Exhibit 10.8 to
Form 10-Q











                                 $125,000,000


                               CREDIT AGREEMENT


                          Dated as of October 8, 1996

                                     among


                            ON COMMAND CORPORATION
                                as the Borrower

                                      and


                           THE LENDERS NAMED HEREIN

                                      and


                          NATIONSBANK OF TEXAS, N.A.
                          as the Administrative Agent










<PAGE>


                            Exhibits and Schedules


Exhibits


Exhibit A   -     Form of Administrative Questionnaire
Exhibit B   -     Form of Assignment and Acceptance
Exhibit C   -     Form of Borrowing Request
Exhibit D-1 -     Form of Competitive Bid Request
Exhibit D-2       -     Form of Notice of Competitive Bid Request
Exhibit D-3       -     Form of Competitive Bid
Exhibit D-4       -     Form of Competitive Accept/Reject Letter
Exhibit E   -     Form of Application for a Letter of Credit
Exhibit F   -     Form of Compliance Certificate

Schedules



Schedule 2.01(a)        -     Short Term Commitments
Schedule 2.01(b)        -     Long Term Commitments
Schedule 3.08     -     Subsidiaries
Schedule 3.09     -     Litigation
Schedule 3.10     -     Restrictive Material Agreements
Schedule 3.14     -     Taxes Owed by Spectradyne and SpectraVision
Schedule 3.16     -     ERISA Disclosure
Schedule 3.18     -     Insurance
Schedule 3.20     -     Environmental Matters
Schedule 4.02(h)  -     Certain    Spectradyne    FCC    Licenses    not
Transferred
Schedule 6.01     -     Subsidiary Indebtedness
Schedule 6.02     -     Liens
Schedule 6.04     -     Investments
Schedule 7.0            -     Modification of the Reorganization Plan


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                               TABLE OF CONTENTS

      ARTICLE I

                                  Definitions

      SECTION 1.01.     Defined Terms......................................  1
      SECTION 1.02.     Terms Generally.................................... 20

      ARTICLE II

                                  The Credits

      SECTION 2.01.     Commitments........................................ 20
      SECTION 2.02.     Loans.............................................. 21
      SECTION 2.03.     Competitive Bid Procedure.......................... 23
      SECTION 2.04.     Borrowing Procedure................................ 25
      SECTION 2.05.     Evidence of Debt; Repayment of Loans............... 26
      SECTION 2.06.     Fees............................................... 27
      SECTION 2.07.     Interest on Loans.................................. 28
      SECTION 2.08.     Default Interest................................... 29
      SECTION 2.09.     Alternate Rate of Interest......................... 29
      SECTION 2.10.     Termination      and      Reduction     of
                    Commitments; Extension of the Short Term
             Revolving Loan Maturity Date....................... 30
      SECTION 2.11.     Conversion and Continuation of Borrowings.......... 31
      SECTION 2.12.     Prepayment......................................... 33
      SECTION 2.13.     Reserve     Requirements;     Change    in
            Circumstances.................................................. 35
      SECTION 2.14.     Change in Legality................................. 36
      SECTION 2.15.     Indemnity.......................................... 37
      SECTION 2.16.     Pro Rata Treatment................................. 38
      SECTION 2.17.     Sharing of Setoffs................................. 38
      SECTION 2.18.     Payments........................................... 39
      SECTION 2.19.     Taxes.............................................. 39
      SECTION 2.20.     Assignment  of  Commitments  Under Certain
                        Circumstances; Duty to Mitigate.................... 43
      SECTION 2.21.     Letters of Credit.................................. 44

      ARTICLE III

                        Representations and Warranties

      SECTION 3.01.     Organization; Powers............................... 48
      SECTION 3.02.     Authorization...................................... 48
      SECTION 3.03.     Enforceability..................................... 49
      SECTION 3.04.     Governmental Approvals............................. 49


<PAGE>


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------------------------------------------------------------------------
                                       3
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      SECTION 3.05.     Financial Statements............................... 49
      SECTION 3.06.     No Material Adverse Change......................... 49
      SECTION 3.07.     Title  to  Properties;   Possession  Under
            Leases       49
      SECTION 3.08.     Subsidiaries....................................... 50
      SECTION 3.09.     Litigation; Compliance with Laws................... 50
      SECTION 3.10.     Agreements......................................... 50
      SECTION 3.11.     Federal Reserve Regulations........................ 51
      SECTION 3.12.     Investment  Company  Act;  Public  Utility
                        Holding Company Act................................ 51
      SECTION 3.13.     Use of Proceeds.................................... 51
      SECTION 3.14.     Tax Returns........................................ 51
      SECTION 3.15.     No Material Misstatements.......................... 51
      SECTION 3.16.     Employee Benefit Plans............................. 52
      SECTION 3.17.     Solvency........................................... 52
      SECTION 3.18.     Insurance.......................................... 52
      SECTION 3.19.     Labor Matters...................................... 53
      SECTION 3.20.     Environmental Matters.............................. 53
      SECTION 3.21.     Acquisition of Spectradyne......................... 54
      SECTION 3.22.     Survival    of     Representations     and
            Warranties, etc................................................ 54

      ARTICLE IV

                             Conditions of Lending

      SECTION 4.01.     All Credit Events.................................. 55
      SECTION 4.02.     First Credit Event................................. 55
      SECTION 4.03.     Increase of Long Term ............................. 58

      ARTICLE V

                             Affirmative Covenants

      SECTION 5.01.     Existence; Businesses and Properties............... 59
      SECTION 5.02.     Insurance.......................................... 59
      SECTION 5.03.     Obligations and Taxes.............................. 59
      SECTION 5.04.     Financial Statements, Reports, etc................. 60
      SECTION 5.05.     Litigation and Other Notices....................... 61
      SECTION 5.06.     Employee Benefits.................................. 61
      SECTION 5.07.     Maintaining     Records;     Access     to
                        Properties and Inspections......................... 61
      SECTION 5.08.     Use of Proceeds.................................... 62
      SECTION 5.09.     Compliance with Environmental Laws................. 62
      SECTION 5.10.     Compliance with Material Contracts................. 62


<PAGE>


      ARTICLE VI

                              Negative Covenants

      SECTION 6.01.     Indebtedness  of the  Subsidiaries  of the
            Borrower     63
      SECTION 6.02.     Liens.............................................. 63
      SECTION 6.03.     Sale   and   Lease   Back    Transactions;
                        Off-Balance Sheet Financings....................... 64
      SECTION 6.04.     Investments,   Acquisitions,   Loans   and
            Advances     65
      SECTION 6.05.     Mergers,   Consolidations   and  Sales  of
            Assets       65
      SECTION 6.06.     Dividends        and        Distributions;
                     Restrictions on Ability of Subsidiaries
             to Pay Dividends................................... 66
      SECTION 6.07.     Transactions with Affiliates....................... 67
      SECTION 6.08.     Limitation on Restrictive Agreements............... 67
      SECTION 6.09.     Leverage Ratio..................................... 67
      SECTION 6.10.     Coverage Ratio..................................... 68
      SECTION 6.11.     Amendments to Organizational Documents.  .......... 68

      ARTICLE VII

                               Events of Default


      ARTICLE VIII

                           The Administrative Agent


      ARTICLE IX

                                 Miscellaneous

      SECTION 9.01.     Notices............................................ 74
      SECTION 9.02.     Survival of Agreement.............................. 76
      SECTION 9.03.     Binding Effect..................................... 76
      SECTION 9.04.     Successors and Assigns............................. 76
      SECTION 9.05.     Expenses; Indemnity................................ 80
      SECTION 9.06.     Right of Setoff.................................... 81
      SECTION 9.07.     Applicable Law..................................... 81
      SECTION 9.08.     Waivers; Amendment................................. 81
      SECTION 9.09.     Interest Rate Limitation........................... 82
      SECTION 9.10.     ENTIRE AGREEMENT................................... 82
      SECTION 9.11.     WAIVER OF JURY TRIAL............................... 83
      SECTION 9.12.     Severability....................................... 83
      SECTION 9.13.     Counterparts....................................... 83
      SECTION 9.14.     Headings........................................... 83
      SECTION 9.15.     Jurisdiction;   Consent   to   Service  of
            Process      83
      SECTION 9.16.     Confidentiality.................................... 84



<PAGE>


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                            ON COMMAND CORPORATION

                                 $125,000,000

                               CREDIT AGREEMENT


      This CREDIT  AGREEMENT  (this  "Agreement"),  dated as of October 8, 1996,
among ON COMMAND  CORPORATION,  a Delaware  corporation  (the  "Borrower"),  the
Lenders (as defined in Article I hereof),  and  NATIONSBANK  OF TEXAS,  N.A.,  a
national banking  association,  as issuing bank (in such capacity,  the "Issuing
Bank"),  and as  administrative  agent (in such  capacity,  the  "Administrative
Agent") for the Lenders.

      The Borrower  has  requested  the Lenders to extend  credit in the form of
revolving loans, competitive bid rate loans, and letters of credit (such letters
of credit in an aggregate face amount not to exceed  $10,000,000),  in a maximum
aggregate  principal  amount for all such facilities at any time outstanding not
in excess of $125,000,000. The proceeds of the Loans are to be used to refinance
existing indebtedness and for general corporate purposes of the Borrower and its
Subsidiaries,  including,  without  limitation,  working  capital and  strategic
acquisitions permitted under the terms hereof.

      The Lenders are willing to extend a $125,000,000 aggregate credit facility
to the  Borrower in the form of either  revolving  loans,  competitive  bid rate
loans or  letters of credit,  as  elected by the  Borrower,  in each case on the
terms and subject to the conditions set forth herein.  Accordingly,  the parties
hereto agree as follows:

                                   ARTICLE I

                                  Definitions

      Defined  Terms.  As used in this  Agreement,  the following  terms
shall have the meanings specified below:

      "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

      "ABR Loan" shall mean any Loan bearing interest at the Alternate Base Rate
in accordance with the provisions of Article II hereof.

      "Acquisition"   shall  mean  the  acquisition  made  by  the  Borrower  in
accordance with the terms of the Acquisition Agreement.



<PAGE>


------------------------------------------------------------------------
      "Acquisition  Agreement" shall mean that certain Acquisition  Agreement by
and  among  the  Borrower,   Ascent,  the  Official  Creditors'   Committee  for
SpectraVision, Inc. and Certain of its Subsidiaries,  SpectraVision, Spectradyne
and other Debtors named therein, dated as of August 13, 1996, as amended through
the Closing Date.
------------------------------------------------------------------------

      "Adjusted LIBO Rate" shall mean, with respect to any Eurodollar  Borrowing
for any Interest Period, a simple per annum interest rate equal to the lesser of
(a) the Highest  Lawful Rate and (b) the sum of (i) the quotient of (x) the LIBO
Rate divided by (y) one minus the LIBOR Reserve Percentage, stated as a decimal,
plus (ii) the  Applicable  Percentage.  The  Adjusted  LIBO Rate shall  apply to
Interest Periods of one, two, three or six months,  or, if determined  available
by the  Administrative  Agent,  twelve  months.  The Adjusted LIBO Rate shall be
subject to availability  with respect to the Lenders and to Section 2.14 hereof.
Once  determined,  the  Adjusted  LIBO Rate shall  remain  unchanged  during the
applicable  Interest  Period,  except for changes to reflect  adjustments in the
LIBOR Reserve Percentage.

      "Administrative  Agent Fees" shall have the meaning  assigned to such term
in Section 2.06(b) hereof.

      "Administrative  Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A hereto.

      "Affiliate"  shall mean,  when used with  respect to a  specified  Person,
another Person that directly,  or indirectly through one or more intermediaries,
Controls  or is  Controlled  by or is  under  common  Control  with  the  Person
specified.

      "Alternate  Base Rate" shall mean,  for any day, a rate per annum (rounded
upwards,  if necessary,  to the next 1/100 of 1%) equal to the lesser of (a) the
Highest Lawful Rate and (b) sum of (i) the Applicable Percentage,  plus (ii) the
greater of (A) the Prime Rate in effect on such day,  and (B) the Federal  Funds
Effective  Rate in  effect  on such day plus 1/2 of 1%.  If for any  reason  the
Administrative  Agent  shall  have  determined  (which  determination  shall  be
conclusive  absent  manifest  error) that it is unable to ascertain  the Federal
Funds  Effective Rate for any reason,  including the inability or failure of the
Administrative  Agent to obtain  sufficient  quotations in  accordance  with the
terms of the  definition  thereof,  the Alternate  Base Rate shall be determined
without regard to clause (B) of the preceding sentence,  until the circumstances
giving rise to such inability no longer exist.  Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall
be  effective  on the  effective  date of such  change in the Prime  Rate or the
Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean the
rate  of  interest  per  annum  publicly  announced  from  time  to  time by the
Administrative Agent as its prime rate in effect at its office in Dallas, Texas;
each  change in the Prime Rate  shall be  effective  on the date such  change is
publicly  announced as being effective.  The term "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight  Federal
funds  transactions  with  members of the  Federal  Reserve  System  arranged by
Federal funds brokers,  as published on the next succeeding  Business Day by the
Federal  Reserve Bank of Dallas,  Texas or, if such rate is not so published for
any day that is a Business  Day, the average of the  quotations  for the day for
such transactions  received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

      "Applicable  Law" shall mean (a) in respect of any Person,  all provisions
of Laws of tribunals  applicable  to such Person,  and all orders and decrees of
all  courts and  arbitrators  in  proceedings  or actions to which the Person in
question is a party and (b) in respect of  contracts  made or  performed  in the
State of Texas,  "Applicable  Law" also means the laws of the  United  States of
America,  including,  without limiting the foregoing, 12 USC Sections 85 and 86,
as  amended  to the date  hereof  and as the same may be amended at any time and
from time to time  hereafter,  and any other  statute  of the  United  States of
America now or at any time hereafter  prescribing  the maximum rates of interest
on  loans  and  extensions  of  credit,  and the  laws of the  State  of  Texas,
including, without limitations,  Articles 5069-1.04 and 5069-1.07(a),  Title 79,
Revised Civil Statutes of Texas,  1925, as amended ("Art.  1.04"), and any other
statute of the State of Texas now or at any time hereafter  prescribing  maximum
rates of interest on loans and  extensions  of credit;  provided  however,  that
pursuant to Article  5069-15.10(b),  Title 79,  Revised Civil Statutes of Texas,
1925, as amended,  the Borrower  agrees that the provisions of Chapter 15, Title
79,  Revised Civil Statutes of Texas,  1925, as amended,  shall not apply to the
Loans hereunder.

      "Applicable  Percentage"  shall  mean,  for any day,  with  respect to any
Eurodollar Loan or ABR Loan (other than any Eurodollar  Competitive  Loan),  the
applicable  percentage set forth below under the caption  "Eurodollar Margin" or
"ABR Margin",  as the case may be, based upon the Leverage Ratio, then in effect
for purposes hereof:

                              Eurodollar        ABR
Leverage Ratio                  Margin          Margin

Category 1                        0.625%        0%

Greater than or equal
to 2.00 to 1.00

Category 2                        0.500%        0%

Greater than or equal to
1.00 to 1.00 but less than
2.00 to 1.00

Category 3                        0.375%        0%

Less than 1.00 to 1.00

      Except as set forth  below,  the Leverage  Ratio  utilized for purposes of
determining  the Eurodollar  Margin and ABR Margin shall be that in effect as of
the last day of the most  recent  fiscal  quarter of the  Borrower in respect of
which financial statements have been delivered pursuant to this Agreement.  From
the date hereof until the earliest to occur of the initial delivery of financial
statements  pursuant to Section 5.04(a) or (b) hereof, the Borrower's failure to
timely  deliver  such  financial  statements  or the  occurrence  of an Event of
Default,  the Leverage Ratio shall be deemed to be within Category 1 above.  The
Applicable Percentage from time to time in effect shall be based on the Leverage
Ratio from time to time in effect, and each change in the Applicable  Percentage
resulting from a change in (or the initial  establishment of) the Leverage Ratio
shall be effective with respect to all Loans,  Commitments and Letters of Credit
outstanding on and after the date of delivery to the Administrative Agent of the
financial statements and certificates  required by Section 5.04(a) or (b) hereof
indicating such change to and including the date immediately  preceding the next
date of  delivery  of such  financial  statements  and  certificates  indicating
another such change. Notwithstanding the foregoing, (a) at any time during which
the Borrower has failed to deliver the  financial  statements  and  certificates
required  by  Section  5.04(a)  or (b)  hereof,  or (b) at any  time  after  the
occurrence and during the continuance of an Event of Default, the Leverage Ratio
shall be deemed  to be in  Category  1 above for  purposes  of  determining  the
Applicable Percentage.

      "Application"  shall  mean  any  stand-by  letter  of  credit  application
delivered to the  Administrative  Agent for or in connection  with any Letter of
Credit pursuant to Section 2.21 hereof, in the  Administrative  Agent's standard
form for stand-by letters of credit,  the form of which, on the Closing Date, is
attached as Exhibit E hereto.

      "Art.  1.04"  has  the  meaning  specified  in the  definition  of
"Applicable Law".

      "Ascent"  shall  mean  Ascent   Entertainment   Group,  Inc.,  a  Delaware
corporation and majority owner of the Borrower.

      "Ascent  Agreements"  shall mean the  Services  Agreement,  the  Corporate
Agreement and the Tax Sharing  Agreement,  in each case between the Borrower and
Ascent, in the forms delivered to the  Administrative  Agent, as such agreements
may hereafter be amended as permitted by, and in accordance with, the provisions
of this Agreement.

      "Ascent Loan  Facility"  shall mean that  certain loan  facility to Ascent
pursuant  to that  certain  Amended and  Restated  Credit  Agreement,  dated the
Closing  Date from a group of  financial  institutions  with the  Administrative
Agent as the administrative agent thereunder.
      "Asset  Disposition"  shall  have the  meaning  assigned  to it in
Section 6.05(b) hereof.

      "Assignment  and  Acceptance"  shall  mean an  assignment  and  acceptance
entered  into by a Lender and an assignee,  and  accepted by the  Administrative
Agent,  in the form of Exhibit B hereto or such other form as shall be  approved
by the Administrative Agent.

      "Attributable  Debt"  shall  mean  as of any  date of  determination,  the
present  value  (discounted  semiannually  at the  interest  rate  set  forth or
implicit  in the  terms of such  transaction,  as  determined  by the  principal
accounting or financial  officer of the Borrower) of the  obligation of a lessee
for rental  payments  pursuant to any  Equipment  Lease  Transaction  during the
remaining term of such  Equipment  Lease  Transaction  (including any period for
which the lease relating thereto has been extended), such rental payments not to
include amounts  payable by the lessee for  maintenance and repairs,  insurance,
taxes, assessments and similar charges.

      "Board" shall mean the Board of Governors of the Federal Reserve System of
the United States of America.

      "Borrowing"  shall  mean  Loans of a single  Type made by the  Lenders  in
accordance with the terms hereof (or, in the case of a Competitive Borrowing, by
the Lender or Lenders  whose  Competitive  Bids have been  accepted  pursuant to
Section 2.03 hereof) on a single date and as to which a single  Interest  Period
is in effect.

      "Borrowing  Request"  shall mean a request by the  Borrower in  accordance
with the terms of Section 2.04 hereof and substantially in the form of Exhibit C
hereto.

      "Business Day" shall mean any day other than a Saturday,  Sunday or day on
which banks in Dallas, Texas or New York, New York are authorized or required by
Law to close; provided,  however, that when used in connection with a Eurodollar
Loan,  the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.

      "Capital Lease  Obligations"  of any Person shall mean the  obligations of
such  Person  to pay  rent  or  other  amounts  under  any  lease  of (or  other
arrangement  conveying  the  right  to use)  real  or  personal  property,  or a
combination  thereof,  which  obligations  are  required  to be  classified  and
accounted  for as capital  leases on a balance  sheet of such Person under GAAP,
and the  amount of such  obligations  shall be the  capitalized  amount  thereof
determined in accordance with GAAP.

      "Capital Stock" shall mean, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person  that is a  corporation  and each class of  partnership  interests
(including  without  limitation,  general,  limited and preference units) in any
Person that is a partnership.

      A "Change in Control" shall be deemed to have occurred if (a) Ascent fails
to own  directly or  indirectly,  beneficially  or of record,  shares of Capital
Stock  of the  Borrower  representing  50.1% or more of the  aggregate  ordinary
voting power of the Borrower,  or (b) Ascent shall fail to control a majority of
the seats on the Board of Directors of the Borrower.

      "Closing Date" shall mean the date of the first Credit Event.

      "Code" shall mean the Internal  Revenue Code of 1986, as amended from time
to time.

      "Commitment"  shall  mean,  with  respect  to  each  Lender,  such
Lender's Short Term Commitment and Long Term Commitment.

      "Commitment  Fee" shall have the meaning  assigned to such term in Section
2.06(d) hereof.

      "Competitive  Bid" shall  mean an offer by a Lender to make a  Competitive
Loan pursuant to Section 2.03(b) hereof in the form of Exhibit D-3 hereto.

      "Competitive Bid  Accept/Reject  Letter" shall mean a notification made by
the  Borrower  pursuant  to Section  2.03(d)  hereof in the form of Exhibit  D-4
hereto.

      "Competitive  Bid Rate" shall mean, as to any Competitive  Bid, (i) in the
case of a  Eurodollar  Loan,  the  Margin,  and (ii) in the case of a Fixed Rate
Loan, the fixed rate of interest  offered by the Lender making such  Competitive
Bid.

      "Competitive  Bid  Request"  shall  mean a  request  made by the  Borrower
pursuant to Section 2.03(a) hereof in the forte of Exhibit D-1 hereto.

      "Competitive Borrowing" shall mean a Borrowing consisting of a Competitive
Loan  or  concurrent   Competitive  Loans  from  the  Lender  or  Lenders  whose
Competitive Bids for such Borrowing have been accepted by the Borrower under the
bidding procedure described in Section 2.03 hereof.

      "Competitive  Loan"  shall  mean  a  Loan  from  a  Lender  to the
Borrower  pursuant to the bidding  procedure  described in  Section 2.03
hereof.  Each  Competitive  Loan shall be a Eurodollar  Competitive Loan
or a Fixed Rate Loan.

      "Compliance    Certificate"   shall   mean   a   compliance   certificate,
substantially in the form of Exhibit F hereto,  and certifying that there exists
no Default or Event of Default at the time of delivery thereof.

      "Consolidated  Assets"  shall mean,  with  respect to the Borrower and its
Subsidiaries, at any date, the consolidated total assets of the Borrower and its
Subsidiaries at such date, as determined in accordance with GAAP.

      "Consolidated  Cash  Interest  Expense"  shall  mean,  for any  period  of
determination,  the gross interest  expense of the Borrower and its Subsidiaries
for such period  determined on a  consolidated  basis in  accordance  with GAAP,
excluding  any amounts not paid or not  required  (whether  during or after such
period)  to be paid in cash.  For  purposes  of the  foregoing,  gross  interest
expense shall be determined after giving effect to any net cash payments made or
received by the Borrower with respect to rate protection agreements entered into
as a hedge  against  interest rate  exposure.  Gross  interest  expense shall be
calculated in  accordance  with GAAP as in effect and applied by the Borrower on
the date of this  Agreement and,  accordingly,  shall exclude the effects of any
changes in GAAP or its application by the Borrower after the date hereof.

      "Consolidated  Liabilities"  shall mean,  with respect to the Borrower and
its  Subsidiaries,  at any  date,  the  consolidated  total  liabilities  of the
Borrower and its  Subsidiaries  at such date, as  determined in accordance  with
GAAP.

      "Consolidated Tangible Net Worth" shall mean, at any date, with respect to
the Borrower and its  Subsidiaries  on a consolidated  basis,  the excess of the
Consolidated Assets over Consolidated  Liabilities excluding,  however, from the
determination  of  Consolidated  Assets (a) except as otherwise  provided in the
provision  hereto,  all assets which would be  classified as  intangibles  under
GAAP,  including  goodwill  (whether  representing  the excess of cost over book
value of assets  acquired or otherwise),  organizational  expenses,  trademarks,
trade names,  copyrights,  patents, patent applications,  licenses and rights in
any thereof and (b) treasury stock held as an asset.

      "Consolidated   Total  Indebtedness"  shall  mean,  for  any  Person,  all
Indebtedness  of such  Person  and its  consolidated  subsidiaries  (other  than
Indebtedness  referred  to in  clause  (h)  of the  definition  of  such  term),
determined on a consolidated basis in accordance with GAAP.

      "Control" shall mean the possession,  directly or indirectly, of the power
to direct or cause the  direction  of the  management  or  policies of a Person,
whether  through the ownership of voting  securities,  by contract or otherwise,
and "Controlling and "Controlled" shall have meanings correlative thereto.

      "Corporate   Restructuring"   shall  mean  that  series  of   transactions
consisting of the Merger, the Acquisition and the  Reorganization  Plan, and the
related  issuance of the  Borrower's  Capital Stock and Warrants for the Capital
Stock of the Borrower, as each is described in the S-4 Registration Statement.

      "Coverage  Ratio"  shall  mean,  on any  date  for  the  Borrower  and its
Subsidiaries on a consolidated  basis, the ratio of (a) EBITDA for the four most
recently  completed  consecutive  fiscal  quarters,  to  (b)  Consolidated  Cash
Interest Expense of the Borrower and its Subsidiaries for the four most recently
completed consecutive fiscal quarters.

      "Credit  Event"  shall have the  meaning  assigned to such term in Section
4.01 hereto.

      "Debtor  Relief Laws" shall mean  applicable  bankruptcy,  reorganization,
moratorium,  or similar Laws, or principles of equity  affecting the enforcement
of creditors' rights generally.

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

      "dollars" or "$" shall mean lawful  money of the United  States of
America.

      "EBITDA" shall mean, with respect to any Person and its  subsidiaries on a
consolidated  basis for any period,  the  consolidated net income of such Person
and its subsidiaries for such period, computed in accordance with GAAP, plus, to
the extent  deducted  in  computing  such  consolidated  net income and  without
duplication,  the sum of (a) income  tax  expense,  (b)  interest  expense,  (c)
depreciation  and  amortization  expense,  (d)  allocation of income to minority
interests in earnings of consolidated  subsidiaries and (e) extraordinary losses
(including  restructuring  provisions)  during such period minus,  to the extent
added in computing such  consolidated  net income and without  duplication,  (y)
extraordinary  gains during such period and (z) allocation of losses to minority
interests in earnings of consolidated  subsidiaries.  EBITDA shall be calculated
in accordance  with GAAP as in effect and applied by the Borrower on the date of
this  Agreement  and,  accordingly,  shall exclude the effects of any changes in
GAAP or its application by the Borrower after the date hereof.

      "EDS Agreement" shall mean the Agreement among  SpectraVision,  Electronic
Data Systems  Corporation and EDS Technical  Products  Corporation,  dated as of
August 5, 1996.

      "Environment"  shall  mean  ambient  air,  surface  water and  groundwater
(including  potable water,  navigable  water and wetlands),  the land surface or
subsurface  strata,  the workplace or as otherwise  defined in any Environmental
Law.

      "Equipment  Lease  Transaction"  shall mean any transaction or arrangement
(other than (a) a Capital Lease Obligation reflected as such on the consolidated
financial  statements of the Borrower or (b) an operating lease) (i) pursuant to
which the Borrower or any of its  Subsidiaries  sells or transfers any equipment
or  fixtures  used or useful in its  business,  whether  now owned or  hereafter
acquired,  to any other Person,  and thereafter rents or leases such property or
other  property  which it intends to use for  substantially  the same purpose or
purposes as the property being sold or transferred or (ii) pursuant to which the
Borrower or any of its  Subsidiaries  rents or leases from any other  Person any
equipment or fixtures  used or useful in its  business  and which,  although not
required  to be  accounted  for as a  Capital  Lease  Obligation,  in  substance
represents the financing of the  acquisition of such property by the Borrower or
such Subsidiary.

      "Environmental  Claim"  shall  mean any  written  accusation,  allegation,
notice of violation,  claim,  demand,  order,  directive,  consent decree,  cost
recovery  action or other cause of action by, or on behalf of, any  Governmental
Authority or any Person for damages,  injunctive or equitable  relief,  personal
injury (including sickness,  disease or death),  Remedial Action costs, tangible
or intangible property damage,  natural resource damages,  nuisance,  pollution,
any adverse effect on the Environment caused by any Hazardous  Material,  or for
fines,  penalties  or  restrictions,  resulting  from  or  based  upon:  (a) the
existence,  or the continuation of the existence, of a Release (including sudden
or  non-sudden,  accidental  or  non-accidental  Releases);  (b) exposure to any
Hazardous Material; (c) the presence,  use, handling,  transportation,  storage,
treatment or disposal of any Hazardous Material; or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.

      "Environmental  Law" shall mean any and all applicable  present and future
treaties,  Laws, codes,  judgments,  injunctions,  notices or binding agreements
issued,  promulgated or entered into by any Governmental Authority,  relating in
any way to the  Environment,  preservation or reclamation of natural  resources,
the management,  Release or threatened  Release of any Hazardous  Material or to
health and safety matters,  including the Comprehensive  Environmental Response,
Compensation  and Liability Act of 1980, as amended by the Superfund  Amendments
and  Reauthorization  Act of  1986,  42  U.S.C.  " 9601  et  seq.  (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and  Hazardous  and Solid Waste  Amendments of 1984, 42
U.S.C.  " 6901 et seq., the Federal Water  Pollution  Control Act, as amended by
the Clean  Water Act of 1977,  33  U.S.C.  " 1251 et seq.,  the Clean Air Act of
1970, 42 U.S.C. " 7401 et seq., as amended,  the Toxic Substances Control Act of
1976, 15 U.S.C. " 2601 et seq., the Occupational  Safety and Health Act of 1970,
as amended by 29 U.S.C.  " 651 et seq.,  the  Emergency  Planning and  Community
Right-to-Know  Act of 1986, 42 U.S.C.  " 11001 et seq.,  the Safe Drinking Water
Act of 1974, as amended by 42 U.S.C. " 300(f) et seq.,  the Hazardous  Materials
Transportation  Act, 49 U.S.C. " 5101 et seq.,  and any similar or  implementing
state or local law, and all amendments or regulations promulgated thereunder.

      "Environmental  Permit"  shall mean any permit,  approval,  authorization,
certificate,  license,  variance,  filing or permission  required by or from any
Governmental Authority pursuant to any Environmental Law.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.

      "ERISA  Affiliate"  shall  mean any  trade  or  business  (whether  or not
incorporated) that, together with the Borrower,  is treated as a single employer
under  Section  414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and  Section  412 of the Code,  is treated as a single  employer  under
Section 414 of the Code.

      "ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder,  with respect to a Plan; (b)
the  adoption of any  amendment  to a Plan that would  require the  provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c)
the existence with respect to any Plan of an  "accumulated  funding  deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA),  whether or not
waived;  (d) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an  application  for a waiver of the minimum  funding  standard with
respect to any Plan; (e) the incurrence of any liability under Title IV of ERISA
upon the termination of any Plan or the withdrawal or partial  withdrawal of the
Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f)
the receipt by the Borrower or any ERISA  Affiliate  from the PBGC of any notice
relating to the intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan;  (g) the receipt by the Borrower or any ERISA  Affiliate
of  any  notice   concerning  the  imposition  of  Withdrawal   Liability  or  a
determination  that a Multiemployer  Plan is, or is expected to be, insolvent or
in  reorganization,  within  the  meaning  of  Title  IV of  ERISA;  and (h) the
occurrence of a "prohibited  transaction"  with respect to which the Borrower or
any of its  Subsidiaries  is a  "disqualified  person"  (within  the  meaning of
Section  4975 of the Code) or with  respect  to which the  Borrower  or any such
Subsidiary could otherwise be liable.

      "Eurodollar   Borrowing"  shall  mean  a  Borrowing  comprised  of
Eurodollar Loans.

      "Eurodollar   Competitive   Borrowing"   shall  mean  a  Borrowing
comprised of Eurodollar Competitive Loans.

      "Eurodollar  Competitive  Loan" shall mean any  Competitive  Loan  bearing
interest at a rate  determined by reference to the LIBO Rate in accordance  with
the provisions of Article II.

      "Eurodollar  Loan"  shall mean any  Eurodollar  Revolving  Loan or
Eurodollar Competitive Loan.

      "Eurodollar  Revolving  Loans" shall mean Revolving Loans bearing interest
at a rate  determined by reference to the Adjusted LIBO Rate in accordance  with
the provisions of Article II hereof.

      "Event of Default" shall have the meaning assigned to such term in Article
VII hereof.

      "Facility  Fee" shall have the  meaning  assigned  to such term in Section
2.06(a) hereof.

      "Fee  Letters"  shall mean that certain Fee Letter dated  October 8, 1996,
between the Borrower  and the  Administrative  Agent,  and any other fee letters
executed from time to time among the Borrower,  the Administrative Agent and the
Lenders,  as each may be amended,  extended,  increased,  revised or substituted
from time to time.

      "Fees" shall mean the Facility  Fees,  the  Commitment  Fees,  the
Administrative  Agent Fees, the L/C  Participation  Fees and the Issuing
Bank Fees.

      "Financial  Officer"  of any  corporation  shall mean the chief  financial
officer,   principal  accounting  officer,   Treasurer  or  Controller  of  such
corporation.

      "Fixed  Rate  Borrowing"  shall  mean a  Borrowing,  comprised  of
Fixed Rate Loans.

      "Fixed Rate Loan" shall mean any  Competitive  Loan bearing  interest at a
fixed  percentage rate per annum  (expressed in the form of a decimal to no more
than four  decimal  places)  specified  by the  Lender  making  such Loan in its
Competitive Bid.

      "GAAP" shall mean generally accepted accounting principles.

      "Governmental  Authority" shall mean any Federal,  state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.

      "Guarantee" of or by any Person shall mean any  obligation,  contingent or
otherwise,  of such  Person  guaranteeing  or  having  the  economic  effect  of
guaranteeing any Indebtedness of any other Person (the "primary obligor") in any
manner,  whether  directly or  indirectly,  and including any obligation of such
Person,  direct or indirect,  (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such  Indebtedness or to purchase (or to advance
or supply  funds for the  purchase  of) any  security  for the  payment  of such
Indebtedness,  (b) to purchase or lease property, securities or services for the
purpose  of  assuring  the owner of such  Indebtedness  of the  payment  of such
Indebtedness,  (c) to  maintain  working  capital,  equity  capital or any other
financial  statement  condition  or  liquidity  of the primary  obligor so as to
enable the  primary  obligor to pay such  Indebtedness  or (d) to  guaranty  the
obligations,  payments by or performance of, a Person that is not a wholly owned
direct or indirect subsidiary of the Borrower;  provided, however, that the term
Guarantee  shall not  include  endorsements  for  collection  or  deposit in the
ordinary course of business.

      "Guarantors"  shall mean all Wholly Owned  Subsidiaries  of the  Borrower,
except  those   Subsidiaries  of  the  Borrower  which  are  foreign   organized
Subsidiaries.

      "Hazardous  Materials" shall mean all explosive or radioactive  substances
or wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous  wastes,  including  petroleum  or  petroleum  distillates,  asbestos or
asbestos-containing    materials,    polychlorinated   biphenyls   ("PCBs")   or
PCB-containing  materials or equipment,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

      "Highest  Lawful Rate" shall mean at the  particular  time in question the
maximum  rate of  interest  which,  under  Applicable  Law,  any  Lender is then
permitted to charge on the  Obligations.  If the maximum rate of interest which,
under Applicable Law, any Lender is permitted to charge on the Obligations shall
change after the date  hereof,  the Highest  Lawful Rate shall be  automatically
increased  or  decreased,  as the  case  may  be,  from  time  to time as of the
effective  time of each change in the Highest  Lawful Rate without notice to the
Borrower.  For purposes of determining the Highest Lawful Rate under  Applicable
Law,  the  applicable  rate  ceiling  shall be (a) the  indicated  rate  ceiling
described in and computed in accordance with the provisions of Section (a)(1) of
Art. l.04; or (b) provided notice is given as required in Section (h)(1) of Art.
1.04,  either the annualized  ceiling or quarterly  ceiling computed pursuant to
Section (d) of Art. 1.04; provided, however, that at any time the indicated rate
ceiling,  the annualized ceiling or the quarterly ceiling, as applicable,  shall
be less  than  18% per  annum or more  than 24% per  annum,  the  provisions  of
Sections  (b)(1) and (2) of said Art.  1.04 shall  control for  purposes of such
determination, as applicable.

      "Indebtedness"  of any Person  shall mean,  without  duplication,  (a) all
obligations  of such Person for borrowed  money or with respect to deposits with
such Person or advances to such Person of any kind, (b) all  obligations of such
Person evidenced by bonds,  debentures,  notes or similar  instruments,  (c) all
obligations  of such Person  under  conditional  sale or other  title  retention
agreements  relating to property or assets  purchased  by such  Person,  (d) all
obligations  of such Person issued or assumed as the deferred  purchase price of
property or services  (excluding trade accounts payable and accrued  obligations
incurred in the  ordinary  course of business,  and  excluding  any  obligations
relating to operating leases), (e) all Indebtedness of others secured by (or for
which the holder of such  Indebtedness  has an  existing  right,  contingent  or
otherwise,  to be secured  by) any Lien on  property  owned or  acquired by such
Person,  whether or not the obligations  secured thereby have been assumed,  (f)
all Guarantees by such Person, (g) all Capital Lease Obligations of such Person,
(h) all net  obligations  of such Person in respect of interest rate  protection
agreements,  foreign currency exchange  agreements or other interest or exchange
rate hedging  arrangements  and (i) all obligations of such Person as an account
party in respect to letters of credit and bankers' acceptances. The Indebtedness
of any Person shall include the  Indebtedness  of any  partnership in which such
Person is a general partner.

      "Interest  Payment Date" shall mean,  with respect to any Loan, each March
31, June 30,  September  30 and December 31 of each year during the term of this
Agreement.

      "Interest  Period"  shall  mean (a) as to any  Eurodollar  Borrowing,  the
period  commencing on the date of such  Borrowing and ending on the  numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day)  in the  calendar  month  that  is 1, 2, 3 or 6  months  thereafter,  or if
determined available by the Administrative  Agent, 12 months thereafter,  as the
Borrower may elect,  (b) as to any ABR Borrowing,  the period  commencing on the
date of such  Borrowing  and ending on the  earliest of (i) the next  succeeding
March 31, June 30,  September 30 or December  31, (ii) the Short Term  Revolving
Loan Maturity Date or the Long Term Revolving Loan Maturity Date, as applicable,
and (iii) the date such  Borrowing  is  converted  to a Borrowing of a different
Type in  accordance  with Section 2.11 hereof or repaid or prepaid in accordance
with  Section  2.12  hereof and (c) as to any Fixed Rate  Borrowing,  the period
commencing on the date of such Borrowing and ending on the date specified in the
Competitive  Bids in which the offers to make the Fixed  Rate  Loans  comprising
such Borrowing  were extended,  which shall not be earlier than seven days after
the date of such  Borrowing  or  later  than  360  days  after  the date of such
Borrowing;  provided,  however,  that if any Interest  Period would end on a day
other than a Business Day,  such  Interest  Period shall be extended to the next
succeeding Business Day unless, in the case of a Eurodollar Borrowing only, such
next  succeeding  Business Day would fall in the next calendar  month,  in which
case such Interest Period shall end on the next preceding Business Day. Interest
shall  accrue  from and  including  the first day of an  Interest  Period to but
excluding the last day of such Interest Period.

      "Issuing Bank" shall mean  NationsBank  (or any Affiliate  thereof) or any
other Lender that may become an Issuing Bank pursuant to Section 2.21(i) hereof,
in each case with respect to Letters of Credit issued by it.

      "Issuing  Bank  Fees"  shall  have the  meaning  assigned  to such term in
Section 2.06(c) hereof.

      "Law" shall mean any constitution,  statute,  law, ordinance,  regulation,
rule, order, writ, injunction, or decree of any tribunal.

      "L/C  Commitment"  shall mean the  commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.21 hereof.

      "L/C  Disbursement"  shall  mean a  payment  or  disbursement  made by the
Issuing Bank pursuant to a Letter of Credit.

      "L/C Exposure" shall mean at any time the sum of (a) the aggregate undrawn
amount of all outstanding  Letters of Credit at such time plus (b) the aggregate
principal amount of all L/C  Disbursements  that have not yet been reimbursed at
such time.  The L/C  Exposure  of any Lender at any time shall mean its Pro Rata
Percentage of the aggregate L/C Exposure at such time.

      "L/C  Participation  Fee" shall have the meaning  assigned to such term in
Section 2.06(c) hereof.

      "Lenders"  shall mean (a) the  financial  institutions  listed on Schedule
2.01 hereto (other than any such financial  institution  that has ceased to be a
party hereto  pursuant to an Assignment  and  Acceptance)  and (b) any financial
institution  that has  become  a party  hereto  pursuant  to an  Assignment  and
Acceptance.

      "Letter of Credit"  shall mean any  letter of credit  issued  pursuant  to
Section 2.21 hereof.

      "Leverage  Ratio"  shall  mean,  on any  date  for  the  Borrower  and its
Subsidiaries  on a consolidated  basis,  the ratio of (a) the Borrower's and its
Subsidiaries'  Consolidated Total Indebtedness to (b) EBITDA of the Borrower and
its  consolidated  Subsidiaries  for the most  recently  completed  four  fiscal
quarters.

      "LIBO Rate" shall mean,  for any  Eurodollar  Borrowing  for any  Interest
Period  therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the
nearest one-one  hundredth  (1/100th) of one percent (1%)) appearing on Telerate
Page 3750 (or any  successor  page) as the  London  interbank  offered  rate for
deposits in United States dollars at approximately  11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period.  If for any reason
such rate is not available,  the term "LIBO Rate" shall mean, for any Eurodollar
Borrowing for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary,  to the nearest one-one  hundredth  (1/100th) of one percent (1%))
appearing on Reuters Screen LIBO page as the London  interbank  offered rate for
deposits in United States 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.

      "LIBOR  Reserve  Percentage"  shall  mean,  with  respect to any  Interest
Period,  the percentage which is in effect on the first day of such period under
Regulation D of the Board of Governors of the Federal  Reserve  System,  as such
regulation may be amended from time to time, as the maximum reserve  requirement
(including,  without limitation, any basic, supplemental,  emergency or marginal
reserves) with respect to  eurocurrency  liabilities (as that term is defined in
Regulation  D),  applicable  to any  Lender.  The  Adjusted  LIBO  Rate  for any
Eurodollar  Borrowing  shall be  adjusted  for any  change in the LIBOR  Reserve
Percentage.

      "Lien" shall mean,  with respect to any asset,  (a) any mortgage,  deed of
trust,  lien,  pledge,  encumbrance,  charge or security  interest in or on such
asset,  (b) the  interest  of a vendor or a lessor  under any  conditional  sale
agreement,  capital lease or title  retention  agreement (or any financing lease
having  substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities,  any purchase  option,  call or
similar right of a third party with respect to such securities.

      "Loans" shall mean the Short Term Revolving Loans,  Competitive  Loans and
the  Long  Term  Revolving  Loans  made in  accordance  with  the  terms of this
Agreement,  and "Loan" shall mean any of the above, as applicable in the context
used.

      "Loan Papers" shall mean this Agreement,  the promissory  notes evidencing
the Loans, all guaranties executed by the Guarantors,  Fee Letters,  all Letters
of Credit, all Applications and all other agreements between the Borrower or any
Subsidiary of the Borrower and the Administrative Agent related to any Letter of
Credit,  Assignment  and  Acceptances,   post-closing  letters,  and  all  other
documents,  instruments,  agreements, or certificates executed or delivered from
time to time by any Person in connection  with this Agreement or as security for
the  Obligations  hereunder,  as each such  agreement may be amended,  modified,
substituted, replaced or extended from time to time.

      "Long Term  Commitment"  shall  mean,  with  respect to each  Lender,  the
commitment  of such Lender to make Long Term  Revolving  Loans  hereunder as set
forth on Schedule 2.01(b) hereto,  or in the Assignment and Acceptance  pursuant
to which such Lender assumed its Long Term  Commitment,  as  applicable,  as the
same may be (a)  increased  from time to time  pursuant  to the terms of Section
4.03 hereof,  (b) reduced from time to time pursuant to (i) Section 2.10 hereof,
(ii) Section 2.20 hereof, (iii) the amount of Letters of Credit issued under the
Long Term Commitment in accordance with Section 2.21 hereof, and (iv) the amount
of Competitive  Loans issued under the Long Term  Commitment in accordance  with
Sections  2.02 and 2.03  hereof and (c) reduced or  increased  from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04 hereof.

      "Long Term Revolving Loan Maturity Date" shall mean, the date that is five
years after the date hereof, or such earlier date as the Obligations are due and
payable in full (whether by scheduled  reduction,  acceleration,  termination or
otherwise).

      "Long Term Revolving  Loans" shall mean the long term revolving Loans made
available by the Lenders to the Borrower  pursuant to the Long Term  Commitments
and Section 2.01(b) hereof.  Each Long Term Revolving Loan shall be a Eurodollar
Revolving Loan or an ABR Revolving Loan.

      "Margin"  shall mean, as to any  Eurodollar  Competitive  Loan, the margin
(expressed  as a  percentage  rate per annum in the form of a decimal to no more
than four  decimal  places) to be added to or  subtracted  from the LIBO Rate in
order to determine  the interest  rate  applicable to such Loan, as specified in
the Competitive Bid relating to such Loan.

      "Margin Stock" shall have the meaning  assigned to such term in Regulation
U.

      "Material  Adverse  Effect" shall mean (a) a materially  adverse effect on
the business, assets, operations, or financial condition of the Borrower and its
Subsidiaries  taken as a whole,  (b) material  impairment  of the ability of the
Borrower to perform any of its  obligations  under this  Agreement  or under any
other  Loan  Paper or (c)  material  impairment  of the  enforceability  of this
Agreement, any other Loan Paper or the Loans.

      "Maximum  Amount"  means the  maximum  amount  of  interest  which,  under
Applicable Law, Administrative Agent or any Lender is permitted to charge on the
Obligations.

      "Merger  Agreement" shall mean that certain  Agreement and Plan of Merger,
by and among the Borrower,  On Command Merger  Corporation  and OCV, dated as of
August 13, 1996.

      "Merger" shall mean the merger of On Command Merger  Corporation  with and
into OCV, in accordance with the terms of the Merger Agreement.

      "Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

      "NationsBank"  shall mean  NationsBank of Texas,  N.A., a national
banking association.

      "Net Cash Proceeds"  shall mean with respect to any Asset  Disposition (i)
the gross  amount of any cash paid to or received by the  Borrower or any of its
Subsidiaries  in respect of such Asset  Disposition  (including  (a) payments of
principal or interest,  or cash proceeds from the sale or other  disposition  in
respect of noncash  consideration  permitted under Section 6.05 hereof,  and (b)
insurance  proceeds,  condemnation  awards  and  payments  from  time to time in
respect of installment  obligations,  if applicable),  less (ii) the amount,  if
any, of (x) the Borrower's good faith best estimate of all taxes attributable to
such Asset  Disposition which it in good faith expects to be paid in the taxable
year in which such Asset  Disposition  shall occur or in the next taxable  year,
(y)  reasonable  and customary  fees,  discounts,  commissions,  costs and other
expenses  (other  than those  payable to the  Borrower or any  Affiliate  of the
Borrower),  which are incurred in connection with such Asset Disposition and are
payable by the  Borrower  or any of its  Subsidiaries  and (z) in the case of an
Asset  Disposition  that is a sale,  transfer or other  disposition of assets or
properties,  proceeds  required to discharge  Liens in respect of such assets or
properties permitted by Section 6.02 hereof.

      "Obligations" shall mean all present and future obligations,  indebtedness
and liabilities,  and all renewals and extensions of all or any part thereof, of
the  Borrower  and each  Obligor to the  Lenders  and the  Administrative  Agent
arising from, by virtue of, or pursuant to this Agreement, any of the other Loan
Papers and any and all renewals and extensions  thereof or any part thereof,  or
future amendments thereto,  all interest accruing on all or any part thereof and
reasonable  attorneys'  fees  incurred  by  the  Administrative  Agent  for  the
preparation  of  this  Agreement  and  consummation  of  this  credit  facility,
execution  of waivers,  amendments  and  consents,  and in  connection  with the
enforcement  or  the  collection  of all or any  part  thereof,  and  reasonable
attorneys'  fees incurred by the Lenders in connection  with the  enforcement or
the collection of all or any part of the  Obligations  during the continuance of
an Event of Default,  in each case whether such  obligations,  indebtedness  and
liabilities are direct, indirect, fixed, contingent, joint, several or joint and
several.  Without  limiting  the  generality  of  the  foregoing,  "Obligations"
includes all amounts which would be owed by the Borrower, each other Obligor and
any other  Person  (other than the  Administrative  Agent or the Lenders) to the
Administrative  Agent or the Lenders under any Loan Paper, but for the fact that
they are  unenforceable  or not  allowable due to the existence of a bankruptcy,
reorganization or similar proceeding  involving the Borrower,  any other Obligor
or any other Person  (including all such amounts which would become due or would
be secured but for the filing of any petition in bankruptcy, or the commencement
of any insolvency,  reorganization or like proceeding of the Borrower, any other
Obligor or any other Person under any Debtor Relief Law).

      "Obligor" shall mean (a) the Borrower, (b) each Guarantor,  (c) each other
Person  liable  for  performance  of any of the  Obligations  and (d) each other
Person the Property of which  hereafter  secures the  performance  of any of the
Obligations.

      "OCV"  shall  mean  On  Command  Video  Corporation,   a  Delaware
corporation.

      "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.

      "Permitted Investments" shall mean:

      (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such  obligations  are backed by the full faith and
credit of the United States of America),  in each case maturing  within one year
from the date of acquisition thereof;

      (b)  investments  in  commercial  paper  maturing  within 270 days
from  the  date of  acquisition  thereof  and  having,  at such  date of
acquisition,  the  highest  credit  rating  obtainable  from  Standard &
Poor's Ratings Group,  a Division of  McGraw-Hill,  Inc. or from Moody's
Investors Service, Inc.;

      (c) investments in certificates of deposit,  banker's acceptances and time
deposits maturing within one year from the date of acquisition thereof issued or
guaranteed  by or placed  with,  and money  market  deposit  accounts  issued or
offered by, any domestic  office of any commercial  bank which bank or office is
organized  under the Laws of the United  States of America or any State  thereof
which has a combined capital and surplus and undivided  profits of not less than
$250,000,000; and

      (d) fully  collateralized  repurchase  agreements  with a term of not more
than 30 days for underlying securities of the type described in clause (a) above
entered into with any institution meeting the qualifications specified in clause
(c) above.

      "Person" shall mean any natural person, corporation, business trust, joint
venture,  association,  company,  partnership  or  government,  or any agency or
political subdivision thereof.

      "Plan"  shall  mean  any  employee  pension  benefit  plan  (other  than a
Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or Section
112 of the Code or Section 307 of ERISA and in respect of which the  Borrower or
any ERISA Affiliate is (or if such plan were terminated would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

      "Preferred  Stock",  as applied to the Capital  Stock of any  corporation,
means  Capital  Stock of any  class or  classes  (however  designated)  which is
preferred as to the payment of dividends,  or as to the  distribution  or assets
upon  any  voluntary  or  involuntary  liquidation  or  dissolution  of any such
corporation,   over  shares  of  Capital  Stock  of  any  other  class  of  such
corporation.

      "Pro Forma Financials" shall mean those pro forma financial  statements of
the Borrower and its Subsidiaries set forth in the S-4 Registration Statement.

      "Pro Rata  Percentage" of any Lender at any time shall mean the percentage
of such Lender set forth  opposite its  signature  line on the  signature  pages
hereof and  designated as such, as such  percentage may be hereafter be adjusted
pursuant to any Assignment and Acceptance or amendment to this Agreement.

      "Register"  shall have the  meaning  given  such term in  Section  9.04(d)
hereof.

      "Regulation  G" shall mean  Regulation G of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

      "Regulation  U" shall mean  Regulation U of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

      "Regulation  X" shall mean  Regulation X of the Board as from time to time
in effect and all official rulings and interpretations thereunder or thereof.

      "Release" shall mean any spilling,  leaking, pumping,  pouring,  emitting,
emptying,  discharging,   injecting,  escaping,  leaching,  dumping,  disposing,
depositing,  dispersing,  emanating or migrating of any  Hazardous  Material in,
into, onto or through the Environment.

      "Remedial Action" shall mean (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
abate or in any other way address  any  Hazardous  Material in the  Environment;
(ii) prevent the Release or threat of Release,  or minimize the further  Release
of any  Hazardous  Material  so it does not  migrate or  endanger or threaten to
endanger public health, welfare or the Environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.

      "Reorganization  Plan" shall mean the Debtors' First Amended Joint Plan of
Reorganization,  dated August 2, 1996,  as  supplemented  on August 27, 1996 and
modified on September 11, 1996.

      "Required Lenders" shall mean, at any time, (i) Lenders having Commitments
representing  at least 51% of the sum of all  Commitments at such time, (ii) for
purposes  of  acceleration  pursuant  to clause  (ii) of the last  paragraph  of
Article  VII,  Lenders  having  Loans,  L/C  Exposures  and  unused  Commitments
representing at least 51% of the sum of all Loans outstanding,  L/C Exposure and
unused  Commitments or (iii) if the Commitments have terminated,  Lenders having
Loans  and L/C  Exposure  representing  at  least  51% of the  sum of all  Loans
outstanding and L/C Exposure.

      "Responsible  Officer" of any corporation shall mean any executive officer
or  Financial  Officer  of such  corporation  and any other  officer  or similar
official thereof  responsible for the  administration of the obligations of such
corporation in respect of this Agreement and the other Loan Papers.

      "Revolving  Loans" shall mean the Short Term Revolving  Loans and the Long
Term Revolving  Loans made available by the Lenders to the Borrower  pursuant to
the Short Term  Commitments,  the Long Term Commitments and Section 2.01 hereof.
Each  Revolving  Loan shall be a Eurodollar  Revolving  Loan or an ABR Revolving
Loan.

      "S-4 Registration Statement" shall mean that certain Form S-4 Registration
Statement,  as filed by the Borrower with the Securities and Exchange Commission
on August 16, 1996,  as amended on September 4, 1996,  September 26, 1996 and as
further amended on October 7, 1996.

      "Short Term  Commitment"  shall mean,  with  respect to each  Lender,  the
commitment of such Lender to make Short Term  Revolving  Loans  hereunder as set
forth on Schedule 2.01(a) hereto,  or in the Assignment and Acceptance  pursuant
to which such Lender assumed its Commitment,  as applicable,  as the same may be
(a) reduced from time to time pursuant to (i) Section 2.10 hereof,  (ii) Section
2.20 hereof,  (iii) the amount of Letters of Credit  issued under the Short Term
Commitment in accordance with Section 2.21 hereof, (iv) Section 4.03 hereof, and
(iv) the amount of Competitive  Loans issued under the Short Term  Commitment in
accordance with Sections 2.02 and 2.03 hereof, and (b) reduced or increased from
time to time pursuant to  assignments  by or to such Lender  pursuant to Section
9.04 hereof.

      "Short Term Revolving  Loan Maturity Date" shall mean,  subject to Section
2.10(g) hereof, the date that is 364 days after the date hereof, or such earlier
date as the  Obligations  are due and  payable  in full  (whether  by  scheduled
reduction, acceleration, termination or otherwise).

      "Short Term  Revolving  Loans" shall mean the short term  revolving  Loans
made  available  by the  Lenders  to the  Borrower  pursuant  to the Short  Term
Commitments  and  Section  2.01(a)  hereof.  Each  Revolving  Loan  shall  be  a
Eurodollar Revolving Loan or an ABR Revolving Loan.

      "Spectradyne" shall mean Spectradyne, Inc., a Texas corporation and wholly
owned Subsidiary of SpectraVision.

      "SpectraVision"   shall  mean  SpectraVision,   Inc.,  a  Delaware
corporation.

      "Subsidiary" shall mean, with respect to any Person (herein referred to as
the  "parent"),  any  corporation,  partnership,  association  or other business
entity of which securities or other ownership  interests  representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made,  owned,  controlled or held, by the parent or one or more  subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.

      "Total  Commitment"  shall mean, at any time, the aggregate  amount of the
Lenders' Commitments, as in effect at such time.

      "Total  Exposure" shall mean, with respect to the Lenders at any time, the
aggregate  principal  amount  at such  time  of the  sum of (a) all  outstanding
Revolving Loans,  plus (b) the aggregate amount at such time of all Lenders' L/C
Exposure,  plus (c) the amount by which the outstanding  Competitive  Borrowings
shall be deemed to have utilized all Lenders'  Commitments  in  accordance  with
Section 2.16 hereof.

      "Transactions"  shall have the  meaning  assigned  to such term in Section
3.02 hereof.

      "Type", when used in respect of any Loan or Borrowing,  shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.  For purposes hereof, the term "Rate" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.

      "Wholly  Owned  Subsidiary"  of any Person shall mean a subsidiary of such
Person of which securities  (except for directors'  qualifying  shares) or other
ownership  interests  representing  100% of the  outstanding  Capital  Stock  or
partnership interests, as the case may be, are, at the time any determination is
being made,  owned by such Person or one or more Wholly  Owned  Subsidiaries  of
such Person or by such Person and one or more Wholly Owned  Subsidiaries of such
Person.

      "Withdrawal  Liability" shall mean liability to a Multiemployer  Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

      Terms  Generally.  The  definitions in Section 1.01 shall apply equally to
both the singular and plural  forms of the terms  defined.  Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be  followed  by the  phrase  "without  limitation".  All  references  herein to
Articles,  Sections,  Exhibits  and  Schedules  shall be  deemed  references  to
Articles and Sections of, and Exhibits and Schedules to, this  Agreement  unless
the context shall  otherwise  require.  Except as otherwise  expressly  provided
herein,  all terms of an  accounting  or financial  nature shall be construed in
accordance with GAAP, as in effect from time to time;  provided,  however,  that
for purposes of determining  compliance with the covenants  contained in Article
VI hereof,  all accounting  terms herein shall be interpreted and all accounting
determinations  hereunder  shall be made in accordance with GAAP as in effect on
the  date  of  this  Agreement  and  applied  on a  basis  consistent  with  the
application used in the financial statements referred to in Section 3.05 hereof.


                                  ARTICLE II

                                  The Credits

      Commitments..     Commitments

      (a) Short Term  Revolving  Loans.  Subject to the terms and conditions and
relying upon the  representations  and warranties  herein set forth, each Lender
agrees,  severally and not jointly,  to make Short Term  Revolving  Loans to the
Borrower,  at any time and from  time to time on or after the date  hereof,  and
until the earlier of (a) the Short Term  Revolving  Loan Maturity  Date, and (b)
the  termination of the Short Term  Commitment of such Lender in accordance with
the  terms  hereof,  in an  aggregate  principal  amount  at any time up to such
Lender's  Short Term  Commitment,  provided  that,  the  Borrower  agrees  that,
notwithstanding  anything  in this  Agreement  or in any other Loan Paper to the
contrary, no Lender shall at any time be obligated to make any Loan if such Loan
would result in such Lender's Total Exposure exceeding such Lender's Commitment.
Within the limits set forth in the preceding  sentence and subject to the terms,
conditions and  limitations  set forth herein,  the Borrower may borrow,  pay or
prepay and reborrow Short Term Revolving Loans.

      (b) Long Term  Revolving  Loans.  Subject to the terms and  conditions and
relying upon the  representations  and warranties  herein set forth, each Lender
agrees,  severally  and not jointly,  to make Long Term  Revolving  Loans to the
Borrower,  at any time and from  time to time on or after the date  hereof,  and
until the earlier of (a) the Long Term Revolving Loan Maturity Date, and (b) the
termination  of the Long Term  Commitment of such Lender in accordance  with the
terms hereof,  in an aggregate  principal amount at any time up to such Lender's
Long Term Commitment,  provided that, the Borrower agrees that,  notwithstanding
anything in this Agreement or in any other Loan Paper to the contrary, no Lender
shall at any time be  obligated  to make any Loan if such Loan  would  result in
such Lender's Total  Exposure  exceeding  such Lender's  Commitment.  Within the
limits set forth in the preceding sentence and subject to the terms,  conditions
and  limitations  set forth herein,  the Borrower may borrow,  pay or prepay and
reborrow Long Term Revolving Loans.

      Loans.N 2.02.     Loans

      (a) Each Loan (other than  Competitive  Loans)  shall be made as part of a
Borrowing  consisting of Loans made by the Lenders  ratably in  accordance  with
their respective Pro Rata Percentages;  provided,  however,  that the failure of
any Lender to make any Loan shall not in itself  relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible  for the failure of any other Lender to make any Loan required to
be made by such other Lender). Each Competitive Loan shall be made in accordance
with the  procedures  set forth in Section  2.03.  hereof,  and shall reduce the
Short Term  Commitment or the Long Term Commitment as designated by the Borrower
in  accordance  with the terms of Section  2.03  below,  provided  that,  if the
Borrower fails to designate,  then such Competitive Loan shall reduce (i) first,
the Short Term  Commitment,  and if the Short Term  Commitment is zero, then the
Long Term Commitment,  by the amount of each such outstanding  Competitive Loan.
If the Total Commitment has been reduced to zero, Competitive Loans shall not be
available  hereunder.  Except for Loans deemed made pursuant to Section  2.02(f)
hereof,  the Loans  comprising any Borrowing shall be in an aggregate  principal
amount that is (i) (x) with respect to any  Competitive  Borrowing,  an integral
multiple of $1,000,000 and not less than  $3,000,000 and (y) with respect to any
other Borrowing, an integral multiple of $1,000,000 and not less than $3,000,000
or (ii) equal to the remaining available balance of the Total Commitments.

      (b) Subject to Sections 2.09 and 2.14 hereof,  each Competitive  Borrowing
shall be comprised entirely of Eurodollar Competitive Loans or Fixed Rate Loans,
and each other Borrowing shall be comprised  entirely of ABR Loans or Eurodollar
Loans as the  Borrower may request  pursuant to Section 2.03 or 2.04 hereof,  as
applicable;  provided,  however,  that  Borrowings  on the Closing Date shall be
comprised  entirely  of ABR  Loans.  Each  Lender  may at its  option  make  any
Eurodollar  Loan by causing any domestic or foreign  branch or Affiliate of such
Lender to make such Loan;  provided  that any  exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance  with the
terms of this Agreement.  Borrowings of more than one Type may be outstanding at
the same time;  provided,  however,  that the Borrower  shall not be entitled to
request any Borrowing that, if made, would result in more than twelve Eurodollar
Borrowings  outstanding  hereunder at any time.  For purposes of the  foregoing,
Borrowings  having  different  Interest  Periods,  regardless  of  whether  they
commence on the same date, shall be considered separate Borrowings.

      (c) Each  Lender  shall make each Loan to be made by it  hereunder  on the
proposed date thereof by wire transfer of  immediately  available  funds to such
account in Dallas,  Texas as the  Administrative  Agent may  designate not later
than 12:00 noon, Dallas,  Texas time, and the Administrative Agent shall by 3:00
p.m.,  Dallas,  Texas time,  credit the amounts so received to an account in the
name of the Borrower, maintained with the Administrative Agent and designated by
the Borrower in the applicable  Borrowing Request or Competitive Bid Request or,
if a  Borrowing  shall not occur on such date  because any  condition  precedent
herein  specified shall not have been met, return the amounts so received to the
respective Lenders.

      (d) Unless the  Administrative  Agent  shall have  received  notice from a
Lender  prior  to the  date of any  Borrowing  that  such  Lender  will not make
available to the  Administrative  Agent such Lender's portion of such Borrowing,
the  Administrative  Agent may assume  that such  Lender  has made such  portion
available  to the  Administrative  Agent  on  the  date  of  such  Borrowing  in
accordance  with  paragraph  (c)  above and the  Administrative  Agent  may,  in
reliance  upon such  assumption,  make  available to the Borrower on such date a
corresponding  amount.  If the  Administrative  Agent  shall  have so made funds
available  then, to the extent that such Lender shall not have made such portion
available to the  Administrative  Agent, such Lender and the Borrower  severally
agree  to  repay  to  the   Administrative   Agent   forthwith  on  demand  such
corresponding  amount together with interest thereon, for each day from the date
such  amount is made  available  to the  Borrower  until the date such amount is
repaid  to the  Administrative  Agent  at (i) in the case of the  Borrower,  the
interest rate applicable at the time to the Loans  comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the  Administrative  Agent
to  represent  its cost of overnight or  short-term  funds (which  determination
shall be conclusive  absent manifest  error).  If such Lender shall repay to the
Administrative  Agent such  corresponding  amount,  such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.

      (e) The Borrower  acknowledges that if the Borrower requests any Borrowing
with an  Interest  Period  that  would end after the Short Term  Revolving  Loan
Maturity Date or the Long Term Revolving  Loan Maturity  Date, as applicable,  a
Breakage  Event (as defined in Section 2.15 hereof) will occur on the Short Term
Revolving  Loan Maturity Date or the Long Term  Revolving Loan Maturity Date, as
applicable,  and the Borrower  will be  obligated  to  indemnify  the Lenders in
accordance with the terms of Section 2.15 hereof.

      (f) If the Issuing  Bank shall not have  received  from the  Borrower  the
payment  required to be made by Section 2.21(e) hereof within the time specified
in such Section,  the Issuing Bank will promptly notify the Administrative Agent
of the L/C Disbursement and the  Administrative  Agent will promptly notify each
Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each Lender
shall pay by wire transfer of immediately  available funds to the Administrative
Agent not later than 2:00 p.m.,  Dallas,  Texas time,  on such date (or, if such
Lender shall have received such notice later than 12:00  (noon),  Dallas,  Texas
time,  on any day,  not later  than  10:00  a.m.,  Dallas,  Texas  time,  on the
immediately  following  Business Day), an amount equal to such Lender's Pro Rata
Percentage of such L/C  Disbursement (it being understood that such amount shall
be deemed to  constitute  an ABR Loan of such Lender and such  payment  shall be
deemed to have  reduced the L/C  Exposure),  and the  Administrative  Agent will
promptly pay to the Issuing Bank amounts so received by it from the Lenders. The
Administrative  Agent will promptly pay to the Issuing Bank any amounts received
by it from the  Borrower  pursuant to Section  2.21(e)  hereof prior to the time
that any Lender  makes any payment  pursuant  to this  paragraph  (f);  any such
amounts  received  by the  Administrative  Agent  thereafter  will  be  promptly
remitted by the  Administrative  Agent to the Lenders  that shall have made such
payments and to the Issuing Bank, as their  interests may appear.  If any Lender
shall not have made its Pro Rata Percentage of such L/C  Disbursement  available
to the  Administrative  Agent as provided  above,  such Lender and the  Borrower
severally agree to pay interest on such amount,  for each day from and including
the date such amount is required to be paid in accordance with this paragraph to
but excluding the date such amount is paid, to the  Administrative  Agent at (i)
in the  case of the  Borrower,  a rate per  annum  equal  to the  interest  rate
applicable to ABR Loans pursuant to Section 2.07 hereof, and (ii) in the case of
such Lender,  for the first such day, the Federal Funds  Effective Rate, and for
each day thereafter, the Alternate Base Rate.

      Competitive Bid Procedure.ive Bid Procedure

      (a) In order to request  Competitive Bids, the Borrower shall hand deliver
or telecopy to the Administrative Agent a duly completed Competitive Bid Request
(i) in the case of a  Eurodollar  Competitive  Borrowing,  not later  than 10:00
a.m.,  Dallas,  Texas time,  four Business Days before the proposed date of such
Borrowing and (ii) in the case of a Fixed Rate  Borrowing,  not later than 10:00
a.m.,  Dallas,  Texas time,  one Business  Day before the proposed  date of such
Borrowing. A Competitive Bid Request shall not be made within five Business Days
after the date of any previous  Competitive  Bid  Request.  No ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request.  A Competitive Bid
Request that does not conform  substantially to the format of Exhibit D-1 hereto
may be rejected by the Administrative  Agent and the Administrative  Agent shall
notify  the  Borrower  of  such  rejection  as  promptly  as  practicable.  Each
Competitive  Bid Request  shall refer to this  Agreement and specify (i) whether
the Borrowing  being  requested is to be a Eurodollar  Borrowing or a Fixed Rate
Borrowing;  (ii) the date of such  Borrowing  (which  shall be a Business  Day);
(iii) the  number  and the  location  of the  account  to which  funds are to be
disbursed  (which shall be an account that  complies  with the  requirements  of
Section 2.02(c) hereof);  (iv) the aggregate principal amount of such Borrowing,
which shall be a minimum of $3,000,000  and an integral  multiple of $1,000,000;
(v) the Interest Period with respect  thereto and (vi) whether such  Competitive
Loan is being  made  under  the  Short  Term  Commitment  or under the Long Term
Commitment.  Promptly after its receipt of a Competitive Bid Request that is not
rejected,  the  Administrative  Agent shall by telecopy in the form set forth in
Exhibit D-2 invite the Lenders to bid to make Competitive  Loans pursuant to the
Competitive  Bid Request.  Each  Competitive  Loan may only be made in an amount
equal to or less than (i) the amount by which the Total  Commitment  exceeds the
Total Exposure on such date,  (ii) if such  Competitive  Loan was made under the
Short Term Revolving  Commitment,  the amount by which the Short Term Commitment
exceeds the sum of (A) the aggregate outstanding Short Term Revolving Loans, (B)
the L/C Exposure attributable to the Short Term Commitment and (C) the aggregate
outstanding  Competitive  Loans  attributable to the Short Term Commitment,  and
(iii)  if  such  Competitive  Loan  was  made  under  the  Long  Term  Revolving
Commitment,  the amount by which the Long Term Commitment exceeds the sum of (A)
the  aggregate  outstanding  Long Term  Revolving  Loans,  (B) the L/C  Exposure
attributable  to the Long  Term  Commitment  and (C) the  aggregate  outstanding
Competitive Loans attributable to the Long Term Commitment.

      (b) Each  Lender  may make one or more  Competitive  Bids to the  Borrower
responsive to a Competitive Bid Request.  Each  Competitive Bid by a Lender must
be  received  by the  Administrative  Agent  by  telecopy,  (i) in the case of a
Eurodollar Competitive Borrowing,  not later than 9:30 a.m., Dallas, Texas time,
three Business Days before the proposed date of such Competitive Borrowing,  and
(ii) in the case of a Fixed Rate  Borrowing,  not later than 9:30 a.m.,  Dallas,
Texas time, on the proposed date of such Competitive Borrowing. Competitive Bids
that do not conform  substantially  to the format of Exhibit D-3 may be rejected
by the  Administrative  Agent,  and the  Administrative  Agent shall  notify the
applicable  Lender as promptly as practicable.  Each Competitive Bid shall refer
to this Agreement and specify (x) the principal amount (which shall be a minimum
of $3,000,000  and an integral  multiple of  $1,000,000  and which may equal the
entire principal amount of the Competitive  Borrowing requested by the Borrower)
of the  Competitive  Loan or Loans that the  Lender is willing to make,  (y) the
Competitive  Bid Rate or Rates at which the Lender is prepared to make such Loan
or Loans and (z) the Interest  Period  applicable  to such Loan or Loans and the
last day thereof.

      (c) The  Administrative  Agent  shall  promptly  notify  the  Borrower  by
telecopy  of  the  Competitive  Bid  Rate  and  the  principal  amount  of  each
Competitive  Loan in respect of which a Competitive Bid shall have been made and
the identity of the Lender that shall have made each bid.

      (d) The Borrower may,  subject only to the  provisions  of this  paragraph
(d),  accept or reject  any  Competitive  Bid.  The  Borrower  shall  notify the
Administrative  Agent  by  telephone,  confirmed  by  telecopy  in the form of a
Competitive Bid Accept/Reject Letter,  whether and to what extent it has decided
to  accept or  reject  each  Competitive  Bid,  (x) in the case of a  Eurodollar
Competitive  Borrowing,  not later than 10:30 a.m.,  Dallas,  Texas time,  three
Business Days before the date of the proposed Competitive Borrowing,  and (y) in
the case of a Fixed Rate  Borrowing,  not later than 10:30 a.m.,  Dallas,  Texas
time, on the proposed date of the Competitive Borrowing; provided, however, that
(i) the  failure of the  Borrower  to give such  notice  shall be deemed to be a
rejection  of each  Competitive  Bid,  (ii)  the  Borrower  shall  not  accept a
Competitive  Bid made at a particular  Competitive  Bid Rate if the Borrower has
decided to reject a Competitive Bid made at a lower  Competitive Bid Rate, (iii)
the aggregate  amount of the Competitive Bids accepted by the Borrower shall not
exceed the principal  amount  specified in the Competitive Bid Request,  (iv) if
the  Borrower  shall  accept  a  Competitive  Bid or Bids  made at a  particular
Competitive Bid Rate but the amount of such  Competitive Bid or Bids would cause
the total amount to be accepted by the  Borrower to exceed the amount  specified
in the Competitive Bid Request, then the Borrower shall accept a portion of such
Competitive  Bid or Bids in an  amount  equal  to the  amount  specified  in the
Competitive  Bid  Request  less the  amount  of all  other  Competitive  Bids so
accepted,  which  acceptance,  in the case of multiple  Competitive Bids at such
Competitive  Bid Rate,  shall be made pro rata in accordance  with the amount of
each such Bid, and (v) except  pursuant to clause (iv) above, no Competitive Bid
shall be accepted for a Competitive  Loan unless such  Competitive  Loan is in a
minimum  principal amount of $3,000,000 and an integral  multiple of $1,000,000;
provided further,  however, that if a Competitive Loan must be in an amount less
than $3,000,000 because of the provisions of clause (iv) above, such Competitive
Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in
calculating  the pro rata  allocation  of  acceptances  of  portions of multiple
Competitive  Bids at a particular  Competitive  Bid Rate pursuant to clause (iv)
the amounts  shall be rounded to integral  multiples of  $1,000,000  in a manner
determined  by the  Borrower.  A notice given by the  Borrower  pursuant to this
paragraph (d) shall be irrevocable.

      (e) The Administrative  Agent shall promptly notify each bidding Lender by
telecopy  whether or not its  Competitive  Bid has been accepted (and, if so, in
what amount and at what Competitive Bid Rate),  and each successful  bidder will
thereupon become bound, upon the terms and subject to the conditions  hereof, to
make the  Competitive  Loan in  respect  of which its  Competitive  Bid has been
accepted.

      (f) If the Administrative Agent shall elect to submit a Competitive Bid in
its capacity as a Lender,  it shall submit such  Competitive Bid directly to the
Borrower  at least one  quarter  of an hour  earlier  than the time by which the
other   Lenders  are   required  to  submit  their   Competitive   Bids  to  the
Administrative Agent pursuant to paragraph (b) above.

      Borrowing  Procedure.  In order  to  request  a  Borrowing  (other  than a
Competitive  Borrowing or a deemed Borrowing pursuant to Section 2.02(f) hereof,
as to which this Section 2.04 shall not apply),  the Borrower shall hand deliver
or telecopy to the Administrative  Agent a duly completed  Borrowing Request (a)
in the case of a Eurodollar Borrowing,  not later than 11:00 a.m., Dallas, Texas
time, three Business Days before a proposed Borrowing, and (b) in the case of an
ABR Borrowing, not later than 10:00 a.m., Dallas, Texas on the date (which shall
be a Business  Day) of a proposed  Borrowing.  Each  Borrowing  Request shall be
irrevocable,  shall be signed by or on behalf of the Borrower and shall  specify
the following information:  (i) whether the Borrowing then being requested is to
be a Eurodollar  Borrowing or an ABR  Borrowing  (it being  understood  that the
Borrowing on the Closing Date shall be an ABR Borrowing);  (ii) the date of such
Borrowing  (which shall be a Business Day); (iii) the number and location of the
account to which  funds are to be  disbursed  (which  shall be an  account  that
complies with the requirements of Section  2.02(c))  hereof;  (iv) the amount of
such  Borrowing;  (v) if such  Borrowing  is to be a Eurodollar  Borrowing,  the
Interest Period with respect thereto; and (vi) if the Borrower has complied with
each  condition  set forth in Section  2.02(b)  hereof and Section  4.03 hereof,
whether  such  Borrowing  is to be a Short  Term  Revolving  Loan or a Long Term
Revolving  Loan;   provided,   however,   that,   notwithstanding  any  contrary
specification in any Borrowing  Request,  each requested  Borrowing shall comply
with the requirements set forth in Section 2.03 hereof. If no election as to the
Type of Borrowing is specified in any such notice,  then the requested Borrowing
shall be an ABR Borrowing.  If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice,  then the Borrower shall be deemed to
have selected an Interest  Period of one month's  duration.  The  Administrative
Agent shall  promptly  advise the Lenders of any notice  given  pursuant to this
Section 2.04 hereof (and the contents thereof),  and of each Lender's portion of
the requested Borrowing.

      Evidence of Debt; Repayment of Loans.epayment of Loans

      (a)  The  Borrower   hereby   unconditionally   promises  to  pay  to  the
Administrative  Agent  for  the  account  of the  Lenders  (i) the  then  unpaid
principal  amount  of each  Competitive  Loan,  on the last day of the  Interest
Period applicable to such Loan or, if earlier,  on the Short Term Revolving Loan
Maturity  Date or the Long Term  Revolving  Loan  Maturity  Date,  (ii) the then
unpaid  principal  amount of each  Short Term  Revolving  Loan on the Short Term
Revolving Loan Maturity Date, and (iii) the then unpaid principal amount of each
Long Term Revolving Loan on the Long Term Revolving Loan Maturity Date.

      (b) Each Lender shall  maintain in accordance  with its usual  practice an
account or accounts  evidencing the  indebtedness of the Borrower to such Lender
resulting  from each Loan made by such Lender from time to time,  including  the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.

      (c) The  Administrative  Agent  shall  maintain  accounts in which it will
record  (i)  whether  such Loan is a Short  Term  Revolving  Loan or a Long Term
Revolving Loan, the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and  payable or to become due and payable  from the  Borrower to each Lender
hereunder and (iii) the amount of any sum received by the  Administrative  Agent
hereunder from the Borrower and each Lender's share thereof.
      (d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie  evidence of the existence and amounts of the
obligations therein recorded;  provided however,  that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the  obligations  of the Borrower to repay the Loans in
accordance with their terms.

      (e) As evidence of the Loans  hereunder,  on the Closing Date the Borrower
shall  deliver  to each  Lender  one  promissory  note  evidencing  its Pro Rata
Percentage of the Loans made hereunder.  Such promissory note will evidence each
Lenders'  Pro Rata  Percentage  of each  Revolving  Loan,  L/C Exposure and each
Lenders' exposure under any Competitive Loan, if any.

      Fees.ON 2.06.     Fees

      (a) The Borrower agrees to pay to each Lender,  through the Administrative
Agent,  such  Facility  Fees as are set forth in any Fee Letters (the  "Facility
Fees") in accordance with such terms set forth in the Fee Letters.

      (b) The Borrower agrees to pay to the  Administrative  Agent,  for its own
account, the administrative fees set forth in its Fee Letter at the times and in
the amounts specified therein (the "Administrative Agent Fees").

      (c)  The  Borrower  agrees  to  pay  (i)  to  each  Lender,   through  the
Administrative  Agent, on the last day of March, June, September and December of
each  year and on the date on which  the  Short  Term  Commitment  and Long Term
Commitment  of such Lender shall be  terminated  as  applicable  and as provided
herein, a fee (an "L/C Participation  Fee") calculated on such Lender's Pro Rata
Percentage of the average daily  aggregate L/C Exposure  (excluding  the portion
thereof  attributable to unreimbursed  L/C  Disbursements)  during the preceding
quarter (or shorter  period  commencing  with the date hereof or ending with the
Short  Term  Revolving  Loan  Maturity  Date,  or the Long Term  Revolving  Loan
Maturity  Date, as  applicable,  or the date on which all Letters of Credit have
been canceled or have expired and the Commitments of all Lenders shall have been
terminated) at a rate equal to the Applicable  Percentage from time to time used
to determine  the interest  rate on  Borrowings  comprised of  Eurodollar  Loans
pursuant to Section  2.07  hereof,  and (ii) to the Issuing Bank with respect to
each Letter of Credit the standard fronting, issuance and drawing fees specified
from time to time by the Issuing  Bank (the  "Issuing  Bank  Fees").  Subject to
Section 9.09 hereof and Applicable Law, all L/C  Participation  Fees and Issuing
Bank Fees shall be computed on the basis of the actual number of days elapsed in
a year of 365 or 366 days, as applicable.

      (d)  Subject to Section  9.09  hereof,  commencing  on the first  Interest
Payment Date after the Closing Date and continuing on each Interest Payment Date
of each year on and until the date on which the Commitments of such Lender shall
be terminated as provided herein,  the Borrower shall pay to the  Administrative
Agent for the account of Lenders  commitment fees (the "Commitment Fees") on the
average daily amount of the difference  between (A) the Total Commitment and (B)
the Total Exposure, at a per annum rate (the "Commitment Fee Rate") based on the
Leverage Ratio for the most recently  completed full fiscal quarter as set forth
below:

            Leverage Ratio                Per Annum Commitment Fee Rate

Category 1

            Greater than or
            equal to 1.50 to 1.00               0.2500%

Category 2

            Less than 1.50 to 1.00              0.1875%

Except  as set  forth  below,  the  Leverage  Ratio  utilized  for  purposes  of
determining  the  Commitment Fee Rate shall be that in effect as of the last day
of the most recent fiscal quarter of the Borrower in respect of which  financial
statements have been delivered pursuant to this Agreement.  From the date hereof
until the  earliest to occur of the initial  delivery  of  financial  statements
pursuant to Section  5.04(a) or (b)  hereof,  the  Borrower's  failure to timely
deliver such financial  statements or the occurrence of an Event of Default, the
Leverage Ratio shall be deemed to be within Category 1 above. The Commitment Fee
Rate from time to time in effect shall be based on the Leverage  Ratio from time
to time in effect,  and each change in the  Commitment Fee Rate resulting from a
change  in (or  the  initial  establishment  of) the  Leverage  Ratio  shall  be
effective with respect to the  Commitment Fee Rate  outstanding on and after the
date of delivery to the  Administrative  Agent of the financial  statements  and
certificates required by Section 5.04(a) or (b) hereof indicating such change to
and including the date  immediately  preceding the next date of delivery of such
financial   statements  and   certificates   indicating   another  such  change.
Notwithstanding  the  foregoing,  (a) at any time during  which the Borrower has
failed to deliver the financial statements and certificates  required by Section
5.04(a) or (b) hereof,  or (b) at any time after the  occurrence  and during the
continuance of an Event of Default,  the Leverage Ratio shall be deemed to be in
Category 1 above for purposes of determining the Commitment Fee Rate. Subject to
Section 9.09 hereof and Applicable Law, all Commitment Fees shall be computed on
the basis of the actual  number of days elapsed in a year of 365 or 366 days, as
applicable.

      (e) All Fees  shall be paid on the dates  due,  in  immediately  available
funds,  to the  Administrative  Agent for  distribution,  if and as appropriate,
among the Lenders,  except that the Issuing Bank Fees shall be paid  directly to
the Issuing Bank.  Once paid,  none of the Fees shall be  refundable,  except in
accordance with the provisions of Section 9.09 hereof.
      Interest on Loans.Interest on Loans

      (a) Subject to the provisions of Section 2.08 hereof, the Loans comprising
each ABR  Borrowing  shall bear  interest  (computed  on the basis of the actual
number of days elapsed over a year of 365 or 366 days,  as the case may be, when
the Alternate  Base Rate is determined by reference to the Prime Rate and over a
year of 360 days at all other times) at a rate per annum equal to the  Alternate
Base  Rate.  If the  amount of  interest  payable  in  respect  of any  interest
computation  period is limited to the Highest Lawful Rate in accordance with the
definition of Alternate Base Rate, and the amount of interest payable in respect
of any  subsequent  interest  computation  period would be less than the Maximum
Amount,  then the amount of  interest  payable  in  respect  of such  subsequent
interest  computation  period  shall be  automatically  increased to the Maximum
Amount;  provided that at no time shall the aggregate  amount by which  interest
paid has been increased pursuant to this sentence exceed the aggregate amount by
which  interest has been reduced had the Alternate Base Rate not been limited to
the Highest Lawful Rate.

      (b) Subject to the provisions of Section 2.08 hereof, the Loans comprising
each  Eurodollar  Borrowing  shall bear  interest  (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to (i) in the  case of each  Revolving  Loan,  the  Adjusted  LIBO  Rate for the
Interest  Period in effect for such Borrowing plus the Applicable  Percentage in
effect from time to time,  and (ii) in the case of each  Competitive  Loan,  the
LIBO Rate for the Interest  Period in effect for such  Borrowing plus the Margin
offered by the Lender making such Loan and accepted by the Borrower  pursuant to
Section 2.03 hereof.

      (c) Subject to the provisions of Section 2.08 hereof, each Fixed Rate Loan
shall bear interest  (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to the fixed rate of interest
offered by the Lender making such Loan and accepted by the Borrower  pursuant to
Section 2.03 hereof.

      (d) Interest on each Loan shall be payable on the Interest  Payment  Dates
applicable  to such Loan and on the last day of each  Interest  Period except as
otherwise  provided in this  Agreement.  The  applicable  Alternate Base Rate or
Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as
the case may be,  shall be  determined  by the  Administrative  Agent,  and such
determination shall be conclusive absent manifest error.

      Default  Interest.  Notwithstanding  any other provision of this Agreement
and the other Loan Papers except  Section 9.09 hereof to the contrary,  if there
shall exist any Event of Default  hereunder,  at the  election  of the  Required
Lenders by written  notice to the Borrower,  the Borrower  shall pay interest on
the  Obligations  to but excluding the date of actual  payment (after as well as
before  judgment)  at a rate per annum  equal to the  lesser of (a) the  Highest
Lawful Rate and (b) a rate per annum (computed on the basis of the actual number
of days  elapsed  over a year  of 365 or 366  days,  as the  case  may be,  when
determined  by  reference  to the Prime  Rate and over a year of 360 days at all
other times) equal to the sum of the Alternate Base Rate plus 1.00%.

      Alternate Rate of Interest.  In the event,  and on each occasion,  that on
the day two Business Days prior to the commencement of any Interest Period for a
Eurodollar  Borrowing the Administrative Agent shall have determined that dollar
deposits in the principal amounts of the Loans comprising such Borrowing are not
generally  available in the London interbank  market, or that the rates at which
such dollar  deposits are being offered will not  adequately  and fairly reflect
the cost to the  Required  Lenders  of making or  maintaining  Eurodollar  Loans
during  such  Interest  Period,  or  that  reasonable  means  do not  exist  for
ascertaining the Adjusted LIBO Rate, the Administrative  Agent shall, as soon as
practicable thereafter, give written or telecopy notice of such determination to
the Borrower and the Lenders. In the event of any such determination,  until the
Administrative  Agent shall have  advised the  Borrower and the Lenders that the
circumstances  giving  rise to such notice no longer  exist,  any request by the
Borrower  for a  Eurodollar  Borrowing  pursuant to Section 2.04 hereof shall be
deemed to be a request for an ABR Borrowing  provided  that,  any request by the
Borrower for a Eurodollar  Competitive Borrowing pursuant to Section 2.03 hereof
shall be of no force and effect and shall be denied by the Administrative Agent.
Each  determination  by the  Administrative  Agent hereunder shall be conclusive
absent manifest error.

      SECTION  2.10.  Termination  and Reduction of  Commitments;  ExtensSECTION
2.10.ort TTermination and Reduction of Commitments;  Extension of the Short Term
Revolving Loan Maturity Date.

      (a)  Maturity  Dates.  The  Short  Term  Commitments  shall  automatically
terminate on the Short Term  Revolving  Loan  Maturity Date (and the same may be
extended  pursuant  to  paragraph  (g) of this  Section  2.10).  The  Long  Term
Commitments  shall  automatically  terminate  on the Long  Term  Revolving  Loan
Maturity Date. The L/C Commitment  shall  terminate upon the  termination of the
Total Commitments.

      (b) Voluntary  Reduction of the Commitments.  Upon at least three Business
Days' prior irrevocable  written or telecopy notice to the Administrative  Agent
(specifying  whether such reduction or termination shall be applied to the Short
Term Commitments or the Long Term Commitments, and the amount of reduction), the
Borrower may at any time in whole permanently terminate, or from time to time in
part  permanently  reduce,  the  either  or both of the  Commitments;  provided,
however,  that (i) each partial  reduction  shall be in an integral  multiple of
$1,000,000 and in a minimum  amount of $5,000,000 and (ii) the Total  Commitment
shall not be reduced to an amount that is less than the Total Exposure.

      (c)  Reduction  of  Short  Term   Commitment  by  Increase  of  Long  Term
Commitment.  The  Short  Term  Commitments  shall  be  reduced  immediately  and
automatically  dollar for dollar on the date and in the amount of each  increase
of the Long Term Commitments, as further described in Section 4.03 hereof.

      (d) Total Exposure in Excess of Total Commitments.  If, as a result of any
reduction of the Commitments,  the Total Exposure exceeds the Total Commitments,
then  the  Borrower  shall,  on the  date  of such  reduction,  repay  Loans  in
accordance with this Agreement in an aggregate  principal  amount  sufficient to
eliminate  such  excess.  If, as a result  of any  reduction  of the Short  Term
Commitments,  the aggregate  outstanding  Short Term Revolving Loans exceeds the
aggregate Short Term  Commitments,  then the Borrower shall, on the date of such
reduction, repay Short Term Revolving Loans in accordance with this Agreement in
an aggregate  principal  amount  sufficient to eliminate  such excess.  If, as a
result of any reduction of the Long Term Commitments,  the aggregate outstanding
Long Term Revolving Loans exceeds the aggregate Long Term Commitments,  then the
Borrower shall,  on the date of such reduction,  repay Long Term Revolving Loans
in accordance with this Agreement in an aggregate principal amount sufficient to
eliminate such excess.

      (e)  Commitment  Reduction  Due to  Asset  Dispositions.  The  Short  Term
Commitments or the Long Term Commitments (as specified by the Borrower) relating
to any Loan prepaid  pursuant to Section  2.12(c) hereof shall be  automatically
and permanently  reduced, on the date of such prepayment,  in an amount equal to
the amount of such prepayment.

      (f) Commitment  Reduction,  Generally.  Each reduction in the  Commitments
hereunder  shall be made  ratably  among the  Lenders in  accordance  with their
respective Commitments.  The Borrower shall pay, to the Administrative Agent for
the  account  of the  applicable  Lenders,  on the date of each  termination  or
reduction, the Commitment Fees on the amount of the Commitments so terminated or
reduced accrued to but excluding the date of such termination or reduction.

      (g)  Extension  of Short Term  Commitments.  The  Borrower  may, by giving
written notice to the Administrative  Agent (which shall promptly deliver a copy
to each of the Lenders)  not fewer than 15 days prior to the then current  Short
Term  Revolving Loan Maturity Date (the "Existing  Maturity  Date"),  extend the
Short Term  Revolving  Loan Maturity Date to the date that occurs 364 days after
the  Existing  Maturity  Date (or if such 364th day is not a Business  Day,  the
immediately  preceding Business Day); provided,  however,  that the Borrower may
effect  only  four   extensions   pursuant  to  this  Section   2.10(g)  hereof.
Notwithstanding the foregoing, the extension of the Existing Maturity Date shall
not be effective  with  respect to any Lender  unless (i) no Default or Event of
Default  shall have  occurred and be  continuing  on both the date of the notice
requesting such extension and on the Existing Maturity Date and (ii) each of the
representations  and  warranties  set forth in Article  III  hereof  (including,
without  limitation,  those set forth in Section  3.06 hereof and  Section  3.09
hereof) shall be true and correct in all material  respects on and as of each of
the date of the notice  requesting such extension and the Existing Maturity Date
with the same force and effect as if made on and as of each such date, except to
the extent such  representations  and warranties  expressly relate to an earlier
date.

      Conversion and Continuation of Borrowings.ion of Borrowings

      (a) The Borrower  shall have the right at any time upon prior  irrevocable
notice to the  Administrative  Agent (x) not later  than 12:00  (noon),  Dallas,
Texas time,  one Business  Day prior to  conversion,  to convert any  Eurodollar
Borrowing into an ABR Borrowing,  (y) not later than 10:00 a.m.,  Dallas,  Texas
time,  three Business Days prior to conversion or  continuation,  to convert any
ABR  Borrowing  into  a  Eurodollar  Borrowing  or to  continue  any  Eurodollar
Borrowing as a Eurodollar  Borrowing for an additional  Interest Period, and (z)
not later than 10:00 a.m.,  Dallas,  Texas time,  three  Business  Days prior to
conversion,  to convert  the  Interest  Period  with  respect to any  Eurodollar
Borrowing to another  permissible  Interest Period,  subject in each case to the
following:

            (i) each conversion or continuation shall be made pro rata among the
      Lenders in accordance with the respective  principal  amounts of the Loans
      comprising the converted or continued Borrowing;

            (ii) if  less  than  all the  outstanding  principal  amount  of any
      Borrowing shall be converted or continued,  then each resulting  Borrowing
      shall satisfy the  limitations  specified in Sections  2.02(a) and 2.09(b)
      hereof  regarding the principal amount and maximum number of Borrowings of
      the relevant Type;

            (iii)  each  conversion  shall be  effected  by each  Lender and the
      Administrative  Agent by recording  for the account of such Lender the new
      Loan of such Lender  resulting from such  conversion and reducing the Loan
      (or portion  thereof)  of such Lender  being  converted  by an  equivalent
      principal  amount;  accrued  interest on any  Eurodollar  Loan (or portion
      thereof)  being  converted  shall be paid by the  Borrower  at the time of
      conversion;

            (iv) if any  Eurodollar  Borrowing is converted at a time other than
      the end of the Interest Period applicable thereto, the Borrower shall pay,
      upon  demand,  any  amounts due to the  Lenders  pursuant to Section  2.15
      hereof;

            (v)   any  portion of a  Borrowing  maturing  or required to
      be repaid in less  than one  month  may not be  converted  into or
      continued as a Eurodollar Borrowing;

            (vi) any portion of a Eurodollar  Borrowing that cannot be converted
      into or continued as a Eurodollar  Borrowing by reason of the  immediately
      preceding  clause  shall  be  automatically  converted  at the  end of the
      Interest Period in effect for such Borrowing into an ABR Borrowing; and
            (vii) after the occurrence  and during the  continuance of a Default
      or an Event of Default,  no  outstanding  Loan may be converted  into,  or
      continued for an additional interest period as, a Eurodollar Loan.

      (b) Each notice  pursuant to this  Section 2.11 shall be  irrevocable  and
shall refer to this  Agreement  and specify (i) the  identity  and amount of the
Borrowing  that the Borrower  requests be converted or  continued,  (ii) whether
such  Borrowing is to be converted to or continued as a Eurodollar  Borrowing or
an ABR Borrowing,  (iii) if such notice requests a conversion,  the date of such
conversion  (which  shall be a Business  Day),  (iv) if such  Borrowing is to be
converted to or continued as a Eurodollar  Borrowing,  the Interest  Period with
respect  thereto,  and (v) whether  such  Borrowing is made under the Short Term
Revolving  Loans or the Long Term  Revolving  Loans.  If no  Interest  Period is
specified in any such notice with respect to any  conversion to or  continuation
as a  Eurodollar  Borrowing,  the Borrower  shall be deemed to have  selected an
Interest Period of one month's duration.  The Administrative  Agent shall advise
the  Lenders of any  notice  given  pursuant  to this  Section  2.11 and of each
Lender's portion of any converted or continued Borrowing.  If the Borrower shall
not have given  notice in  accordance  with this  Section  2.11 to continue  any
Borrowing into a subsequent  Interest Period (and shall not otherwise have given
notice in  accordance  with this Section 2.11 to convert such  Borrowing),  such
Borrowing  shall, at the end of the Interest Period  applicable  thereto (unless
repaid  pursuant to the terms  hereof),  automatically  be continued  into a new
Interest  Period as an ABR  Borrowing.  The Borrower shall not have the right to
continue  or  convert  the  Interest  Period  with  respect  to any  Competitive
Borrowing pursuant to this Section 2.11.

      Prepayment. .     Prepayment

      (a) Voluntary  Prepayment.  The Borrower  shall have the right at any time
and from time to time to prepay any Borrowing, whether such Borrowing is a Short
Term Revolving Loan or a Long Term Revolving  Loan, in whole or in part, upon at
least two Business Days' prior written or telecopy  notice (or telephone  notice
promptly  confirmed by written or telecopy notice) to the  Administrative  Agent
before 11:00 a.m.,  Dallas,  Texas time;  provided,  however,  that each partial
prepayment shall be in an amount that is an integral  multiple of $1,000,000 and
not less than $3,000,000.

      (b) Mandatory Prepayment and Cash  Collateralization.  In the event of any
termination  of the  Commitments,  the  Borrower  shall  repay or prepay all its
outstanding  Borrowings (and irrevocably cash  collateralize the L/C Exposure in
the  manner  contemplated  by  Section  2.21(j)  hereof)  on the  date  of  such
termination. In the event of any partial reduction of the Commitments,  then (i)
at or  prior  to the  effective  date  of such  reduction  or  termination,  the
Administrative  Agent shall notify the Borrower and the Lenders of the aggregate
amount of outstanding  Revolving  Loans or Total  Exposure,  as the case may be,
after  giving  effect  thereto  and (ii) if the sum of the  aggregate  amount of
outstanding  Revolving  Loans or  Total  Exposure,  as the case may be,  and the
aggregate  outstanding  principal  amount of the Competitive  Loans, at the time
would exceed the Total  Commitments,  after giving  effect to such  reduction or
termination,  then  the  Borrower  shall,  on the  date  of  such  reduction  or
termination,  repay or prepay  Borrowings  in an amount  sufficient to eliminate
such excess.

      (c) Asset Dispositions. Whenever and on each occasion that the Borrower or
any  Subsidiary  of the  Borrower  receives  Net  Cash  Proceeds  from an  Asset
Disposition  (not  including  any  transaction  in which the Borrower  transfers
control through a sale, corporate transaction or other disposition, of the hotel
contracts  and  related  assets  for its hotel  customers  outside of the United
States) which,  when taken together with all such Net Cash Proceeds  theretofore
received,  exceeds  $25,000,000  (any such Net Cash  Proceeds  in excess of such
amount being referred to as "Excess Proceeds"), the Borrower will, substantially
simultaneously  with  (and in any event not  later  than the  Business  Day next
following) the receipt of such Excess Proceeds,  pay to the Administrative Agent
(for  application  to the prepayment of the Loans as designated by the Borrower,
however,  upon the failure of the Borrower to  designate,  application  shall be
made to reduce  Short  Term  Revolving  Loans  first,  and then to the Long Term
Revolving  Loans) an amount  equal to such Excess  Proceeds.  To the extent such
prepayment  is  applied  to the Short  Term  Revolving  Loans,  the  Short  Term
Commitment   relating  to  the  Short  Term  Revolving  Loans  so  prepaid  will
automatically  be  permanently  reduced in an amount equal to the amount of such
prepayment.  When all Short Term  Revolving  Loans have been prepaid to zero and
the Short Term  Commitment is zero,  the  remaining  amounts shall repay amounts
owed under the Long Term  Revolving  Loans.  To the extent  such  prepayment  is
applied to the Long Term Revolving Loans,  the Long Term Commitment  relating to
the Long Term  Revolving  Loans so prepaid  will  automatically  be  permanently
reduced in an amount equal to the amount of such prepayment.

      (d) Escrow  Amounts for Repayment of Fixed Rate  Borrowings and Eurodollar
Borrowings.  In the event the amount of any prepayment required to be made above
shall exceed the aggregate  principal  amount of the applicable  outstanding ABR
Loans (the amount of any such excess  being  called the  "Escrow  Amount"),  the
Borrower  shall have the right,  in lieu of making such  prepayment  in full, to
prepay all the  outstanding  applicable ABR Loans and to deposit an amount equal
to the Escrow Amount with the Administrative  Agent in a cash collateral account
maintained by and in the sole dominion and control of the Administrative  Agent.
Any amounts so deposited shall be held by the Administrative Agent as collateral
for the  Obligations  and applied to the  prepayment of  outstanding  Eurodollar
Loans at the end of the current  Interest  Periods  applicable  thereto.  On any
Business  Day on which (x)  collected  amounts  remain on  deposit  in or to the
credit of such cash collateral  account after giving effect to the payments made
on such day and (y) the  Borrower  shall have  delivered  to the  Administrative
Agent a written request or telephonic request (which shall be promptly confirmed
in writing) that such remaining  collected  amounts be invested in the Permitted
Investments  specified in such request,  the Administrative  Agent shall use its
reasonable efforts to invest such remaining  collected amounts in such Permitted
Investments;  provided,  however,  that  the  Administrative  Agent  shall  have
continuous  dominion and full control  over any such  investments  (and over any
interest  that  accrues  thereon) to the same extent  that it has  dominion  and
control  over such cash  collateral  account and no Permitted  Investment  shall
mature after the end of the Interest  Period for which it is to be applied.  The
Borrower  shall  not have the  right to  withdraw  any  amount  from  such  cash
collateral  account until such Eurodollar Loans and accrued interest thereon are
paid in full or if a Default or Event of Default then exists or would result.

      (e)  Notice of  Voluntary  Prepayment.  Each  notice of  prepayment  shall
specify the prepayment  date, the principal amount of each Borrowing (or portion
thereof)  to be prepaid and  whether  such amount is to prepaid  under the Short
Term Revolving Loan or the Long Term Revolving  Loan.  Each such notice shall be
irrevocable and shall commit the Borrower to prepay such Borrowing by the amount
stated therein on the date stated therein.  All  prepayments  under this Section
2.12 shall be subject to Section 2.15 hereof but  otherwise  without  premium or
penalty. All prepayments under this Section 2.12 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of payment.

      (f)  Prepayment  as a Result  of the  Total  Exposure  in  Excess of Total
Commitments.  Whenever and on each occasion that the Total Exposure  exceeds the
Total  Commitments,  the Borrower will immediately prepay the Revolving Loans by
the amount  necessary  to reduce the Total  Exposure  to an amount  less than or
equal to the Total Commitments. Any such prepayment shall be applied as directed
by the  Borrower,  however,  upon  failure of the  Borrower  to so direct,  such
amounts shall first be applied to prepay Short Term Revolving  Loans and then to
prepay  Long  Term  Revolving  Loans.  Whenever  and on each  occasion  that the
aggregate  outstanding  Short  Term  Revolving  Loans  exceeds  the  Short  Term
Commitments, the Borrower will immediately prepay the Short Term Revolving Loans
by the amount necessary to reduce the aggregate outstanding Short Term Revolving
Loans to an amount  less than or equal to the Short Term  Commitments.  Whenever
and on each occasion that the aggregate  outstanding  Long Term Revolving  Loans
exceeds the Long Term Commitments, the Borrower will immediately prepay the Long
Term Revolving Loans by the amount necessary to reduce the aggregate outstanding
Long  Term  Revolving  Loans to an  amount  less  than or equal to the Long Term
Commitments.

      SECTION 2.13.     Reserve Requirements; Change in Circumstances.

      (a)  Notwithstanding  any other provision of this Agreement,  if after the
date  of this  Agreement  any  change  in any  Law or in the  interpretation  or
administration   thereof  by  any  Governmental   Authority   charged  with  the
interpretation  or  administration  thereof  (whether or not having the force of
Law) shall change the basis of taxation of payments to any Lender or the Issuing
Bank of the principal of or interest on any  Eurodollar  Loan or Fixed Rate Loan
made by such Lender or any Fees or other amounts payable  hereunder  (other than
changes in respect of taxes imposed on the overall net income (including without
limitation  franchise  taxes on net income,  branch  profit taxes and  alternate
minimum income taxes) of such Lender or the Issuing Bank by the  jurisdiction in
which such  Lender or the  Issuing  Bank is  incorporated  or has its  principal
office or by any political  subdivision or taxing authority  therein),  or shall
impose,  modify or deem  applicable  any  reserve,  special  deposit  or similar
requirement  against  assets of,  deposits  with or for the account of or credit
extended by any Lender or the Issuing Bank (except any such reserve  requirement
which is reflected in the Adjusted  LIBO Rate) or shall impose on such Lender or
the Issuing Bank or the London  interbank  market any other condition  affecting
this  Agreement or  Eurodollar  Loans or Fixed Rate Loans made by such Lender or
any  Letter of Credit or  participation  therein,  and the  result of any of the
foregoing  shall be to increase  the cost to such Lender or the Issuing  Bank of
making or  maintaining  any  Eurodollar  Loan or Fixed Rate Loan or increase the
cost to any Lender of issuing or maintaining  any Letter of Credit or purchasing
or  maintaining  a  participation  therein  or to reduce  the  amount of any sum
received or receivable by such Lender or the Issuing Bank  hereunder  whether of
principal,  interest  or  otherwise,  by an amount  deemed by such Lender or the
Issuing  Bank to be material,  then the Borrower  will pay to such Lender or the
Issuing Bank, as the case may be, upon demand such additional  amount or amounts
as will compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.

      (b) If any  Lender or the  Issuing  Bank shall  have  determined  that the
adoption  after the date hereof of any Law,  agreement  or  guideline  regarding
capital adequacy, or any change after the date hereof in any such Law, agreement
or  guideline  (regardless  of  whether  the  change in such Law,  agreement  or
guideline has been adopted) or in the  interpretation or administration  thereof
by any Governmental  Authority charged with the interpretation or administration
thereof,  or compliance by any Lender (or any lending  office of such Lender) or
the Issuing Bank or any Lender's or the Issuing Bank's holding  company with any
request or directive regarding capital adequacy (whether or not having the force
of Law) of any  Governmental  Authority has or would have the effect of reducing
the rate of return on such  Lender's  or the  Issuing  Bank's  capital or on the
capital of such Lender's or the Issuing  Bank's  holding  company,  if any, as a
consequence of this Agreement or the Loans made or  participations in Letters of
Credit  purchased by such Lender pursuant hereto or the Letters of Credit issued
by the Issuing Bank  pursuant  hereto to a level below that which such Lender or
the Issuing Bank or such Lender's or the Issuing  Bank's  holding  company could
have achieved but for such applicability, adoption, change or compliance (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's  holding  company with respect to capital
adequacy) by an amount deemed by such Lender or the Issuing Bank to be material,
then from time to time the  Borrower  shall  pay to such  Lender or the  Issuing
Bank, as the case may be, such  additional  amount or amounts as will compensate
such Lender or the Issuing Bank or such Lender's or the Issuing  Bank's  holding
company for any such reduction suffered.

      (c) A  certificate  of a  Lender  or the  Issuing  Bank  setting  forth in
reasonable  detail the basis for computation of the amount or amounts  necessary
to  compensate  such  Lender or the  Issuing  Bank or its  holding  company,  as
applicable, as specified in paragraph (a) or (b) above shall be delivered to the
Borrower and shall be conclusive  absent manifest error.  The Borrower shall pay
such Lender or the Issuing Bank the amount shown as due on any such  certificate
delivered by it within 10 days after its receipt of the same.

      (d)  Failure  or delay on the part of any  Lender or the  Issuing  Bank to
demand  compensation for any increased costs or reduction in amounts received or
receivable  or reduction in return on capital  shall not  constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided,
however,  that in no event shall the  Borrower be  obligated to make any payment
under this  Section  2.13 in respect of increased  costs  incurred  prior to the
period  commencing 90 days prior to the date on which demand for compensation in
respect of such increased  costs is first made. In addition,  the Borrower shall
not incur liability for additional  amounts with respect to changes in the basis
of  taxation  described  above for periods of time before such Lender or Issuing
Bank  becomes  aware  of the  change  in such  basis  except  in the case of any
retroactive  application of such a change.  The protection of this Section shall
be  available  to each Lender and the Issuing  Bank  regardless  of any possible
contention of the invalidity or inapplicability or the Law, agreement, guideline
or  other  change  or  condition  that  shall  have  occurred  or been  imposed.
Notwithstanding any other provision of this Section, no Lender shall be entitled
to demand compensation  hereunder in respect of any Competitive Loan if it shall
have been aware of the event or  circumstance  giving rise to such demand at the
time it submitted the Competitive Bid pursuant to which such Loan was made.

      Change in Legality.hange in Legality

      (a) Notwithstanding  any other provision of this Agreement,  if, after the
date  hereof,  any  change in any Law or in the  interpretation  thereof  by any
Governmental Authority charged with the administration or interpretation thereof
shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or
to give effect to its  obligations  as  contemplated  hereby with respect to any
Eurodollar   Loan,   then,  by  written  notice  to  the  Borrower  and  to  the
Administrative Agent:

            (i)  such  Lender  may  declare  that  Eurodollar   Loans  will  not
      thereafter (for the duration of such  unlawfulness) be made by such Lender
      hereunder (or be continued for additional  Interest  Periods and ABR Loans
      will not  thereafter  (for such  duration)  be converted  into  Eurodollar
      Loans),  whereupon  such  Lender  shall not  submit a  Competitive  Bid in
      response to a request for a  Eurodollar  Competitive  Loan and any request
      for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar
      Borrowing or to continue a Eurodollar Borrowing for an additional interest
      Period) shall, as to such Lender only, be deemed a request for an ABR Loan
      (or a request to continue an ABR Loan as such for an  additional  Interest
      Period or to convert a Eurodollar  Loan into an ABR Loan,  as the case may
      be), unless such declaration shall be subsequently withdrawn; and

            (ii) such Lender may require that all outstanding  Eurodollar  Loans
      made by it be converted to ABR Loans,  in which event all such  Eurodollar
      Loans shall be  automatically  converted to ABR Loans as of the  effective
      date of such notice as provided in paragraph (b) below.

In the event any Lender shall  exercise its rights under (i) or (ii) above,  all
payments and  prepayments of principal that would otherwise have been applied to
repay the  Eurodollar  Loans  that  would  have been made by such  Lender or the
converted  Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting  from the  conversion of,
such Eurodollar Loans.

      (b) For  purposes of this  Section  2.14,  a notice to the Borrower by any
Lender  shall be effective as to each  Eurodollar  Loan made by such Lender,  if
lawful,  on the last day of the Interest  Period  currently  applicable  to such
Eurodollar  Loan;  in all other cases such notice shall be effective on the date
of receipt by the Borrower.

      Indemnity.  The Borrower  shall  indemnify each Lender against any loss or
expense that such Lender may sustain or incur as a consequence of (a) any event,
other  than a default  by such  Lender  in the  performance  of its  obligations
hereunder, which results in (i) such Lender receiving or being deemed to receive
any amount on account of the principal of any Fixed Rate Loan or Eurodollar Loan
prior to the end of the Interest Period in effect therefor,  (ii) the conversion
of any Eurodollar  Loan to an ABR Loan, or the conversion of the Interest Period
with respect to any Eurodollar  Loan, in each case other than on the last day of
the  Interest  Period  in  effect  therefor,  or (iii)  any  Fixed  Rate Loan or
Eurodollar  Loan to be made by such Lender  (including any Eurodollar Loan to be
made  pursuant to a conversion  or  continuation  under Section 2.11 hereof) not
being  made after  notice of such Loan  shall  have been  given by the  Borrower
hereunder  for any  reason  other than  default  by a Lender  (any of the events
referred  to in this  clause  (a) being  called a  "Breakage  Event") or (b) any
default  in  the  making  of any  payment  or  prepayment  required  to be  made
hereunder.  In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining  funds for the Fixed Rate Loan or Eurodollar  Loan that is the subject
of such Breakage  Event for the period from the date of such  Breakage  Event to
the last day of the  Interest  Period  in  effect  (or that  would  have been in
effect) for such Loan over (ii) the amount of interest  likely to be realized by
such Lender in redeploying  the funds released or not utilized by reason of such
Breakage  Event for such  period.  A  certificate  of any such  Lender  shall be
delivered to the Borrower and shall be conclusive absent manifest error, so long
as such certificate sets forth in reasonable  detail any amount or amounts which
such Lender is entitled to receive  pursuant to this  Section 2.15 and the basis
of computation of the amount or amounts necessary to compensate such Lender.

      Pro Rata  Treatment.  Except as provided  below in this  Section 2.16 with
respect to  Competitive  Borrowings  and as required  under Section 2.14 hereof,
each Borrowing,  each payment or prepayment of principal of any Borrowing,  each
payment  of  interest  on the  Loans,  each  payment  of the  Facility  Fees and
Commitment  Fees,  each reduction of the  Commitments and each conversion of any
Borrowing to or  continuation  of any Borrowing as a Borrowing of any Type shall
be  allocated  pro rata among the Lenders in  accordance  with their  respective
applicable  Commitments  (or,  if such  Commitments  shall have  expired or been
terminated,  in  accordance  with  the  respective  principal  amounts  of their
outstanding Loans). Each payment of principal of any Competitive Borrowing shall
be allocated  pro rata among the Lenders  participating  in such  Borrowing,  in
accordance  with  the  respective   principal   amounts  of  their   outstanding
Competitive  Loans  comprising such  Borrowing.  Each payment of interest on any
Competitive   Borrowing   shall  be   allocated   pro  rata  among  the  Lenders
participating  in such Borrowing in accordance  with the  respective  amounts of
accrued and unpaid interest on their  outstanding  Competitive  Loans comprising
such  Borrowing.  For purposes of determining  the available  Commitments of the
Lenders at any time, each outstanding  Competitive  Borrowing shall be deemed to
have  utilized the  Commitments  of the Lenders  (including  those Lenders which
shall not have made  Loans as part of such  Competitive  Borrowing)  pro rata in
accordance  with  such  respective  Commitments.  Each  Lender  agrees  that  in
computing  such  Lender's  portion of any  Borrowing to be made  hereunder,  the
Administrative  Agent may, in its discretion,  round each Lender's percentage of
such Borrowing to the next higher or lower whole dollar amount.

      Sharing of  Setoffs.  Each  Lender  agrees  that if it shall,  through the
exercise  of a right of  banker's  lien,  setoff  or  counterclaim  against  the
Borrower,  or pursuant to a secured  claim under  Section 506 of Title 11 of the
United  States Code or other  security or interest  arising from, or in lieu of,
such secured claim, received by such Lender under any Debtor Relief Law or other
similar Law or otherwise,  or by any other means,  obtain payment  (voluntary or
involuntary) in respect of any Loan or Loans or L/C  Disbursement as a result of
which the  unpaid  principal  portion  of its Loans  and  participations  in L/C
Disbursements shall be proportionately less than the unpaid principal portion of
the Loans and  participations in L/C Disbursements of any other Lender, it shall
be deemed simultaneously to have purchased from such other Lender at face value,
and  shall  promptly  pay to  such  other  Lender  the  purchase  price  for,  a
participation  in the Loans and L/C Exposure of such other  Lender,  so that the
aggregate   unpaid   principal   amount  of  the  Loans  and  L/C  Exposure  and
participations  in Loans and L/C  Exposure  held by each Lender  shall be in the
same proportion to the aggregate  unpaid  principal  amount of all Loans and L/C
Exposure then  outstanding as the principal amount of its Loans and L/C Exposure
prior to such exercise of banker's lien,  setoff or  counterclaim or other event
was to the principal amount of all Loans and L/C Exposure  outstanding  prior to
such exercise of banker's lien, setoff or counterclaim or other event; provided,
however,  that if any such  purchase or purchases or  adjustments  shall be made
pursuant  to this  Section  2.17  and the  payment  giving  rise  thereto  shall
thereafter be  recovered,  such  purchase or purchases or  adjustments  shall be
rescinded to the extent of such  recovery  and the  purchase  price or prices or
adjustment  restored without interest.  The Borrower  expressly  consents to the
foregoing  arrangements  and agrees that any Lender holding a participation in a
Loan or L/C  Disbursement  deemed to have been so purchased may exercise any and
all rights of banker's lien,  setoff or counterclaim with respect to any and all
moneys  owing by the  Borrower to such  Lender by reason  thereof as fully as if
such  Lender  had made a Loan  directly  to the  Borrower  in the amount of such
participation.

      Payments..18.     Payments

      (a) The  Borrower  shall  make each  payment  (including  principal  of or
interest on any Borrowing or any L/C  Disbursement or any Fees or other amounts)
hereunder not later than 12:00 (noon),  Dallas, Texas time, on the date when due
in immediately available dollars, without setoff, defense or counterclaim.  Each
such payment (other than Issuing Bank Fees,  which shall be paid directly to the
Issuing Bank,) shall be made to the  Administrative  Agent at its offices at 901
Main, 64th Floor, Dallas, Texas 75202.

      (b)  Whenever  any  payment  (including  principal  of or  interest on any
Borrowing or any Fees or other amounts) hereunder shall become due, or otherwise
would occur,  on a day that is not a Business  Day,  such payment may be made on
the next succeeding  Business Day, and such extension of time shall in such case
be included in the computation of interest or Fees, if applicable.

      Taxes.N 2.19.     Taxes

      (a) Any and all  payments  by the  Borrower  hereunder  shall be made,  in
accordance with Section 2.18 hereof, free and clear of and without deduction for
any and all current or future taxes,  levies,  imposts,  deductions,  charges or
withholdings,  and all  liabilities  with respect  thereto  excluding (i) income
taxes imposed on the net income  (including  without  limitation,  branch profit
taxes and  alternative  minimum income taxes of the  Administrative  Agent,  any
Lender or the Issuing Bank (or any transferee or assignee  thereof,  including a
participation  holder (any such entity a  "Transferee")),  (ii) franchise  taxes
imposed on the net income of the Administrative Agent, any Lender or the Issuing
Bank (or Transferee),  in each case by the jurisdiction  under the Laws of which
the  Administrative  Agent,  such Lender or the Issuing Bank (or  Transferee) is
organized or any political  subdivision  thereof or by the jurisdiction in which
the  applicable  lending or issuing  office of the  Administrative  Agent,  such
Lender,  or the  Issuing  Bank  (or  Transferee)  is  located  or any  political
subdivision thereof (all such nonexcluded taxes,  levies,  imposts,  deductions,
charge, withholdings and liabilities, collectively or individually, being called
"Taxes").  If the  Borrower  shall be  required  to deduct  any Taxes from or in
respect of any sum payable hereunder to the Administrative  Agent, any Lender or
the Issuing Bank (or and Transferee),  (i) the sum payable shall be increased by
the amount (an "additional  amount") necessary so that after making all required
deductions  (including  deductions  applicable to additional  sums payable under
this Section 2.19) the Administrative  Agent, such Lender or the Issuing Bank or
Transferee),  as the case may be,  shall  receive an amount  equal to the sum it
would have received had no such  deductions  been made,  (ii) the Borrower shall
make such  deductions and (iii) the Borrower shall pay the full amount  deducted
to the relevant Governmental Authority in accordance with Applicable Law.

      (b) In addition,  the Borrower agrees to pay to the relevant  Governmental
Authority  in  accordance  with  Applicable  Law any current or future  stamp or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies  that  arise  from and  payment  made  hereunder  or from the  execution,
delivery or  registration  of, or  otherwise  with  respect  to, this  Agreement
("Other Taxes").

      (c) The Borrower will indemnify the Administrative  Agent, each Lender and
the Issuing  Bank (or  Transferee)  for the full amount of Taxes and Other Taxes
paid  by  the  Administrative  Agent,  such  Lender  or  the  Issuing  Bank  (or
Transferee),  as the  case  may be,  and any  liability,  (including  penalties,
interest and  expenses  (including  reasonable  attorney's  fees and  expenses))
arising  therefrom or with respect  thereto,  whether or not such Taxes or Other
Taxes were correctly or legally asserted by the relevant Governmental Authority.
A  certificate  as to the amount of such  payment or  liability  prepared by the
Administrative  Agent,  a Lender or the  Issuing  Bank (or  Transferee),  or the
Administrative  Agent on its  behalf,  absent  manifest  error,  shall be final,
conclusive  and binding for all  purposes.  Such  indemnification  shall be made
within  30 days  after  the date the  Administrative  Agent,  any  Lender or the
Issuing Bank (or Transferee), as the case may be, makes written demand therefor.

      (d) If  the  Administrative  Agent,  a  Lender  or the  Issuing  Bank  (or
Transferee) receives a refund in respect of any Taxes or Other Taxes as to which
it has been  indemnified  by the  Borrower or with respect to which the Borrower
has paid  additional  amounts  pursuant to this Section 2.19, it shall within 30
days from the date of such receipt pay over to the Borrower (a) such refund (but
only to the extent of indemnity  payments  made, or additional  amounts paid, by
the  Borrower  under this  Section 2.19 with respect to the Taxes or Other Taxes
giving  rise  to  such  refund),  net  of  all  out-of-pocket  expenses  of  the
Administrative  Agent,  such Lender or the Issuing Bank (or  Transferee) and (b)
interest  paid by the  relevant  Governmental  Authority  with  respect  to such
refund;  provided,   however,  that  the  Borrower,  upon  the  request  of  the
Administrative  Agent,  such Lender or the Issuing Bank (or  Transferee),  shall
repay the amount paid over to the Borrower  (plus  penalties,  interest or other
charges)  to the  Administrative  Agent,  such  Lender or the  Issuing  Bank (or
Transferee) in the event the  Administrative  Agent,  such Lender or the Issuing
Bank (or  Transferee)  is  required to repay such  refunds to such  Governmental
Authority.  If the Borrower  determines  in good faith that a  reasonable  basis
exists for contesting any Tax or Other Tax, the  Administrative  Agent,  Lender,
Issuing Bank or Transferee, as applicable,  shall cooperate with the Borrower in
challenging such Tax or Other Tax at the Borrower's  expense if requested by the
Borrower (it being understood and agreed that the Administrative  Agent, Lender,
Issuing Bank or Transferee,  as applicable,  shall have no obligation to contest
or responsibility for contesting such Tax or Other Tax).

      (e) As soon as practicable after the date of any payment of Taxes or Other
Taxes by the Borrower to the relevant Governmental Authority,  the Borrower will
deliver to the Administrative  Agent, at its address referred to in Section 9.01
hereof,  the original or a certified copy of any receipt actually issued by such
Governmental Authority evidencing payment thereof.

      (f) Each  Lender (or  Transferee)  that is  organized  under the Laws of a
jurisdiction  other than the United States, any State thereof or the District of
Columbia  (a  "Non-U.S.   Lender")   shall  deliver  to  the  Borrower  and  the
Administrative Agent two copies of either United States Internal Revenue Service
Form 1001 or Form 4224, or, in the case of a Non-U.S.  Lender claiming exemption
from U.S.  Federal  withholding  tax under Section  871(h) or 881(c) of the Code
with respect to payments of "portfolio interest",  a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S.  Lender delivers a
Form W-8, a certificate containing  representations regarding the status of such
Non-U.S.  Lender as not being a bank for purposes of Section 881(c) of the Code,
as  not  being  a  10-percent   shareholder   (within  the  meaning  of  Section
871(h)(3)(B) of the Code) of the Borrower and as not being a controlled  foreign
corporation  related to the Borrower (within the meaning of Section 864(d)(4) of
the  Code)),  properly  completed  and duly  executed  by such  Non-U.S.  Lender
claiming complete  exemption from, or reduced rate of, U.S. Federal  withholding
tax on  payments  by the  Borrower  under this  Agreement.  Such forms  shall be
delivered  by each  Non-U.S.  Lender on or before the date it becomes a party to
this Agreement (or, in the case of a Transferee that is a participation  holder,
on or before the date such participation holder becomes a Transferee  hereunder)
and on or before the date, if any, such Non-U.S.  Lender  changes its applicable
lending  office by  designating  a  different  lending  office  (a "New  Lending
Office").  In addition,  each Non-U.S.  Lender shall deliver such forms promptly
upon the  obsolescence  or invalidity of any form  previously  delivered by such
Non-U S. Lender.  Notwithstanding any other provision of this Section 2.19(f), a
Non-U.S.  Lender  shall not be  required  to deliver  any form  pursuant to this
Section 2.19(f) that such Non-U.S. Lender is not legally able to deliver.

      (g) The Borrower shall not be required to indemnify any Non-U.S. Lender or
to pay any  additional  amounts  to any  Non-U.S.  Lender,  in respect of United
States  Federal  withholding  tax pursuant to paragraph  (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S.  Lender became a party
to this  Agreement  (or,  in the case of a  Transferee  that is a  participation
holder, on the date such participation holder became a Transferee hereunder) or,
with respect to payments to a New Lending Office, the date such Non-U.S.  Lender
designated  such New Lending Office with respect to a Loan;  provided,  however,
that this  paragraph  (g) shall not apply (x) to any  Transferee  or New Lending
Office  that  becomes  a  Transferee  or New  Lending  Office  as a result of an
assignment,  participation,  transfer or designation  made at the request of the
Borrower and (y) to the extent the indemnity  payment or additional  amounts any
Transferee, or any Lender (or Transferee),  acting through a New Lending Office,
would be  entitled  to receive  (without  regard to this  paragraph  (g)) do not
exceed the indemnity  payment or  additional  amounts that the Person making the
assignment,  participation  or  transfer  to  such  Transferee,  or  Lender  (or
Transferee)  making the designation of such New Lending Office,  would have been
entitled to receive in the absence of such assignment,  participation,  transfer
or designation or (ii) the obligation to pay such  additional  amounts would not
have  arisen  but for a failure  by such  Non-U.S.  Lender  to  comply  with the
provisions of paragraph (g) above.

      (h) Nothing contained in this Section 2.19 shall require any Lender or the
Issuing Bank (or any Transferee) or the  Administrative  Agent to make available
any  of  its  tax  returns  (or  any  other  information  that  it  deems  to be
confidential or proprietary).

      (i) Each Bank represents  that, to the best of its knowledge,  it is not a
party  to any  "conduit  financing  arrangement"  as  defined  under  applicable
Treasury Regulations promulgated under the Code.

      (j)  Any  Non-U.S.   Lender  that  could  become  completely  exempt  from
withholding  of any tax,  assessment  or other  charge or levy  imposed by or on
behalf of the United States of America or any taxing  authority  thereof  ("U.S.
Taxes") in respect of payment of any  obligations  due to such  Non-U.S.  Lender
under this Agreement  ("Lender  Obligations") if the Lender  Obligations were in
registered  form for U.S.  Federal  income tax purposes may request the Borrower
(through the  Administrative  Agent),  and the  Borrower  agrees  thereupon,  to
exchange  any  promissory   note(s)   evidencing  such  Lender  Obligations  for
promissory  note(s)  registered  as provided in  subsection  (k) below (each,  a
"Registered  Note").  Registered Notes may not be exchanged for promissory notes
that are not Registered Notes.

      (k) From and after the time, if any, when any Lender requests a Registered
Note, the Borrower shall  maintain,  or cause to be maintained,  a register (the
"Register") on which it enters the name of each  registered  owner of the Lender
Obligation(s)  evidenced by a Registered  Note. A Registered Note and the Lender
Obligation(s)  evidenced  thereby may be assigned or  otherwise  transferred  in
whole or in part only by  registration  of such  assignment  or transfer of such
Registered Note and the Lender  Obligation(s)  evidenced thereby on the Register
(and each  Registered  Note shall  expressly  so  provide).  Any  assignment  or
transfer of all or part of such Lender  Obligation(s) and the Registered Note(s)
evidencing  the same shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Registered Note(s) evidencing such
Lender  Obligation(s),  duly endorsed by (or accompanied by a written instrument
of assignment or transfer duly executed by) the Registered  Noteholder  thereof,
and thereupon one or more new Registered Note(s) in the same aggregate principal
amount shall be issued to the designated  assignee(s) or transferee(s)  pursuant
to, in  accordance  with,  and  subject to the  restrictions  of,  Section  9.04
hereof). Prior to the due presentment for registration of assignment or transfer
of any Registered  Note, the Borrower and the  Administrative  Agent shall treat
the Person in whose name such Lender  Obligation(s)  and the Registered  Note(s)
evidencing  the same is  registered  as the owner  thereof  for the  purpose  of
receiving all payments thereon and for all other purposes,  notwithstanding  any
notice to the contrary.  The Register  shall be available for  inspection by the
Administrative Agent and any Lender at any reasonable time upon reasonable prior
notice.

      SECTION 2.20.     Assignment   of   Commitments   Under  Certain
CircumAssignment of Commitments  Under Certain  Circumstances;  Duty to
Mitigate.

      (a) In the event (i) any Lender or the Issuing Bank delivers a certificate
requesting  compensation pursuant to Section 2.13 hereof, (ii) any Lender or the
Issuing  Bank  delivers a notice  described  in Section 2.14 hereof or (iii) the
Borrower is required to pay any  additional  amount to any Lender or the Issuing
Bank or any Governmental  Authority on account of any Lender or the Issuing Bank
pursuant to Section  2.19  hereof,  the  Borrower  may, at its sole  expense and
effort (including with respect to the processing and recordation fee referred to
in Section 9.04(b)  hereof),  upon notice to such Lender or the Issuing Bank and
the  Administrative  Agent,  require such Lender or the Issuing Bank to transfer
and assign, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04 hereof), all of its interests,  rights and obligations
under this Agreement to an assignee that shall assume such assigned  obligations
which  assignee may be another  Lender,  if a Lender  accepts such  assignment);
provided  that (x) such  assignment  shall not  conflict  with any Law,  rule or
regulation  or  order  of any  court  or  other  Governmental  Authority  having
jurisdiction,  (v) the Borrower shall have received the prior written consent of
the Administrative Agent (and, if a Commitment is being assigned, of the Issuing
Bank), which consent shall not unreasonably be withheld, and (z) the Borrower or
such  assignee  shall have paid to the  affected  Lender or the Issuing  Bank in
immediately  available  funds an amount equal to the sum of the principal of and
interest  accrued  to the date of such  payment  on the  outstanding  Loans  and
participations  in L/C Disbursements of such Lender or the Issuing Bank plus all
Fees and other  amounts  accrued  for the  account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.13 hereof and Section 2.15
hereof); provided further that, if prior to any such transfer and assignment the
circumstances  or event that  resulted in such  Lender's  or the Issuing  Bank's
claim for  compensation  under  Section 2.13 hereof or notice under Section 2.14
hereof or the amounts paid pursuant to Section 2.19 hereof,  as the case may be,
cease to cause such  Lender or the  Issuing  Bank to suffer  increased  costs or
reductions in amounts  received or receivable or reduction in return on capital,
or cease to have the consequences  specified in Section 2.14, or cease to result
in  amounts  being  payable  under  Section  2.19  hereof,  as the  case may be,
including  as a result of any action  taken by such Lender or the  Issuing  Bank
pursuant to  paragraph  (b) below),  or if such Lender or the Issuing Bank shall
waive its right to claim  further  compensation  under  Section  2.13  hereof in
respect  of such  circumstances  or event or shall  withdraw  its  notice  under
Section 2.14 hereof or shall waive its right to further  payments  under Section
2.19 hereof in respect of such  circumstances or event, as the case may be, then
such Lender or the  Issuing  Bank shall not  thereafter  be required to make any
such transfer and assignment hereunder.

      (b) If (i) any Lender or the Issuing Bank shall request compensation under
Section  2.13  hereof,  (ii) any Lender or the  Issuing  Bank  delivers a notice
described  in Section  2.14 hereof or (iii) the  Borrower is required to pay any
additional  amount  to  any  Lender  or the  Issuing  Bank  or any  Governmental
Authority  on account of any Lender or the  Issuing  Bank,  pursuant  to Section
2.19,  then such Lender or the Issuing Bank shall use reasonable  efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed  loss
or unreimbursed  cost or expense or otherwise take any action  inconsistent with
its  internal  policies  or legal  or  regulatory  restrictions  or  suffer  any
disadvantage  or  burden  deemed  by it to  be  significant)  (x)  to  file  any
certificate or document  reasonably  requested in writing by the Borrower or (y)
to assign its rights and  delegate and  transfer  its  obligations  hereunder to
another of its offices,  branches or  affiliates,  if such filing or  assignment
would reduce its claims for compensation  under Section 2.13 hereof or enable it
to withdraw its notice  pursuant to Section 2.14 hereof or would reduce accounts
payable pursuant to Section 2.19 hereof, as the case may be, in the future.  The
Borrower hereby agrees to pay all reasonable costs and expenses  incurred by any
Lender or the Issuing  Bank in  connection  with any such filing or  assignment,
delegation and transfer.

      Letters of Credit.Letters of Credit

      (a) General.  The Borrower may request the issuance of a Letter of Credit,
in a form  reasonably  acceptable  to the  Administrative  Agent and the Issuing
Bank,  appropriately completed, for the account of the Borrower, at any time and
from time to time while the  Commitments  remain in effect.  The face  amount of
each  Letter of Credit may never be greater  than the lesser of (i)  $10,000,000
and (ii) the amount by which the Total Commitment  exceeds the Total Exposure on
the  date of  issuance.  This  Section  shall  not be  construed  to  impose  an
obligation  upon  the  Issuing  Bank to  issue  any  Letter  of  Credit  that is
inconsistent with the terms and conditions of this Agreement.

      (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
In order to request the  issuance  of a Letter of Credit (or to amend,  renew or
extend an  existing  Letter of  Credit),  the  Borrower  shall  hand  deliver or
telecopy to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance,  amendment, renewal or extension) a completed
Application  and a notice  requesting  the  issuance  of a Letter of Credit,  or
identifying the Letter of Credit to be amended, renewed or extended, the date of
issuance,  amendment,  renewal or  extension,  the date on which such  Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of
such Letter of Credit, the name and address of the beneficiary thereof,  whether
such Letter of Credit is being  issued  under the Short Term  Commitment  or the
Long Term Commitment and such other information as shall be necessary to prepare
such Letter of Credit. In connection with a request for the issuance of a Letter
of  Credit,  in  the  event  of  any  inconsistency  between  the  terms  of any
Application  and  the  provisions  of this  Agreement,  the  provisions  of this
Agreement  shall be  controlling.  A Letter of Credit shall be issued,  amended,
renewed or extended only if, and upon issuance,  amendment, renewal or extension
of each Letter of Credit the Borrower  shall be deemed to represent  and warrant
that, after giving effect to such issuance,  amendment, renewal or extension (A)
the L/C Exposure shall not exceed $10,000,000, (B) the sum of the Total Exposure
shall not exceed the Total Commitment, and (C) as applicable, (I) the sum of the
aggregate  outstanding Short Term Revolving Loans plus L/C Exposure attributable
to the Short Term Commitment (after giving effect to the issuance of such Letter
of Credit)  does not exceed the Short Term  Commitment,  and (II) the sum of the
aggregate  outstanding Long Term Revolving Loans plus L/C Exposure  attributable
to the Long Term Commitment  (after giving effect to the issuance of such Letter
of Credit) does not exceed the Long Term Commitment.  The Issuing Bank shall not
enter into any amendment of an  outstanding  Letter of Credit which has not been
requested or approved in writing by the Borrower.

      (c)  Expiration  Date.  Each Letter of Credit shall expire at the close of
business on the  earlier of the date one year after the date of the  issuance of
such Letter of Credit and the date that is five Business Days prior to the Short
Term Revolving Loan Maturity Date or the Long Term Revolving Loan Maturity Date,
as  applicable,  unless  such  Letter of Credit  (i)  expires by its terms on an
earlier date or (ii) has a one-year  tenor and provides for the renewal  thereof
for additional  one-year  periods,  so long as such periods  referred to in this
clause (ii) shall not in any event  expire at a date later than the date that is
five Business Days prior to the Short Term  Revolving  Loan Maturity Date or the
Long Term Revolving Loan Maturity Date, as applicable.

      (d) Participations.  By the issuance of a Letter of Credit and without any
further action on the part of the Issuing Bank or the Lenders,  the Issuing Bank
hereby  grants to each Lender,  and each such Lender  hereby  acquires  from the
applicable  Issuing Bank, a participation in such Letter of Credit equal to such
Lender's Pro Rata Percentage of the aggregate amount available to bc drawn under
such Letter of Credit,  effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally  agrees to pay to the Administrative  Agent, for the account
of the Issuing Bank, such Lender's Pro Rata Percentage of each L/C  Disbursement
made by the Issuing Bank and not  reimbursed  by the  Borrower  forthwith on the
date due as provided in Section 2.02(f)  hereof.  Each Lender  acknowledges  and
agrees that its obligation to acquire participations  pursuant to this paragraph
in respect of Letters of Credit is absolute and  unconditional  and shall not be
affected  by  any   circumstance   whatsoever,   including  the  occurrence  and
continuance  of a Default  or an Event of  Default,  and that each such  payment
shall  be  made  without  any  offset,   abatement,   withholding  or  reduction
whatsoever.

      (e) Reimbursement.  If the Issuing Bank shall make any L/C Disbursement in
respect  of a Letter of Credit,  the  Borrower  shall pay to the  Administrative
Agent an amount  equal to such L/C  Disbursement  not later than two hours after
the Borrower  shall have  received  notice from the Issuing Bank that payment of
such draft will be made,  or, if the Borrower  shall have  received  such notice
later than 10:00 a.m.,  Dallas,  Texas time, on any Business Day, not later than
10:00 a.m., Dallas, Texas time, on the immediately following Business Day.

      (f)  Obligations  Absolute.  The  Borrower's  obligations to reimburse L/C
Disbursements   as  provided  in   paragraph   (e)  above  shall  be   absolute,
unconditional  and  irrevocable,  and shall be performed  strictly in accordance
with the terms of this Agreement,  under any and all  circumstances  whatsoever,
and irrespective of:

            (i)   any lack of validity or  enforceability  of any Letter
      of  Credit  or any  other  Loan  Paper,  or any term or  provision
      therein;

            (ii)  any   amendment   or  waiver  of  or  any  consent  to
      departure  from  all or any of the  provisions  of any  Letter  of
      Credit or this Agreement;

            (iii) the  existence  of any claim,  setoff,  defense or other right
      that the Borrower,  any other party  guaranteeing,  or otherwise obligated
      with,  the Borrower,  any  Subsidiary  of the Borrower or other  Affiliate
      thereof or any other Person may at any time have  against the  beneficiary
      under any Letter of Credit, the Issuing Bank, the Administrative  Agent or
      any Lender or any other Person,  whether in connection with this Agreement
      or any other related or unrelated agreement or transaction;
            (iv) any draft or other document  presented under a 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;

            (v)  payment by the  Issuing  Bank under a Letter of Credit  against
      presentation  of a draft or other  document  that does not comply with the
      terms of such Letter of Credit; and

            (vi) any  other act or  omission  to act or delay of any kind of the
      Issuing Bank, the Lenders, the Administrative Agent or any other Person or
      any other event or circumstance whatsoever,  whether or not similar to any
      of the  foregoing,  that might,  but for the  provisions  of this Section,
      constitute a legal or equitable  discharge of the  Borrower's  obligations
      hereunder.

      The  foregoing  shall not be  construed  to excuse the  Issuing  Bank from
liability  to the  Borrower  to the extent of any direct  damages (as opposed to
consequential  damages,  claims in  respect  of which are  hereby  waived by the
Borrower to the extent  permitted by  Applicable  Law)  suffered by the Borrower
that are caused by the Issuing Bank's gross  negligence or wilful  misconduct in
determining  whether  drafts  and other  documents  presented  under a Letter of
Credit comply with the terms thereof; it is understood that the Issuing Bank may
accept   documents   that  appear  on  their  face  to  be  in  order,   without
responsibility   for  further   investigation,   regardless  of  any  notice  or
information  to the  contrary  and,  in making any  payment  under any Letter of
Credit (i) the Issuing Bank's exclusive  reliance on the documents  presented to
it under  such  Letter of Credit as to any and all  matters  set forth  therein,
including  reliance  on the amount of any draft  presented  under such Letter of
Credit,  whether or not the amount due to the beneficiary  thereunder equals the
amount of such draft and whether or not any document  presented pursuant to such
Letter of Credit proves to be insufficient  in any respect,  if such document on
its face appears to be in order,  and whether or not any other  statement or any
other document  presented  pursuant to such Letter of Credit proves to be forged
or invalid or any  statement  therein  proves to be  inaccurate or untrue in any
respect  whatsoever and (ii) any noncompliance in any immaterial  respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute  wilful misconduct or gross negligence of
the Issuing Bank

      (g) Disbursement  Procedures.  The Issuing Bank shall,  promptly following
its receipt thereof,  examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall as promptly as possible
give telephonic notification, confirmed by telecopy, to the Administrative Agent
and the  Borrower of such  demand for  payment and whether the Issuing  Bank has
made or will make an L/C Disbursement  thereunder;  provided that any failure to
give or delay in giving  such  notice  shall not  relieve  the  Borrower  of its
obligation  to  reimburse  the Issuing  Bank and the Lenders with respect to any
such L/C Disbursement.  The Administrative Agent shall promptly give each Lender
notice thereof.
      (h) Interim Interest.  If the Issuing Bank shall make any L/C Disbursement
in respect of a Letter of Credit, then, unless the Borrower shall reimburse such
L/C  Disbursement  in full on such date,  the unpaid  amount  thereof shall bear
interest for the account of the Issuing  Bank,  for each day from and  including
the date of such L/C  Disbursement,  to but excluding the earlier of the date of
payment by the Borrower or the date on which  interest  shall commence to accrue
thereon as provided in Section 2.09(f) hereof,  at the rate per annum that would
apply to such amount if such amount were an ABR Loan.

      (i)  Resignation  or Removal of the Issuing  Bank.  The  Issuing  Bank may
resign at any time by giving 90 days' prior written notice to the Administrative
Agent,  the  Lenders  and the  Borrower,  and may be  removed at any time by the
Borrower  by  notice  to the  Issuing  Bank,  the  Administrative  Agent and the
Lenders.  Subject to the next succeeding  paragraph,  upon the acceptance of any
appointment  as the Issuing Bank hereunder by a Lender that shall agree to serve
as successor  Issuing Bank,  such  successor  shall succeed to and become vested
with all the interests,  rights and obligations of the retiring Issuing Bank and
the retiring  Issuing Bank shall be  discharged  from its  obligations  to issue
additional Letters of Credit hereunder.  At the time such removal or resignation
shall  become  effective,  the  Borrower  shall pay all  accrued and unpaid fees
pursuant to Section  2.06(c)  hereof.  The acceptance of any  appointment as the
Issuing Bank hereunder by a successor  Lender shall be evidenced by an agreement
entered into by such successor,  in a form  satisfactory to the Borrower and the
Administrative  Agent, and, from and after the effective date of such agreement,
(i) such  successor  Lender  shall have all the rights  and  obligations  of the
previous  Issuing Bank under this  Agreement and (ii)  references  herein to the
term Issuing Bank, shall be deemed to refer to such successor or to any previous
Issuing  Bank,  or to such  successor  and all previous  Issuing  Banks,  as the
context  shall  require.  After the  resignation  or removal of the Issuing Bank
hereunder,  the  retiring  Issuing  Bank shall  remain a party  hereto and shall
continue to have all the rights and  obligations  of an Issuing  Bank under this
Agreement  with  respect  to  Letters  of  Credit  issued  by it  prior  to such
resignation or removal, but shall not be required to issue additional Letters of
Credit.

      (j) Cash  Collateralization.  If any Event of Default  shall  occur and be
continuing,  the Borrower shall, on the Business Day it receives notice from the
Administrative  Agent or the Required  Lenders (or, if the maturity of the Loans
has been accelerated,  Lenders holding  participations in outstanding Letters of
Credit  representing  greater than 50% of the  aggregate  undrawn  amount of all
outstanding Letters of Credit thereof and of the amount to be deposited, deposit
in an account with the Administrative  Agent, for the benefit of the Lenders, an
amount in cash equal to the L/C Exposure as of such date.  Such deposit shall be
held by the  Administrative  Agent as collateral for the payment and performance
of the  obligations of the Borrower  under this  Agreement.  The  Administrative
Agent shall have exclusive  dominion and control,  including the exclusive right
of  withdrawal,  over such account and, if so requested by the  Borrower,  shall
invest the deposits  therein in Permitted  Investments.  Other than any interest
earned on the  investment  of such  deposits  in  Permitted  Investments,  which
investments   shall  be  made  at  the  option  and  sole   discretion   of  the
Administrative  Agent, such deposits shall not bear interest or profits, if any,
on such  investments  shall  accumulate in such account.  Moneys in such account
shall (i) automatically be applied by the Administrative  Agent to reimburse the
Issuing Bank for L/C Disbursements for which it has not been reimbursed, (ii) be
held for the satisfaction of the  reimbursement  obligations of the Borrower for
the L/C  Exposure  at such time and (iii) if the  maturity of the Loans has been
accelerated  (but subject to the consent of Lenders  holding  participations  in
outstanding  Letters of Credit  representing  greater than 50% of the  aggregate
undrawn  amount of all  outstanding  Letters of  Credit),  be applied to satisfy
other obligations of the Borrower under this Agreement.


                                  ARTICLE III

                        Representations and Warranties

      The Borrower  represents  and warrants to the  Administrative  Agent,  the
Issuing Bank and each of the Lenders that:

      Organization;  Powers.  The Borrower and each of its Subsidiaries (a) is a
corporation duly organized, validly existing and in good standing under the Laws
of the  jurisdiction  of its  organization,  (b) has  all  requisite  power  and
authority  to own its  property  and assets and to carry on its  business as now
conducted and as proposed to be  conducted,  (c) is qualified to do business in,
and is in good  standing  in, every  jurisdiction  where such  qualification  is
required,  except  where the  failure  so to  qualify  could not  reasonably  be
expected to result in a Material Adverse Effect, and (d) has the corporate power
and  authority  to  execute,  deliver and  perform  its  obligations  under this
Agreement,  the  other  Loan  Papers  and each  other  agreement  or  instrument
contemplated thereby to which it is or will be a party and to borrow hereunder.

      Authorization.  The execution, delivery and performance by the Borrower of
this  Agreement,  the promissory  notes,  the execution of the guaranties by the
Guarantors,  the  execution  of all other Loan  Papers by the  Obligors  and the
borrowings  hereunder  (collectively,  the  "Transactions")  (a) have  been duly
authorized by all requisite  corporate and, if required,  stockholder action and
(b) will not (i) violate (A) any provision of Law, statute,  rule or regulation,
or of the  certificate  or  articles  of  incorporation  or  other  constitutive
documents or by-laws of the Borrower or any Subsidiary of the Borrower,  (B) any
order of any  Governmental  Authority  or (C) any  provision  of any  indenture,
material  agreement or other  material  instrument  to which the Borrower or any
Subsidiary  of the  Borrower  is a party or by which any of them or any of their
property is or may be bound,  (ii) be in conflict with, result in a breach of or
constitute  (alone or with notice or lapse of time or both) a default under,  or
give rise to any right to accelerate or to require the prepayment, repurchase or
redemption  of any  obligation  under  any such  indenture,  agreement  or other
instrument  or (iii)  result in the creation or  imposition  of any Lien upon or
with respect to any  property or assets now owned or  hereafter  acquired by the
Borrower or any Subsidiary of the Borrower.

      Enforceability. This Agreement has been duly executed and delivered by the
Borrower and constitutes a legal,  valid and binding  obligation of the Borrower
enforceable  against the Borrower in accordance  with its terms.  All other Loan
Papers have been duly  executed  and  delivered by the Borrower and the Obligors
and each constitutes a legal,  valid and binding  obligation of the Borrower and
the Obligors, as appropriate, enforceable against the Borrower and the Obligors,
as appropriate, in accordance with its terms.

      Governmental Approvals. No action, consent or approval of, registration or
filing  with or any other  action by any  Governmental  Authority  is or will be
required in connection with the Transactions,  except for such as have been made
or obtained and are in full force and effect.

      Financial  Statements.  OCV has  heretofore  furnished  to the Lenders its
balance  sheets and  statements of income and equity and cash flow (a) as of and
for the fiscal year ended December 31, 1995,  audited by and  accompanied by the
opinion of Deloitte & Touche, LLP, independent public accountants, and (b) as of
and for the fiscal  quarter  and the  portion of the fiscal  year ended June 30,
1996.  Such  financial  statements  present  fairly the financial  condition and
results  of  operations  and  cash  flows of OCV as of such  dates  and for such
periods.  Such  balance  sheets  and the notes  thereto  disclose  all  material
liabilities,  direct or  contingent,  of such entities as of the dates  thereof.
Such  financial  statements  were prepared in accordance  with GAAP applied on a
consistent basis. The Pro Forma Financial Statements were prepared in good faith
and management believes them to be based on reasonable assumptions and to fairly
present  the pro forma  financial  condition  and results of  operations  of the
Borrower and its  Subsidiaries  consistent with the rules and regulations of the
Securities and Exchange Commission.

      No Material  Adverse Change.  There has been no material adverse change in
the business, assets, operations, financial condition, or material agreements of
the Borrower and its Subsidiaries, taken as a whole, since June 30, 1996.

      Title to Properties; Possession Under Leases.sion Under Leases

      (a) Each of the  Borrower  and its  Subsidiaries  has good and  marketable
title to, or valid  leasehold  interests  in, all its  material  properties  and
assets, except for minor defects in title that do not interfere with its ability
to conduct its business as currently conducted or to utilize such properties and
assets for their intended purposes.  All such material properties and assets are
free and clear of Liens,  other than Liens  expressly  permitted by Section 6.02
hereof.
      (b)  Each of the  Borrower  and its  Subsidiaries  has  complied  with all
material  obligations  under all material  leases to which it is a party and all
such  leases  are in  full  force  and  effect.  Each  of the  Borrower  and its
Subsidiaries enjoys peaceful and undisturbed  possession under all such material
leases.

      (c) Each of the Borrower and its Subsidiaries owns or possesses,  or could
obtain  ownership or possession of, on terms not  materially  adverse to it, all
patents, trademarks, service marks, trade names, copyrights, licenses and rights
with respect thereto necessary for the present conduct of its business,  without
any known  conflict  with the  rights of  others,  and free from any  burdensome
restrictions,   except  where  such  conflicts  and   restrictions   could  not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse Effect.

      Subsidiaries. Schedule 3.08 hereto sets forth as of the date hereof a list
of all Subsidiaries of the Borrower and the percentage ownership interest of the
Borrower  therein.  As of the date hereof,  the shares of Capital Stock or other
ownership   interests  so  indicated  on  Schedule   3.08  are  fully  paid  and
non-assessable and are owned by the Borrower,  directly or indirectly,  free and
clear of all Liens.

      Litigation; Compliance with Laws.pliance with Laws

      (a)  Except  as set  forth on  Schedule  3.09  hereof,  there  are not any
actions,  suits  or  proceedings  at  Law  or in  equity  or by  or  before  any
Governmental  Authority  now  pending  or,  to the  knowledge  of the  Borrower,
threatened  against or affecting the Borrower or any  Subsidiary of the Borrower
or any  business,  property or rights of any such Person (i) that  involve  this
Agreement  or the  Transactions  or  (ii)  as to  which  there  is a  reasonable
possibility of an adverse determination and that, if adversely determined, could
reasonably  be  expected,  individually  or in the  aggregate,  to  result  in a
Material Adverse Effect.

      (b)  None  of the  Borrower  or any of its  Subsidiaries  or any of  their
respective  material  properties  or assets  is in  violation  of,  nor will the
continued  operation  of their  material  properties  and  assets  as  currently
conducted violate, any Law, or is in default with respect to any judgment, writ,
injunction,  decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.

      Agreements.0.     Agreements

      (a) Neither the  Borrower  nor any of its  Subsidiaries  is a party to any
agreement or subject to any corporate restriction that, since December 31, 1995,
has  resulted or could  reasonably  be expected to result in a Material  Adverse
Effect, except as disclosed on Schedule 3.10 hereof.

      (b) Neither the Borrower nor any of its  Subsidiaries is in default in any
manner under any  provision of any  indenture or other  agreement or  instrument
evidencing Indebtedness,  or any other material agreement or instrument to which
it is a party or by which it or any of its  properties  or assets  are or may be
bound,  where such default could  reasonably be expected to result in a Material
Adverse Effect.

      Federal Reserve Regulations.serve Regulations

      (a)  Neither  the  Borrower  nor  any  of  its   Subsidiaries  is  engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.

      (b) No part of the  proceeds  of any Loan or any Letter of Credit  will be
used, whether directly or indirectly,  and whether immediately,  incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the Regulations of the Board,  including Regulation G, U
or X.

      SECTION   3.12.   Investment   Company   Act;   Public   Utility   Holding
CompanInvestment  Company Act; Public Utility  Holding Company Act.  Neither the
Borrower nor any  Subsidiary of the Borrower is (a) an  "investment  company" as
defined in, or subject to regulation  under, the Investment  Company Act of 1940
or (b) a "holding  company" as defined in, or subject to regulation  under,  the
Public Utility Holding Company Act of 1935.

      Use of Proceeds.  The Borrower will use the proceeds of the Loans and will
request the issuance of Letters of Credit only for the purposes specified in the
preamble to this Agreement.

      Tax Returns. Each of the Borrower and its Subsidiaries has filed or caused
to be filed all Federal,  state,  and material  local and foreign tax returns or
materials  required  to have been  filed by it and has paid or caused to be paid
all taxes due and payable by it and all  assessments  received by it, except (a)
taxes that are being contested in good faith by appropriate  proceedings and for
which the Borrower or such  Subsidiary,  as applicable,  shall have set aside on
its  books  adequate  reserves,  and  (b)  taxes  owed  by  Spectradyne  or  its
Subsidiaries, as described on Schedule 3.14 hereto.

      No Material Misstatements.  None of (a) the S-4 Registration Statement (at
the time it is declared  effective under the Securities Act of 1933), or (b) any
other written  information,  report,  financial  statement,  exhibit or schedule
prepared by the Borrower and furnished to the Administrative Agent or any Lender
in connection  with the  negotiation of this Agreement and the other Loan Papers
or in  connection  with  any of the  Corporate  Restructuring  transactions,  or
included  herein  or  delivered  pursuant  hereto  contained  (in  the  case  of
subsection  (a))  and  contained,  contains  or will  contain  (in  the  case of
subsection  (b)) when  furnished any material  misstatement  of fact or omitted,
omits or will omit when  furnished to state any material fact  necessary to make
the statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading.

      Employee  Benefit Plans.  Each of the Borrower and its ERISA Affiliates is
in compliance in all material  respects with the applicable  provisions of ERISA
and the Code and the regulations and published  interpretations  thereunder.  No
ERISA Event has  occurred or is  reasonably  expected to occur that,  when taken
together  with all other such ERISA  Events,  could  reasonably  be  expected to
result in  liability  of the Borrower or any  Subsidiary  of the Borrower  which
would be material to the Borrower and its Subsidiaries on a consolidated basis.

      Solvency..17.     Solvency

      (a) Immediately  after the  consummation of the Transactions and the other
transactions to occur on the Closing Date and  immediately  following the making
of each Loan made and the  issuance  of each  Letter of Credit  issued and after
giving effect to the application of the proceeds thereof,  (i) the fair value of
the assets of the Borrower and its  Subsidiaries  on a consolidated  basis, at a
fair valuation,  will exceed the debts and  liabilities,  direct,  subordinated,
contingent or otherwise,  of the Borrower and its Subsidiaries on a consolidated
basis;  (ii) the present fair saleable value of the property of the Borrower and
its  Subsidiaries  on a consolidated  basis will be greater than the amount that
will  be  required  to pay  the  probable  liability  of the  Borrower  and  its
Subsidiaries  on a  consolidated  basis on their  debts and  other  liabilities,
direct,  subordinated,   contingent  or  otherwise,  as  such  debts  and  other
liabilities become absolute and matured; (iii) the Borrower and its Subsidiaries
on a consolidated basis will be able to pay their debts and liabilities, direct,
subordinated,  contingent or  otherwise,  as such debts and  liabilities  become
absolute  and  matured;  and  (iv)  the  Borrower  and  its  Subsidiaries  on  a
consolidated  basis  will not have  unreasonably  small  capital  with  which to
conduct  the  businesses  in which they are engaged as such  businesses  are now
conducted and are proposed to be conducted following the Closing Date.

      (b) The  Borrower  does not intend to, and does not believe that it or any
Subsidiary  of the  Borrower  will,  incur debts  beyond its ability to pay such
debts as they  mature,  taking into account the timing and amounts of cash to be
received by it or any such  Subsidiary  and the timing and amounts of cash to be
payable on or in respect of its  Indebtedness  or the  Indebtedness  of any such
Subsidiary.

      Insurance.  Schedule  3.18 hereto sets forth a true,  complete and correct
description of all insurance  maintained by or for the Borrower or for or by its
Subsidiaries  as of the date hereof and the Closing  Date. As of each such date,
such insurance is in full force and effect and all premiums have been duly paid.
The Borrower and its  Subsidiaries  have  insurance in such amounts and covering
such risks and liabilities as are in accordance with normal industry practice.

      Labor  Matters.  As of the date hereof and the Closing Date,  there are no
strikes,  lockouts or slowdowns  against the  Borrower or any of its  Subsidiary
pending or, to the knowledge of the Borrower,  threatened which could reasonably
be expected to have a Material Adverse Effect.  The hours worked by and payments
made  to  employees  of the  Borrower  and its  Subsidiaries  have  not  been in
violation  of the Fair  Labor  Standards  Act or any other  applicable  Federal,
state, local or foreign Law dealing with such matters. All payments due from the
Borrower or any  Subsidiary of the Borrower,  or for which any claim may be made
against the Borrower or any Subsidiary of the Borrower,  on account of wages and
employee  health and welfare  insurance  and other  benefits,  have been paid or
accrued as a  liability  on the books of the  Borrower or such  Subsidiary.  The
consummation  of the  Transactions  to be consummated on or prior to the Closing
Date will not give rise to any right of termination or right of renegotiation on
the part of any union under any  collective  bargaining  agreement  to which the
Borrower or any Subsidiary of the Borrower is bound.

      Environmental Matters.  Except as set forth in Schedule 3.20:

      (a) The  properties  owned,  operated  or leased by the  Borrower  and its
Subsidiaries  (the  "Properties")  do not contain  any  Hazardous  Materials  in
amounts or concentrations  which (i) constitute,  or constituted a violation of,
or  (ii)  could  reasonably  be  expected  to  give  rise  to  liability  under,
Environmental  Laws, which violations and liabilities,  in the aggregate,  could
reasonably be expected to result in a Material Adverse Effect;

      (b) All  Environmental  Permits have been  obtained and are in effect with
respect to the Properties  and operations of the Borrower and its  Subsidiaries,
and the Properties and all operations of the Borrower and its  Subsidiaries  are
in  compliance,  and in the last two  years  have been in  compliance,  with all
Environmental Laws and all necessary Environmental Permits, except to the extent
that such  non-compliance  or failure to obtain any  necessary  permits,  in the
aggregate,  could not  reasonably  be expected  to result in a Material  Adverse
Effect;

      (c) Neither the  Borrower  nor any of its  Subsidiaries  has  received any
notice  of an  Environmental  Claim in  connection  with the  Properties  or the
operations  of the  Borrower  or its  Subsidiaries  or with regard to any Person
whose  liabilities  for  environmental  matters  the  Borrower  or  any  of  its
Subsidiaries has retained or assumed, in whole or in part, contractually, which,
in the aggregate,  could  reasonably be expected to result in a Material Adverse
Effect,  nor do the Borrower or any of its Subsidiaries  have knowledge that any
such notice will be received or is being threatened;

      (d) Hazardous Materials have not been transported from the Properties, nor
have Hazardous Materials been generated,  treated,  stored or disposed of at, on
or under any of the Properties in a manner that could  reasonably be expected to
give rise to liability under any Environmental Law, nor have the Borrower or its
Subsidiaries  retained or assumed any liability  contractually,  with respect to
the generation,  treatment,  storage or disposal of Hazardous  Materials,  which
transportation,  generation,  treatment,  storage or  disposal,  or  retained or
assumed liabilities, in the aggregate, could reasonably be expected to result in
a Material Adverse Effect.

      SECTION 3.21.     Acquisition of Spectradyne; Merger of OCV.

      (a)  Acquisition;  Bankruptcy  Proceedings.  An  order  has  been  entered
confirming the Reorganization Plan and the time for  reconsideration,  rehearing
or new  trial  and the  time to  appeal  or to seek a  petition  for  review  or
certiorari has expired and no post-trial motion, appeal or request for review is
pending. All notices to creditors pursuant to Debtor Relief Laws relating to the
solicitation  of votes and  confirmation of a plan of  reorganization  have been
made within the time required by Debtor Relief Laws.  The  Acquisition  has been
consummated  in  accordance  with the terms of the  Acquisition  Agreement.  The
Capital Stock of  Spectradyne  and all of the assets of  Spectradyne  are wholly
owned by the Borrower, free and clear of any Liens on the terms set forth in the
Acquisition Agreement and in the Reorganization Plan.

      (b)  Merger.  No  condition  to  closing  of  either  the  Merger  or  the
Acquisition has been waived by the Borrower.  The Merger has been consummated in
accordance with the terms of the Merger  Agreement.  On the Closing Date,  there
are no shareholders who have  effectively  exercised their appraisal rights with
respect  to the  Capital  Stock of OCV.  After the  Closing  Date,  there are no
shareholders  who have effectively  exercised,  or continue to have the right to
effectively  exercise,  their appraisal rights with respect to the Capital Stock
of OCV, the result of which exercise could reasonably be expected to result in a
Material Adverse Effect.

      SECTION 3.22. Survival of Representations and Warranties, etc. Survival of
Representations  and Warranties,  etc. All  representations  and warranties made
under this Agreement and the other Loan Papers shall be deemed to be made at and
as of the Closing Date and at and as of the date of each Borrowing  under either
of the Revolving Loans, and each shall be true and correct when made,  except to
the extent (a)  previously  fulfilled in accordance  with the terms hereof,  (b)
subsequently   inapplicable,   or  (c)  previously  waived  in  writing  by  the
Administrative  Agent  and  Lenders  with  respect  to  any  particular  factual
circumstance.  The  representations and warranties made under this Agreement and
the other Loan  Papers  shall be deemed  applicable  to each  Subsidiary  of the
Borrower as of the formation or acquisition of such  Subsidiary and at and as of
each  date the  representations  and  warranties  are  remade  pursuant  to this
provision.  All representations and warranties made under this Agreement and the
other Loan Papers shall survive,  and not be waived by, the execution  hereof by
the  Administrative  Agent and  Lenders,  any  investigation  or  inquiry by the
Administrative  Agent or any  Lender,  or by the  making of any Loan  under this
Agreement and the other Loan Papers.

                                  ARTICLE IV

                             Conditions of Lending

      The  obligations  of the Lenders to make Loans and of the Issuing  Bank to
issue  Letters  of Credit  hereunder  are  subject  to the  satisfaction  of the
following conditions:

      All Credit Events. On the date of each Borrowing,  and on the date of each
issuance of a Letter of Credit (each such event being called a "Credit Event"):

      (a)  The  Administrative  Agent  shall  have  received  a  notice  of such
Borrowing  as required by Section 2.03 or 2.04 hereof,  as  applicable  (or such
notice shall have been deemed given in accordance with Section 2.04 hereof), or,
in the case of the  issuance  of a Letter of Credit,  the  Issuing  Bank and the
Administrative  Agent shall have  received a duly  completed  Application  and a
notice  requesting  the  issuance of such Letter of Credit,  required by Section
2.21(b) hereof.

      (b) The  representations  and  warranties  set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of such
Credit Event with the same effect as though made on and as of such date,  except
to the extent such representations and warranties expressly relate to an earlier
date,  and there shall have  occurred no event which  caused a Material  Adverse
Effect.

      (c) The Borrower and each of its  Subsidiaries  shall be in  compliance in
all material respects with the terms and provisions set forth herein on its part
to be  observed  or  performed,  and at the time of and  immediately  after such
Credit  Event,  no Event of  Default  or  Default  shall  have  occurred  and be
continuing.

      Each  Credit  Event shall be deemed to  constitute  a  representation  and
warranty  by the  Borrower  on the date of such  Credit  Event as to the matters
specified in paragraphs (b) and (c) of this Section 4.01.

      First Credit Event.  On the Closing Date:

      (a) The Administrative Agent shall have received, on behalf of itself, the
Lenders and the Issuing  Bank,  a favorable  written  opinion of (i) the General
Counsel of the  Borrower  and its  Subsidiaries  and (ii)  Latham & Watkins,  in
connection with the Transactions and the Corporate  Restructuring,  in each case
(y) dated the Closing Date, and (z) covering such other matters relating to this
Agreement,   the   Transactions   and  the   Corporate   Restructuring   as  the
Administrative  Agent shall reasonably request in form reasonably  acceptable to
the Administrative  Agent and its counsel,  and the Borrower hereby requests and
instructs such counsel to deliver such opinions. The opinions shall be addressed
to  the  Issuing  Bank,   the   Administrative   Agent  and  the  Lenders.   The
Administrative  Agent  shall  have  also  received  copies  of (i) all  opinions
delivered  by  each  counsel  to the  Borrower  and  each of its  Affiliates  in
connection with the Corporate Restructuring,  and (ii) all opinions addressed to
the Borrower or any of its  Affiliates  from counsel to any party in  connection
with  the  Corporate   Restructuring,   in  each  case,  with  reliance  letters
authorizing the Administrative Agent and the Lenders to rely on such opinions.

      (b) All legal matters  incident to this  Agreement,  the  Borrowings,  the
Corporate  Restructuring,  the  Transaction  and extensions of credit  hereunder
shall be reasonably  satisfactory to the Lenders, to the Issuing Bank and to the
Administrative Agent.

      (c)  The  Administrative  Agent  shall  have  received  (i) a copy  of the
certificate or articles of incorporation,  including all amendments  thereto, of
the  Borrower  and  each  of  its   Subsidiaries,   except   foreign   organized
Subsidiaries,  certified  as of a recent date by the  Secretary  of State of the
state of its  organization,  and a  certificate  as to the good  standing of the
Borrower and each of its  Subsidiaries  as of a recent date, from such Secretary
of State;  (ii) a  certificate  of the  Secretary or Assistant  Secretary of the
Borrower and each of its Subsidiaries,  except foreign  organized  Subsidiaries,
dated the Closing Date and  certifying  (A) that attached  thereto is a true and
complete copy of the by-laws of the Borrower and each of its  Subsidiaries as in
effect on the  Closing  Date and at all times  since a date prior to the date of
the resolutions  described in clause (B) below,  (B) that attached  thereto is a
true and complete copy of resolutions  duly adopted by the Board of Directors of
the Borrower and each of its  Subsidiaries  authorizing the execution,  delivery
and performance of this Agreement and the borrowings  hereunder,  as applicable,
and that such resolutions have not been modified rescinded or amended and are in
full force and effect,  (C) that the certificate or articles of incorporation of
the Borrower and each of its  Subsidiaries  have not been amended since the date
of the  last  amendment  thereto  shown  on the  certificate  of  good  standing
furnished  pursuant to clause (i) above,  (D) as to the  incumbency and specimen
signature  of each  officer  executing  this  Agreement  or any  other  document
delivered  in  connection  herewith  on behalf of the  Borrower  and each of its
Subsidiaries,  (E) that  attached  thereto  is a true and  complete  copy of the
Acquisition  Agreement,   the  Merger  Agreement,  the  EDS  Agreement  and  the
Reorganization  Plan,  each as in  effect  on the  Closing  Date,  and (F)  that
attached thereto is a true and complete copy of each of the Ascent Agreements as
in effect on the Closing Date;  (iii) a certificate of another officer as to the
incumbency  and  specimen  signature of the  Secretary  or  Assistant  Secretary
executing the certificate  pursuant to (ii) above; and (iv) such other documents
as the Lenders,  the Issuing Bank or Donohoe,  Jameson & Carroll,  P.C., counsel
for the Administrative Agent, may reasonably request.

      (d)  The  Lenders  shall  have  received  a  duly   completed   Compliance
Certificate  dated the Closing Date and  executed by a Financial  Officer of the
Borrower,  confirming  compliance  with the  conditions  precedent  set forth in
paragraphs (b) and (c) of Section 4.01 hereof,  with  paragraphs  (f), (g), (i),
(j) and (k) of this Section 4.02, and  demonstrating  compliance by the Borrower
with the provisions of Sections 6.09 and 6.10 hereof, and certifying to the fact
that  there  exists  no  Default  or Event of  Default  under  the terms of this
Agreement, and consummating the Agreement and making the initial Loans hereunder
would not cause a Default or Event of Default.

      (e) Each Lender and the  Administrative  Agent shall have received payment
in full of all Fees and other amounts due and payable on or prior to the Closing
Date,  including  reimbursement  or  payment  of  all  reasonable  out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.

      (f) The Borrower shall have  delivered duly executed and completed  copies
to each of the Lenders of each of the  following  documents and  agreements,  in
form and substance  satisfactory to each Lender: this Agreement,  applicable Fee
Letters  and  guaranties  of the  Obligations  executed by all  Guarantors.  The
Borrower  shall have  delivered a promissory  note to each  Lender,  in form and
substance  satisfactory to each such Lender, and any other Loan Paper reasonably
required by any Lender in connection with this Agreement.

      (g) An order has been entered confirming the Reorganization  Plan, and the
time for  reconsideration,  rehearing  or new trial and the time to appeal or to
seek a petition for review or certiorari has expired and no post-trial motion or
request for review is pending.  All notices to creditors  required  under Debtor
Relief  Laws in order to  confirm  such  Plan have  been  made  within  the time
required by Debtor  Relief Laws. No condition to closing of either the Merger or
the  Acquisition  has been  waived by the  Borrower.  The  Acquisition  has been
consummated  (or will be consummated on the Closing Date) in accordance with the
terms of the Acquisition  Agreement and the Merger has been consummated (or will
be consummated  simultaneous with this Transaction) in accordance with the terms
of the Merger Agreement.  The Capital Stock of Spectradyne and all of the assets
of Spectradyne  are wholly owned by the Borrower (or will be wholly owned by the
Borrower on the Closing Date) free and clear of any Liens in accordance with the
terms of the Acquisition  Agreement and the  Reorganization  Plan.  There are no
shareholders  who have effectively  exercised,  or continue to have the right to
effectively  exercise,  their appraisal rights with respect to the Capital Stock
of OCV.

      (h) Except with respect to certain FCC licenses of  Spectradyne  described
on Schedule 4.02(h) hereto, all governmental and third party approvals necessary
or advisable in connection with the Corporate  Restructuring,  the Transactions,
and the continuing  operations of the Borrower and its  Subsidiaries  shall have
been  obtained  and be in full  force and  effect,  and all  applicable  waiting
periods  shall have expired  without any action being taken or threatened by any
Governmental Authority which would restrain, prevent or otherwise impose adverse
conditions on the Corporate Restructuring or the Transactions.

      (i)  There  shall  not  have   occurred   any   material   change  in  the
capitalization (whether in debt or in equity),  corporate structure or assets of
the  Borrower  or any  of its  Subsidiaries  from  that  set  forth  in the  S-4
Registration Statement.

      (j) No action,  suit,  litigation  or similar  proceeding by or before any
Governmental  Authority  shall  exist  or,  in  the  case  of  litigation  by  a
Governmental   Authority,   be   threatened,   with  respect  to  the  Corporate
Restructuring or the Transactions contemplated thereby or otherwise, which would
be likely in the reasonable  opinion of the Required  Lenders to have a Material
Adverse Effect.

      (k) The structure and documentation of the Corporate Restructuring and the
Transactions contemplated thereby, and all corporate and other proceedings taken
or to be  taken  and all  documents  incidental  thereto,  shall  be  reasonably
satisfactory  in form and  substance  to the  Administrative  Agent and Donohoe,
Jameson & Carroll,  P.C., counsel for the Administrative  Agent, and each Lender
shall have received copies of all such documents as such Lender,  acting through
the Administrative Agent, may reasonably request. All transactions  necessary to
consummate the Corporate  Restructuring  shall have been completed in accordance
with the terms and conditions of the Merger Agreement, the Acquisition Agreement
and the Reorganization Plan.

      (l) The  Lenders  shall  have  received  a  certification  from the  chief
financial officer of the Borrower, in form and substance reasonably satisfactory
to the Lenders,  as to the solvency of the  Borrower and its  Subsidiaries  on a
consolidated  basis after giving effect to the Corporate  Restructuring  and the
consummation of the other transactions contemplated hereby.

      (m)  The  Ascent  Loan  Facility   shall  have  closed,   or  shall  close
simultaneously with, this Transaction.

      SECTION 4.03.     Increase  of  Long  Term  Commitment.  The  Long
Term  Commitment  may  only  be  increased  if  each  of  the  following
conditions has been satisfied:

      (a) The Borrower and each of its Subsidiaries,  and the Guarantors,  shall
have satisfied  each condition in Section 4.01 hereof,  and there shall exist no
Default or Event of Default on the date the Borrower requests such advance,  and
both immediately before and after such increase.

      (b) The Borrower  shall give not less than five Business Day's notice of a
requested  increase in the Long Term Commitment  specifying (i) that such notice
is for an increase in the Long Term Commitment (with a corresponding decrease in
the Short Term  Commitment)  in  accordance  with the terms of  Section  2.01(b)
hereof and this Section 4.03, (ii) the date that such proposed increase is to be
effective  and (iii) the  amount of such  increase  in the Long Term  Commitment
(which such amount must be in excess of $5,000,000 and in integral  multiples of
$5,000,000 in excess thereof and otherwise comply with subsection (c) below).
      (c) The sum of (i) the aggregate outstanding Revolving Loans plus (ii) the
aggregate   amount  of   outstanding   Competitive   Loans  shall  never  exceed
$125,000,000  (as such  $125,000,000  amount is reduced by each reduction in the
Commitments and Total Commitment in accordance with Section 2.10 hereof).

      (d) Every increase in the Long Term Commitment shall reduce the Short Term
Commitment immediately and automatically in the amount of each such increase. No
increase in the Long Term  Commitment may be made if such increase  would,  upon
reduction  of the Short Term  Commitment  in  accordance  with the terms of this
subsection (d), reduce the Short Term Commitment to a number less than zero.
                                   ARTICLE V

                             Affirmative Covenants

      The  Borrower  covenants  and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments  have been terminated
and the Obligations  shall have been paid in full and all Letters of Credit have
been  canceled  or have  expired  and all  amounts  drawn  thereunder  have been
reimbursed in full, the Borrower  will, and will cause each of its  Subsidiaries
to:

      Existence; Businesses and Properties.es and Properties

      (a) Do or cause to be done all things  necessary  to  preserve,  renew and
keep in full force and effect its legal existence, except as otherwise expressly
permitted under Section 6.05 hereof.

      (b) Do or cause to be done  all  things  necessary  to  obtain,  preserve,
renew, extend and keep in full force and effect the rights,  licenses,  permits,
franchises,  authorizations,  patents,  copyrights,  trademarks  and trade names
material to the conduct of its  business;  comply in all material  respects with
all  applicable  Laws,  rules,   regulations  and  decrees  and  orders  of  any
Governmental  Authority,  whether now in effect or hereafter enacted; and at all
times  maintain  and  preserve  all  property  material  to the  conduct of such
business and keep such property in good repair,  working order and condition and
from time to time make,  or cause to be made,  all needful  and proper  repairs,
renewals,  additions,  improvements and replacements  thereto necessary in order
that the business carried on in connection  therewith may be properly  conducted
at all times.

      Insurance.  Keep its  insurable  properties  insured  in  accordance  with
industry  standards at all times by  financially  sound and reputable  insurers;
maintain such other insurance,  to such extent and against such risks, including
fire and other risks insured against by extended coverage,  as is customary with
companies  in the same or similar  businesses  operating  in the same or similar
locations,  including  public  liability  insurance  against claims for personal
injury or death or property  damage  occurring  upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and maintain
such other insurance as may be required by Law.

      Obligations  and Taxes.  Pay and  discharge  promptly  when due all taxes,
assessments  and  governmental  charges  or levies  imposed  upon it or upon its
income or profits or in respect  of its  property  before the same shall  become
delinquent or in default, as well as all lawful claims for labor,  materials and
supplies  or  otherwise  that,  if  unpaid,  might give rise to a Lien upon such
properties  or any part  thereof;  provided,  however,  that  such  payment  and
discharge  shall not be  required  with  respect  to any such  tax,  assessment,
charge,  levy or  claim  so long as the  validity  or  amount  thereof  shall be
contested in good faith by appropriate  proceedings  and the Borrower shall have
set aside on its books adequate reserves with respect thereto in accordance with
GAAP  and  such  contest  operates  to  suspend   collection  of  the  contested
obligation,  tax,  assessment  or charge  and  enforcement  of a Lien,  and with
respect to those matters listed on Schedule 3.14 hereto.

      Financial   Statements,   Reports,   etc.   In  the  case  of  the
Borrower, furnish to the Administrative Agent and each Lender:

      (a) within 105 days after the end of each fiscal  year,  its  consolidated
and  consolidating  balance  sheet and related  consolidated  and  consolidating
statements  of income and cash flow,  showing  the  financial  condition  of the
Borrower and its  consolidated  Subsidiaries as of the close of such fiscal year
and the results of their  operations  during such year, and a comparison of such
financial  position and results of operations as of the  corresponding  date and
for the  previous  fiscal  year,  all audited  (in the case of the  consolidated
financial  statements)  by Deloitte & Touche,  LLP or other  independent  public
accountants of recognized  national standing  acceptable to the Required Lenders
and accompanied by an opinion of such accountants  (which shall not be qualified
in any  material  respect)  to  the  effect  that  such  consolidated  financial
statements  fairly present the financial  condition and results of operations of
the  Borrower  and its  consolidated  Subsidiaries  on a  consolidated  basis in
accordance with GAAP consistently applied;

      (b)  within  60 days  after  the end of each  of the  first  three  fiscal
quarters  of each  fiscal  year,  its  consolidated  balance  sheet and  related
consolidated  statements  of  earnings  and  cash  flow  showing  the  financial
condition of the Borrower and its  consolidated  Subsidiaries as of the close of
such  fiscal  quarter  and the  results of their  operations  during such fiscal
quarter and the then  elapsed  portion of the fiscal year,  and a comparison  of
such financial  position and results of operations as of the corresponding  date
and for the corresponding  periods in the previous fiscal year, all certified by
one of its Financial  Officers as fairly presenting the financial  condition and
results of operations  of the Borrower and its  consolidated  Subsidiaries  on a
consolidated  basis in accordance  with GAAP  consistently  applied,  subject to
normal year-end audit adjustment;

      (c) (i)  concurrently  with any  delivery of  financial  statements  under
sub-paragraph  (a) above,  a certificate  of the  accounting  firm opining on or
certifying  such  statements  (which  certificate  may be limited to  accounting
matters and disclaim  responsibility for legal interpretations)  certifying that
no Event of Default has occurred in Sections 6.01,  6.02(h),  6.03,  6.04, 6.05,
6.06, 6.09 and 6.10 hereof; and (ii) concurrently with any delivery of financial
statements under  sub-paragraph (a) or (b) above, a Compliance  Certificate of a
Financial Officer of the Borrower certifying that no Event of Default or Default
has occurred or, if such an Event of Default or Default has occurred, specifying
the nature and extent thereof and any corrective  action taken or proposed to be
taken  with  respect  thereto  and  setting  forth  computations   demonstrating
compliance with the covenants contained in Sections 6.01, 6.03, 6.04, 6.06, 6.09
and 6.10 hereof;

      (d)  promptly  after the same  become  publicly  available,  copies of all
periodic and other reports,  proxy  statements,  registration  statements (other
than on Form S-8) and  other  similar  materials  filed by the  Borrower  or any
Subsidiary of the Borrower with the Securities and Exchange  Commission,  or any
Governmental  Authority  succeeding  to  any or all  of  the  function  of  said
Commission,  or with any national securities exchange,  or distributed generally
to its shareholders, as the case may be; and

      (e)  promptly,  from time to time,  such other  information  regarding the
operations,  business  affairs and  financial  condition  of the Borrower or any
Subsidiary of the Borrower,  or compliance  with the terms of this Agreement and
the other Loan Papers, as the Administrative  Agent or any Lender may reasonably
request.

      Litigation  and  Other  Notices.  Furnish  to  the  Administrative
Agent,  the Issuing Bank and each Lender  prompt  written  notice of the
following:

      (a) any Event of  Default  or  Default,  specifying  the nature and extent
thereof  and the  corrective  action (if any) taken or proposed to be taken with
respect thereto;

      (b) the (i) filing or commencement  of, or any written threat or notice of
intention of any Person to file or  commence,  any action,  suit or  proceeding,
whether at Law or in equity or by or before any Governmental  Authority, or (ii)
the making of any  written  claim,  in either case  against the  Borrower or any
Affiliate  thereof as to which there is a reasonable  possibility  of an adverse
determination and which if adversely determined, could reasonably be expected to
result in a Material Adverse Effect; and

      (c) any  development  (including  developments  in pending  litigation and
developments in pending or threatened labor disruption) that has resulted in, or
could reasonably be expected to result in, a Material Adverse Effect.

      Employee Benefits. (a) Comply in all material respects with the applicable
provisions of ERISA and the Code and (b) furnish to the Administrative Agent (i)
as soon as possible after, and in any event within 10 days after any Responsible
Officer of the Borrower or any ERISA Affiliate knows or has reason to know that,
any ERISA Event has occurred that,  alone or together with any other ERISA Event
could  reasonably  be  expected  to result in  liability  of the  Borrower in an
aggregate amount exceeding  $55,000,000,  a statement of a Financial  Officer of
the Borrower  setting  forth  details as to such ERISA Event and the action,  if
any, that the Borrower proposes to take with respect thereto.

      SECTION   5.07.   Maintaining   Records;    Access   to   Properties   and
InspecMaintaining  Records;  Access to Properties and  Inspections.  Keep proper
books  of  record  and  account  in which  full,  true and  correct  entries  in
conformity  with GAAP and all  requirements  of Law are made of all dealings and
transactions in relation to its business and activities.  The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior written notice, to
visit and inspect the  financial  records and the  properties of the Borrower or
any  Subsidiary of the Borrower at  reasonable  times and as often as reasonably
requested and to make extracts from and copies of such  financial  records,  and
permit any representatives  designated by the Administrative Agent or any Lender
to discuss the affairs, finances and condition of the Borrower or any Subsidiary
of the  Borrower  with the  officers  thereof and (with the  concurrence  of the
Administrative  Agent)  independent  accountants  therefor  (provided  that  the
Borrower has the right to have a representative present for any meeting with the
Borrower's independent accountants).

      Use of Proceeds. Use the proceeds of the Loans and request the issuance of
Letters  of  Credit  only for the  purposes  set forth in the  preamble  to this
Agreement.

      Compliance with Environmental Laws.nvironmental Laws

      (a)  Comply,  and  exercise  best  efforts to cause all  lessees and other
Persons  occupying its Properties to comply,  in all material  respects with all
Environmental  Laws and Environmental  Permits  applicable to its operations and
Properties;  and obtain and renew all material  Environmental  Permits necessary
for its operations and Properties; and conduct any Remedial Action to the extent
required by and in accordance with Environmental Laws; provided,  however,  that
none of the Borrower or any of its  Subsidiaries  shall be required to undertake
any  Remedial  Action  to the  extent  that  its  obligation  to do so is  being
contested in good faith and by proper  proceedings and appropriate  reserves are
being maintained with respect to such circumstances.

      (b) If a Default  caused by reason of a breach of  paragraph  (a) above or
Section 3.20 hereof shall have occurred and be continuing, at the request of the
Required Lenders through the Administrative Agent, provide to the Lenders within
45 days  after  such  request,  at the  expense  of the  Borrower,  a "Phase  1"
environmental site assessment report for the Properties which are the subject of
such default  prepared by an  environmental  consulting  firm  acceptable to the
Administrative  Agent and  indicating  the  presence  or  absence  of  Hazardous
Materials  and the  estimated  cost of any  compliance  or  Remedial  Action  in
connection with such Properties.

      Compliance  with Material  Contracts.  Except as set forth in Section 6.07
hereof,  maintain in full force and effect  (including  exercising any available
renewal option), and without amendment or modification,  each material contract,
unless the  failure so to maintain  any such  material  contract or  replacement
contract or contracts  thereof (or any amendment or modification  thereto) could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.


                                  ARTICLE VI

                              Negative Covenants

      The Borrower  covenants  and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments  have been terminated
and the  Obligations  have been paid in full and all Letters of Credit have been
canceled or have expired and all amounts drawn  thereunder  have been reimbursed
in full:

      SECTION 6.01.  Indebtedness of the Subsidiaries of the  BorrowIndebtedness
of the  Subsidiaries of the Borrower.  The Borrower will not cause or permit any
of its Subsidiaries to, issue any Preferred Stock, or to issue,  incur,  create,
assume or permit to exist any Indebtedness, except:

      (a)  Indebtedness  of any  Subsidiary  of the Borrower for borrowed  money
existing on the date hereof and set forth in Schedule  6.01 hereto,  but not any
extensions, renewals or replacements of such Indebtedness; and

      (b) Indebtedness of any Subsidiary of the Borrower owed to the Borrower or
to a Wholly Owned Subsidiary of the Borrower that does not otherwise violate any
provision of this Agreement or any other Loan Paper.

      Liens.  The  Borrower  will not,  and will not cause or permit  any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any of its
property or assets (including stock or other securities of any Person, including
any Subsidiary)  now owned or hereafter  acquired by it or them or on any income
or revenues or rights in respect of any thereof, except:

      (a)  Liens on  property  or assets of the  Borrower  and its  Subsidiaries
existing on the date hereof and set forth in Schedule 6.02 hereto; provided that
such Liens  shall  secure only those  obligations  which they secure on the date
hereof;
      (b) any Lien  existing on any  property or asset prior to the  acquisition
thereof by the Borrower or any  Subsidiary  of the  Borrower;  provided that (i)
such  Lien  is not  created  in  contemplation  of or in  connection  with  such
acquisition and (ii) such Lien does not apply to any other property or assets of
the Borrower or any Subsidiary of the Borrower;

      (c)   Liens for  taxes  not yet due or which  are being  contested
in compliance with Section 5.03 hereof;

      (d) carriers', warehousemen's,  mechanics', materialmen's,  repairmen's or
other like  Liens  arising  in the  ordinary  course of  business  and  securing
obligations  that  are not due and  payable  or which  are  being  contested  in
compliance  with  Section  5.03  hereof,  which,  in  the  aggregate,   are  not
substantial  in  amount  and do not  materially  detract  from the  value of the
property  subject thereto or materially  interfere with the ordinary  conduct of
the business of the Borrower or any of its Subsidiaries;

      (e)  pledges  and  deposits  made in the  ordinary  course of  business in
compliance with workmen's compensation,  unemployment insurance and other social
security Laws or regulations;

      (f) deposits to secure the  performance of bids,  trade  contracts  (other
than for Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course or business;

      (g) zoning restrictions, easements, rights-of-way,  restrictions on use of
real property and other similar encumbrances  incurred in the ordinary course of
business  which,  in the  aggregate,  are not  substantial  in amount and do not
materially  detract from the value of the property subject thereto or materially
interfere  with the  ordinary  conduct of the business of the Borrower or any of
its Subsidiaries; and

      (h) purchase money security interests in real property, equipment or other
assets  hereafter  acquired by the Borrower or any  Subsidiary  of the Borrower;
provided that (i) such security  interests secure  Indebtedness  (including,  as
applicable, Capital Lease Obligations) permitted by Section 6.01(c) hereof, (ii)
such security  interests are incurred,  and the Indebtedness  secured thereby is
created, within 180 days after such acquisition,  (iii) the Indebtedness secured
thereby  does not exceed 100% of the cost of such real  property,  equipment  or
other assets at the time of such acquisition and (iv) such security interests do
not apply to any other  property or assets of the Borrower or any  Subsidiary of
the Borrower.

      SECTION 6.03.     Sale and Lease Back  Transactions;  Off-Balance
Sheet Sale and Lease Back  Transactions;  Off-Balance  Sheet Financings.
The  Borrower  will  not,  and  will  not  cause  or  permit  any of its
Subsidiaries to:
      (a) Enter into any  arrangement,  directly or indirectly,  with any person
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property which it intends to use for  substantially
the  same  purpose  or  purposes  as the  property  being  sold or  transferred;
provided,  however,  that the Borrower or a Subsidiary of the Borrower may enter
into (i) any operating  lease,  (ii) Equipment Lease  Transactions  permitted by
paragraph  (b) of this Section and (iii) Capital  Lease  Obligations  secured by
purchase money security interests permitted by Section 6.02(h) hereof to finance
the initial acquisition of real property, equipment or other assets.

      (b) Directly or indirectly  enter into or be or become liable with respect
to any Equipment Lease Transactions,  other than Equipment Lease Transactions of
the Borrower and all of its  Subsidiaries,  which do not in the aggregate at any
time have  Attributable  Debt in an  amount  in excess of 20% of the  Borrower's
Consolidated  Tangible Net Worth as of the last day of the most  recently  ended
fiscal quarter of the Borrower.

      Investments,  Acquisitions,  Loans and Advances. The Borrower es will not,
and will not cause or  permit  any of its  Subsidiaries  to,  purchase,  hold or
acquire any Capital Stock,  evidences of  indebtedness  or other  securities of,
make or permit to exist any loans or advances to, or make or permit to exist any
investment or any other  interest in, or make any  acquisition  of assets of any
other Person as a going concern (each, an "Investment"), except:

      (a)   Investments  existing  on the  date  hereof  in the  Capital
Stock set forth on Schedule 6.04 hereto;

      (b)   Permitted Investments;

      (c)  Investments  consisting  of loans or advances  to (i) a Wholly  Owned
Subsidiary,  provided  that such loans or advances are not  subordinated  to any
other  Indebtedness or other  obligations of such Subsidiary and rank pari passu
with all senior, unsecured Indebtedness of such Subsidiary, or (ii) employees of
the  Borrower  or the Wholly  Owned  Subsidiaries,  provided  that such loans or
advances are made in the  ordinary  course of business  and in  accordance  with
company policy,  and provided  further that the proceeds of such loan or advance
are used to finance employee related expenses (including relocation expenses and
travel and entertainment expenses);

      (d) additional equity  Investments in any Subsidiary of the Borrower which
is in  existence  on the date hereof  provided  that,  immediately  after giving
effect  thereto,  (i) the ratio of such  Subsidiary's  consolidated  liabilities
(less  borrowings  by  such  Subsidiary   allowed  and  outstanding  under  this
Agreement,  deferred  compensation,  deferred income and allocation of income to
minority   interests  in  earnings  of   consolidated   subsidiaries)   to  such
Subsidiary's  consolidated  assets (determined in accordance with GAAP) shall be
less  than  1.00 to 4.00 and (ii) the ratio of  Consolidated  Liabilities  (less
borrowings allowed and outstanding under this Agreement,  deferred compensation,
deferred  income and  allocation of income to minority  interests in earnings of
consolidated  subsidiaries)  to  Consolidated  Assets shall be less than 1.00 to
4.00;

      (f)  Investments   consisting  of  non-cash   consideration   received  in
connection  with a sale or  disposition of assets  permitted  under Section 6.05
hereof; and

      (g) Investments  (other than Investments  described in clauses (a) through
(f) above and other than equity  Investments in Subsidiaries of the Borrower) to
the extent the aggregate  amount thereof made in any fiscal year does not exceed
10% of the Consolidated  Assets as of the last day of the immediately  preceding
fiscal year.

      Mergers,  Consolidations  and Sales of Assets.  The Borrower  will
not, and will not cause or permit any of its Subsidiaries to:

      (a) merge into or consolidate with any Person,  or permit any other Person
to merge into or consolidate  with it, provided that, if there exists no Default
or Event of  Default at the time  thereof or  immediately  after  giving  effect
thereto  (i) any  Wholly  Owned  Subsidiary  may merge  into the  Borrower  in a
transaction in which the Borrower is the surviving corporation,  (ii) any Wholly
Owned  Subsidiary  may merge into or  consolidate  with any other  Wholly  Owned
Subsidiary  in a  transaction  in which the  surviving  entity is a Wholly Owned
Subsidiary  and no Person other than the  Borrower or a Wholly Owned  Subsidiary
receives any consideration; or

      (b) sell,  transfer,  lease or otherwise dispose of (in one transaction or
in a series of transactions)  all or any substantial part of its assets (whether
now  owned  or  hereafter  acquired)  or any  amount  of  Capital  Stock  of any
Subsidiary of the Borrower,  except that (a) the Borrower and any  Subsidiary of
the  Borrower may sell or dispose of  inventory  and  obsolete  equipment in the
ordinary course of business,  (b) if at the time thereof and  immediately  after
giving effect  thereto no Event of Default or Default shall have occurred and be
continuing,  the  Borrower  or any of its  Subsidiaries  may sell or  dispose of
assets (not  including  Capital Stock owned by the Borrower or any Subsidiary of
the  Borrower)  for fair market value  outside the  ordinary  course of business
(each  an  "Asset  Disposition")  so long as the  cumulative  aggregate  noncash
consideration  for all such Asset  Dispositions  after the date hereof shall not
exceed $10,000,000 in fair market value and provided that the aggregate Net Cash
Proceeds  of all  such  Asset  Dispositions  are,  to  the  extent  they  exceed
$25,000,000,  applied in accordance  with the terms of Section 2.12(c) hereof to
repay the Loans and reduce the  Commitments,  and (c) if at the time thereof and
immediately  after giving  effect  thereto no Event of Default or Default  shall
have occurred and be continuing,  the Borrower may transfer  control,  through a
sale,  corporate  transaction or other  disposition,  of the hotel contracts and
related assets for its hotel customers outside of the United States.

      SECTION 6.06. Dividends and Distributions; Restrictions on AbilitDividends
and Distributions; Restrictions on Ability of Subsidiaries to Pay Dividends. The
Borrower  will not,  and will not cause or permit  any of its  Subsidiaries  to,
declare  or  pay,  directly  or  indirectly,  any  dividend  or make  any  other
distribution (by reduction of capital or otherwise),  whether in cash, property,
securities or a combination  thereof,  with respect to any shares of its Capital
Stock or directly or indirectly  redeem,  purchase,  retire or otherwise acquire
for value (or permit any  Subsidiary of the Borrower to purchase or acquire) any
shares of any class of its  Capital  Stock or set aside any  amount for any such
purpose; provided,  however, that (a) any Subsidiary of the Borrower may declare
and pay dividends or make other distributions to another Wholly Owned Subsidiary
or to the  Borrower,  and (b) so long as there  exists  no  Default  or Event of
Default both before and after giving effect to such  dividend,  distribution  or
repurchase  (i) the Borrower may make  redemptions or repurchases of its Capital
Stock in  connection  with  employee  stock  options  upon  termination  of such
employment,  for an aggregate  amount of  consideration  paid from and after the
date hereof of up to  $10,000,000,  in connection with any employee stock option
or  incentive  plans,  (ii)  the  Borrower  may  declare  and pay  dividends  or
distributions to its  shareholders,  and redeem,  purchase,  retire or otherwise
acquire  for value any shares of any class of its Capital  Stock,  and (iii) any
Subsidiary  of the Borrower may declare  and/or pay any  dividends in accordance
with the terms of the Reorganization Plan.

      Transactions  with  Affiliates.  Except  in  accordance  with the terms of
Section 6.06 hereof,  the Borrower will not, and will not cause or permit any of
its  Subsidiaries to, sell or transfer any property or assets to, or purchase or
acquire  any  property  or  assets  from,  or  otherwise  engage  in  any  other
transactions  with, or permit any Subsidiary of the Borrower to sell or transfer
any  property or assets to, or purchase or acquire any  property or assets from,
or otherwise engage in any other transactions with any of its Affiliates, except
that the  Borrower or any  Subsidiary  of the  Borrower may engage in any of the
foregoing transactions in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such  Subsidiary than could
be obtained on an arm's length basis from  unrelated  third  parties;  provided,
however,  that the foregoing  shall not preclude the Borrower nor any Subsidiary
of the Borrower from performing and complying with its obligations under (a) the
Ascent Agreements in accordance with the terms thereof on the date hereof or, so
long as any such amendment (or extension to additional services,  in the case of
the Services  Agreement) does not materially  adversely  affect the interests of
the  Administrative  Agent, the Issuing Bank or the Lenders,  as the same may be
hereafter  amended (or extended to additional  services) or (b) the transactions
necessary to consummate the Corporate Restructuring. Notwithstanding anything in
this Agreement or the other Loan Papers to the contrary, it is understood by all
parties hereto that all or any of the Ascent Agreements may be terminated by the
parties thereto at any time during the term of this Agreement.

      Limitation on Restrictive Agreements.  The Borrower will not, and will not
cause or permit any of its Subsidiaries to, enter into any indenture, agreement,
instrument,   financing  document  or  other  arrangement  which,   directly  or
indirectly,  prohibits  or  restrains,  or has  the  effect  of  prohibiting  or
restraining,  or imposes materially adverse conditions upon: (a) the granting of
Liens, (b) the making or granting of Guarantees, (c) the payment of dividends or
distributions,  (d) the purchase, redemption or retirement of any Capital Stock,
(e) the making of loans or  advances  or (f)  transfers  or sales of property or
assets  (including  Capital  Stock) by the Borrower or any of its  Subsidiaries,
other than  restrictions on the granting of Liens on, or the transfer of, assets
that are encumbered by Liens permitted under clauses (b), (h) and (i) of Section
6.02 hereof with respect to the property or assets covered by such Lien only.

      Leverage Ratio.  The Borrower will not permit the Leverage Ratio as of the
last day of any fiscal  quarter  ending  during any period set forth below to be
more than the ratio set forth below for such period:

            Quarter Ending Ratio                        Ratio

            From the Closing Date to
            through December 31, 1997                 2.50 to 1.00

            January 1, 1998 and thereafter                  2.00      to
1.00

      In the event  that the  Borrower  shall  complete,  directly  or through a
Subsidiary of the Borrower, a permitted acquisition, the Leverage Ratio shall be
determined thereafter, to the extent necessary, by computing such ratio on a pro
forma basis as if such  acquisition  had been  completed on the first day of the
period of four  consecutive  fiscal quarters ending on the dates indicated above
occurring after the date of such acquisition.

      Coverage Ratio.  The Borrower will not permit the Coverage Ratio as of the
last day of any fiscal  quarter  ending  during any period set forth below to be
less than 4.00 to 1.00. In the event that the Borrower shall complete,  directly
or through a Subsidiary of the Borrower, a permitted  acquisition,  the Coverage
Ratio shall be determined thereafter, to the extent necessary, by computing such
ratio on a pro forma  basis as if such  acquisition  had been  completed  on the
first day of the period of four consecutive  fiscal quarters ending on the dates
indicated above occurring after the date of such acquisition.

      Amendments to  Organizational  Documents.  The Borrower will not, and will
not cause or permit any of its  Subsidiaries to, enter into any amendment of any
term or  provision,  or accept any  consent or waiver  with  respect to any such
provision,  of its articles of  incorporation,  by-laws,  or its  organizational
documents,  as  applicable,  in any manner that is  material  and adverse to the
Lenders.


                                  ARTICLE VII

                               Events of Default

      In  case of the  happening  of any of the  following  events  ("Events  of
Default"):

      (a) (i) any representation or warranty made or deemed made by the Borrower
      or any of its Subsidiaries (except representations and warranties by or on
      behalf of Spectradyne and its  Subsidiaries on the Closing Date) in, or in
      connection  with,  this  Agreement  or in  any  other  Loan  Paper,  or in
      connection with any agreement  related to the Corporate  Restructuring  or
      the  borrowings  or  issuances  of  Letters  of Credit  hereunder,  or any
      representation,  warranty,  statement or written information  contained in
      any report, certificate,  financial statement or other instrument prepared
      by the Borrower or any Subsidiary of the Borrower (except  Spectradyne and
      its  Subsidiaries)  and furnished by the Borrower or any Subsidiary of the
      Borrower (except  Spectradyne and its  Subsidiaries) in connection with or
      pursuant to this Agreement or any other Loan Paper,  or in connection with
      any of the  transactions  contemplated  to occur as of the  Closing  Date,
      shall prove to have been false or misleading in any material  respect when
      so made, deemed made or furnished; or

            (ii) any  representation  or  warranty  made or deemed made by or on
      behalf of Spectradyne or any of its  Subsidiaries  on the Closing Date: in
      or in connection  with,  this Agreement or in any other Loan Paper,  or in
      connection with any agreement  related to the Corporate  Restructuring  or
      the  borrowings  or  issuances  of  Letters  of Credit  hereunder,  or any
      representation,  warranty,  statement or written information  contained in
      any report, certificate,  financial statement or other instrument prepared
      by  Spectradyne  or any  Subsidiary  of  Spectradyne  and furnished by the
      Borrower or any Subsidiary of the Borrower in connection  with or pursuant
      to this  Agreement or any other Loan Paper,  or in connection  with any of
      the transactions contemplated to occur as of the Closing Date, shall prove
      to have been false or  misleading  in any  material  respect when so made,
      deemed made or furnished, and which could reasonably be expected to have a
      Material Adverse Effect;

      (b) default  shall be made in the payment of any  principal of any Loan or
the  reimbursement of principal with respect to any L/C Disbursement when and as
the same shall become due and  payable,  whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise;

      (c) default  shall be made in the  payment of any  interest on any Loan or
any Fee or L/C  Disbursement  or any other amount (other than an amount referred
to in (b) above) due under this  Agreement or any other Loan Paper,  when and as
the  same  shall  become  due and  payable,  and  such  default  shall  continue
unremedied for a period of five Business Days;
      (d) default  shall be made in the due  observance  or  performance  by the
Borrower  or any  Subsidiary  of the  Borrower  of any  covenant,  condition  or
agreement  contained in Sections  5.01(a),  5.05 or 5.08 hereof or in Article VI
hereof;

      (e) default  shall be made in the due  observance  or  performance  by the
Borrower  or any  Subsidiary  of the  Borrower  of any  covenant,  condition  or
agreement contained in this Agreement (other than those specified in (b), (c) or
(d) above) or in any other Loan Paper and such default shall continue unremedied
for a period of 15 days after notice  thereof from the  Administrative  Agent or
any Lender to the Borrower;

      (f) the Borrower or any  Subsidiary of the Borrower  shall (i) fail to pay
any  principal  or  interest,  regardless  of  amount,  due  in  respect  of any
Indebtedness  in a principal  amount in excess of  $10,000,000,  when and as the
same shall become due and payable,  or (ii) fail to observe or perform any other
term, covenant,  condition or agreement contained in any agreement or instrument
evidencing  or  governing  any such  Indebtedness  if the effect of any  failure
referred to in this clause (ii) is to cause,  or to permit the holder or holders
of such  indebtedness  or a trustee on its or their  behalf (with or without the
giving of  notice,  the lapse of time or both) to cause,  such  Indebtedness  to
become due prior to its stated maturity;

      (g)  an  involuntary  proceeding  shall  be  commenced  or an  involuntary
petition shall be filed in a court of competent  jurisdiction seeking (i) relief
in  respect  of  the  Borrower  or  any  Subsidiary  of  the  Borrower,  or of a
substantial  part of the property or assets of the  Borrower or a Subsidiary  of
the Borrower,  under Title 11 of the United States Code, as now  constituted  or
hereafter  amended,   or  any  other  Federal,   state  or  foreign  bankruptcy,
insolvency,  receivership  or similar Law, (ii) the  appointment  of a receiver,
trustee,  custodian,  sequestrator,  conservator  or  similar  official  for the
Borrower or any  Subsidiary  of the  Borrower or for a  substantial  part of the
property or assets of the Borrower or a Subsidiary  of the Borrower or (iii) the
winding-up or liquidation of the Borrower or any Subsidiary of the Borrower; and
such  proceeding or petition shall continue  undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;

      (h) the Borrower or any Subsidiary of the Borrower  shall (i)  voluntarily
commence any  proceeding or file any petition  seeking  relief under Title 11 of
the United States Code, as now  constituted or hereafter  amended,  or any other
Federal, state or foreign bankruptcy,  insolvency,  receivership or similar Law,
(ii)  consent  to the  institution  of,  or  fail to  contest  in a  timely  and
appropriate  manner,  any proceeding or the filing of any petition  described in
(g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or any
Subsidiary of the Borrower,  or for a substantial part of the property or assets
of the Borrower or any Subsidiary of the Borrower, (iv) file an answer admitting
the material  allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors,  (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;

      (i) one or more judgments for the payment of money in an aggregate  amount
in excess of $10,000,000 shall be rendered against the Borrower,  any Subsidiary
of  the  Borrower  or  any  combination   thereof  and  the  same  shall  remain
undischarged  for a period of 30 consecutive  days during which  execution shall
not be  effectively  stayed,  or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any  Subsidiary of
the Borrower to enforce any such judgment;

      (j) an ERISA Event shall have occurred that,  when taken together with all
other such ERISA Events,  could reasonably be expected to result in liability of
the Borrower,  any Subsidiary of the Borrower, or any combination thereof, in an
aggregate amount exceeding $10,000,000;

      (k)   there shall have occurred a Change in Control;

      (l) Ascent shall: (i) fail to pay any principal or interest, regardless of
amount,  due in respect of the Ascent Loan Facility,  when and as the same shall
become due and  payable  taking  into  account  any  applicable  period of grace
thereunder,  or (ii)  fail to  observe  or  perform  any other  term,  covenant,
condition or agreement  contained in any agreement or  instrument  evidencing or
governing the Ascent Loan  Facility if the effect of any failure  referred to in
this  clause  (ii) is to cause,  or to permit  the  holder  or  holders  of such
indebtedness  or a trustee on its or their behalf (with or without the giving of
notice,  the lapse of time or both) to cause,  such  Indebtedness  to become due
prior to its stated maturity;

      (m) any of the following shall occur: (i) This Agreement, any guarantee or
promissory  note executed in connection with this Agreement  (collectively,  the
"Material Agreements"),  or any material provision of any thereof shall, for any
reason, not be valid and binding on the Obligor signatory thereto,  or not be in
full force and effect,  or shall be  declared  to be null and void;  or (ii) the
validity or enforceability  of any Material  Agreement shall be contested by any
Obligor,  the  Borrower,  any  Subsidiary  of  the  Borrower  or  any  of  their
Affiliates;  or (iii)  any  Obligor  shall  deny in  writing  that it has any or
further  liability or obligation under its respective  Material  Agreements;  or
(iv) any default or breach under any provision of any Material  Agreement  shall
continue after the applicable grace period,  if any,  specified in such Material
Agreement;

      (n) the occurrence of either of the following two events: (i) confirmation
of the  Reorganization  Plan is  revoked;  or (ii)  the  Reorganization  Plan is
modified after  confirmation  in any manner not described on Schedule 7.0 hereto
(A)without prior written notice to the Lenders or (B) in any manner material and
adverse to the interest of the Lenders (as determined by the Required Lenders in
their  sole   discretion)   and  without  the  prior  written   consent  of  the
Administrative Agent and the Required Lenders; or

      (o) at any time that the debt  limitation on the Borrower in the Corporate
Agreement  with Ascent  operates to limit the ability of the  Borrower to make a
borrowing  hereunder  at a time when the  Borrower  needs  such  ability to meet
operating  expenses  or  capital  requirements  in  each  case  approved  by the
Borrower's Board of Directors (as such approval may be amended),  provided that,
no amendment to any such approval may be made once operating expenses or capital
requirements  have been  incurred or made,  or to avoid a Default or an Event of
Default under this subsection (v);

then,  and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above),  and at any time thereafter during the
continuance of such event, the  Administrative  Agent may, and at the request of
the Required  Lenders shall,  by notice to the Borrower,  take either or both of
the following actions,  at the same or different times: (i) terminate  forthwith
the either or both of the Short  Term  Commitment  or the Long Term  Commitment,
(ii) declare the Loans then outstanding to be forthwith due and payable in whole
or in part,  whereupon  the  principal  of the Loans so  declared  to be due and
payable,  together with accrued interest thereon and any unpaid accrued Fees and
all other liabilities of the Borrower accrued hereunder,  shall become forthwith
due and payable, without presentment, demand, protest or any other notice of any
kind,  all of which  are  hereby  expressly  waived  by the  Borrower,  anything
contained  herein  to  the  contrary   notwithstanding  or  (iii)  require  cash
collateral as  contemplated  by Section  2.21(j)  hereof;  and in any event with
respect  to the  Borrower  described  in  paragraph  (g) or (h)  above,  all the
Commitments  shall  automatically  terminate and the principal of the Loans then
outstanding,  together with accrued  interest hereon and any unpaid accrued Fees
and all other liabilities of the Borrower accrued hereunder, shall automatically
become due and payable, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Borrower,  anything
contained herein to the contrary  notwithstanding.  Notwithstanding  anything in
this  Agreement or in any Loan Paper to the contrary,  to the extent any Default
or Event of  Default  under  any of  subsections  (a),  (d) or (e)  above is due
exclusively to the actions,  inactions or misrepresentations with respect to any
foreign  Subsidiary of the  Borrower,  then such event shall not be a Default or
Event of Default unless such event could also  reasonably be expected to cause a
Material Adverse Effect.


                                 ARTICLE VIII

                           The Administrative Agent

      In order to expedite the  transactions  contemplated by this Agreement and
the other Loan Papers,  NationsBank is hereby appointed to act as Administrative
Agent on behalf of the  Lenders and the  Issuing  Bank.  Each of the Lenders and
each  assignee  of  any  such  Lender,   hereby   irrevocably   authorizes   the
Administrative  Agent to take such  actions on behalf of such Lender or assignee
or the Issuing Bank and to exercise such powers as are specifically delegated to
the Administrative Agent by the terms and provisions hereof,  together with such
actions and powers as are  reasonably  incidental  thereto.  The  Administrative
Agent is hereby  expressly  authorized  by the  Lenders  and the  Issuing  Bank,
without hereby limiting any implied  authority,  (a) to receive on behalf of the
Lenders and the Issuing  Bank all  payments of  principal of and interest on the
Loans, all payments in respect of L/C Disbursements and all other amounts due to
the Lenders hereunder,  and promptly to distribute to each Lender or the Issuing
Bank its proper share of each payment so received;  (b) to give notice on behalf
of each of the Lenders to the Borrower of any Event of Default specified in this
Agreement and the other Loan Papers of which the Administrative Agent has actual
knowledge  acquired  in  connection  with  its  agency  hereunder;  and  (c)  to
distribute to each Lender copies of all notices,  financial statements and other
materials  delivered by the Borrower  pursuant to this  Agreement  and the other
Loan Papers as received by the Administrative Agent.

      Neither  the  Administrative  Agent  nor any of its  directors,  officers,
employees  or agents  shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct,  or
be  responsible  for any  statement,  warranty or  representation  herein or the
contents of any document  delivered in  connection  herewith,  or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower of any of the terms,  conditions,  covenants  or  agreements  contained
herein. The Administrative Agent shall not be responsible to the Lenders for the
due execution,  genuineness,  validity,  enforceability or effectiveness of this
Agreement,  the other Loan Papers or any other  instruments or  agreements.  The
Administrative  Agent  shall in all  cases  be fully  protected  in  acting,  or
refraining from acting,  in accordance with written  instructions  signed by the
Required Lenders and, except as otherwise  specifically  provided  herein,  such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders.  The Administrative Agent shall, in the absence of knowledge to the
contrary,  be entitled to rely on any  instrument or document  believed by it in
good  faith to be genuine  and  correct  and to have been  signed or sent by the
proper  Person  or  Persons.  Neither  the  Administrative  Agent nor any of its
directors,  officers,  employees or agents shall have any  responsibility to the
Borrower on account of the failure of or delay in  performance  or breach by any
Lender or the Issuing Bank of any of its obligations  hereunder or to any Lender
or the  Issuing  Bank on account of the  failure of or delay in  performance  or
breach by any other  Lender or the issuing  Bank or the Borrower of any of their
respective  obligations hereunder or in connection herewith.  The Administrative
Agent may execute any and all duties hereunder by or through agents or employees
and shall be  entitled to rely upon the advice of legal  counsel  selected by it
with respect to all matters  arising  hereunder  and shall not be liable for any
action  taken or suffered in good faith by it in  accordance  with the advice of
such counsel.

      The Lenders  hereby  acknowledge  that the  Administrative  Agent shall be
under  no duty to take  any  discretionary  action  permitted  to be taken by it
pursuant to the  provisions of this  Agreement or any other Loan Paper unless it
shall be requested in writing to do so by the Required Lenders.

      Subject to the  appointment  and acceptance of a successor  Administrative
Agent as  provided  below,  the  Administrative  Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation,  the Required
Lenders shall have the right to appoint a successor.  If no successor shall have
been  so  appointed  by the  Required  Lenders  and  shall  have  accepted  such
appointment within 30 days after the retiring  Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent which shall be a bank having a
combined  capital and surplus of at least  $500,000,000  or an  Affiliate of any
such bank.  Upon the  acceptance  of any  appointment  as  Administrative  Agent
hereunder by a successor bank, such successor shall succeed to and become vested
with  all  the  rights,   powers,   privileges   and  duties  of  the   retiring
Administrative  Agent and the retiring  Administrative Agent shall be discharged
from its duties and  obligations  hereunder.  After the  Administrative  Agent's
resignation  hereunder,  the  provisions of this Article and Section 9.05 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 Administrative Agent.

      With respect to the Loans made by it hereunder,  the Administrative  Agent
in its individual  capacity and not as Administrative  Agent shall have the same
rights and powers as any other  Lender  and may  exercise  the same as though it
were  not  the  Administrative  Agent,  and  the  Administrative  Agent  and its
Affiliates may accept deposits from,  lend money to and generally  engage in any
kind of business  with the Borrower or any  Subsidiary  of the Borrower or other
Affiliate thereof as if it were not Administrative Agent.

      Each Lender agrees (a) to reimburse the  Administrative  Agent, on demand,
in the amount of its pro rata share (based on its  Commitment  hereunder) of any
expenses  incurred for the benefit of the Lenders by the  Administrative  Agent,
including  reasonable counsel fees and compensation of agents and employees paid
for  services  rendered  on  behalf  of the  Lenders,  that  shall not have been
reimbursed  by  the  Borrower  and  (b)  to  indemnify  and  hold  harmless  the
Administrative Agent and any of its directors, officers, employees or agents, on
demand,  in the  amount of such pro rata  share,  from and  against  any and all
liabilities, taxes, obligations, losses, damages, penalties, actions, judgments,
suits,  costs,  expenses or disbursements of any kind or nature  whatsoever that
may be Imposed on,  incurred by or  asserted  against it in its  capacity as the
Administrative  Agent or any of them in any way  relating  to or arising  out of
this Agreement or any other Loan Paper,  or any action taken or omitted by it or
any of them under this Agreement or any other Loan Paper, to the extent the same
shall not have been reimbursed by the Borrower; provided that no Lender shall be
liable to the Administrative  Agent or any such other indemnified Person for any
portion of such liabilities,  obligations,  losses, damages, penalties, actions,
judgments,  suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of the Administrative  Agent or any of
its directors, officers, employees or agents.

      Each Lender  acknowledges that it has,  independently and without reliance
upon the  Administrative  Agent, or any other Lender and based on such documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement  and the other Loan  Papers.  Each Lender
also  acknowledges  that it will,  independently  and without  reliance upon the
Administrative  Agent  or any  other  Lender  and  based on such  documents  and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this  Agreement
and the other Loan Papers,  or any related  agreement or any document  furnished
hereunder or thereunder.


                                  ARTICLE IX

                                 Miscellaneous

      Notices.  Notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight  courier service,  mailed by
certified or registered mail or sent by telecopy, as follows:

      (a)   if to the Borrower, to it at:

            On Command Corporation
            3301 Olcott Street
            Santa Clara, CA  85054
            Attn:             Brian Steel
            Telephone:        (408) 496-1800
            Telecopy No.:     (408) 496-0668

      With a copy to:

            Ascent Entertainment Group., Inc.
            One Tabor Center, Suite 2800
            1200 17th Street
            Denver, Colorado  80202
            Attention:        W. D. Minami
            Telephone:        (303) 626-7030
            Telecopy No.:     (303) 595-0823

      With a copy to:

            Ascent Entertainment Group, Inc.
            One Tabor Center, Suite 2800
            1200 17th Street
            Denver, Colorado  80202
            Attention:        Arthur Aaron, Esq.
            Telephone:        (303) 626-7040
            Telecopy No.:     (303) 595-0127

      (b)   if to the Administrative Agent, to it at:

            NationsBank of Texas, National Association
            NationsBank Plaza
            901 Main Street, 64th Floor
            Dallas, Texas  75202
            Telephone No.:    (214) 508-0860
            Telecopier No.:   (214) 508-9390
            Attention:        Mr. Gregory I. Meador
                              Vice President

            With a copy to:

            Donohoe, Jameson & Carroll, P.C.
            3400 Renaissance Tower
            1201 Elm Street
            Dallas, Texas  75270
            Telephone No.:    (214) 698-3814
            Telecopier No.:   (214) 744-0231
            Attention:        Melissa Ruman Stewart

      (c) if to a Lender, to it at its address (or telecopy number) set forth on
the signature pages hereto or in the Assignment and Acceptance pursuant to which
such Lender shall have become a party hereto.

All notices and other  communications  given to any party  hereto in  accordance
with the  provisions of this Agreement and the other Loan Papers shall be deemed
to have been  given on the date of  receipt if  delivered  by hand or  overnight
courier  service or sent by  telecopy  or on the date five  Business  Days after
dispatch by certified or registered mail if mailed, in each case delivered, sent
or mailed (properly addressed) to such party as provided in this Section 9.01 or
in  accordance  with the latest  unrevoked  direction  from such party  given in
accordance with this Section 9.01.

      Survival of Agreement.  All  covenants,  agreements,  representations  and
warranties  made  by  the  Borrower  herein  and in the  certificates  or  other
instruments  prepared  or  delivered  in  connection  with or  pursuant  to this
Agreement and the other Loan Papers shall be considered to have been relied upon
by the Lenders and the Issuing Bank and shall  survive the making by the Lenders
of the  Loans and the  issuance  of  Letters  of  Credit  by the  Issuing  Bank,
regardless  of any  investigation  made by the Lenders or the Issuing Bank or on
their  behalf,  and  shall  continue  in full  force  and  effect as long as the
principal of or any accrued  interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Paper is  outstanding  and unpaid
or any Letter of Credit is outstanding and so long as the  Commitments  have not
been  terminated.  The provisions of Sections 2.13.  2.15,  2.19 and 9.05 hereof
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby,  the repayment of any of the Loans,  the expiration of the  Commitments,
the expiration of any Letter of Credit,  the invalidity or  unenforceability  of
any  term or  provision  of this  Agreement  or any  other  Loan  Paper,  or any
investigation  made by or on behalf of the  Administrative  Agent, any Lender or
the Issuing Bank.

      Binding Effect.  This Agreement shall become  effective when it shall have
been  executed  by the  Borrower  and the  Administrative  Agent  and  when  the
Administrative  Agent shall have received  counterparts hereof which, when taken
together,  bear  the  signatures  of  each  of the  other  parties  hereto,  and
thereafter  shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted successors and assigns.

      Successors and Assigns.ssors and Assigns

      (a) Whenever in this  Agreement or any other Loan Paper any of the parties
hereto is referred to, such  reference  shall be deemed to include the permitted
successors and assigns of such party, and all covenants, promises and agreements
by or on behalf of the Borrower,  the Administrative  Agent, the Issuing Bank or
the Lenders that are contained in this Agreement and the other Loan Papers shall
bind and inure to the benefit of their respective successors and assigns.

      (b) Each  Lender may assign to one or more  assignees  all or a portion of
its interests,  rights and  obligations  under this Agreement and the other Loan
Papers  (including all or a portion of its Commitments and the Loans at the time
owing to it); provided, however, that (i) except in the case of an assignment to
a Lender or an Affiliate of such Lender, (x) the Borrower and the Administrative
Agent (and, in the case of any  assignment  of a  Commitment,  the Issuing Bank)
must give their prior written  consent to such  assignment  (which consent shall
not be  unreasonably  withheld)  and (y) the  amount of the  Commitments  of the
assigning Lender subject to each such assignment  (determined as of the date the
Assignment  and Acceptance  with respect to such  assignment is delivered to the
Administrative  Agent)  shall not be less than  $10,000,000  (or,  if less,  the
entire remaining amount of such Lender's Commitments) and will not result in the
unassigned  portion,  if any, of the assigning  Lender's  Commitments being less
than $10,000,000 (provided, however, that the $10,000,000 amounts referred to in
this clause (i) shall be reduced  ratably in accordance  with any  reductions in
the Total  Commitments)  (ii) the parties to each such assignment  shall execute
and deliver to the Administrative  Agent an Assignment and Acceptance,  together
with a processing and  recordation  fee of $3,500 and (iii) the assignee,  if it
shall  not  be  a  Lender,   shall  deliver  to  the  Administrative   Agent  an
Administrative   Questionnaire.   Upon  acceptance  and  recording  pursuant  to
paragraph (e) of this Section 9.04,  from and after the effective date specified
in each Assignment and  Acceptance,  which effective date shall be at least five
Business Days after the execution thereof,  (A) the assignee thereunder shall be
a party  hereto and, to the extent of the interest  assigned by such  Assignment
and Acceptance, have the rights and obligations of a Lender under this Agreement
and the other Loan Papers and (B) the assigning Lender  thereunder shall, to the
extent of the interest  assigned by such Assignment and Acceptance,  be released
from its obligations under this Agreement and the other Loan Papers (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning  Lender's  rights and  obligations  under this Agreement and the other
Loan Papers,  such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections  2.13,  2.15,  2.19 and 9.05 hereof,  as
well as to any Fees  accrued  for its account  and not yet paid).  The  Borrower
shall, at its expense,  issue to the assignor and assignee new promissory notes,
as  applicable,  in the  respective  amounts  of each  such  Lender's  Pro  Rata
Percentage in the Loans,  each in the form of the promissory  notes delivered by
the Borrower on the Closing Date.

      (c)  By  executing  and  delivering  an  Assignment  and  Acceptance,  the
assigning  Lender  thereunder  and the  assignee  thereunder  shall be deemed to
confirm to and agree with each other and the other  parties  hereto as  follows:
(i) such assigning  Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its  Commitments,  and the  outstanding  balances  of its  Revolving  Loans  and
Competitive  Loans,  in each case without giving effect to  assignments  thereof
which  have  nor  become  effective,  are as set  forth in such  Assignment  and
Acceptance;  (ii) except as set forth in (i) above,  such assigning Lender makes
no representation or warranty and assumes no responsibility  with respect to any
statements,  warranties or  representations  made in or in connection  with this
Agreement  or any  other  Loan  Paper,  or the  execution,  legality,  validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Paper, or any other instrument or document  furnished  pursuant hereto,  or
the financial condition of the Borrower or any Subsidiary of the Borrower or the
performance  or observance by the Borrower or any  Subsidiary of the Borrower of
any of its obligations under this Agreement or any other Loan Paper or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants  that it is legally  authorized to enter into such  Assignment  and
Acceptance;  (iv) such  assignee  confirms  that it has  received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in  Section  3.05 or  delivered  pursuant  to  Section  5.04 and  such  other
documents and  information  as it has deemed  appropriate to make its own credit
analysis and decision to enter into such  Assignment  and  Acceptance;  (v) such
assignee will independently and without reliance upon the Administrative  Agent,
such  assigning  Lender or any other  Lender  and  based on such  documents  and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking  action under this  Agreement  and the
other Loan Papers; (vi) such assignee appoints and authorizes the Administrative
Agent to take such  action as agent on its behalf and to  exercise  such  powers
under  this  Agreement  and  the  other  Loan  Papers  as are  delegated  to the
Administrative  Agent by the terms  hereof,  together  with  such  powers as are
reasonably  incidental  thereto;  and (vii) such  assignee  agrees  that it will
perform in accordance with their terms all the obligations which by the terms of
this Agreement and the other Loan Papers are required to be performed by it as a
Lender.

      (d) The Administrative  Agent,  acting for this purpose as an agent of the
Borrower,  shall  maintain  at its  offices  in  Dallas,  Texas  a copy  of each
Assignment and Acceptance  delivered to it and a register for the recordation of
the names and addresses of the Lenders,  and the  Commitments  of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the  "Register").  The entries in the Register  shall be conclusive and
the Borrower,  the  Administrative  Agent,  the Issuing Bank and the Lenders may
treat each Person whose name is recorded in the  Register  pursuant to the terms
hereof as a Lender  hereunder  for all purposes of this  Agreement and the other
Loan Papers,  notwithstanding  notice to the  contrary.  The  Register  shall be
available for  inspection by the Borrower,  the Issuing Bank and any Lender,  at
any reasonable time and from time to time upon reasonable prior notice.

      (e)  Upon  its  receipt  of a duly  completed  Assignment  and  Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee  (unless the  assignee  shall  already be a
Lender  hereunder),  the processing and recordation fee referred to in paragraph
(b) above and, if required,  the written  consent of the  Borrower,  the Issuing
Bank and the Administrative  Agent to such assignment,  the Administrative Agent
shall (i) accept such  Assignment and  Acceptance,  (ii) record the  information
contained  therein in the Register and (iii) give prompt  notice  thereof to the
Lenders and the Issuing  Bank. No  assignment  shall be effective  unless it has
been recorded in the Register as provided in this paragraph (e).

      (f) Each Lender may without the consent of the Borrower,  the Issuing Bank
or the  Administrative  Agent sell  participations to one or more banks or other
entities in all or a portion of its rights and obligations  under this Agreement
and the other Loan Papers (including all or a portion of its Commitments and the
Loans owing to it); provided,  however, that (i) such Lender's obligations under
this  Agreement  and the other Loan Papers  shall  remain  unchanged,  (ii) such
Lender shall  remain  solely  responsible  to the other  parties  hereto for the
performance of such obligations, (iii) the participating banks or other entities
shall be entitled to the benefit of the cost protection  provisions contained in
Sections  2.13,  2.15 and 2.19 hereof to the same extent as if they were Lenders
and (iv) the  Borrower,  the  Administrative  Agent,  the  Issuing  Bank and the
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's  rights and  obligations  under this Agreement and
the other Loan  Papers,  and such Lender  shall retain the sole right to enforce
the obligations of the Borrower  relating to the Loans or L/C  Disbursements and
to  approve  any  amendment,  modification  or waiver of any  provision  of this
Agreement and the other Loan Papers  (other than  amendments,  modifications  or
waivers  decreasing any fees payable  hereunder or the amount of principal of or
the rate at which  interest  is payable on the Loans,  extending  any  scheduled
principal payment date or date fixed for the payment of interest on the Loans or
increasing or extending the Commitments).

      (g) Any Lender or  participant  may, in connection  with any assignment or
participation or proposed  assignment or participation  pursuant to this Section
9.04.   disclose  to  the  assignee  or  participant  or  proposed  assignee  or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower;  provided  that,  prior to any such  disclosure of
information  designated by the Borrower as  confidential,  each such assignee or
participant  or proposed  assignee or  participant  shall  execute an  agreement
whereby  such  assignee  or  participant   shall  agree  (subject  to  customary
exceptions) to preserve the confidentiality of such confidential  information on
terms no less  restrictive  than those  applicable  to the  Lenders  pursuant to
Section 9.16 hereof.

      (h) Any  Lender may at any time  assign  all or any  portion of its rights
under this  Agreement  and the other Loan  Papers to a Federal  Reserve  Bank to
secure  extensions  of  credit  by such  Federal  Reserve  Bank to such  Lender;
provided  that no  such  assignment  shall  release  a  Lender  from  any of its
obligations  hereunder  or  substitute  any such Bank for such Lender as a party
hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the
Borrower shall, at the request of the assigning Lender, duly execute and deliver
to the assigning  Lender a promissory note or notes evidencing the Loans made to
the Borrower by the assigning Lender hereunder.

      (i) The Borrower  shall not assign or delegate any of its rights or duties
hereunder  without the prior written consent of the  Administrative  Agent,  the
Issuing Bank and each Lender, and any attempted  assignment without such consent
shall be null and void.

      (j) In the event  that  Standard & Poor's  Ratings  Group,  a Division  of
McGraw-Hill, Inc., Moody's Investors Service, Inc., and Thompson's BankWatch (or
Insurance  Watch  Ratings  Service,  in the case of Lenders  that are  insurance
companies (or Best's Insurance  Reports,  if such insurance company is not rated
by  Insurance  Watch  Ratings  Service))  shall,  after the date that any Lender
becomes a Lender,  downgrade the longterm  certificate  deposit  ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the
case of a Lender that is an insurance company (or B, in the case of an insurance
company not rated by Insurance  Watch Ratings  Service)),  then the Issuing Bank
shall have the right, but not the obligation, at its own expense, upon notice to
such Lender and the Administrative Agent, to replace (or to request the Borrower
to use its  reasonable  efforts to replace)  such  Lender  with an assignee  (in
accordance  with and subject to the  restrictions  contained  in  paragraph  (b)
above),  and such Lender hereby agrees to transfer and assign  without  recourse
(in accordance with and subject to the  restrictions  contained in paragraph (b)
above) all its interests,  rights and  obligations in respect of its Commitments
to such assignee;  provided, however, that (i) no such assignment shall conflict
with any Law,  rule and  regulation or order of any  Governmental  Authority and
(ii) the Issuing  Bank or such  assignee,  as the case may be, shall pay to such
Lender  in  immediately  available  funds  on the  date of such  assignment  the
principal  of and  interest  accrued to the date of payment on the Loans made by
such Lender hereunder and all other amounts accrued for such Lender's account or
owed to it hereunder.

      Expenses; Indemnity.penses; Indemnity

      (a) The  Borrower  agrees  to pay all  reasonable  out-of-pocket  expenses
incurred by the Administrative Agent and the Issuing Bank in connection with the
syndication of the credit facilities provided for herein and the preparation and
administration of this Agreement and the other Loan Papers or in connection with
any amendments,  modifications  or waivers of the provisions  hereof (whether or
not the  transactions  hereby or thereby  contemplated  shall be consummated) or
incurred  by the  Administrative  Agent or any  Lender  in  connection  with the
enforcement  or protection of its rights in connection  with this  Agreement and
the other Loan Papers, or in connection with the Loans made or Letters of Credit
issued  hereunder,  including the reasonable fees,  charges and disbursements of
Donohoe,  Jameson & Carroll, P.C., counsel for the Administrative Agent, and, in
connection  with any such  enforcement  or  protection,  the fees,  charges  and
disbursements of any other counsel for the Administrative Agent or any Lender.

      (b) The Borrower agrees to indemnify the Administrative Agent, each Lender
and the Issuing Bank, each Affiliate of any of the foregoing Persons and each of
their  respective  directors,  officers,  employees and agents (each such Person
being called an  "Indemnitee")  against,  and to hold each  Indemnitee  harmless
from, any and all losses,  claims,  damages,  liabilities and related  expenses,
including  reasonable counsel fees,  charges and  disbursements,  incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the  execution or delivery of this  Agreement and the other Loan
Papers or any agreement or instrument  contemplated  thereby, the performance by
the  parties  thereto  of  their  respective   obligations   thereunder  or  the
consummation  of  the  Transactions  and  the  other  transactions  contemplated
thereby,  (ii) the use of the  proceeds  of the Loans or  issuance of Lenders of
Credit,  (iii)  the  Corporate   Restructuring  or  any  transactions  connected
therewith or (iv) any claim, litigation, investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee,  be available to the extent
that  such  losses,  claims,  damages,   liabilities  or  related  expenses  are
determined  by a court of  competent  jurisdiction  by final  and  nonappealable
judgment to have resulted from the gross negligence or wilful  misconduct of, or
breach of contract by, such Indemnitee.

      (c) The provisions of this Section 9.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
other Loan Papers, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the expiration
of any Letter of  Credit,  the  invalidity  or  unenforceability  of any term or
provision of this Agreement,  any other Loan Paper, or any investigation made by
or on behalf of the  Administrative  Agent,  any Lender or the Issuing Bank. All
amounts due under this Section 9.05 shall be payable on written demand therefor.

      Right of  Setoff.  If an Event  of  Default  shall  have  occurred  and be
continuing,  each Lender 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  to or for the
credit or the account of the Borrower  against any of and all the obligations of
the Borrower now or hereafter  existing  under this Agreement and the other Loan
Papers held by such  Lender,  irrespective  of whether or not such Lender  shall
have made any demand under this Agreement and although such  obligations  may be
unmatured.  The rights of each Lender under this Section 9.06 are in addition to
other rights and remedies  (including  other rights of setoff) which such Lender
may have.

      Applicable  Law.  THIS  AGREEMENT  AND THE  OTHER  LOAN  PAPERS  SHALL  BE
CONSTRUED  IN  ACCORDANCE  WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF TEXAS
(EXCEPT,  IN THE CASE OF CERTAIN OF THE LOAN  PAPERS,  TO THE EXTENT THE LAWS OF
ANOTHER   JURISDICTION  GOVERN  THE  PERFECTION  AND  EFFECT  OF  PERFECTION  OR
NON-PERFECTION  OF CERTAIN  LIENS).  EACH LETTER OF CREDIT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED IN ACCORDANCE  WITH THE LAWS OR RULES  DESIGNATED IN SUCH
LETTER OF CREDIT OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS
AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),  INTERNATIONAL  CHAMBER OF
COMMERCE,  PUBLICATION  NO. 500 (THE "UNIFORM  CUSTOMS")  AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF TEXAS.

      Waivers; Amendment.aivers; Amendment

      (a) No failure  or delay of the  Administrative  Agent,  any Lender or the
Issuing  Bank in  exercising  any power or right  hereunder  shall  operate as a
waiver  thereof,  nor shall any single or partial  exercise of any such right or
power, or any abandonment or  discontinuance of steps to enforce such a right or
power,  preclude  any other or further  exercise  thereof or the exercise of any
other right or power. The rights and remedies of the  Administrative  Agent, the
Issuing Bank and the Lenders  hereunder are  cumulative and are not exclusive of
any  rights  or  remedies  that  they  would  otherwise  have.  No waiver of any
provision of this Agreement or any other Loan Paper, or consent to any departure
by the Borrower  therefrom shall in any event be effective unless the same shall
be permitted by paragraph  (b) below,  and then such waiver or consent  shall be
effective only in the specific  instance and for the purpose for which given. No
notice 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.

      (b) Neither this  Agreement nor any provision  hereof or in any other Loan
Paper may be waived,  amended or modified  except  pursuant to an  agreement  or
agreements  in writing  entered into by the  Borrower and the Required  Lenders;
provided,  however,  that no such  agreement  shall (i) decrease  the  principal
amount of, or extend the maturity of or any scheduled  principal payment date or
date for the payment of any  interest on any Loan or any date for  reimbursement
of an L/C Disbursement, or waive or excuse any such payment or any part thereof,
or decrease  the rate of interest on any Loan or L/C  Disbursement,  without the
prior written consent of each Lender affected  thereby (ii) change or extend the
Commitments or decrease the  Commitment  Fees or the Facility Fees of any Lender
without the prior written  consent of such Lender,  or (iii) amend or modify the
provisions of Sections 2.16 or 9.04(i) hereof, the provisions of this Section or
the definition of the term "Required Lenders", without the prior written consent
of each Lender;  provided further that no such agreement shall amend,  modify or
otherwise affect the rights or duties of the Administrative Agent or the Issuing
Bank hereunder without the prior written consent of the Administrative  Agent or
the Issuing Bank.

      Interest Rate Limitation. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Laws of any applicable jurisdiction
relating  to usury.  In no event  shall  the  Borrower  or any  other  Person be
obligated to pay any amount in excess of the Maximum Amount.  If  Administrative
Agent or any Lender ever receives,  collects or applies,  as interest,  any such
excess,  such amount which would be excessive interest shall be deemed a partial
repayment of principal and treated  hereunder as such;  and if principal is paid
in full, any remaining  excess shall be paid to the Borrower or the other Person
entitled  thereto.  In determining  whether or not the interest paid or payable,
under any  specific  contingency,  exceeds the  Maximum  Amount,  each  Obligor,
Administrative  Agent and each Lender  shall,  to the maximum  extent  permitted
under Applicable Law, (a)  characterize any nonprincipal  payment as an expense,
fee or premium rather than as interest,  (b) exclude  voluntary  prepayments and
the effect  thereof,  and (c)  amortize,  prorate,  allocate and spread in equal
parts, the total amount of interest  throughout the entire  contemplated term of
the  Obligation so that the interest rate is uniform  throughout the entire term
of the Obligation; provided that if the Obligation is paid and performed in full
prior to the end of the full  contemplated  term  thereof,  and if the  interest
received for the actual period of existence  thereof exceeds the Maximum Amount,
Administrative  Agent or Lenders,  as appropriate,  shall refund to the Borrower
the amount of such excess or credit the amount of such excess  against the total
principal amount owing, and, in such event, neither Administrative Agent nor any
Lender shall be subject to any  penalties  provided by any Laws for  contracting
for,  charging  or  receiving  interest in excess of the  Maximum  Amount.  This
Section 9.09 shall control  every other  provision of all  agreements  among the
parties to the Loan Papers  pertaining to the  transactions  contemplated  by or
contained in the Loan Papers.

      SECTION 9.10.     ENTIRE   AGREEMENT.   THIS   AGREEMENT  AND  THE
OTHER LOAN  PAPERS  REPRESENT  THE FINAL  AGREEMENT  BETWEEN THE PARTIES
AND MAY NOT BE  CONTRADICTED  BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS  OR
SUBSEQUENT  ORAL  AGREEMENT OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

      WAIVER OF JURY TRIAL.  EACH PARTY  HERETO  HEREBY  WAIVES,  TO THE FULLEST
EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY  LITIGATION  DIRECTLY OR  INDIRECTLY  ARISING OUT OF, UNDER OR IN
CONNECTION  WITH THIS  AGREEMENT OR ANY OTHER LOAN PAPER.  EACH PARTY HERETO (A)
CERTIFIES  THAT NO  REPRESENTATIVE,  AGENT OR  ATTORNEY  OF ANY OTHER  PARTY HAS
REPRESENTED,  EXPRESSLY  OR  OTHERWISE,  THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION,  SEEK TO ENFORCE THE FOREGOING  WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER  PARTIES  HERETO  HAVE  BEEN  INDUCED  TO ENTER  INTO THIS
AGREEMENT AND THE OTHER LOAN PAPERS BY, AMONG OTHER THINGS,  THE MUTUAL  WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.11.

      Severability.  In the event any one or more of the provisions contained in
this  Agreement  or in any other Loan Paper should be held  invalid,  illegal or
unenforceable in any respect,  the validity,  legality and enforceability of the
remaining  provisions  contained  herein  and  therein  shall  not in any way be
affected  or impaired  thereby (it being  understood  that the  invalidity  of a
particular  provision  in a particular  jurisdiction  shall not in and of itself
affect the validity of such  provision in any other  jurisdiction).  The parties
shall  endeavor in good-faith  negotiations  to replace the invalid,  illegal or
unenforceable  provisions  with valid  provisions  the economic  effect of which
comes as close as  possible  to that of the  invalid,  illegal or  unenforceable
provisions.

      Counterparts.  This  Agreement  may be  executed in  counterparts  (and by
different  parties  hereto  on  different  counterparts),  each of  which  shall
constitute an original but all of which when taken together  shall  constitute a
single contract,  and shall become effective as provided in Section 9.03 hereof.
Delivery  of  an  executed   signature  page  to  this  Agreement  by  facsimile
transmission  shall be as effective as delivery of a manually signed counterpart
of this Agreement.

      Headings.  Article and  Section  headings  and the Table of Contents  used
herein are for convenience of reference only, are not part of this Agreement and
are not to affect  the  construction  of, or to be taken into  consideration  in
interpreting, this Agreement.

      Jurisdiction; Consent to Service of Process.ervice of Process

      (a) The Borrower  hereby  irrevocably  and  unconditionally  submits,  for
itself and its property,  to the  nonexclusive  jurisdiction  of any Texas State
court or Federal court of the United States of America sitting in Dallas,  Texas
and any appellate  court from any thereof,  in any action or proceeding  arising
out of or relating to this Agreement or any other Loan Paper, or for recognition
or  enforcement  of  any  judgment,  and  each  of  the  parties  hereto  hereby
irrevocably  and  unconditionally  agrees that all claims in respect of any such
action or proceeding  may be heard and determined in such Texas State or, to the
extent  permitted  by Law, in such  Federal  court.  Each of the parties  hereto
agrees  that a  final  judgment  in any  such  action  or  proceeding  shall  be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner  provided by Law.  Nothing in this Agreement or in any other
Loan Paper shall  affect any right that the  Administrative  Agent,  the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding relating
to this Agreement or any other Loan Paper against the Borrower or its properties
in the courts of any jurisdiction.

      (b) The Borrower hereby  irrevocably and  unconditionally  waives,  to the
fullest extent it may legally and  effectively do so, any objection which it may
now or hereafter  have to the laying of venue of any suit,  action or proceeding
arising  out of or  relating  to this  Agreement  or any other Loan Paper in any
Dallas,  Texas  State  or  Federal  court.  Each of the  parties  hereto  hereby
irrevocably  waives,  to the fullest extent  permitted by Law, the defense of an
inconvenient  forum to the  maintenance of such action or proceeding in any such
court.

      (c) Each party to this  Agreement  and any other  Loan  Paper  irrevocably
consents  to service of process in the manner  provided  for  notices in Section
9.01 hereof.  Nothing in this  Agreement or any other Loan Paper will affect the
right of any party to this Agreement or any other Loan Paper to serve process in
any other manner permitted by Law.

      Confidentiality.  The  Administrative  Agent, the Issuing Bank and each of
the Lenders  agrees to keep  confidential  (and to use its best efforts to cause
its respective agents and  representatives to keep confidential) the Information
(as defined below) and all copies  thereof,  extracts  therefrom and analyses or
other materials based thereon, except that the Administrative Agent, the Issuing
Bank or any Lender shall be permitted to disclose Information (a) to such of its
respective   officers,    directors,    employees,    agents,   affiliates   and
representatives as need to know such Information, (b) to the extent requested by
any regulatory  authority,  (c) to the extent  otherwise  required by Applicable
Laws and  regulations  or by any  subpoena  or  similar  legal  process,  (d) in
connection  with any suit,  action or proceeding  relating to the enforcement of
its rights  hereunder or (e) to the extent such Information (i) becomes publicly
available  other  than as a result  of a  breach  of this  Section  9.16 or (ii)
becomes available to the Administrative  Agent the Issuing Bank or any Lender on
a nonconfidential basis from a source other than the Borrower.  For the purposes
of  this   Section,   "Information"   shall  mean  all   financial   statements,
certificates,  reports,  agreements  and  information  (including  all analyses,
compilations and studies prepared by the Administrative  Agent, the Issuing Bank
or any Lender based on any of the foregoing) that are received from the Borrower
and related to the Borrower,  any  shareholder  of the Borrower or any employee,
customer or supplier of the Borrower,  other than any of the foregoing that were
available  to the  Administrative  Agent,  the  Issuing  Bank or any Lender on a
nonconfidential basis prior to its disclosure thereto by the Borrower, and which
are in  the  case  of  Information  provided  after  the  date  hereof,  clearly
identified  at the time of  delivery as  confidential.  The  provisions  of this
Section 9.16 shall remain  operative and in full force and effect  regardless of
the expiration and term of this Agreement.


<PAGE>



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


THE BORROWER:                       ON COMMAND CORPORATION



                                    By:
                                    Its:



THE ADMINISTRATIVE AGENT:



                                    NATIONSBANK   OF   TEXAS,   NATIONAL
                                    ASSOCIATION,    as    Administrative
                                    Agent



                                    By:   Gregory I. Meador
                                    Its:  Vice President


LENDERS:
                                    NATIONSBANK   OF   TEXAS,   NATIONAL
                                    ASSOCIATION,   individually   as   a
                                    Lender
Pro Rata Percentage:

      100%

Address:
901 Main Street
64th Floor
Dallas, Texas  75202
                                    By:   Gregory I. Meador
Attn.:            Gregory I. Meador       Its:  Vice President
Telephone:  (214) 508-0860
Telecopy:   (214) 508-9390