA-
         or better by S&P and P-1 or Aa3 or better by Moody's.

                  "Nationally  Recognized  Standing"  means with  respect to any
         firm of certified public accountants,  any "Big Six" accounting firm or
         other firm as may be recognized in writing as acceptable to the Agent.

                  "NationsBank" means NationsBank of Texas, National Association

                  "NCMI" means NationsBanc Capital Markets, Inc .and its
                   successors.

                  "Net  Proceeds"  means cash payments  received by the Borrower
         from  an  Equity  Offering  as and  when  received,  net of all  legal,
         accounting,  banking and underwriting  fees and expenses,  commissions,
         discounts and other issuance expenses incurred in connection  therewith
         and all taxes  required to be paid or accrued as a consequence  of such
         issuance.

                  "Note or Notes" means the Revolving Notes and the Swing Line
         Notes.

                  "Obligations"   means   the   obligations,   liabilities   and
         Indebtedness  of the  Borrower  with respect to (i) the  principal  and
         interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
         Obligations  and  otherwise in respect of the Letters of Credit,  (iii)
         all


                                       18

<PAGE>

         liabilities  of  Borrower  to  any  Lender  which  arise  under  a Swap
         Agreement,   and  (iv)  the  payment  and   performance  of  all  other
         obligations,  liabilities  and  Indebtedness  of  the  Borrower  to the
         Lenders,  the  Agent or NCMI  hereunder,  under  any one or more of the
         other Loan Documents or with respect to the Loans.

                  "Organizational Action" means with respect to any corporation,
         limited liability company,  partnership,  limited partnership,  limited
         liability  partnership  or other  legally  authorized  incorporated  or
         unincorporated  entity,  any  corporate,  organizational,   partnership
         action (including any required  shareholder,  member or partner action)
         or other similar official action, as applicable, taken by such entity.

                  "Organizational   Documents"   means   with   respect  to  any
         corporation,    limited   liability   company,   partnership,   limited
         partnership,  limited liability partnership or other legally authorized
         incorporated or unincorporated  entity,  the articles of incorporation,
         certificate of incorporation, articles of organization,  certificate of
         limited  partnership  or other  applicable  organizational  or  charter
         documents relating to the creation of such entity.

                  "Operating  Documents"  means with respect to any corporation,
         limited liability company,  partnership,  limited partnership,  limited
         liability  partnership  or other  legally  authorized  incorporated  or
         unincorporated  entity, the bylaws,  operating  agreement,  partnership
         agreement,  limited partnership agreement or other applicable documents
         relating to the operation, governance or management of such entity.

                  "Outstandings" means, collectively, at any date, the Letter of
         Credit  Outstandings,  Swing Line  Outstandings  and  Revolving  Credit
         Outstandings on such date.

                  "Participation"  means,  (i) with respect to any Lender (other
         than  NationsBank)  in connection with a Swing Line Loan, the extension
         of credit  represented by the participation of such Lender hereunder in
         the  liability  of  NationsBank  in respect of such Swing Line Loan and
         (ii) with  respect  to any  Lender  (other  than the  Issuing  Bank) in
         connection with a Letter of Credit, the extension of credit represented
         by the  participation  of such Lender hereunder in the liability of the
         Issuing  Bank in  respect of a Letter of Credit  issued by the  Issuing
         Bank in accordance with the terms hereof;

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

                  "Pension Plan" means any employee  pension benefit plan within
         the meaning of Section 3(2) of ERISA, other than a Multiemployer  Plan,
         which is subject to the  provisions of Title IV of ERISA or Section 412
         of the Code and which (i) is  maintained  for employees of the Borrower
         or any of its ERISA  Affiliates or is assumed by the Borrower or any of
         its ERISA  Affiliates in connection with any Acquisition or (ii) has at
         any time been  maintained  for the  employees  of the  Borrower  or any
         current or former ERISA Affiliate.


                                       19

<PAGE>



                  "Permitted Liens" has the meaning given to such term in
         Section 8.3 hereof.

                  "Person" means an individual, partnership, corporation, trust,
         unincorporated organization, association, joint venture or a government
         or agency or political subdivision thereof.

                  "Prime Rate" means the per annum rate of interest  established
         from time to time by NationsBank as its prime rate,  which rate may not
         be the lowest rate of interest charged by NationsBank to its customers.

                  "Principal  Office" means the principal office of NationsBank,
         presently  located at 901 Main  Street,  TX1-492-14-11,  Dallas,  Texas
         75202, Attention: Agency Services, or such other office and address as
         the Agent may from time to time designate.

                  "Regulation D" means Regulation D of the Board as the same may
         be amended or supplemented from time to time.

                  "Reimbursement   Obligation"  shall  mean  at  any  time,  the
         obligation  of the  Borrower  with  respect  to any Letter of Credit to
         reimburse  the  Issuing  Bank and the  Lenders  to the  extent of their
         respective Participations (including by the receipt by the Issuing Bank
         of proceeds of Base Rate  Refunding  Loans pursuant to Section 4.2) for
         amounts  theretofore  paid by the  Issuing  Bank  pursuant to a drawing
         under such Letter of Credit.

                  "Required Financial Information" has the meaning given to such
         term in the definition of "Material Subsidiary."

                  "Required Lenders" means, as of any date, Lenders on such date
         having Credit Exposures (as defined below) aggregating in excess of 50%
         of the aggregate  Credit Exposures of all the Lenders on such date. For
         purposes of the preceding sentence, the amount of the "Credit Exposure"
         of each Lender shall be equal at all times (a) other than following the
         occurrence and during the  continuance  of an Event of Default,  to its
         Revolving  Credit  Commitment,  and (b)  following the  occurrence  and
         during the  continuance  of an Event of Default,  to the sum of (i) the
         amount of such Lender's Applicable  Commitment  Percentage of Revolving
         Credit  Outstandings,  plus (ii) the amount of such Lender's Applicable
         Commitment  Percentage  of Swing Line  Outstandings  and plus (iii) the
         amount of such Lender's Applicable  Commitment  Percentage of Letter of
         Credit Outstandings;  provided that, for the purpose of this definition
         only,  (x) if any  Lender  shall  have  failed  to fund its  Applicable
         Commitment  Percentage of any Advance,  the Revolving Credit Commitment
         of such  Lender  shall be deemed  reduced by the amount it so failed to
         fund for so long as such  failure  shall  continue  and  such  Lender's
         Credit  Exposure  attributable  to such failure shall be deemed held by
         any Lender  making more than its  Applicable  Commitment  Percentage of
         such  Advance to the extent it covers such  failure,  (y) if any Lender
         shall have failed to pay to the Issuing Bank upon demand its Applicable
         Commitment  Percentage  of any  drawing  under  any  Letter  of  Credit
         resulting in an

                                       20

<PAGE>

         outstanding  Reimbursement  Obligation,  such Lender's  Credit Exposure
         attributable to such Letter of Credit  Outstandings  shall be deemed to
         be held by Issuing  Bank and (z) if any Lender shall have failed to pay
         to NationsBank upon demand its Applicable  Commitment Percentage of any
         Swing  Line  Loan when  required  pursuant  to  Section  2.13(c),  such
         Lender's  Credit Exposure  attributable to all Swing Line  Outstandings
         shall be deemed to be held by NationsBank.

                  "Responsible  Officer"  means,  the Chief  Executive  Officer,
         Chief Financial  Officer,  President or General Counsel of the Borrower
         or,  with  respect  to  matters  relating  to  specific  areas  of  the
         Borrower's business, each executive officer of the Borrower managing or
         responsible for oversight of such area.

                  "Reserve  Requirement" means, at any time, the maximum rate at
         which reserves (including,  without limitation, any marginal,  special,
         supplemental,  or emergency  reserves)  are  required to be  maintained
         under regulations issued from time to time by the Board of Governors of
         the Federal  Reserve  System (or any  successor) by member banks of the
         Federal Reserve System against "Eurocurrency liabilities" (as such term
         is used in Regulation D). Without limiting the effect of the foregoing,
         the Reserve Requirement shall reflect any other reserves required to be
         maintained  by such member  banks with  respect to (i) any  category of
         liabilities   which  includes   deposits  by  reference  to  which  the
         Eurodollar Rate is to be determined, or (ii) any category of extensions
         of credit or other  assets which  include  Eurodollar  Rate Loans.  The
         Eurodollar  Rate  shall  be  adjusted  automatically  on  and as of the
         effective date of any change in the Reserve Requirement.

                  "Restricted   Payment"   means  (a)  any   dividend  or  other
         distribution, direct or indirect, on account of any shares of any class
         of stock of  Borrower  or any of its  Subsidiaries  (other  than  those
         payable  or  distributable  solely to the  Borrower)  now or  hereafter
         outstanding, except a dividend or other distribution payable (i) solely
         in shares of a class of stock to the  holders  of that class or (ii) in
         shares of common  stock to the  holders of any class of stock;  (b) any
         redemption,   conversion,  exchange,  retirement  or  similar  payment,
         purchase or other  acquisition  for value,  direct or indirect,  of any
         shares of any  class of stock of  Borrower  or any of its  Subsidiaries
         (other than those  payable or  distributable  solely to the Borrower or
         solely in shares of common stock) now or hereafter outstanding; and (c)
         any  payment  made to  retire,  or to  obtain  the  surrender  of,  any
         outstanding warrants,  options or other rights to acquire shares of any
         class of stock of Borrower or any of its  Subsidiaries now or hereafter
         outstanding.

                  "Revolving  Credit  Commitment"  means,  with  respect to each
         Lender,  the obligation of such Lender to make  Revolving  Loans to the
         Borrower  up  to  an  aggregate   principal  amount  at  any  one  time
         outstanding equal to such Lender's Applicable  Commitment Percentage of
         the Total Revolving Credit Commitment.


                                       21

<PAGE>

                  "Revolving  Credit  Facility" means the facility  described in
         Article II hereof  providing for Revolving Loans to the Borrower by the
         Lenders in the aggregate principal amount of the Total Revolving Credit
         Commitment.

                  "Revolving  Credit  Outstandings"  means,  as of any  date  of
         determination,  the aggregate  principal  amount of all Revolving Loans
         then outstanding.

                  "Revolving  Credit  Termination  Date"  means the  earliest to
         occur  of  (i)  the  Stated  Termination  Date  or  (ii)  the  date  of
         termination of Lenders' obligations pursuant to Section 9.1 hereof upon
         the  occurrence  of  an  Event  of  Default,   or  (iii)  the  Facility
         Termination Date.

                  "Revolving  Loan" means any  borrowing  pursuant to an Advance
         under the  Revolving  Credit  Facility in  accordance  with  Article II
         hereof.

                  "Revolving Notes" means, collectively, the promissory notes of
         the Borrower  evidencing  Revolving Loans executed and delivered to the
         Lenders as provided in Section 2.5 hereof  substantially in the form of
         Exhibit F-1, with appropriate insertions as to amounts, dates and names
         of Lenders.

                  "S&P" means Standard & Poor's Ratings Group, a division of the
         McGraw-Hill Company, Inc.

                  "Significant  Subsidiary"  means each Material  Subsidiary and
         any non-Material  Subsidiary of the Borrower which (i) has total assets
         equal to or greater than 5% of Consolidated Total Assets (calculated as
         of the most recent date for which the Agent has  received  the Required
         Financial  Information)  or (ii) has income equal to or greater than 5%
         of Consolidated  Net Income  (calculated for the most recent period for
         which the Agent has received the Required Financial Information).

                  "Single Employer Plan" means any employee pension benefit plan
         covered by Title IV of ERISA in respect  of which the  Borrower  or any
         Subsidiary is an  "employer"  as described in Section  4001(b) of ERISA
         and which is not a Multiemployer Plan.

                  "Solvent" means, when used with respect to any Person, that at
         the time of determination:

                            (i) the  fair  value  of its  assets  (both  at fair
                  valuation  and at present  fair  saleable  value on an orderly
                  basis) is in excess  of the total  amount of its  liabilities,
                  including Contingent Obligations  (calculated for the purposes
                  hereof  at  the  amount  which,  in  light  of all  facts  and
                  circumstances  at the time,  could  reasonably  be expected to
                  become an actual or mature liability); and


                                       22

<PAGE>

                            (ii) it is then able and expects to be able to pay
                  its debts as they mature; and

                            (iii) it has capital sufficient to carry on its
                  business as conducted and as proposed to be conducted.

                  "Stated Termination Date" means September 30, 2000.

                  "Subsidiary"  means any  corporation  or other entity in which
         more than 50% of its  outstanding  voting stock or more than 50% of all
         equity interests is owned directly or indirectly by the Borrower and/or
         by one or more of the Borrower's Subsidiaries.

                  "Subsidiary  Guaranty" means each Guaranty  Agreement  between
         one or more Material  Subsidiaries and the Agent for the benefit of the
         Lenders,  delivered  as of the Closing Date and  otherwise  pursuant to
         Section  7.19  hereof,  as the same  may be  amended,  supplemented  or
         replaced from time to time.

                  "Swap  Agreement"  means one or more  agreements  between  the
         Borrower and any Person with respect to  Indebtedness  evidenced by any
         or all of the Notes, on terms mutually  acceptable to Borrower and such
         Person and approved by the Lenders,  which  agreements  create  Hedging
         Obligations;  provided,  however,  that no such approval of the Lenders
         shall be  required  to the extent  such  agreements  are  entered  into
         between the Borrower and any Lender.

                  "Swing Line" means the revolving line of credit established by
         NationsBank pursuant to Section 2.13.

                  "Swing Line Loans" means loans made by NationsBank pursuant to
         Section 2.13.

                  "Swing Line Note" means the  promissory  note of the  Borrower
         evidencing  Swing Line Loans  executed  and  delivered  to  NationsBank
         substantially in the form attached hereto as Exhibit F-2.

                  "Swing   Line   Outstandings"   means,   as  of  any  date  of
         determination,  the aggregate  principal amount of all Swing Line Loans
         then outstanding.

                  "Termination  Event" means: (i) a "Reportable Event" described
         in Section 4043 of ERISA and the regulations  issued thereunder (unless
         the notice  requirement has been waived by applicable  regulation);  or
         (ii) the  withdrawal  of the  Borrower  or any ERISA  Affiliate  from a
         Pension  Plan  during  a plan  year  in  which  it  was a  "substantial
         employer" as defined in Section  4001(a)(2) of ERISA or was deemed such
         under Section  4068(f) of ERISA;  or (iii) the termination of a Pension
         Plan,  the filing of a notice of intent to  terminate a Pension Plan or
         the  treatment  of a Pension  Plan  amendment  as a  termination  under
         Section  4041 of  ERISA;  or (iv) the  institution  of  proceedings  to
         terminate a Pension

                                       23

<PAGE>

         Plan by the  PBGC;  or (v) any other  event or  condition  which  would
         constitute  grounds under Section  4042(a) of ERISA for the termination
         of, or the appointment of a trustee to administer, any Pension Plan; or
         (vi) the partial or complete  withdrawal  of the  Borrower or any ERISA
         Affiliate from a Multiemployer  Plan; or (vii) the imposition of a Lien
         pursuant to Section 412 of the Code or Section 302 of ERISA;  or (viii)
         any  event  or  condition  which  results  in  the   reorganization  or
         insolvency of a  Multiemployer  Plan under Section 4241 or Section 4245
         of ERISA, respectively; or (ix) any event or condition which results in
         the termination of a Multiemployer Plan under Section 4041A of ERISA or
         the institution by the PBGC of proceedings to terminate a Multiemployer
         Plan under Section 4042 of ERISA.

                  "Total Letter of Credit Commitment" means an amount not to
         exceed $15,000,000.

                  "Total Revolving Credit  Commitment"  means a principal amount
         equal to $110,000,000,  as reduced from time to time in accordance with
         Section 2.7 hereof.

                  "Type" shall mean any type of Loan (i.e.,  a Base Rate Loan or
         a Eurodollar Rate Loan).

                  "Voting  Stock"  means  shares of  capital  stock  issued by a
         corporation,  or equivalent  interests in any other Person, the holders
         of which are ordinarily,  in the absence of contingencies,  entitled to
         vote for the  election  of  directors  (or persons  performing  similar
         functions)  of such  Person,  even if the  right  so to vote  has  been
         suspended by the happening of such a contingency.

         1.2.     Rules of Interpretation.

                  (a) All accounting terms not specifically defined herein shall
         have the meanings  assigned to such terms and shall be  interpreted  in
         accordance with GAAP applied on a Consistent Basis.

                  (b) Each term  defined in Article 1, 5, 8 or 9 of the New York
         Uniform  Commercial  Code shall have the meaning given  therein  unless
         otherwise  defined  herein,  except  to the  extent  that  the  Uniform
         Commercial Code of another  jurisdiction is controlling,  in which case
         such terms shall have the meaning given in the Uniform  Commercial Code
         of the applicable jurisdiction.

                  (c) The  headings,  subheadings  and  table of  contents  used
         herein or in any other Loan  Document  are solely  for  convenience  of
         reference  and  shall not  constitute  a part of any such  document  or
         affect the meaning, construction or effect of any provision thereof.

                  (d)      Except as otherwise expressly provided, references
         herein to articles, sections, paragraphs, clauses, annexes, appendices,
         exhibits and schedules are references


                                       24

<PAGE>

         to  articles,  sections,  paragraphs,   clauses,  annexes,  appendices,
         exhibits and schedules in or to this Agreement.

                  (e) All  definitions  set forth  herein  or in any other  Loan
         Document shall apply to the singular as well as the plural form of such
         defined term, and all references to the masculine  gender shall include
         reference  to the  feminine or neuter  gender,  and vice versa,  as the
         context may require.

                  (f) When used herein or in any other Loan Document, words such
         as "hereunder", "hereto", "hereof" and "herein" and other words of like
         import  shall,  unless the context  clearly  indicates to the contrary,
         refer to the whole of the applicable document and not to any particular
         article, section, subsection, paragraph or clause thereof.

                  (g) References to "including" means including without limiting
         the generality of any description preceding such term.

                  (h) All dates and times of day specified herein shall refer to
         such dates and times at Dallas, Texas.

                  (i)  Each of the  parties  to the  Loan  Documents  and  their
         counsel have reviewed and revised, or requested (or had the opportunity
         to  request)  revisions  to,  the  Loan  Documents,  and  any  rule  of
         construction  that  ambiguities are to be resolved against the drafting
         party shall be inapplicable in the construing and interpretation of the
         Loan Documents and all exhibits, schedules and appendices thereto.

                  (j) Any  reference  to an officer of the Borrower or any other
         Person by  reference  to the title of such  officer  shall be deemed to
         refer to each other officer of such Person, however titled,  exercising
         the same or substantially similar functions.

                  (k) All  references  to any  agreement or document as amended,
         modified or supplemented,  or words of similar effect,  shall mean such
         document  or  agreement,  as the case may be, as  amended,  modified or
         supplemented  from  time to time  only as and to the  extent  permitted
         therein and in the Loan Documents.


                                       25

<PAGE>

                                   ARTICLE II

                          The Revolving Credit Facility
                          -----------------------------


2.1.     Revolving Loans.
         ----------------

                  (a)  Commitment.  Subject to the terms and  conditions of this
Agreement,  each Lender  severally agrees to make Advances to the Borrower under
the Revolving  Credit Facility from time to time from the Closing Date until the
Revolving Credit  Termination Date on a pro rata basis as to the total borrowing
requested  by the Borrower on any day  determined  by such  Lender's  Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided,  however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing  or (ii) if the Agent has  accelerated
the  maturity of any of the Notes as a result of an Event of  Default;  provided
further, however, that immediately after giving effect to each such Advance, the
aggregate  amount of Outstandings  shall not exceed the Total  Revolving  Credit
Commitment.  Within such limits,  the  Borrower  may borrow,  repay and reborrow
under the  Revolving  Credit  Facility on a Business  Day from the Closing  Date
until,  but (as to borrowings and  reborrowings)  not  including,  the Revolving
Credit Termination Date; provided, however, that (y) no Revolving Loan that is a
Eurodollar  Rate Loan shall be made which has an Interest  Period  that  extends
beyond  the  Stated  Termination  Date and (z)  each  Revolving  Loan  that is a
Eurodollar  Rate Loan may,  subject to the provisions of Section 2.7 hereof,  be
repaid only on the last day of the Interest  Period with respect  thereto unless
such payment is  accompanied  by the  additional  payment,  if any,  required by
Section 4.5.

                  (b) Amounts. Except as otherwise permitted by the Lenders from
time to time, the aggregate amount of Outstandings  shall not exceed at any time
the  Total  Revolving  Credit  Commitment,  and,  in the  event  there  shall be
outstanding any such excess,  the Borrower shall  immediately make such payments
and  prepayments  as shall be  necessary to comply with this  restriction.  Each
Revolving Loan  hereunder,  other than Base Rate Refunding  Loans and Swing Line
Loans, and each Conversion under Section 2.8 hereof, shall be in an amount of at
least  $1,000,000,  and, if greater  than  $1,000,000,  an integral  multiple of
$100,000.

                  (c) Advances. (i) An Authorized  Representative shall give the
Agent (1) at least  three  (3)  Business  Days'  irrevocable  written  notice by
telefacsimile  transmission  of a Borrowing  Notice or Interest  Rate  Selection
Notice (as applicable) with appropriate  insertions,  effective upon receipt, of
each  Revolving  Loan that is a Eurodollar  Rate Loan (whether  representing  an
additional  borrowing  hereunder or the Conversion of a borrowing hereunder from
Base Rate Loans to  Eurodollar  Rate  Loans) on or prior to 10:30  A.M.  and (2)
irrevocable  written notice by telefacsimile  transmission of a Borrowing Notice
or Interest Rate Selection Notice (as applicable)  with appropriate  insertions,
effective  upon receipt,  of each Revolving Loan (other than Base Rate Refunding
Loans to the extent the same are  effected  without  notice  pursuant to Section
2.1(c)(iv) hereof) that is a Base Rate Loan (whether  representing an additional
borrowing  hereunder or the Conversion of borrowing  hereunder  from  Eurodollar
Rate Loans to Base Rate


                                       26

<PAGE>

Loans) on or prior to 10:30 A.M.  on the day of such  proposed  Revolving  Loan.
Each  such  notice  shall  specify  the  amount  of the  borrowing,  the Type of
Revolving Loan (Base Rate or Eurodollar  Rate),  the date of borrowing and, if a
Eurodollar  Rate Loan,  the  Interest  Period to be used in the  computation  of
interest.  Notice of receipt of such Borrowing Notice or Interest Rate Selection
Notice, as the case may be, together with the amount of each Lender's portion of
an Advance requested  thereunder,  shall be provided by the Agent to each Lender
by  telefacsimile  transmission  with reasonable  promptness,  but (provided the
Agent shall have received such notice by 10:30 A.M.) not later than 12:00 P.M.
on the same day as the Agent's receipt of such notice.

         (ii) Not later than 2:00 P.M. on the date  specified for each borrowing
under this Section 2.1, each Lender shall,  pursuant to the terms and subject to
the conditions of this Agreement,  make the amount of the Advance or Advances to
be made by it on such day  available by wire transfer to the Agent in the amount
of its  pro  rata  share,  determined  according  to  such  Lender's  Applicable
Commitment  Percentage  of the Revolving  Loan or Revolving  Loans to be made on
such day.  Such wire  transfer  shall be directed to the Agent at the  Principal
Office and shall be in the form of Dollars  constituting  immediately  available
funds.  The  amount so  received  by the Agent  shall,  subject to the terms and
conditions of this Agreement,  be made immediately  available to the Borrower by
delivery of the proceeds thereof to the Borrower's Account or otherwise as shall
be directed in the applicable Borrowing Notice by the Authorized  Representative
and reasonably acceptable to the Agent.

         (iii) The  Borrower  shall have the option to elect the duration of the
initial and any subsequent  Interest  Periods and to Convert the Revolving Loans
in accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided,  however, there shall not be outstanding
at any one time  Eurodollar  Rate  Loans  having  more  than  six (6)  different
Interest  Periods.  If the  Agent  does not  receive  a  Borrowing  Notice or an
Interest Rate  Selection  Notice giving notice of election of the duration of an
Interest  Period or of Conversion of any Loan to or  Continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by Section  2.1(c)(i) or 2.8 hereof,
the  Borrower  shall be deemed to have elected to request such Advance to be, or
Convert  such Loan to,  or  Continue  such  Loan as, a Base Rate Loan  until the
Borrower notifies the Agent in accordance with Section 2.8 hereof.

         (iv)  Notwithstanding  the  foregoing,  if a drawing  is made under any
Letter of Credit,  such  drawing is  honored  by the  Issuing  Bank prior to the
Revolving Credit  Termination Date, and the Borrower shall not immediately fully
reimburse  the Issuing Bank in respect of such  drawing,  (A) provided  that the
conditions  to  making  a  Revolving  Loan  as  herein  provided  shall  then be
satisfied,  the Reimbursement Obligation arising from such drawing shall be paid
to the Issuing Bank by the Agent  without the  requirement  of notice to or from
the Borrower from immediately  available funds which shall be advanced as a Base
Rate  Refunding  Loan by each Lender under the Revolving  Credit  Facility in an
amount  equal  to  such  Lender's  Applicable   Commitment  Percentage  of  such
Reimbursement  Obligation,  and (B) if the conditions to making a Revolving Loan
as herein  provided shall not then be satisfied,  each of the Lenders shall fund
by payment to the Agent (for the  benefit of the  Issuing  Bank) in  immediately
available  funds  the  purchase  from  the  Issuing  Bank  of  their  respective
Participations in the related Reimbursement Obligation based


                                       27

<PAGE>

on their  respective  Applicable  Commitment  Percentages of the Total Letter of
Credit  Commitment.  If a drawing  is  presented  under any  Letter of Credit in
accordance  with the  terms  thereof  and the  Borrower  shall  not  immediately
reimburse  the Issuing Bank in respect  thereof,  then notice of such drawing or
payment  shall be provided  promptly  by the  Issuing  Bank to the Agent and the
Agent  shall  provide  notice  to each  Lender  by  telephone  or  telefacsimile
transmission.  If notice to the Lenders of a drawing  under any Letter of Credit
is given by the Agent at or before 12:00 noon on any Business  Day,  each Lender
shall,  pursuant to the conditions specified in this Section 2.1(c)(iv),  either
make a Base Rate  Refunding Loan or fund the purchase of its  Participation,  as
applicable,  in the amount of such Lender's Applicable  Commitment Percentage of
such  drawing or payment  and shall pay such amount to the Agent for the account
of the  Issuing  Bank at the  Principal  Office in  Dollars  and in  immediately
available  funds  before  2:00 P.M. on the same  Business  Day. If notice to the
Lenders of a drawing  under a Letter of Credit is given by the Agent after 12:00
noon  on any  Business  Day,  each  Lender  shall,  pursuant  to the  conditions
specified in this Section 2.1(c)(iv),  either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's Applicable
Commitment  Percentage  of such  drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in Dollars
and in  immediately  available  funds  before  12:00 noon on the next  following
Business Day. Any such Base Rate  Refunding Loan shall be advanced as, and shall
Continue as, a Base Rate Loan unless and until the Borrower  Converts  such Base
Rate Loan in accordance with the terms of Section 2.8 hereof.


2.2.  Payment of Interest.
      --------------------

                  (a) The  Borrower  shall  pay  interest  to the  Agent for the
account of each Lender on the  outstanding and unpaid  principal  amount of each
Revolving Loan made by such Lender for the period commencing on the date of such
Revolving  Loan until such  Revolving  Loan shall be due at the then  applicable
Base Rate for Base Rate Loans or applicable  Eurodollar Rate for Eurodollar Rate
Loans,  as designated by the Authorized  Representative  pursuant to Section 2.1
hereof;  provided,  however,  that if any amount  shall not be paid when due (at
maturity,  by  acceleration or otherwise) or if any other Event of Default shall
have occurred and be continuing  hereunder,  all amounts  outstanding  hereunder
shall bear  interest  thereafter at the Default Rate from the date such Event of
Default occurred until the date such Event of Default is cured or waived.

                  (b) Interest on each  Revolving  Loan shall be computed on the
basis of a year of 360 days and calculated in each case for the actual number of
days  elapsed.  Interest on each  Revolving  Loan shall be paid (i) quarterly in
arrears on the last  Business Day of each March,  June,  September and December,
commencing  September 30, 1997 for each Base Rate Loan,  (ii) on the last day of
the  applicable  Interest  Period  for each  Eurodollar  Rate Loan and,  if such
Interest  Period  extends for more than three (3) months,  at intervals of three
(3) months after the first day of such Interest  Period,  and (iii) upon payment
in full of the principal amount of such Revolving Loan.


2.3.   Payment of Principal.
       --------------------

The  principal  amount of each  Revolving  Loan shall be due and  payable to the
Agent for the benefit of each Lender in full on the Revolving Credit Termination
Date, or earlier as specifically  provided  herein.  The principal amount of any
Base Rate Loan may be prepaid in whole or in part at any time. The principal


                                       28

<PAGE>

Rate Loan may be prepaid in whole or in part at any time.  The principal  amount
of any  Eurodollar  Rate Loan may be prepaid  only at the end of the  applicable
Interest  Period  unless the Borrower  shall pay to the Agent for the account of
the Lenders the additional  amount,  if any,  required under Section 4.5 hereof.
All  prepayments of Revolving  Loans made by the Borrower shall be in the amount
of $1,000,000 or such greater amount which is an integral  multiple of $100,000,
or the amount equal to all Revolving Credit  Outstandings,  or such other amount
as necessary to comply with Section 2.1(c)(iv) or Section 2.8 hereof.


2.4. Manner of Payments.
     ------------------

                  (a) Each payment of principal  (including any  prepayment) and
payment of interest and fees,  and any other  amount  required to be paid to the
Lenders with respect to the Revolving  Loans,  shall be made to the Agent at the
Principal Office,  for the account of each Lender, in Dollars and in immediately
available funds before 1:00 P.M. on the date such payment is due. The Agent may,
but shall not be obligated to, debit the amount of any such payment which is not
made by such time to any ordinary deposit account,  if any, of the Borrower with
the Agent.

                  (b) The Agent shall deem any  payment  made by or on behalf of
the  Borrower  hereunder  that is not made both in  Dollars  and in  immediately
available funds and prior to 1:00 P.M. to be a non-conforming  payment. Any such
payment  shall not be deemed to be  received by the Agent until the later of (i)
the time such funds become  available  funds and (ii) the next Business Day. Any
non-conforming  payment may  constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a  non-conforming
payment  is made  until the later of (x) the date such  funds  become  available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.

                  (c) In the  event  that any  payment  hereunder  or under  the
Revolving Notes becomes due and payable on a day other than a Business Day, then
such due date  shall be  extended  to the next  succeeding  Business  Day unless
provided  otherwise  under clause (ii) of the  definition of "Interest  Period";
provided  that interest  shall  continue to accrue during the period of any such
extension  and  provided  further,  that in no event  shall any such due date be
extended beyond the Revolving Credit Termination Date.


2.5. Notes.
     ------

                  (a) Revolving  Loans made by each Lender shall be evidenced by
a Revolving Note payable to the order of such Lender in the respective amount of
its Revolving Credit Commitment, which Revolving Note shall be dated the Closing
Date or a later date pursuant to an Assignment  and Acceptance and shall be duly
completed, executed and delivered by the Borrower.

                  (b) Swing Line Loans made by NationsBank shall be evidenced by
the Swing  Line Note  payable to the order of  NationsBank,  which Note shall be
dated the Closing Date and shall be duly  completed,  executed and  delivered by
the Borrower.



                                       29

<PAGE>

2.6. Pro Rata Payments.
     ------------------

Except  as  otherwise  provided  herein,  (a) each  payment  on  account  of the
principal  of and  interest on the  Revolving  Loans and the fees  described  in
Section  2.10  hereof  shall be made to the Agent for the account of the Lenders
pro rata based on their Applicable Commitment  Percentages,  (b) all payments to
be made by the  Borrower  for the  account of each of the  Lenders on account of
principal,  interest  and  fees,  shall  be  made  without  diminution,  setoff,
recoupment or  counterclaim,  and (c) the Agent will promptly  distribute to the
Lenders in immediately  available  funds payments  received  infully  collected,
immediately available funds from the Borrower.


2.7.  Reductions.
      -----------

The Borrower shall, by notice from an Authorized Representative,  have the right
from time to time but not more frequently  than once each calendar  month,  upon
not less than three (3) Business  Days' written  notice to the Agent,  effective
upon receipt,  to reduce the Total Revolving Credit Commitment.  The Agent shall
give each  Lender,  within  one (1)  Business  Day of  receipt  of such  notice,
telefacsimile  notice,  or telephonic  notice  (confirmed  in writing),  of such
reduction. Each such reduction shall be in the aggregate amount of $1,000,000 or
such  greater  amount  which is in an integral  multiple of  $1,000,000,  or the
entire remaining Total Revolving Credit Commitment, and shall permanently reduce
the Total Revolving  Credit  Commitment and the Revolving  Credit  Commitment of
each Lender pro rata.  Each reduction of the Total Revolving  Credit  Commitment
shall be  accompanied  by payment of the Revolving  Loans to the extent that the
aggregate  principal  amount of Outstandings  exceeds the Total Revolving Credit
Commitment  after giving  effect to such  reduction,  together  with accrued and
unpaid  interest on the amounts  prepaid.  No such reduction shall result in the
payment of any  Eurodollar  Rate Loan other than on the last day of the Interest
Period of such  Eurodollar  Rate Loan unless such  prepayment is  accompanied by
amounts due, if any, under Section 4.5 hereof.


2.8. Conversions and Elections of Subsequent Interest Periods.
     --------------------------------------------------------

                  (a) Upon  delivery,  effective  upon  receipt,  of a  properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on
any Business  Day, the  Borrower  may Convert all or a part of  Eurodollar  Rate
Loans under the Revolving  Credit Facility to Base Rate Loans on the last day of
the Interest Period for such Eurodollar Rate Loans; and

                  (b)  Provided  that no Default or Event of Default  shall have
occurred and be continuing and subject to the limitations set forth below and in
Article IV hereof, the Borrower may, upon delivery, effective upon receipt, of a
properly  completed  Interest  Rate  Selection  Notice to the Agent on or before
10:30  A.M.  three (3)  Business  Days'  prior to the date of such  election  or
Conversion:

                           (i) elect a subsequent  Interest  Period for all or a
                  portion of Eurodollar  Rate Loans under the  Revolving  Credit
                  Facility to begin on the last day of the then current Interest
                  Period for such Eurodollar Rate Loans; and

                           (ii) Convert Base Rate Loans under the Revolving
                  Credit Facility to Eurodollar Rate Loans on any Business Day.


                                       30

<PAGE>

Each  election and  Conversion  pursuant to this Section 2.8 shall be subject to
the  limitations  on  Eurodollar  Rate  Loans  set  forth in the  definition  of
"Interest  Period"  herein and in Sections  2.1, 2.3 and Article IV hereof.  The
Agent  shall give  written  notice to each  Lender of such notice of election or
Conversion  prior to 12:00 P.M. on the day such notice of election or Conversion
is received.  All such  Continuations  or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.


2.9. Increase and Decrease in Amounts.
     ---------------------------------

The amount of the Total Revolving Credit  Commitment which shall be available to
the  Borrower  as  Advances  shall  be  reduced  by  the  aggregate   amount  of
Outstandings.


2.10. Commitment Fee.
      ---------------

For the period  beginning on the Closing Date and ending on the Revolving Credit
Termination  Date,  the  Borrower  agrees to pay to the Agent,  for the pro rata
benefit of the Lenders based on their Applicable Commitment  Percentages,  a fee
equal to the Applicable  Margin for the Commitment Fee multiplied by the average
daily  amount  by which  the  Total  Revolving  Credit  Commitment  exceeds  the
Outstandings  (without  giving effect to Swing Line  Outstandings  except in the
case of NationsBank). Such fees shall be due in arrears on the last Business Day
of each March, June,  September and December,  commencing  September 30, 1997 to
and on the Revolving Credit Termination Date.  Notwithstanding the foregoing, so
long as any Lender fails to make  available any portion of its Revolving  Credit
Commitment when requested,  such Lender shall not be entitled to receive payment
of its pro rata share of such fee until such Lender  shall make  available  such
portion. Such fee shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.


2.11.  Deficiency  Advances.
       ---------------------

No Lender shall be responsible for any default of any other Lender in respect to
such other  Lender's  obligation  to make any Loan or fund its  purchase  of any
Participation  hereunder nor shall the Revolving Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender.  Without
limiting the generality of the foregoing,  in the event any Lender shall fail to
advance  funds to the Borrower  under the  Revolving  Credit  Facility as herein
provided,  the Agent may in its  discretion,  but  shall  not be  obligated  to,
advance under the Revolving  Note in its favor as a Lender all or any portion of
such amount or amounts  (each, a "deficiency  advance") and shall  thereafter be
entitled to payments of principal of and interest on such deficiency  advance in
the same  manner  and at the same  interest  rate or rates to which  such  other
Lender would have been  entitled had it made such  advance  under its  Revolving
Note;  provided  that,  upon  payment to the Agent from such other Lender of the
entire outstanding amount of each such deficiency advance, together with accrued
and unpaid interest thereon,from the most recent date or dates interest was paid
to the Agent by the Borrower on each  Revolving  Loan  comprising the deficiency
advance at the interest rate per annum for overnight borrowing by the Agent from
the Federal  Reserve  Bank,  then such  payment  shall be  credited  against the
applicable Revolving Note of the Agent in full payment of such deficiency


                                       31

<PAGE>

advance and the  Borrower  shall be deemed to have  borrowed  the amount of such
deficiency  advance  from such other Lender as of the most recent date or dates,
as the case may be,  upon  which  any  payments  of  interest  were  made by the
Borrower thereon.


2.12. Use of Proceeds.
      ----------------

The  proceeds  of the Loans  made  pursuant  to the  Revolving  Credit  Facility
hereunder  shall  be  used  by  the  Borrower  for  working   capital,   capital
expenditures, permitted Acquisitions and general corporate purposes.


2.13. Swing Line.
      -----------

                 a) Notwithstanding any other provision of this Agreement to the
contrary,  in order to administer the Revolving  Credit Facility in an efficient
manner and to minimize the transfer of funds  between the Agent and the Lenders,
NationsBank  shall make available  Swing Line Loans to the Borrower prior to the
Facility  Termination  Date.  NationsBank  shall  not make any  Swing  Line Loan
pursuant hereto (i) if NationsBank has received written notice from the Borrower
or a Lender that the Borrower is not in  compliance  with all the  conditions to
the making of Loans set forth in this Agreement,  (ii) if after giving effect to
such Swing Line Loan, the Swing Line Outstandings  exceed $5,000,000 or (iii) if
after  giving  effect to such  Swing  Line  Loan,  the  aggregate  amount of all
Outstandings  exceeds the Total Revolving  Credit  Commitment.  Swing Line Loans
shall bear  interest  at the Base  Rate.  The  Borrower  may  borrow,  repay and
reborrow  under  this  Section  2.13.   Unless   notified  to  the  contrary  by
NationsBank, borrowings under the Swing Line shall be made in the minimum amount
of $100,000 or, if greater,  in amounts which are integral multiples of $50,000,
upon written request by telefacsimile  transmission,  effective upon receipt, by
an Authorized Representative made to NationsBank not later than 2:00 P.M. on the
Business  Day of the  requested  borrowing.  Each such  Borrowing  Notice  shall
specify the amount of the borrowing  and the date of borrowing,  and shall be in
the form of Exhibit D-2, with  appropriate  insertions.  Unless  notified to the
contrary by  NationsBank,  each  repayment  of a Swing Line Loan shall be in the
minimum amount of $500,000 or an integral multiple of $50,000 in excess thereof,
or the  aggregate  amount  of all  Swing  Line  Outstandings.  If an  Authorized
Representative  instructs  NationsBank to debit any demand deposit  account of a
Borrower  in the amount of any  payment  with  respect to a Swing Line Loan,  or
NationsBank  otherwise  receives  repayment,  after 2:00 P.M. on a Business Day,
such payment shall be deemed  received on the next Business Day. Each Swing Line
Loan  shall be  repaid by the  Borrower  on or before  the  tenth  Business  Day
following the day such Swing Line Loan is made.

                 (b) The interest  payable on Swing Line Loans is solely for the
account of NationsBank,  and all accrued and unpaid interest on Swing Line Loans
shall be payable on the dates and in the manner provided in Sections 2.2 and 2.4
with  respect to interest on Base Rate Loans  except as  otherwise  set forth in
Section 2.13(a) above. The Swing Line Outstandings shall be evidenced by th Note
delivered to NationsBank pursuant to Section 2.5.

                 (c) Upon the making of a Swing Line Loan,  each Lender shall be
deemed to have purchased from  NationsBank a Participation  therein in an amount
equal to that Lender's Applicable Commitment Percentage of such Swing Line Loan.
Upon demand made by NationsBank,  each Lender shall, according to its Applicable
Commitment  Percentage of such Swing Line Loan,  promptly provide to NationsBank
its purchase price therefor in an amount equal


                                       32

<PAGE>

to its Participation therein. Any Advance made by a Lender pursuant to demand of
NationsBank of the purchase price of its Participation shall be deemed to be (i)
provided that the  conditions  to making Loans shall be  satisfied,  a Base Rate
Refunding  Loan  pursuant to Section 2.1 until the Borrower  Converts  such Base
Rate Loan in  accordance  with the terms of Section  2.8,  and (ii) in all other
cases, the funding by each Lender of the purchase price of its  Participation in
such Swing Line Loan.  The  obligation of each Lender to so provide its purchase
price to  NationsBank  pursuant  to clause  (ii)  above  shall be  absolute  and
unconditional  and shall not be affected by the  occurrence or  continuance of a
Default or an Event of  Default,  the failure to satisfy  any  condition  to the
making of a Loan or any other occurrence or event.

                  (d) The  Borrower  at its  option  and  subject  to the  terms
hereof,  may request an Advance pursuant to Section 2.1 in an amount  sufficient
to repay  Swing Line  Outstandings  on any date and the Agent  shall  provide to
NationsBank from the proceeds of such Advance the amount necessary to repay such
Swing Line Outstandings  (which  NationsBank shall then apply to such repayment)
and credit any  balance of the  Advance in  immediately  available  funds in the
manner directed by the Borrower  pursuant to Section  2.1(c)(ii) and the Lenders
shall  then be deemed to have made  Loans in the  amount of such  Advances.  The
Swing Line shall continue in effect until the Revolving Credit Termination Date.




                                   ARTICLE III
                                   -----------

                                Letters of Credit
                                -----------------


3.1.  Letters of Credit.
      -----------------

                  (a)  The  Issuing  Bank  agrees,  subject  to  the  terms  and
conditions of this Agreement, upon request of the Borrower to issue from time to
time for the  account of the  Borrower  Letters of Credit  upon  delivery to the
Issuing  Bank of an  Application  and  Agreement  for Letter of Credit  relating
thereto in form and content acceptable to the Issuing Bank;  provided,  that (i)
the Letter of Credit  Outstandings  shall not exceed the Total  Letter of Credit
Commitment,  (ii) no Letter of Credit shall be issued if,  after  giving  effect
thereto,  the aggregate amount of Outstandings  shall exceed the Total Revolving
Credit  Commitment  and (iii) no Letter of Credit shall be issued if the Issuing
Bank has received written notice from the Borrower or a Lender that the Borrower
is not in  compliance  with all of the  conditions  to  issuance  of a Letter of
Credit set forth in this Agreement.

                  (b) No Letter  of  Creditshall  have an  initial  expiry  date
occurring later than the earlier to occur of twelve (12) month after the date of
its  issuance or the fifth  Business Day prior to the Stated  Termination  Date;
provided,  however,  that each  Letter of Credit may by its terms  automatically
extend its then existing expiry date for an additional  twelve (12) month period
(an  "Extension  Period")  provided  (i) the Agent  has not given  notice to the
Borrower  and the  beneficiary  of such Letter of Credit of its  election not to
renew such  Letter of Credit,  such  notice to be given at least sixty (60) days
prior to the then  existing  expiry  date of such Letter of Credit and (ii) such
Letter of Credit shall have been cash-collateralized in a manner consistent with
the terms of Section 9.1(B) hereof. Each Letter of Credit may have any number of
consecutive Extension Periods provided no notice, as described above has been


                                       33

<PAGE>

delivered  by the Agent;  provided,  however,  no Letter of Credit shall have an
Extension Period ending after the date which is twelve (12) months following the
fifth  Business  Day prior to the  Stated  Termination  Date.  After the  Stated
Termination  Date, no Lender shall be deemed to have a Participation in a Letter
of  Credit  having  an  Extension  Period  which  continues  beyond  the  Stated
Termination  Date to the extent such Lender has  delivered to the Agent and each
other Lender  written notice of its election not to renew its  Participation  in
such Letter of Credit,  such notice to be given at least  seventy-five (75) days
prior to the existing expiry date of such Letter of Credit.  Notwithstanding the
foregoing  provisions of this Section 3.1(b),  no Letter of Credit providing for
confirmation  by a  confirming  bank or a nominated  Person shall have an expiry
date later than 45 days preceding the Stated Termination Date (or, if subject to
an  Extension  Period  continuing  past the  Stated  Termination  Date,  45 days
preceding the date which is twelve(12)  months following the Stated  Termination
Date).


3.2.     Reimbursement.
         -------------

                  (a) The Borrower hereby  unconditionally  agrees to pay to the
Issuing Bank  immediately on demand at the Principal Office all amounts required
to pay all drafts  drawn or  purporting  to be drawn under the Letters of Credit
and all reasonable  expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing  Bank (which  shall  include  Advances  under the  Revolving  Credit
Facility if permitted by Section 2.1 hereof)  sufficient  funds to pay all debts
and liabilities  arising under any Letter of Credit.  The Issuing Bank agrees to
give the  Borrower  prompt  notice of any  request  for a draw under a Letter of
Credit.  The Issuing  Bank may charge any account the  Borrower may have with it
for any and all  amounts the  Issuing  Bank pays under a Letter of Credit,  plus
charges  and  reasonable  expenses as from time to time agreed to by the Issuing
Bank  and  the  Borrower;  provided  that to the  extent  permitted  by  Section
2.1(c)(iv)  hereof,  amounts  shall  be paid  pursuant  to  Advances  under  the
Revolving Credit Facility.  The Borrower agrees to pay the Issuing Bank interest
on any  Reimbursement  Obligations  not paid when due  hereunder  at the Default
Rate,  such rate to be  calculated on the basis of a year of 360 days for actual
days elapsed.

                  (b) In accordance  with the  provisions of Section  2.1(c)(iv)
hereof,  the Issuing Bank shall notify the Agent of any drawing under any Letter
of Credit promptly following the receipt by the Issuing Bank of such drawing.

                  (c)  Each  Lender   (other   than  the  Issuing   Bank)  shall
automatically  acquire on the date of issuance  thereof,  a Participation in the
liability  of the Issuing  Bank in respect of each Letter of Credit in an amount
equal to such Lender's Applicable Commitment  Percentage of such liability,  and
to the extent that the  Borrower  is  obligated  to pay the  Issuing  Bank under
Section 3.2(a)  hereof,  each Lender (other than the Issuing Bank) thereby shall
absolutely, unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to the Issuing Bank as  hereinafter  described,  its Applicable
Commitment  Percentage of the liability of the Issuing Bank under such Letter of
Credit.


                                       34

<PAGE>

                           (i) Each Lender  (other than the Issuing Bank) shall,
                  subject to the terms and  conditions of Article II, pay to the
                  Agent for the  account of the  Issuing  Bank at the  Principal
                  Office in  Dollars  and in  immediately  available  funds,  an
                  amount equal to its  Applicable  Commitment  Percentage of any
                  Reimbursement  Obligation under a Letter of Credit, such funds
                  to be provided in the manner  described in Section  2.1(c)(iv)
                  hereof.

                           (ii)  Simultaneously  with the making of each payment
                  by  a  Lender  to  the  Issuing   Bank   pursuant  to  Section
                  2.1(c)(iv)(B)  hereof,  such Lender shall,  automatically  and
                  without any further  action on the part of the Issuing Bank or
                  such  Lender,  acquire a  Participation  in an amount equal to
                  such  payment  (excluding  the  portion  thereof  constituting
                  interest  accrued  prior  to the  date  the  Lender  made  its
                  payment)  in  the  related  Reimbursement  Obligation  of  the
                  Borrower. The Reimbursement  Obligations of the Borrower shall
                  be  immediately  due and payable  whether by Advances  made in
                  accordance with Section 2.1(c)(iv)(A) hereof or otherwise.

                           (iii) Each Lender's obligation to make payment to the
                  Agent for the account of the Issuing Bank  pursuant to Section
                  2.1(c)(iv)  hereof and this Section  4.2(c),  and the right of
                  the Issuing  Bank to receive the same,  shall be absolute  and
                  unconditional,  shall  not be  affected  by  any  circumstance
                  whatsoever  and shall be made  without any offset,  abatement,
                  withholding  or  reduction   whatsoever.   If  any  Lender  is
                  obligated to pay but does not pay amounts to the Agent for the
                  account  of the  Issuing  Bank in full  upon such  request  as
                  required by Section  2.1(c)(iv) hereof or this Section 3.2(c),
                  such Lender shall, on demand, pay to the Agent for the account
                  of the Issuing Bank interest on the unpaid amount for each day
                  during the period  commencing  on the date of notice  given to
                  such  Lender  pursuant  to Section  2.1(c)  hereof  until such
                  Lender  pays such  amount to the Agent for the  account of the
                  Issuing  Bank in full  at the  interest  rate  per  annum  for
                  overnight  borrowing  by the Agent  from the  Federal  Reserve
                  Bank.

                           (iv)  In  the  event  the  Lenders   have   purchased
                  Participations in any Reimbursement Obligation as set forth in
                  clause  (ii)  above,   then  at  any  time   payment  of  such
                  Reimbursement  Obligation  (including  any payment of interest
                  pursuant to Section  3.2(a)  hereof),  in whole or in part, is
                  received  by  Issuing  Bank in  fully  collected,  immediately
                  available funds from the Borrower, Issuing Bank shall promptly
                  pay  to  each  Lender  an  amount  equal  to  its   Applicable
                  Commitment Percentage of such payment.

                  (d) Promptly  following the end of each calendar quarter,  the
Issuing  Bank  shall  deliver  to the Agent a notice  describing  the  aggregate
undrawn  amount of all  Letters of Credit at the end of such  quarter.  Upon the
request of any Lender from time to time,  the Issuing Bank shall  deliver to the
Agent,  and the Agent  shall  deliver  to such  Lender,  any  other  information
reasonably  requested  by such  Lender  with  respect  to each  Letter of Credit
outstanding.


                                       35
<PAGE>

                  (e) The  issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article V hereof, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably  satisfactory  to the Issuing Bank  consistent
with the then current  practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements  relating to such Letters of Credit as the
Issuing Bank shall have reasonably  requested consistent with such practices and
procedures. All Letters of Credit shall be issued pursuant to and subject to the
Uniform   Customs  and  Practice  for   Documentary   Credits,   1993  revision,
International  Chamber  of  Commerce  Publication  No.  500 and  all  subsequent
amendments and revisions thereto.

                  (f) The  Borrower  agrees that  Issuing  Bank may, in its sole
discretion,  accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other  documents  otherwise in order which may be signed or issued
by an  administrator,  executor,  trustee in  bankruptcy,  debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal  representative  of a party who is  authorized  under such Letter of
Credit to draw or issue any drafts or other documents.

                  (g)  Subject to and without  limiting  the  generality  of the
provisions of Section 11.9 hereof,  the Borrower  hereby agrees to indemnify and
hold harmless the Issuing Bank, each other Lender and the Agent from and against
any and all claims and damages, losses,  liabilities,  reasonable and documented
out-of-pocket  costs and expenses  which the Issuing Bank,  such other Lender or
the Agent incurs by reason of or in connection  with the issuance or transfer of
or payment or  failure  to pay under any  Letter of  Credit;  provided  that the
Borrower  shall not be required to indemnify the Issuing Bank,  any other Lender
or the Agent for any claims, damages, losses, liabilities,  costs or expenses to
the extent,  but only to the extent,  (i) caused by the  willful  misconduct  or
gross negligence of the party to be indemnified or (ii) caused by the failure of
the Issuing Bank to pay under any Letter of Credit after the  presentation to it
of a request for payment  strictly  complying  with the terms and  conditions of
such Letter of Credit, unless such payment is prohibited by any law, regulation,
court order or decree.

                  (h) Without limiting Borrower's rights as set forth in Section
3.2(g)  hereof,  the  obligation  of the Borrower to  immediately  reimburse the
Issuing Bank for drawings  made under  Letters of Credit and the Issuing  Bank's
right to receive such payment shall be absolute,  unconditional and irrevocable,
and that  such  obligations  of the  Borrower  shall be  performed  strictly  in
accordance  with the terms of this  Agreement and such Letters of Credit and the
related  Applications  and  Agreement  for  any  Letter  of  Credit,  under  all
circumstances whatsoever, including the following circumstances:

                           (i) any lack of  validity  or  enforceability  of the
                  Letter of Credit,  the  obligation  supported by the Letter of
                  Credit or any other agreement or instrument  relating  thereto
                  (collectively, the "Related LC Documents");


                                       36

<PAGE>

                           (ii) any amendment or waiver of or any consent to or
                  departure from all or any of the Related LC Documents;

                           (iii) the  existence  of any claim,  setoff,  defense
                  (other  than the  defense of payment  in  accordance  with the
                  terms of this  Agreement)  or other  rights which the Borrower
                  may have at any time against any beneficiary or any transferee
                  of a Letter of Credit (or any persons or entities for whom any
                  such  beneficiary or any such  transferee may be acting),  the
                  Agent, the Lenders or any other Person,  whether in connection
                  with the Loan  Documents,  the  Related  LC  Documents  or any
                  unrelated transaction;

                           (iv) any breach of contract or other dispute  between
                  the Borrower and any beneficiary or any transferee of a Letter
                  of  Credit  (or  any  persons  or   entities   for  whom  such
                  beneficiary or any such transferee may be acting),  the Agent,
                  the Lenders or any other Person;

                           (v)  any  draft,  statement  or  any  other  document
                  presented  under the  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
                  whatsoever;

                           (vi)  any   delay,   extension   of  time,   renewal,
                  compromise  or other  indulgence  or  modification  granted or
                  agreed to by the Agent,  with or without notice to or approval
                  by the  Borrower in respect of any of  Borrower's  Obligations
                  under this Agreement; or

                           (vii) any other circumstance or happening whatsoever,
                  whether or not similar to any of the foregoing.


3.3.  Letter of Credit Facility  Fees.
      --------------------------------

The  Borrower  shall pay to the Agent (a) for the pro rata benefit of the enders
based on their Applicable Commitment Percentages,  a fee on the aggregate amount
available  to be drawn on each  outstanding  Letter of Credit at a rate equal to
the Applicable  Margin for the fee for Letters of Credit and (b) for the benefit
of the Issuing Bank, 0.125% per annum based on the aggregate amount available to
be drawn on each outstanding Letter of Credit.  Such fees shall be due quarterly
in arrears on the last day of each March, June, September and December the first
such  payment  to be made on the  first  such date  occurring  after the date of
issuance of a Letter of Credit.  The fees described in this Section 3.3 shall be
calculated  on the  basis of a year of 360 days for the  actual  number  of days
elapsed.


3.4.  Administrative Fees.
      --------------------

The  Borrower  shall pay to the Issuing Bank such  administrative  fee and other
fees,  if any,in  connection  with the Letters of Credit in such  amounts and at
such times as the Issuing Bank and the Borrower shall agree from time to time.



                                       37

<PAGE>

                                   ARTICLE IV
                                   ----------

                             Change in Circumstances
                             -----------------------


4.1.  Increased Cost and Reduced Return.
      ----------------------------------

                  (a) If, after the date hereof,  the adoption of any applicable
law,  rule,  or  regulation,  or any  change in any  applicable  law,  rule,  or
regulation, or any change in the interpretation or administration thereof by any
governmental  authority,  central bank, or  comparable  agency  charged with the
interpretation  or administration  thereof,  or compliance by any Lender (or its
Applicable  Lending Office) with any request or directive (whether or not having
the  force  of  law)  of any  such  governmental  authority,  central  bank,  or
comparable agency:

                         (i)  shall  subject  such  Lender  (or  its  Applicable
         Lending  Office) to any tax,  duty, or other charge with respect to any
         Loans, Letters of Credit, its Note, or its obligation to make Loans, or
         change the basis of taxation of any amounts  payable to such Lender (or
         its  Applicable  Lending  Office)  under this  Agreement or its Note in
         respect of any Loans  (other  than taxes  imposed  on the  overall  net
         income of such Lender by the  jurisdiction in which such Lender has its
         principal office or such Applicable Lending Office) and taxes for which
         indemnification is provided under Section 4.6 hereof;

                        (ii)  shall  impose,  modify,  or  deem  applicable  any
         reserve,  special deposit,  assessment,  or similar  requirement (other
         than the  Reserve  Requirement  utilized  in the  determination  of the
         Eurodollar  Rate)  relating to any extensions of credit or other assets
         of, or any deposits with or other  liabilities or commitments  of, such
         Lender (or its  Applicable  Lending  Office),  including  the Revolving
         Credit Commitment of such Lender hereunder; or

                       (iii)  shall  impose on such  Lender  (or its  Applicable
         Lending Office) or on the London  interbank  market any other condition
         affecting  this  Agreement  or its  Note or any of such  extensions  of
         credit or liabilities or commitments;

and the result of any of the  foregoing  is to increase  the cost to such Lender
(or its Applicable Lending Office) of making,  Converting into,  Continuing,  or
maintaining any Loans or to reduce any sum received or receivable by such Lender
(or its Applicable Lending Office) under this Agreement or its Note with respect
to any Loans or Letters of Credit, then the Borrower shall pay to such Lender on
demand such amount or amounts as will  compensate such Lender for such increased
cost or reduction.  If any Lender  requests  compensation  by the Borrower under
this Section 4.1(a),  the Borrower may, by notice to such Lender (with a copy to
the Agent),  suspend the  obligation of such Lender to make or Continue Loans of
the Type with respect to which such  compensation  is  requested,  or to Convert
Loans of any other Type into Loans of such  Type,  until the event or  condition
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.4 shall be  applicable);  provided that such  suspension  shall not
affect the right of such Lender to receive the compensation so requested.

                                       38

<PAGE>

                  (b)  If,  after  the  date  hereof,   any  Lender  shall  have
determined  that  the  adoption  of any  applicable  law,  rule,  or  regulation
regarding  capital  adequacy or any change therein or in the  interpretation  or
administration  thereof  by  any  governmental   authority,   central  bank,  or
comparable agency charged with the interpretation or administration  thereof, or
any request or directive  regarding  capital adequacy (whether or not having the
force of law) of any such  governmental  authority,  central bank, or comparable
agency,  has or would  have the  effect  of  reducing  the rate of return on the
capital  of  such  Lender  or  any  corporation  controlling  such  Lender  as a
consequence of such Lender's  obligations  hereunder to a level below that which
such  Lender or such  corporation  could have  achieved  but for such  adoption,
change,  request,  or directive  (taking into  consideration  its policies  with
respect to capital  adequacy),  then from time to time upon demand the  Borrower
shall pay to such Lender such  additional  amount or amounts as will  compensate
such Lender for such reduction.

                  (c) Each Lender  shall  promptly  notify the  Borrower and the
Agent of any event of which it has knowledge,  occurring  after the date hereof,
which will entitle such Lender to compensation  pursuant to this Section 4.1 and
will designate a different  Applicable  Lending Office if such  designation will
avoid the need for, or reduce the amount of, such  compensation and will not, in
the judgment of such  Lender,  be  otherwise  disadvantageous  to it. Any Lender
claiming  compensation  under this Section 4.1 shall furnish to the Borrower and
the Agent a statement  setting forth the additional amount or amounts to be paid
to it hereunder  which shall be conclusive in the absence of manifest  error. In
determining  such  amount,  such  Lender may use any  reasonable  averaging  and
attribution methods.


 4.2. Limitation on Types of Loans.
      ----------------------------

If on or prior to the first day of any Interest  Period for any Eurodollar  Rate
Loan:

                  (a)  the  Agent  determines  (which   determination  shall  be
         conclusive)  that by reason of  circumstances  affecting  the  relevant
         market, adequate and reasonable means do not exist for ascertaining the
         Eurodollar Rate for such Interest Period; or

                  (b) the Required Lenders determine (which  determination shall
         be conclusive)  and notify the Agent that the Eurodollar  Rate will not
         adequately  and  fairly  reflect  the cost to the  Lenders  of  funding
         Eurodollar Rate Loans for such Interest Period;

then the Agent shall give the Borrower  prompt  notice  thereof  specifying  the
relevant Type of Loans and the relevant amounts or periods,  and so long as such
condition  remains in effect,  the Lenders  shall be under no obligation to make
additional Loans of such Type,  Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the  Borrower  shall,  on the last
day(s) of the then current Interest  Period(s) for the outstanding  Loans of the
affected Type,  either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.


4.3.  Illegality.
      -----------

Notwithstanding  any other  provision  of this  Agreement,  in the event that it
becomes  unlawful  for any  Lender  or its  Applicable  Lending  Office to make,
maintain, or fund Eurodollar Rate Loans herunder, then such Lender shall


                                       39

<PAGE>

promptly  notify the Borrower  thereof and such  Lender's  obligation to make or
Continue  Eurodollar  Rate  Loans  and to  Convert  other  Types of  Loans  into
Eurodollar  Rate Loans  shall be  suspended  until such time as such  Lender may
again  make,  maintain,  and fund  Eurodollar  Rate  Loans  (in  which  case the
provisions of Section 6.4 shall be applicable).


4.4.  Treatment of Affected  Loans.
      -----------------------------

If the  obligation of any Lender to make a Eurodollar  Rate Loan or to Continue,
or to Convert Loans of any other Type into,  Loans of a particular Type shall be
suspended pursuant to Section 4.1 or 4.3 hereof (Loans of such Type being herein
called "Affected Loans" and such Type being herein called the "Affected Type") ,
such Lender's  Affected  Loans shall be  automatically  Converted into Base Rate
Loans on the last day(s) of the then  current  Interest  Period(s)  for Affected
Loans (or, in the case of a Conversion  required by Section 4.3 hereof,  on such
earlier  date as such  Lender  may  specify to the  Borrower  with a copy to the
Agent) and, unless and until such Lender gives notice as provided below that the
circumstances  specified  in Section  4.1 or 4.3  hereof  that gave rise to such
Conversion no longer exist:

                  (a) to the extent that such Lender's  Affected Loans have been
         so  Converted,  all payments and  prepayments  of principal  that would
         otherwise be applied to such Lender's  Affected  Loans shall be applied
         instead to its Base Rate Loans; and

                  (b) all Loans that would  otherwise  be made or  Continued  by
         such Lender as Loans of the  Affected  Type shall be made or  Continued
         instead as Base Rate  Loans,  and all Loans of such  Lender  that would
         otherwise  be  Converted  into  Loans  of the  Affected  Type  shall be
         Converted instead into (or shall remain as) Base Rate Loans.

If such Lender gives notice to the Borrower  (with a copy to the Agent) that the
circumstances  specified  in  Section  4.1 or 4.3  hereof  that gave rise to the
Conversion  of such  Lender's  Affected  Loans  pursuant to this  Section 4.4 no
longer exist (which such Lender  agrees to do promptly  upon such  circumstances
ceasing  to  exist)  at a time  when  Loans of the  Affected  Type made by other
Lenders are  outstanding,  such Lender's Base Rate Loans shall be  automatically
Converted,  on the first day(s) of the next  succeeding  Interest  Period(s) for
such  outstanding  Loans of the Affected Type, to the extent  necessary so that,
after giving effect thereto,  all Loans held by the Lenders holding Loans of the
Affected  Type and by such  Lender are held pro rata (as to  principal  amounts,
Types,  and Interest  Periods) in  accordance  with their  respective  Revolving
Credit Commitments.


4.5. Compensation
     ------------

Upon the  request of any  Lender,  the  Borrower  shall pay to such  Lender such
amount or amounts  as shall  compensate  it for any loss,  cost,  or  reasonable
expense (including loss of anticipated profits) incurred by it as a result of:

                  (a) any payment,  prepayment,  or  Conversion  of a Eurodollar
         Rate  Loan  for  any  reason  (including,   without   limitation,   the
         acceleration  of the Loans  pursuant  to Section  9.1 hereof) on a date
         other than the last day of the Interest Period for such Loan; or


                                       40

<PAGE>

                  (b) any  failure by the  Borrower  for any reason  (including,
         without limitation, the failure of any condition precedent specified in
         Article V to be satisfied) to borrow,  Convert,  Continue,  or prepay a
         Eurodollar  Rate  Loan on the  date  for  such  borrowing,  Conversion,
         Continuation,  or  prepayment  specified  in  the  relevant  notice  of
         borrowing,   prepayment,   Continuation,   or  Conversion   under  this
         Agreement.

         Any Lender claiming  compensation  under this Section 4.5 shall furnish
to the Borrower and the Agent a statement setting forth in reasonable detail the
calculation of amounts to be paid to it hereunder.


4.6.  Taxes.
      ------

                    (a) Any  and  all  payments  by the  Borrower  to or for the
account of any Lender or the Agent  hereunder  or under any other Loan  Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions,  charges or withholdings, and
all liabilities with respect thereto,  excluding, in the case of each Lender and
the Agent,  taxes imposed on its income,  and franchise  taxes imposed on it, by
the jurisdiction  under the laws of which such Lender (or its Applicable Lending
Office)  or the  Agent  (as the  case  may  be) is  organized  or any  political
subdivision  thereof,  other than to the extent such income or franchise  tax is
imposed solely as a result of the  activities of the Agent or a Lender  pursuant
to or in respect of this  Agreement or any of the other Loan Documents (all such
non-excluded taxes, duties, levies, imposts, deductions,  charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be  required  by law to deduct any Taxes  from or in respect of any sum  payable
under this Agreement or any other Loan Document to any Lender or the Agent,  (i)
the sum  payable  shall be  increased  as  necessary  so that  after  making all
required deductions  (including deductions applicable to additional sums payable
under this Section 4.6) such Lender or the Agent receives an amount equal to the
sum it would have received had no such  deductions  been made, (ii) the Borrower
shall  make such  deductions,  (iii)  the  Borrower  shall  pay the full  amount
deducted to the relevant  taxation  authority or other  authority in  accordance
with  applicable  law, and (iv) the Borrower shall furnish to the Agent,  at its
address referred to in Section 11.2 hereof,  the original or a certified copy of
a receipt evidencing payment thereof.

                  (b) In  addition,  the  Borrower  agrees  to pay  any  and all
present or future  stamp or  documentary  taxes and any other excise or property
taxes or charges or similar  levies which arise from any payment made under this
Agreement  or any other Loan  Document or from the  execution or delivery of, or
otherwise   with  respect  to,  this   Agreement  or  any  other  Loan  Document
(hereinafter referred to as "Other Taxes").

                  (c) The Borrower agrees to indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any  jurisdiction on amounts payable
under this  Section  4.6) paid by such  Lender or the Agent (as the case may be)
and  any  liability  (including  penalties,   interest,  and  expenses)  arising
therefrom or with respect thereto.



                                       41

<PAGE>



                  (d) Each  Lender  organized  under the laws of a  jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this  Agreement  in the case of each  Lender  listed on the  signature  pages
hereof  and on or prior to the date on which it  becomes a Lender in the case of
each other Lender,  and from time to time  thereafter if requested in writing by
the Borrower or the Agent (but only so long as such Lender remains lawfully able
to do so),  shall  provide  the  Borrower  and the  Agent  with  (i) a  properly
completed  Internal  Revenue Service Form 1001 or 4224, as  appropriate,  or any
successor form prescribed by the Internal Revenue Service,  certifying that such
Lender is entitled  to  benefits  under an income tax treaty to which the United
States is a party  which  reduces  the rate of  withholding  tax on  payments of
interest or certifying that the income receivable  pursuant to this Agreement is
effectively  connected  with the  conduct of a trade or  business  in the United
States,  (ii) a properly  completed Internal Revenue Service Form W-8 or W-9, as
appropriate,  or any successor form prescribed by the Internal  Revenue Service,
certifying that such Lender is exempt from United States backup withholding, and
(iii) any other form or certificate  required by any taxing authority (including
any certificate  required by Sections 871(h) and 881(c) of the Internal  Revenue
Code), certifying that such Lender is entitled to an exemption from or a reduced
rate of tax on  payments  pursuant  to this  Agreement  or any of the other Loan
Documents.

                  (e) For any period  with  respect to which a Lender has failed
to provide the  Borrower  and the Agent with the  appropriate  form  pursuant to
Section 4.6(d) hereof (unless such failure is due to a change in treaty, law, or
regulation  occurring  subsequent  to the  date on which a form  originally  was
required to be provided),  such Lender shall not be entitled to  indemnification
under  Section  4.6(a) or 4.6(b)  hereof  with  respect to Taxes  imposed by the
United  States;  provided,  however,  that should a Lender,  which is  otherwise
exempt from or subject to a reduced rate of withholding  tax,  become subject to
Taxes because of its failure to deliver a form required hereunder,  the Borrower
shall  take such  steps as such  Lender  shall  reasonably  request  and at such
Lender's cost to assist such Lender to recover such Taxes.

                  (f) If the Borrower is required to pay  additional  amounts to
or for the account of any Lender  pursuant to this Section 4.6, then such Lender
will  agree  to  use  reasonable  efforts  to  change  the  jurisdiction  of its
Applicable  Lending  Office so as to  eliminate  or reduce  any such  additional
payment  which may  thereafter  accrue if such  change,  in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.

                  (g) Within  thirty  (30) days after the date of any payment of
Taxes,  the Borrower shall furnish to the Agent the original or a certified copy
of a receipt evidencing such payment.

                  (h) Without  prejudice to the survival of any other  agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained in this Section 4.6 shall survive until the first  anniversary  of the
Facility Termination Date.

                  (i) If the Borrower makes any additional payment to any Lender
pursuant to this Section 4.6 in respect of any Taxes, and such Lender determines
that it has  received  (i) a refund  of such  Taxes,  or (ii) a credit  against,
relief or remission for, or a reduction in the amount of, any taxes or other


                                       42

<PAGE>

governmental  charge as a result of any  deduction  or credit for any Taxes with
respect to which it has received  payments  under this Section 4.6,  such Lender
shall,  to the extent that it can do so without  prejudice  to the  retention of
such refund,  credit, relief,  remission or reduction,  pay to the Borrower such
amount  as  shall  be  reasonably   determined  by  such  Lender  to  be  solely
attributable to the deduction or withholding of such Taxes. If such Lender later
determines that it was not entitled to such refund, credit, relief, remission or
reduction to the full extent of any payment made pursuant to the first  sentence
of this Section  4.6(i),  the Borrower shall upon demand of such Lender promptly
repay the amount of such  overpayment.  Nothing in this Section  4.6(i) shall be
construed  as  requiring  such Lender to conduct  its  business or to arrange or
alter in any  respect  its tax or  financial  affairs so that it is  entitled to
receive such a refund,  credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.


                                       43

<PAGE>

                                    ARTICLE V
                                   -----------

            Conditions to Making Loans and Issuing Letters of Credit
            -------------------------------------------------------


5.1.  Conditions  of Initial  Advance of  Revolving  Loans and  Initial
      -----------------------------------------------------------------
Issuance  of Letters  of  Credit.
--------------------------------

The  obligations of the Lenders to make the initial  Advance under the Revolving
Credit  Facility  and of  NationsBank  to make any  Swing  Line  Loan and of the
Issuing  Bank to issue any  Letter of  Credit,  are  subject  to the  conditions
precedent that:

                  (a) the Agent shall have received on the Closing Date, in form
         and substance satisfactory to the Agent and Lenders, the following:

                            (i) executed  originals  of each of this  Agreement,
                  the Notes,  the initial  Subsidiary  Guaranties  and the other
                  Loan  Documents,  together  with all  schedules  and  exhibits
                  thereto;

                           (ii) the favorable  written  opinion or opinions with
                  respect   to  the   Loan   Documents   and  the   transactions
                  contemplated  thereby of special counsel to the Credit Parties
                  dated the Closing Date, addressed to the Agent and the Lenders
                  and  reasonably  satisfactory  to Smith Helms Mulliss & Moore,
                  L.L.P., special counsel to the Agent;

                           (iii) resolutions of the boards of directors or other
                  appropriate  governing body (or of the  appropriate  committee
                  thereof) of each Credit Party  certified by its secretary,  or
                  assistant  secretary  as of the Closing  Date,  approving  and
                  adopting the Loan Documents to be executed by such Person, and
                  authorizing the execution and delivery thereof;

                           (iv)  specimen  signatures of officers of each of the
                  Credit Parties  executing the Loan Documents on behalf of such
                  Credit   Party,   certified  by  the  secretary  or  assistant
                  secretary of such Credit Party;

                            (v)  the Organizational Documents of each of the
                  Credit Parties certified as of a recent date by the Secretary
                  of State of its state of organization;

                           (vi) the  Operating  Documents  of each of the Credit
                  Parties  certified  as of the Closing Date as true and correct
                  by its secretary or assistant secretary;

                           (vii) certificates  issued as of a recent date by the
                  Secretaries  of  State  of  the  respective  jurisdictions  of
                  formation  of  each  of  the  Credit  Parties  as to  the  due
                  existence and good standing of such Person;

                           (viii)  appropriate  certificates of qualification to
                  do business,  good standing and, where appropriate,  authority
                  to conduct business under assumed name, issued


                                       44

<PAGE>

                  in respect of each of the Credit  Parties as of a recent  date
                  by the  Secretary  of State  or  comparable  official  of each
                  jurisdiction  in  which  the  failure  to be  qualified  to do
                  business or authorized so to conduct business could reasonably
                  be likely to have a Material Adverse Effect;

                           (ix)  notice of appointment of the initial Authorized
                  Representative(s);

                            (x)  certificate  of  an  Authorized  Representative
                  dated  the  Closing  Date  demonstrating  compliance  with the
                  financial  covenants  contained  in  Sections  8.1(a)  through
                  8.1(d)  hereof as of the Closing  Date,  substantially  in the
                  form of Exhibit H;

                           (xi)  evidence of all insurance required by the Loan
                  Documents;

                           (xii) an initial Borrowing Notice, if any, and, if
                  elected by the Borrower, Interest Rate Selection Notice;

                           (xiii) evidence that all fees payable by the Borrower
                  on the Closing  Date to the Agent,  NCMI and the Lenders  have
                  been paid in full;

                           (xiv)  a certificate of an Authorized Representative
                  as to the matters set forth in Section 5.1(b) hereof; and

                           (xv) such other documents, instruments,  certificates
                  and opinions as the Agent or any Lender may reasonably request
                  on or  prior  to the  Closing  Date  in  connection  with  the
                  consummation of the transactions contemplated hereby;

                  (b)  In the good faith judgment of the Agent and the Lenders:

                            (i) there shall not have  occurred  (A) any material
                  adverse change in the business,  assets, revenues,  operations
                  or  condition  (financial  or  otherwise)  or prospects of the
                  Borrower and its Subsidiaries  taken as a whole since June 28,
                  1997 and (B) any event, condition,  situation or status of, or
                  change in the facts, assumptions or information regarding, the
                  Borrower  and  its   Subsidiaries,   since  the  date  of  the
                  information   contained   in  the   financial   and   business
                  projections,  budgets, pro forma data and forecasts concerning
                  the Borrower and its Subsidiaries delivered to the Agent prior
                  to the  Closing  Date  that  has had or  could  reasonably  be
                  expected to result in a Material Adverse Effect;

                           (ii) no litigation,  action,  suit,  investigation or
                  other arbitral,  administrative or judicial  proceeding before
                  any arbitrator or  Governmental  Authority shall be pending or
                  threatened   which   purports   to  affect  the   transactions
                  contemplated   under  the  Loan   Documents   or  which  could
                  reasonably be likely to result in a Material Adverse Effect;


                                       45

<PAGE>



                           (iii) the  Credit  Parties  shall have  received  all
                  approvals,  consents and waivers, and shall have made or given
                  all  necessary  filings  and  notices as shall be  required to
                  consummate the  transactions  contemplated  hereby without the
                  occurrence of any default under, conflict with or violation of
                  (A) any applicable law, rule,  regulation,  order or decree of
                  any  Governmental  Authority or arbitral  authority or (B) any
                  agreement,  document or  instrument to which any of the Credit
                  Parties is a party or by which any of them or their properties
                  is bound; and

                           (iv) there shall not have  occurred and be continuing
                  a material adverse change in the market for syndicated  credit
                  facilities  similar in nature to the  Facilities or a material
                  disruption  of, or a material  adverse  change in,  financial,
                  banking  or  capital  market  conditions,   in  each  case  as
                  determined by the Agent in its reasonable discretion; and

                  (c) the Existing  Letter of Credit  Agreement  shall have been
         terminated and all letters of credit  outstanding  thereunder  shall be
         deemed Letters of Credit hereunder.


5.2.   Conditions  of  Revolving  Loans  and  Letter  of  Credit.
       ----------------------------------------------------------

The obligations of the Lenders to make any Revolving Loans and of NationsBank to
make any Swing  Line  Loan and the  Issuing  Bank to issue  Letters  of  Credit,
hereunder on or subsequent  to the Closing Date are subject to the  satisfaction
of the following conditions:

                  (a)  the  Agent  (or,   in  the  case  of  Swing  Line  Loans,
         NationsBank)  shall have  received a  Borrowing  Notice if  required by
         Article II hereof;

                  (b) the  representations  and warranties of the Credit Parties
         set forth in Article VI hereof and in each of the other Loan  Documents
         shall be true and  correct in all  material  respects  on and as of the
         date of such Advance or Swing Line Loan or Letter of Credit issuance or
         renewal,  with the same  effect  as  though  such  representations  and
         warranties  had been made on and as of such date,  except to the extent
         that such representations and warranties expressly relate to an earlier
         date and except that the  financial  statements  referred to in Section
         6.6(a)  hereof shall be deemed to be those  financial  statements  most
         recently delivered to the Agent and the Lenders pursuant to Section 7.1
         hereof from the date  financial  statements  are delivered to the Agent
         and the Lenders in accordance with such Section;

                  (c) in the case of the  issuance  of a Letter of  Credit,  the
         Borrower  shall have  executed  and  delivered  to the Issuing  Bank an
         Application  and  Agreement  for  Letter of Credit in form and  content
         acceptable to the Issuing Bank together with such other instruments and
         documents as it shall reasonably request;

                  (d) at the time of (and after  giving  effect to) each Advance
         or Swing Line Loan or the issuance of a Letter of Credit, no Default or
         Event of Default shall have occurred and be continuing; and


                                       46

<PAGE>

                  (e)      immediately after giving effect to:

                           (i) a Revolving Loan, the aggregate principal balance
                  of all  outstanding  Revolving Loans for each Lender shall not
                  exceed such Lender's Revolving Credit Commitment;

                           (ii) a Swing Line Loan, the aggregate principal
                  balance of all Swing Line Outstandings shall not exceed
                  $5,000,000;

                           (iii) a Letter  of  Credit or  renewal  thereof,  the
                  aggregate principal balance of all outstanding  Participations
                  in Letters of Credit and Reimbursement  Obligations (or in the
                  case  of  the  Issuing  Bank,  its  remaining  interest  after
                  deduction  of all  Participations  in  Letters  of Credit  and
                  Reimbursement  Obligations  of other  Lenders) for each Lender
                  and in the aggregate shall not exceed, respectively,  (A) such
                  Lender's  Letter of Credit  Commitment or (B) the Total Letter
                  of Credit Commitment;

                           (iv) a Revolving  Loan, a Swing Line Loan or a Letter
                  of  Credit or  renewal  thereof,  the sum of all  Outstandings
                  shall not exceed the Total Revolving Credit Commitment.




                                       47

<PAGE>

                                   ARTICLE VI
                                   ----------

                         Representations and Warranties
                         ------------------------------

         The Borrower  represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:

6.1.  Organization and Authority.
      ---------------------------

                  (a)  The  Borrower  and  each  Significant   Subsidiary  is  a
         corporation  duly organized and validly  existing under the laws of the
         jurisdiction of its formation;

                  (b) The Borrower and each  Significant  Subsidiary (i) has the
         requisite  power and authority to own its  properties and assets and to
         carry on its business as now being conducted and as contemplated in the
         Loan  Documents,  and  (ii)  is  qualified  to  do  business  in  every
         jurisdiction in which failure so to qualify could  reasonably be likely
         to have a Material Adverse Effect;

                  (c) The  Borrower  has the power  and  authority  to  execute,
         deliver  and  perform  this  Agreement  and the  Notes,  and to  borrow
         hereunder,  and to execute,  deliver and perform each of the other Loan
         Documents to which it is a party;

                  (d) Each  Material  Subsidiary  has the power and authority to
         execute,  deliver and perform the  Subsidiary  Guaranty and each of the
         other Loan Documents to which it is a party; and

                  (e) When executed and delivered, each of the Loan Documents to
         which any Credit Party is a party will be the legal,  valid and binding
         obligation  or  agreement,  as the case may be, of such  Credit  Party,
         enforceable  against  such Credit Party in  accordance  with its terms,
         subject  to  the  effect  of  any  applicable  bankruptcy,  moratorium,
         insolvency,   reorganization   or  other   similar  law  affecting  the
         enforceability  of  creditors'  rights  generally  and to the effect of
         general principles of equity (whether considered in a proceeding at law
         or in equity);


6.2. Loan Documents.
     --------------

The execution, delivery and performance by each Credit Party of each of the Loan
Documents to which it is a party:

                  (a) have been duly authorized by all requisite  Organizational
         Action (including any required shareholder or partner approval) of such
         Credit  Party   required  for  the  lawful   execution,   delivery  and
         performance thereof;

                  (b) do not violate any provisions of (i) applicable  law, rule
         or regulation, (ii) any judgment, writ, order, determination, decree or
         arbitral award of any Governmental Authority or arbitral authority


                                       48

<PAGE>

         binding on such Credit Party or its properties, or (iii) the
         Organizational  Documents or Operating Documents of such Credit Party;

                  (c) does not and will not be in  conflict  with,  result  in a
         breach of or  constitute an event of default,  or an event which,  with
         notice or lapse of time or both,  would constitute an event of default,
         under  any  contract,  indenture,  agreement  or  other  instrument  or
         document  to  which  such  Credit  Party is a  party,  or by which  the
         properties or assets of such Credit Party are bound; and

                  (d) does not and will not result in the creation or imposition
         of any Lien upon any of the properties or assets of such Credit Party;


6.3. Solvency.
     --------

Each Credit Party is Solvent after giving effect to the transactions
contemplated by the Loan Documents;


6.4.  Ownership of the Borrower and its Subsidiaries.
      ----------------------------------------------

The Borrower has no Significant  Subsidiaries other than those Persons listed as
Significant  Subsidiaries in Schedule 6.4 and additional Subsidiaries created or
acquired  after the Closing Date.  Schedule 6.4 states as of the date hereof the
organizational  form  of the  Borrower  and  each  Significant  Subsidiary,  the
authorized and issued  capitalization of the Borrower listed thereon, the number
of shares or other equity  interests of each class of capital  stock or interest
issued  and  outstanding  of the  Borrower  and  the  number  or  percentage  of
outstanding  shares or other equity interest  (including  options,  warrants and
other rights to acquire any  interest)  of such class of capital  stock or other
equity interest of each Significant  Subsidiary owned by Borrower or by any such
Significant Subsidiary.

The outstanding  shares or other equity  interests of the Borrower and each such
Significant  Subsidiary  have been duly  authorized  and validly  issued and are
fully  paid  and  nonassessable  and the  Borrower  and  each  such  Significant
Subsidiary owns beneficially and of record all the shares and other interests it
is listed as owning in Schedule 6.4, free and clear of any Lien;


6.5. Borrower Ownership Interests.
     ----------------------------

Borrower  owns no  interest  in any  Person  other  than the  Persons  listed in
Schedule  6.4,  equity  investments  in Persons  not  constituting  Subsidiaries
permitted  under  Section  8.6 hereof  and  additional  Subsidiaries  created or
acquired after the Closing Date;


6.6. Financial Condition.
     --------------------

                  (a) The  Borrower has  heretofore  furnished to each Lender an
         audited consolidated balance sheet of the Borrower and its Subsidiaries
         as at  September  28,  1996  and the  notes  thereto  and  the  related
         consolidated statements of income,  stockholders' equity and cash flows
         for the  Fiscal  Year then ended as  examined  and  certified  by Price
         Waterhouse,  and unaudited consolidated interim financial statements of
         the Borrower and its  Subsidiaries  consisting of consolidated  balance
         sheets and related consolidated and consolidating statements of income,
         stockholders'  equity and cash flows,  in each case without notes,  for
         and as of the end of the nine month period ending June 28, 1997.


                                       49

<PAGE>

         Except as set forth therein,  such financial statements  (including the
         notes thereto)  present fairly the financial  condition of the Borrower
         and its  Subsidiaries  as of the end of such  Fiscal Year and six month
         period  and  results  of  their  operations  and  the  changes  in  its
         stockholders' equity for the Fiscal Year and interim period then ended,
         all in conformity with GAAP, subject however,  in the case of unaudited
         interim statements to normal, recurring year end audit adjustments;

                  (b)  since  September  28,  1996  there  has been no  material
         adverse  change  in  the  condition,  financial  or  otherwise,  of the
         Borrower and its  Subsidiaries  taken as a whole or in the  businesses,
         properties,  performance,  prospects or  operations of the Borrower and
         its  Subsidiaries  taken  as a  whole,  nor  have  such  businesses  or
         properties  taken as a whole been  materially  adversely  affected as a
         result of any fire, explosion,  earthquake,  accident, strike, lockout,
         combination of workers, flood, embargo or act of God; and

                  (c) except as set forth in the financial  statements  referred
         to in Section 6.6(a) hereof or on Schedule 6.6 hereto, neither Borrower
         nor any Subsidiary has incurred,  other than in the ordinary  course of
         business,  any (i)  Indebtedness,  (ii) Contingent  Obligation or (iii)
         other commitment or liability which remains outstanding or unsatisfied,
         which are  material to the  Borrower  and its  Subsidiaries  taken as a
         whole;


6.7. Title to Properties.
     -------------------

The Borrower  and each  Material  Subsidiary  has good title to all its real and
personal properties,  subject to no transfer  restrictions or Liens of any kind,
except for Permitted Liens;


6.8. Taxes.
     ------

The Borrower and each of its Significant  Subsidiaries has filed or caused to be
filed all federal, state and local tax returns which are required to be filed by
it and,  except  for taxes and  assessments  being  contested  in good  faith by
appropriate   proceedings   diligently  conducted  and  against  which  reserves
reflected in the financial  statements described in Section 6.6(a) hereof and as
required by GAAP have been established, have paid or caused to be paid all taxes
as shown on said returns or on any assessment received by it, to the extent that
such taxes have become due and payable;


6.9. Other Agreements.
     -----------------

Neither the Borrower nor any Subsidiary is

                  (a) a party to or  subject  to any  judgment,  order,  decree,
         agreement, lease or instrument, or subject to other restrictions, which
         individually or in the aggregate could reasonably be expected to have a
         Material Adverse Effect or would result in or require the creation of a
         Lien on the property or assets of any Credit Party; or

                  (b) in default in the  performance,  observance or fulfillment
         of any of the  obligations,  covenants or  conditions  contained in any
         agreement  or  instrument  to which any  Subsidiary  is a party,  which
         default  has, or if not  remedied  within any  applicable  grace period
         could reasonably be likely to have, a Material Adverse Effect; or



                                       50

<PAGE>

                  (c) is a party to any indenture,  loan or credit  agreement or
         any lease or other agreement or instrument or subject to any charter or
         corporate restriction that could reasonably be expected to have, and no
         provision of applicable law or governmental regulation could reasonably
         be expected to have,  a material  adverse  effect on the ability of the
         Borrower to carry out its obligations under this Agreement or any other
         Loan Document as such obligations become due.


6.10. Litigation.
      ----------

There is no action, suit,  investigation or proceeding at law or in equity or by
or before any governmental  instrumentality  or agency or arbitral body pending,
or, to the knowledge of any  Responsible  Officer,  threatened by or against the
Borrower  or any  Subsidiary  that (i) is  reasonably  likely  to be  determined
adversely to the Borrower or such Subsidiary and which, if determined  adversely
to the  Borrower  or such  Subsidiary,  could  reasonably  be  likely  to have a
Material Adverse Effect or (ii) questions the validity or enforceability  of, or
the ability of any Credit Party to perform under, any Loan Document;


6.11.  Margin Stock.
       -------------

The proceeds of the borrowings  made hereunder will be used by the Borrower only
for the purposes expressly authorized herein. None of such proceeds will be used
directly or  indirectly,  for the purpose of  purchasing  or carrying any margin
stock or for the  purpose of reducing or  retiring  any  Indebtedness  which was
originally  incurred to purchase or carry margin stock or for any other  purpose
which might  constitute any of the Loans under this Agreement a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R.  Part 224) of
the Board.  Neither the Borrower nor any agent acting in its behalf has taken or
will take any action which might cause this Agreement or any of the documents or
instruments  delivered pursuant hereto to violate any regulation of the Board or
to violate the  Securities  Exchange Act of 1934, as amended,  or the Securities
Act of 1933, as amended, or any state securities laws, in each case as in effect
on the date hereof;


6.12.  Investment Company; Public Utility Holding Company.
       --------------------------------------------------

Neither the Borrower nor any  Subsidiary is (a) an  "investment  company," or an
"affiliated  person"  of, or  "promoter"  or  "principal  underwriter"  for,  an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C.  ss. 80a-1,  et seq.) or (b) a "holding  company" as
defined in, or otherwise subject to regulation under, the Public Utility Holding
Company Act of 1935, as amended;


6.13. Intellectual  Property.
      -----------------------

To the knowledge of each Responsible  Officer,  each of the Credit Parties owns,
or has a license or  otherwise  has the right to use,  in all  jurisdictions  in
which it carries on business, all patents (including all applications, renewals,
reissues,   extensions,   divisions,   continuations  and  extensions   thereof)
trademarks   (including   both  registered  and   unregistered   trademarks  and
applications  therefor),  service marks, trade names,  copyrights (including all
registrations, renewals, modifications and extensions thereof), and know-how and
trade secrets of material importance to the conduct of its business as currently
conducted  (collectively,  the  "Intellectual  Property"),  without violating or
conflicting with any patent, license, franchise,  trademark, trade secret, trade
name,  copyright,  or other proprietary rights of any other Person, except where
the failure to so own or have the right to use or such conflict could not


                                       51

<PAGE>



reasonably be expected to have a Material Adverse Effect. None of the
Intellectual Property is subject to any Lien other than Permitted Liens;


6.14.  No Untrue  Statement.
       ---------------------

Neither  (a) this  Agreement  nor any other  Loan  Document  or  certificate  or
document  executed  and  delivered  by or on behalf of the Borrower or any other
Credit  Party in  accordance  with or pursuant to any Loan  Document nor (b) any
statement,  representation, or warranty contained in the Loan Documents contains
any  misrepresentation  or untrue statement of material fact or omits to state a
material fact necessary,  in light of the circumstance  under which it was made,
in order  to make  any such  warranty,  representation  or  statement  contained
therein not misleading in any material respect, and, to the extent that any such
written  statements  constitute  projections,  such projections were prepared in
good faith on the basis of  assumptions,  methods,  data,  tests and information
believed by the Borrower to be valid and  accurate at the time such  projections
were furnished to the Agent or such governmental authority, as the case may be;


6.15. No Consents, Etc.
      -----------------

Neither  the  respective  businesses  or  properties  of  the  Borrower  or  any
Subsidiary, nor any relationship among the Borrower and its Subsidiaries and any
other Person,  nor any  circumstance in connection with the execution,  delivery
and performance of the Loan Documents and the transactions contemplated thereby,
is such as to  require a  consent,  approval  or  authorization  of, or  filing,
registration  or  qualification  with, any  Governmental  Authority or any other
Person on the part of the  Borrower  or any  Subsidiary  as a  condition  to the
execution,  delivery and performance  of, or  consummation  of the  transactions
contemplated  by  the  Loan  Documents,  or  if  so,  such  consent,   approval,
authorization,  filing,  registration or qualification has been duly obtained or
effected, as the case may be;


6.16. Employee Benefit Plans.
      ----------------------

                  (a) The  Borrower and each ERISA  Affiliate  is in  compliance
         with  all  applicable  provisions  of  ERISA  and the  regulations  and
         published interpretations thereunder and in compliance with all Foreign
         Benefit Laws with respect to all Employee  Benefit Plans except for any
         required  amendments for which the remedial amendment period as defined
         in  Section  401(b) of the Code has not yet  expired  and except to the
         extent  non-compliance does not or is not reasonably expected to have a
         Material Adverse Effect. Each Employee Benefit Plan that is intended to
         be qualified  under Section  401(a) of the Code has been  determined by
         the Internal Revenue Service to be so qualified.  No material liability
         has been incurred by the Borrower or any ERISA  Affiliate which remains
         unsatisfied  for any taxes or  penalties  with  respect to any Employee
         Benefit Plan or any Multiemployer Plan;

                  (b)  Neither  the  Borrower  nor any ERISA  Affiliate  has (i)
         engaged in a nonexempt prohibited transaction described in Section 4975
         of the Code or  Section  406 of  ERISA  affecting  any of the  Employee
         Benefit Plans or the trusts created  thereunder which could subject any
         such  Employee  Benefit  Plan or trust to a material  tax or penalty on
         prohibited  transactions  imposed under  Internal  Revenue Code Section
         4975 or ERISA, (ii) incurred any accumulated  funding deficiency within
         the meaning of Section 412 of the


                                       52

<PAGE>

         Code with respect to any Pension  Plan,  whether or not waived,  or any
         other material  liability to the PBGC which remains  outstanding  other
         than  the  payment  of  premiums,  (iii)  failed  to  make  a  required
         contribution or payment to a Multiemployer Plan, or (iv) failed to make
         a required  installment or other required  payment under Section 412 of
         the Code,  Section 302 of ERISA or the terms of such  Employee  Benefit
         Plan which, if not contributed,  could reasonably be expected to have a
         Material Adverse Effect;

                  (c)  No  Termination  Event  has  occurred  or  is  reasonably
         expected  to occur with  respect to any Pension  Plan or  Multiemployer
         Plan, and neither the Borrower nor any ERISA Affiliate has incurred any
         unpaid withdrawal liability with respect to any Multiemployer Plan;

                  (d) The present  value of all vested  accrued  benefits  under
         each  Employee  Benefit  Plan  which  is  subject  to Title IV of ERISA
         (determined  in  accordance  with the  assumptions  used to compute the
         minimum funding  standards under Section 302(b) of ERISA),  did not, as
         of the most recent  valuation date for each such plan,  exceed the then
         current value of the assets of such Employee  Benefit Plan allocable to
         such benefits;

                  (e) To the Borrower's  knowledge,  each Employee  Benefit Plan
         subject to Title IV of ERISA,  maintained  by the Borrower or any ERISA
         Affiliate,  has been  administered  in accordance with its terms in all
         material  respects and is in compliance  in all material  respects with
         all  applicable  requirements  of  ERISA  and  other  applicable  laws,
         regulations  and rules except for any compliance for which the remedial
         amendment  period as defined in Section  401(b) of the Code has not yet
         expired  and  except to the  extent  non-compliance  does not or is not
         reasonably expected to have a Material Adverse Effect;

                  (f)   No   material   proceeding,    claim,   lawsuit   and/or
         investigation  exists or, to the best  knowledge of the Borrower  after
         due inquiry, is threatened concerning or involving any Employee Benefit
         Plan;


6.17.  No Default.
       ----------

As of the date hereof, there does not exist any Default or Event of Default
hereunder;


6.18.  Hazardous  Materials.
       --------------------

The  Borrower  and  each   Subsidiary  is  in  compliance  with  all  applicable
Environmental  Laws except to the xtent  non-compliance  could not reasonably be
expected  to have a  Material  Adverse  Effect.  Neither  the  Borrower  nor any
Subsidiary has been notified of any action,  suit,  proceeding or  investigation
which (i) calls into question  compliance by the Borrower or any Subsidiary with
any  Environmental  Laws,  (ii) which seeks to suspend,  revoke or terminate any
license,  permit or approval  necessary for the generation,  handling,  storage,
treatment or disposal of any Hazardous  Material,  or (iii) which seeks to cause
any property of the Borrower or any Subsidiary to be subject to any restrictions
on ownership,  use, occupancy or transferability  under any Environmental Law to
the  extent  any such  non-compliance,  suspension  revocation  or  restriction,
individually  or in the  aggregate,  could  reasonably  be  expected  to  have a
Material Adverse Effect;


                                       53

<PAGE>

6.19.  Employment Matters.
       ------------------

                   (a) None of the  employees of the Borrower or any  Subsidiary
is subject to any collective bargaining agreement and there are no strikes, work
stoppages,  election or decertification  petitions or proceedings,  unfair labor
charges, equal opportunity proceedings, or other material labor/employee related
controversies  or  proceedings  pending or, to the  knowledge  of a  Responsible
Officer,  threatened  against  the  Borrower  or any  Subsidiary  or between the
Borrower or any Subsidiary  and any of its  employees,  other than to the extent
the foregoing  arise in the ordinary course of business and could not reasonably
be  expected,  individually  or in the  aggregate,  to have a  Material  Adverse
Effect; and

                  (b)  Except to the  extent a failure  to  maintain  compliance
could not reasonably be expected to have a Material Adverse Effect, the Borrower
and each  Subsidiary is in compliance in all respects with all applicable  laws,
rules and  regulations  pertaining  to labor or  employment  matters,  including
without  limitation those  pertaining to wages,  hours,  occupational  afety and
taxation  and  there  is  neither   pending  or   threatened   any   litigation,
administrative  proceeding nor, to the knowledge of a Responsible  Officer,  any
investigation,  in respect of such matters which,  if decided  adversely,  could
reasonably  be  likely,  individually  or in the  aggregate,  to have a Material
Adverse Effect.




                                       54

<PAGE>

                                   ARTICLE VII
                                   -----------

                              Affirmative Covenants
                              ---------------------


         Until the Facility  Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:


7.1. Financial Reports,  Etc.
     ------------------------

                  (a) As soon as practical and in any event within 90 days after
the end of each Fiscal Year of the Borrower, deliver or cause to be delivered to
the Agent and each Lender (i)  consolidated  balance  sheets of the Borrower and
its  Subsidiaries as at the end of such Fiscal Year, and the notes thereto,  and
the related  consolidated  statements of income,  stockholders'  equity and cash
flows,  and the respective  notes thereto,  for such Fiscal Year,  setting forth
comparative  financial statements for the preceding Fiscal Year, all prepared in
accordance  with GAAP applied on a Consistent  Basis,  except to the extent GAAP
requires application of different accounting  principles,  and containing,  with
respect to the consolidated financial statements,  opinions of Price Waterhouse,
or other  independent  certified  public  accountants  of Nationally  Recognized
Standing, which are unqualified as to the scope of the audit performed and as to
the "going  concern"  status of the  Borrower  and  without  any  exception  not
acceptable   to  the  Lenders,   and  (ii)  a   certificate   of  an  Authorized
Representative  demonstrating  compliance  with Sections  8.1(a)  through 8.1(d)
hereof, which certificate shall be in the form of Exhibit H;

                  (b) as soon as practical and in any event within 45 days after
the end of each fiscal  quarter  (except  the last fiscal  quarter of the Fiscal
Year),  deliver to the Agent and each Lender (i) consolidated  balance sheets of
the Borrower and its Subsidiaries as at the end of such fiscal quarter,  and the
related consolidated  statements of income,  stockholders' equity and cash flows
for such  fiscal  quarter  and for the  period  from the  beginning  of the then
current Fiscal Year through the end of such reporting period, and accompanied by
a certificate of an Authorized  Representative to the effect that such financial
statements  present  fairly  the  financial  position  of the  Borrower  and its
Subsidiaries  as of the end of such  fiscal  period  and the  results  of  their
operations and the changes in their  financial  position for such fiscal period,
in conformity with the standards set forth in Section 6.6(a) hereof with respect
to  interim  financial  statements,  and  (ii) a  certificate  of an  Authorized
Representative  containing  computations  for such  quarter  comparable  to that
required pursuant to Section 7.1(a)(ii) hereof;

                  (c) together with each  delivery of the  financial  statements
required  by Section  7.1(a)(i)  hereof,  deliver to the Agent and each Lender a
letter from the Borrower's  accountants  specified in Section  7.1(a)(i)  hereof
stating  that in  performing  the audit  necessary  to render an  opinion on the
financial  statements delivered under Section 7.1(a)(i) hereof, they obtained no
knowledge of any Default or Event of Default by the Borrower in the  fulfillment
of the  terms  and  provisions  of this  Agreement  insofar  as they  relate  to
financial matters (which at the date of such statement  remains uncured);  or if
the accountants have obtained  knowledge of such Default or Event of Default,  a
statement specifying the nature and period of existence thereof;



                                       55

<PAGE>

                  (d) promptly  upon their  becoming  available to the Borrower,
the  Borrower  shall  deliver  to the  Agent  and each  Lender a copy of (i) all
regular or special reports or effective  registration  statements which Borrower
shall  file  with the  Securities  and  Exchange  Commission  (or any  successor
thereto) or any securities exchange, (ii) any proxy statement distributed by the
Borrower to its shareholders, bondholders or the financial community in general,
and (iii) any  management  letter or other  report  submitted to the Borrower by
independent  accountants  in connection  with any annual or special audit of the
Borrower;

                  (e)  promptly,  from  time to  time,  deliver  or  cause to be
delivered  to the  Agent  and  each  Lender  such  other  information  regarding
Borrower's  and any  Subsidiary's  operations,  business  affairs and  financial
condition as the Agent or such Lender may reasonably request.

The Agent and the  Lenders are hereby  authorized  to deliver a copy of any such
financial  or other  information  delivered  hereunder  to the  Lenders  (or any
affiliate of any Lender) or to the Agent, to any  Governmental  Authority having
jurisdiction  over  the  Agent or any of the  Lenders  pursuant  to any  written
request  therefor or in the ordinary  course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement;


7.2.  Maintain Properties.
      -------------------

Maintain all properties of any Credit Party  necessary to its operations in good
working order and condition,  as reasonably necessary to conduct its business as
currently  conducted or as contemplated  hereby and in accordance with customary
and prudent business practices;


7.3. Existence,  Qualification,  Etc.
     --------------------------------

Except as otherwise expressly permitted under Sections 8.5 and 8.7 hereof, do or
cause to be done all things  necessary  to  preserve  and keep in full force and
effect its existence and all material  rights and  franchises,  and maintain its
license  or  qualification  to do  business  as a foreign  corporation  and good
standing in each jurisdiction in which its ownership or lease of property or the
nature of its business  makes such  license or  qualification  necessary  except
where the failure to so preserve  and keep or maintain the same or to so qualify
could not reasonably be expected to have a Material Adverse Effect;


7.4. Regulations  and Taxes.
     -----------------------

Comply in all material  respects  with or contest in good faith all statutes and
governmental regulations and pay all material taxes,  assessments,  governmental
charges,  claims for labor,  supplies,  rent and any other obligation  which, if
unpaid,  would become a Lien against any material  portion of any Credit Party's
properties  except  liabilities  being  contested  in good faith by  appropriate
proceedings  diligently  conducted  and against  which all reserves with respect
thereto as may be  required by GAAP have been  established  unless and until any
Lien resulting therefrom attaches to any of its property and becomes enforceable
against its creditors;


 7.5. Insurance.
      ----------

                  (a) Keep all of its insurable properties adequately insured at
all times with financially sound and responsible insurance carriers against loss
or  damage by fire and  other  hazards  to the  extent  and in the  manner as is
consistent with past practice,

                   (b) maintain general public liabilityinsurance at all times



                                 56


<PAGE>

with  responsible  insurance  carriers against  liability  on account of damage
to persons and  property,

                   (c) maintain insurance against  interruption of its business
operations  and,
                   (d)  maintain   insurance   under  all  applicable   workers'
compensation  laws  (or  in  the  alternative,  maintain  required  reserves  if
self-insured for workers' compensation purposes), all such policies of insurance
to have such limits, deductibles,  exclusions, co-insurance and other provisions
providing no less coverages than is consistent  with past practice.  Each of the
issuers  of the  policies  of  insurance  described  in this  Section  7.5 shall
undertake  to provide the Agent not less than  thirty  (30) days' prior  written
notice  before any such policy shall be  terminated,  lapse or be altered in any
manner;


7.6. True Books.
     -----------

Keep true books of record and account in which,  to the extent required by GAAP,
full,  true  and  correct  entries  will  be  made  of all of its  dealings  and
transactions,  and set up on its books such  reserves as may be required by GAAP
with respect to doubtful accounts and all taxes,  assessments,  charges,  levies
and claims  and with  respect to its  business  in  general,  and  include  such
reserves in interim as well as year-end financial statements;


7.7. Right of Inspection.
     --------------------

Permit  any Person  designated  by any  Lender or the Agent  (such  Person to be
subject to a  Confidentiality  Agreement) to visit and inspect at the Agent's or
such  Lender's  expense any of the  properties,  corporate  books and  financial
reports of the Borrower or any Subsidiary  and to discuss its affairs,  finances
and accounts  with its  principal  officers  and  independent  certified  public
accountants,   all  at  reasonable  times,  at  reasonable  intervals  and  with
reasonable  prior notice;  provided that,  upon and during the continuance of an
Event of Default,  all costs and expenses  incurred in connection  with any such
visits and inspections shall be paid by the Borrower;


7.8. Observe  all Laws.
     ------------------

Conform  to and duly  observe  in all  material  respects  all  laws,  rules and
regulations and all other valid requirements of any Governmental  Authority with
respect to the conduct of its business,  except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect;


7.9. Governmental Licenses.
     ---------------------

Obtain and maintain all licenses,  permits,  certifications and approvals of all
applicable  Governmental  Authorities  as are  required  for the  conduct of its
business as  currently  conducted  and as  contemplated  by the Loan  Documents,
except  where the  failure to do so could not  reasonably  be expected to have a
Material Adverse Effect;


7.10. Covenants Extending to Subsidiaries.
      ------------------------------------

Cause each of its  Significant  Subsidiaries  to do with respect to itself,  its
business and its assets, each of the things required of the Borrower in Sections
7.2 through 7.9, 7.18 and 7.19 hereof inclusive;


7.11.  Officer's  Knowledge of Default.
       -------------------------------

Upon any  Responsible  Officer  obtaining  knowledge  of any Default or Event of
Default  hereunder or under any other obligation of the Borrower or other Credit
Party to any  Lender,  notify  the Agent of the  nature  thereof,  the period of
existence thereof and what action the Borrower or other Credit Party proposes to
take with respect thereto;


                                       57

<PAGE>

7.12. Suits  or  Other  Proceedings.
      -----------------------------

Upon any  Responsible  Officer  obtaining  knowledge of any  litigation or other
proceedings being instituted  against the Borrower or other Credit Party, or any
attachment, levy, execution or other process being instituted against any assets
of the  Borrower  or any  other  Credit  Party,  making a claim or  claims in an
aggregate  amount greater than  $15,000,000 not otherwise  covered by insurance,
promptly  deliver to the Agent  written  notice  thereof  stating the nature and
status  of such  litigation,  dispute,  proceeding,  levy,  execution  or  other
process;


7.13. Notice of Discharge of Hazardous Material or Environmental Complaint.
      ---------------------------------------------------------------------

Promptly provide to the Agent true,  accurate and complete copies of any and all
notices,  complaints,  orders, directives,  claims, or citations received by the
Borrower or any Significant Subsidiary relating to any (a) material violation or
alleged material  violation by any applicable  Environmental Law; (b) release or
threatened release by the Borrower or any Significant Subsidiary on any facility
or  property  owned or leased or operated  by the  Borrower  or any  Significant
Subsidiary,  of any Hazardous  Material,  except where occurring legally; or (c)
liability or alleged liability of the Borrower or any Significant Subsidiary for
the costs of cleaning up,  removing,  remediating  or responding to a release of
Hazardous Materials;


7.14. Environmental  Compliance.
      --------------------------

If the Borrower or any Significant  Subsidiary shall receive any letter, notice,
complaint,  order,  directive,  claim or citation  alleging that the Borrower or
such  Significant  Subsidiary  is liable for any  material  cost of cleaning up,
removing,  remediating  or responding to a release of Hazardous  Materials,  the
Borrower shall, within the time period permitted by the applicable Environmental
Law or the Governmental  Authority  responsible for enforcing such Environmental
Law, remove or remedy, or cause the applicable  Significant Subsidiary to remove
or remedy,  such violation or release or satisfy such liability  unless and only
during the period that the applicability of the  Environmental  Law, the fact of
such  violation  or  liability  or what is  required  to remove  or remedy  such
violation  is being  contested  by the  Borrower or the  applicable  Significant
Subsidiary by appropriate proceedings diligently conducted and all reserves with
respect  thereto as may be required  under GAAP, if any, have been made,  and no
Liens in  connection  therewith  shall  have  attached  to any  property  of the
Borrower  or the  applicable  Significant  Subsidiary  which  shall have  become
enforceable  against  creditors of such Person and which  individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect;


7.15. Indemnification.
      ---------------

Subject to and without  limiting the  generality  of Section  11.9  hereof,  the
Borrower hereby agrees to indemnify and hold the Agent,  the Lenders,  and their
respective officers, directors,  employees and agents, harmless from and against
any and all claims,  losses,  penalties,  liabilities,  damages  and  documented
out-of-pocket  expenses  (including  assessment and cleanup costs and reasonable
attorneys' fees and  disbursements)  arising directly or indirectly from, out of
or by reason of (a) the  violation of any  Environmental  Law by the Borrower or
any Subsidiary or with respect to any property owned,  operated or leased by the
Borrower or any Subsidiary or (b) the handling, storage, treatment,  emission or
disposal  of any  Hazardous  Materials  by or on behalf of the  Borrower  or any
Subsidiary or on or with respect to property  owned or leased or operated by the
Borrower or any Subsidiary;


                                       58

<PAGE>

7.16. Further  Assurances.
      --------------------

At the  Borrower's  cost and expense,  upon written  request of the Agent,  duly
execute and deliver or cause to be duly  executed  and  delivered,  to the Agent
such further instruments, documents and certificates and do and cause to be done
such further acts that may be reasonably necessary to carry out more effectively
the provisions and purposes of this Agreement and the other Loan Documents;



7.17. Employee Benefit Plans.
      -----------------------

                  (a) With reasonable promptness, and in any event within thirty
         (30) days thereof, give notice to the Agent of (a) the establishment of
         any new Pension Plan (which  notice shall include a copy of such plan),
         (b) the  commencement of  contributions to any Employee Benefit Plan to
         which the Borrower or any of its ERISA  Affiliates  was not  previously
         contributing, (c) any material increase in the benefits of any existing
         Pension Plan, (d) each funding waiver request filed with respect to any
         Employee  Benefit Plan and (e) the failure of the Borrower or any ERISA
         Affiliate to make a required  installment  or payment under Section 302
         of ERISA or Section 412 of the Code by the due date which,  if not made
         could reasonably be expected to have a Material Adverse Effect;

                  (b)  Promptly  and in any event  within  fifteen  (15) days of
         becoming aware of the  occurrence or forthcoming  occurrence of any (a)
         Termination  Event or (b) nonexempt  "prohibited  transaction," as such
         term is defined in Section 406 of ERISA or Section 4975 of the Code, in
         connection  with any  Pension  Plan or any  trust  created  thereunder,
         deliver  to the Agent a notice  specifying  the  nature  thereof,  what
         action the  Borrower  or any ERISA  Affiliate  has taken,  is taking or
         proposes to take with respect thereto and, when known, any action taken
         or threatened by the Internal Revenue Service,  the Department of Labor
         or the PBGC with respect thereto; and

                  (c) With reasonable promptness but in any event within fifteen
         (15) days for  purposes  of clauses  (a) and (b) and within  sixty (60)
         days of the filing of the annual  report for  purposes  of clause  (c),
         deliver to the Agent copies of (a) any unfavorable determination letter
         from the Internal  Revenue Service  regarding the  qualification  of an
         Employee Benefit Plan under Section 401(a) of the Code, (b) all notices
         received by the Borrower or any ERISA Affiliate of the PBGC's intent to
         terminate any Pension Plan or to have a trustee appointed to administer
         any Pension Plan,  (c) each Schedule B (Actuarial  Information)  to the
         annual  report  (Form 5500  Series)  filed by the Borrower or any ERISA
         Affiliate  with the  Internal  Revenue  Service  with  respect  to each
         Pension Plan and (d) all notices  received by the Borrower or any ERISA
         Affiliate from a Multiemployer  Plan sponsor  concerning the imposition
         or amount of  withdrawal  liability  pursuant to Section 4202 of ERISA.
         The Borrower will notify the Agent in writing  within five (5) Business
         Days of the  Borrower or any ERISA  Affiliate  obtaining  knowledge  or
         reason to know that the  Borrower or any ERISA  Affiliate  has filed or
         intends to file a notice of intent to terminate  any Pension Plan under
         a distress termination within the meaning of Section 4041(c) of ERISA;



                                       59

<PAGE>

7.18. Continued Operations.
      ---------------------

Continue at all times to conduct its business and engage principally in the same
line or lines of business substantially as heretofore conducted;


7.19. New Material Subsidiaries.
      -------------------------

Within 30 days of the  acquisition  or creation of any Material  Subsidiary,  or
upon  any  existing  Subsidiary  becoming  a  Material  Subsidiary,  cause to be
delivered to the Agent for the benefit of the Lenders each of the following,  as
applicable:

                  (a) a Subsidiary Guaranty executed by such Material Subsidiary
         substantially in the form of Exhibit I; and

                  (b) an opinion of counsel to such Material Subsidiary dated as
         of the date of  delivery  of the  Subsidiary  Guaranty  and other  Loan
         Documents  provided  for in this Section  7.19(a) and  addressed to the
         Agent and the Lenders, in form and substance  reasonably  acceptable to
         the Agent, which opinion shall include substantially identical opinions
         as those  delivered  to the Agent and the Lenders on the  Closing  Date
         with respect to comparable  matters and from  comparable  jurisdictions
         and which opinion may include  assumptions and  qualifications,  all of
         similar effect to those contained in the opinions of counsel  delivered
         pursuant to Section 5.1(a) hereof.



                                       60

<PAGE>

                                  ARTICLE VIII
                                  ------------

                               Negative Covenants
                               ------------------

         Until the Facility  Termination Date, unless the Required Lenders shall
otherwise  consent in writing,  the  Borrower  will not,  nor will it permit any
Subsidiary  or  Significant  Subsidiary,  as  applicable,  to violate any of the
following provisions:


8.1. Financial Covenants.
     --------------------

The Borrower and its Subsidiaries will not:

                  (a) Consolidated Leverage Ratio. Permit at any time during any
         Four-Quarter Period of the Borrower, the Consolidated Leverage Ratio to
         be greater than 2.25 to 1.00.

                  (b) Consolidated Fixed Charge Ratio. Permit at any time during
         any Four - Quarter Period of the Borrower the Consolidated Fixed Charge
         Ratio to be less than 1.50 to 1.00.

                  (c)  Consolidated  Tangible  Net  Worth.  Permit  at any  time
         Consolidated  Tangible  Net  Worth to be less than  $375,000,000,  such
         amount to be  increased  as at the first  day of each  fiscal  quarter,
         beginning  with the fiscal  quarter  ending  December 31,  1997,  by an
         amount  equal to (a) fifty  percent  (50%) of  Consolidated  Net Income
         during the immediately  preceding fiscal quarter,  plus (b) one hundred
         percent (100%) of the Net Proceeds of any Equity  Offering  consummated
         during the immediately preceding fiscal quarter; provided,  however, in
         no event  shall the  Consolidated  Tangible  Net Worth  requirement  be
         decreased  as  a  result  of  a  net  loss  of  the  Borrower  and  its
         Subsidiaries  (i.e.,  negative  Consolidated Net Income) for any fiscal
         quarter.  Any increase  calculated  pursuant hereto shall be determined
         based upon financial  statements  delivered in accordance  with Section
         7.1(a)  hereof;  provided,   however  such  increase  shall  be  deemed
         effective  as of the  first day of the  fiscal  quarter  in which  such
         financial statements are delivered.

                  (d) Consolidated Liquidity Ratio. Permit at any time during
         any Four - Quarter Period of the Borrower the Consolidated Liquidity
         Ratio to be less than 1.50 to 1.00.


8.2. Acquisitions.
     ------------

Neither  the  Borrower,  nor any  Subsidiary  shall  enter  into any  agreement,
contract,  binding commitment or other arrangement providing for any Acquisition
or take any action to solicit  the  tender of  securities  or proxies in respect
thereof  in order to effect  any  Acquisition,  unless  (i) the Person to be (or
whose  assets are to be)  acquired  does not oppose  such  Acquisition,  (ii) no
Default  or Event of  Default  shall  have  occurred  and be  continuing  either
immediately  prior to or  immediately  after giving effect to such  Acquisition,
(iii) if the Cost of Acquisition  shall exceed  $25,000,000,  the Borrower shall
have furnished to the Agent a certificate in the form of Exhibit H prepared on a
historical pro forma basis giving effect to such Acquisition,  which certificate
shall demonstrate that no Default or Event of Default would exist immediately


                                       61

<PAGE>

after giving effect thereto, and pro forma historical financial statements as of
the end of the most  recently  completed  Fiscal Year of the  Borrower  and most
recent interim fiscal quarter, if applicable,  giving effect to such Acquisition
and (iv) the Cost of Acquisition, in the aggregate with all Costs of Acquisition
during the  Four-Quarter  Period in which the  Acquisition  is closed,  does not
exceed  twenty  percent  (20%)  of  Consolidated  Tangible  Net  Worth as at the
beginning of such Four-Quarter Period;


8.3. Liens.
     -----

Neither the  Borrower nor any  Significant  Subsidiary  shall  incur,  create or
permit to exist any Lien,  charge or other  encumbrance of any nature whatsoever
with respect to any  property or assets now owned or  hereafter  acquired by the
Borrower or any Significant  Subsidiary,  other than the following (collectively
"Permitted Liens"):

                  (a) Liens existing as of the date hereof and as set forth in
         Schedule 6.7;

                  (b) Liens imposed by law for taxes,  assessments or charges of
         any  Governmental  Authority  for claims not yet due or which are being
         contested in good faith by appropriate proceedings diligently conducted
         and with respect to which  adequate  reserves are being  maintained  in
         accordance with GAAP and which Liens are not yet enforceable;

                  (c)  statutory  Liens of  landlords  and  Liens  of  carriers,
         warehousemen,  mechanics, materialmen and other Liens imposed by law or
         created in the ordinary  course of business and in existence  less than
         90 days from the date of  creation  thereof  for amounts not yet due or
         which are being  contested  in good  faith by  appropriate  proceedings
         diligently  conducted and with respect to which  adequate  reserves are
         being  maintained in  accordance  with GAAP and which Liens are not yet
         enforceable;

                  (d) Liens incurred or deposits made in the ordinary  course of
         business (including, without limitation, surety bonds and appeal bonds)
         in connection with workers'  compensation,  unemployment  insurance and
         other  types of social  security  benefits  or to secure  (or to obtain
         letters of credit  that  secure)  the  performance  of  tenders,  bids,
         leases,  contracts  (other  than for the  repayment  of  Indebtedness),
         statutory  obligations or tax obligations or refunds, and other similar
         obligations  or  arising  as  a  result  of  progress   payments  under
         government contracts;

                  (e) easements  (including  reciprocal  easement agreements and
         utility agreements),  rights-of-way, covenants, consents, reservations,
         encroachments, variations and zoning and other restrictions, charges or
         encumbrances  (whether  or  not  recorded),   which  do  not  interfere
         materially with the ordinary conduct of the business of the Borrower or
         any Significant Subsidiary and which do not materially detract from the
         value of the property to which they attach or materially impair the use
         thereof to the Borrower or any Significant Subsidiary; and



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<PAGE>

                  (f)  purchase  money  Liens to secure  Indebtedness  permitted
         under  Section  8.4(d)  hereof,   including  any  refinancing   thereof
         permitted under Section 8.4(m) hereof, provided that no such Lien shall
         extend to any property other than the assets so purchased;

                  (g) Liens arising in connection with Capital Leases  permitted
         under Section 8.4(f) hereof; provided that no such Lien shall extend to
         any property other than the assets subject to such Capital Leases;

                  (h)  Liens  on  the  property  or  assets  of  a   Significant
         Subsidiary  acquired  after  the  date  hereof  securing   Indebtedness
         permitted  by  Section  8.4(j)  hereof,  provided  that (i) such  Liens
         existed at the time such  corporation  became a Subsidiary and were not
         created in anticipation  thereof, (ii) any such Lien does not attach to
         any additional  property or assets of such corporation  (other than the
         proceeds  of the  property  subject  to  such  Lien  on the  date  such
         corporation  becomes a Subsidiary and  after-acquired  property of such
         corporation  on which a Lien had been granted prior to such date) after
         the time such corporation becomes a Subsidiary, and (iii) the amount of
         Indebtedness secured thereby is not increased;

                  (i)  Liens   arising   pursuant  to  one  or  more  orders  of
         attachment,  distraint or similar  legal  process  issued in connection
         with one or more court proceedings (which may or may not be related) so
         long as the  execution  or other  enforcement  thereof  is  effectively
         stayed and the claims secured  thereby do not exceed  $2,500,000 in the
         aggregate  and  are  being  contested  in  good  faith  by  appropriate
         proceedings diligently conducted; and

                  (j) other incidental Liens which do not individually or in the
         aggregate  materially interfere with the use, occupancy or operation of
         any  property to which they attach and which  secured  Indebtedness  or
         obligations in an aggregate amount not greater than $5,000,000.


8.4.  Indebtedness.
      -------------

Neither the Borrower nor any Significant  Subsidiary shall incur, create, assume
or  permit  to  exist  any  Indebtedness  of the  Borrower  or  any  Significant
Subsidiary,howsoever evidenced, except:

                  (a) Indebtedness  existing as of the Closing Date as set forth
         in Schedule  6.6;  provided,  none of the  instruments  and  agreements
         evidencing or governing such Indebtedness shall be amended, modified or
         supplemented   after  the   Closing   Date  to  change   any  terms  of
         subordination,  repayment  or rights of  conversion,  put,  exchange or
         other  rights  from such terms and  rights as in effect on the  Closing
         Date or to change any terms in a manner  not  permitted  under  Section
         8.4(m) hereof with respect to any refinancing;

                  (b) Indebtedness owing to the Agent or any Lender in
         connection with this Agreement, any Note or other Loan Document;



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<PAGE>

                  (c) the endorsement of negotiable instruments for deposit or
         collection or similar transactions in the ordinary course of business;

                  (d)  Indebtedness   not  to  exceed  an  aggregate   principal
         outstanding  amount at any time of  $15,000,000  incurred  to  purchase
         fixed assets,  provided such Indebtedness  represents not less than 75%
         nor more than 100% of the purchase price or market value,  whichever is
         less, of such assets as of the date of purchase thereof;

                  (e) Indebtedness arising from Hedging Obligations not
          prohibited under Section 8.14 hereof;

                  (f) Indebtedness consisting of Capital Leases not to exceed an
         aggregate amount outstanding at any time of $5,000,000;

                  (g) unsecured intercompany Indebtedness of the Borrower or any
         Material  Subsidiary owing to any  non-Guarantor  Subsidiary,  provided
         that such Indebtedness  shall be subordinated upon terms  substantially
         the same as set forth in Exhibit J hereto and, if  evidenced  by a note
         or other instrument, such instrument shall be non-negotiable;

                  (h) unsecured intercompany Indebtedness of the Borrower or any
         Material Subsidiary owing to a Material Subsidiary;

                  (i)  Indebtedness  of the Borrower or a  Subsidiary  hereunder
         incurred to fund part of the Cost of Acquisition in connection  with an
         Acquisition permitted hereunder,  provided such Indebtedness is owed to
         the selling party in such  Acquisition and is evidenced by a promissory
         note  which  is  subordinated  to the  Obligations  hereunder  on terms
         substantially the same as set forth in Exhibit J hereto;

                  (j) Indebtedness for Borrowed Money of a Person acquired in an
         Acquisition  permitted  under  Section  8.2  hereof so long as (i) such
         Indebtedness is not incurred in contemplation of such Acquisition,  and
         (ii) the aggregate  principal amount of all such  Indebtedness does not
         exceed $10,000,000;

                  (k)   Indebtedness  in  connection   with   contingent   lease
         obligations in accordance with Generally Accepted Accounting Principles
         applied on a Consistent Basis arising from recourse lease  transactions
         in an aggregate amount not in excess of $25,000,000;

                  (l) intercompany Indebtedness of non-Guarantor Subsidiaries
         permitted under Section 8.6(e) or (h) hereof;

                  (m) additional  unsecured  Indebtedness for Money Borrowed not
         otherwise  covered by clauses (a) through (k) above,  provided that the
         aggregate  outstanding  principal amount of all such other Indebtedness
         permitted under this clause (k) shall in no event exceed  $5,000,000 at
         any time;


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<PAGE>

                  (n) Indebtedness consisting of short-term overdraft facilities
         arising in the  ordinary  course of business and  consistent  with past
         practice and to the extent repaid within 30 days of incurrence;

                  (o)  Indebtedness of the Borrower  consisting of Guaranties of
         performance  obligations of  Subsidiaries  entered into in the ordinary
         course of business and  consistent  with past practice of the Borrower;
         and

                  (p)  Indebtedness  extending  the  maturity  of, or  renewing,
         refunding or refinancing,  in whole or in part,  Indebtedness  incurred
         created,  assumed or permitted  under  clauses (a), (d), (f), (g), (h),
         (i), (j), (k), (l) or (m) of this Section 8.4,  provided that the terms
         of any such extension,  renewal,  refunding or refinancing Indebtedness
         (and  of  any  agreement  or  instrument  entered  into  in  connection
         therewith)  are no less favorable to the Agent and the Lenders than the
         terms  of the  Indebtedness  as in  effect  prior to such  action,  and
         provided further that (1) the aggregate principal amount of or interest
         rate or rates and fees payable on such extended,  renewed,  refunded or
         refinanced  Indebtedness shall not be increased by such action, (2) the
         group of direct or contingent  obligors on such Indebtedness  shall not
         be expanded as a result of any such action,  and (3) immediately before
         and  immediately  after giving effect to any such  extension,  renewal,
         refunding  or  refinancing,  no Default or Event of Default  shall have
         occurred and be continuing.


8.5. Transfer of Assets;  Issuance of Capital Stock.
     -----------------------------------------------

                  (a) Neither the Borrower nor any Significant  Subsidiary shall
         sell,  lease,  transfer  or  otherwise  dispose  of any of its  assets,
         including any sale of any capital stock of a Significant Subsidiary (or
         any option,  warrant or right to acquire  such  stock),  other than (i)
         dispositions  of inventory,  demonstration  equipment,  or equipment on
         rotation in the  ordinary  course of  business,  (ii)  dispositions  of
         equipment  which,  in the aggregate  during any Fiscal Year, have a fai
         market value or book value,  whichever is less, of  $10,000,000 or less
         and is not replaced by equipment having at least equivalent value,(iii)
         dispositions of property that is substantially worn, damaged,  obsolete
         or, in the judgment of the  Borrower,  no longer best used or useful in
         its business or that of any  Significant  Subsidiary,  iv) transfers of
         assets necessary to give effect to merger or consolidation  liquidation
         or dissolution transactions permitted by Section 8.7 hereof and (v) the
         disposition of Eligible Securities in the ordinary course of management
         of  the  investment  portfolio  of the  Borrower  and  its  Significant
         Subsidiaries.

                  (b) The Borrower shall not permit any  Significant  Subsidiary
         to issue  any  shares  of  capital  stock to any  Person  other  than a
         Material Subsidiary or the Borrower.


8.6. Investments.
     ------------

Neither the Borrower nor any Significant Subsidiary shall purchase,  own, invest
in or otherwise acquire, directly or indirectly,  any stock or other securities,
or make or permit to exist any interest whatsoever in any other Person or permit
to exist any loans or  advances  to any  Person,  except  the  Borrower  and its
Significant Subsidiaries may:

                  (a) own securities of any Person acquired in an Acquisition
         permitted hereunder and de minimis equity interests in any Person;


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<PAGE>

                  (b) own Eligible Securities;

                  (c)  maintain  investments  existing as of the date hereof not
         otherwise provided for in this Section 8.6 and as set forth in Schedule
         6.4 hereof;

                  (d) create  accounts  receivable  arising  and  provide  trade
         credit  granted  in  the  ordinary  course  of  business  and  own  any
         securities received in satisfaction or partial  satisfaction thereof in
         connection with accounts of financially  troubled Persons to the extent
         reasonably necessary in order to prevent or limit loss;

                  (e) in addition to any Indebtedness permitted under clause (h)
         below, make or maintain unsecured intercompany loans, advances and cash
         investments by the Borrower or any Significant  Subsidiary to or in any
         non-Guarantor  Subsidiary  in an  aggregate  amount  not in  excess  of
         $10,000,000;  provided that if the obligations thereunder are evidenced
         by a note or other instrument, such instrument shall be non-negotiable;

                  (f) make and maintain loans and advances  between the Borrower
         and its Material Subsidiaries and between a Material Subsidiary and any
         other Material Subsidiary;

                  (g) make and maintain cash investments in non-Guarantor
         Subsidiaries in an aggregate amount outstanding at any time not in
         excess of $10,000,000;

                  (h) make and maintain  non-cash  investments in  Non-Guarantor
         Subsidiaries  in the form of sales or  transfers  of  inventory to such
         Subsidiaries  consistent  with past practice and in the ordinary course
         of business, whether in the form of accounts receivable or Indebtedness
         derived therefrom owing from the Subsidiary;

                  (i) make and  maintain  investments  in any  Person or Persons
         engaged in the same or similar line of business as the Borrower,  which
         is acquired in an Acquisition permitted under Section 8.2 hereof;

                  (j) make loans and  advances to its  officers,  directors  and
         employees for any business purpose in an aggregate  amount  outstanding
         at any time not in excess of $750,000;

                  (k) invest in key man life insurance with respect to its
         executive officers; and

                  (l) make other loans, advances and investments in an aggregate
         principal amount at any time outstanding not to exceed $15,000,000.


8.7. Merger or Consolidation.
     -----------------------
Neither the Borrower nor any Subsidiary shall

                  (a)consolidate with or merge into any other Person, or

                  (b) permit any other Person to merge into it; provided,however
         (i) any  Subsidiary  of the  Borrower  may  merge  or  transfer  all or
         substantiallyall of its assets inot or consldate with the Borrower or


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<PAGE>

any Guarantor,  (ii) any non-Guarantor  Subsidiary may merge or consolidate with
or into any other non-Guarantor  Subsidiary and (iii) any other Person may merge
into or  consolidate  with the Borrower or any  wholly-owned  Subsidiary and any
Subsidiary  may merge  into or  consolidate  with any  other  Person in order to
consummate an Acquisition permitted by Section 8.2 hereof provided further, that
any resulting or surviving  entity shall execute and deliver such agreements and
other  documents,  including a Subsidiary  Guaranty,  and take such other action
required  under  Section 7.19 hereof or as the Agent may  reasonably  require to
evidence or confirm its express assumption of the obligations and liabilities of
its  predecessor  entities  under the Loan  Documents to which such  predecessor
entities were party;


8.8. Restricted Payments.
     -------------------

Neither the Borrower nor any  Subsidiary  shall make any  Restricted  Payment or
apply  or set  apart  any of  their  assets  therefor  or agree to do any of the
foregoing;


8.9. Transactions with Affiliates.
     -----------------------------

Other than  transactions  permitted  under  Sections  8.7 and 8.8,  neither  the
Borrower nor any Subsidiary  shall enter into any transaction  after the Closing
Date, including,  without limitation,  the purchase,  sale, lease or exchange of
property,  real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except

                 (a) that such Affiliates may render services to the Borrower or
         its  Subsidiaries  for compensation at the same rates generally paid by
         Persons  engaged  in the  same or  similar  businesses  for the same or
         similar services,

                  (b) that the Borrower or any Subsidiary may render services to
         such Affiliates for compensation at the same rates generally charged by
         the Borrower or such Subsidiary,

                  (c) in the  ordinary  course of business  and  pursuant to the
         reasonable   requirements  of  the  Borrower's  (or  any  Subsidiary's)
         business and upon fair and reasonable terms no less favorable to the
          Borrower (or any  Subsidiary)  than would be obtained in a comparable
          arm's-length  transaction  with a  Person  not an  Affiliate  or

                  (d)transactions described in Section 8.6(g) hereof;


8.10. Compliance with ERISA.
      ----------------------

Neither the Borrower nor any Subsidiary  shall with respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:

                  (a) permit the occurrence of any Termination Event which would
         result  in a  liability  on the  part  of  the  Borrower  or any  ERISA
         Affiliate to the PBGC except where such occurrence could not reasonably
         be expected to have a Material Adverse Effect; or

                  (b) permit any accumulated  funding  deficiency (as defined in
         Section 302 of ERISA and  Section 412 of the Code) with  respect to any
         Pension Plan, whether or not waived, except where such occurrence could
         not reasonably be expected to have a Material Adverse Effect; or

                  (c)  fail  to  make  any   contribution   or  payment  to  any
         Multiemployer  Plan which the  Borrower or any ERISA  Affiliate  may be
         required to make under any  agreement  relating  to such  Multiemployer
         Plan, or any law pertaining thereto; or


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<PAGE>

                  (d) engage,  or permit any Borrower or any ERISA  Affiliate to
         engage,  in any  prohibited  transaction  under Section 406 of ERISA or
         Sections 4975 of the Code for which a civil penalty pursuant to Section
         502(i) of ERISA or a tax  pursuant  to Section  4975 of the Code may be
         imposed except where such  occurrence  could not reasonably be expected
         to have a Material Adverse Effect; or

                  (e) permit the  establishment  of any  Employee  Benefit  Plan
         providing  post-retirement  welfare benefits, or establish or amend any
         Employee Benefit Plan which  establishment or amendment could result in
         any  liability to the  Borrower or any ERISA  Affiliate or increase the
         obligation  of the Borrower or any ERISA  Affiliate to a  Multiemployer
         Plan except  where such  liability or  increased  obligation  could not
         reasonably be expected to have a Material Adverse Effect; or

                  (f) fail,  or permit the  Borrower or any ERISA  Affiliate  to
         fail, to establish,  maintain and operate each Employee Benefit Plan in
         compliance in all material  respects with the provisions of ERISA,  the
         Code, all applicable Foreign Benefit Laws and all other applicable laws
         and the  regulations  and  interpretations  thereof  except  where such
         occurrence  could not reasonably be expected to have a Material Adverse
         Effect;


8.11. Fiscal Year.
      ------------

Neither the Borrower nor any Subsidiary shall change its Fiscal Year;


8.12. Dissolution,  etc.
      ------------------

Neither the Borrower nor any Significant  Subsidiary shall wind up, liquidate or
dissolve  (voluntarily or  involuntarily)  or commence or suffer any proceedings
seeking any such winding up,  liquidation or  dissolution,  except in connection
with a merger or consolidation permitted pursuant to Section 8.7 hereof;


8.13. Limitations on Sales and Leasebacks.
      -----------------------------------

Neither  the  Borrower  nor any  Significant  Subsidiary  shall  enter  into any
arrangement  with any Person  providing  for the leasing by the  Borrower or any
Significant  Subsidiary  of real or  personal  property,  whether  now  owned or
hereafter acquired in a related  transaction or series of related  transactions,
which  has  been  or is to be  sold  or  transferred  by  the  Borrower  or  any
Significant  Subsidiary to such Person or to any other Person to whom funds have
been or are to be advanced by such  Person on the  security of such  property or
rental  obligations of the Borrower or any  Significant  Subsidiary (a "Sale and
Leaseback  Transaction");  provided  however,  the  Borrower or any  Significant
Subsidiary  may enter  into Sale and  Leaseback  Transactions  to the extent the
aggregate amount of all payments made in connection  therewith during any twelve
month period do not exceed $10,000,000;


8.14. Hedging Obligations.
      --------------------

Neither  the  Borrower  nor any  Significant  Subsidiary  shall incur any Hedgin
Obligations, or enter into any agreements,  arrangements, devices or instruments
relating to Hedging Obligations, for speculative or investment purposes;


8.15. Negative Pledge Clauses.
      ------------------------

Neither the Borrower  nor any  Subsidiary  shall enter into or cause,  suffer or
permit to exist  any  agreement  with any  Person  other  than the Agent and the
Lenders  pursuant to this Agreement or any other Loan Documents  which prohibits
or limits the ability of any of the Borrower or any Subsidiary to create, incur


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<PAGE>

assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or  hereafter  acquired,  provided  that the  Borrower and any
Subsidiary may enter into such an agreement in connection  with, and limited to,
property  acquired with the proceeds of purchase  money  Indebtedness  permitted
hereunder;


8.16. Change in Accountants.
      ---------------------

The  Borrower  shall  not  change  its  independent  public  accountants  to any
accounting firm other than an accounting firm of Nationally Recognized Standing;


8.17. Limitations  on  Certain  Restrictive  Covenants.
      -------------------------------------------------

Neither the Borrower nor any  Subsidiary  shall enter into,  or permit to exist,
with any Person any agreement  (other than this  Agreement)  which  prohibits or
limits the ability of any  Subsidiary to declare or pay any dividend or make any
loan to or investment in the Borrower or any other owner of such Subsidiary.


8.18. Payment of Indebtedness.
      ------------------------

The  Borrower  shall  not  make  any  optional  redemption  of any  Indebtedness
outstanding  under the  Indenture  nor  deposit  any funds with the  Trustee (as
defined in the Indenture)  pursuant to Section  13.1(b)of the Indenture in order
to effect, directly or indirectly, an optional redemption if

                 (a) an Event of Default has occurred and is continuing or such
         prepayment  would  create a  Default  or Event of  Default,

                 (b)  there  are any Outstandings  hereunder or

                 (c) the sum of cash plus  Eligible  Securities of the
         Borrower is less than $500,000,000.


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<PAGE>

                                   ARTICLE IX
                                   ----------

                       Events of Default and Acceleration
                       -----------------------------------


9.1. Events of  Default.
     ------------------

If any one or more of the following  events  (herein called "Events of Default")
shall occur for any reason  whatsoever  (and  whether such  occurrence  shall be
voluntary  or  involuntary  or come about or be effected by  operation of law or
pursuant to or in compliance with any judgment,  decree or order of any court or
any order, rule or regulation of any Governmental Authority), that is to say:

                  (a) if default  shall be made in the due and punctual  payment
         of the  principal  or  interest  of  any  Loan,  Swing  Line  Loan,  or
         Reimbursement Obligation, when and as the same shall be due and payable
         whether  pursuant to any provision of Article II or Article III hereof,
         at maturity, by acceleration or otherwise; or

                  (b) if default  shall be made in the due and punctual  payment
         of any fees or other  Obligations  payable to  NationsBank,  any of the
         Lenders  or the  Agent on the date on which  the same  shall be due and
         payable  and such  default  shall  continue  for a  period  of five (5)
         Business  Days after notice of such default is received  from the Agent
         or any Lender; or

                  (c) if default shall be made in the  performance or observance
         of any covenant  set forth in Section 7.3,  7.7,  7.11,  7.12,  7.19 or
         Article VIII;

                  (d)  if  a  default  shall  be  made  in  the  performance  or
         observance  of,  or shall  occur  under,  any  covenant,  agreement  or
         provision  contained  in this  Agreement  or the Notes  (other  than as
         described  in clauses  (a),  (b) or (c) above) and such  default  shall
         continue  for 30 or more days after the earlier of receipt of notice of
         such  default by the  Authorized  Representative  from the Agent or any
         Lender, or a Responsible  Officer of the Borrower becomes aware of such
         default, or if a default shall be made in the performance or observance
         of,  or  shall  occur  under,  any  covenant,  agreement  or  provision
         contained  in any of the other Loan  Documents  (beyond any  applicable
         grace  period,  if any,  contained  therein)  or in any  instrument  or
         document  evidencing or creating any obligation,  guaranty,  or Lien in
         favor of the Agent or any of the Lenders or  delivered  to the Agent or
         any of the Lenders in connection  with or pursuant to this Agreement or
         any of the  Obligations,  or if any Loan Document  ceases to be in full
         force and effect (other than by reason of any action by the Agent or in
         accordance  with its terms),  or if without the written  consent of the
         Lenders, this Agreement or any other Loan Document shall be disaffirmed
         or shall ter minate,  be  terminable or be terminated or become void or
         unenforceable  for any reason whatsoever (other than in accordance with
         its terms in the  absence  of default or by reason of any action by the
         Lenders or the Agent); or

                  (e) if there shall  occur (i) a default,  which is not waived,
         in the payment of any principal, interest, premium or other amount with
         respect to any Indebtedness(other than the Loans and other Obligations)


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<PAGE>

         of the Borrower or any Subsidiary  which  Indebtedness  is in an amount
         not less  than  $15,000,000  in the  aggregate  outstanding,  or (ii) a
         default,  which  is not  waived,  in  the  performance,  observance  or
         fulfillment  of  any  term  or  covenant  contained  in  any  agreement
         instrument  under or pursuant to which any such  Indebtedness  may have
         been issued, created, assumed, guaranteed or secured by the Borrower or
         any Subsidiary, and such default or event of default shall continue for
         more than the  period  of grace,  if any,  therein  specified,  or such
         default  or  event of  default  shall  permit  the  holder  of any such
         Indebtedness  (or any agent or trustee  acting on behalf of one or more
         holders) to accelerate the maturity thereof; or

                  (f) if any representation, warranty or other statement of fact
         contained in any Loan Document or in any writing,  certificate,  report
         or statement at any time  furnished to the Agent or any Lender by or on
         behalf of the  Borrower  or any other  Credit  Party  pursuant to or in
         connection  with any Loan  Document,  or  otherwise,  shall be false or
         misleading in any material respect when given; or

                  (g) if the  Borrower or any other Credit Party shall be unable
         to pay its debts  generally as they become due; file a petition to take
         advantage of any insolvency statute; make an assignment for the benefit
         of its  creditors;  commence  a  proceeding  for the  appointment  of a
         receiver,  trustee, liquidator or conservator of itself or of the whole
         or any  substantial  part of its  property;  file a petition  or answer
         seeking  liquidation,  reorganization  or arrangement or similar relief
         under  the  federal  bankruptcy  laws or any  other  applicable  law or
         statute; or

                  (h) if a court of competent jurisdiction shall enter an order,
         judgment  or  decree   appointing  a  custodian,   receiver,   trustee,
         liquidator or  conservator of the Borrower or any other Credit Party or
         of the whole or any substantial  part of its properties and such order,
         judgment  or decree  continues  unstayed  and in effect for a period of
         sixty (60) days,  or approve a petition  filed  against the Borrower or
         any  other  Credit  Party  seeking   liquidation,   reorganization   or
         arrangement or similar relief under the federal  bankruptcy laws or any
         other  applicable law or statute of the United States of America or any
         state,  which petition is not dismissed  within sixty (60) days; or if,
         under the provisions of any other law for the relief or aid of debtors,
         a court of competent  jurisdiction  shall assume  custody or control of
         the  Borrower  or  any  other  Credit  Party  or of  the  whole  or any
         substantial  part of its properties,  which control is not relinquished
         within sixty (60) days;  or if there is commenced  against the Borrower
         or  any  other  Credit  Party  any   proceeding  or  petition   seeking
         reorganization,   arrangement  or  similar  relief  under  the  federal
         bankruptcy  laws or any other  applicable  law or statute of the United
         States of America or any state which  proceeding  or  petition  remains
         undismissed  for a period of sixty (60) days; or if the Borrower or any
         other  Credit  Party  takes any action to  indicate  its  consent to or
         approval of any such proceeding or petition; or

                  (i)if (i) one or more judgments or orders where the amount not
         covered  by  insurance  (or the amount as to which the  insurer  denies
         liability) in excess of $15,000,000 is rendered against the Borrower


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<PAGE>



         or any  Subsidiary,  or (ii)  there is any  attachment,  injunction  or
         execution against any of the Borrower's or Subsidiaries' properties for
         any  amount  in  excess  of  $15,000,000  in the  aggregate;  and  such
         judgment, attachment, injunc tion or execution remains unpaid, unstayed
         undischarged,  unbonded or undismissed for a period of sixty (60) days;
         or

                  (j) if the Borrower or any Subsidiary shall, other than in the
         ordinary course of business (as determined by past practices),  suspend
         all or any  part  of its  operations  material  to the  conduct  of the
         business of the Borrower or such  Subsidiary  for a period of more than
         60 days; or

                  (k) if the Borrower or any Subsidiary  shall breach any of the
         material  terms or conditions of any agreement  under which any Hedging
         Obligations  permitted hereby is created and such breach shall continue
         beyond any grace period, if any, relating thereto pursuant to the terms
         of such agreement, or if the Borrower or any Subsidiary shall disaffirm
         or seek to  disaffirm  any  such  agreement  or any of its  obligations
         thereunder; or

                  (l)      if a Change of Control shall occur;

then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,

                           (A) either or both of the  following  actions  may be
                  taken: (i) the Agent, with the consent of the Required Lenders
                  may,  and at the  direction  of the  Required  Lenders  shall,
                  declare any  obligation  of the Lenders,  NationsBank  and the
                  Issuing  Bank to make  further  Revolving  Loans or Swing Line
                  Loans or to issue  additional  Letters  of Credit  terminated,
                  whereupon  the  obligation  of each  Lender  to  make  further
                  Revolving  Loans and of  NationsBank  to make Swing Line Loans
                  and of the Issuing Bank to issue additional Letters of Credit,
                  hereunder  shall  terminate  immediately,  and (ii) the  Agent
                  shall  at the  direction  of the  Required  Lenders,  at their
                  option,  declare by notice to the  Borrower  any or all of the
                  Obligations to be immediately  due and payable,  and the same,
                  including   all  interest   accrued   thereon  and  all  other
                  obligations  of the  Borrower  to the Agent  and the  Lenders,
                  shall  forthwith  become  immediately  due and payable without
                  presentment, demand, protest, notice or other formality of any
                  kind,  all of which  are  hereby  expressly  waived,  anything
                  contained   herein  or  in  any   instrument   evidencing  the
                  Obligations   to  the  contrary   notwithstanding;   provided,
                  however,  that notwithstanding the above, if there shall occur
                  an Event of Default  under  clause (g) or (h) above,  then the
                  obligation  of the  Lenders to make  Revolving  Loans,  and of
                  NationsBank  to make Swing Line Loans and of the Issuing  Bank
                  to issue  Letters  of  Credit  hereunder  shall  automatically
                  terminate  and  any  and  all  of  the  Obligations  shall  be
                  immediately  due and  payable  without  the  necessity  of any
                  action by the Agent or the Required Lenders or notice to or by
                  the Agent or the Lenders;



                                       72

<PAGE>



                           (B) The Borrower  shall,  upon demand of the Agent or
                  the Required Lenders, deposit cash with the Agent in an amount
                  equal to the amount of any Letter of Credit  Outstandings,  as
                  collateral  security for the repayment of any future  drawings
                  or payments  under such  Letters of Credit,  and such  amounts
                  shall be held by the Agent  pursuant  to the terms of the Cash
                  Collateral Account Agreement; and

                           (C) the Agent and each of the Lenders  shall have all
                  of the rights and remedies  available under the Loan Documents
                  or under any applicable law.


9.2.  Agent to Act.
      -------------

In case any one or more Events of Default  shalloccur  and not have been waived,
the Agent may, and at the direction of the Required  Lenders  shall,  proceed to
protect and  enforce  their  rights or  remedies  either by suit in equity or by
action at law, or both,  whether for the specific  performance  of any covenant,
agreement or other provision contained herein or in any other Loan Document,  or
to enforce the payment of the  Obligations or any other legal or equitable right
or remedy.


9.3.  Cumulative  Rights.
      -------------------

No right or remedy herein conferred upon the Lenders or the Agent is intended to
be exclusive of any other  rights or remedies  contained  herein or in any other
Loan  Document,  and every such right or remedy shall be cumulative and shall be
in addition to every other such right or remedy  contained herein and therein or
now or hereafter existing at law or in equity or by statute, or otherwise.


9.4. No Waiver.
     ----------

No course of dealing  between  the  Borrower  and any Lender or the Agent or any
failure or delay on the part of any Lender or the Agent in exercising any rights
or remedies  under any Loan Document or otherwise  available to it shall operate
as a waiver of any rights or remedies  and no single or partial  exercise of any
rights or remedies  shall  operate as a waiver or preclude  the  exercise of any
other  rights or remedies  hereunder  or of the same right or remedy on a future
occasion.


9.5.  Allocation  of Proceeds.
      -----------------------

If an Event of Default has occurred and not been waived, and the maturity of the
Notes has been accelerated  pursuant to Article XI hereof, all payments received
by the Agent  hereunder,  in  respect of any  principal  of or  interest  on the
Obligations  or any other amounts  payable by the Borrower  hereunder,  shall be
applied by the Agent in the following order:

                  (a) amounts due to the Lenders pursuant to Sections 2.10, 3.3,
         3.4 and 11.5;

                  (b) amounts due to the Agent pursuant to Section 10.9;

                  (c) payments of interest on Loans, Swing Line Loans and
         Reimbursement Obligations, to be applied for the ratable benefit of the
         Lenders;

                  (d) payments of principal of Loans, Swing Line Loans and
         Reimbursement Obligations, to be applied for the ratable benefit of the
         Lenders;


                                       73

<PAGE>



                  (e) payments of cash amounts to the Agent in respect of Letter
         of Credit Outstandings pursuant to Section 9.1(l)(B);

                  (f) amounts due to the Lenders pursuant to Sections 3.2(g),
         7.15 and 11.9;

                  (g) payments of all other amounts due to the Lenders under any
         of the Loan Documents, if any, to be applied for the ratable benefit of
         the Lenders;

                  (h)   amounts  due  to  any  of  the  Lenders  in  respect  of
         Obligations consisting of liabilities under any Swap Agreement with any
         of the Lenders on a pro rata basis according to the amounts owed; and

                  (i) any surplus  remaining  after  application as provided for
         herein,  to the Borrower or otherwise as may be required by  applicable
         law.


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<PAGE>

                                    ARTICLE X
                                    ---------

                                    The Agent
                                    ---------


10.1. Appointment, Powers,  and Immunities.
      -------------------------------------

Each Lender hereby  irrevocably  appoints and authorizes the Agent to act as its
agent under this  Agreement  and the other Loan  Documents  with such powers and
discretion  as are  specifically  delegated  to the  Agent by the  terms of this
Agreement and the other Loan  Documents,  together with such other powers as are
reasonably  incidental  thereto.  The Agent (which term as used in this sentence
and in Section  10.5 hereof and the first  sentence of Section 10.6 hereof shall
include  its  affiliates  and its own and its  affiliates'  officers,  directors
employees, and agents):

                  (a) shall not have any duties or responsibilities except those
         expressly  set forth in this  Agreement  and shall not be a trustee  or
         fiduciary for any Lender;

                  (b) shall not be  responsible  to the Lenders for any recital,
         statement,  representation,  or warranty (whether written or oral) made
         in or in connection  with any Loan Document or any certificate or other
         document  referred  to or  provided  for in, or received by any of them
         under, any Loan Document,  or for the value,  validity,  effectiveness,
         genuineness,  enforceability,  or sufficiency of any Loan Document,  or
         any other  document  referred  to or  provided  for  therein or for any
         failure by any Credit  Party or any other  Person to perform any of its
         obligations thereunder;

                  (c)  shall  not  be  responsible  for  or  have  any  duty  to
         ascertain, inquire into, or verify the performance or observance of any
         covenants or agreements by any Credit Party or the  satisfaction of any
         condition or to inspect the property  (including the books and records)
         of any Credit Party or any of its Subsidiaries or affiliates;

                  (d) shall not be required to initiate or conduct any
         litigation or collection  proceedings under any Loan Document; and

                  (e) shall not be  responsible  for any action taken or omitted
         to be taken by it under or in connection with any Loan Document, except
         for its own gross negligence or willful misconduct.

The Agent may employ agents and  attorneys-in-fact  and shall not be responsible
for the  negligence  or  misconduct  of any  such  agents  or  attorneys-in-fact
selected by it with reasonable care.


10.2. Reliance by Agent.
      -----------------

The Agent shall be entitled to rely upon any certification,  notice, instrument,
writing, or other communication (including,  without limitation,  any thereof by
telephone or telefacsimile) believed by it to be genuine and correct and to have
been signed,  sent or made by or on behalf of the proper Person or Persons,  and
upon advice and  statements of legal counsel  (including  counsel for any Credit
Party),  independent  accountants,  and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the holder thereof for all


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<PAGE>

purposes  hereof  unless and until the Agent  receives and accepts an Assignment
and  Acceptance  executed in  accordance  with Section  11.1  hereof.  As to any
matters not  expressly  provided for by this  Agreement,  the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain  from  acting  (and shall be fully  protected  in so acting or
refraining from acting) upon the instructions of the Required Lenders,  and such
instructions shall be binding on all of the Lenders; provided, however, that the
Agent  shall  not be  required  to take any  action  that  exposes  the Agent to
personal liability or that is contrary to any Loan Document or applicable law or
unless it shall first be indemnified to its  satisfaction by the Lenders against
any and all  liability  and  expense  which may be  incurred  by it by reason of
taking any such action.


 10.3. Defaults.
       --------

The Agent shall not be deemed to have knowledge or notice of the occurrence of a
Default or Event of Default unless the Agent has received  written notice from a
Lender or the Borrower  specifying  such Default or Event of Default and stating
that such notice is a "Notice of Default".  In the event that the Agent receives
such a notice of the  occurrence  of a Default  or Event of  Default,  the Agent
shall give prompt  notice  thereof to the Lenders.  The Agent shall  (subject to
Section  10.2  hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required  Lenders,  provided that
unless and until the Agent shall have  received such  directions,  the Agent may
(but shall not be obligated  to) take such  action,  or refrain from taking such
action,  with  respect  to such  Default  or Event of  Default  as it shall deem
advisable in the best interest of the Lenders.


10.4. Rights as Lender.
      -----------------

With  respect  to its  Revolving  Credit  Commitment  and the Loans  made by it,
NationsBank  (and any  successor  acting as Agent) in its  capacity  as a Lender
hereunder  shall have the same rights and powers  hereunder  as any other Lender
and may  exercise  the same as though it were not acting as the  Agent,  and the
term  "Lender"  or  "Lenders"  shall,  unless the context  otherwise  indicates,
include the Agent in its  individual  capacity.  NationsBank  (and any successor
acting as Agent) and its affiliates may (without  having to account  therefor to
any Lender) accept  deposits from,  lend money to, make  investments in, provide
services  to,  and  generally  engage in any kind of  lending,  trust,  or other
business with any Credit Party or any of its Subsidiaries or affiliates as if it
were not acting as Agent,  and NationsBank  (and any successor  acting as Agent)
and its affiliates may accept fees and other consideration from any Credit Party
or any of its  Subsidiaries  or affiliates for services in connection  with this
Agreement or otherwise without having to account for the same to the Lenders.


10.5. Indemnification.
      ----------------

The Lenders  agree to indemnify  the Agent (to the extent not  reimbursed  under
Section 11.9 hereof,  but without limiting the obligations of the Borrower under
such Section) ratably in accordance with their respective  Applicable Commitment
Percentages,  for  any  and  all  liabilities,   obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs,  expenses (including  attorneys'
fees), or  disbursements  of any kind and nature  whatsoever that may be imposed
on, incurred by or asserted  against the Agent  (including by any Lender) in any
way  relating  to or  arising  out  of any  Loan  Document  or the  transactions
contemplated  thereby or any action taken or omitted by the Agent under any Loan
Document;  provided  that no Lender shall be liable for any of the  foregoing to
the extent they arise from the gross negligence or willful


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<PAGE>



misconduct of the Person to be indemnified. Without limitation of the foregoing,
each Lender agrees to reimburse  the Agent  promptly upon demand for its ratable
share of any costs or expenses  payable by the Borrower  under  Section 11.5, to
the extent that the Agent is not promptly reimbursed for such costs and expenses
by the  Borrower.  The  agreements  contained in this Section 10.5 shall survive
payment in full of the Loans and all other amounts payable under this Agreement.


10.6. Non-Reliance on Agent and Other Lenders.
      ---------------------------------------

Each Lender agrees that it has,  independently and without reliance on the Agent
or any other  Lender,  and based on such  documents  and  information  as it has
deemed appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries  and  decision  to  enter  into  this  Agreement  and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such  documents  and  information  as it shall deem  appropriate  at the time
continue to make its own analysis and  decisions in taking or not taking  action
under the Loan Documents.  Except for notices,  reports, and other documents and
information  expressly  required  to be  furnished  to the  Lenders by the Agent
hereunder,  the Agent shall not have any duty or  responsibility  to provide any
Lender with any credit or other  information  concerning the affairs,  financial
condition,  or  business  of any  Credit  Party  or any of its  Subsidiaries  or
affiliates  that  may  come  into  the  possession  of the  Agent  or any of its
affiliates.


10.7. Resignation of Agent.
      ---------------------

The Agent may resign at any time by giving notice thereof to the Lenders and the
Borrower.  Upon any such resignation,  the Required Lenders shall have the right
to appoint a successor Agent who must be reasonably  acceptable to the Borrower.
If no successor  Agent shall have been so appointed by the Required  Lenders and
shall have accepted such appointment  within thirty (30) days after the retiring
Agent's giving of notice of resignation,  then the retiring Agent may, on behalf
of the  Lenders,  appoint a successor  Agent which  shall be a  commercial  bank
organized under the laws of the United States of America having combined capital
and surplus of at least $500,000,000.  Upon the acceptance of any appointment as
Agent hereunder by a successor,  such successor  shall thereupon  succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring  Agent,  and the retiring Agent shall be discharged from its duties
and obligations  hereunder.  After any retiring Agent's resignation hereunder as
Agent,  the provisions of this Article X hereof shall continue in effect for its
benefit in respect  of any  actions  taken or omitted to be taken by it while it
was acting as Agent.


10.8. Sharing of Payments,  etc.
      -------------------------

Each Lender agrees that if it shall, through the exercise of a right of banker's
lien,  set-off,  counterclaim  or otherwise,  obtain payment with respect to its
Obligations  (other  than  pursuant to Article IV hereof)  which  results in its
receiving more than its pro rata share of the aggregate payments with respect to
all of the Obligations  (other than any payment expressly  provided hereunder to
be distributed  on other than a pro rata basis and payments  pursuant to Article
IV hereof), then

                  (a)  such  Lender  shall  be  deemed  to  have  simultaneously
         purchased from the other Lenders a share in their Obligations so that
the amount of the Obligations  held by each of the Lenders shall be pro rata and

                  (b) such other  adjustments shall be made from time to time as
         shall be  equitable  to insure  that the  Lenders  share such  payments
         ratably;

provided, however, that for purposes of this Section 10.8 the term "pro rata"


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<PAGE>

shall be  determined  with respect to the  Revolving  Credit  Commitment of each
Lender to the Total Revolving Credit  Commitments after subtraction in each case
of  amounts,  if any,  by which any such  Lender has not funded its share of the
outstanding  Loans and  Obligations.  If all or any  portion of any such  excess
payment is thereafter  recovered  from the Lender which  received the same,  the
purchase  provided in this Section 10.8 shall be rescinded to the extent of such
recovery,  without interest.  The Borrower  expressly  consents to the foregoing
arrangements  and agrees that each Lender so  purchasing  a portion of the other
Lenders'  Obligations  may  exercise all rights of payment  (including,  without
limitation,  all rights of set-off,  banker's lien or counterclaim) with respect
to such  portion  as fully as if such  Lender  were the  direct  holder  of such
portion.


 10.9. Fees.
       ----

The Borrower agrees to pay to the Agent, for its individual  account,  an annual
Agent's fee as agreed to by the Borrower and Agent  pursuant to that certain fee
letter  dated July 2, 1997  between  the  Borrower  and the Agent,  as it may be
amended prior to the Closing Date.


                                       78

<PAGE>

                                   ARTICLE XI
                                   ----------

                                  Miscellaneous
                                  -------------


11.1. Assignments and Participations.
      -------------------------------

                  (a) Each Lender may assign to one or more  Eligible  Assignees
         all or a portion  of its rights and  obligations  under this  Agreement
         (including, without limitation, all or a portion of its Loans, its Note
         and its Revolving Credit Commitment); provided, however, that

                      (i) each such assignment shall be to an Eligible Assignee;

                      (ii) except in the case of an assignment to another Lender
             or an assignment of all of a Lender's rights and obligations  under
             this Agreement,  any such partial  assignment shall be in an amount
             at least equal to $5,000,000;

                      (iii)  each  such  assignment  by a  Lender  shall be of a
             constant,  and not  varying,  percentage  of all of its  rights and
             obligations under this Agreement and the Note; and

                      (iv)  the  parties  to such  assignment  shallexecute  and
             deliver  to  the  Agent  for  its   acceptance  an  Assignment  and
             Acceptance in the form of Exhibit B hereto,  together with any Note
             subject to such assignment and a processing fee of $3,500.

         Upon  execution,  delivery,  and  acceptance  of  such  Assignment  and
         Acceptance, the assignee thereunder shall be a party hereto and, to the
         extent of such assignment,  have the obligations,  rights, and benefits
         of a Lender  hereunder and the assigning Lender shall, to the extent of
         such  assignment,  relinquish  its  rights  (other  than  rights  under
         Sections 3.2(g),  4.1, 4.6, 7.15, 11.5 and 11.9 of the Credit Agreement
         which shall  survive  any such  assignment)  and be  released  from its
         obligations  under  this  Agreement.   Upon  the  consummation  of  any
         assignment  pursuant to this Section,  the assignor,  the Agent and the
         Borrower shall make appropriate  arrangements so that, if required, new
         Notes are issued to the assignor and the  assignee.  If the assignee is
         not  incorporated  under the laws of the United  States of America or a
         state  thereof,  it  shall  deliver  to  the  Borrower  and  the  Agent
         certification as to exemption from deduction or withholding of Taxes in
         accordance with Section 4.6 hereof.

                  (b) The Agent shall  maintain  at its  address  referred to in
         Section 11.2 hereof a copy of each Assignment and Acceptance  delivered
         to and accepted by it and a register for the  recordation  of the names
         and addresses of the Lenders and the Revolving  Credit  Commitment  of,
         and  principal  amount of the Loans  owing to, each Lender from time to
         time (the "Register").  The entries in the Register shall be conclusive
         and binding for all purposes,  absent manifest error, and the Borrower,
         the Agent and the Lenders may treat each Person  whose name is recorded
         in the  Register  as a  Lender  hereunder  for  all  purposes  of  this
         Agreement.  The  Register  shall be  available  for  inspection  by the
         Borrower  or any  Lender at any  reasonable  time and from time to time
         upon reasonable prior notice.



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<PAGE>

                  (c) Upon its receipt of an Assignment and Acceptance  executed
         by the  parties  thereto,  together  with  any  Note  subject  to  such
         assignment and payment of the processing  fee, the Agent shall, if such
         Assignment and  Acceptance  has been completed and is in  substantially
         the form of Exhibit B hereto, (i) accept such Assignment and Acceptance
         (ii) record the information contained therein in the Register and (iii)
         give prompt notice thereof to the parties thereto.

                  (d) Each Lender may sell participations to one or more Persons
         in all or a portion of its rights and obligations  under this Agreement
         (including all or a portion of its Revolving Credit  Commitment and its
         Loans);  provided,  however,  that (i) such Lender's  obligations under
         this Agreement  shall remain  unchanged,  (ii) such Lender shall remain
         solely  responsible to the other parties hereto for the  performance of
         such  obligations,  (iii)  the  participant  shall be  entitled  to the
         benefit of the yield protection  provisions contained in Article IV and
         the right of set-off contained in Section 11.3 hereof provided, however
         that no  participant  shall be entitled  to receive any greater  amount
         than the  transferor  Lender  would  have been  entitled  to receive in
         respect  of  the  participation   effected  by  such  transfer  had  no
         participation  occurred,  and (iv) the Borrower  shall continue to deal
         solely and directly with such Lender in  connection  with such Lender's
         rights and  obligations  under this  Agreement,  and such Lender  shall
         retain  the sole  right to  enforce  the  obligations  of the  Borrower
         relating  to its  Loans  and its Note  and to  approve  any  amendment,
         modification,  or waiver of any provision of this Agreement (other than
         amendments,  modifications, or waivers decreasing fees or the amount of
         principal of or the rate at which  interest is payable on such Loans or
         Notes, extending any scheduled principal payment date or date fixed for
         the  payment of interest on or fees with espect to such Loans or Notes,
         or extending its Revolving Credit Commitment).

                  (e)  Notwithstanding  any  other  provision  set forth in this
          Agreement,  any  Lender  may at any time  assign and pledge all or any
          portion  of its  Loans and its Notes to any  Federal  Reserve  Bank as
          collateral  security  pursuant  to  Regulation  A  and  any  Operating
          Circular issued by such Federal Reserve Bank. No such assignment shall
          release the assigning Lender from its obligations hereunder.

                  (f) Any Lender may  furnish  any  information  concerning  the
          Borrower or any of its  Subsidiaries  in the possession of such Lender
          from time to time to assignees and participants.


11.2. Notices.
      --------

Any  notice  (other  than  notice of a  Default  or Event of  Default)  shall be
conclusively  deemed to have been  received by any party hereto and be effective
(i) on the day on which delivered (including hand delivery by commercial courier
service) to such party (against receipt  therefor),  (ii) on the date of receipt
at such telefacsimile number as may from time to time be specified by such party
in written notice to the other parties  hereto,  or otherwise  received,  in the
case of notice by  telefacsimile  (where the receipt of such message is verified
by return), or (iii) on the fifth Business Day after the day on which mailed, if
sent prepaid by certified or registered mail, return receipt requested,  in each
case  delivered,  transmitted  or mailed,  as the case may be, to the address or
telefacsimile  number, as appropriate,  set forth below or such other address or
number as such party shall specify by notice hereunder;  provided, however, that
notice of a Default or event of Default herunder shall


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<PAGE>

only be  effective  if  delivered pursuant to subsection (i) or (iii) of this
Section 11.2:

                  (a) if to the Borrower or any other Credit Party:

                         Data General Corporation
                         4400 Computer Drive
                         Westboro, Massachusetts 01580
                         Attn: Treasurer (Mr. Robert McBride)
                         Telephone:(508) 898-6426
                         Telefacsimile: (508) 898-4584

                         with a copy to (in the case of notice of a Default or
                         an Event of Default only):

                         Data General Corporation
                         4400 Computer Drive
                         Westboro, Massachusetts 01580
                         Attn: General Counsel, Law Department
                         Telephone: (508) 898-6227
                         Telefacsimile: (508) 898-4632

                  (b) if to the Agent:

                         NationsBank of Texas, National Association
                         TX1-492-14-11
                         901 Main Street
                         Dallas, Texas 75202
                         Attention: Agency Services
                         Telephone:(214) 508-9970
                         Telefacsimile: (214) 508-2515

                         with a copy to:

                         NationsBank of Texas, National Association
                         TX1-492-67-01
                         901 Main Street
                         Dallas, Texas 75202
                         Attention: Mr. Yousuf Omar
                         Telephone:(212) 508-3347
                         Telefacsimile: (212) 508-0980



                                       81

<PAGE>

                  (c) if to the Lenders:

                         At the addresses set forth on the signature pages
                         hereof and on the signature page of each Assignment and
                         Acceptance;

                  (d) if to any other Credit Party,  at the address set forth on
         the signature page of the Subsidiary  Guaranty  executed by such Credit
         Party.


11.3. Right of Set-off; Adjustments.
      -----------------------------

Upon the  occurrence and during the  continuance  of any Event of Default,  each
Lender (and each of its  affiliates)  is hereby  authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other indebtedness at any time owing by such Lender (or any of
its affiliates) to or for the credit or the account of the Borrower  against any
and all of the obligations of the Borrower now or hereafter  existing under this
Agreement and the Note held by such Lender,  irrespective of whether such Lender
shall have made any demand under this  Agreement or such Note and although  such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application made by such Lender;  provided,  however,
that the  failure to give such  notice  shall not affect  the  validity  of such
set-off and  application.  The rights of each Lender under this Section 11.3 are
in addition to other rights and remedies (including,  without limitation,  other
rights of set-off) that such Lender may have.


11.4. Survival.
      ---------

All covenants,  agreements,  representations  and  warranties  made herein shall
survive the making by the  Lenders of the Loans and the  issuance of the Letters
of Credit and the  execution  and delivery to the Lenders of this  Agreement and
the  Notes and shall  continue  in full  force  and  effect  until the  Facility
Termination  Date unless otherwise  provided herein.  Whenever in this Agreement
any of the parties  hereto is referred  to,  such  reference  shall be deemed to
include the  successors  and permitted  assigns of such party and all covenants,
provisions and agreements by or on behalf of the Borrower which are contained in
the Loan  Documents  shall inure to the benefit of the  successors and permitted
assigns of the Lenders or any of them.


11.5. Expenses.
      ---------

The Borrower  agrees to pay on demand all reasonable,  documented  out-of-pocket
costs and expenses of the Agent  incurred in  connection  with the  syndication,
preparation, execution, delivery, administration, modification, and amendment of
this  Agreement,  the  other  Loan  Documents,  and the  other  documents  to be
delivered  hereunder,  including,  without  limitation,  the reasonable fees and
expenses of special  counsel for the Agent with respect thereto and with respect
to  advising  the Agent as to its  rights  and  responsibilities  under the Loan
Documents.  The  Borrower  further  agrees  to pay  on  demand  all  reasonable,
documented out-of-pocket costs and expenses of the Agent and the Lenders, if any
(including, without limitation,  reasonable attorneys' fees and expenses and the
cost of internal  counsel of each Lender),  in connection  with the  enforcement
(whether  through  negotiations,  legal  proceedings,  or otherwise) of the Loan
Documents  and  the  other  documents  to be  delivered  hereunder.  All  of the
foregoing costs and expenses will be paid by the Borrower to the Agent except to
the extent such cost, liability or expense is


                                       82

<PAGE>



found in a judgment by a court of competent  jurisdiction  to have resulted from
the gross negligence or willful misconduct of the party claiming reimbursement.


11.6. Amendments  and Waivers.
      ------------------------

Any  provision of this  Agreement  or any other Loan  Document may be amended or
waived if, but only if, such  amendment or waiver is in writing and is signed by
the Borrower and the Required Lenders (and, if Article X or the rights or duties
of the  Agent  are  affected  thereby,  by the  Agent);  provided  that  no such
amendment or waiver shall,  unless  signed by all the Lenders,  (i) increase the
Revolving Credit Commitments hereunder,  (ii) reduce the principal of or rate of
interest  on any Loan or any  fees or other  amounts  payable  hereunder,  (iii)
postpone  any  date  fixed  for the  payment  of any  scheduled  installment  of
principal  of or  interest  on any  Loan or any fees or  other  amounts  payable
hereunder or for  termination  of any Loan,  (iv) change the  percentage  of the
Revolving Credit  Commitments or of the unpaid principal amount of the Notes, or
change the number of Lenders  which shall be required  for the Lenders or any of
them to take any action under this  Section 11.6 or any other  provision of this
Agreement,  (v) release any  Guarantor  or (vi)  change the  provisions  of this
Section  11.6;  and  provided,  further,  that no such  amendment or waiver that
affects the rights,  privileges or  obligations  of  NationsBank  as provider of
Swing Line Loans, shall be effective unless signed in writing by NationsBank and
that no such  amendment  or  waiver  that  affects  the  rights,  privileges  or
obligations  of the  Issuing  Bank as  issuer of  Letters  of  Credit,  shall be
effective unless signed in writing by the Issuing Bank;

Notwithstanding  any  provision  of the other Loan  Documents  to the  contrary,
solely as between the Agent and the Lenders, execution by the Agent shall not be
deemed  conclusive  evidence that the Agent has obtained the written  consent of
the Required  Lenders.  No notice to or demand on the Borrower in any case shall
entitle  the  Borrower  to any other or  further  notice or demand in similar or
other circumstances,  except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right,  remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.


11.7. Counterparts.
      -------------

This Agreement may be executed in any number of counterparts, each of which when
so  executed  and  delivered  shall be deemed an  original,  and it shall not be
necessary in making proof of this  Agreement to produce or account for more than
one such fully - executed counterpart.


11.8. Termination.
      ------------

The  termination of this Agreement  shall not affect any rights of the Borrower,
the Lenders or the Agent or any  obligation of the Borrower,  the Lenders or the
Agent,  arising  prior to the  effective  date of such  termination.  The rights
granted to the Agent for the  benefit of the  Lenders  under the Loan  Documents
shall  continue in full force and effect,  notwith  standing the  termination of
this Agreement,  until the Facility  Termination Date shall have occurred (other
than with respect to Sections  3.2(g),  7.15 and 11.9 hereof which shall survive
any such termination). All representations,  warranties,  covenants, waivers and
agreements  contained herein shall survive termination hereof until the Facility
Termination  Date  unless  otherwise   provided  herein.   Notwithstanding   the
foregoing, if after receipt of any payment of all or any part of the


                                       83

<PAGE>

Obligations, any Lender is for any reason compelled to surrender such payment to
any Person  because  such  payment is  determined  to be void or  voidable  as a
preference,  impermissible  setoff,  a diversion of trust funds or for any other
reason,  this  Agreement  shall continue in full force and the Borrower shall be
liable to, and shall  indemnify and hold the Agent or such Lender  harmless for,
the amount of such payment surrendered until the Agent or such Lender shall have
been finally and  irrevocably  paid in full.  The  provisions  of the  foregoing
sentence shall be and remain effective notwithstanding any contrary action which
may have been taken by the Agent or the Lenders in reliance  upon such  payment,
and any such contrary action so taken shall be without prejudice to the Agent or
the  Lenders'  rights  under  this  Agreement  and  shall be deemed to have been
conditioned upon such payment having become final and irrevocable.


11.9. Indemnification; Limitation of Liability.
      -----------------------------------------

                  (a) The  Borrower  agrees to indemnify  and hold  harmless the
         Agent and each Lender and each of their affiliates and their respective
         officers   directors,   employees,   agents,  and  advisors  (each,  an
         "Indemnified  Party")  from and against  any and all  claims,  damages,
         losses,   liabilities,   costs,   and  expenses   (including,   without
         limitation, reasonable attorneys' fees and disbursements) ("Indemnified
         Liabilities")  incurred by or awarded against any Indemnified Party, in
         each  case  arising  out  of or in  connection  with  or by  reason  of
         (including,  without limitation,  in connection with any investigation,
         litigation,  or  proceeding  or  preparation  of defense in  connection
         therewith) the Loan  Documents,  any of the  transactions  contemplated
         herein or the  actual or  proposed  use of the  proceeds  of the Loans,
         except to the extent such  Indemnified  Liability  is found in a final,
         non-appealable  judgment by a court of competent  jurisdiction  to have
         resulted  from such  Indemnified  Party's  gross  negligence or willful
         misconduct or to the extent relating to actions or proceedings  between
         or among the  Indemnified  Parties and the Lenders not arising from any
         action or inaction of the Borrower or any Credit Party.  In the case of
         an investigation, litigation or other proceeding to which the indemnity
         in this Section 11.9 applies, such indemnity shall be effective whether
         or not such  investigation,  litigation or proceeding is brought by the
         Borrower,  its directors,  shareholders  or creditors or an Indemnified
         Party or any other Person or any Indemnified Party is otherwise a party
         thereto and  whether or not the  transactions  contemplated  hereby are
         consummated. If and to the extent that the foregoing undertaking may be
         unenforceable  for any reason,  the Borrower  hereby agrees to make the
         maximum  contribution  to the payment and  satisfaction  of each of the
         Indemnified Liabilities which is permissible under applicable law. This
         Section  11.9  supersedes  any prior  agreements  of the  parties as to
         indemnification or limits on liability.

                  (b)  If a  claim  is  to  be  made  by  a  party  entitled  to
         indemnification under this Section 11.9, Section 3.2(g) or Section 7.15
         hereof  against the Borrower,  the applicable  Indemnified  Party shall
         give written  notice to the Borrower  promptly  after such  Indemnified
         Party receives actual notice of any claim,  action,  suit,  loss, cost,
         liability,  damage or  expense  incurred  or  instituted  for which the
         indemnification is sought. If requested by the Borrower in writing, and
         so long as no Default or Event of Default  shall have  occurred  and be
         continuing,  such Indemnified Party shall contest at the expense of the
         Borrower  the  validity,  applicability  and/or  amount  of such  suit,
         action,  or cause of action to the extent such contest may be conducted
         in good  faith  on  legally  supportable  grounds.  If any  lawsuit  or
         enforcement  action is filed  against any  Indemnified  Party,  written
         notice  thereof  shall be given to the Borrower as soon as  practicable
         (and in any event  within 20 days after the service of the  citation or
         summons. Notwithstanding the foregoing, the failure so


                                       84

<PAGE>



         to notify the  Borrower as provided in this  section  will  relieve the
         Borrower from  liability  hereunder only if and to the extent that such
         failure  results in the  forfeiture by the Borrower of any  substantive
         rights or  defenses  or results in  demonstrable  monetary  harm to the
         Borrower  (but such relief from  liability  shall only be the extent of
         such  demonstrable  monetary harm).  The applicable  Indemnified  Party
         shall  control the defense and  investigation  of such lawsuit o action
         and shall  employ  and  engage  counsel of its own choice to handle and
         defend the same, at the Borrower's  cost,  risk and expense;  provided,
         however,  that the  Borrower  may, at its own cost  participate  in the
         investigation,  trial and  defense  of such  lawsuit  or action and any
         appeal  arising  therefrom  and the  Indemnified  Party  shall  provide
         reasonable  cooperation  with  any  such  participation  to the  extent
         determined,  in such  Indemnified  Party's  sole  judgement,  not to be
         detrimental to the interests and rights of such  Indemnified  Party. If
         the Borrower has  acknowledged in writing to any Indemnified  Party its
         obligation to indemnify hereunder (including during the twenty (20) day
         notice period described below),  such Indemnified  Party, so long as no
         Default or Event of  Default  shall have  occurred  and be  continuing,
         shall not settle such lawsuit or  enforcement  action without the prior
         written  consent  of the  Borrower  and,  if the  Borrower  has  not so
         acknowledged its obligation,  such  Indemnified  Party shall not settle
         such lawsuit or  enforcement  action  without  giving twenty (20) days'
         prior written notice of such settlement and its terms to the Borrower.

                  (c) The Borrower  agrees that no Indemnified  Party shall have
         anyliability  (whether  direct  or  indirect,  in  contract  or tort or
         otherwise)  to it,  any  of its  Subsidiaries,  any  Guarantor,  or any
         security holders or creditors  thereof arising out of, related to or in
         connection with the  transactions  contemplated  herein,  except to the
         extent that such liability is found in a final non-appealable  judgment
         by a court  of  competent  jurisdiction  to  have  resulted  from  such
         Indemnified Party's gross negligence or willful  misconduct;  provided,
         however,  in no  event  shall  any  Indemnified  Party  be  liable  for
         punitive,  consequential,  indirect or special  damages,  as opposed to
         direct damages.

                  (d) Without  prejudice to the survival of any other  agreement
         of the  Borrower  hereunder,  the  agreements  and  obligations  of the
         Borrower  contained in Section  11.9,  Section  3.2(g) and Section 7.15
         shall survive the payment in full of the Obligations payable under this
         Agreement,  the  occurrence  of the Facility  Termination  Date and the
         expiration or termination of this Agreement.


11.10. Severability.
       -------------

If any  provision  of this  Agreement  or the  other  Loan  Documents  shall  be
determined  to be illegal or  invalid as to one or more of the  parties  hereto,
then such provision shall remain in effect with respect to all parties,  if any,
as to whom such provision is neither  illegal nor invalid,  and in any event all
other provisions hereof shall remain effective and binding on the parties hereto


11.11. Entire Agreement.
       -----------------

This Agreement,  together with the other Loan Documents,  constitutes the entire
agreement among the parties with respect to the subject matter hereof and


                                       85

<PAGE>

supersedes  all  previous  proposals,  negotiations,  representations  and other
communications between or among the parties, both oral and written, with respect
thereto.


11.12. Agreement Controls.
       ------------------

In the  event  that  any  term of any of the  Loan  Documents  other  than  this
Agreement  conflicts  with any  express  term of this  Agreement,  the terms and
provisions of this Agreement shall control to the extent of such conflict.


11.13. Usury  Savings  Clause.
       -----------------------

Notwithstanding  any other provision herein, the aggregate interest rate charged
under any of the Notes,  including all charges or fees in  connection  therewith
deemed in the  nature of  interest  under  applicable  law shall not  exceed the
Highest  Lawful  Rate (as such term is defined  below).  If the rate of interest
(determined  without regard to the preceding  sentence)  under this Agreement at
any time  exceeds the Highest  Lawful Rate (as defined  below),  the  utstanding
amount of the Loans made  hereunder  shall bear  interest at the Highest  Lawful
Rate  until the total  amount of  interest  due  hereunder  equals the amount of
interest which would have been due hereunder if the stated rates of interest set
forth in this  Agreement had at all times been in effect.  In addition,  if when
the Loans made  hereunder  are repaid in full the total  interest due  hereunder
(taking  into  account the  increase  provided for above) is less than the total
amount of interest  which would have been due  hereunder  if the stated rates of
interest set forth in this  Agreement  had at all times been in effect,  then to
the extent permitted by law, the Borrower shall pay to the Agent an amount equal
to the difference between the amount of interest paid and the amount of interest
which would have been paid if the  Highest  Lawful Rate had at all times been in
effect.  Notwithstanding  the foregoing,  it is the intention of the Lenders and
the Borrower to conform strictly to any applicable usury laws.  Accordingly,  if
any  Lender  contracts   for,charges,   or  receives  any  consideration   which
constitutes  interest in excess of the Highest Lawful Rate, then any such excess
shall be cancelled automatically and, if previously paid, shall at such Lender's
option be applied to the  outstanding  amount of the Loans made  hereunder or be
refunded to the Borrower.  As used in this  paragraph,  the term "Highest Lawful
Rate" means the maximum  lawful  interest  rate, if any, tha at any time or from
time to time  may be  contracted  for,  charged,  or  received  under  the  laws
applicable  to such  Lender  which are  presently  in effect  or, to the  extent
allowed by law, under such  applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious  interest rate than applicable laws now
allow.


11.14. Governing Law; Waiver of Jury Trial.
       -----------------------------------

                  (a) THIS  AGREEMENT  AND THE  OTHER  LOAN  DOCUMENTS  SHALL BE
         GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
         NEW YORK APPLICABLE TO CONTRACTS  EXECUTED,  AND TO BE FULLY PERFORMED,
         IN SUCH STATE.

                  (b) THE BORROWER HEREBY  EXPRESSLY AND IRREVOCABLY  AGREES AND
         CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
         TO THIS  AGREEMENT  AND THE  TRANSACTIONS  CONTEMPLATED  HEREIN  MAY BE
         INSTITUTED  IN ANY STATE OR FEDERAL  COURT SITTING IN THE COUNTY OF NEW
         YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE

                                       86

<PAGE>



         EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES
         ANY OBJECTION  THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
         IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
         SUCH COURT IN ANY SUCH SUIT,  ACTION OR  PROCEEDING,  AND THE  BORROWER
         HEREBY  IRREVOCABLY   SUBMITS  GENERALLY  AND  UNCONDITIONALLY  TO  THE
         JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

                  (c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
         PERSONAL  SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
         PROCESS IN ANY SUCH SUIT,  ACTION OR  PROCEEDING,  OR BY  REGISTERED OR
         CERTIFIED  MAIL  (POSTAGE  PREPAID)  TO THE  ADDRESS  OF  THE  BORROWER
         PROVIDED IN SECTION  11.2,  OR BY ANY OTHER METHOD OF SERVICE  PROVIDED
         FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW YORK.

                  (d) IN ANY  ACTION OR  PROCEEDING  TO  ENFORCE  OR DEFEND  ANY
         RIGHTS  OR  REMEDIES  UNDER  OR  RELATED  TO ANY LOAN  DOCUMENT  OR ANY
         AMENDMENT,  INSTRUMENT,  DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
         THE FUTURE BE DELIVERED IN  CONNECTION  THEREWITH,  THE  BORROWER,  THE
         AGENT  AND  THE  LENDERS  HEREBY  AGREE,  TO THE  EXTENT  PERMITTED  BY
         APPLICABLE  LAW,  THAT ANY SUCH  ACTION  OR  PROCEEDING  SHALL BE TRIED
         BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY  IRREVOCABLY  WAIVE, TO
         THE EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
         TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.


11.15. Status of Debt.
       --------------

EACH PARTY  HERETO  AGREES THAT THE  REVOLVING  CREDIT  FACILITY,  THE LETTER OF
CREDIT  FACILITY,   ALL  SWING  LINE  LOANS  AND  ALL  OUTSTANDINGS  ARE  HEREBY
SPECIFICALLY  DESIGNATED  AS  "DESIGNATED  SENIOR  INDEBTEDNESS"  AND AS "SENIOR
INDEBTEDNESS"  FOR ALL  PURPOSES OF THE  INDENTURE  AND ARE TO BE  AFFORDED  ALL
RIGHTS OF, AND TERMS APPLICABLE TO,  DESIGNATED  SENIOR  INDEBTEDNESS AND SENIOR
INDEBTEDNESS UNDER THE TERMS OF THE INDENTURE,  INCLUDING,  WITHOUT  LIMITATION,
SUBORDINATION OF THE NOTES (AS DEFINED IN THE INDENTURE)  PURSUANT TO ARTICLE IV
OF THE INDENTURE.


11.16. Existing Letters of Credit.
       --------------------------

Each party  hereto  agrees that the  Existing  Letters of Credit shall be deemed
Letters of Credit issued and outstanding under the terms of this Agreement.



                                       87

<PAGE>



                         [Signatures on following pages]



                                       88

<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have caused this instrument to
be made,  executed and delivered by their duly authorized officers as of the day
and year first above written.


                                 DATA GENERAL CORPORATION


                                     By:__/s/ Robert C. McBride_________________
                                     Name:____Robert C. McBride_________________
                                     Title:__Vice President and Treasurer_______





                                   NATIONSBANK OF TEXAS, NATIONAL
                                   ASSOCIATION, as Agent for the Lenders


                                     By___/s/ Yousuf Omar_______________________
                                     Name:____Yousuf Omar_______________________
                                     Title:___Senior Vice President_____________



                              Signature Page 1 of 7

<PAGE>

                                 NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION

                                     By:___/s/ Yousuf Omar______________________
                                     Name:_____Yousuf Omar______________________
                                     Title:____Senior Vice President____________


                                 Lending Office:
                                     NationsBank of Texas, National Association
                                     901 Main Street
                                     TX1-492-14-11
                                     Dallas, Texas 75202
                                     Attention: Agency Services
                                     Telephone: (214) 508-2138
                                     Telefacsimile: (214) 508-2515

                                 Wire Transfer Instructions:
                                     NationsBank of Texas, National Association
                                     ABA# _________________________________
                                     Account No.:__________________________
                                     Reference: Data General Corporation
                                     Attention: Corporate Loans Funds Transfer





                              Signature Page 2 of 7

<PAGE>



                                 THE BANK OF NEW YORK


                                     By:___/s/ Andrew Keith_____________________
                                     Name:_____Andrew Keith_____________________
                                     Title:____A.V.P.___________________________



                                 Lending Office:
                                     The Bank of New York
                                     Corporate Banking, N/E Division
                                     1 Wall Street 21st Fl
                                     New York, New York  10286  
                                     ====================================
                                     Attention:__Andrew Keith___________________
                                     Telephone:_____(212) 635-6864______________
                                     Telefacsimile:_(212) 635-7978______________

                                Wire Transfer Instructions:
                                     The Bank of New York
                                     ABA#_________________________________
                                     Account No.:_________________________
                                     Reference:___________________________
                                     Attention:__Lorna O. Alleyne_______________





                              Signature Page 3 of 7

<PAGE>



                                 FLEET NATIONAL BANK


                                     By:__/s/ Thomas W. Davies__________________
                                     Name:____Thomas W. Davies__________________
                                     Title:___Senior Vice President_____________


                                 Lending Office:
                                     Fleet National Bank
                                     75 State Street
                                     Boston, Massachusetts 02109
                                     =====================================
                                     Attention:_____Thomas W. Davies____________
                                     Telephone:_____(617) 346-1645______________
                                     Telefacsimile:_(617) 346-1633______________

                                 Wire Transfer Instructions:
                                     Fleet National Bank
                                     ABA#_________________________________
                                     Account No.:_________________________
                                     Reference:__Data General Corporation_______
                                     Attention:___________________________





                              Signature Page 4 of 7

<PAGE>



                                 THE BANK OF NOVA SCOTIA


                                     By:____/s/ T.M. Pitcher____________________
                                     Name:______T.M. Pitcher____________________
                                     Title:_____Authorized Signatory____________


                                 Lending Office:
                                     The Bank of Nova Scotia
                                     101 Federal Street
                                     Boston, Massachusetts  02110
                                     Attention: Stephen F. Foley
                                     Telephone: (617) 737-6318
                                     Telefacsimile: (617) 951-2177

                                 Wire Transfer Instructions:
                                     The Bank of Nova Scotia-Atlanta Agency
                                     ABA# 
                                     Account No.: 
                                     Reference: Boston Loan Servicing
                                     Attention: Amanda Norsworthy




                              Signature Page 5 of 7

<PAGE>



                                 CREDIT LYONNAIS NEW YORK BRANCH


                                     By:___/s/ Alain Papiasse___________________
                                     Name:_____Alain Papiasse___________________
                                     Title:__Executive Vice President___________


                                 Lending Office:
                                     Credit Lyonnais New York Branch
                                     1301 Avenue of the Americas
                                     New York, NY  10019
                                     =====================================
                                     Attention:____Anthony Muller_______________
                                     Telephone:_____(617) 723-2615______________
                                     Telefacsimile:_(617) 723-4803______________

                                 Wire Transfer Instructions:
                                     Credit Lyonnais New York
                                     ABA#_________________________________
                                     Account No.:_________________________
                                     Reference:Client name+description of funds
                                     Attention:Loan Servicing___________________






                              Signature Page 6 of 7

<PAGE>



                                 US TRUST


                                     By:__/s/ Thomas F. Macina__________________
                                     Name:____Thomas F. Macina__________________
                                     Title:___Vice President____________________


                                 Lending Office:
                                     -------------------------------------
                                     40 Court Street
                                     Boston, Massachusetts  02108
                                     Attention: David Pennybaker
                                     Telephone: (617) 726-7137
                                     Telefacsimile:(617) 726-7309

                                 Wire Transfer Instructions:
                                     -------------------------------------
                                     ABA# ________________________________
                                     Account No.:_________________________
                                     Reference: Data General Corporation
                                     Attention: Commercial Loan Operations





                              Signature Page 7 of 7

<PAGE>



                                    EXHIBIT A
                                    ----------

                        Applicable Commitment Percentages
                        ---------------------------------


                                       Commitment
Lender                                 Percentage                 Amount
------------------------------       --------------            ------------

NationsBank of Texas, National
  Association                        22.7272727272%            $ 25,000,000
The Bank of New York                 18.1818181818%            $ 20,000,000
Fleet National Bank                  18.1818181818%            $ 20,000,000
The Bank of Nova Scotia              13.6363636363%            $ 15,000,000
Credit Lyonnais New York Branch      13.6363636363%            $ 15,000,000
US Trust                             13.6363636363%            $ 15,000,000

TOTAL:                                                         $110,000,000




                                       A-1

<PAGE>



                                    EXHIBIT B
                                    ---------

                        Form of Assignment and Acceptance
                        ---------------------------------


         Reference is made to the Credit  Agreement  dated as of  September  30,
1997 (the  "Credit  Agreement")  among  Data  General  Corporation,  a  Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meaning.

         The "Assignor"  and the  "Assignee"  referred to on Schedule 1 agree as
follows:

         1. The  Assignor  hereby  sells and  assigns to the  Assignee,  WITHOUT
RECOURSE and without  representation  or warranty  except as expressly set forth
herein,  and the Assignee  hereby  purchases and assumes from the  Assignor,  an
interest  in and to the  Assignor's  rights  and  obligations  under the  Credit
Agreement  and the  other  Loan  Documents  as of the date  hereof  equal to the
percentage  interest  specified  on  Schedule  1 of all  outstanding  rights and
obligations  under the  Credit  Agreement  and the other Loan  Documents.  After
giving effect to such sale and assignment,  the Assignee's Revolving Loans owing
to the Assignee will be as set forth on Schedule 1.

         2. The Assignor (i)  represents  and warrants  that it is the legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or  representations  made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of the Loan  Documents or any other  instrument  or document  furnished
pursuant  thereto;  (iii) makes no  representation  or  warranty  and assumes no
responsibility  with respect to the  financial  condition of any Credit Party or
the  performance  or  observance  by any Credit Party of any of its  obligations
under the Loan Documents or any other instrument or document  furnished pursuant
thereto;  and (iv)  attaches the Note held by the Assignor and requests that the
Agent  exchange  such Note for new Notes payable to the order of the Assignee in
an amount  equal to the  Revolving  Credit  Commitment  assumed by the  Assignee
pursuant  hereto and to the Assignor in an amount equal to the Revolving  Credit
Commitment retained by the Assignor, if any, as specified on Schedule 1.

         3. The Assignee (i) confirms  that it has received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 9.1 thereof and such other  documents and  information  as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance  upon the Agent,  the  Assignor  or any other  Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  decisions  in taking or not taking  action under the Credit
Agreement;  (iii)  confirms that it is an Eligible  Assignee;  (iv) appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and  discretion  under the Credit  Agreement as are delegated to the
Agent by

                                       B-1

<PAGE>



the terms  thereof,  together with such powers and  discretion as are reasonably
incidental  thereto;  (v) agrees that it will perform in  accordance  with their
terms all of the  obligations  that by the  terms of the  Credit  Agreement  are
required to be performed by it as a Lender;  and (vi) attaches any U.S. Internal
Revenue Service or other forms required under Section 6.6.

         4. Following the execution of this Assignment and  Acceptance,  it will
be  delivered  to the Agent for  acceptance  and  recording  by the  Agent.  The
effective date for this Assignment and Acceptance  (the "Effective  Date") shall
be the date of acceptance  hereof by the Agent,  unless  otherwise  specified on
Schedule 1.

         5. Upon such acceptance and recording by the Agent, as of the Effective
Date,  (i) the  Assignee  shall be a party to the Credit  Agreement  and, to the
extent  provided  in  this  Assignment  and  Acceptance,  have  the  rights  and
obligations of a Lender  thereunder and (ii) the Assignor  shall,  to the extent
provided in this  Assignment and  Acceptance,  relinquish its rights (other than
rights  under  Sections  3.2(g),  4.1,  4.6,  7.15,  11.5 and 11.9 of the Credit
Agreement which shall survive the assignment hereunder) and be released from its
obligations under the Credit Agreement.

         6. Upon such acceptance and recording by the Agent,  from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the  Notes in  respect  of the  interest  assigned  hereby  (including,  without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee.  The Assignor and Assignee shall make all  appropriate
adjustments  in payments  under the Credit  Agreement  and the Notes for periods
prior to the Effective Date directly between themselves.

         7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.

         8. This  Assignment  and  Acceptance  may be  executed in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart of Schedule 1 to this  Assignment  and  Acceptance by  telefacsimile
shall be  effective  as  delivery  of a manually  executed  counterpart  of this
Assignment and Acceptance.

         IN WITNESS WHEREOF,  the Assignor and the Assignee have caused Schedule
1 to this  Assignment and Acceptance to be executed by their officers  thereunto
duly authorized as of the date specified thereon.



                                       B-2

<PAGE>



                                   Schedule 1
                                   ----------


         Percentage interest assigned:                    ________%

         Assignee's Commitment:                           $_______

         Aggregate outstanding principal amount
          of Loans assigned:                              $_______

         Principal amount of Revolving Note payable to
          Assignee:                                       $_______

         Principal amount of Revolving Note payable to
          Assignor:                                       $_______

         Effective Date (if other than date
          of acceptance by Agent):                        *_______, 19__


                                   [NAME OF ASSIGNOR], as Assignor

                                     By:________________________________
                                        Title:

                                     Dated:_______________________, 19 _


                                   [NAME OF ASSIGNEE], as Assignee

                                     By:________________________________
                                        Title:

                                   Domestic Lending Office:

                                   Eurodollar Lending Office:


       * This  date  should be no  earlier  than five  Business  Days  after the
         delivery of this Assignment and Acceptance to the Agent.

Accepted [and Approved] **
this ___ day of ___________, 19 _

NationsBank of Texas, National Association


                                       B-3

<PAGE>



By:_______________
   Title:


[Approved this ____ day
of ____________, 19__

Data General Corporation


By:____________________]**
   Title:
























** Required if the Assignee is an Eligible  Assignee  solely by reason of clause
(iii) of the definition of "Eligible Assignee".

                                       B-4

<PAGE>



                                    EXHIBIT C
                                    ---------

       Notice of Appointment (or Revocation) of Authorized Representative
       ------------------------------------------------------------------


             Reference  is  hereby  made to the  Credit  Agreement  dated  as of
September 30, 1997 (the "Agreement") among Data General Corporation,  a Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent").  Capitalized  terms  used  but  not  defined  herein  shall  have  the
respective meanings therefor set forth in the Agreement.

             The  Borrower  hereby  nominates,  constitutes  and  appoints  each
individual named below as an Authorized Representative under the Loan Documents,
and  hereby  represents  and  warrants  that (i) set  forth  opposite  each such
individual's name is a true and correct  statement of such  individual's  office
(to  which  such  individual  has been duly  elected  or  appointed),  a genuine
specimen  signature of such  individual and an address for the giving of notice,
and (ii) each such individual has been duly authorized by the Borrower to act as
Authorized Representative under the Loan Documents:

 Name and Address                 Office                   Specimen Signature
-----------------              ---------------             ------------------
-----------------

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

Borrower  hereby revokes  (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.

             This the ___ day of __________________, 19__.



                                          By:_________________________________
                                          Name:_______________________________
                                          Title:______________________________



                                       C-1

<PAGE>

                                   EXHIBIT D-1
                                   -----------

                Form of Borrowing Notice--Revolving Credit Loans
                ------------------------------------------------


To:          NationsBank of Texas, National Association,
             as Agent
             901 Main Street
             TX1-492-14-11
             Dallas, Texas 75202
             Attention: Agency Services
             Telefacsimile: (214) 508-2515

             Reference  is  hereby  made to the  Credit  Agreement  dated  as of
September 30, 1997 (the "Agreement") among Data General Corporation,  a Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent").  Capitalized  terms  used  but  not  defined  herein  shall  have  the
respective meanings therefor set forth in the Agreement.

             The Borrower  through its  Authorized  Representative  hereby gives
notice to the Agent that Loans of the type and amount set forth below be made on
the date indicated:

Type of Loan                 Interest         Aggregate
(check one)                  Period(1)        Amount(2)        Date of Loan(3)
-----------                  ---------       ----------        ---------------

Revolving Loan
--------------
o  Base Rate Loan             ______          _________          ____________
o  Eurodollar Rate Loan       ______          _________          ____________


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

(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $_________ or if greater an integral multiple of $_______, unless a
    Base Rate Refunding Loan.
(3)At least three (3) Business Days later if a Eurodollar Rate Loan;

             The Borrower  hereby  requests that the proceeds of Loans described
in this Borrowing  Notice be made available to the Borrower as follows:  [insert
transmittal instructions] .

             The undersigned hereby certifies that:

             1.   No Default or Event of Default exists either now or after
giving effect to the borrowing described herein; and

                                      D-1-1

<PAGE>



             2. All the representations and warranties set forth in Article VIII
of the Agreement and in the Loan Documents (other than those expressly stated to
refer to a  particular  date) are true and correct as of the date hereof  except
that  the  reference  to the  financial  statements  in  Section  6.6(a)  of the
Agreement  are to those  financial  statements  most  recently  delivered to you
pursuant to Section 7.1 of the Agreement (it being understood that any financial
statements  delivered  pursuant  to Section  7.1(b) have not been  certified  by
independent  public  accountants)  and  attached  hereto are any  changes to the
Schedules referred to in connection with such representations and warranties.

             3.   All conditions contained in the Agreement to the making of any
Loan requested hereby have been met or satisfied in full.




                                   DATA GENERAL CORPORATION

                                   BY:____________________________________
                                             Authorized Representative

                                   DATE:__________________________________






                                      D-1-2

<PAGE>


                                  EXHIBIT D-2
                                 -------------

                   Form of Borrowing Notice--Swing Line Loans
                   -------------------------------------------


To:          NationsBank of Texas, National Association,
             as Agent
             901 Main Street
             TX1-492-14-11
             Dallas, Texas 75202
             Attention: Agency Services
             Telefacsimile:(214) 508-2515

             Reference  is  hereby  made to the  Credit  Agreement  dated  as of
September 30, 1997 (the "Agreement") among Data General Corporation,  a Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent").  Capitalized  terms  used  but  not  defined  herein  shall  have  the
respective meanings therefor set forth in the Agreement.

             The Borrower  through its  Authorized  Representative  hereby gives
notice to the Agent that Loans of the type and amount set forth below be made on
the date indicated:

                      Amount(1)           Date of Loan



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

(1)Must be $100,000 or if greater an integral multiple of $50,000, unless a Base
   Rate Refunding Loan.


             The Borrower  hereby  requests that the proceeds of Loans described
in this Borrowing  Notice be made available to the Borrower as follows:  [insert
transmittal instructions] .

             The undersigned hereby certifies that:

             1.No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and

             2. All the representations and warranties set forth in Article VIII
of the Agreement and in the Loan Documents (other than those expressly stated to
refer to a  particular  date) are true and correct as of the date hereof  except
that  the  reference  to the  financial  statements  in  Section  6.6(a)  of the
Agreement  are to those  financial  statements  most  recently  delivered to you
pursuant to Section 7.1 of the Agreement (it being understood that any financial


                                      D-2-1

<PAGE>

statements  delivered  pursuant  to Section  7.1(b) have not been  certified  by
independent  public  accountants)  and  attached  hereto are any  changes to the
Schedules referred to in connection with such representations and warranties.

             3. All  conditions  contained in the Agreement to the making of any
Swing Line Loan requested hereby have been met or satisfied in full .


                                  DATA GENERAL CORPORATION


                                  By:______________________________
                                        Authorized Representative

                                  Date:____________________________


                                      D-2-2

<PAGE>


                                    EXHIBIT E
                                    ---------

                     Form of Interest Rate Selection Notice
                     --------------------------------------


To:          NationsBank of Texas, National Association,
             as Agent
             901 Main Street
             TX1-492-14-11
             Dallas, Texas 75202
             Attention: Agency Services
             Telefacsimile:(214) 508-2515

             Reference  is  hereby  made to the  Credit  Agreement  dated  as of
September 30, 1997 (the "Agreement") among Data General Corporation,  a Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent").  Capitalized  terms  used  but  not  defined  herein  shall  have  the
respective meanings therefor set forth in the Agreement.

             The Borrower  through its  Authorized  Representative  hereby gives
notice to the Agent of the  following  selection  of a type of Loan and Interest
Period:

Type of Loan                 Interest        Aggregate
(check one)                  Period(1)       Amount(2)       Date of Loan(3)
-------------                ---------      -----------      ---------------
Revolving Loan
o  Base Rate Loan              ______        _________        ____________
o  Eurodollar Rate Loan        ______        _________        ____________


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

(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $_________ or if greater an integral multiple of $_______, unless a
    Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;



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

                                  BY:_____________________________________
                                          Authorized Representative
                                  DATE:___________________________________



                                       E-1

<PAGE>

                                   EXHIBIT F-1
                                   -----------

                             Form of Revolving Note
                             ----------------------

                                 Promissory Note
                                (Revolving Loan)



$______________                                               New York, New York

                                                                 ______ __, 1997


         FOR VALUE RECEIVED,  DATA GENERAL  CORPORATION,  a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of________________________
--------------------------------------------------------------------------------
(the  "Lender"),  in its  individual  capacity,  at the office of NationsBank of
Texas, National Association,  as agent for the Lenders (the "Agent"), located at
901 Main Street,  TX1-492-14-11,  Dallas, Texas 75202 (or at such other place or
places as the  Agent may  designate  in  writing)  at the times set forth in the
Credit  Agreement  dated as of  September  30,  1997  among  the  Borrower,  the
financial institutions party thereto (collectively, the "Lenders") and the Agent
(the  "Agreement" -- all  capitalized  terms not otherwise  defined herein shall
have the respective meanings set forth in the Agreement), in lawful money of the
United States of America,  in immediately  available funds, the principal amount
of ___________ DOLLARS ($__________) or, if less than such principal amount, the
aggregate  unpaid  principal amount of all Revolving Loans made by the Lender to
the Borrower pursuant to the Agreement on the Revolving Credit  Termination Date
or such earlier date as may be required  pursuant to the terms of the Agreement,
and to pay interest from the date hereof on the unpaid  principal amount hereof,
in like money, at said office, on the dates and at the rates provided in Article
II of the Agreement.  All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.

         If payment of all sums due hereunder is accelerated  under the terms of
the  Agreement  or under the  terms of the  other  Loan  Documents  executed  in
connection with the Agreement,  the then remaining  principal amount and accrued
but unpaid  interest shall bear interest which shall be payable on demand at the
Default Rate.  Further,  in the event of such acceleration,  this Revolving Note
shall become immediately due and payable, without presentation,  demand, protest
or notice of any kind, all of which are hereby waived by the Borrower.

         In the event this  Revolving Note is not paid when due at any stated or
accelerated  maturity,  the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.

         Interest hereunder shall be computed as provided in the Agreement.


                                      F-1-1

<PAGE>

         This  Revolving  Note is one of the  Revolving  Notes in the  principal
amount of  $110,000,000  referred to in the Agreement and is issued  pursuant to
and entitled to the benefits and security of the Agreement to which reference is
hereby made for a more complete statement of the terms and conditions upon which
the Revolving Loans evidenced hereby were or are made and are to be repaid. This
Revolving Note is subject to certain  restrictions  on transfer or assignment as
provided in the Agreement.

         All Persons bound on this obligation,  whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent  permitted by law the benefits of all  provisions  of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability  hereon  until  judgment be obtained
and execution  issues against any other of them and returned  satisfied or until
it can be shown  that the  maker  or any  other  party  hereto  had no  property
available for the  satisfaction  of the debt  evidenced by this  instrument,  or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder  hereof to hold as security for this  Revolving  Note
any collateral deposited by any of said Persons as security.  Protest, notice of
protest, notice of dishonor,  diligence or any other formality are hereby waived
by all parties bound hereon.

         IN WITNESS  WHEREOF,  the Borrower has caused this Revolving Note to be
made,  executed and delivered by its duly  authorized  representative  as of the
date and year first above written, all pursuant to authority duly granted.


                                  DATA GENERAL CORPORATION


                                  By:_____________________________________
                                  Name:___________________________________
                                  Title:__________________________________


                                      F-1-2

<PAGE>


                                   EXHIBIT F-2
                                   -----------

                             Form of Swing Line Note
                             -----------------------



$5,000,000                                                    New York, New York

                                                              September __, 1997


         FOR VALUE RECEIVED,  FOR VALUE RECEIVED,  DATA GENERAL  CORPORATION,  a
Delaware  corporation (the  "Borrower"),  hereby promises to pay to the order of
NATIONSBANK OF TEXAS,  NATIONAL  ASSOCIATION  (the "Lender"),  in its individual
capacity,  at its office,  located at 901 Main  Street,  TX1-492-14-11,  Dallas,
Texas  75202 (or at such other place or places as the Lender may  designate)  at
the times set forth in the Credit Agreement dated as of September 30, 1997 among
the  Borrower,  the financial  institutions  party  thereto  (collectively,  the
"Lenders")  and the  Agent  (as from  time to  time,  amended,  supplemented  or
replaced,  the "Agreement" -- all capitalized terms not otherwise defined herein
shall have the respective meanings set forth in the Agreement),  in lawful money
of the United States of America,  in immediately  available funds, the lesser of
(i) the principal  amount of FIVE MILLION  DOLLARS  ($5,000,000) or (ii) if less
than such principal  amount,  the aggregate unpaid principal amount of all Swing
Line Loans made by the Lender to the Borrower  pursuant to the  Agreement on the
Revolving  Credit  Termination  Date or  such  earlier  date as may be  required
pursuant to the terms of the Agreement, and to pay interest from the date hereof
on the unpaid  principal  amount hereof,  in like money, at said office,  on the
dates and at the rates  provided in Section  2.13 of the  Agreement.  All or any
portion  of the  principal  amount of Loans may be prepaid  as  provided  in the
Agreement.

         If payment of all sums due hereunder is accelerated  under the terms of
the  Agreement  or under the  terms of the  other  Loan  Documents  executed  in
connection with the Agreement,  the then remaining  principal amount and accrued
but unpaid  interest  shall bear interest  which shall be payable on demand at a
rate of two  percent  (2%) per annum in  excess of the Base Rate for such  Swing
Line Loan, or the maximum rate permitted under  applicable law, if lower,  until
such  principal  and interest have been paid in full.  Further,  in the event of
such acceleration,  this Note, and all other indebtedness of the Borrower to the
Lender shall become immediately due and payable,  without presentation,  demand,
protest or notice of any kind, all of which are hereby waived by the Borrower.

         In the  event  this  Note  is not  paid  when  due  at  any  stated  or
accelerated  maturity,  the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.


                                      F-2-1

<PAGE>



         Interest hereunder shall be computed as specified in the Agreement.

         This Note is the Swing Line Note  referred to in the  Agreement  and is
issued  pursuant to and  entitled  to the  benefits  of the  Agreement  to which
reference  is  hereby  made  for a more  complete  statement  of the  terms  and
conditions upon which the Loans evidenced  hereby were or are made and are to be
repaid.  This Note is subject to certain  restrictions on transfer or assignment
as provided in the Agreement.

         All Persons bound on this obligation,  whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent  permitted by law the benefits of all  provisions  of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability  hereon  until  judgment be obtained
and execution  issues against any other of them and returned  satisfied or until
it can be shown  that the  maker  or any  other  party  hereto  had no  property
available for the  satisfaction  of the debt  evidenced by this  instrument,  or
until any other proceedings can be had against any of them, also their right, if
any,  to  require  the  holder  hereof  to hold as  security  for this  Note any
collateral  deposited  by any of said Persons as  security.  Protest,  notice of
protest, notice of dishonor,  diligence or any other formality are hereby waived
by all parties bound hereon.

         IN WITNESS  WHEREOF,  the  Borrower  has  caused  this Note to be made,
executed and delivered by its duly authorized representatives as of the date and
year first above written, all pursuant to authority duly granted.

                                  DATA GENERAL CORPORATION

                                  By: _________________________________
                                  Name:  ______________________________
                                  Title: ______________________________


                                      F-2-2

<PAGE>

                                    EXHIBIT G
                                    ---------

                      Form of Opinion of Borrower's Counsel
                      -------------------------------------




                             _____________ ___, 199_



NationsBank of Texas, National Association,
as Agent and
  Each of the Lenders Party to the
  Credit Agreement Referenced Below
901 Main Street
Dallas, Texas 75202

Re: Revolving Credit and Letter of Credit Facilities among NationsBank of Texas,
    National Association, as Agent, the Lenders party thereto and Data General
    Corporation

Ladies and Gentlemen:

         We have  acted as  counsel  to Data  General  Corporation,  a  Delaware
corporation  (the  "Borrower"),  and  the  Guarantors  in  connection  with  the
Revolving  Loan in an aggregate  amount of up to  $110,000,000  (the  "Revolving
Loans"),  including  the  $10,000,000  Swing Line  Facility and the  $15,000,000
Letter of Credit  Facility  constituting  part of the Revolving  Credit Facility
(the "LC  Facility"),  each being made  available to the Borrower by you on this
date  pursuant to the Credit  Agreement  of even date  herewith  among you,  the
Lenders and the Borrower (the "Credit  Agreement"),  and the other  transactions
contemplated under the Credit Agreement.

         This opinion is being  delivered in accordance  with the conditions set
forth  in  Section  5.1 of the  Credit  Agreement.  All  capitalized  terms  not
otherwise defined herein shall have the meanings provided therefor in the Credit
Agreement.

         As such counsel, we have reviewed the following documents:

         1.       the Credit Agreement;

         2.       the Notes;

         3.       the Swing Line Note; and

                                       G-1

<PAGE>



         4.       the Subsidiary Guaranty.

         The  documents  described  in items 1 through 4  immediately  above are
referred to herein as the "Loan Documents".

         For purposes of the opinions  expressed below, we have assumed that all
natural persons  executing the Loan Documents have legal capacity to do so; that
all  signatures  (other than those of  representatives  of the  Borrower and the
Guarantors on the Loan Documents) on all documents  submitted to us are genuine;
that all documents  submitted to us as originals (other than the Loan Documents)
are  authentic;  and that all documents  submitted to us as certified  copies or
photocopies  conform to the originals of such  documents,  which  themselves are
authentic.

         In addition, for purposes of giving this opinion, we have examined such
corporate  records of the Borrower and the  Guarantors,  certificates  of public
officials,  certificates  of  appropriate  officials  of the  Borrower  and  the
Guarantors,  and such other  documents,  and have made such inquiries as we have
deemed appropriate.

         Based upon and subject to the foregoing, it is our opinion that:

         1. The Borrower is a corporation  duly organized,  validly existing and
in good  standing  under  the  laws of its  state of  incorporation  and is duly
qualified to transact business as a foreign  corporation and is in good standing
in all  jurisdictions  in  which  the  nature  of  its  business  requires  such
qualification  and in which the failure to be so qualified  would  reasonably be
likely to result in a Material  Adverse Effect.  The Borrower has full corporate
power and authority to own its assets and conduct the  businesses in which it is
now engaged and as are expressly  contemplated  by the Loan  Documents,  and has
full  corporate  power and authority to enter into each of the Loan Documents to
which it is a party and to perform its obligations thereunder.

         2. Each of the Loan Documents to which the Borrower is a party has been
duly  authorized  by the Board of Directors of the Borrower (and by any required
shareholder action),  has been duly executed and delivered by the Borrower,  and
constitutes the legal, valid and binding  obligation,  agreement,  instrument or
conveyance,  as the  case  may be,  of the  Borrower,  enforceable  against  the
Borrower in accordance with its respective terms,  except as the  enforceability
thereof may be limited by applicable bankruptcy, insolvency,  reorganization and
other similar laws relating to or affecting  creditors'  rights generally and by
the  application  of  general  equitable   principles   (whether  considered  in
proceedings at law or in equity).

         3. Each Credit Party (other than the  Borrower) is a  corporation  duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
respective state of its formation and is duly qualified to transact  business as
a foreign  entity  and is in good  standing  in all  jurisdictions  in which the
nature of its business  requires such  qualification and in which the failure to
be so  qualified  would  reasonably  be likely to result in a  Material  Adverse
Effect. Each Credit Party (other than the Borrower) has full corporate power and
authority  to own its  assets  and  conduct  the  businesses  in which it is now
engaged and as expressly contemplated in the Loan Documents, and

                                       G-2

<PAGE>



has full corporate  power and authority to enter into each of the Loan Documents
to which it is a party and to perform its obligations thereunder.

         4. Each of the Loan  Documents  to which each Credit  Party (other than
the  Borrower) is a party has been duly  authorized by the Board of Directors of
such  Credit  Party  (and by any  required  shareholder  action),  has been duly
executed and delivered by such Credit Party,  and con stitutes the legal,  valid
and binding  obligation,  agreement or  instrument,  as the case may be, of such
Credit  Party,  enforceable  against  such Credit Party in  accordance  with its
respective  terms,  except  as the  enforceability  thereof  may be  limited  by
applicable  bankruptcy,  insolvency,   reorganization  and  other  similar  laws
relating to or affecting  creditors'  rights generally and by the application of
general  equitable  principles  (whether  considered in proceedings at law or in
equity).

         5.  Neither  the  execution  or  delivery  of, nor  performance  by the
Borrower or any other Credit Party of its obligations  under, the Loan Documents
(a) does or will  conflict  with,  violate  or  constitute  a breach  of (i) the
Organizational  Documents  or  Operating  Documents of the Borrower or any other
Credit Party, (ii) any laws, rules or regulations  applicable to the Borrower or
any other Credit Party,  or (iii) any  contract,  agreement,  indenture,  lease,
instrument,  other document,  judgment,  writ,  determination,  order, decree or
arbitral  award to which the Borrower or any  Subsidiary  is a party or by which
the  Borrower  or any  Subsidiary  or any  other  Credit  Party  or any of their
properties is bound,  (b) requires the prior consent of, notice to, license from
or filing with any  Governmental  Authority  which has not been duly obtained or
made on or prior to the date hereof,  or (c) does or will result in the creation
or imposition of any lien,  pledge,  charge or encumbrance of any nature upon or
with respect to any of the  properties of the Borrower or any  Subsidiary or any
other  Credit  Party,  except  for the  Liens in your  favor  expressly  created
pursuant to the Loan Documents.

         6. There is no pending or, to our knowledge,  threatened, action, suit,
investigation or proceeding  (including,  without limitation,  any action, suit,
investigation, or proceeding under any environmental or labor law), nor is there
any  basis  therefor,  before  or by  any  court,  or  governmental  department,
commission,  board, bureau,  instrumentality,  agency or arbitral authority, (i)
which calls into  question  the  validity or  enforceability  of any of the Loan
Documents,  or the  titles  to their  respective  offices  or  authority  of any
officers of the Borrower or any other Credit Party or (ii) an adverse  result in
which would reasonably be likely to have a Material Adverse Effect.

         7. Neither the Borrower nor any  Subsidiary  nor any other Credit Party
is  subject  to any  Organizational  Document  or  Operating  Document  or other
corporate restrictions nor, to our knowledge,  is the Borrower or any Subsidiary
or any other Credit  Party party to or bound by any contract or agreement  which
(i)  materially  and  adversely  affects its  business,  properties or condition
(financial or otherwise), or (ii) restricts, limits, or prohibits performance of
any of their respective obligations pursuant to the terms of the Loan Documents.

         8.To our  knowledge  after due  inquiry,  neither the  Borrower nor any
Subsidiary  nor any other Credit Party (i) is in default  (which default has not
been waived) under any agreement,

                                       G-3

<PAGE>



document  or  instrument  to  which  it is a party  or by which it or any of its
assets is bound or (ii) is in violation of any law, rule, regulation,  judgment,
writ,  determination,  order,  decree or arbitral award to which the Borrower or
any  Subsidiary or any other Credit Party is a party or by which the Borrower or
any Subsidiary or any other Credit Party or any of their  respective  properties
is bound,  which  default or violation,  as the case may be, would  constitute a
Default  or Event of Default  under the  Credit  Agreement  or  otherwise  could
reasonably be likely to have a Material Adverse Effect.

         9.  None of the  transactions  contemplated  by the  Credit  Agreement,
including, without limitation, the use of the proceeds of the Loans provided for
in the Loan Documents, will violate or result in a violation of Section 7 of the
Securities  Exchange Act of 1934, as amended,  any  regulations  issued pursuant
thereto,  or  regulations  G, T, U or X of the Board of Governors of the Federal
Reserve System.

         Our opinions  contained  herein are rendered  solely in connection with
the  transactions  contemplated  under the Loan  Documents and may not be relied
upon in any manner by any Person other than the addressees hereof, any successor
or assignee of any addressee (including successive assignees) and any Person who
shall  acquire  a   participation   interest  in  the  interest  of  any  Lender
(collectively,  the "Reliance Parties"),  or by any Reliance Party for any other
purpose.  Our  opinions  herein  shall  not be  quoted  or  otherwise  included,
summarized or referred to in any  publication or document,  in whole or in part,
for any  purposes  whatsoever,  or furnished to any Person other than a Reliance
Party (or a Person  considering  whether to become a Reliance Party),  except as
may be required of any Reliance  Party by  applicable  law or  regulation  or in
accordance  with any  auditing or  oversight  function or request of  regulatory
agencies to which a Reliance Party is subject.


                                                     Very truly yours,




                                       G-4

<PAGE>

                                    EXHIBIT H
                                    ---------

                             Compliance Certificate
                             ----------------------



NationsBank of Texas, National Association,
as Agent
901 Main Street
TX1-492-14-11
Dallas, Texas 75202
Attention: Agency Services
Telefacsimile:(214) 508-2515

NationsBank of Texas, National Association,
as Agent
901 Main Street
Dallas, Texas 75202
Attention: Mr. Yousuf Omar, Senior Vice President
Telefacsimile:(214) 508-0980


         Reference is hereby made to the Credit  Agreement dated as of September
30,  1997  (the  "Agreement")  among  Data  General   Corporation,   a  Delaware
corporation (the  "Borrower"),  the Lenders (as defined in the Credit Agreement)
and NationsBank of Texas,  National  Association,  as agent for the Lenders (the
"Agent"). Capitalized terms used but not otherwise defined herein shall have the
respective meanings therefor set forth in the Agreement. The undersigned, a duly
authorized and acting Authorized  Representative,  hereby certifies to you as of
__________ (the "Determination Date") as follows:

1. Calculations:

      A.  Compliance with Section 8.1(a): Consolidated Leverage Ratio

              1. Consolidated Funded Indebtedness                $______________

              2. Consolidated EBITDA*                            $______________

              3. Ratio of A.1 to A.2                               __.__ to 1.00

                  Required: A.3 must not be greater than 2.25 to 1.00




* See attached Schedule 1 for EBIT and EBITDA calculation

                                       H-1

<PAGE>

      B. Compliance with Section 8.1(b): Consolidated Fixed Charge Ratio

              1.       Consolidated EBIT*                        $______________

              2.       Consolidated Lease Payments               $______________

              3.       Sum of B.1 + B.2                          $______________

              4.       Consolidated Interest Expense             $______________

              5.       Consolidated Lease Payments               $______________

              6.       Sum of B.4 + B.5                          $______________

              7.       Ratio of B.3 to B.6                         __.__ to 1.00

                  Required: B.7 must not be less than 1.50 to 1.00

      C.Compliance with Section 8.1(c): Consolidated Tangible Net Worth

              1. Required Consolidated Tangible Net Worth at the last
                 day of the preceding fiscal quarter             $______________

              2. Consolidated Net Income x 0.5                   $______________

              3. Net Proceeds of any Equity Offering             $______________

              4. Sum of C.1 + C.2 + C.3                          $______________

              5. Actual Consolidated Tangible Net Worth          $______________

                  Required: C.5 must not be less than C.4


      D. Compliance with Section 8.1(d): Consolidated Liquidity Ratio

              1. Cash                                            $______________

              2. Eligible Securities                             $______________

              3. Consolidated Accounts Receivable                $______________


* See attached Schedule 1 for EBIT and EBITDA calculation

                                       H-2

<PAGE>


              4. Sum of D.1 + D.2 + D.3                          $______________

              5. Consolidated Funded Indebtedness                $______________

              6. Consolidated Accounts Payable                   $______________

              7. Sum of D.5 + D.6                                $______________

              8. Ratio of D.4 to D.7                               __.__ to 1.00

                  Required: D.8 must not be less than 1.50 to 1.00

2. No Default

                           A.  Since  __________  (the date of the last  similar
                  certification),  (a) the  Borrower  has not  defaulted  in the
                  keeping,   observance,   performance  or  fulfillment  of  its
                  obligations pursuant to any of the Loan Documents;  and (b) no
                  Default  or Event of  Default  specified  in Article IX of the
                  Agreement has occurred and is continuing.

                           B. If a  Default  or Event of  Default  has  occurred
                  since __________ (the date of the last similar certification),
                  the  Borrower  proposes  to take  the  following  action  with
                  respect to such Default or Event of Default:


                           (Note,   if  no  Default  or  Event  of  Default  has
                           occurred, insert "Not Applicable").

         The  Determination  Date is the  date of the  last  required  financial
statements  submitted  to the  Lenders in  accordance  with  Section  7.1 of the
Agreement.


IN  WITNESS  WHEREOF,  I  have  executed  this  Certificate  this  _____  day of
__________, 19___.


                                  By:_____________________________________
                                            Authorized Representative

                                  Name:___________________________________

                                  Title:__________________________________



                                       H-3

<PAGE>



                      Schedule 1 to Compliance Certificate
                      ------------------------------------

                    [Insert Applicable Determination Date__,__]
                    -------------------------------------------



Consolidated EBITDA Calculation


A.       Consolidated Net Income                     $____________________

B.       Consolidated Interest Expense               $____________________

C.       Taxes on Income                             $____________________

D.       Consolidated EBIT                           $____________________
         (A +B+C)

E.       Amortization                                $____________________

F.       Depreciation                                $____________________

G.       Consolidated EBITDA                         $____________________
         (D +E +F)


                                       H-4

<PAGE>

                                    EXHIBIT I
                                    ---------

                           Form of Subsidiary Guaranty
                           ---------------------------


                               GUARANTY AGREEMENT

         THIS GUARANTY  AGREEMENT (the "Guaranty  Agreement" or the "Guaranty"),
dated as of September  30, 1997, is made by each of the  undersigned  guarantors
(each a "Guarantor" and collectively the "Guarantors") to NATIONSBANK,  NATIONAL
ASSOCIATION,  a national  banking  association  organized and existing under the
laws of the United  States,  as Agent (the  "Agent")  for each of the  financial
institutions (each a "Lender" and collectively,  the "Lenders") now or hereafter
party to the Credit Agreement (as defined below).

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

         WHEREAS,  the Agent and the  Lenders  have  agreed to  provide  to Data
General Corporation, a Delaware corporation (the "Borrower"),  certain revolving
credit facilities and letter of credit  facilities  pursuant to the terms of the
Credit  Agreement  dated as of September 29, 1997 among the Borrower,  the Agent
and the Lenders (as from time to time  amended,  modified or  supplemented,  the
"Credit Agreement"); and

         WHEREAS, each Guarantor is a Material Subsidiary of the Borrower;

         WHEREAS,  the Agent and the  Lenders  are  unwilling  to enter into the
Credit  Agreement  and to  make  the  Loans  thereunder  unless  each  Guarantor
guarantees to the Lenders payment of the Borrower's  Liabilities (as hereinafter
defined) in accordance with the terms of this Guaranty; and

         WHEREAS,  each Guarantor will  materially  benefit from the Loans to be
made under the Credit  Agreement,  and each  Guarantor  is willing to enter into
this  Guaranty to provide an  inducement  for the Lenders and the Agent to enter
into the Credit Agreement and for the Lenders to make the Loans thereunder.

         NOW,  THEREFORE,  in order to induce the Lenders and the Agent to enter
into the  Credit  Agreement  and to make the Loans  thereunder,  each  Guarantor
agrees as follows:

1. Definitions.
   ------------

All  capitalized  terms not  otherwise  defined  herein  shall have the meanings
ascribed to such terms in the Credit Agreement.


2. Guaranty.
   --------

Each  Guarantor  hereby  jointly  and  severally,  unconditionally,  absolutely,
continually and irrevocably  guarantees to the Agent and the Lenders the payment
and performance in full of the Borrower's  Liabilities  (as defined below).  For
all purposes of this Guaranty Agreement, "Borrower's Liabilities" means: (a) the
Borrower's  prompt  payment in full,  when due or  declared  due and at all such
times, of all Obligations and all other amounts pursuant to the terms of the



                                       I-1

<PAGE>

Credit Agreement, the Notes, and all other Loan Documents executed in connection
with the  Credit  Agreement  heretofore,  now or at any time or times  hereafter
owing,  arising,  due or payable  from the  Borrower to the  Lenders,  including
without  limitation  principal,  interest,  premium or fee  (including,  but not
limited to, loan fees and  attorneys'  fees and  expenses);  and (b)  Borrower's
prompt,  full and faithful  performance,  observance  and  discharge of each and
every agreement,  undertaking,  covenant and provision to be performed, observed
or  discharged  by the Borrower  under the Credit  Agreement  and all other Loan
Documents executed in connection therewith.  Each Guarantor's obligations to the
Agent and the Lenders under this Guaranty Agreement are hereinafter collectively
referred to as the "Guarantors' Obligations";

         Each Guarantor  agrees that it is jointly and  severally,  directly and
primarily  liable  for  the  Borrowers'  Liabilities;   provided,  however,  the
obligations of each Guarantor  hereunder shall be limited to an aggregate amount
equal to the  largest  amount  that would not render its  obligations  hereunder
subject to avoidance  under Section 548 of the United States  Bankruptcy Code or
any comparable provisions of any applicable state law.


 3. Payment.
    --------

If the  Borrower  shall  default  in payment or  performance  of any  Borrower's
Liabilities,  whether  principal,  interest,  premium,  fee (including,  but not
limited to, loan fees and attorneys' fees and expenses), or otherwise,  when and
as the same  shall  become  due,  whether  according  to the terms of the Credit
Agreement,  by acceleration,  or otherwise,  or upon the occurrence of any other
Event of Default under the Credit  Agreement  that has not been cured or waived,
then each  Guarantor,  upon  demand  thereof by the Agent or its  successors  or
assigns,  will as of the date of the Agent's demand fully pay to the Agent,  for
the benefit of the Lenders,  subject to any  restriction  set forth in Section 2
hereof, an amount equal to all Guarantors'  Obligations then due and owing. Each
Guarantor hereby agrees that the Guarantors'  Obligations will be paid in lawful
currency of the United  States of America and in  immediately  available  funds,
regardless  of any law,  regulation  or decree now or  hereafter  in effect that
might in any manner  affect  the  Borrower's  Liabilities,  or the rights of the
Agent or any Lender with respect  thereto as against the  Borrower,  or cause or
permit to be invoked any alteration in the time,  amount or manner of payment by
the Borrower of any or all of the Borrower's Liabilities.


4. Unconditional Obligations.
   --------------------------

This is a guaranty of payment and not of collection. The Guarantors' Obligations
under  this  Guaranty  Agreement  shall  be  joint  and  several,  absolute  and
unconditional  irrespective of the validity,  legality or  enforceability of the
Credit Agreement,  the Notes or any other Loan Document or any other guaranty of
the Borrower's Liabilities,  and shall not be affected by any action taken under
the  Credit  Agreement,  the Notes or any other  Loan  Document,  this  Guaranty
Agreement  against any other  Guarantor,  any other  guaranty of the  Borrower's
Liabilities,  or any other  agreement  between  the Agent or the Lenders and the
Borrower or any other  person,  in the  exercise  of any right or power  therein
conferred,  or by any failure or omission to enforce any right conferred  hereby
or  thereby,  or by any waiver of any  covenant or  condition  herein or therein
provided,  or by any  acceleration  of  the  maturity  of any of the  Borrower's
Liabilities,  or by the release or other disposal of any security for any of the
Borrower's  Liabilities,  or by the dissolution of the Borrower or any Guarantor
or the  combination  or  consolidation  of the Borrower or any Guarantor into or
with another entity or any transfer or disposition of any assets of the

                                       I-2

<PAGE>

Borrower or any Guarantor or by any extension or renewal of the Credit Agreement
any of the  Notes or any other  Loan  Document,  in whole or in part,  or by any
modification,  alteration,  amendment or addition of or to the Credit Agreement,
any of the Notes or any other Loan  Document,  this  Guaranty  Agreement  or any
other guaranty of the Borrower's Liabilities, or any other agreement between the
Agent or the  Lenders  and the  Borrower  or any other  Person,  or by any other
circumstance whatsoever(with or without notice to or knowledge of any Guarantor)
which  may or  might  in any  manner  or to any  extent  vary  the  risks of any
Guarantor,  or might  otherwise  constitute a legal or equitable  discharge of a
surety or guarantor;  it being the purpose and intent of the parties hereto that
this  Guaranty  Agreement and the  Guarantors'  Obligations  hereunder  shall be
absolute  and  unconditional  under any and all  circumstances  and shall not be
discharged except by payment as herein provided.


5. Subordination.
   -------------

Until the Guarantors'  Obligations are paid in full and the Lenders are under no
further  obligation  to lend or extend  funds or credit  which would  constitute
Guarantors'  Obligations,  and until the occurrence of the Facility  Termination
Date, each Guarantor hereby unconditionally  subordinates all present and future
debts,  liabilities  or  obligations  of the  Borrower to such  Guarantor to the
Guarantors' Obligations,  and all amounts due under such debts, liabilities,  or
obligations shall, upon the occurrence and during the continuance of an Event of
Default,  be collected and paid over  forthwith to the Lenders on account of the
Guarantors'  Obligations  and,  pending  such  payment,  shall  be  held by each
Guarantor  as agent and bailee of the Lenders  separate and apart from all other
funds,  property  and accounts of such  Guarantor;  provided,  however,  nothing
herein shall be deemed to prevent such Guarantor from receiving payments of such
obligations  from the Borrower  other than after the  occurrence  and during the
continuation of an Event of Default.  Each Guarantor,  at the reasonable request
of the Lenders,  shall execute such further documents in favor of the Lenders to
further  evidence  and  support the  purpose of this  Section 5. Each  Guarantor
hereby  irrevocably  waives and releases any right or rights of  subrogation  or
contribution  existing at law, by  contract or  otherwise  to recover all or any
portion of any payment made hereunder from the Borrower or any other Guarantor.


6. Suits.
   -----

Each  Guarantor  from time to time shall pay to the Agent for the benefit of the
Lenders,  on demand,  at the Agent's  place of business  set forth in the Credit
Agreement,  the Guarantors'  Obligations as they become or are declared due, and
in the event such payment is not made forthwith, the Agent or the Lenders or any
of them may proceed to suit against any one or more or all of the Guarantors. At
the Agent's  election,  one or more and  successive or  concurrent  suits may be
brought  hereon by the Agent  against any one or more or all of the  Guarantors,
whether  or not  suit  has  been  commenced  against  the  Borrower,  any  other
Guarantor,  any other  guarantor  of the  Borrower's  Liabilities,  or any other
Person  and  whether  or not the Agent or any Lender has taken or failed to take
any other action to collect all or any portion of theBorrower's Liabilities.


7. Set-Off  and  Waiver.
   --------------------

Each Guarantor waives any right to assert against the Agent and the Lenders as a
defense, counterclaim,  set-off or cross claim, any defense (legal or equitable)
or other  claim  which  such  Guarantor  may now or at any time  hereafter  have
against the Borrower,  each other Guarantor,  the Agent or the Lenders,  without
waiving any additional defenses, set-offs, counterclaims or other claims


                                       I-3

<PAGE>

otherwise available to such Guarantor. If at any time hereafter the Agent or any
Lender  employs  counsel  for  advice or other  representation  to  enforce  the
Guarantors'  Obligations,  then,  in  any of the  foregoing  events,  all of the
expenses,  costs  and  charges  in any  way or  respect  arising  in  connection
therewith  or  relating  thereto  shall be  jointly  and  severally  paid by the
Guarantors to the Agent, for the benefit of the Lenders, on demand.


8. Waiver; Subrogation.
   -------------------

         (a) Each  Guarantor  hereby waives  notice of the  following  events or
occurrences:  (i) the Agent's  acceptance of this Guaranty  Agreement;  (ii) the
Lenders' heretofore, now or from time to time hereafter loaning monies or giving
or extending  credit to or for the benefit of the Borrower,  whether pursuant to
the  Credit  Agreement  or  the  Notes  or  any  amendments,  modifications,  or
supplements thereto, or replacements or extensions thereof; (iii) the Agent, the
Lenders or the Borrower  heretofore,  now or at any time  hereafter,  obtaining,
amending,  sub  stituting  for,  releasing,  waiving  or  modifying  the  Credit
Agreement, the Notes or any other Loan Documents or this Guaranty Agreement with
respect to any other Guarantor; (iv) presentment,  demand, default, non-payment,
partial payment and protest; (v) the Agent or the Lenders heretofore,  now or at
any time  hereafter  granting to the  Borrower (or any other party liable to the
Lenders on account of the Borrowers'  Liabilities)  any indulgence or extensions
of time of  payment  of the  Borrower's  Liabilities  or  granting  to any other
Guarantor  any  indulgence  or extension  of time of payment of its  Guarantors'
Obligations;  and (vi) the Agent or the Lenders  heretofore,  now or at any time
hereafter  accepting from the Borrower or any other Person,  any partial payment
or payments on account of the Borrower's  Liabilities or any collateral securing
the  payment  thereof  or  the  Agent  settling,  subordinating,   compromising,
discharging or releasing the same. Each Guarantor agrees that the Agent and each
Lender  may  heretofore,  now  or at  any  time  hereafter  do any or all of the
foregoing  in such  manner,  upon such  terms and at such times as the Agent and
each Lender, in its sole and absolute  discretion,  deems advisable,  without in
any way or respect  impairing,  affecting,  reducing or releasing such Guarantor
from the Guarantors' Obligations, and each Guarantor hereby consents to each and
all of the foregoing events or occurrences.

         (b) Each  Guarantor  hereby agrees that payment or  performance by such
Guarantor of the Guarantors'  Obligations  under this Guaranty  Agreement may be
enforced by the Agent on behalf of the Lenders  upon demand by the Agent to such
Guarantor without the Agent being required, each Guarantor expressly waiving any
right it may have to require the Agent,  to (i) prosecute  collection or seek to
enforce or resort to any remedies against the Borrower or any other Guarantor or
any  other  guarantor  of  the  Borrower's   Liabilities,   it  being  expressly
understood,  acknowledged and agreed to by each Guarantor that demand under this
Guaranty  Agreement may be made by the Agent, and the provisions hereof enforced
by the Agent,  effective as of the first date any Event of Default occurs and is
continuing under the Credit Agreement,  or (ii) seek to enforce or resort to any
remedies with respect to any security interests,  Liens or encumbrances  granted
to the Agent by the  Borrower,  any  other  Guarantor,  or any  other  Person on
account of the Borrower's Liabilities or any guaranty thereof or the Guarantors'
Obligations.  Neither  the Agent nor any  Lender  shall have any  obligation  to
protect, secure or insure any of the foregoing security interests, Liens or


                                       I-4

<PAGE>

encumbrances on the properties or interests in properties  subject thereto.  The
Guarantors'  Obligations  shall in no way be  impaired,  affected,  reduced,  or
released by reason of the Agent's or any Lender's failure or delay to do or take
any of the  acts,  actions  or  things  described  in  this  Guaranty  Agreement
including, without limiting the generality of the foregoing, those acts, actions
and things described in this Section 8.

         (c)  Each  Guarantor  further  agrees  with  respect  to this  Guaranty
Agreement that such Guarantor shall have no right of subrogation,  reimbursement
or  indemnity,  nor any  right  of  recourse  to  security  for  the  Borrower's
Liabilities until the Facility Termination Date has occurred.


9. Effectiveness;  Enforceability.
   ------------------------------

This Guaranty Agreement shall be effective as of the date of the initial Advance
under the Credit Agreement and shall continue in full force and effect until the
Facility  Termination  Date.  This Guaranty  Agreement shall be binding upon and
inure to the  benefit of each  Guarantor,  the Agent and the  Lenders  and their
respective successors and assigns.  Notwithstanding the foregoing,  no Guarantor
may, without the prior written consent of the Agent, assign any rights,  powers,
duties or  obligations  hereunder.  Any  claim or claims  that the Agent and the
Lenders may at any time hereafter have against any Guarantor under this Guaranty
Agreement may be asserted by the Agent or any Lender by written notice  directed
to any one or more or all of the  Guarantors  at the  address  specified  in the
Credit Agreement.


10. Representations  and  Warranties.
    --------------------------------

Each  Guarantor  warrants  and  represents  to the Agent for the  benefit of the
Lenders that it is duly authorized to execute, deliver and perform this Guaranty
Agreement; that this Guaranty Agreement is legal, valid, binding and enforceable
against such Guarantor in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
equitable  principles;  and  that  such  Guarantor's  execution,   delivery  and
performance of this Guaranty  Agreement do not violate or constitute a breach of
its certificate of incorporation  or other documents of corporate  governance or
any agreement to which such Guarantor is a party, or any applicable laws.


11. Expenses.
    --------

Each Guarantor  agrees to be liable for the payment of all  reasonable  fees and
expenses,  including  attorney's fees,  incurred by the Agent in connection with
the enforcement of this Guaranty Agreement, other than fees and expenses arising
as a result of the Agent's or a Lender's gross negligence or wilfull misconduct.


12. Reinstatement.
    -------------

Each Guarantor  agrees that this Guaranty  Agreement and the obligations of each
Guarantor  hereunder shall be reinstated at any time any payment received by the
Agent under the Credit Agreement or this Guaranty Agreement is rescinded or must
be restored for any reason after the Facility Termination Date.


13. Counterparts.
    ------------

This Guaranty  Agreement may be executed in any number of counterparts,  each of
which shall be deemed to be an  original  as against  any party whose  signature
appears thereon, and all of which shall constitute one and the same instrument.


                                       I-5

<PAGE>

14. Reliance.
    ---------

Each  Guarantor  represents  and  warrants to the Agent,  for the benefit of the
Agent and the Lenders,  that:  (a) such  Guarantor has adequate  means to obtain
from the Borrower,  on a continuing basis,  information  concerning the Borrower
and the  Borrower's  financial  condition  and affairs and has full and complete
access to the Borrower's  books and records;  (b) such Guarantor is not relying,
and will not rely, on the Agent or any Lender, its or their employees, agents or
other  representatives,  to provide such information,  now or in the future; (c)
such Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands  the  obligations  and financial  risk  undertaken by providing this
Guaranty;   (d)  such  Guarantor  has  relied  solely  on  the  Guarantor's  own
independent  investigation,  appraisal  and  analysis  of the  Borrower  and the
Borrower's  financial condition and affairs in deciding to provide this Guaranty
and is fully  aware of the same;  and (e) such  Guarantor  has not  depended  or
relied  on  the  Agent  or  any  Lender,  its  or  their  employees,  agents  or
representatives,  for any information whatsoever concerning the Borrowers or the
Borrower's  financial  condition and affairs or other  matters  material to such
Guarantor's  decision to provide this Guaranty or for any counseling,  guidance,
or special  consideration or any promise therefor with respect to such decision.
Each  Guarantor  agrees  that  neither  the Agent nor any Lender has any duty or
responsibility whatsoever, now or in the future, to provide to any Guarantor any
information  concerning the Borrower or the Borrower's  financial  condition and
affairs,  other than as expressly  provided herein,  and that, if such Guarantor
receives  any such  information  from  the  Agent  or any  Lender,  its or their
employees,  agents or other  representatives,  such Guarantor will independently
verify  the  information  and will not rely on the Agent or any  Lender,  its or
their  employees,  agents  or  other  representatives,   with  respect  to  such
information.


15. Termination.
    ------------

Subject to reinstatement  pursuant to Section 12 hereof, this Guaranty Agreement
and all obligations of the Guarantors hereunder shall terminate without delivery
of any  instrument  or  performance  of any  act by any  party  on the  Facility
Termination Date.


16. Governing Law; Venue; Waiver of Jury Trial.
    ------------------------------------------

                  (a) THIS  GUARANTY  SHALL BE  GOVERNED  BY, AND  CONSTRUED  IN
         ACCORDANCE  WITH,  THE  LAWS  OF THE  STATE  OF NEW  YORKAPPLICABLE  TO
         CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

                  (b) EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
         CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
         TO  THIS  GUARANTY  AND THE  TRANSACTIONS  CONTEMPLATED  HEREIN  MAY BE
         INSTITUTED  IN ANY STATE OR FEDERAL  COURT SITTING IN THE COUNTY OF NEW
         YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION
         AND DELIVERY OF THIS  AGREEMENT,  EACH GUARANTOR  EXPRESSLY  WAIVES ANY
         OBJECTION  THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN,
         OR TO THE  EXERCISE OF  JURISDICTION  OVER IT AND ITS  PROPERTY BY, ANY
         SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND EACH GUARANTOR


                                       I-6

<PAGE>



         HEREBY  IRREVOCABLY   SUBMITS  GENERALLY  AND  UNCONDITIONALLY  TO  THE
         JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

                  (c) EACH GUARANTOR  AGREES THAT SERVICE OF PROCESS MAY BE MADE
         BY PERSONAL  SERVICE OF A COPY OF THE SUMMONS  AND  COMPLAINT  OR OTHER
         LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING,  OR BY REGISTERED
         OR  CERTIFIED  MAIL  (POSTAGE  PREPAID) TO THE ADDRESS OF THE  BORROWER
         PROVIDED  IN  SECTION  11.2 OF THE  CREDIT  AGREEMENT,  OR BY ANY OTHER
         METHOD OF SERVICE  PROVIDED FOR UNDER THE APPLICABLE  LAWS IN EFFECT IN
         THE STATE OF NEW YORK.

                  (d) IN ANY  ACTION OR  PROCEEDING  TO  ENFORCE  OR DEFEND  ANY
         RIGHTS OR REMEDIES  UNDER OR RELATED TO THIS GUARANTY OR ANY AMENDMENT,
         INSTRUMENT,  DOCUMENT OR AGREEMENT  DELIVERED OR THAT MAY IN THE FUTURE
         BE DELIVERED IN CONNECTION  THEREWITH,  EACH GUARANTOR AND THE AGENT ON
         BEHALF  OF THE  LENDERS  HEREBY  AGREE,  TO  THE  EXTENT  PERMITTED  BY
         APPLICABLE  LAW,  THAT ANY SUCH  ACTION  OR  PROCEEDING  SHALL BE TRIED
         BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY  IRREVOCABLY  WAIVE, TO
         THE EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
         TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.


                            [Signature page Follows.]


                                       I-7

<PAGE>

         IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement on
the day and year first written above.


                                   GUARANTORS:


                                   DATAGEN, INC.

                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________


                                   DATA GENERAL INTERNATIONAL, INC.

                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________


                                   DATA GENERAL INVESTMENT
                                    CORPORATION

                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________



                                   AGENT:

                                   NATIONSBANK, NATIONAL ASSOCIATION,
                                   as Agent for the Lenders



                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________



                              SIGNATURE PAGE 1 OF 1

<PAGE>



                                    EXHIBIT J
                                    ---------

                             Terms of Subordination*
                             ----------------------

1. DEFINITIONS
   -----------

         1.1 Terms  defined in the  Credit  Agreement  shall have their  defined
meanings when used herein unless  otherwise  defined  herein,  and the following
terms shall have the following meanings:

         "Senior Loans" shall mean,  collectively,  the Loans and any extension,
renewal, refunding or refinancing thereof.

         "Senior  Obligations"  shall mean the unpaid  principal  amount of, any
premium applicable to, and interest on (including, without limitation,  interest
accruing after the maturity of the Senior Loans and interest  accruing after the
filing of any petition in bankruptcy,  or the  commencement  of any  insolvency,
reorganization  or like proceeding,  relating to the Borrower,  whether or not a
claim for post-filing or  post-petition  interest is allowed in such proceeding)
the Notes and all other  obligations  and  liabilities  of the  Borrower  or any
Guarantor to the Agent or the Lenders,  whether direct or indirect,  absolute or
contingent,  due or to become due, or now existing or hereafter incurred,  which
may arise under, out of, or in connection with, the Credit Agreement, the Notes,
the  other  Loan  Documents  or this  Agreement  and any  other  document  made,
delivered or given in  connection  therewith or herewith,  whether on account of
principal,  premium,  interest,  reimbursement  obligations,  fees, indemnities,
costs,  expenses (including,  without limitation,  all fees and disbursements of
counsel to the Agent or any Lender that are  required to be paid by the Borrower
pursuant to the terms of the Credit Agreement) or otherwise.

         "Subordinated  Creditors"  shall mean the holders of Subordinated  Debt
and their successors and assigns.

         "Subordinated  Debt"  shall  mean the unpaid  principal  amount of, any
premium  applicable to and any interest on the  Indebtedness of the Subordinated
Debtor to the Subordinated  Creditor  evidenced by that certain  promissory note
dated  _____________  by the  Subordinated  Debtor  payable to the  Subordinated
Creditor in the original principal amount of $__________.

         "Subordinated Debtor" means____________________________________________


         1.2 (a) The  words  "hereof",  "herein"  and  "hereunder"  and words of
similar  import when used in this  Agreement  shall refer to this Agreement as a
whole  and not to any  particular  provision  of this  Agreement,  and  Section,
subsection,  Schedule  and  Exhibit  references  are to  this  Agreement  unless
otherwise specified.

--------
*   The terms hereof shall not apply to any Indebtedness under the Indenture.


                                       J-1

<PAGE>

         (b) the  meanings  given  to terms  defined  herein  shall  be  equally
applicable to both the singular and plural forms of such terms.


2. SUBORDINATION
    ------------

         2.1 The Subordinated  Creditor and the  Subordinated  Debtor agree, for
themselves and their  respective  successors and assigns,  that the Subordinated
Debt is  expressly  subordinate  and junior in right of payment  (as  defined in
subsection 2.2) to all Senior Obligations.

         2.2  "Subordinate and junior in right of payment" shall mean that:

         (a) The  Subordinated  Creditor shall not have any claim,  as holder of
the Subordinated  Debt, to any assets of the Subordinated  Debtor on parity with
or prior to the claim of the  Lenders as holders of the Senior  Obligations.  At
any time after an Event of Default  shall have occurred and be  continuing,  the
Subordinated  Creditor  will not take,  demand or receive from the  Subordinated
Debtor or any of its direct or indirect subsidiaries,  nor will the Subordinated
Debtor or any of its direct or indirect subsidiaries,  give or permit,  directly
or  indirectly,  by set-off,  redemption,  purchase or in any other manner,  any
payment or  prepayment  of principal  or interest on, or security,  guarantee or
collateral for the whole or any part of, the Subordinated Debt.

         (b) In the  event (i) of any  distribution,  division  or  application,
partial or complete, voluntary or involuntary, by operation of law or otherwise,
of all or any  substantial  part of the  property,  assets  or  business  of the
Subordinated  Debtor or the proceeds thereof to any creditor or creditors of the
Subordinated  Debtor  or (ii) of any  Indebtedness  of the  Subordinated  Debtor
becoming  due and  payable by reason of any  liquidation,  dissolution  or other
winding-up of the Subordinated  Debtor or its business or by reason of any sale,
receivership,  insolvency,  reorganization or bankruptcy proceedings, assignment
for the benefit of creditors,  arrangement  or any  proceeding by or against the
Subordinated  Debtor  for any relief  under any  bankruptcy,  reorganization  or
insolvency law or laws, Federal or state, or any law, Federal or state, relating
to  the  relief  of  debtors,  readjustment  of  indebtedness,   reorganization,
composition,  or extension,  or (iii) any of the Senior Obligations have become,
or have  been  declared  to be,  due and  payable  (and  have not  been  paid in
accordance  with  their  terms),  then and in any such  event,  any  payment  or
distribution of any kind or character,  whether in cash,  property or securities
which, but for the subordination provisions contained herein, would otherwise be
payable or  deliverable to the  Subordinated  Creditor upon or in respect of the
Subordinated  Debt,  shall  instead  be paid over or  delivered  to the Agent on
behalf of the Lenders to be applied to the Senior Obligations and the remainder,
if any, to be paid to the Subordinated Creditor.


3. PAYMENTS, ETC.
   -------------

         3.1 The Subordinated  Creditor and the Subordinated  Debtor irrevocably
authorize and empower (without  imposing any obligation on) the Lenders,  or the
Agent on behalf of the Lenders,  under the circumstances set forth in clause (i)
or (ii) of subsection 2.2(b), to demand, sue for, collect and receive every such
payment or  distribution  referred to in such  subsection  and give  acquittance
therefor,  and file claims and proofs of claim in any statutory or non-statutory
proceeding, to vote the Subordinated Debt in the sole discretion of the Lenders


                                       J-2

<PAGE>



or  the  Agent,  as  the  case  may  be,  in  connection  with  any  resolution,
arrangement, plan of reorganization,  compromise, settlement or extension and to
take such other action (including,  without limitation, the right to participate
in any composition of creditors and the right to vote such  Subordinated Debt at
creditors'  meetings  for the  election of  trustees,  acceptances  of plans and
otherwise) and take such other  proceedings,  in their own names as Lenders,  or
the Agent,  as the case may be, or in the name of the  Subordinated  Creditor or
otherwise,  as the Lenders or the Agent,  as the case may be, may deem necessary
or advisable  for the  enforcement  of the  provisions  of this  Agreement.  The
Subordinated Creditor hereby agrees, under the circumstances set forth in clause
(i) or (ii) of subsection  2.2(b),  duly and promptly to take such action as may
be  requested  at any time and from time to time by the  Lenders or the Agent to
enable the Lenders or the Agent,  as the case may be, to enforce all claims upon
or in respect of the  Subordinated  Debt,  including,  without  limitation,  the
filing of appropriate  proofs of claim in respect of the Subordinated  Debt, and
to collect  and  receive  any and all  payments  or  distributions  which may be
payable or deliverable any time upon or in respect of the Subordinated Debt.

         3.2 Should any payment or distribution or security,  or the proceeds of
any thereof, be collected or received by the Subordinated Creditor in respect of
the  Subordinated  Debt after the  occurrence  and during the  continuance of an
Event of Default,  the applicable  Subordinated  Creditor will forthwith deliver
the same to the  Agent in the  form  received  (except  for the  endorsement  or
assignment  of such  Subordinated  Creditor  when  necessary)  and,  until  such
delivery, shall hold the same in trust for the benefit of the Agent.

         3.3  Notwithstanding  anything to the contrary in this  Agreement,  the
Subordinated Creditor hereby irrevocably waives all rights which may have arisen
in connection with this Agreement to be subrogated to any of the rights (whether
contractual,  under the Bankruptcy Code,  including  Section 509 thereof,  under
common law or  otherwise)  of the Agent or any Lender  against the  Subordinated
Debtor  or  against  the  Agent or any  Lender  for the  payment  of the  Senior
Obligations.  The Subordinated  Creditor hereby further  irrevocably  waives all
contractual,   common  law,   statutory  or  other   rights  of   reimbursement,
contribution,  exoneration  or indemnity (or any similar  right) from or against
the Subordinated  Debtor or any other Person which may have arisen in connection
with this Agreement.  So long as the Senior Obligations remain  outstanding,  if
any  amount  shall be paid by or on  behalf  of the  Subordinated  Debtor to the
Subordinated  Creditor on account of any of the rights waived in this paragraph,
such amount shall be held by the Subordinated Creditor in trust, segregated from
other funds of the Subordinated  Creditor,  and shall, forthwith upon receipt by
the  Subordinated  Creditor,  be turned  over to the  Agent,  in the exact  form
received  by the  Subordinated  Creditor  (duly  indorsed  by  the  Subordinated
Creditor to the Collateral Agent, if required), to be applied against the Senior
Obligations,  whether  matured  or  unmatured,  in such  order as the  Agent may
determine.  The provisions of this paragraph  shall survive until the occurrence
of the Facility Termination Date.

         3.4 Notwithstanding the foregoing,  the obligations of the Subordinated
Creditor under this Agreement shall continue to be effective,  or be reinstated,
as the  case may be,  if at any  time  any  payment  in  respect  of any  Senior
Obligations,  or any other  payment  to any  Lender  in  respect  of the  Senior
Obligations,  is  rescinded  or must  otherwise  be restored or returned by such
Lender upon,  or as a result of the  appointment  of a receiver,  intervenor  or
conservator of, or trustee or similar officer for, the Debtor or any substantial


                                       J-3

<PAGE>



part of its  property,  or otherwise, all as though such payment had not been
made.




                                       J-4

<PAGE>

                                    EXHIBIT K
                                    ---------

                    Form of Cash Collateral Account Agreement
                    -----------------------------------------


                        CASH COLLATERAL ACCOUNT AGREEMENT


         THIS CASH COLLATERAL  ACCOUNT AGREEMENT (the  "Agreement")  dated as of
this 30th day of September,  1997, and made between DATA GENERAL CORPORATION,  a
Delaware corporation (the "Pledgor"),  and NATIONSBANK,  NATIONAL ASSOCIATION, a
national  banking  association,  as Agent (in such capacity  herein and together
with any successors in such capacity,  the "Agent") for each of the lenders (the
"Lenders" and together with the Agent,  the "Secured  Parties") now or hereafter
party to the Credit Agreement (as defined below).


                              W I T N E S S E T H:


         WHEREAS, the Pledgor, the Lenders, and the Agent have entered into that
certain  Credit  Agreement  dated as of the date hereof among the  Pledgor,  the
Agent and the Lenders (as from time to time amended,  supplemented  or restated,
the  "Credit  Agreement")  pursuant  to which the  Lenders  have  agreed to make
certain credit facilities  available to the Pledgor and to issue certain letters
of credit; and

         WHEREAS, as a condition  precedent to the Lenders'  obligations to make
Loans or to issue  Letters of Credit,  the  Pledgor is  required  to execute and
deliver to the Agent a copy of this Agreement on or before the Closing Date;

         NOW,  THEREFORE,  in consideration of the foregoing and the agreements,
provisions  and  covenants  contained  herein,  the Pledgor and the Agent hereby
agree as follows:


 1. Definitions.
    -----------

The following  capitalized terms used in this Agreement shall have the following
meanings  notwithstanding any definition thereof in the Credit Agreement.  Other
capitalized terms used but not defined herein shall have the meanings  therefore
set forth in the Credit Agreement.

         "Collateral"  means (a) all funds  from time to time on  deposit in the
Cash  Collateral   Account;   (b)  all  Investments  and  all  certificates  and
instruments from time to time representing or evidencing such  Investments;  (c)
all notes,  certificates of deposit,  checks and other  instruments from time to
time hereafter delivered to or otherwise possessed by the Agent for or on behalf
of  the  Pledgor  in  substitution  for  or in  addition  to  any  or all of the
Collateral  described in clause (a) or (b) above;  (d) all interest,  dividends,
cash,  instruments and other property from time to time received,  receivable or
otherwise distributed in respect of or in exchange for any or all of the


                                       K-1

<PAGE>

Collateral  described in clause (a), (b) or (c) above; and (e) to the extent not
covered by clauses  (a)  through  (d) above,  all  proceeds of any or all of the
foregoing Collateral.

         "Investments"  means  those  investments,  if any,  made  by the  Agent
pursuant to Section 5 hereof.

         "Cash Collateral Account" means the cash collateral account established
and maintained pursuant to Section 2 hereof.

         "Secured  Obligations"  means (i) all  Obligations  of the  Pledgor now
existing or hereafter arising under or in respect of the Credit Agreement or the
Notes (including,  without limitation, the Pledgor's obligation to pay principal
and interest and all other charges, fees, expenses, commissions, reimbursements,
indemnities  and other  payments  related to or in  respect  of the  obligations
contained in the Credit  Agreement  or the Notes) or any  documents or agreement
related to the Credit Agreement or the Notes; and (ii) without duplication,  all
obligations of the Pledgor now or hereafter existing under or in respect of this
Agreement,  including,  without limitation,  with respect to all charges,  fees,
expenses, commissions, reimbursements, indemnities and other payments related to
or in respect of the obligations contained in this Agreement.


2.Cash Collateral Account; Cash Collateralization of Letters of Credit.
  --------------------------------------------------------------------

                  (i) At any time,  in the Agent's  sole  discretion,  the Agent
         shall  establish and maintain at its offices at 101 North Tryon Street,
         Charlotte,  North Carolina, in its name and under its sole dominion and
         control,   a  cash  collateral   account  designated  as  Data  General
         Corporation Cash Collateral Account.

                  (ii) In the event that the  Pledgor  delivers  to the Agent an
         amount equal to the maximum  amount  remaining  undrawn or unpaid under
         any Letters of Credit either (A) as required  pursuant to Article IX of
         the Credit  Agreement or (B) as otherwise  agreed by the parties hereto
         to provide  cash  collateral  for the  undrawn  amount of any Letter of
         Credit,  the Agent shall  deposit such amount into the Cash  Collateral
         Account  to be held  pursuant  to the terms of this  Agreement.  Upon a
         drawing  under the  Letters of Credit in  respect of which any  amounts
         described above have been deposited in the Cash Collateral Account, the
         Agent shall apply such amounts to reimburse  NationsBank for the amount
         of such  drawing.  In the event the  Letters of Credit are  canceled or
         expire or in the event of any reduction in the maximum amount available
         at any time for  drawing  under such  Letters of Credit  (the  "Maximum
         Available  Amount"),  the Agent shall apply the amount then in the Cash
         Collateral  Account less the Maximum Available Amount immediately after
         such cancellation,  expiration or reduction, if any, first, to the cash
         collateralization of the Letters of Credit if the Pledgor has failed to
         pay all or a portion  of the  maximum  amounts  described  in the first
         sentence of this clause (ii) above,  second,  to the payment in full of
         the outstanding  Secured Obligations and third, the balance, if any, to
         the Pledgor or as otherwise required by law.



                                       K-2

<PAGE>



                  (iii)  Interest  and  other  income  received  in  respect  of
         Investments  of any amounts  deposited in the Cash  Collateral  Account
         pursuant to clause (ii) of this Section 2 shall be held by the Agent as
         additional Collateral hereunder.


3. Pledge; Security for Secured Obligations.
   ----------------------------------------

The Pledgor hereby grants and pledges to the Agent,  for itself and on behalf of
the  Secured  Parties,  a first  priority  lien  and  security  interest  in the
Collateral now existing or hereafter arising or acquired,  s collateral security
for the  prompt  payment  in full  when due,  whether  at  stated  maturity,  by
acceleration  or  otherwise  (including,  without  limitation,  the  payment  of
interest and other  amounts which would accrue and become due but for the filing
of a petition in bankruptcy or the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), of all Secured Obligations.


4. Delivery of Collateral.
   ----------------------

The  Collateral,  when  delivered to the Agent,  for the benefit of the Lenders,
shall be in the form of immediately available funds.


5. Investing of Amounts in the Cash Collateral Account; Amounts held by the
   ------------------------------------------------------------------------
Agent.
------

Cash held by the Agent in the Cash  Collateral  Account shall not be invested or
reinvested except as provided in this Section 5.

                  (i)  Subject to the  remedies  and other  rights  provided  in
         Section 11 hereof and provided  that the lien and security  interest in
         favor of the Agent and Secured Parties remains perfected and so long as
         no Event of Default shall have occurred and be continuing, any funds on
         deposit in the Cash  Collateral  Account shall be invested by the Agent
         in cash equivalents.

                  (ii) The Agent  shall have no  responsibility  and the Pledgor
         hereby  agrees to hold the Agent and the Lenders  harmless for any loss
         in the value of the Collateral resulting from a fluctuation in interest
         rates or otherwise. Any interest on Investments permitted hereunder and
         the net proceeds of the sale or payment of any such  Investments  shall
         constitute  part of the Collateral  and be held in the Cash  Collateral
         Account by the Agent.


6. Representations and Warranties.
   -------------------------------

In addition to its representations and warranties made pursuant to Article VI of
the Credit  Agreement,  the Pledgor  represents  and  warrants to the Agent (for
itself and as agent on behalf of the Lenders), that the following statements are
true, correct and complete:

                  (i) The Pledgor will be the legal and beneficial  owner of the
         Collateral  free and clear of any Lien except for the lien and security
         interest created by this Agreement;

                  (ii) The pledge and assignment of the  Collateral  pursuant to
         this Agreement  creates a valid and perfected  first priority  security
         interest  in the  Collateral,  securing  the  payment  of  the  Secured
         Obligations.



                                       K-3

<PAGE>



7.  Further  Assurances.
    --------------------

The  Pledgor  agrees  that at any time and from time to time,  at the  Pledgor's
expense,  the Pledgor will promptly execute and deliver to the Agent any further
instruments and documents,  and take any further actions,  that may be necessary
or that the Agent may  reasonably  request in order to perfect  and  protect any
security  interest  granted or purported  to be granted  hereby or to enable the
Agent to exercise and enforce its rights and remedies  hereunder with respect to
any Collateral.


8. Transfers and Other Liens.
   --------------------------

The Pledgor agrees that it will not (a) sell or otherwise  dispose of any of the
Collateral,  or (b)  create or permit to exist any Lien upon or with  respect to
any of the Collateral, except for the Lien and security interest created by this
Agreement and the Credit Agreement.


9. The Agent  Appointed  Attorney-in  Fact.
   ---------------------------------------

Upon the  occurrence  and during  the  continuation  of an Event of Default  and
acceleration of the Obligations under the Credit  Agreement,  the Pledgor hereby
appoints the Agent as its attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or  otherwise,  from time to
time in the Agent's reasonable  discretion to take any action and to execute any
instrument  which  the Agent may  reasonably  deem  necessary  or  advisable  to
accomplish  the purposes of the Agreement,  including,  without  limitation,  to
receive,  endorse  and collect all  instruments  made  payable to the Pledgor or
either of them  representing  any payment,  dividend,  or other  distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same. In performing  its  functions and duties under this  Agreement,  the Agent
shall act solely for the Secured Parties and the Agent has not assumed nor shall
be deemed to have assumed,  other than as may be required by law, any obligation
towards or relationship of agency or trust with or for the Pledgor.


10. The Agent May Perform.
    ---------------------

If Pledgor fails to perform any agreement  contained  herein,  after  reasonable
notice to Pledgor,  the Agent may itself perform,  or cause performance of, such
agreement,  and the  reasonable  expenses of the Agent  incurred  in  connection
therewith shall be payable by Pledgor under Section 13 hereof.


11. Standard of Care; No Responsibility For Certain Matters.
    -------------------------------------------------------

In dealing with the Collateral in its  possession,  the Agent shall exercise the
same care which it would  exercise in dealing with similar  collateral  property
pledged  by others in  transactions  of a  similar  nature,  but it shall not be
responsible  for (a)  ascertaining  or  taking  action  with  respect  to calls,
conversions,  exchanges,  maturities,  tenders or other matters  relative to any
Collateral,  whether or not the Agent has or is deemed to have knowledge of such
matters,  (b) taking any steps to  preserve  rights  against  any  parties  with
respect  to any  Collateral  (other  than  steps  taken in  accordance  with the
standard of care set forth above to maintain possession of the Collateral),  (c)
the collection of any proceeds,  (d) any loss resulting  from  Investments  made
pursuant to Section 5 hereof,  or (e)  determining  (x) the  correctness  of any
statement or calculation made by the Pledgor in any written instructions, or (y)
whether any deposit in the Cash Collateral Account is proper.


12. Remedies upon Default; Application of Proceeds.
    ----------------------------------------------

If the Pledgor  shall fail to perform  any action  required  hereunder  or shall
otherwise breach any term or provision hereof (a "Default" hereunder which



                                       K-4

<PAGE>



Default shall not have been waived in accordance with Section 11.6 of the Credit
Agreement:

                  (i) The  Agent may and shall at the  request  of the  Required
         Lenders  exercise  in respect of the  Collateral,  in addition to other
         rights and remedies provided for herein otherwise  available to it, all
         the rights and remedies of a secured party on default under the Uniform
         Commercial  Code  (the  "Code")  as in effect in the state in which the
         Collateral is located at that time,  and the Agent may,  without notice
         except as specified  below,  sell the Collateral or any part thereof in
         one or more  parcels  at public or private  sale,  at any  exchange  or
         broker's board or at any of the Agent's offices or elsewhere, for cash,
         on credit or for future delivery, and at such price or prices, and upon
         such other terms as the Agent may deem commercially reasonable. Pledgor
         agrees that,  to the extent notice of sale shall be required by law, at
         least ten (10)  days'  notice to  Pledgor  of the time and place of any
         public  sale or the time  after  which any  private  sale is to be made
         shall  constitute  reasonable  notification.  The  Agent  shall  not be
         obligated to make any sale of the  Collateral  regardless  of notice of
         sale  having  been  given.  The Agent 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.

                  (ii) In addition to the  remedies  set forth in part (i) above
         and subject to the provisions of Section 2(ii) hereof, any cash held by
         the Agent as Collateral and all cash proceeds  received by the Agent in
         respect of any sale of,  collection from, or other realization upon all
         or part of the  Collateral  shall  be  applied  (after  payment  of any
         amounts  payable  to the Agent  pursuant  to  Section 12 hereof) by the
         Agent to pay the  Secured  Obligations  pursuant  to  Article IX of the
         Credit Agreement.


13. Expenses.
    --------

In  addition to any  payments  of  expenses of the Agent  pursuant to the Credit
Agreement or the other Loan Documents, the Pledgor agrees to pay promptly to the
Agent  all the costs  and  expenses,  including  reasonable  attorneys  fees and
expenses,  which  the  Agent may incur in  connection  with (a) the  custody  or
preservation of, or the sale of, collection from, or other realization upon, any
of the  Collateral,  (b) the exercise or enforcement of any of the rights of the
Agent hereunder,  or (c) the failure by the Pledgor to perform or observe any of
the provisions hereof,  other than costs and expenses arising as a result of the
Agent's or a Lender's gross negligence or wilfull misconduct.


14. No  Delays;  Waiver,  etc.
    --------------------------

No delay or  failure  on the part of the Agent in  exercising,  and no course of
dealing with respect to, any power or right  hereunder shall operate as a waiver
thereof;  nor shall any single or partial  exercise by the Agent of any power or
right hereunder  preclude other or further  exercise  thereof or the exercise of
any other power or right. The remedies herein provided are to the fullest extent
permitted by law  cumulative  and are not exclusive of any remedies  provided by
law.



                                       K-5

<PAGE>


15. Amendments, Etc.
    ---------------

No  amendment,  modification,  termination  or waiver of any  provision  of this
Agreement,  or consent to any departure by the Pledgor  therefrom,  shall in any
event be effective without the written concurrence of the Agent.


16. Notices.
    --------

Except as otherwise  specifically  provided herein,  all notices which are to be
sent to the  Pledgor  or Agent  shall be given  in  accordance  with the  Credit
Agreement.


17. Continuing  Security  Interest;  Termination.
    --------------------------------------------

This Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until all Secured  Obligations  (other
than Secured  Obligations  in the nature of  continuing  indemnities  or expense
reimbursement  obligations not yet due and payable) shall have been indefeasibly
paid in full in cash, the  commitments or other  obligations of the Agent or any
Lender to make any Loan  under the Credit  Agreement  shall  have  expired,  the
Letters of Credit  shall have expired and the  Facility  Termination  Date shall
have occurred,  (b) be binding upon Pledgor, its successors and assigns, and (c)
inure to the  benefit of the Agent,  the Secured  Parties  and their  respective
successors,  transferees  and assigns.  Without  limiting the  generality of the
foregoing clause (c) and subject to the provisions of the Credit Agreement,  any
Lender may assign or otherwise  transfer any Note held by it to any other person
or entity,  and such other person or entity shall  thereupon  become vested with
all the benefits in respect  thereof granted to such Lender herein or otherwise.
Upon the indefeasible  payment in full in cash of the Secured Obligations (other
than Secured  Obligations  in the nature of  continuing  indemnities  or expense
reimbursement  obligations  not yet due and payable),  and the  cancellation  or
expiration  of the  Letters  of Credit  and  termination  or  expiration  of all
commitments  and other  obligations of the Agent and any Lender to make any Loan
and the occurrence of the Facility  Termination Date, Pledgor shall be entitled,
subject to the provisions of Section 11 hereof, to the return,  upon its request
and at its  expense,  of such of the  Collateral  as shall not have been sold or
otherwise applied pursuant to the terms hereof.


18. Successors  and  Assigns.
    -------------------------

Whenever  in this  Agreement  any of the  parties  hereto is  referred  to, such
reference  shall be deemed to include the  successors  and assigns of such party
and all covenants, promises, and agreements by or on behalf of the Pledgor or by
and on behalf of the Agent shall bind and inure to the benefit of the successors
and assigns of the Pledgor, the Agent and the Lenders.


19. Execution in  Counterparts.
    ---------------------------

This  Agreement  may  be  executed  in any  number  of  counterparts  and by the
different  parties on separate  counterparts and each such counterpart shall for
all purposes be deemed an original,  but all such  counterparts  shall  together
constitute  but one and the same  Agreement.  The Pledgor  and the Agent  hereby
acknowledge  receipt  of a  true,  correct,  and  complete  counterpart  of this
Agreement.


20. Swap Agreements.
    ---------------

All Hedging Obligations of any Pledgor shall be deemed to be Secured Obligations
secured  hereby,  and each  Lender or  affiliate  of a Lender  party to any Swap
Agreement shall be deemed to be a Secured Party hereunder.



                                       K-6

<PAGE>

21. Severability.
    ------------

Any provision of this  Agreement  which is prohibited  or  unenforceable  in any
jurisdiction  shall, as to such provision and such jurisdiction,  be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining   provisions   of  this   Agreement  or  affecting   the  validity  or
enforceability of such provision in any other jurisdiction.


22. Headings.
    --------

The section headings in this Agreement are inserted for convenience of reference
and  shall  not  be  considered  a  part  of  this  Agreement  or  used  in  its
interpretation.


23. GOVERNING LAW; TERMS.
    --------------------

                  (a) THIS  AGREEMENT  SHALL BE GOVERNED  BY, AND  CONSTRUED  IN
         ACCORDANCE  WITH,  THE  LAWS OF THE  STATE OF NEW  YORK  APPLICABLE  TO
         CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

                  (b) THE PLEDGOR HEREBY  EXPRESSLY AND  IRREVOCABLY  AGREES AND
         CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
         TO THIS  AGREEMENT  AND THE  TRANSACTIONS  CONTEMPLATED  HEREIN  MAY BE
         INSTITUTED  IN ANY STATE OR FEDERAL  COURT SITTING IN THE COUNTY OF NEW
         YORK, STATE OF NEW YORK, UNITED STATES OF AMERICA AND, BY THE EXECUTION
         AND  DELIVERY  OF THIS  AGREEMENT,  THE  PLEDGOR  EXPRESSLY  WAIVES ANY
         OBJECTION  THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN,
         OR TO THE  EXERCISE OF  JURISDICTION  OVER IT AND ITS  PROPERTY BY, ANY
         SUCH  COURT IN ANY SUCH SUIT,  ACTION OR  PROCEEDING,  AND THE  PLEDGOR
         HEREBY  IRREVOCABLY   SUBMITS  GENERALLY  AND  UNCONDITIONALLY  TO  THE
         JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

                  (c) THE PLEDGOR  AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
         PERSONAL  SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
         PROCESS IN ANY SUCH SUIT,  ACTION OR  PROCEEDING,  OR BY  REGISTERED OR
         CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE PLEDGOR PROVIDED
         IN SECTION  11.2 OF THE  CREDIT  AGREEMENT,  OR BY ANY OTHER  METHOD OF
         SERVICE  PROVIDED FOR UNDER THE APPLICABLE  LAWS IN EFFECT IN THE STATE
         OF NEW YORK.

                  (d) IN ANY  ACTION OR  PROCEEDING  TO  ENFORCE  OR DEFEND  ANY
         RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
         INSTRUMENT,  DOCUMENT OR AGREEMENT  DELIVERED OR THAT MAY IN THE FUTURE
         BE DELIVERED IN CONNECTION THEREWITH, THE PLEDGOR AND THE AGENT ON


                                       K-7

<PAGE>



         BEHALF  OF THE  LENDERS  HEREBY  AGREE,  TO  THE  EXTENT  PERMITTED  BY
         APPLICABLE  LAW,  THAT ANY SUCH  ACTION  OR  PROCEEDING  SHALL BE TRIED
         BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY  IRREVOCABLY  WAIVE, TO
         THE EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
         TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.



                         [Signatures on following pages]



                                       K-8

<PAGE>

         IN WITNESS  WHEREOF,  the  Pledgor  and the Agent have caused this Cash
Collateral  Account  Agreement  to be  duly  executed  and  delivered  by  their
respective  officers  thereunto  duly  authorized  as of the  date  first  above
written.


                                   DATA GENERAL CORPORATION


                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________



                                   NATIONSBANK,  NATIONAL ASSOCIATION,
                                   as Agent for the Lenders


                                   By:____________________________________
                                   Name:__________________________________
                                   Title:_________________________________






                        CASH COLLATERAL ACCOUNT AGREEMENT

                                 Signature Page

<PAGE>

                                    EXHIBIT L
                                    ---------

                            Confidentiality Agreement
                            -------------------------

                 PROPRIETARY RIGHTS AND NONDISCLOSURE AGREEMENT



                  Non-Disclosure Agreement for the benefit of:
                        DATA GENERAL CORPORATION ("DGC")
               4400 Computer Drive, Westboro, Massachusetts 01580


         Reference is hereby made to that certain Credit  Agreement  dated as of
September  30, 1997 among DGC, the lenders  party  thereto (the  "Lenders")  and
NationsBank,  National  Association,  as  agent  for the  Lenders  (as  amended,
supplemented  or  replaced  from  time to time,  the  "Credit  Agreement").  All
capitalized  terms not otherwise defined herein shall have the meanings given to
such terms in the Credit Agreement.

1. The  undersigned  shall  not  disclose  to any third  party any  Confidential
   Information and shall keep confidential any Confidential Information,  except
   as provided  in the next  sentence,  unless DGC has, in its sole  discretion,
   previously  and  expressly  consented  to such  disclosure  in  writing.  The
   undersigned  may disclose  Confidential  Financial  Information to the extent
   necessary  to  protect,  exercise  or  enforce  its  rights  or  perform  its
   obligations under the Credit Agreement or as otherwise specifically permitted
   pursuant  to  the  terms  of  the  Credit  Agreement,  or to  (i)  any of the
   undersigned's directors, officers, employees, agents, accountants, attorneys,
   auditors and advisors on a "need to know" and confidential  basis pursuant to
   this  Agreement  or  terms  equivalent,   (ii)  prospective  participants  or
   prospective  assignees on a confidential  basis pursuant to this Agreement or
   terms equivalent;  (iii) examiners or regulatory  agencies having supervisory
   or examination  authority over the undersigned;  and (iv) any person pursuant
   to the order of any  governmental  authority or as otherwise  required by any
   rule,  regulation,  law or judicial process,  after giving DGC notice thereof
   promptly after becoming aware of such requirement,  to the extent such notice
   would not be prohibited by law,  regulation  or such  judicial  process.  The
   undersigned may disclose Confidential Non-Financial Information to the extent
   necessary  to  protect,  exercise  or  enforce  its  rights  or  perform  its
   obligations under the Credit Agreement but only upon notice to DGC sufficient
   to permit  DGC to obtain  such  protective  orders  reasonably  necessary  to
   prevent  public  disclose  of  such   Non-Financial   Information   (and  the
   undersigned  agrees not to oppose obtaining such protective orders where such
   action is not  reasonably  likely to impair  the rights or  interests  of the
   undersigned) or as otherwise  specifically permitted pursuant to the terms of
   the Credit Agreement, or to (i) any of the undersigned's directors, officers,
   employees, agents, accountants,  attorneys,  auditors and advisors on a "need
   to  know"  and  confidential  basis  pursuant  to  this  Agreement  or  terms
   equivalent, (ii) prospective participants or prospective assignees on a



<PAGE>

   confidential  basis  pursuant to this  Agreement or terms  equivalent;  (iii)
   examiners or regulatory agencies having supervisory or examination  authority
   over the undersigned  requesting or requiring such  disclosure;  and (iv) any
   person  pursuant to the order of any  governmental  authority or as otherwise
   required by any rules, regulation,  law or judicial process, after giving DGC
   notice thereof  promptly after  becoming  aware of such  requirement,  to the
   extent  such  notice  would  not be  prohibited  by law,  regulation  or such
   judicial process.

         "Confidential Information" means all Confidential Financial Information
          and all Confidential Non-Financial Information.

         "Confidential  Financial  Information" means all financial  information
         concerning  DGC and its  Affiliates  which has been  identified in good
         faith by DGC as confidential  and delivered to the undersigned by or on
         behalf of DGC pursuant to this  Agreement and which is not  information
         which is (a) in the public domain;  (b) known to the undersigned at the
         time  of  such  disclosure   without  duty  of   confidentiality;   (c)
         subsequently  received  by the  undersigned  in good faith from a third
         party  who  is  not  known  to  the   undersigned  to  be  bound  by  a
         confidentiality  agreement  with DGC or known to the  undersigned to be
         otherwise   prohibited  from   transmitting   the  information  to  the
         undersigned  by a  contractual,  legal  or  fiduciary  obligation;  (d)
         independently generated by the undersigned; or (e) approved for release
         or disclosure by DGC in a separate writing;

         "Confidential   Non-Financial   Information"  means  all  non-financial
         information  which  has  been  identified  in  good  faith  by  DGC  as
         confidential and relating to DGC and its Subsidiaries and its and their
         trade-secrets,  proprietary rights, operations and plans which has been
         delivered  to the  undersigned  by or on behalf of DGC pursuant to this
         Agreement  and  which is not  information  which  is (a) in the  public
         domain;  (b) known to the  undersigned  at the time of such  disclosure
         without  duty of  confidentiality;  (c)  subsequently  received  by the
         undersigned  in good faith  from a third  party who is not known to the
         undersigned  to be bound  by a  confidentiality  agreement  with DGC or
         known to the undersigned to be otherwise  prohibited from  transmitting
         the information to the undersigned by a contractual, legal or fiduciary
         obligation;  (d)  independently  generated by the  undersigned;  or (e)
         approved for release or disclosure by DGC in a separate writing;


2. The  undersigned  recognizes  the  proprietary  rights  of  DGC in and to the
   Confidential  Information and/or the confidential  nature of the Confidential
   Information,  and agrees to keep the Confidential Information as confidential
   in accordance with its customary  procedures for handling similar information
   and with  such care as is  otherwise  reasonable  and treat the  Confidential
   Information  as  confidential  to DGC,  and to  take  appropriate  action  by
   instruction,   agreement  or  notice  to  its  directors,   officers,  agent,
   consultants, contractors and employees to notify them of the confidential and
   proprietary nature of the Confidential  Information  submitted by DGC, and to
   require that they conform to therequirements of this Agreement.



<PAGE>



3. The undersigned  further agrees that it will not make use of, either directly
   or indirectly,  any of the Confidential  Information which it receives or has
   received  from DGC,  other than for the purpose  for which such  Confidential
   Information has been disclosed or in connection with the protection, exercise
   or  enforcement of its rights under the Loan  Documents,  except as otherwise
   permitted  hereunder or with the specific proper written  authorization of an
   officer of DGC.


4. This Agreement shall be governed by and construed in accordance with the laws
   of the State of New York.


                                   AGREED:


                                   By:____________________________________
                                   Its:___________________________________
                                   Date:__________________________________



<PAGE>

<TABLE>



                                  Schedule 6.4
                                  ------------

          Borrower, Material and Significant Subsidiaries of Borrower
                          disclosed under Section 6.4:
          -----------------------------------------------------------
<CAPTION>


                                            Share Owned by                                Capitalization
                                              Borrower or                                -----------------
                       Organizational      Other Significant      Class of
  Name of Entity           Form             Subsidiaries          Security         Authorized         Issued
-----------------------------------------------------------------------------------------------------------------

<S>                           <C>                     <C>                <C>              <C>      <C>
  Borrower:
  ---------
  Data General                Delaware                 N/A               Common           100M     Approximately
  Corporation                corporation                                                               48.8M
                                                                                                    (including
                                                                                                       220,653
                                                                                                      treasury
                                                                                                       shares)

                                                                        Preferred           1M         -0-

  Material Subsidiaries
  ---------------------
  Data General                 Delaware               100%               Common
  International, Inc.         corporation

  Datagen, Inc.                Delaware               100%               Common
                              corporation

  Data General Investment       Delaware              100%               Common
  Corporation                 corporation


<FN>
  Significant Subsidiaries

  Those  Subsidiaries  listed in that  letter  from  Borrower to Agent dated and
  delivered contemporaneously with this Agreement.
</FN>
</TABLE>


Borrower  Ownership  Interests  disclosed  under Section 6.5:
-------------------------------------------------------------
Those  investments  listed  in that  letter  from  Borrower  to Agent  dated and
delivered contemporaneously with this Agreement.





<PAGE>



                                  Schedule 6.6
                                  ------------

                                  Indebtedness
                                  ------------


   1. $212,750,000 6% Convertible Subordinated Notes due 2004

   2. That  guarantee  described in that letter from Borrower to Agent dated and
      delivered contemporaneously with this Agreement.





<PAGE>
                                  SCHEDULE 6.7
                                  ------------

                                     Liens


                                     None.


<PAGE>
                                   SCHEDULE 8
                                   ----------

                              INVESTMENT GUIDELINES
                              ---------------------
<TABLE>

ISSUE/
RATING                                                                                                                 MINIMUM
TYPE OF INVESTMENT                                          MAX PER       MAXIMUM      MAX % OF       BANK RATING      MIN.
MOODY/S&P                                     ACCOUNT      ANK/ISSUE      MATURITY     PORTFOLIO      MOOD/ S&P        FUND
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                           <C>          <C>            <C>          <C>            <C>                <C>
U.S. Treasury Securities (OID only) (1) (2)   BVI          Unlimited      183 days     100%           - -   - -          - -  - -
U.S. Treasury Securities (1)                  DGC/DGIC     Unlimited       1 Year      100%           - -   - -          - -  - -
U.S. Treasury Securities (1)                  DGC/DGIC     Unlimited       2 Years      50%           - -   - -          - -  - -

U.S. Government Agencies (OID only) (2)       BVI          Unlimited      183 days      50%           - -   - -          - -  - -

U.S. Government Agencies                      DGC/DGIC     Unlimited       1 Year       50%           - -   - -          - -  - -

Repurchase Agreements (3) (4)                 DGC/DGIC          $10M      2 months      50%           A2     A           - -  - -
Repurchase Agreements (3)                     DGC/DGIC          $20M      3 Months      50%          Aaa    AAA          - -  - -

Bankers Acceptances (4)                       DGC/DGIC          $10M      3 Months      50%           A2     A           - -  - -
Bankers Acceptances                           DGC/DGIC          $20M      6 Months      50%          Aaa    AAA          - -  - -

CD's(Dom/Euro/Yankee/Floating rate) (4)       DGC/DGIC /BVI     $10M      6 Months      50%           A2     A           - -  - -
CD's(Dom/Euro/Yankee/Floating rate)           DGC/DGIC /BVI     $20M       1 Year       50%          Aaa    AAA          - -  - -

Time Deposits (Domestic, Euro) (4)            DGC/DGIC /BVI     $10M      3 Months      50%           A2     A           - -  - -
Time Deposits (Domestic, Euro)                DGC/DGIC /BVI     $20M      6 Months      50%          Aaa    AAA          - -  - -

Corporate/Municipal Bonds (4)                 DGC/DGIC          $10M      3 Months      50%          - -    - -           A2   A

Corporate/Municipal Bonds                     DGC/DGIC          $20M      6 Months      50%          - -    - -          Aaa  AAA

Commercial Paper                              DGC/DGIC          $10M      1 Month       20%          - -    - -          A1    P1
Commercial Paper                              DGC/DGIC          $10M      3 Months      20%          - -    - -          A1+   P1

Eurocommercial Paper                          BVI               $10M      1 Month       20%          - -    - -          A1    P1
Eurocommercial Paper                          BVI               $10M      3 Months      20%          - -    - -          A1+   P1

Money Market Fund (w/Facility Banks)          DGC/DGIC          $20M      Daily         20%           A3     A-          Aaa  AAA
                                                                          Liquidity

Auction Preferreds and Notes                  DGC/DGIC          $10M      2 Months      20%          - -    - -          Aaa  AAA

<FN>
A minimum 50% of the domestic investment portfolio must be maintained in U.S. Treasuries.
BVI limits further restricted by Tax Department.  OID = Original Issue Discount.

(1) With permitted institutions only and secured only by U.S. Treasury and Agency collateral at 102%
    Mark to Market plus accrued interest:  (subject to investment criteria on banks).

(2) $10M limit for Credit Facility Banks with a bank rating of A3/A-.

</FN>
</TABLE>
<PAGE>