<PAGE>
 
                                                                   EXHIBIT 10(f)
================================================================================

                             $750,000,000 (364-day)


                                CREDIT AGREEMENT


                                      AMONG


                        GREEN TREE FINANCIAL CORPORATION,


                                  as Borrower,


                            THE LENDERS NAMED HEREIN


                                       and


                       THE FIRST NATIONAL BANK OF CHICAGO,


                             as Administrative Agent



                                   DATED AS OF


                                 April 29, 1997


================================================================================
<PAGE>
 
                                TABLE OF CONTENTS

                                                                            PAGE

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

ARTICLE II THE FACILITY.......................................................14
   2.1.     The Facility......................................................14
            2.1.1.   Description of Facility..................................14
            2.1.2.   Facility Amount..........................................14
            2.1.3.   Availability of Facility.................................14
   2.2.     Ratable Advances..................................................15
            2.2.1.   Ratable Advances.........................................15
            2.2.2    Ratable Advance Rate Options.............................15
            2.2.3.   Method of Selecting Types and Interest 
                     Periods for Ratable Advances.............................15
            2.2.4.   Conversion and Continuation of 
                     Outstanding Ratable Advances.............................16
   2.3.     Competitive Bid Advances..........................................16
            2.3.1.   Competitive Bid Option...................................16
            2.3.2.   Competitive Bid Quote Request............................17
            2.3.3.   Invitation for Competitive Bid Quotes....................17
            2.3.4.   Submission and Contents of Competitive Bid Quotes........17
            2.3.5.   Notice to Borrower.......................................19
            2.3.6.   Acceptance and Notice by Borrower........................19
            2.3.7.   Allocation by Administrative Agent.......................19
   2.4.     [reserved]........................................................20
   2.5.     Availability of Funds.............................................20
   2.6.     Facility Fee; Utilization Fee; Reductions in 
            Aggregate Commitment..............................................20
   2.7.     Minimum Amount of Each Advance....................................21
   2.8.     Optional Principal Payments.......................................21
   2.9.     Mandatory Prepayments.............................................21
   2.10.    Changes in Interest Rate, etc.....................................21
   2.11.    Rates Applicable After Default....................................21
   2.12.    Method of Payment.................................................21
   2.13.    Notes; Telephonic Notices.........................................22
   2.14.    Interest Payment Dates; Interest and Fee Basis....................22
   2.15.    Notification of Advances, Interest Rates, Prepayments and
            Commitment Reductions.............................................23
   2.16.    Lending Installations.............................................23
   2.17.    Non-Receipt of Funds by the Administrative Agent..................23
   2.18.    Taxes.............................................................23
   2.19.    Administrative Agent's Fees.......................................24
   2.20.    Extension of Facility Termination Date............................25

ARTICLE III CHANGE IN CIRCUMSTANCES...........................................25
   3.1.     Yield Protection..................................................25
   3.2.     Changes in Capital Adequacy Regulations...........................26
<PAGE>
 
   3.3.     Availability of Types of Advances.................................26
   3.4.     Funding Indemnification...........................................27
   3.5.     Lender Statements; Survival of Indemnity..........................27

ARTICLE IV CONDITIONS PRECEDENT...............................................27
   4.1.     Initial Loans.....................................................27
   4.2.     Each Future Advance...............................................29

ARTICLE V REPRESENTATIONS AND WARRANTIES......................................29
   5.1.     Corporate Existence and Standing..................................29
   5.2.     Authorization and Validity........................................29
   5.3.     Compliance with Laws and Contracts................................30
   5.4.     Governmental Consents.............................................30
   5.5.     Financial Statements..............................................30
   5.6.     Material Adverse Change...........................................30
   5.7.     Taxes.............................................................31
   5.8.     Litigation and Contingent Obligations.............................31
   5.9.     Subsidiaries.  ...................................................31
   5.10.    ERISA.............................................................31
   5.11.    Defaults..........................................................32
   5.12.    Federal Reserve Regulations.......................................32
   5.13.    Investment Company................................................32
   5.14.    Disclosure........................................................32

ARTICLE VI COVENANTS..........................................................32
   6.1.     Financial Reporting...............................................33
   6.2.     Use of Proceeds...................................................33
   6.3.     Notice of Default.................................................34
   6.4.     Conduct of Business...............................................34
   6.5.     Taxes.............................................................34
   6.6.     Compliance with Laws..............................................34
   6.7.     Maintenance of Properties.........................................34
   6.8.     Inspection........................................................34
   6.9.     Mergers, Sales of Assets, etc.....................................35
   6.10.    Liens.............................................................35
   6.11.    Inconsistent Agreements...........................................37
   6.12.    Financial Covenants...............................................38
            6.12.1.  Net Worth................................................38
            6.12.2.  Fixed Charge Coverage Ratio..............................38
            6.12.3.  Debt to Equity Ratio.....................................38

ARTICLE  VII DEFAULTS.........................................................38

ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................39
   8.1.     Acceleration......................................................39
   8.2.     Amendments........................................................40
   8.3.     Preservation of Rights............................................40
<PAGE>
 
ARTICLE IX GENERAL PROVISIONS.................................................41
   9.1.     Survival of Representations.......................................41
   9.2.     Governmental Regulation...........................................41
   9.3.     Taxes.............................................................41
   9.4.     Headings..........................................................41
   9.5.     Entire Agreement..................................................41
   9.6.     Several Obligations; Benefits of this Agreement...................41
   9.7.     Expenses; Indemnification.........................................41
   9.8.     Numbers of Documents..............................................42
   9.9.     Accounting........................................................42
   9.10.    Severability of Provisions........................................42
   9.11.    Nonliability of Lenders...........................................42
   9.12.    CHOICE OF LAW.....................................................43
   9.13.    CONSENT TO JURISDICTION...........................................43
   9.14.    WAIVER OF JURY TRIAL..............................................43
   9.15.    Disclosure........................................................43
   9.16.    Counterparts......................................................43

ARTICLE X.....................................................................44

THE ADMINISTRATIVE AGENT......................................................44
   10.1.    Appointment.......................................................44
   10.2.    Powers............................................................44
   10.3.    General Immunity..................................................44
   10.4.    No Responsibility for Loans, Recitals, etc........................44
   10.5.    Action on Instructions of Lenders.................................44
   10.6.    Employment of Agents and Counsel..................................45
   10.7.    Reliance on Documents; Counsel....................................45
   10.8.    Administrative Agent's Reimbursement and Indemnification..........45
   10.9.    Notice of Default.................................................45
   10.10.   Rights as a Lender................................................45
   10.11.   Lender Credit Decision............................................46
   10.12.   Successor Administrative Agent....................................46
   10.13.  Co-Agents..........................................................47

ARTICLE XI SETOFF; RATABLE PAYMENTS...........................................47
   11.1.    Setoff............................................................47
   11.2.    Ratable Payments..................................................47

ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................47
   12.1.    Successors and Assigns............................................47
   12.2.    Participations....................................................48
                  12.2.1.  Permitted Participants; Effect.  ..................48
                  12.2.2.  Voting Rights......................................48
                  12.2.3.  Benefit of Setoff..................................48
   12.3.    Assignments.......................................................48
<PAGE>
 
                  12.3.1.  Permitted Assignments..............................48
                  12.3.2.  Effect; Effective Date.............................49
   12.4.    Dissemination of Information......................................49
   12.5.    Tax Treatment.....................................................49

ARTICLE XIII NOTICES..........................................................49
   13.1.    Giving Notice.....................................................49
   13.2.    Change of Address.................................................50
<PAGE>
 
                                    EXHIBITS

Exhibit A    -Note (Ratable Loan)
Exhibit B    -Note (Competitive Bid Loan)
Exhibit C    -Competitive Bid Quote Request
Exhibit D    -Invitation for Competitive Bid Quotes
Exhibit E    -Competitive Bid Quote
Exhibit F    -[reserved]
Exhibit G-1  -Opinion of Counsel to the Borrower
Exhibit G-2  -Opinion of General Counsel of the Borrower
Exhibit H    -Compliance Certificate
Exhibit I    -Assignment Agreement
Exhibit J    -Money Transfer Instructions



                                   SCHEDULES

Schedule 5.3 -Approvals and Consents
Schedule 5.8 -Material Contingent Obligations
Schedule 5.9 -Subsidiaries
Schedule 5.10-ERISA
<PAGE>
 
                                CREDIT AGREEMENT


     This Credit Agreement, dated as of April 29, 1997, is among GREEN TREE
FINANCIAL CORPORATION, a Delaware corporation, the Lenders and THE FIRST
NATIONAL BANK OF CHICAGO, individually and as Administrative Agent.


                                R E C I T A L S:

     A. The Borrower has requested the Lenders to make financial accommodations
to it in the aggregate principal amount of $750,000,000, the proceeds of which
the Borrower will use for the general corporate needs, including commercial
paper backup, of the Borrower and its Subsidiaries.

     B. The Lenders are willing to extend such financial accommodations on the
terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the
Administrative Agent hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

     As used in this Agreement:

     "Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.

     "Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.

     "Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.3.

     "Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next
<PAGE>
 
succeeding Business Day.

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

     "Adjusted EBIT" means, for any applicable computation period, the
Borrower's and Subsidiaries' Net Income on a consolidated basis, PLUS (a) income
and franchise taxes paid or accrued during such period and (b) Interest Expense,
MINUS (a) income derived from discontinued operations of the Borrower and its
Subsidiaries and (b) extraordinary gains of the Borrower and its Subsidiaries
resulting from changes in the application of Agreement Accounting Principles.

     "Administrative Agent" means First Chicago in its capacity as
administrative agent for the Lenders pursuant to ARTICLE X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to ARTICLE X.

     "Advance" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by some or all of the Lenders to the Borrower on the same
Borrowing Date, of the same Type (or on the same interest basis in the case of
Competitive Bid Advances) and, when applicable, for the same Interest Period and
includes a Competitive Bid Advance.

     "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

     "Aggregate Commitment" means the aggregate of the Commitments of all the
Lenders hereunder. The initial Aggregate Commitment is $750,000,000.

     "Agreement" means this Credit Agreement, as it may be amended, modified or
restated and in effect from time to time.

     "Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements; PROVIDED, HOWEVER, that for
purposes of all computations required to be made with respect to compliance by
the Borrower with SECTION 6.12, such term shall mean generally accepted
accounting principles as in effect on the date hereof, applied in a manner
consistent with those used in preparing the Financial Statements.

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

     "Alternate Base Rate Advance" means an Advance which bears interest at the
Alternate 
<PAGE>
 
Base Rate requested by the Borrower pursuant to SECTION 2.2.3.

     "Alternate Base Rate Loan" means a Ratable Loan which bears interest at the
Alternate Base Rate requested by the Borrower pursuant to SECTION 2.2.3.

     "Applicable Eurodollar Margin" means 0.22%.

     "Applicable Facility Fee Percentage" means 0.08%.

     "Applicable Utilization Fee Percentage" means, on any date, subject to the
final sentence of this definition:

          (a) In the event that the average daily aggregate principal amount of
     the Ratable Loans outstanding during any calendar quarter is greater than
     33_%, but less than or equal to 66_%, of the Aggregate Commitment as in
     effect on the last day of such calendar quarter, the applicable of the
     following percentages:

                                                     APPLICABLE UTILIZATION
      DEBT RATING ON SUCH DATE                           FEE PERCENTAGE
      ------------------------                       ----------------------
      Level I Status                                         .05%

      Level II Status                                      .0625%

      Level III Status                                       .10%

      Level IV Status                                        .10%

          (b) In the event that the average daily aggregate principal amount of
     the Ratable Loans outstanding during any calendar quarter is greater than
     66_% of the Aggregate Commitment as in effect on the last day of such
     calendar quarter, the applicable of the following percentages:

                                                      APPLICABLE UTILIZATION
      DEBT RATING ON SUCH DATE                           FEE PERCENTAGE
      ------------------------                        -----------------------
      Level I Status                                        .10%

      Level II Status                                      .125%

      Level III Status                                      .20%

      Level IV Status                                       .20%

Any change in the Applicable Utilization Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.

                                      -3-
<PAGE>
 
     "Article" means an article of this Agreement unless another document is
specifically referenced.

     "Authorized Officer" means any of the president, chief financial officer or
treasurer of the Borrower, acting singly.

     "Bankruptcy Code" means Title 11, United States Code, sections 1 ET SEQ.,
as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.

     "Borrower" means Green Tree Financial Corporation, a Delaware corporation,
and its successors and assigns.

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

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

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

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

     "Change" is defined in SECTION 3.2.

     "Closing Transactions" is defined in SECTION 4.1(D).

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

     "Commitment" means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below and as set
forth in any Notice of Assignment relating to any assignment which has become
effective pursuant to SECTION 12.3.2, as such amount may be modified from time
to time pursuant to the terms hereof.

     "Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the 

                                      -4-
<PAGE>
 
Borrower at the same time and for the same Interest Period.

     "Competitive Bid Borrowing Notice" is defined in SECTION 2.3.6.

     "Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, or both, as the case may be.

     "Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.

     "Competitive Bid Note" means a promissory note in substantially the form of
EXHIBIT B hereto, with appropriate insertions, duly executed and delivered to
the Administrative Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.

     "Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of EXHIBIT E hereto completed and delivered by a Lender to the
Administrative Agent in accordance with SECTION 2.3.4.

     "Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto completed and delivered by the
Borrower to the Administrative Agent in accordance with SECTION 2.3.2.

     "Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.

     "Consolidated Debt" means, at any time, the aggregate principal amount of
Indebtedness outstanding at such time of the Borrower and its Subsidiaries as
reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.

     "Consolidated Net Tangible Assets" means, at any time, (a) the total of all
assets reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles, at
their net book value (after deducting related depreciation, depletion,
amortization, allowance for doubtful accounts and all other valuation reserves
which, in accordance with Agreement Accounting Principles, should be set aside
in connection with the business conducted), but excluding goodwill, unamortized
debt discount and all other like segregated intangible assets, all as determined
in accordance with Agreement Accounting Principles, less (b) the aggregate of
the current liabilities of the Borrower and its Subsidiaries reflected on such
balance sheet, all as determined in accordance with Agreement Accounting
Principles. For purposes of this definition, "current liabilities" includes all
Indebtedness of the Borrower and its Subsidiaries and accruals of the Borrower
and its Subsidiaries, in each case 

                                      -5-
<PAGE>
 
payable on demand or due within one year of the date of the determination of
Consolidated Net Tangible Assets, all as reflected on such consolidated balance
sheet of the Borrower and its Subsidiaries, prepared in accordance with
Agreement Accounting Principles.

     "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract or application for a Letter of Credit.

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

     "Conversion/Continuation Notice" is defined in SECTION 2.2.4.

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

     "Debt Rating" means the credit rating assigned to the Borrower's senior,
unsecured long term debt (without credit enhancement) as publicly announced by
Moody's or S&P, as the case may be.

     "Debt to Equity Ratio" means, at any time, the ratio of (a) Consolidated
Debt to (b) Net Worth.

     "Default" means an event described in ARTICLE VII.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

     "Eurodollar Advance" means a Eurodollar Bid Rate Advance or a Eurodollar
Ratable Advance, or both, as the case may be.

     "Eurodollar Auction" means a solicitation of Competitive Bid Quotes setting
forth Eurodollar Bid Rates pursuant to SECTION 2.3.

     "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Administrative
Agent to be the rate of interest per annum for deposits in U.S. dollars for a
period equal to the relevant Eurodollar 

                                      -6-
<PAGE>
 
Interest Period quoted on Telerate Screen Page 3750 (or its successor if such
page number changes) at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Eurodollar Interest Period. If no quotation is
available on Telerate, the "Eurodollar Base Rate" shall mean the rate determined
by the Administrative Agent to be the rate at which deposits in U.S. dollars are
offered by First Chicago to first class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period.

     "Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.

     "Eurodollar Bid Rate Advance" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.

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

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

     "Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid Rate
Loan, or both, as the case may be.

     "Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.

     "Eurodollar Ratable Loan" means a Ratable Loan which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.

     "Eurodollar Rate" means, with respect to a Eurodollar Ratable Advance for
any date during the relevant Eurodollar Interest Period, the sum of (a) the
quotient of (i) the Eurodollar Base Rate applicable to such Eurodollar Interest
Period, divided by (ii) one MINUS the Reserve Requirement (expressed as a
decimal) applicable to such Eurodollar Interest Period, PLUS (b) the 

                                      -7-
<PAGE>
 
Applicable Eurodollar Margin for such date. The Eurodollar Rate shall be rounded
to the next higher multiple of 1/16 of 1% if the rate is not such a multiple.

     "Existing Lien" is defined in SECTION 6.10(M).

     "Extended Lien" is defined in SECTION 6.10(M).

     "Facility Termination Date" means April 28, 1998, as such date may be
extended from time to time pursuant to SECTION 2.20.

     "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

     "Financial Statements" is defined in SECTION 5.5.

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

     "Fiscal Quarter" means each of the four quarterly accounting periods
comprising a Fiscal Year.

     "Fiscal Year" means the twelve-month accounting period commencing on
January 1 and ending on December 31 of each year.

     "Fixed Charge Coverage Ratio" means, for any applicable computation period,
the ratio of (a) Adjusted EBIT to (b) Interest Expense.

     "Governmental Authority" means any government (foreign or domestic) or any
state or other political subdivision thereof or any governmental body, agency,
authority, department or commission (including, without limitation, any taxing
authority or political subdivision) or any instrumentality or officer thereof
(including, without limitation, any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by or subject to the control of any of the
foregoing.

     "Indebtedness" of a Person means such Person's (a) obligations for borrowed
money, (b) obligations representing the deferred purchase price of Property or
services (other than accounts 

                                      -8-
<PAGE>
 
payable arising in the ordinary course of such Person's business payable on
terms customary in the trade), (c) obligations, whether or not assumed, secured
by Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or similar instruments, (e) Capitalized Lease
Obligations, (f) Rate Hedging Obligations, (g) Contingent Obligations, (h)
obligations for which such Person is obligated pursuant to or in respect of a
Letter of Credit and (i) repurchase obligations or liabilities of such Person
with respect to accounts or notes receivable and chattel paper sold by such
Person.

     "Interest Expense" means, for any applicable computation period, all
interest paid or accrued during such period by the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with Agreement Accounting
Principles.

     "Interest Period" means a Eurodollar Interest Period or an Absolute Rate
Interest Period.

     "Invitation for Competitive Bid Quotes" means an Invitation for Competitive
Bid Quotes substantially in the form of EXHIBIT D hereto, completed and
delivered by the Administrative Agent to the Lenders in accordance with SECTION
2.3.3.

     "Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.

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

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

     "Level I Status" exists at any date if at such date the Debt Rating is A3
(or the equivalent) or higher by Moody's and A- (or the equivalent) or higher by
S&P.

     "Level II Status" exists at any date if at such date (a) the Debt Rating is
Baal (or the equivalent) or higher by Moody's and BBB+ (or the equivalent) or
higher by S&P and (b) Level I Status does not exist.

     "Level III Status" exists at any date if at such date (a) the Debt Rating
is Baa3 (or the equivalent) or higher by Moody's and BBB- (or the equivalent) or
higher by S&P and (b) neither Level I Status nor Level II Status exists.

     "Level IV Status" exists at any date if at such date (a) the Debt Rating is
either lower than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
equivalent) by S&P or (b) the Borrower's senior, unsecured and publicly-held
indebtedness is unrated by either Moody's or 

                                      -9-
<PAGE>
 
S&P.

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

     "Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.

     "Loan Documents" means this Agreement, the Notes and the other documents
and agreements contemplated hereby and executed by the Borrower in favor of the
Administrative Agent or any Lender.

     "Majority Lenders" means Lenders in the aggregate having at least 66_% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66_% of the aggregate unpaid principal
amount of outstanding Advances.

     "Margin Stock" has the meaning assigned to that term under Regulation U.

     "Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or any Subsidiary to perform its obligations
under the Loan Documents, or (c) the validity or enforceability of any of the
Loan Documents or the rights or remedies of the Administrative Agent or the
Lenders thereunder.

     "Moody's" means Moody's Investors Service, Inc., a Delaware corporation,
together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.

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

     "Net Income" means, for any computation period, with respect to the
Borrower on a consolidated basis with its Subsidiaries (other than any
Subsidiary which is restricted from declaring or paying dividends or otherwise
advancing funds to its parent whether by contract or otherwise), cumulative net
income earned during such period as determined in accordance with Agreement
Accounting Principles.

     "Net Worth" means, at any date, the consolidated common stockholders'
equity of the 

                                      -10-
<PAGE>
 
Borrower and its consolidated Subsidiaries determined in accordance with
Agreement Accounting Principles.

     "Non-Excluded Taxes" is defined in SECTION 2.18(A).

     "Notes" means, collectively, the Competitive Bid Notes and the Ratable
Notes; and "Note" means any one of the Notes.

     "Notice of Assignment" is defined in SECTION 12.3.2.

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

     "Participants" is defined in SECTION 12.2.1.

     "Payment Date" means the last day of each of March, June, September and
December.

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

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

     "Plan" means an employee pension benefit plan, as defined in Section 3(2)
of ERISA, as to which the Borrower or any member of the Controlled Group may
have any liability.

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

     "pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.

     "Purchase" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (a) acquires any going business or all or substantially all
of the assets of any firm, corporation or division or line of business thereof,
whether through purchase of assets, merger or otherwise, or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage or voting power) of 

                                      -11-
<PAGE>
 
the outstanding partnership interests of a partnership or equity interests in a
limited liability company.

         "Purchasers" is defined in SECTION 12.3.1.

         "Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.

         "Ratable Borrowing Notice" is defined in SECTION 2.2.3.

         "Ratable Loan" means a Loan made by a Lender pursuant to SECTION 2.2.

         "Ratable Note" means a promissory note in substantially the form of
EXHIBIT A hereto, duly executed and delivered to the Administrative Agent by the
Borrower for the account of each Lender and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.

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

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

         "Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.

         "Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by securities 

                                      -12-
<PAGE>
 
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.

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

         "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.

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

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

         "Risk-Based Capital Guidelines" is defined in SECTION 3.2.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.

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

         "Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.

         "Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, 

                                      -13-
<PAGE>
 
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Borrower.

         "Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (a) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries, as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the Net Income of the Borrower and its Subsidiaries
for the 12-month period ending as of the end of the Fiscal Quarter next
preceding the date of determination.

         "Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or any other member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such Plan, the
filing of a notice of intent to terminate such Plan or the treatment of an
amendment of such Plan as a termination under Section 4041 of ERISA, (d) the
institution by the PBGC of proceedings to terminate such Plan or (e) any event
or condition which might constitute grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Plan.

         "Transferee" is defined in SECTION 12.4.

         "Type" means, with respect to any Advance, its nature as an Alternate
Base Rate Advance, Eurodollar Advance or Absolute Rate Advance.

         "Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a Single Employer Plan
exceeds the fair market value of assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.

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

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


                                   ARTICLE II

                                  THE FACILITY

                                      -14-
<PAGE>
 
         2.1.     THE FACILITY

                  2.1.1. DESCRIPTION OF FACILITY. The Lenders hereby establish
in favor of the Borrower a revolving credit facility pursuant to which, and upon
the terms and subject to the conditions herein set out:

                  (a) each Lender severally agrees to make Ratable Loans to the
         Borrower in accordance with SECTION 2.2 in amounts not to exceed in the
         aggregate at any one time outstanding the amount of its Commitment less
         the amount of such Lender's pro-rata share of the outstanding principal
         amount of all Competitive Bid Advances (regardless of which Lender or
         Lenders made such Competitive Bid Advances) exclusive of Competitive
         Bid Advances being repaid substantially contemporaneously with the
         making of any such Ratable Loans; and

                  (b) each Lender may, in its sole discretion, make bids to make
         Competitive Bid Loans to the Borrower, and make such Loans, in
         accordance with SECTION 2.3.

                  2.1.2. FACILITY AMOUNT. In no event may the aggregate
principal amount of all outstanding Advances (including the Ratable Advances and
the Competitive Bid Advances) at any time exceed the Aggregate Commitment.

                  2.1.3. AVAILABILITY OF FACILITY. Subject to the terms of this
Agreement, from and including the date hereof to, but not including, the
Facility Termination Date, the Borrower may borrow, repay and reborrow Advances
hereunder. All outstanding Advances and all other unpaid Obligations shall be
due and payable in full by the Borrower on the Facility Termination Date and on
such date all remaining Commitments shall be deemed to have been reduced to
zero.

         2.2.     RATABLE ADVANCES

                  2.2.1. RATABLE ADVANCES. Each Ratable Advance hereunder shall
consist of borrowings made from the several Lenders ratably in proportion to the
amounts of their respective Commitments. The Borrower's obligation to pay the
principal of, and interest on, the Ratable Advances shall be evidenced by the
Ratable Notes. Although the Ratable Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding and, although the
stated amount of each Ratable Note shall be equal to the applicable Lender's
Commitment, each Ratable Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Ratable Loans at the time evidenced thereby.

                  2.2.2 RATABLE ADVANCE RATE OPTIONS. The Ratable Advances may
be Alternate 

                                      -15-
<PAGE>
 
Base Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with SECTION 2.2.3 or 2.2.4. No
Ratable Advance may mature after, or have an Interest Period which extends
beyond, the Facility Termination Date.

                  2.2.3. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR
RATABLE ADVANCES. The Borrower shall select the Type of each Ratable Advance
and, in the case of each Eurodollar Ratable Advance, the Eurodollar Interest
Period applicable to such Ratable Advance from time to time. The Borrower shall
give the Administrative Agent irrevocable notice (a "RATABLE BORROWING NOTICE")
not later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Alternate
Base Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for an Alternate Base Rate Advance may be given not later than 30 minutes
after the time which the Borrower is required to reject one or more bids offered
in connection with an Absolute Rate Auction pursuant to SECTION 2.3.6 and a
Ratable Borrowing Notice for a Eurodollar Ratable Advance may be given not later
than 30 minutes after the time the Borrower is required to reject one or more
bids offered in connection with a Eurodollar Auction pursuant to SECTION 2.3.6.
A Ratable Borrowing Notice shall specify:

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

                  (b) the aggregate amount of such Ratable Advance, which, when
         added to all outstanding Ratable Advances and Competitive Bid Advances
         and after giving effect to the repayment of any such outstanding
         Advances out of the proceeds of the requested Ratable Advance, shall
         not exceed the Aggregate Commitment;

                  (c) the Type of Advance selected; and

                  (d) in the case of each Eurodollar Ratable Advance, the
         Eurodollar Interest Period applicable thereto (which may not end after
         the Facility Termination Date).

                  2.2.4. CONVERSION AND CONTINUATION OF OUTSTANDING RATABLE
ADVANCES. Alternate Base Rate Advances shall continue as Alternate Base Rate
Advances unless and until such Alternate Base Rate Advances are converted into
Eurodollar Ratable Advances. Each Eurodollar Ratable Advance shall continue as a
Eurodollar Ratable Advance until the end of the then applicable Eurodollar
Interest Period therefor, at which time such Eurodollar Ratable Advance shall be
automatically converted into an Alternate Base Rate Advance unless the Borrower
shall have given the Administrative Agent a Conversion/Continuation Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Ratable Advance continue as a Eurodollar Ratable Advance for the same or another
Eurodollar Interest Period. Subject to the terms of SECTION 2.7, the Borrower
may elect from time to time to convert all or any part of a Ratable Advance of
any Type into any other Type or Types of Ratable Advances; PROVIDED that

                                      -16-
<PAGE>
 
any conversion of any Eurodollar Ratable Advance shall be made on, and only on,
the last day of the Eurodollar Interest Period applicable thereto. The Borrower
shall give the Administrative Agent irrevocable notice (a
"CONVERSION/CONTINUATION NOTICE") of each conversion of a Ratable Advance or
continuation of a Eurodollar Ratable Advance not later than 10:00 a.m. (Chicago
time) at least three Business Days, in the case of a conversion into or
continuation of a Eurodollar Ratable Advance, prior to the date of the requested
conversion or continuation, specifying:

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

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

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

         2.3.     COMPETITIVE BID ADVANCES

                  2.3.1. COMPETITIVE BID OPTION. In addition to Ratable Advances
pursuant to SECTION 2.2, but subject to the terms and conditions of this
Agreement (including, without limitation, the limitation set forth in SECTION
2.1.2 as to the maximum aggregate principal amount of all outstanding Advances
hereunder), prior to the Facility Termination Date the Borrower may, as set
forth in this SECTION 2.3, request the Lenders to make offers to make
Competitive Bid Advances to the Borrower. Each Lender may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this SECTION
2.3. The Borrower's obligation to pay the principal of, and interest on, the
Competitive Bid Advances shall be evidenced by the Competitive Bid Notes.
Although the Competitive Bid Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding.

                  2.3.2. COMPETITIVE BID QUOTE REQUEST. When the Borrower wishes
to request offers to make Competitive Bid Loans under this SECTION 2.3, it shall
transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto so as to be received no later than
(a) 10:00 a.m. (Chicago time) at least five Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction, or (b) 9:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction, specifying:

                  (a) the proposed Borrowing Date, which shall be a Business
         Day, for the proposed Competitive Bid Advance;

                                      -17-
<PAGE>
 
                  (b) the aggregate principal amount of such Competitive Bid
         Advance;

                  (c) whether the Competitive Bid Quotes requested are to set
         forth a Eurodollar Bid Rate, an Absolute Rate, or both; and

                  (d) the Interest Period applicable thereto (which may not end
         after the Facility Termination Date).

The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be given within five Business Days (or such other number of
days as the Borrower and the Administrative Agent may agree) of any other
Competitive Bid Quote Request. A Competitive Bid Quote Request that does not
conform substantially to the format of EXHIBIT C hereto shall be rejected, and
the Administrative Agent shall promptly notify the Borrower of such rejection by
telecopy.

                  2.3.3. INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in
any event before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.3.2,
the Administrative Agent shall send to each of the Lenders by telex or telecopy
an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT D
hereto, which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with this SECTION
2.3.

                  2.3.4.   SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.

                  (b) Each Lender may, in its sole discretion, submit a
         Competitive Bid Quote containing an offer or offers to make Competitive
         Bid Loans in response to any Invitation for Competitive Bid Quotes.
         Each Competitive Bid Quote must comply with the requirements of this
         SECTION 2.3.4 and must be submitted to the Administrative Agent by
         telex or telecopy at its offices specified in or pursuant to ARTICLE
         XIII not later than (i) 9:00 a.m. (Chicago time) at least three
         Business Days prior to the proposed Borrowing Date, in the case of a
         Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed
         Borrowing Date, in the case of an Absolute Rate Auction (or, in either
         case, upon reasonable prior notice to the Lenders, such earlier time
         and date as the Borrower and the Administrative Agent may agree);
         PROVIDED that Competitive Bid Quotes submitted by First Chicago may
         only be submitted if the Administrative Agent or First Chicago notifies
         the Borrower of the terms of the offer or offers contained therein not
         later than 15 minutes prior to the latest time at which the relevant
         Competitive Bid Quotes must be submitted by the other Lenders. Subject
         to ARTICLES IV AND VIII, any Competitive Bid Quote so made shall be
         irrevocable except with the written consent of the Administrative Agent
         given on the instructions of the Borrower.

                                      -18-
<PAGE>
 
                  (c) Each Competitive Bid Quote shall be in substantially the
         form of EXHIBIT E hereto and shall in any case specify:

                           (i) the proposed Borrowing Date, which shall be the
                  same as that set forth in the applicable Invitation for
                  Competitive Bid Quotes;

                           (ii) the principal amount of the Competitive Bid Loan
                  for which each such offer is being made, which principal
                  amount a) may be greater than, less than or equal to the
                  Commitment of the quoting Lender, b) must be at least
                  $10,000,000 and an integral multiple of $5,000,000, and c) may
                  not exceed the principal amount of Competitive Bid Loans for
                  which offers were requested;

                           (iii) in the case of a Eurodollar Auction, the
                  Competitive Bid Margin offered for each such Competitive Bid
                  Loan;

                           (iv) the minimum amount, if any, of the Competitive
                  Bid Loan which may be accepted by the Borrower;

                           (v) in the case of an Absolute Rate Auction, the
                  Absolute Rate offered for each such Competitive Bid Loan; and

                           (vi) the identity of the quoting Lender.

                  (d) The Administrative Agent shall reject any Competitive Bid
         Quote that:

                           (i) is not substantially in the form of EXHIBIT E
                  hereto or does not specify all of the information required by
                  SECTION 2.3.4(B);

                           (ii) contains qualifying, conditional or similar
                  language, other than any such language contained in EXHIBIT E
                  hereto;

                           (iii) proposes terms other than or in addition to
                  those set forth in the applicable Invitation for Competitive
                  Bid Quotes; or

                           (iv) arrives after the time set forth in SECTION
                  2.3.4(A).

If any Competitive Bid Quote shall be rejected pursuant to this SECTION
2.3.4(C), then the Administrative Agent shall promptly notify the relevant
Lender of such rejection.

                  2.3.5. NOTICE TO BORROWER. The Administrative Agent shall
promptly notify the Borrower of the terms (a) of any Competitive Bid Quote
submitted by a Lender that is in 

                                      -19-
<PAGE>
 
accordance with SECTION 2.3.4 and (b) of any Competitive Bid Quote that amends,
modifies or is otherwise inconsistent with a previous Competitive Bid Quote
submitted by such Lender with respect to the same Competitive Bid Quote Request.
Any such subsequent Competitive Bid Quote shall be disregarded by the
Administrative Agent unless such subsequent Competitive Bid Quote specifically
states that it is submitted solely to correct a manifest error in such former
Competitive Bid Quote. The Administrative Agent's notice to the Borrower shall
specify the aggregate principal amount of Competitive Bid Loans for which offers
have been received for each Interest Period specified in the related Competitive
Bid Quote Request and the respective principal amounts and Eurodollar Bid Rates
or Absolute Rates, as the case may be, so offered.

                  2.3.6. ACCEPTANCE AND NOTICE BY BORROWER. Not later than (a)
10:00 a.m. (Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (b) 10:00 a.m. (Chicago
time) on the proposed Borrowing Date, in the case of an Absolute Rate Auction
(or, in either case, upon reasonable prior notice to the Lenders, such earlier
time and date as the Borrower and the Administrative Agent may agree), the
Borrower shall notify the Administrative Agent of its acceptance or rejection of
the offers so notified to it pursuant to SECTION 2.3.5; PROVIDED, HOWEVER, that
the failure by the Borrower to give such notice to the Administrative Agent
shall be deemed to be a rejection of all such offers. In the case of acceptance,
such notice (a "COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Competitive Bid Quote in whole or in part (subject to
the terms of SECTION 2.3.4(B)(IV)); PROVIDED that:

                  (b) the aggregate principal amount of each Competitive Bid
         Advance may not exceed the applicable amount set forth in the related
         Competitive Bid Quote Request,

                  (c) acceptance of offers may only be made on the basis of
         ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
         and

                  (d) the Borrower may not accept any offer that is described in
         SECTION 2.3.4(C) or that otherwise fails to comply with the
         requirements of this Agreement.

                  2.3.7. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made
by two or more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as
the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among such Lenders as
nearly as possible (in such multiples, not greater than $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amount of such offers; PROVIDED, HOWEVER, that no Lender shall be
allocated a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing to accept.
Allocations by the Administrative Agent of the amounts of Competitive Bid Loans
shall be 

                                      -20-
<PAGE>
 
conclusive in the absence of manifest error. The Administrative Agent shall
promptly, but in any event on the same Business Day, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate principal amount
of such Competitive Bid Advance allocated to each participating Lender.

         2.4.     [reserved]

         2.5. Not later than noon (Chicago time) on each Borrowing Date, each
Lender (or in the case of a Competitive Bid Advance, each Lender making a
portion of such Advance) shall make available its Loan or Loans, in immediately
available funds in Chicago, to the Administrative Agent at its address specified
pursuant to ARTICLE XIII. The Administrative Agent shall, by 2:00 p.m. (Chicago
time) on such Borrowing Date, make the funds so received from the Lenders
available to the Borrower by crediting the principal amount thereof, in
immediately available funds, to the account of the Borrower maintained with
First Chicago.

         2.6. FACILITY FEE; UTILIZATION FEE; REDUCTIONS IN AGGREGATE COMMITMENT.

                  (a) The Borrower agrees to pay to the Administrative Agent for
         the ratable account of each Lender a facility fee equal to the
         Applicable Facility Fee Percentage times such Lender's Commitment from
         the date hereof to and including the Facility Termination Date, payable
         in arrears on each Payment Date hereafter and on the Facility
         Termination Date.

                  (b) The Borrower agrees to pay to the Administrative Agent for
         the ratable account of each Lender a utilization fee equal to the
         Applicable Utilization Fee Percentage times such Lender's average daily
         principal amount of the Ratable Loans outstanding during each calendar
         quarter from the date hereof to the Facility Termination Date, payable
         in arrears on each Payment Date hereafter and on the Facility
         Termination Date; PROVIDED, HOWEVER, that in the event the average
         daily principal amount of the Ratable Loans outstanding during any
         calendar quarter is less than or equal to 33_% of the Aggregate
         Commitment as in effect on the last day of such quarter, no utilization
         fee shall be payable with respect to such quarter.

                  (c) The Borrower may permanently reduce the Aggregat
         Commitment in whole, or in part ratably among the Lenders in a minimum
         aggregate amount of $25,000,000, or any integral multiple of $5,000,000
         in excess thereof, upon at least three Business Days' written notice to
         the Administrative Agent, which notice shall specify the amount of any
         such reduction; PROVIDED, HOWEVER, that the amount of the Aggregate
         Commitment may not be reduced below the aggregate principal amount of
         the outstanding Advances. All accrued facility fees and utilization
         fees shall be payable on the effective date of any termination of the
         obligations of the Lenders to make Loans hereunder.

         2.7. Each Advance shall be in the minimum amount of $10,000,000 (and in
any integral multiple of $5,000,000 if in excess thereof); 

                                      -21-
<PAGE>
 
PROVIDED, HOWEVER, that (a) any Alternate Base Rate Advance may be in the amount
of the unused Aggregate Commitment and (b) in no event shall more than six
Eurodollar Advances be permitted to be outstanding at any time.

         2.8. The Borrower may from time to time pay, without penalty or
premium, all outstanding Ratable Advances or, in a minimum aggregate amount of
$10,000,000 or any integral multiple of $5,000,000 in excess thereof, any
portion of the outstanding Ratable Advances upon one Business Day's prior notice
to the Administrative Agent in the case of an Alternate Base Rate Advance and
upon three Business Days' prior notice to the Administrative Agent in the case
of a Eurodollar Advance. Any prepayment of a Eurodollar Advance prior to the
last day of the applicable Eurodollar Interest Period shall be subject to the
indemnity provisions of SECTION 3.4. Competitive Bid Advances may not be
voluntarily prepaid.

         2.9. MANDATORY PREPAYMENTS. If at any time the aggregate principal
balance of the Loans exceeds the Aggregate Commitment, the Borrower shall repay
immediately its then outstanding Loans in such amount as may be necessary to
eliminate such excess.

         2.10. CHANGES IN INTEREST RATE, ETC. Each Alternate Base Rate Advance
shall bear interest at the Alternate Base Rate from and including the date of
such Advance or the date on which such Advance was converted into an Alternate
Base Rate Advance to (but not including) the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar Ratable Advance. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Ratable Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such Interest Period
at the interest rate determined as applicable to such Eurodollar Ratable Advance
or Absolute Rate Advance. No Interest Period may end after the Facility
Termination Date.

         2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTION 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Administrative Agent and the Majority Lenders) when any Default
or Unmatured Default has occurred and is continuing. During the continuance of a
Default, each Eurodollar Advance, Absolute Rate Advance and Alternate Base Rate
Advance shall bear interest (for the remainder of the applicable Interest Period
in the case of Eurodollar Advances and Absolute Rate Advances) at the rate
otherwise applicable plus two percent (2%) per annum.

         2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to ARTICLE XIII, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative Agent to
the Borrower, by noon (Chicago time) on the date when due and shall be applied
ratably 

                                      -22-
<PAGE>
 
by the Administrative Agent among the applicable Lenders. Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds that the Administrative Agent received at its address specified
pursuant to ARTICLE XIII or at any Lending Installation specified in a notice
received by the Administrative Agent from such Lender. The Administrative Agent
is hereby authorized to charge the account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder.

         2.13. NOTES; TELEPHONIC NOTICES. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; PROVIDED, HOWEVER, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances, submit Competitive Bid Quotes and to transfer funds based
on telephonic notices made by any person or persons the Administrative Agent or
any Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

         2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued
on each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which an Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Alternate Base Rate Advance converted into a
Eurodollar Ratable Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance or
Absolute Rate Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance or Absolute Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance having an
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Interest Period. Interest, facility and
utilization fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment shall be received by
the Administrative Agent later than noon (Chicago time), such payment shall be
deemed to have been received on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest and utilization fees in connection with such payment. If any
payment shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest and utilization fees in connection with

                                      -23-
<PAGE>
 
such payment.

         2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Administrative Agent
will notify each Lender of the contents of each Aggregate Commitment reduction
notice, Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The
Administrative Agent will notify each Lender of the interest rate applicable to
each Eurodollar Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Alternate Base Rate.

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

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

         2.18.    TAXES.

                  (a) Any payments made by the Borrower under this Agreement
         shall be made 

                                      -24-
<PAGE>
 
          free and clear of, and without deduction or withholding for or on
          account of, any present or future income, stamp or other taxes,
          levies, imposts, duties, charges, fees, deductions or withholdings,
          now or hereafter imposed, levied, collected, withheld or assessed by
          any Governmental Authority, excluding net income taxes and franchise
          taxes or any other tax based upon any income imposed on the
          Administrative Agent or any Lender by the jurisdiction in which the
          Administrative Agent or such Lender is incorporated or has its
          principal place of business. If any such non-excluded taxes, levies,
          imposts, duties, charges, fees, deductions or withholdings
          ("NON-EXCLUDED Taxes") are required to be withheld from any amounts
          payable to the Administrative Agent or any Lender hereunder, the
          amounts so payable to the Administrative Agent or such Lender shall be
          increased to the extent necessary to yield to the Administrative Agent
          or such Lender (after payment of all Non-Excluded Taxes) interest or
          any such other amounts payable hereunder at the rates or in the
          amounts specified in or pursuant to this Agreement; PROVIDED, HOWEVER,
          that the Borrower shall not be required to increase any such amounts
          payable to any Lender that is not organized under the laws of the U.S.
          or a state thereof if such Lender fails to comply with the
          requirements of paragraph (b) of this SECTION 2.18. Whenever any
          Non-Excluded Taxes are payable by the Borrower, as promptly as
          practicable thereafter the Borrower shall send to the Administrative
          Agent for its own account or for the account of such Lender, as the
          case may be, a certified copy of an original official receipt received
          by the Borrower showing payment thereof. If the Borrower fails to pay
          any Non-Excluded Taxes when due to the appropriate taxing authority or
          fails to remit to the Administrative Agent the required receipts or
          other required documentary evidence, the Borrower shall indemnify the
          Administrative Agent and the Lenders for any incremental taxes,
          interest or penalties that may become payable by any Administrative
          Agent or any Lender as a result of any such failure. The agreements in
          this SECTION 2.18 shall survive the termination of this Agreement and
          the payment of all other amounts payable hereunder.

                  (b) At least five Business Days prior to the first date on
          which interest or fees are payable hereunder for the account of any
          Lender, each Lender that is not incorporated under the laws of the
          United States of America, or a state thereof, agrees that it will
          deliver to each of the Borrower and the Administrative Agent two duly
          completed copies of United States Internal Revenue Service Form 1001
          or 4224, certifying in either case that such Lender is entitled to
          receive payments under this Agreement and the Notes without deduction
          or withholding of any United States federal income taxes. Each Lender
          which so delivers a Form 1001 or 4224 further undertakes to deliver to
          each of the Borrower and the Administrative Agent two additional
          copies of such form (or a successor form) on or before the date that
          such form expires (currently, three successive calendar years for Form
          1001 and one calendar year for Form 4224) or becomes obsolete or after
          the occurrence of any event requiring a change in the most recent
          forms so delivered by it, and such amendments thereto or extensions or
          renewals thereof as may be reasonably requested by the Borrower or the
          Administrative Agent, in each case certifying that such Lender is
          entitled to receive payments under this Agreement and the Notes
          without deduction or withholding of any United States federal income
          taxes, unless an event (including, without limitation, any change in
          treaty, law or regulation) has occurred prior to the date on which any
          such delivery would otherwise be required which renders all such forms
          inapplicable
                                      -25-
<PAGE>
 
         or which would prevent such Lender from duly completing and delivering
         any such form with respect to it and such Lender advises the Borrower
         and the Administrative Agent that it is not capable of receiving
         payments without any deduction or withholding of United States federal
         income tax.

         2.19. ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to the
Administrative Agent those fees, in addition to the facility fees and
utilization fees referenced in SECTION 2.6(A) and 2.6(B), in the amounts and at
the times separately agreed to between the Administrative Agent and the
Borrower.

         2.20. EXTENSION OF FACILITY TERMINATION DATE. The Borrower may request
an extension of the Facility Termination Date by submitting a request for an
extension to the Administrative Agent (an "Extension Request") no more than 60
days but no less than 40 days prior to the then effective Facility Termination
Date. The Extension Request must specify the new Facility Termination Date
requested by the Borrower and the date (which must be at least 30 days after the
Extension Request is delivered to the Administrative Agent) as of which the
Lenders must respond to the Extension Request (the "Extension Date"). The new
Facility Termination Date shall be no more than 364 days after the Extension
Date, including the Extension Date as one of the days in the calculation of the
days elapsed. Promptly upon receipt of an Extension Request, the Administrative
Agent shall notify each Lender of the contents thereof and shall request each
Lender to approve the Extension Request. Each Lender may, in its sole
discretion, elect to approve or deny such Extension Request. Failure of a Lender
to respond to an Extension Request by the Extension Date shall be deemed a
refusal to approve such Extension Request. Each Lender approving the Extension
Request shall deliver its written consent no later than the Extension Date. Any
consent delivered by a Lender to the Administrative Agent prior to the Extension
Date may be revoked prior to the Extension Date by the Lender giving written
notice of such revocation to the Administrative Agent before the Extension Date.
If the consent of each of the Lenders is received by the Administrative Agent
and remains in effect on the Extension Date, the Facility Termination Date
specified in the Extension Request shall become effective on the Extension Date
and the Administrative Agent shall promptly notify the Borrower and each Lender
of the new Facility Termination Date.


                                   ARTICLE III

                             CHANGE IN CIRCUMSTANCES

         3.1. YIELD PROTECTION. If, after the date hereof, the adoption of or
any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, or the compliance of any Lender therewith,

                  (a) subjects any Lender or any applicable Lending Installation
         to any tax, 

                                      -26-
<PAGE>
 
         duty, charge or withholding on or from payments due from the Borrower
         (excluding taxation of the overall net income of any Lender or
         applicable Lending Installation imposed by the jurisdiction in which
         such Lender or Lending Installation is incorporated or has its
         principal place of business), or changes the basis of taxation of
         principal, interest or any other payments to any Lender or Lending
         Installation in respect of its Loans or other amounts due it hereunder,
         or

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

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

then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.

         3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (a) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, or (b) any adoption of
or change in any law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means
(a) the risk-based capital guidelines in effect in the United States on the date
of this Agreement and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
entitled "International Convergence of Capital Measurements and Capital
Standards" and any amendments to such regulations adopted prior to the date of
this Agreement. Notwithstanding the foregoing, no Lender shall be entitled to
demand compensation pursuant to this SECTION 3.2 if it shall not be the general
practice of such Lender to demand such

                                      -27-
<PAGE>
 
compensation in similar circumstances under comparable provisions of comparable
credit agreements.

     3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Majority Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Type of Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Administrative Agent shall suspend the availability of the affected
Type of Advance until such circumstance no longer exists and require any
Eurodollar Advances of the affected Type to be repaid.

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

     3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower to
such Lender under SECTIONS 3.1 and 3.2 or to avoid the unavailability of a Type
of Advance under SECTION 3.3, so long as such designation is not disadvantageous
to such Lender. Each Lender shall deliver a written statement of such Lender to
the Borrower (with a copy to the Administrative Agent) as to the amount due, if
any, under SECTION 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Advance shall be calculated as though each Lender
funded its Eurodollar Advances through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. The amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of the written statement;
PROVIDED, HOWEVER, that no amount shall be payable by the Borrower pursuant to
SECTION 3.1, 3.2 or 3.4 with respect to any period commencing more than 120 days
before the delivery of the written statement contemplated by this SECTION 3.5.
The obligations of the Borrower under SECTIONS 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.


                                   ARTICLE IV

                              CONDITIONS PRECEDENT

                                      -28-
<PAGE>
 
     4.1. INITIAL LOANS. The Lenders shall not be required to make the initial
Advance hereunder unless the Borrower has furnished the following to the
Administrative Agent with sufficient copies for the Lenders and the other
conditions set forth below have been satisfied, in each case on or before April
30, 1997:

                  (a) CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of
         the certificate of incorporation of the Borrower, together with all
         amendments thereto, certified by the appropriate governmental officer
         in its jurisdiction of incorporation, together with a good standing
         certificate issued by the Secretary of State of the jurisdiction of its
         incorporation and such other jurisdictions as shall be requested by the
         Administrative Agent.

                  (b) BY-LAWS AND RESOLUTIONS. Copies, certified by the
         Secretary or Assistant Secretary of the Borrower, of its by-laws and of
         its Board of Directors' resolutions authorizing the execution, delivery
         and performance of the Loan Documents to which the Borrower is a party.

                  (c) SECRETARY'S CERTIFICATE. An incumbency certificate,
         executed by the Secretary or Assistant Secretary of the Borrower, which
         shall identify by name and title and bear the signature of the officers
         of the Borrower authorized to sign the Loan Documents and to make
         borrowings hereunder, upon which certificate the Administrative Agent
         and the Lenders shall be entitled to rely until informed of any change
         in writing by the Borrower.

                  (d) OFFICER'S CERTIFICATE. A certificate, dated the date
         hereof, signed by an Authorized Officer of the Borrower, in form and
         substance satisfactory to the Administrative Agent, to the effect that:
         (i) on such date (both before and after giving effect to the making of
         any Loans hereunder), no Default or Unmatured Default has occurred and
         is continuing; (ii) no injunction or temporary restraining order which
         would prohibit the making of the Loans or the consummation of any of
         the other transactions contemplated hereby (collectively, including the
         making of the Loans, the "CLOSING TRANSACTIONS"), or other litigation
         which could reasonably be expected to have a Material Adverse Effect is
         pending or, to the best of such Person's knowledge, threatened; (iii)
         each of the representations and warranties set forth in ARTICLE V of
         this Agreement is true and correct on and as of such date; and (iv)
         since December 31, 1996, no event or change has occurred that has
         caused or evidences a Material Adverse Effect.

                  (e) LEGAL OPINIONS. A written opinion of each of (i) Briggs
         and Morgan, counsel to the Borrower, substantially in the form of
         EXHIBIT G-1 hereto, and (ii) Joel H. Gottesman, general counsel of the
         Borrower, substantially in the form of EXHIBIT G-2 hereto, addressed to
         the Administrative Agent and the Lenders.

                  (f) NOTES. Notes payable to the order of each of the Lenders
         duly executed by the Borrower.

                                      -29-
<PAGE>
 
                  (g) LOAN DOCUMENTS. Executed originals of this Agreement and
         each of the Loan Documents, which shall be in full force and effect,
         together with all schedules, exhibits, certificates, instruments,
         opinions, documents and financial statements required to be delivered
         pursuant hereto and thereto.

                  (h) LETTERS OF DIRECTION. Written money transfer instructions
         with respect to the initial Advances and to future Advances in the form
         of EXHIBIT J hereto addressed to the Administrative Agent and signed by
         an Authorized Officer, together with such other related money transfer
         authorizations as the Administrative Agent may have reasonably
         requested.

                  (i) TERMINATION OF AGREEMENT. Evidence satisfactory to the
         Administrative Agent that the Credit Agreement dated as of April 16,
         1996 among the Borrower, First Chicago, individually and as
         administrative agent, and the other financial institutions party
         thereto has been, or is contemporaneously being, terminated and all
         amounts due thereunder paid in full. 

                  (j) OTHER. Such other documents as the Administrative Agent,
         any Lender or their counsel may have reasonably requested.

     4.2. EACH FUTURE ADVANCE. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:

                  (a) There exists no Default or Unmatured Default and none
         would result from such Advance;

                  (b) The representations and warranties contained in ARTICLE V
         (other than SECTION 5.6) are true and correct as of such Borrowing
         Date;

                  (c) A Ratable Borrowing Notice or Competitive Bid Quote
         Request shall have been properly submitted; and

                  (d) All legal matters incident to the making of such Advance
         shall be satisfactory to the Lenders and their counsel.

         Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in SECTION 4.2 have been satisfied.


                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Lenders that, both before
and after giving effect to the Closing Transactions:

                                      -30-
<PAGE>
 
     5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business is
conducted or proposed to be conducted except where the failure to be so
qualified or authorized may not reasonably be expected to have a Material
Adverse Effect.

     5.2. AUTHORIZATION AND VALIDITY. The Borrower has all requisite power and
authority (corporate and otherwise) and legal right to execute and deliver (or
file, as the case may be) each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.

     5.3. COMPLIANCE WITH LAWS AND CONTRACTS. The Borrower and its Subsidiaries
have complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over the conduct of
their respective businesses or the ownership of their respective properties,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect. Neither the execution and delivery by the Borrower of
the Loan Documents, the application of the proceeds of the Loans or the
consummation of the Closing Transactions, nor compliance with the provisions of
the Loan Documents, or at the relevant time did, (a) violate any law, rule,
regulation (including Regulations G, T, U and X), order, writ, judgment,
injunction, decree or award binding on the Borrower or any Subsidiary or the
Borrower's or any Subsidiary's charter, articles or certificate of incorporation
or by-laws, (b) violate the provisions of or require the approval or consent of
any party to any indenture, instrument or agreement to which the Borrower or any
Subsidiary is a party or is subject, or by which it, or its respective property,
is bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien (other than Liens permitted by, the Loan
Documents) in, of or on the property of the Borrower or any Subsidiary pursuant
to the terms of any such indenture, instrument or agreement, or (c) require any
consent of the stockholders of any Person, except for approvals or consents
which will be obtained on or before the initial Advance and are disclosed on
SCHEDULE 5.3, except for any violation of, or failure to obtain an approval or
consent required under, any such indenture, instrument or agreement that could
not reasonably be expected to have a Material Adverse Effect.

     5.4. GOVERNMENTAL CONSENTS. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any Governmental
Authority, any securities exchange or other Person is or at the relevant time
was required to authorize, or is or at the relevant time was required in

                                      -31-
<PAGE>
 
connection with the execution, delivery, consummation or performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents, the application of the proceeds of the Loans or any other transaction
contemplated in the Loan Documents.

     5.5. FINANCIAL STATEMENTS. The Borrower has heretofore furnished to each of
the Lenders the December 31, 1996 audited consolidated financial statements of
the Borrower and its Subsidiaries (the "FINANCIAL STATEMENTS"). Each of the
Financial Statements was prepared in accordance with Agreement Accounting
Principles and fairly presents the consolidated financial condition and
operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended.

     5.6. MATERIAL ADVERSE CHANGE. No material adverse change in the business,
Property, condition (financial or otherwise), performance, prospects or results
of operations of the Borrower and its Subsidiaries taken as a whole has occurred
since December 31, 1996.

     5.7. TAXES. The Borrower and its Subsidiaries have filed or caused to be
filed on a timely basis and in correct form all United States federal and
applicable foreign, state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any Subsidiary, except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with Agreement Accounting
Principles and as to which no Lien prohibited by Section 6.10 exists. As of the
date hereof, the United States income tax returns of the Borrower on a
consolidated basis have been audited by the Internal Revenue Service through its
Fiscal Year ending December 31, [1991], and there are no pending audits or
investigations regarding the Borrower's or its Subsidiaries' federal, foreign,
state or local tax returns. No tax liens have been filed and no claims are being
asserted with respect to any such taxes which could reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with Agreement Accounting Principles.

     5.8. LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation (including,
without limitation, by the Federal Trade Commission) pending or, to the
knowledge of any of their officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective properties which could reasonably
be expected to have a Material Adverse Effect or to prevent, enjoin or unduly
delay the making of the Loans under this Agreement. Neither the Borrower nor any
Subsidiary has any material contingent obligations except as set forth on
SCHEDULE 5.8.

     5.9.SUBSIDIARIES. SCHEDULE 5.9 hereto contains an accurate list of all of
the existing Subsidiaries as of the date of this Agreement, setting forth their
respective jurisdictions of incorporation and the percentage of their capital
stock owned by the Borrower or other Subsidiaries.

                                      -32-
<PAGE>
 
         5.10. ERISA. Except as disclosed on SCHEDULE 5.10, neither the Borrower
nor any other member of the Controlled Group maintains any Single Employer
Plans, and no Single Employer Plan has any Unfunded Liability. Neither the
Borrower nor any other member of the Controlled Group maintains, or is obligated
to contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of the Controlled Group has,
with respect to any Plan, failed to make any contribution or pay any amount
required under Section 412 of the Code or Section 302 of ERISA or the terms of
such Plan. There are no pending or, to the knowledge of the Borrower, threatened
claims, actions, investigations or lawsuits against any Plan, any fiduciary
thereof, or the Borrower or any member of the Controlled Group with respect to a
Plan. Neither the Borrower nor any member of the Controlled Group has engaged in
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years neither the Borrower nor any
member of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group. No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which is subject to Title IV of ERISA.

         5.11. DEFAULTS. No Default or Unmatured Default has occurred and is
continuing.

         5.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation G, Regulation T, Regulation U or
Regulation X. Neither the making of any Advance hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U or Regulation X.

         5.13. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
the Borrower nor any Subsidiary is, or after giving effect to any Advance will
be, an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

         5.14. DISCLOSURE. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the
Administrative Agent or to any Lender in connection with the negotiation of the
Loan Documents, or (b) representations or warranties of the Borrower contained
in this Agreement, the other Loan Documents, or any other document, certificate
or written statement furnished to the Administrative Agent or the Lenders by or
on 

                                      -33-
<PAGE>
 
behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement, contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no fact known to the Borrower (other than matters of a general economic nature)
that has had or could reasonably be expected to have a Material Adverse Effect
and that has not been disclosed herein or in such other documents, certificates
and statements furnished to the Lenders for use in connection with the
transactions contemplated by this Agreement.

                                   ARTICLE VI

                                    COVENANTS

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

         6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently applied,
and furnish to the Lenders:

                  (a) As soon as practicable and in any event within 90 days
         after the close of each of its Fiscal Years, an unqualified audit
         report certified by KPMG Peat Marwick or other independent certified
         public accountants, acceptable to the Lenders, prepared in accordance
         with Agreement Accounting Principles on a consolidated basis for itself
         and its Subsidiaries, including balance sheets as of the end of such
         period and related statements of income, retained earnings and cash
         flows.

                  (b) As soon as practicable and in any event within 60 days
         after the close of the first three Fiscal Quarters of each of its
         Fiscal Years, for itself and its Subsidiaries, consolidated unaudited
         balance sheets as at the close of each such period and consolidated
         statements of income, retained earnings and cash flows for the period
         from the beginning of such Fiscal Year to the end of such quarter, all
         certified by its chief financial officer or treasurer and prepared in
         accordance with Agreement Accounting Principles.

                  (c) concurrently with any delivery of financial statements
         under (a) or (b) above, a certificate of the chief financial officer or
         treasurer of the Borrower, substantially in the form of EXHIBIT H
         hereto, opining on or certifying such statements (i) certifying that no
         Default or Unmatured Default has occurred or, if such Default or
         Unmatured Default has occurred, specifying the nature and extent
         thereof and any corrective action taken or proposed to be taken with
         respect thereto and (ii) setting forth computations in reasonable
         detail satisfactory to the Administrative Agent demonstrating
         compliance with the covenants contained in SECTIONS 6.12.1, 6.12.2 and
         6.12.3;

                                      -34-
<PAGE>
 
                  (d) As soon as possible and in any event within ten days after
         the Borrower knows that any Termination Event has occurred with respect
         to any Plan, a statement, signed by the chief financial officer or
         treasurer of the Borrower, describing said Termination Event and the
         action which the Borrower proposes to take with respect thereto.

                  (e) Promptly upon the furnishing thereof to the shareholders
         of the Borrower, copies of all financial statements, reports and proxy
         statements so furnished.

                  (f) Promptly upon the filing thereof, copies of all
         registration statements and annual, quarterly, monthly or other regular
         reports which the Borrower or any of its Subsidiaries files with the
         Securities and Exchange Commission.

                  (g) Such other information (including non-financial
         information) as the Administrative Agent or any Lender may from time to
         time reasonably request.

         6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U) or to finance the Purchase of any Person which has not been
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.

         6.3. NOTICE OF DEFAULT. The Borrower will give prompt notice in writing
to the Lenders of the occurrence of (a) any Default or Unmatured Default and (b)
of any other event or development, financial or other, relating specifically to
the Borrower or any of its Subsidiaries (and not of a general economic or
political nature) which could reasonably be expected to have a Material Adverse
Effect.

         6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, except where failure to
maintain such authority could not reasonably be expected to have a Material
Adverse Effect.

         6.5. TAXES. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by applicable law and pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.

                                      -35-
<PAGE>
 
         6.6. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws (including ERISA), rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which could reasonably be expected to have a
Material Adverse Effect.

         6.7. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.

         6.8. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Lenders may
designate. The Borrower will keep or cause to be kept, and cause each Subsidiary
to keep or cause to be kept, appropriate records and books of account in which
complete entries are to be made reflecting its and their business and financial
transactions, such entries to be made in accordance with Agreement Accounting
Principles consistently applied.

         6.9. MERGERS, SALES OF ASSETS, ETC.

                  (a) The Borrower will not consolidate with or merge into any
         other corporation or convey, transfer or lease its Property
         substantially as an entirety to any Person, unless:

                           (i) the corporation formed by such consolidation or
                  into which the Borrower is merged or the Person which acquires
                  by conveyance or transfer, or which leases, the Property of
                  the Borrower substantially as an entirety shall be a
                  corporation organized and existing under the laws of the
                  United States of America or any state or the District of
                  Columbia and shall expressly assume, by an agreement
                  supplemental hereto, executed and delivered to each other
                  party hereto, in form satisfactory to the Administrative
                  Agent, the due and punctual payment of the Obligations and the
                  performance or observance of every covenant of this Agreement
                  on the part of the Borrower to be performed or observed;

                           (ii) immediately after giving effect to such
                  transaction, no Default or Unmatured Default shall have
                  occurred and be continuing; and

                           (ii) the Borrower shall have delivered to the
                  Administrative Agent an officer's certificate and an opinion
                  of counsel, each stating that such consolidation, merger,

                                      -36-
<PAGE>
 
                  conveyance, transfer or lease and such supplemental agreement
                  comply with this paragraph (a) and that all conditions
                  precedent herein provided for relating to such transaction
                  have been complied with.

                  (b) Upon any consolidation by the Borrower with or merger by
         the Borrower into any other corporation or any conveyance, transfer or
         lease of the Property of the Borrower substantially as an entirety in
         accordance with paragraph (a) above, the successor corporation formed
         by such consolidation or into which the Borrower is merged or to which
         such conveyance, transfer or lease is made shall succeed to, and be
         substituted for, and may exercise every right and power of, the
         Borrower under the Loan Documents with the same effect as if such
         successor corporation had been named as the Borrower herein.

         6.10. LIENS. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or assume any Lien on the Property of the Borrower or any
Subsidiary to secure any obligation incurred, issued, assumed or guaranteed by
the Borrower or any Subsidiary, except:

                  (a) any Lien existing on any Property or shares of stock of a
         corporation at the time the corporation becomes a Subsidiary or merges
         into or consolidates with the Borrower or any Subsidiary;

                  (b) any Lien existing on any Property at the time the Borrower
         or any Subsidiary acquires such property; PROVIDED, HOWEVER, that such
         Lien may not extend to any other Property owned by the Borrower or any
         Subsidiary at the time (or after the time) such Lien is created,
         incurred or assumed;

                  (c) any Lien securing Indebtedness incurred to finance all or
         part of the purchase price or cost of construction of Property of the
         Borrower or any Subsidiary; PROVIDED that (i) such Lien does not extend
         to any other Property owned by the Borrower or any Subsidiary at the
         time (or after the time) the Lien is created, incurred or assumed,
         except that, in the case of a Lien incurred to finance construction on
         real property, such Lien may extend to unimproved real property on
         which the construction takes place and (ii) the Indebtedness secured by
         such Lien may not be incurred more than 120 days after the later of the
         acquisition, completion of construction or commencement of full
         operation of the Property subject to such Lien;

                  (d) any Lien securing Indebtedness of any Subsidiary owing to
         the Borrower or any other Subsidiary;

                  (e) Liens for taxes, assessments or governmental charges or
         levies on its Property if the same shall not at the time be delinquent
         or thereafter can be paid without penalty, or are being contested in
         good faith and by appropriate proceedings and for which adequate
         reserves shall have been set aside on its books in accordance with
         Agreement Accounting Principles;

                                      -37-
<PAGE>
 
                  (f) Liens imposed by law, such as carriers', warehousemen's
         and mechanics' liens and other similar liens arising in the ordinary
         course of business which secure payment of obligations not more than 60
         days past due or which are being contested in good faith by appropriate
         proceedings and for which adequate reserves shall have been set aside
         on its books;

                  (g) Liens arising out of pledges or deposits made in the
         ordinary course of business in connection with worker's compensation
         laws, unemployment insurance, old age pensions and other social
         security or retirement benefits, and statutory obligations and other
         similar obligations;

                  (h) any Lien arising out of a judgment, decree or court order,
         so long as any appropriate legal proceeding that may have been
         initiated for review shall not have been finally terminated or so long
         as the period within which such proceeding may be initiated shall not
         have expired or such Lien arises in connection with any other
         proceeding or action at law or in equity; PROVIDED that no proceeding
         to enforce such Lien has been commenced and the aggregate amount
         secured by all such Liens shall not at any time exceed $10,000,000;

                  (i) any Lien on chattel paper, instruments or other rights to
         payment of the Borrower or any Subsidiary, or cash deposited or
         otherwise subjected to such Lien, (i) as a basis for the issuance of
         Letters of Credit, to secure repurchase obligations arising in
         connection with securities repurchase agreements entered into in the
         ordinary course of business or in aid of other similar borrowing
         arrangements, or (ii) arising in connection with the Borrower's
         securitizations of such rights to payment conducted in the ordinary
         course of business;

                  (j) any Lien on Property (or any receivables arising in
         connection with the lease thereof) acquired by the Borrower or any
         Subsidiary through repossession, foreclosure or like proceeding, or
         securing Indebtedness incurred at the time of such acquisition or at
         any time thereafter to finance all or part of the cost of maintenance,
         improvement or construction relating thereto; PROVIDED that such Lien
         does not apply to any other Property of the Borrower or any Subsidiary,
         except that, in the case of any such Lien incurred to finance
         construction on real property, such Lien may extend to unimproved real
         property on which the construction takes place;

                  (k) any Lien incurred or deposit or pledge made or given in
         the ordinary course of business in connection with, or to secure
         payment of, indemnity, performance or other similar bonds;

                  (l) any encumbrance in the nature of zoning restrictions,
         easements and rights or restrictions of record on the use of real
         property, and landlord's liens under leases on the premises rented,
         which do not materially detract from the value of such property or

                                      -38-
<PAGE>
 
         impair the use thereof in the business of the Borrower and its
         Subsidiaries;

                  (m) any Lien (an "EXTENDED LIEN") extending, renewing or
         replacing in whole or in part another Lien (an "EXISTING LIEN")
         permitted by paragraphs (a) through (l) above; PROVIDED that (i) such
         Extended Lien shall not extend beyond (A) the Property subject to such
         Existing Lien and (B) improvements and construction on such Property,
         and (ii) the principal amount of the Indebtedness secured by such
         Extended Lien may not exceed the principal amount of the Indebtedness
         secured by such Existing Lien; or

                  (n) any Lien securing Indebtedness of the Borrower or any
         Subsidiary in a principal amount at any time outstanding that does not
         exceed the amount, if any, by which (i) 5% of Consolidated Net Tangible
         Assets exceeds (ii) the aggregate amount of all other Indebtedness of
         the Borrower and its Subsidiaries outstanding at such time that is
         secured by Liens on Property of the Borrower and its Subsidiaries,
         other than Indebtedness secured by Liens permitted by paragraphs (a)
         through (m) above.

         6.11. INCONSISTENT AGREEMENTS. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the granting of Liens to
secure the Obligations, the amending of the Loan Documents or the ability of any
Subsidiary to (i) pay dividends or make other distributions on its capital
stock, (ii) make loans or advances to the Borrower or (iii) repay loans or
advances from the Borrower or (b) contains any provision which would be violated
or breached by the making of Advances or by the performance by the Borrower of
any of its obligations under any Loan Document.

         6.12. FINANCIAL COVENANTS. The Borrower on a consolidated basis with
its Subsidiaries shall:

               6.12.1. NET WORTH. At all times after the date hereof, maintain a
         minimum Net Worth of at least $750,000,000.

               6.12.2. FIXED CHARGE COVERAGE RATIO. For the twelve-month period
         ending on each Fiscal Quarter end, maintain a Fixed Charge Coverage
         Ratio of not less than 1.25:1.0.

               6.12.3. DEBT TO EQUITY RATIO. At all times after the date hereof,
         maintain a Debt to Equity Ratio of not more than 5.0:1.0.


                                   ARTICLE VII

                                    DEFAULTS

                                      -39-
<PAGE>
 
         The occurrence of any one or more of the following events shall
constitute a Default:

         7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower to the Lenders or the Administrative Agent under or in
connection with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the date as of
which made.

         7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any facility or utilization fee or obligations under
any of the Loan Documents within five days after the same becomes due.

         7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3(A) or SECTIONS 6.9 through
6.12. 

         7.4. The breach by the Borrower (other than a breach which constitutes
a Default under SECTION 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within 30 days after written notice from
the Administrative Agent or any Lender.

         7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating an amount equal to or in
excess of $25,000,000 was created or is governed, or the occurrence of any other
event or existence of any other condition, the effect of any of which is to
cause, or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof.

         7.6. The Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this SECTION 7.6, (f) fail to contest in good faith any appointment
or proceeding described in SECTION 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.

         7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the 

                                      -40-
<PAGE>
 
Borrower or any of its Subsidiaries or any Substantial Portion of its Property,
or a proceeding described in SECTION 7.6(D) shall be instituted against the
Borrower or any of its Subsidiaries and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of 30
consecutive days.

         7.8. For any period of 60 consecutive days there shall be outstanding
against the Borrower or any of its Subsidiaries any judgment(s) or order(s) for
the payment of money aggregating in excess of $25,000,000, which judgments or
orders have not been paid, bonded, otherwise discharged or stayed on appeal or
as to which any enforcement action has been commenced.

         7.9. The Unfunded Liabilities of all Plans shall exceed in the
aggregate $10,000,000.


                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

         8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7
occurs with respect to the Borrower, the obligations of the Lenders to make
Loans hereunder shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
the Administrative Agent or any Lender. If any other Default occurs, the
Majority Lenders may (or the Administrative Agent, if so directed by the
Majority Lenders, shall) terminate or suspend the obligations of the Lenders to
make Loans hereunder, or declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which the Borrower
hereby expressly waives.

         If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTION 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Majority Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.

         8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Majority Lenders (or the Administrative Agent with the consent in writing of the
Majority Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default or condition hereunder; PROVIDED, HOWEVER, that no such
supplemental agreement shall, without the consent of each Lender:

                  (a) Extend the final maturity of any Loan or Note or reduce
         the principal 

                                      -41-
<PAGE>
 
         amount thereof, or reduce the rate or extend the time of payment of
         interest or fees (including facility fees and utilization fees)
         thereon;

                  (b) Change the percentage specified in the definition of
         Majority Lenders;

                  (c) Reduce the amount of or extend the date for the mandatory
         prepayments required under SECTION 2.9, or increase the amount of the
         Commitment of any Lender hereunder;

                  (d) Extend the Facility Termination Date;

                  (e) Amend this SECTION 8.2;

                  (f) Permit any assignment by the Borrower of its Obligations
         or its rights hereunder (other than an assignment of such Obligations
         or rights occurring by operation of law pursuant to a merger or
         consolidation permitted pursuant to SECTION 6.9).

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
SECTION 12.3.2 without obtaining the consent of any other party to this
Agreement.

         8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to SECTION 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.


                                   ARTICLE IX

                               GENERAL PROVISIONS

         9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.

                                      -42-
<PAGE>
 
         9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         9.3. TAXES. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.

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

         9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Administrative Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof
other than the fee letter dated March 4, 1997 in favor of First Chicago.

         9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns.

         9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Administrative Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent and the Lenders, which attorneys may be employees
of the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify the
Administrative Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder

                                      -43-
<PAGE>
 
except to the extent that they arise out of the gross negligence or willful
misconduct of the party seeking indemnification. The obligations of the Borrower
under this SECTION 9.7 shall survive the termination of this Agreement.

         9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.

         9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

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

         9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the Administrative Agent nor any Lender shall have any
fiduciary responsibilities to the Borrower. Neither the Administrative Agent nor
any Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower's business
or operations. The Borrower shall rely entirely upon its own judgment with
respect to its business, and any review, inspection or supervision of, or
information supplied to the Borrower by the Administrative Agent or the Lenders
is for the protection of the Administrative Agent and the Lenders and neither
the Borrower nor any other Person is entitled to rely thereon. The Borrower
agrees that neither the Administrative Agent nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases and agrees
not to sue for, any special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby or the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith.

         9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

         9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN

                                      -44-
<PAGE>
 
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL
BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED THAT SUCH PROCEEDINGS
MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED IN A COURT IN
CHICAGO, ILLINOIS.

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

         9.15. DISCLOSURE. The Borrower and each Lender hereby (a) acknowledge
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.

         9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent that it has taken such action.


                                    ARTICLE X

                            THE ADMINISTRATIVE AGENT

                                      -45-
<PAGE>
 
         10.1. APPOINTMENT. First Chicago is hereby appointed Administrative
Agent hereunder and under each other Loan Document, and each of the Lenders
authorizes the Administrative Agent to act as the agent of such Lender. The
Administrative Agent agrees to act as such upon the express conditions contained
in this ARTICLE X. The Administrative Agent shall not have a fiduciary
relationship in respect of the Borrower or any Lender by reason of this
Agreement.

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

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

         10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into, or verify
(a) any statement, warranty or representation made in connection with any Loan
Document or any borrowing hereunder, (b) the performance or observance of any of
the covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in ARTICLE IV,
except receipt of items required to be delivered to the Administrative Agent and
not waived at closing, or (d) the validity, effectiveness, sufficiency,
enforceability or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith. The Administrative Agent shall have
no duty to disclose to the Lenders information that is not required to be
furnished by the Borrower to the Administrative Agent at such time, but is
voluntarily furnished by the Borrower to the Administrative Agent (either in its
capacity as Administrative Agent or in its individual capacity).

         10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Majority Lenders (or, to the extent required by
SECTION 8.2, all Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.

         10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any

                                      -46-
<PAGE>
 
of its duties as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.

         10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.

         10.8. ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (a) for any amounts not reimbursed by the Borrower for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents, and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents; PROVIDED
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Administrative Agent. The
obligations of the Lenders under this SECTION 10.8 shall survive payment of the
Obligations and termination of this Agreement.

         10.9. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders.

         10.10. RIGHTS AS A LENDER. In the event the Administrative Agent is a
Lender, the Administrative Agent shall have the same rights and powers hereunder
and under any other Loan Document as any Lender and may exercise the same as
though it were not the Administrative Agent, and the term "Lender" or "Lenders"
shall, at any time when the Administrative Agent is a Lender, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by

                                      -47-
<PAGE>
 
this Agreement or any other Loan Document, with the Borrower or any of its
Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby
from engaging with any other Person. The Administrative Agent, in its individual
capacity, is not obligated to remain a Lender.

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

         10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative Agent gives notice
of its intention to resign. Upon any such resignation, the Majority Lenders
shall have the right to appoint, on behalf of the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty days after the resigning Administrative Agent's giving notice of
its intention to resign, then the resigning Administrative Agent may appoint, on
behalf of the Borrower and the Lenders, a successor Administrative Agent. If the
Administrative Agent has resigned and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the
Lenders. No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $50,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning Administrative Agent. Upon the effectiveness of the resignation
of the Administrative Agent, the resigning Administrative Agent shall be
discharged from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an Administrative
Agent, the provisions of this ARTICLE X 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 the Administrative Agent hereunder and under the other Loan Documents.

         10.13. CO-AGENTS. There shall be no rights, obligations or liabilities
imposed upon the Co-Agents identified on the signature pages of this Agreement
by virtue of their status as such.

                                      -48-
<PAGE>
 
                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS

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

         11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTION 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of such
Loans, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made. If an
amount to be setoff is to be applied to Indebtedness of the Borrower to a
Lender, other than Indebtedness evidenced by any of the Notes held by such
Lender, such amount shall be applied ratably to such other Indebtedness and to
the Indebtedness evidenced by such Notes.


                                   ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

         12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or Obligations under the
Loan Documents (other than an assignment of such rights or Obligations occurring
by operation of law pursuant to a merger or consolidation permitted pursuant to
SECTION 6.9), and (b) any assignment by any Lender must be made in compliance
with SECTION 12.3. Notwithstanding CLAUSE (B) of this SECTION 12.1, any Lender
may at any time, without the consent of the Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Administrative Agent may treat the payee of any Note as the owner
thereof for

                                      -49-
<PAGE>
 
all purposes hereof unless and until such payee complies with SECTION 12.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Administrative Agent. Any
assignee or transferee of a Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.

         12.2. PARTICIPATIONS.

                  12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
         ordinary course of its business and in accordance with applicable law,
         at any time sell to one or more banks or other entities
         ("PARTICIPANTS") participating interests in any Loan owing to such
         Lender, any Note held by such Lender, any Commitment of such Lender or
         any other interest of such Lender under the Loan Documents. In the
         event of any such sale by a Lender of participating interests to a
         Participant, such Lender's obligations under the Loan Documents shall
         remain unchanged, such Lender shall remain solely responsible to the
         other parties hereto for the performance of such obligations, such
         Lender shall remain the holder of any such Note for all purposes under
         the Loan Documents, all amounts payable by the Borrower under this
         Agreement shall be determined as if such Lender had not sold such
         participating interests, and the Borrower and the Administrative Agent
         shall continue to deal solely and directly with such Lender in
         connection with such Lender's rights and obligations under the Loan
         Documents.

                  12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right
         to approve, without the consent of any Participant, any amendment,
         modification or waiver of any provision of the Loan Documents other
         than any amendment, modification or waiver which effects any of the
         modifications referenced in clauses (a) through (f) of SECTION 8.2.

                  12.2.3. BENEFIT OF SENDOFF. The Borrower agrees that each
         Participant shall be deemed to have the right of setoff provided in
         SECTION 11.1 in respect of its participating interest in amounts owing
         under the Loan Documents to the same extent as if the amount of its
         participating interest were owing directly to it as a Lender under the
         Loan Documents; PROVIDED that each Lender shall retain the right of
         setoff provided in SECTION 11.1 with respect to the amount of
         participating interests sold to each Participant. The Lenders agree to
         share with each Participant, and each Participant, by exercising the
         right of setoff provided in SECTION 11.1, agrees to share with each
         Lender, any amount received pursuant to the exercise of its right of
         setoff, such amounts to be shared in accordance with SECTION 11.2 as if
         each Participant were a Lender.

         12.3. ASSIGNMENTS.

                  12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
         course of its business and in accordance with applicable law, at any
         time assign to one or more banks or other entities ("PURCHASERS") all
         or any part of its rights and obligations under the Loan Documents;

                                      -50-
<PAGE>
 
         PROVIDED, HOWEVER, that in the case of an assignment to an entity which
         is not a Lender or an Affiliate of a lender, such assignment shall be
         in a minimum amount of $10,000,000. Such assignment shall be
         substantially in the form of EXHIBIT I hereto or in such other form as
         may be agreed to by the parties thereto. The consent of the
         Administrative Agent and, so long as no Default is continuing, the
         Borrower shall be required prior to an assignment becoming effective
         with respect to a Purchaser which is not a Lender or an Affiliate
         thereof. Such consent shall not be unreasonably withheld.

                  12.3.2. EFFECT; EFFECTIVE DATE. Upon (a) delivery to the
         Administrative Agent of a notice of assignment, substantially in the
         form attached as EXHIBIT I to EXHIBIT I hereto (a "NOTICE OF
         ASSIGNMENT"), together with any consents required by SECTION 12.3.1,
         and (b) payment of a $3,500 fee to the Administrative Agent for
         processing such assignment, such assignment shall become effective on
         the effective date specified in such Notice of Assignment. On and after
         the effective date of such assignment, (a) such Purchaser shall for all
         purposes be a Lender party to this Agreement and any other Loan
         Document executed by the Lenders and shall have all the rights and
         obligations of a Lender under the Loan Documents, to the same extent as
         if it were an original party hereto, and (b) the transferor Lender
         shall be released with respect to the percentage of the Aggregate
         Commitment and Loans assigned to such Purchaser without any further
         consent or action by the Borrower, the Lenders or the Administrative
         Agent. Upon the consummation of any assignment to a Purchaser pursuant
         to this SECTION 12.3.2, the transferor Lender, the Administrative Agent
         and the Borrower shall make appropriate arrangements so that
         replacement Notes are issued to such transferor Lender and new Notes
         or, as appropriate, replacement Notes, are issued to such Purchaser, in
         each case in principal amounts reflecting their Revolving Credit
         Commitment, as adjusted pursuant to such assignment.

         12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries.

         12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.18.


                                  ARTICLE XIII

                                     NOTICES


         13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.15 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its

                                      -51-
<PAGE>
 
signature hereto or at such other address as may be designated by such party in
a notice to the other parties. Any notice, if mailed and properly addressed with
first class postage prepaid, return receipt requested, shall be deemed given
three Business Days after deposit in the U.S. mail; any notice, if transmitted
by facsimile, shall be deemed given when transmitted; and any notice given by
overnight courier shall be deemed given when received by the addressee.

         13.2. CHANGE OF ADDRESS. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

                            [signature pages follow]
<PAGE>
 
                                    EXHIBIT I

                              ASSIGNMENT AGREEMENT


         This Assignment Agreement (this "Assignment Agreement") between
_________________________ (the "Assignor") and _______________________________
(the "Assignee") is dated as of ____________________, ____. The parties hereto
agree as follows:

         1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement
(which, as it may be amended, supplemented, modified, renewed or extended from
time to time, is herein called the "Credit Agreement") described in Item 1 of
SCHEDULE 1 attached hereto. Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the Credit Agreement.

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

         3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of SCHEDULE
1 or two Business Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of EXHIBIT I
attached hereto has been delivered to the Administrative Agent. Such Notice of
Assignment must include any consents required to be delivered to the
Administrative Agent pursuant to Section 12.3.1 of the Credit Agreement. In no
event will the Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under SECTION 4 hereof are not
made on the proposed Effective Date. The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to the proposed
Effective Date. As of the Effective Date, (a) the Assignee shall have the rights
and obligations of a Lender under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder, and (b) the Assignor shall
relinquish its rights and be released from its corresponding obligations under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder.

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

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

         5. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE

                                      -2-
<PAGE>
 
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim created by the Assignor. It
is understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor nor
any of its officers, directors, employees, agents or attorneys shall be
responsible for (a) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectibility of any Loan Document, [including,
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of any Borrower or any guarantor], (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of any Borrower
[or any guarantor], (d) the performance of or compliance with any of the terms
or provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of any Borrower, [(f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans], or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.

*    include bracketed language if applicable.

         6. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (a) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements requested by the Assignee and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement, (b) agrees that it will,
independently and without reliance upon the Administrative Agent, the Assignor
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (c) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Loan Documents as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto, (d) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender, (e) agrees that its payment
instructions and notice instructions are as set forth in the attachment to
SCHEDULE 1, (f) confirms that none of the funds, monies, assets or other
consideration being used to make the purchase and assumption hereunder are "plan
assets" as defined under ERISA and that its rights, benefits and interests in
and under the Loan Documents will not be "plan assets" under ERISA, [and (g)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying that the Assignee is entitled to receive payments under the
Loan Documents without deduction or withholding of any United States federal
income taxes].*

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

         7. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless 

                                      -3-
<PAGE>
 
against any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement. The obligations of the
Assignee under this SECTION 7 shall survive the payment of all amounts hereunder
and the termination of this Agreement.

         8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to and in accordance with Section 12.3 of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person; PROVIDED that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained, and (b) unless
the prior written consent of the Assignor is obtained, the Assignee is not
thereby released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under SECTIONS 4, 6
and 7 hereof.

         9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of SCHEDULE 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.

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

         11. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

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

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


                                               [NAME OF ASSIGNOR]

                                      -4-
<PAGE>
 
                                               By:
                                                  ---------------------------

                                               Title:
                                                     ------------------------


                                               [NAME OF ASSIGNEE]


                                               By:
                                                  ---------------------------

                                               Title:
                                                     ------------------------


                                      -5-
<PAGE>
 
                                   SCHEDULE 1
                             TO ASSIGNMENT AGREEMENT


1.       Description and Date of Credit Agreement:

                  That certain $750,000,000 (364-day) Credit Agreement, dated as
                  of April 29, 1997, among Green Tree Financial Corporation, the
                  financial institutions named therein and The First National
                  Bank of Chicago, as Administrative Agent.

2.       Date of Assignment Agreement:

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

         (a)      Total of Commitments (Loans)*
                  under Credit Agreement                               $
                                                                        -------

         (b)      Assignee's percentage of the
                  (Loans)* Commitments purchased
                  under the Assignment Agreement**                      -------%

4.       Assignee's aggregate (Loan amount)*
         Commitment amount purchased hereunder:                        $-------

5.       Proposed Effective Date:


Accepted and Agreed:

[NAME OF ASSIGNOR]                                   [NAME OF ASSIGNEE]


By:                                            By:
   ----------------------------                   ---------------------------

Title:                                         Title:
      -------------------------                      ------------------------

 *  If a Commitment has been terminated, insert outstanding Loans in 
     place of Commitment

**  Percentage taken to 10 decimal places
<PAGE>
 
                ATTACHMENT TO SCHEDULE 1 TO ASSIGNMENT AGREEMENT


         Attach Assignor's Administrative Information Sheet, which must
            include notice address for the Assignor and the Assignee
<PAGE>
 
                                    EXHIBIT I
                             TO ASSIGNMENT AGREEMENT


                              NOTICE OF ASSIGNMENT

                                                     ----------------, ------

To:               Green Tree Financial Corporation
                  500 Landmark Towers
                  345 St. Peter Street
                  St. Paul, MN  55102

                  The First National Bank of Chicago
                  One First National Plaza
                  Chicago, IL  60670

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

                  [NAME OF ASSIGNEE] (the "Assignee")


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

         2. This Notice of Assignment (this "Notice") is given and
delivered to the Borrower and the Administrative Agent pursuant to Section
12.3.2 of the Credit Agreement.

         3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , ____ (the "Assignment"), pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the Assignor
the percentage interest specified in Item 3 of SCHEDULE 1 of all outstandings,
rights and obligations under the Credit Agreement relating to the facilities
listed in Item 3 of SCHEDULE 1, including, without limitation, such interest in
the Assignor's Commitment (if applicable) and the Loans owing to the Assignor
relating to such facilities. The effective date of the Assignment (the
"Effective Date") shall be the later of the date specified in Item 5 of SCHEDULE
1 or two Business Days (or such shorter period as agreed to by the
Administrative Agent) after this Notice of Assignment and any consents and fees
required by Sections 12.3.1 and 12.3.2 of the Credit Agreement have been
delivered to the Administrative Agent; PROVIDED that the Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the Assignee
has not been satisfied.

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

         5. The Assignor or the Assignee shall pay to the Administrative Agent
on or before the Effective Date the processing fee of $3,500 required by Section
12.3.2 of the Credit Agreement.

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

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

         8. Each party consenting to the Assignment in the space indicated below
hereby releases the Assignor from any obligations to it which have been assigned
to the Assignee. The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA.

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

[NAME OF ASSIGNOR]                     [NAME OF ASSIGNEE]


By:                                    By:
   ----------------------------           -------------------------------

Title:                                 Title:
      -------------------------              ----------------------------

                                      -2-
<PAGE>
 
ACKNOWLEDGED AND CONSENTED TO          ACKNOWLEDGED AND CONSENTED
BY THE FIRST NATIONAL BANK OF          TO BY GREEN TREE FINANCIAL
CHICAGO, as Administrative Agent       CORPORATION


By:                                    By:
   -----------------------------          -------------------------------

Title:                                 Title:
      --------------------------             ----------------------------


                 [Attach photocopy of Schedule 1 to Assignment]


                                      -3-
<PAGE>
 
================================================================================

                              $750,000,000 (3-year)


                                CREDIT AGREEMENT


                                      AMONG


                        GREEN TREE FINANCIAL CORPORATION,


                                  as Borrower,


                            THE LENDERS NAMED HEREIN


                                       and


                       THE FIRST NATIONAL BANK OF CHICAGO,


                             as Administrative Agent



                                   DATED AS OF


                                 April 29, 1997


================================================================================
<PAGE>
 
                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

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

ARTICLE II THE FACILITY.......................................................15
   2.1.     The Facility......................................................15
            2.1.1.   Description of Facility..................................15
            2.1.2.   Facility Amount..........................................16
            2.1.3.   Availability of Facility.................................16
   2.2.     Ratable Advances..................................................16
            2.2.1.   Ratable Advances.........................................16
            2.2.2    Ratable Advance Rate Options.............................16
            2.2.3.   Method of Selecting Types and Interest 
                     Periods for Ratable Advances.............................17
            2.2.4.   Conversion and Continuation of Outstanding 
                     Ratable Advances.........................................17
   2.3.     Competitive Bid Advances..........................................18
            2.3.1.   Competitive Bid Option...................................18
            2.3.2.   Competitive Bid Quote Request............................18
            2.3.3.   Invitation for Competitive Bid Quotes....................19
            2.3.4.   Submission and Contents of Competitive Bid Quotes........19
            2.3.5.   Notice to Borrower.......................................20
            2.3.6.   Acceptance and Notice by Borrower........................21
            2.3.7.   Allocation by Administrative Agent.......................21

   2.4.     Swing Line Advances...............................................21
   2.5.     Availability of Funds.............................................23
   2.6.     Facility Fee; Utilization Fee; Reductions in 
            Aggregate Commitment..............................................24
   2.7.     Minimum Amount of Each Advance....................................24
   2.8.     Optional Principal Payments.......................................24
   2.9.     Mandatory Prepayments.............................................25
   2.10.    Changes in Interest Rate, etc.....................................25
   2.11.    Rates Applicable After Default....................................25
   2.12.    Method of Payment.................................................25
   2.13.    Notes; Telephonic Notices.........................................25
   2.14.    Interest Payment Dates; Interest and Fee Basis....................26
   2.15.    Notification of Advances, Interest Rates, 
            Prepayments and Commitment Reductions.............................26
   2.16.    Lending Installations.............................................26
   2.17.    Non-Receipt of Funds by the Administrative Agent..................27
   2.18.    Taxes.............................................................27
   2.19.    Administrative Agent's Fees.......................................28

ARTICLE III CHANGE IN CIRCUMSTANCES...........................................28
   3.1.     Yield Protection..................................................28
   3.2.     Changes in Capital Adequacy Regulations...........................29
   3.3.     Availability of Types of Advances.................................30
<PAGE>
 
   3.4.     Funding Indemnification...........................................30
   3.5.     Lender Statements; Survival of Indemnity..........................30

ARTICLE IV CONDITIONS PRECEDENT...............................................31
   4.1.     Initial Loans.....................................................31
   4.2.     Each Future Advance...............................................32

ARTICLE V REPRESENTATIONS AND WARRANTIES......................................33
   5.1.     Corporate Existence and Standing..................................33
   5.2.     Authorization and Validity........................................33
   5.3.     Compliance with Laws and Contracts................................33
   5.4.     Governmental Consents.............................................34
   5.5.     Financial Statements..............................................34
   5.6.     Material Adverse Change...........................................34
   5.7.     Taxes.............................................................34
   5.8.     Litigation and Contingent Obligations.............................34
   5.9.     Subsidiaries.  ...................................................35
   5.10.    ERISA.............................................................35
   5.11.    Defaults..........................................................35
   5.12.    Federal Reserve Regulations.......................................35
   5.13.    Investment Company................................................35
   5.14.    Disclosure........................................................35

ARTICLE VI COVENANTS..........................................................36
   6.1.     Financial Reporting...............................................36
   6.2.     Use of Proceeds...................................................37
   6.3.     Notice of Default.................................................37
   6.4.     Conduct of Business...............................................37
   6.5.     Taxes.............................................................37
   6.6.     Compliance with Laws..............................................37
   6.7.     Maintenance of Properties.........................................38
   6.8.     Inspection........................................................38
   6.9.     Mergers, Sales of Assets, etc.....................................38
   6.10.    Liens.............................................................39
   6.11.    Inconsistent Agreements...........................................41
   6.12.    Financial Covenants...............................................41
            6.12.1.  Net Worth................................................41
            6.12.2.  Fixed Charge Coverage Ratio..............................41
            6.12.3.  Debt to Equity Ratio.....................................41

ARTICLE  VII DEFAULTS.........................................................41
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES...................43
   8.1.     Acceleration......................................................43
   8.2.     Amendments........................................................43
   8.3.     Preservation of Rights............................................44

ARTICLE IX GENERAL PROVISIONS.................................................44
<PAGE>
 
   9.1.     Survival of Representations.......................................44
   9.2.     Governmental Regulation...........................................44
   9.3.     Taxes.............................................................44
   9.4.     Headings..........................................................44
   9.5.     Entire Agreement..................................................45
   9.6.     Several Obligations; Benefits of this Agreement...................45
   9.7.     Expenses; Indemnification.........................................45
   9.8.     Numbers of Documents..............................................45
   9.9.     Accounting........................................................45
   9.10.    Severability of Provisions........................................45
   9.11.    Nonliability of Lenders...........................................46
   9.12.    CHOICE OF LAW.....................................................46
   9.13.    CONSENT TO JURISDICTION...........................................46
   9.14.    WAIVER OF JURY TRIAL..............................................47
   9.15.    Disclosure........................................................47
   9.16.    Counterparts......................................................47

ARTICLE X.....................................................................47

    THE ADMINISTRATIVE AGENT..................................................47
    10.1.    Appointment......................................................47
    10.2.    Powers...........................................................47
    10.3.    General Immunity.................................................47
    10.4.    No Responsibility for Loans, Recitals, etc.......................48
    10.5.    Action on Instructions of Lenders................................48
    10.6.    Employment of Agents and Counsel.................................48
    10.7.    Reliance on Documents; Counsel...................................48
    10.8.    Administrative Agent's Reimbursement and Indemnification.........48
    10.9.    Notice of Default................................................49
    10.10.   Rights as a Lender...............................................49
    10.11.   Lender Credit Decision...........................................49
    10.12.   Successor Administrative Agent...................................49
    10.13.  Co-Agents.........................................................50

ARTICLE XI SETOFF; RATABLE PAYMENTS...........................................50
    11.1.    Setoff...........................................................50
    11.2.    Ratable Payments.................................................50
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.................51
   12.1.    Successors and Assigns............................................51
   12.2.    Participations....................................................51
            12.2.1.  Permitted Participants; Effect.  ........................51
            12.2.2.  Voting Rights............................................52
            12.2.3.  Benefit of Setoff........................................52
   12.3.    Assignments.......................................................52
            12.3.1.  Permitted Assignments....................................52
            12.3.2.  Effect; Effective Date...................................52
   12.4.    Dissemination of Information......................................53
<PAGE>
 
   12.5.    Tax Treatment.....................................................53

ARTICLE XIII NOTICES..........................................................53
   13.1.    Giving Notice.....................................................53
   13.2.    Change of Address.................................................53
<PAGE>
 
                                    EXHIBITS

Exhibit A    - Note (Ratable Loan)
Exhibit B    - Note (Competitive Bid Loan)
Exhibit C    - Competitive Bid Quote Request
Exhibit D    - Invitation for Competitive Bid Quotes
Exhibit E    - Competitive Bid Quote
Exhibit F    - Note (Swing Line Loan)
Exhibit G-1  - Opinion of Counsel to the Borrower
Exhibit G-2  - Opinion of General Counsel of the Borrower
Exhibit H    - Compliance Certificate
Exhibit I    - Assignment Agreement
Exhibit J    - Money Transfer Instructions



                        SCHEDULES

Schedule 5.3 - Approvals and Consents
Schedule 5.8 - Material Contingent Obligations
Schedule 5.9 - Subsidiaries
Schedule 5.10- ERISA
<PAGE>
 
                                CREDIT AGREEMENT


         This Credit Agreement, dated as of April 29, 1997, is among GREEN TREE
FINANCIAL CORPORATION, a Delaware corporation, the Lenders and THE FIRST
NATIONAL BANK OF CHICAGO, individually and as Administrative Agent.


                                R E C I T A L S:

         A. The Borrower has requested the Lenders to make financial
accommodations to it in the aggregate principal amount of $750,000,000, the
proceeds of which the Borrower will use for the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries.

         B. The Lenders are willing to extend such financial accommodations on
the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Administrative Agent hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

         As used in this Agreement:

         "Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower.

         "Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.

         "Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.3.

         "Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance, a period of not less than 30 and not more than 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement. If such
Absolute Rate Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next 
<PAGE>
 
succeeding Business Day.

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

         "Adjusted EBIT" means, for any applicable computation period, the
Borrower's and Subsidiaries' Net Income on a consolidated basis, PLUS (a) income
and franchise taxes paid or accrued during such period and (b) Interest Expense,
MINUS (a) income derived from discontinued operations of the Borrower and its
Subsidiaries and (b) extraordinary gains of the Borrower and its Subsidiaries
resulting from changes in the application of Agreement Accounting Principles.

         "Administrative Agent" means First Chicago in its capacity as
administrative agent for the Lenders pursuant to ARTICLE X, and not in its
individual capacity as a Lender, and any successor Administrative Agent
appointed pursuant to ARTICLE X.

         "Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date, of the same Type (or on the same interest basis in
the case of Competitive Bid Advances) and, when applicable, for the same
Interest Period and includes a Competitive Bid Advance.

         "Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

         "Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders hereunder. The initial Aggregate Commitment is $750,000,000.

         "Agreement" means this Credit Agreement, as it may be amended, modified
or restated and in effect from time to time.

         "Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
those used in preparing the Financial Statements; PROVIDED, HOWEVER, that for
purposes of all computations required to be made with respect to compliance by
the Borrower with SECTION 6.12, such term shall mean generally accepted
accounting principles as in effect on the date hereof, applied in a manner
consistent with those used in preparing the Financial Statements.

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

         "Alternate Base Rate Advance" means an Advance which bears interest at
the Alternate 
<PAGE>
 
Base Rate requested by the Borrower pursuant to SECTION 2.2.3.

         "Alternate Base Rate Loan" means a Ratable Loan which bears interest at
the Alternate Base Rate requested by the Borrower pursuant to SECTION 2.2.3.

         "Alternate Swing Line Rate" means, with respect to a Swing Line Bank, a
rate agreed upon from time to time by the Borrower and such Swing Line Bank
pursuant to such supplemental agreements as may be entered into between the
Borrower and such Swing Line Bank from time to time governing the required
maintenance of minimum average daily qualifying balances with such Swing Line
Bank.

         "Applicable Eurodollar Margin" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:

                                                           APPLICABLE
      DEBT RATING ON SUCH DATE                          EURODOLLAR MARGIN
                           
      Level I Status                                        .185%
                           
      Level II Status                                        .20%
                           
      Level III Status                                       .25%
                           
      Level IV Status                                        .35%

Any change in the Applicable Eurodollar Margin shall be effective as of the date
of the change in the Debt Rating giving rise thereto and shall apply during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change.

         "Applicable Facility Fee Percentage" means, on any date, subject to the
following sentence of this definition, the applicable of the following
percentages:

                                                 APPLICABLE FACILITY
      DEBT RATING ON SUCH DATE                           FEE PERCENTAGE
      
Level I Status                                         .09%
      
Level II Status                                        .10%
      
Level III Status                                       .15%
      
Level IV Status                                        .20%
      
Any change in the Applicable Facility Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.

                                      -3-
<PAGE>
 
         "Applicable Utilization Fee Percentage" means, on any date, subject to
the final sentence of this definition:

                  (a) In the event that the average daily aggregate principal
         amount of the Ratable Loans and the Swing Line Loans outstanding during
         any calendar quarter is greater than 33_%, but less than or equal to
         66_%, of the Aggregate Commitment as in effect on the last day of such
         calendar quarter, the applicable of the following percentages:

                                                        APPLICABLE UTILIZATION
         DEBT RATING ON SUCH DATE                           FEE PERCENTAGE

         Level I Status                                         .05%

         Level II Status                                      .0625%

         Level III Status                                       .10%

         Level IV Status                                        .10%

                  (b) In the event that the average daily aggregate principal
         amount of the Ratable Loans and the Swing Line Loans outstanding during
         any calendar quarter is greater than 66_% of the Aggregate Commitment
         as in effect on the last day of such calendar quarter, the applicable
         of the following percentages:

                                                        APPLICABLE UTILIZATION
         DEBT RATING ON SUCH DATE                           FEE PERCENTAGE

         Level I Status                                         .10%

         Level II Status                                       .125%

         Level III Status                                       .20%

         Level IV Status                                        .20%

Any change in the Applicable Utilization Fee Percentage shall be effective as of
the date of the change in the Debt Rating giving rise thereto and shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change.

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

         "Authorized Officer" means any of the president, chief financial
officer or treasurer of the Borrower, acting singly.

                                      -4-
<PAGE>
 
         "Bankruptcy Code" means Title 11, United States Code, sections 1 ET
SEQ., as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.

         "Borrower" means Green Tree Financial Corporation, a Delaware
corporation, and its successors and assigns.

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

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

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

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

         "Change" is defined in SECTION 3.2.

         "Closing Transactions" is defined in SECTION 4.1(D).

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

         "Commitment" means, for each Lender, the obligation of such Lender to
make Loans not exceeding the amount set forth opposite its signature below and
as set forth in any Notice of Assignment relating to any assignment which has
become effective pursuant to SECTION 12.3.2, as such amount may be modified from
time to time pursuant to the terms hereof.

         "Competitive Bid Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Competitive Bid Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Interest Period.

         "Competitive Bid Borrowing Notice" is defined in SECTION 2.3.6.

         "Competitive Bid Loan" means a Eurodollar Bid Rate Loan or an Absolute
Rate Loan, or both, as the case may be.

                                      -5-
<PAGE>
 
         "Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Base Rate.

         "Competitive Bid Note" means a promissory note in substantially the
form of EXHIBIT B hereto, with appropriate insertions, duly executed and
delivered to the Administrative Agent by the Borrower for the account of a
Lender and payable to the order of such Lender, including any amendment,
modification, renewal or replacement of such promissory note.

         "Competitive Bid Quote" means a Competitive Bid Quote substantially in
the form of EXHIBIT E hereto completed and delivered by a Lender to the
Administrative Agent in accordance with SECTION 2.3.4.

         "Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto completed and delivered by the
Borrower to the Administrative Agent in accordance with SECTION 2.3.2.

         "Consolidated" or "consolidated", when used in connection with any
calculation, means a calculation to be determined on a consolidated basis for
the Borrower and its Subsidiaries in accordance with Agreement Accounting
Principles.

         "Consolidated Debt" means, at any time, the aggregate principal amount
of Indebtedness outstanding at such time of the Borrower and its Subsidiaries as
reflected on the consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.

         "Consolidated Net Tangible Assets" means, at any time, (a) the total of
all assets reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles, at
their net book value (after deducting related depreciation, depletion,
amortization, allowance for doubtful accounts and all other valuation reserves
which, in accordance with Agreement Accounting Principles, should be set aside
in connection with the business conducted), but excluding goodwill, unamortized
debt discount and all other like segregated intangible assets, all as determined
in accordance with Agreement Accounting Principles, less (b) the aggregate of
the current liabilities of the Borrower and its Subsidiaries reflected on such
balance sheet, all as determined in accordance with Agreement Accounting
Principles. For purposes of this definition, "current liabilities" includes all
Indebtedness of the Borrower and its Subsidiaries and accruals of the Borrower
and its Subsidiaries, in each case payable on demand or due within one year of
the date of the determination of Consolidated Net Tangible Assets, all as
reflected on such consolidated balance sheet of the Borrower and its
Subsidiaries, prepared in accordance with Agreement Accounting Principles.

         "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide 

                                      -6-
<PAGE>
 
funds for the payment of, or otherwise becomes or is contingently liable upon,
the obligation or liability of any other Person, or agrees to maintain the net
worth or working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement or take-or-pay
contract or application for a Letter of Credit.

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

         "Conversion/Continuation Notice" is defined in SECTION 2.2.4.

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

         "Debt Rating" means the credit rating assigned to the Borrower's
senior, unsecured long term debt (without credit enhancement) as publicly
announced by Moody's or S&P, as the case may be.

         "Debt to Equity Ratio" means, at any time, the ratio of (a)
Consolidated Debt to (b) Net Worth.

         "Default" means an event described in ARTICLE VII.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "Eurodollar Advance" means a Eurodollar Bid Rate Advance or a
Eurodollar Ratable Advance, or both, as the case may be.

         "Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Eurodollar Bid Rates pursuant to SECTION 2.3.

         "Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the
Administrative Agent to be the rate of interest per annum for deposits in U.S.
dollars for a period equal to the relevant Eurodollar Interest Period quoted on
Telerate Screen Page 3750 (or its successor if such page number changes) at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Eurodollar Interest Period. If no quotation is available on Telerate,
the "Eurodollar Base Rate" shall mean the rate determined by the Administrative
Agent to be the rate at which deposits in U.S. dollars are offered by First
Chicago to first class banks in the London interbank 

                                      -7-
<PAGE>
 
market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Eurodollar Interest Period.

         "Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate Loan
made by a given Lender for the relevant Eurodollar Interest Period, the sum of
(a) the Eurodollar Base Rate and (b) the Competitive Bid Margin offered by such
Lender and accepted by the Borrower.

         "Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.

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

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

         "Eurodollar Loan" means a Eurodollar Ratable Loan or Eurodollar Bid
Rate Loan, or both, as the case may be.

         "Eurodollar Ratable Advance" means an Advance which bears interest at a
Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.

         "Eurodollar Ratable Loan" means a Ratable Loan which bears interest at
a Eurodollar Rate requested by the Borrower pursuant to SECTION 2.2.3.

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

         "Existing Lien" is defined in SECTION 6.10(M).

                                      -8-
<PAGE>
 
         "Extended Lien" is defined in SECTION 6.10(M).

         "Facility Termination Date" means April 29, 2000.

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

         "Financial Statements" is defined in SECTION 5.5.

         "First Bank" means First Bank National Association in its individual
capacity, and its successors.

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

         "Fiscal Quarter" means each of the four quarterly accounting periods
comprising a Fiscal Year.

         "Fiscal Year" means the twelve-month accounting period commencing on
January 1 and ending on December 31 of each year.

         "Fixed Charge Coverage Ratio" means, for any applicable computation
period, the ratio of (a) Adjusted EBIT to (b) Interest Expense.

         "Governmental Authority" means any government (foreign or domestic) or
any state or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority or political subdivision) or any instrumentality or officer
thereof (including, without limitation, any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned or controlled by or subject to the control of any
of the foregoing.

         "Indebtedness" of a Person means such Person's (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from Property now or hereafter owned or acquired by such
Person, (d) 

                                      -9-
<PAGE>
 
obligations which are evidenced by notes, acceptances, or similar
instruments, (e) Capitalized Lease Obligations, (f) Rate Hedging Obligations,
(g) Contingent Obligations, (h) obligations for which such Person is obligated
pursuant to or in respect of a Letter of Credit and (i) repurchase obligations
or liabilities of such Person with respect to accounts or notes receivable and
chattel paper sold by such Person.

         "Interest Expense" means, for any applicable computation period, all
interest paid or accrued during such period by the Borrower and its Subsidiaries
on a consolidated basis, determined in accordance with Agreement Accounting
Principles.

         "Interest Period" means a Eurodollar Interest Period or an Absolute
Rate Interest Period.

         "Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of EXHIBIT D hereto, completed
and delivered by the Administrative Agent to the Lenders in accordance with
SECTION 2.3.3.

         "Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.

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

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

         "Level I Status" exists at any date if at such date the Debt Rating is
A3 (or the equivalent) or higher by Moody's and A- (or the equivalent) or higher
by S&P.

         "Level II Status" exists at any date if at such date (a) the Debt
Rating is Baal (or the equivalent) or higher by Moody's and BBB+ (or the
equivalent) or higher by S&P and (b) Level I Status does not exist.

         "Level III Status" exists at any date if at such date (a) the Debt
Rating is Baa3 (or the equivalent) or higher by Moody's and BBB- (or the
equivalent) or higher by S&P and (b) neither Level I Status nor Level II Status
exists.

         "Level IV Status" exists at any date if at such date (a) the Debt
Rating is either lower than Baa3 (or the equivalent) by Moody's or lower than
BBB- (or the equivalent) by S&P or (b) the Borrower's senior, unsecured and
publicly-held indebtedness is unrated by either Moody's or S&P.

         "Lien" means any security interest, lien (statutory or other),
mortgage, pledge, 

                                      -10-
<PAGE>
 
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).

         "Loan" means, with respect to a Lender, such Lender's portion of any
Advance and "Loans" means, with respect to the Lenders, the aggregate of all
Advances.

         "Loan Documents" means this Agreement, the Notes and the other
documents and agreements contemplated hereby and executed by the Borrower in
favor of the Administrative Agent or any Lender.

         "Majority Lenders" means Lenders in the aggregate having at least 66_%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66_% of the aggregate unpaid principal
amount of outstanding Advances.

         "Margin Stock" has the meaning assigned to that term under Regulation
U.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or other), performance, results of
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(b) the ability of the Borrower or any Subsidiary to perform its obligations
under the Loan Documents, or (c) the validity or enforceability of any of the
Loan Documents or the rights or remedies of the Administrative Agent or the
Lenders thereunder.

         "Moody's" means Moody's Investors Service, Inc., a Delaware
corporation, together with any Person succeeding thereto by merger,
consolidation or acquisition of all or substantially all of its assets,
including substantially all of its business of rating securities.

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

         "Net Income" means, for any computation period, with respect to the
Borrower on a consolidated basis with its Subsidiaries (other than any
Subsidiary which is restricted from declaring or paying dividends or otherwise
advancing funds to its parent whether by contract or otherwise), cumulative net
income earned during such period as determined in accordance with Agreement
Accounting Principles.

         "Net Worth" means, at any date, the consolidated common stockholders'
equity of the Borrower and its consolidated Subsidiaries determined in
accordance with Agreement Accounting Principles.

                                      -11-
<PAGE>
 
         "Non-Excluded Taxes" is defined in SECTION 2.18(A).

         "Notes" means, collectively, the Competitive Bid Notes, the Ratable
Notes and the Swing Line Notes; and "Note" means any one of the Notes.

         "Notice of Assignment" is defined in SECTION 12.3.2.

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

         "Participants" is defined in SECTION 12.2.1.

         "Payment Date" means the last day of each of March, June, September and
December.

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

         "Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof. "Plan" means an employee pension benefit plan, as
defined in Section 3(2) of ERISA, as to which the Borrower or any member of the
Controlled Group may have any liability.

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

         "pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount, an amount equal to such Lender's pro-rata share or
portion based on its percentage of the Aggregate Commitment or, if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.

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

                                      -12-
<PAGE>
 
         "Purchasers" is defined in SECTION 12.3.1.

         "Ratable Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Ratable Loans made by the Lenders to the
Borrower at the same time, of the same Type and for the same Interest Period.

         "Ratable Borrowing Notice" is defined in SECTION 2.2.3.

         "Ratable Loan" means a Loan made by a Lender pursuant to SECTION 2.2.

         "Ratable Note" means a promissory note in substantially the form of
EXHIBIT A hereto, duly executed and delivered to the Administrative Agent by the
Borrower for the account of each Lender and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.

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

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

         "Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by Persons other than banks,
brokers and dealers for the purpose of purchasing or carrying margin stocks
applicable to such Persons.

         "Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by securities brokers and dealers
for the purpose of purchasing or carrying margin stocks applicable to such
Persons.

                                      -13-
<PAGE>
 
         "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to such Persons.

         "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and shall include any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.

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

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

         "Risk-Based Capital Guidelines" is defined in SECTION 3.2.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc., together with any Person succeeding thereto by merger, consolidation or
acquisition of all or substantially all of its assets, including substantially
all of its business of rating securities.

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

         "Single Employer Plan" means a Plan subject to Title IV of ERISA
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group, other than a
Multiemployer Plan.

         "Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(b) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the 

                                      -14-
<PAGE>
 
Borrower.

         "Substantial Portion" means, with respect to the Property of the
Borrower and its Subsidiaries, Property which (a) represents more than 10% of
the consolidated assets of the Borrower and its Subsidiaries, as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the Fiscal Quarter next preceding the date on which such
determination is made, or (b) is responsible for more than 10% of the
consolidated net sales or of the Net Income of the Borrower and its Subsidiaries
for the 12-month period ending as of the end of the Fiscal Quarter next
preceding the date of determination.

         "Swing Line Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Swing Line Loans made by the Swing Line Banks to
the Borrower on the same Borrowing Date.

         "Swing Line Banks" means First Chicago and First Bank and their
respective successors and assigns.

         "Swing Line Commitment" means the obligation of a Swing Line Bank to
make Swing Line Loans hereunder in an aggregate amount at any one time
outstanding not to exceed the amount set forth below, as the same may be
terminated or permanently reduced from time to time hereunder; PROVIDED,
HOWEVER, that the aggregate of the Swing Line Commitments on the date hereof
shall be $50,000,000. The Swing Line Commitments will automatically and
permanently terminate on the Facility Termination Date. The initial Swing Line
Commitments shall be:

               First Chicago         -        $25,000,000
               First Bank            -        $25,000,000

         "Swing Line Loan" means a Loan made by a Swing Line Bank pursuant to
SECTION 2.4.

         "Swing Line Note" means a promissory note substantially in the form of
EXHIBIT F hereto, duly executed and delivered to the Administrative Agent by the
Borrower and payable to the order of a Swing Line Bank in the amount of its
Swing Line Commitment, including any amendment, modification, renewal or
replacement of such promissory note.

         "Termination Event" means, with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other member of the Controlled Group from such Plan during a plan year in
which the Borrower or any other member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section 4068(f) of ERISA, (c) the termination of such Plan, the
filing of a notice of intent to terminate such Plan or the treatment of an
amendment of such Plan as a termination under Section 4041 of ERISA, (d) the
institution by the PBGC of proceedings to terminate such Plan or (e) any event
or condition which might constitute grounds under Section 

                                      -15-
<PAGE>
 
4042 of ERISA for the termination of, or appointment of a trustee to administer,
such Plan.

         "Transferee" is defined in SECTION 12.4.

         "Type" means, with respect to any Advance, its nature as an Alternate
Base Rate Advance, Swing Line Advance, Eurodollar Advance or Absolute Rate
Advance.

         "Unfunded Liability" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under a Single Employer Plan
exceeds the fair market value of assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.

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

         "Unrefunded Swing Line Loans" is defined in SECTION 2.4(D).

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


                                   ARTICLE II

                                  THE FACILITY

         2.1. THE FACILITY.

         2.1.1. DESCRIPTION OF FACILITY The Lenders hereby establish in favor of
the Borrower a revolving credit facility pursuant to which, and upon the terms
and subject to the conditions herein set out:

                  (a) each Lender severally agrees to make Ratable Loans to the
         Borrower in accordance with SECTION 2.2 in amounts not to exceed in the
         aggregate at any one time outstanding the amount of its Commitment less
         (i) the amount of such Lender's pro-rata share of the outstanding
         principal amount of all Competitive Bid Advances (regardless of which
         Lender or Lenders made such Competitive Bid Advances) exclusive of
         Competitive Bid Advances being repaid substantially contemporaneously
         with the making of any such Ratable Loans and (ii) the amount of such
         Lender's pro-rata share of the outstanding principal amount of all
         Swing Line Advances (regardless of which Lender or Lenders made such
         Swing Line Advances) exclusive of Swing Line Advances being repaid
         substantially contemporaneously with the making of any such Ratable
         Loans;

                                      -16-
<PAGE>
 
                  (b) each Lender may, in its sole discretion, make bids to make
         Competitive Bid Loans to the Borrower, and make such Loans, in
         accordance with SECTION 2.3; and

                  (c) each Swing Line Bank agrees, severally and not jointly, to
         make Swing Line Loans to the Borrower in accordance with SECTION 2.4.

         2.1.2. FACILITY AMOUNT. In no event may the aggregate principal amount
of all outstanding Advances (including the Ratable Advances, the Swing Line
Advances and the Competitive Bid Advances) at any time exceed the Aggregate
Commitment.

         2.1.3. AVAILABILITY OF FACILITY. Subject to the terms of this
Agreement, from and including the date hereof to, but not including, the
Facility Termination Date, the Borrower may borrow, repay and reborrow Advances
hereunder. All outstanding Advances and all other unpaid Obligations shall be
due and payable in full by the Borrower on the Facility Termination Date and on
such date all remaining Commitments shall be deemed to have been reduced to
zero.

         2.2. RATABLE ADVANCES

         2.2.1. RATABLE ADVANCES. Each Ratable Advance hereunder shall consist
of borrowings made from the several Lenders ratably in proportion to the amounts
of their respective Commitments. The Borrower's obligation to pay the principal
of, and interest on, the Ratable Advances shall be evidenced by the Ratable
Notes. Although the Ratable Notes shall be dated the date of the initial
Advance, interest in respect thereof shall be payable only for the periods
during which the Loans evidenced thereby are outstanding and, although the
stated amount of each Ratable Note shall be equal to the applicable Lender's
Commitment, each Ratable Note shall be enforceable, with respect to the
Borrower's obligation to pay the principal amount thereof, only to the extent of
the unpaid principal amount of the Ratable Loans at the time evidenced thereby.

         2.2.2 RATABLE ADVANCE RATE OPTIONS. The Ratable Advances may be
Alternate Base Rate Advances or Eurodollar Ratable Advances, or a combination
thereof, selected by the Borrower in accordance with SECTION 2.2.3 or 2.2.4. No
Ratable Advance may mature after, or have an Interest Period which extends
beyond, the Facility Termination Date.

         2.2.3. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR RATABLE
ADVANCES. The Borrower shall select the Type of each Ratable Advance and, in the
case of each Eurodollar Ratable Advance, the Eurodollar Interest Period
applicable to such Ratable Advance from time to time. The Borrower shall give
the Administrative Agent irrevocable notice (a "RATABLE BORROWING NOTICE") not
later than 10:00 a.m. (Chicago time) on the Borrowing Date of each Alternate
Base Rate Advance and three Business Days before the Borrowing Date for each
Eurodollar Ratable Advance. Notwithstanding the foregoing, a Ratable Borrowing
Notice for an Alternate Base Rate Advance may be given not later than 30 minutes
after the time which the 

                                      -17-
<PAGE>
 
Borrower is required to reject one or more bids offered in connection with an
Absolute Rate Auction pursuant to SECTION 2.3.6 and a Ratable Borrowing Notice
for a Eurodollar Ratable Advance may be given not later than 30 minutes after
the time the Borrower is required to reject one or more bids offered in
connection with a Eurodollar Auction pursuant to SECTION 2.3.6. A Ratable
Borrowing Notice shall specify:

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

                  (b) the aggregate amount of such Ratable Advance, which, when
         added to all outstanding Ratable Advances, Swing Line Advances and
         Competitive Bid Advances and after giving effect to the repayment of
         any such outstanding Advances out of the proceeds of the requested
         Ratable Advance, shall not exceed the Aggregate Commitment;

                  (c) the Type of Advance selected; and

                  (d) in the case of each Eurodollar Ratable Advance, the
         Eurodollar Interest Period applicable thereto (which may not end after
         the Facility Termination Date).

         2.2.4. CONVERSION AND CONTINUATION OF OUTSTANDING RATABLE ADVANCES.
Alternate Base Rate Advances shall continue as Alternate Base Rate Advances
unless and until such Alternate Base Rate Advances are converted into Eurodollar
Ratable Advances. Each Eurodollar Ratable Advance shall continue as a Eurodollar
Ratable Advance until the end of the then applicable Eurodollar Interest Period
therefor, at which time such Eurodollar Ratable Advance shall be automatically
converted into an Alternate Base Rate Advance unless the Borrower shall have
given the Administrative Agent a Conversion/Continuation Notice requesting that,
at the end of such Eurodollar Interest Period, such Eurodollar Ratable Advance
continue as a Eurodollar Ratable Advance for the same or another Eurodollar
Interest Period. Subject to the terms of SECTION 2.7, the Borrower may elect
from time to time to convert all or any part of a Ratable Advance of any Type
into any other Type or Types of Ratable Advances; PROVIDED that any conversion
of any Eurodollar Ratable Advance shall be made on, and only on, the last day of
the Eurodollar Interest Period applicable thereto. The Borrower shall give the
Administrative Agent irrevocable notice (a "CONVERSION/CONTINUATION NOTICE") of
each conversion of a Ratable Advance or continuation of a Eurodollar Ratable
Advance not later than 10:00 a.m. (Chicago time) at least three Business Days,
in the case of a conversion into or continuation of a Eurodollar Ratable
Advance, prior to the date of the requested conversion or continuation,
specifying:

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

                                      -18-
<PAGE>
 
                  (c) the aggregate amount and Type of Ratable Advance which is
         to be converted or continued; and

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

         2.3. COMPETITIVE BID ADVANCES.

         2.3.1. COMPETITIVE BID OPTION. In addition to Ratable Advances pursuant
to SECTION 2.2, but subject to the terms and conditions of this Agreement
(including, without limitation, the limitation set forth in SECTION 2.1.2 as to
the maximum aggregate principal amount of all outstanding Advances hereunder),
prior to the Facility Termination Date the Borrower may, as set forth in this
SECTION 2.3, request the Lenders to make offers to make Competitive Bid Advances
to the Borrower. Each Lender may, but shall have no obligation to, make such
offers and the Borrower may, but shall have no obligation to, accept any such
offers in the manner set forth in this SECTION 2.3. The Borrower's obligation to
pay the principal of, and interest on, the Competitive Bid Advances shall be
evidenced by the Competitive Bid Notes. Although the Competitive Bid Notes shall
be dated the date of the initial Advance, interest in respect thereof shall be
payable only for the periods during which the Loans evidenced thereby are
outstanding.

         2.3.2. COMPETITIVE BID QUOTE REQUEST. When the Borrower wishes to
request offers to make Competitive Bid Loans under this SECTION 2.3, it shall
transmit to the Administrative Agent by telecopy a Competitive Bid Quote Request
substantially in the form of EXHIBIT C hereto so as to be received no later than
(a) 10:00 a.m. (Chicago time) at least five Business Days prior to the Borrowing
Date proposed therein, in the case of a Eurodollar Auction, or (b) 9:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction, specifying:

                  (a) the proposed Borrowing Date, which shall be a Business
         Day, for the proposed Competitive Bid Advance;

                  (b) the aggregate principal amount of such Competitive Bid
         Advance;

                  (c) whether the Competitive Bid Quotes requested are to set
         forth a Eurodollar Bid Rate, an Absolute Rate, or both; and

                  (d) the Interest Period applicable thereto (which may not end
         after the Facility Termination Date).

The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period in a single Competitive Bid Quote Request. No Competitive Bid
Quote Request shall be 

                                      -19-
<PAGE>
 
given within five Business Days (or such other number of days as the Borrower
and the Administrative Agent may agree) of any other Competitive Bid Quote
Request. A Competitive Bid Quote Request that does not conform substantially to
the format of EXHIBIT C hereto shall be rejected, and the Administrative Agent
shall promptly notify the Borrower of such rejection by telecopy.

         2.3.3. INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in any event
before the close of business on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.3.2,
the Administrative Agent shall send to each of the Lenders by telex or telecopy
an Invitation for Competitive Bid Quotes substantially in the form of EXHIBIT D
hereto, which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with this SECTION
2.3.

         2.3.4. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.

                  (b) Each Lender may, in its sole discretion, submit a
         Competitive Bid Quote containing an offer or offers to make Competitive
         Bid Loans in response to any Invitation for Competitive Bid Quotes.
         Each Competitive Bid Quote must comply with the requirements of this
         SECTION 2.3.4 and must be submitted to the Administrative Agent by
         telex or telecopy at its offices specified in or pursuant to ARTICLE
         XIII not later than (i) 9:00 a.m. (Chicago time) at least three
         Business Days prior to the proposed Borrowing Date, in the case of a
         Eurodollar Auction or (ii) 9:00 a.m. (Chicago time) on the proposed
         Borrowing Date, in the case of an Absolute Rate Auction (or, in either
         case, upon reasonable prior notice to the Lenders, such earlier time
         and date as the Borrower and the Administrative Agent may agree);
         PROVIDED that Competitive Bid Quotes submitted by First Chicago may
         only be submitted if the Administrative Agent or First Chicago notifies
         the Borrower of the terms of the offer or offers contained therein not
         later than 15 minutes prior to the latest time at which the relevant
         Competitive Bid Quotes must be submitted by the other Lenders. Subject
         to ARTICLES IV AND VIII, any Competitive Bid Quote so made shall be
         irrevocable except with the written consent of the Administrative Agent
         given on the instructions of the Borrower.

                  (c) Each Competitive Bid Quote shall be in substantially the
         form of EXHIBIT E hereto and shall in any case specify:

                           (i) the proposed Borrowing Date, which shall be the
                  same as that set forth in the applicable Invitation for
                  Competitive Bid Quotes;

                           (ii) the principal amount of the Competitive Bid Loan
                  for which each such offer is being made, which principal
                  amount a) may be greater than, less than or equal to the
                  Commitment of the quoting Lender, b) must be at least
                  $10,000,000 and an integral multiple of $5,000,000, and c) may
                  not exceed 

                                      -20-
<PAGE>
 
                  the principal amount of Competitive Bid Loans for which offers
                  were requested;

                           (iii) in the case of a Eurodollar Auction, the
                  Competitive Bid Margin offered for each such Competitive Bid
                  Loan;

                           (iv) the minimum amount, if any, of the Competitive
                  Bid Loan which may be accepted by the Borrower;

                           (v) in the case of an Absolute Rate Auction, the
                  Absolute Rate offered for each such Competitive Bid Loan; and

                           (vi) the identity of the quoting Lender.

                  (d) The Administrative Agent shall reject any Competitive Bid
         Quote that:

                           (i) is not substantially in the form of EXHIBIT E
                  hereto or does not specify all of the information required by
                  SECTION 2.3.4(B);

                           (ii) contains qualifying, conditional or similar
                  language, other than any such language contained in EXHIBIT E
                  hereto;

                           (iii) proposes terms other than or in addition to
                  those set forth in the applicable Invitation for Competitive
                  Bid Quotes; or

                           (iv) arrives after the time set forth in SECTION
                  2.3.4(A).

If any Competitive Bid Quote shall be rejected pursuant to this SECTION
2.3.4(C), then the Administrative Agent shall promptly notify the relevant
Lender of such rejection.

         2.3.5. NOTICE TO BORROWER. The Administrative Agent shall promptly
notify the Borrower of the terms (a) of any Competitive Bid Quote submitted by a
Lender that is in accordance with SECTION 2.3.4 and (b) of any Competitive Bid
Quote that amends, modifies or is otherwise inconsistent with a previous
Competitive Bid Quote submitted by such Lender with respect to the same
Competitive Bid Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative Agent unless such subsequent Competitive
Bid Quote specifically states that it is submitted solely to correct a manifest
error in such former Competitive Bid Quote. The Administrative Agent's notice to
the Borrower shall specify the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Eurodollar Bid Rates or Absolute Rates, as the case may be, so offered.

                  2.3.6. ACCEPTANCE AND NOTICE BY BORROWER2.3.6. ACCEPTANCE AND
NOTICE BY BORROWER. Not later than (a) 10:00 a.m. 

                                      -21-
<PAGE>
 
(Chicago time) at least three Business Days prior to the proposed Borrowing
Date, in the case of a Eurodollar Auction or (b) 10:00 a.m. (Chicago time) on
the proposed Borrowing Date, in the case of an Absolute Rate Auction (or, in
either case, upon reasonable prior notice to the Lenders, such earlier time and
date as the Borrower and the Administrative Agent may agree), the Borrower shall
notify the Administrative Agent of its acceptance or rejection of the offers so
notified to it pursuant to SECTION 2.3.5; PROVIDED, HOWEVER, that the failure by
the Borrower to give such notice to the Administrative Agent shall be deemed to
be a rejection of all such offers. In the case of acceptance, such notice (a
"COMPETITIVE BID BORROWING NOTICE") shall specify the aggregate principal amount
of offers for each Interest Period that are accepted. The Borrower may accept
any Competitive Bid Quote in whole or in part (subject to the terms of SECTION
2.3.4(B)(IV)); PROVIDED that:

                  (b) the aggregate principal amount of each Competitive Bid
         Advance may not exceed the applicable amount set forth in the related
         Competitive Bid Quote Request,

                  (c) acceptance of offers may only be made on the basis of
         ascending Eurodollar Bid Rates or Absolute Rates, as the case may be,
         and

                  (d) the Borrower may not accept any offer that is described in
         SECTION 2.3.4(C) or that otherwise fails to comply with the
         requirements of this Agreement.

         2.3.7. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by two or
more Lenders with the same Eurodollar Bid Rates or Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which offers are accepted for the related Interest Period, the principal amount
of Competitive Bid Loans in respect of which such offers are accepted shall be
allocated by the Administrative Agent among such Lenders as nearly as possible
(in such multiples, not greater than $1,000,000, as the Administrative Agent may
deem appropriate) in proportion to the aggregate principal amount of such
offers; PROVIDED, HOWEVER, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Administrative
Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence
of manifest error. The Administrative Agent shall promptly, but in any event on
the same Business Day, notify each Lender of its receipt of a Competitive Bid
Borrowing Notice and the aggregate principal amount of such Competitive Bid
Advance allocated to each participating Lender.

         2.4. SWING LINE ADVANCES

                  (a) On the terms and subject to the conditions and relying
         upon the representations and warranties herein set forth, each Swing
         Line Bank agrees, severally and not jointly, at any time and from time
         to time from and including the date hereof to but excluding the earlier
         of the Facility Termination Date and the termination of the Commitments
         or the Swing 

                                      -22-
<PAGE>
 
         Line Commitments, in accordance with the terms hereof, to make Swing
         Line Loans to the Borrower in an aggregate principal amount at any time
         outstanding not to exceed the lesser of (i) the amount of the Swing
         Line Commitment of such Swing Line Bank at such time and (ii) an amount
         equal to (A) the Aggregate Commitment at such time MINUS (B) the sum of
         the aggregate principal amounts of all Ratable Loans, Competitive Bid
         Loans and Swing Line Loans outstanding at such time. The Swing Line
         Loans comprising each Swing Line Advance shall be made by the Swing
         Line Banks, at the option of the Borrower, either (i) ratably at the
         Alternate Base Rate in accordance with their Swing Line Commitments or
         (ii) either ratably or non-ratably at the Alternate Swing Line Rate.
         All Swing Line Advances shall be in a minimum amount of $1,000,000 and
         in any integral multiple of $500,000 if in excess thereof. In no event
         shall any Swing Line Loan be made hereunder if (i) the Administrative
         Agent and the Swing Line Banks shall have received notice from the
         Majority Lenders prior to any such Swing Line Loan that a condition
         specified in SECTION 4.1 or 4.2 has not been satisfied and (ii) such
         condition shall not have been subsequently waived in compliance with
         SECTION 8.2.

                  (b) The Borrower shall give the Swing Line Banks (with a copy
         to the Administrative Agent) telephonic, written or telecopy notice (in
         the case of telephonic notice, such notice shall be promptly confirmed
         in writing or by telecopy) not later than 1:00 p.m., Chicago time, on a
         day of a proposed Swing Line Advance. Such notice shall be delivered on
         a Business Day, shall be irrevocable and shall refer to this Agreement
         and shall specify the requested Borrowing Date (which shall be a
         Business Day) and amount of such Swing Line Advance. Each Swing Line
         Bank shall by 2:00 p.m., Chicago time, on the requested Borrowing Date,
         make the requested Swing Line Loans by crediting the principal amount
         thereof, in immediately available funds, to the account of the Borrower
         maintained with such Swing Line Bank, unless such Advance shall not
         occur on such date because any condition precedent herein specified
         shall not have been met.

                  (c) Notwithstanding the occurrence of any Default or
         noncompliance with the conditions precedent set forth in ARTICLE IV, if
         (i) any Swing Line Loans aggregating $10,000,000 or more shall remain
         outstanding at 10:00 a.m., Chicago time, on the fifth Business Day
         following the Borrowing Date thereof and if by such time on such fifth
         Business Day the Administrative Agent shall have received neither (A) a
         Ratable Borrowing Notice delivered by the Borrower pursuant to SECTION
         2.2.3 requesting that Ratable Loans be made pursuant to SECTION 2.2 on
         the immediately succeeding Business Day in an amount at least equal to
         the aggregate principal amount of such Swing Line Loans nor (B) any
         other notice satisfactory to the Administrative Agent indicating the
         Borrower's intent to repay all such Swing Line Loans on or before the
         immediately succeeding Business Day with funds obtained from other
         sources, or (ii) on any date either Swing Line Bank in its sole
         discretion shall so request with respect to the outstanding Swing Line
         Loans, the Administrative Agent shall be deemed to have received a
         Ratable Borrowing Notice from the Borrower pursuant to SECTION 2.2.3
         requesting that a Ratable Advance of Alternate Base Rate Loans be made
         pursuant to SECTION 2.2 on such immediately succeeding Business Day in
         an amount equal to the aggregate amount of such Swing Line Loans, and
         the procedures set forth in SECTION 2.5 shall be followed in making
         such Alternate Base Rate 

                                      -23-
<PAGE>
 
         Loans, provided that the proceeds of such Alternate Base Rate Loans
         received by the Administrative Agent shall be immediately delivered to
         the Swing Line Banks and applied to the direct repayment of such Swing
         Line Loans. Effective on the day such Ratable Loans are made, the
         portion of the Swing Line Loans so paid shall no longer be outstanding
         as Swing Line Loans and shall be outstanding as Ratable Loans of the
         Lenders bearing interest at a rate determined by reference to the
         Alternate Base Rate, in accordance with the provisions of this ARTICLE
         II. The Borrower authorizes the Administrative Agent and each Swing
         Line Bank to charge the Borrower's account maintained with such Swing
         Line Bank (up to the amount available in such account) in order to
         immediately pay the amount of such Swing Line Loans to the extent
         amounts received from the Lenders are not sufficient to repay in full
         such Swing Line Loans. If any portion of any such amount paid (or
         deemed paid) to the Swing Line Banks should be recovered by or on
         behalf of the Borrower from the Swing Line Banks in the event of the
         bankruptcy or reorganization of the Borrower or otherwise, the loss of
         the amount so recovered shall be ratably shared among all Lenders in
         the manner contemplated by SECTION 11.2.

                  (d) If, for any reason (including, without limitation, the
         occurrence of a Default described in SECTION 7.6 or 7.7 of ARTICLE
         VII), Alternate Base Rate Loans may not be, or are not, made pursuant
         to paragraph (c) of this SECTION 2.4 to repay Swing Line Loans as
         required by such paragraph, effective on the date such Alternate Base
         Rate Loans would otherwise have been made, (i) each Lender severally,
         unconditionally and irrevocably agrees that it shall, without regard to
         the occurrence of any Default, purchase a participating interest in
         such Swing Line Loans ("UNREFUNDED SWING LINE LOANS") in an amount
         equal to the amount of Alternate Base Rate Loans which would otherwise
         have been made by such Lender pursuant to paragraph (c) of this SECTION
         2.4 and (ii) each Unrefunded Swing Line Loan previously bearing
         interest at the Alternate Swing Line Rate shall commence accruing
         interest at the Alternate Base Rate. Each Lender will immediately
         transfer to the Administrative Agent, in immediately available funds,
         the amount of its participation, and the proceeds of such participation
         shall be distributed by the Administrative Agent to the Swing Line
         Banks in such amount as will reduce the amount of the participating
         interest retained by the Swing Line Banks in their Swing Line Loans to
         the amount of the Alternate Base Rate Loans which were to have been
         made by the Swing Line Banks pursuant to paragraph (c) of this SECTION
         2.4. In the event a Lender fails to make available to the Swing Line
         Banks the amount of such Lender's participation as provided in this
         paragraph (d), the Swing Line Banks shall be entitled to recover such
         amount on demand from such Lender together with interest at the
         customary rate set by the Swing Line Banks for correction of errors
         among banks for one Business Day and thereafter at the Alternate Base
         Rate then in effect. All payments in respect of Unrefunded Swing Line
         Loans and participations therein shall be made in accordance with
         SECTION 2.12.

                  (e) Each Lender's obligation to make Ratable Loans pursuant to
         paragraph (c) of this SECTION 2.4 and to purchase participating
         interests pursuant to paragraph (d) of this SECTION 2.4 shall be
         absolute and unconditional and shall not be affected by any
         circumstance, including, without limitation, (i) any setoff,
         counterclaim, recoupment, defense or other right which such Lender or
         the Borrower may have against the Swing Line Banks, the Borrower or 

                                      -24-
<PAGE>
 
         any other Person, as the case may be, for any reason whatsoever; (ii)
         the occurrence or continuance of a Default; (iii) any adverse change in
         the condition (financial or otherwise) of the Borrower or any of its
         Subsidiaries; (iv) any breach of this Agreement by the Borrower, any of
         its Subsidiaries or any Lender; or (v) any other circumstance,
         happening or event whatsoever, whether or not similar to any of the
         foregoing.

         2.5. AVAILABILITY OF FUNDS. Not later than noon (Chicago time) on each
Borrowing Date, each Lender (or in the case of a Competitive Bid Advance, each
Lender making a portion of such Advance) shall make available its Loan or Loans
(other than Swing Line Loans), in immediately available funds in Chicago, to the
Administrative Agent at its address specified pursuant to ARTICLE XIII. The
Administrative Agent shall, by 2:00 p.m. (Chicago time) on such Borrowing Date,
make the funds so received from the Lenders available to the Borrower by
crediting the principal amount thereof, in immediately available funds, to the
account of the Borrower maintained with First Chicago.

         2.6. FACILITY FEE; UTILIZATION FEE; REDUCTIONS IN AGGREGATE COMMITMENT.

                  (a) The Borrower agrees to pay to the Administrative Agent for
         the ratable account of each Lender a facility fee equal to the
         Applicable Facility Fee Percentage times such Lender's Commitment from
         the date hereof to and including the Facility Termination Date, payable
         in arrears on each Payment Date hereafter and on the Facility
         Termination Date.

                  (b) The Borrower agrees to pay to the Administrative Agent for
         the ratable account of each Lender a utilization fee equal to the
         Applicable Utilization Fee Percentage times such Lender's average daily
         principal amount of the Ratable Loans and the Swing Line Loans
         outstanding during each calendar quarter from the date hereof to the
         Facility Termination Date, payable in arrears on each Payment Date
         hereafter and on the Facility Termination Date; PROVIDED, HOWEVER, that
         in the event the average daily principal amount of the Ratable Loans
         and the Swing Line Loans outstanding during any calendar quarter is
         less than or equal to 33_% of the Aggregate Commitment as in effect on
         the last day of such quarter, no utilization fee shall be payable with
         respect to such quarter.

                  (c) The Borrower may permanently reduce the Aggregate
         Commitment in whole, or in part ratably among the Lenders in a minimum
         aggregate amount of $25,000,000, or any integral multiple of $5,000,000
         in excess thereof, upon at least three Business Days' written notice to
         the Administrative Agent, which notice shall specify the amount of any
         such reduction; PROVIDED, HOWEVER, that the amount of the Aggregate
         Commitment may not be reduced below the aggregate principal amount of
         the outstanding Advances. All accrued facility fees and utilization
         fees shall be payable on the effective date of any termination of the
         obligations of the Lenders to make Loans hereunder.

         2.7. Each Advance (other than any Swing Line Advance) shall be in the
minimum amount of $10,000,000 (and in any integral multiple of 

                                      -25-
<PAGE>
 
$5,000,000 if in excess thereof); PROVIDED, HOWEVER, that (a) any Alternate Base
Rate Advance may be in the amount of the unused Aggregate Commitment and (b) in
no event shall more than six Eurodollar Advances be permitted to be outstanding
at any time.

         2.8. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time
pay, without penalty or premium, all outstanding Ratable Advances or, in a
minimum aggregate amount of $10,000,000 or any integral multiple of $5,000,000
in excess thereof, any portion of the outstanding Ratable Advances upon one
Business Day's prior notice to the Administrative Agent in the case of an
Alternate Base Rate Advance and upon three Business Days' prior notice to the
Administrative Agent in the case of a Eurodollar Advance. Any prepayment of a
Eurodollar Advance prior to the last day of the applicable Eurodollar Interest
Period shall be subject to the indemnity provisions of SECTION 3.4. Competitive
Bid Advances may not be voluntarily prepaid.

         2.9. MANDATORY PREPAYMENTS. If at any time the aggregate principal
balance of the Loans exceeds the Aggregate Commitment, the Borrower shall repay
immediately its then outstanding Loans in such amount as may be necessary to
eliminate such excess.

         2.10. CHANGES IN INTEREST RATE, ETC. Each Alternate Base Rate Advance
shall bear interest at the Alternate Base Rate from and including the date of
such Advance or the date on which such Advance was converted into an Alternate
Base Rate Advance to (but not including) the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar Ratable Advance. Changes in
the rate of interest on that portion of any Advance maintained as an Alternate
Base Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Ratable Advance and Absolute Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to, but not including, the last day of such Interest Period
at the interest rate determined as applicable to such Eurodollar Ratable Advance
or Absolute Rate Advance. No Interest Period may end after the Facility
Termination Date.

         2.11. RATES APPLICABLE AFTER DEFAULT. Notwithstanding anything to the
contrary contained in SECTION 2.2.3 and 2.2.4, no Advance may be made as,
converted into or continued as a Eurodollar Ratable Advance (except with the
consent of the Administrative Agent and the Majority Lenders) when any Default
or Unmatured Default has occurred and is continuing. During the continuance of a
Default, each Eurodollar Advance, Absolute Rate Advance and Alternate Base Rate
Advance shall bear interest (for the remainder of the applicable Interest Period
in the case of Eurodollar Advances and Absolute Rate Advances) at the rate
otherwise applicable plus two percent (2%) per annum.

         2.12. METHOD OF PAYMENT. All payments of the Obligations hereunder
shall be made, without setoff, deduction or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent's
address specified pursuant to ARTICLE XIII, or at any other Lending Installation
of the Administrative Agent specified in writing by the Administrative Agent to
the Borrower, by noon (Chicago time) on the date when due and shall be applied
ratably 

                                      -26-
<PAGE>
 
by the Administrative Agent among the applicable Lenders. Each payment delivered
to the Administrative Agent for the account of any Lender shall be delivered
promptly by the Administrative Agent to such Lender in the same type of funds
that the Administrative Agent received at its address specified pursuant to
ARTICLE XIII or at any Lending Installation specified in a notice received by
the Administrative Agent from such Lender. The Administrative Agent is hereby
authorized to charge the account of the Borrower maintained with First Chicago
for each payment of principal, interest and fees as it becomes due hereunder.

         2.13. NOTES; TELEPHONIC NOTICES. Each Lender is hereby authorized to
record the principal amount of each of its Loans and each repayment on the
schedule attached to its Note; PROVIDED, HOWEVER, that neither the failure to so
record nor any error in such recordation shall affect the Borrower's obligations
under such Note. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, effect selections
of Types of Advances, submit Competitive Bid Quotes and to transfer funds based
on telephonic notices made by any person or persons the Administrative Agent or
any Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation, if such confirmation is requested by the Administrative Agent or
any Lender, of each telephonic notice signed by an Authorized Officer. If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

         2.14. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued
on each Alternate Base Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which an Alternate Base Rate Advance is prepaid, whether due to acceleration
or otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Alternate Base Rate Advance converted into a
Eurodollar Ratable Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance or
Absolute Rate Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the Eurodollar Advance or Absolute Rate
Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Eurodollar Advance or Absolute Rate Advance having an
Interest Period longer than three months shall also be payable on the last day
of each three-month interval during such Interest Period. Interest, facility and
utilization fees shall be calculated for actual days elapsed on the basis of a
360-day year. Interest shall be payable for the day an Advance is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (Chicago time) at the place of payment. If any payment shall be received by
the Administrative Agent later than noon (Chicago time), such payment shall be
deemed to have been received on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest and utilization fees in connection with such payment. If any
payment shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest and utilization fees in connection with

                                      -27-
<PAGE>
 
such payment.

         2.15. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Administrative Agent
will notify each Lender of the contents of each Aggregate Commitment reduction
notice, Ratable Borrowing Notice, Conversion/Continuation Notice, Invitation for
Competitive Quotes and repayment notice received by it hereunder. The
Administrative Agent will notify each Lender of the interest rate applicable to
each Eurodollar Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Alternate Base Rate.

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

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

         2.18. TAXES. 

                  (a) Any payments made by the Borrower under this Agreement
         shall be made 

                                      -28-
<PAGE>
 
         free and clear of, and without deduction or withholding for or on
         account of, any present or future income, stamp or other taxes, levies,
         imposts, duties, charges, fees, deductions or withholdings, now or
         hereafter imposed, levied, collected, withheld or assessed by any
         Governmental Authority, excluding net income taxes and franchise taxes
         or any other tax based upon any income imposed on the Administrative
         Agent or any Lender by the jurisdiction in which the Administrative
         Agent or such Lender is incorporated or has its principal place of
         business. If any such non-excluded taxes, levies, imposts, duties,
         charges, fees, deductions or withholdings ("NON-EXCLUDED Taxes") are
         required to be withheld from any amounts payable to the Administrative
         Agent or any Lender hereunder, the amounts so payable to the
         Administrative Agent or such Lender shall be increased to the extent
         necessary to yield to the Administrative Agent or such Lender (after
         payment of all Non-Excluded Taxes) interest or any such other amounts
         payable hereunder at the rates or in the amounts specified in or
         pursuant to this Agreement; PROVIDED, HOWEVER, that the Borrower shall
         not be required to increase any such amounts payable to any Lender that
         is not organized under the laws of the U.S. or a state thereof if such
         Lender fails to comply with the requirements of paragraph (b) of this
         SECTION 2.18. Whenever any Non-Excluded Taxes are payable by the
         Borrower, as promptly as practicable thereafter the Borrower shall send
         to the Administrative Agent for its own account or for the account of
         such Lender, as the case may be, a certified copy of an original
         official receipt received by the Borrower showing payment thereof. If
         the Borrower fails to pay any Non-Excluded Taxes when due to the
         appropriate taxing authority or fails to remit to the Administrative
         Agent the required receipts or other required documentary evidence, the
         Borrower shall indemnify the Administrative Agent and the Lenders for
         any incremental taxes, interest or penalties that may become payable by
         any Administrative Agent or any Lender as a result of any such failure.
         The agreements in this SECTION 2.18 shall survive the termination of
         this Agreement and the payment of all other amounts payable hereunder.

                  (b) At least five Business Days prior to the first date on
         which interest or fees are payable hereunder for the account of any
         Lender, each Lender that is not incorporated under the laws of the
         United States of America, or a state thereof, agrees that it will
         deliver to each of the Borrower and the Administrative Agent two duly
         completed copies of United States Internal Revenue Service Form 1001 or
         4224, certifying in either case that such Lender is entitled to receive
         payments under this Agreement and the Notes without deduction or
         withholding of any United States federal income taxes. Each Lender
         which so delivers a Form 1001 or 4224 further undertakes to deliver to
         each of the Borrower and the Administrative Agent two additional copies
         of such form (or a successor form) on or before the date that such form
         expires (currently, three successive calendar years for Form 1001 and
         one calendar year for Form 4224) or becomes obsolete or after the
         occurrence of any event requiring a change in the most recent forms so
         delivered by it, and such amendments thereto or extensions or renewals
         thereof as may be reasonably requested by the Borrower or the
         Administrative Agent, in each case certifying that such Lender is
         entitled to receive payments under this Agreement and the Notes without
         deduction or withholding of any United States federal income taxes,
         unless an event (including, without limitation, any change in treaty,
         law or regulation) has occurred prior to the date on which any such
         delivery would otherwise be required which renders all such forms
         inapplicable 

                                      -29-
<PAGE>
 
         or which would prevent such Lender from duly completing and delivering
         any such form with respect to it and such Lender advises the Borrower
         and the Administrative Agent that it is not capable of receiving
         payments without any deduction or withholding of United States federal
         income tax.

                  2.19. ADMINISTRATIVE AGENT'S FEES. The Borrower shall pay to
         the Administrative Agent those fees, in addition to the facility fees
         and utilization fees referenced in SECTION 2.6(A) and 2.6(B), in the
         amounts and at the times separately agreed to between the
         Administrative Agent and the Borrower.


                                   ARTICLE III

                             CHANGE IN CIRCUMSTANCES

         3.1. YIELD PROTECTION. If, after the date hereof, the adoption of or
any change in any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, or the compliance of any Lender therewith,

                  (a) subjects any Lender or any applicable Lending Installation
         to any tax, duty, charge or withholding on or from payments due from
         the Borrower (excluding taxation of the overall net income of any
         Lender or applicable Lending Installation imposed by the jurisdiction
         in which such Lender or Lending Installation is incorporated or has its
         principal place of business), or changes the basis of taxation of
         principal, interest or any other payments to any Lender or Lending
         Installation in respect of its Loans or other amounts due it hereunder,
         or

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

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

then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or resulting in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.

                                      -30-
<PAGE>
 
         3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (a) any change after the date
of this Agreement in the Risk-Based Capital Guidelines, or (b) any adoption of
or change in any law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means
(a) the risk-based capital guidelines in effect in the United States on the date
of this Agreement and (b) the corresponding capital regulations promulgated by
regulatory authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and Supervisory Practices
entitled "International Convergence of Capital Measurements and Capital
Standards" and any amendments to such regulations adopted prior to the date of
this Agreement. Notwithstanding the foregoing, no Lender shall be entitled to
demand compensation pursuant to this SECTION 3.2 if it shall not be the general
practice of such Lender to demand such compensation in similar circumstances
under comparable provisions of comparable credit agreements.

         3.3. AVAILABILITY OF TYPES OF ADVANCES. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Majority Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available, or (b) the interest rate applicable to a Type of Advance does not
accurately or fairly reflect the cost of making or maintaining such Advance,
then the Administrative Agent shall suspend the availability of the affected
Type of Advance until such circumstance no longer exists and require any
Eurodollar Advances of the affected Type to be repaid.

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

         3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar

                                      -31-
<PAGE>
 
Advances to reduce any liability of the Borrower to such Lender under SECTIONS
3.1 and 3.2 or to avoid the unavailability of a Type of Advance under SECTION
3.3, so long as such designation is not disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to the Borrower (with a
copy to the Administrative Agent) as to the amount due, if any, under SECTION
3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Advance shall be calculated as though each Lender funded its
Eurodollar Advances through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurodollar
Rate applicable to such Loan, whether in fact that is the case or not. The
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower of the written statement; PROVIDED,
HOWEVER, that no amount shall be payable by the Borrower pursuant to SECTION
3.1, 3.2 or 3.4 with respect to any period commencing more than 120 days before
the delivery of the written statement contemplated by this SECTION 3.5. The
obligations of the Borrower under SECTIONS 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.


                                   ARTICLE IV

                              CONDITIONS PRECEDENT

         4.1. INITIAL LOANS. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished the following to the
Administrative Agent with sufficient copies for the Lenders and the other
conditions set forth below have been satisfied, in each case on or before April
30, 1997:

                  (a) CHARTER DOCUMENTS; GOOD STANDING CERTIFICATES. Copies of
         the certificate of incorporation of the Borrower, together with all
         amendments thereto, certified by the appropriate governmental officer
         in its jurisdiction of incorporation, together with a good standing
         certificate issued by the Secretary of State of the jurisdiction of its
         incorporation and such other jurisdictions as shall be requested by the
         Administrative Agent.

                  (b) BY-LAWS AND RESOLUTIONS. Copies, certified by the
         Secretary or Assistant Secretary of the Borrower, of its by-laws and of
         its Board of Directors' resolutions authorizing the execution, delivery
         and performance of the Loan Documents to which the Borrower is a party.

                  (c) SECRETARY'S CERTIFICATE. An incumbency certificate,
         executed by the Secretary or Assistant Secretary of the Borrower, which
         shall identify by name and title and bear the signature of the officers
         of the Borrower authorized to sign the Loan Documents and to make
         borrowings hereunder, upon which certificate the Administrative Agent
         and the Lenders shall be

                                      -32-
<PAGE>
 
         entitled to rely until informed of any change in writing by the
         Borrower.

                  (d) OFFICER'S CERTIFICATE. A certificate, dated the date
         hereof, signed by an Authorized Officer of the Borrower, in form and
         substance satisfactory to the Administrative Agent, to the effect that:
         (i) on such date (both before and after giving effect to the making of
         any Loans hereunder), no Default or Unmatured Default has occurred and
         is continuing; (ii) no injunction or temporary restraining order which
         would prohibit the making of the Loans or the consummation of any of
         the other transactions contemplated hereby (collectively, including the
         making of the Loans, the "CLOSING TRANSACTIONS"), or other litigation
         which could reasonably be expected to have a Material Adverse Effect is
         pending or, to the best of such Person's knowledge, threatened; (iii)
         each of the representations and warranties set forth in ARTICLE V of
         this Agreement is true and correct on and as of such date; and (iv)
         since December 31, 1996, no event or change has occurred that has
         caused or evidences a Material Adverse Effect.

                  (e) LEGAL OPINIONS. A written opinion of each of (i) Briggs
         and Morgan, counsel to the Borrower, substantially in the form of
         EXHIBIT G-1 hereto, and (ii) Joel H. Gottesman, general counsel of the
         Borrower, substantially in the form of EXHIBIT G-2 hereto, addressed to
         the Administrative Agent and the Lenders.

                  (f) NOTES. Notes payable to the order of each of the Lenders
         duly executed by the Borrower.

                  (g) LOAN DOCUMENTS. Executed originals of this Agreement and
         each of the Loan Documents, which shall be in full force and effect,
         together with all schedules, exhibits, certificates, instruments,
         opinions, documents and financial statements required to be delivered
         pursuant hereto and thereto.

                  (h) LETTERS OF DIRECTION. Written money transfer instructions
         with respect to the initial Advances and to future Advances in the form
         of EXHIBIT J hereto addressed to the Administrative Agent and signed by
         an Authorized Officer, together with such other related money transfer
         authorizations as the Administrative Agent may have reasonably
         requested.

                  (i) TERMINATION OF AGREEMENT. Evidence satisfactory to the
         Administrative Agent that the Credit Agreement dated as of April 16,
         1996 among the Borrower, First Chicago, individually and as
         administrative agent, and the other financial institutions party
         thereto has been, or is contemporaneously being, terminated and all
         amounts due thereunder paid in full.

                  (j) OTHER. Such other documents as the Administrative Agent,
         any Lender or their counsel may have reasonably requested.

         4.2. EACH FUTURE ADVANCE. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:

                                      -33-
<PAGE>
 
                  (a) There exists no Default or Unmatured Default and none
         would result from such Advance;

                  (b) The representations and warranties contained in ARTICLE V
         (other than SECTION 5.6) are true and correct as of such Borrowing
         Date;

                  (c) A Ratable Borrowing Notice or Competitive Bid Quote
         Request shall have been properly submitted; and

                  (d) All legal matters incident to the making of such Advance
         shall be satisfactory to the Lenders and their counsel.

         Each Ratable Borrowing Notice and Competitive Bid Quote Request with
respect to each such Advance shall constitute a representation and warranty by
the Borrower that the conditions contained in SECTION 4.2 have been satisfied.


                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         The Borrower represents and warrants to the Lenders that, both before
and after giving effect to the Closing Transactions:

         5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified and in good standing as a foreign corporation and is duly
authorized to conduct its business in each jurisdiction in which its business is
conducted or proposed to be conducted except where the failure to be so
qualified or authorized may not reasonably be expected to have a Material
Adverse Effect.

         5.2. AUTHORIZATION AND VALIDITY. The Borrower has all requisite power
and authority (corporate and otherwise) and legal right to execute and deliver
(or file, as the case may be) each of the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally.

         5.3. COMPLIANCE WTIH LAWS AND CONTRACTS. The Borrower and its
Subsidiaries have complied in all material respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof,

                                      -34-
<PAGE>
 
having jurisdiction over the conduct of their respective businesses or the
ownership of their respective properties, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect. Neither the
execution and delivery by the Borrower of the Loan Documents, the application of
the proceeds of the Loans or the consummation of the Closing Transactions, nor
compliance with the provisions of the Loan Documents, or at the relevant time
did, (a) violate any law, rule, regulation (including Regulations G, T, U and
X), order, writ, judgment, injunction, decree or award binding on the Borrower
or any Subsidiary or the Borrower's or any Subsidiary's charter, articles or
certificate of incorporation or by-laws, (b) violate the provisions of or
require the approval or consent of any party to any indenture, instrument or
agreement to which the Borrower or any Subsidiary is a party or is subject, or
by which it, or its respective property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
Lien (other than Liens permitted by, the Loan Documents) in, of or on the
property of the Borrower or any Subsidiary pursuant to the terms of any such
indenture, instrument or agreement, or (c) require any consent of the
stockholders of any Person, except for approvals or consents which will be
obtained on or before the initial Advance and are disclosed on SCHEDULE 5.3,
except for any violation of, or failure to obtain an approval or consent
required under, any such indenture, instrument or agreement that could not
reasonably be expected to have a Material Adverse Effect.

         5.4. GOVERNMENTAL CONSENTS. No order, consent, approval, qualification,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any Governmental
Authority, any securities exchange or other Person is or at the relevant time
was required to authorize, or is or at the relevant time was required in
connection with the execution, delivery, consummation or performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents, the application of the proceeds of the Loans or any other transaction
contemplated in the Loan Documents.

         5.5. FINANCIAL STATEMENTS. The Borrower has heretofore furnished to
each of the Lenders the December 31, 1996 audited consolidated financial
statements of the Borrower and its Subsidiaries (the "FINANCIAL STATEMENTS").
Each of the Financial Statements was prepared in accordance with Agreement
Accounting Principles and fairly presents the consolidated financial condition
and operations of the Borrower and its Subsidiaries at such date and the
consolidated results of their operations for the period then ended.

         5.6. MATERIAL ADVERSE CHANGE. No material adverse change in the
business, Property, condition (financial or otherwise), performance, prospects
or results of operations of the Borrower and its Subsidiaries taken as a whole
has occurred since December 31, 1996.

         5.7. TAXES. The Borrower and its Subsidiaries have filed or caused to
be filed on a timely basis and in correct form all United States federal and
applicable foreign, state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any Subsidiary, except
such taxes, if any, as are being contested in good faith and as to which

                                      -35-
<PAGE>
 
adequate reserves have been provided in accordance with Agreement Accounting
Principles and as to which no Lien prohibited by Section 6.10 exists. As of the
date hereof, the United States income tax returns of the Borrower on a
consolidated basis have been audited by the Internal Revenue Service through its
Fiscal Year ending December 31, [1991], and there are no pending audits or
investigations regarding the Borrower's or its Subsidiaries' federal, foreign,
state or local tax returns. No tax liens have been filed and no claims are being
asserted with respect to any such taxes which could reasonably be expected to
have a Material Adverse Effect. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with Agreement Accounting Principles.

         5.8. LITIGATION AND CONTINGENT OBLIGATIONS. There is no litigation,
arbitration, proceeding, inquiry or governmental investigation (including,
without limitation, by the Federal Trade Commission) pending or, to the
knowledge of any of their officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective properties which could reasonably
be expected to have a Material Adverse Effect or to prevent, enjoin or unduly
delay the making of the Loans under this Agreement. Neither the Borrower nor any
Subsidiary has any material contingent obligations except as set forth on
SCHEDULE 5.8.

         5.9. SUBSIDIARIES. SCHEDULE 5.9 hereto contains an accurate list of all
of the existing Subsidiaries as of the date of this Agreement, setting forth
their respective jurisdictions of incorporation and the percentage of their
capital stock owned by the Borrower or other Subsidiaries.

         5.10. ERISA. Except as disclosed on SCHEDULE 5.10, neither the Borrower
nor any other member of the Controlled Group maintains any Single Employer
Plans, and no Single Employer Plan has any Unfunded Liability. Neither the
Borrower nor any other member of the Controlled Group maintains, or is obligated
to contribute to, any Multiemployer Plan or has incurred, or is reasonably
expected to incur, any withdrawal liability to any Multiemployer Plan. Each Plan
complies in all material respects with all applicable requirements of law and
regulations. Neither the Borrower nor any member of the Controlled Group has,
with respect to any Plan, failed to make any contribution or pay any amount
required under Section 412 of the Code or Section 302 of ERISA or the terms of
such Plan. There are no pending or, to the knowledge of the Borrower, threatened
claims, actions, investigations or lawsuits against any Plan, any fiduciary
thereof, or the Borrower or any member of the Controlled Group with respect to a
Plan. Neither the Borrower nor any member of the Controlled Group has engaged in
any prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) in connection with any Plan which would subject such Person to any
material liability. Within the last five years neither the Borrower nor any
member of the Controlled Group has engaged in a transaction which resulted in a
Single Employer Plan with an Unfunded Liability being transferred out of the
Controlled Group. No Termination Event has occurred or is reasonably expected to
occur with respect to any Plan which is subject to Title IV of ERISA.

         5.11. DEFAULTS. No Default or Unmatured Default has occurred and is
continuing.

                                      -36-
<PAGE>
 
         5.12. FEDERAL RESERVE REGULATIONS. Neither the Borrower nor any
Subsidiary is engaged, directly or indirectly, principally, or as one of its
important activities, in the business of extending, or arranging for the
extension of, credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of any Loan will be used in a manner which would violate,
or result in a violation of, Regulation G, Regulation T, Regulation U or
Regulation X. Neither the making of any Advance hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, Regulation T, Regulation U or Regulation X.

         5.13. INVESTMENT COMPANY; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
the Borrower nor any Subsidiary is, or after giving effect to any Advance will
be, an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Neither
the Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

         5.14. DISCLOSURE. None of the (a) information, exhibits or reports
furnished or to be furnished by the Borrower or any Subsidiary to the
Administrative Agent or to any Lender in connection with the negotiation of the
Loan Documents, or (b) representations or warranties of the Borrower contained
in this Agreement, the other Loan Documents, or any other document, certificate
or written statement furnished to the Administrative Agent or the Lenders by or
on behalf of the Borrower for use in connection with the transactions
contemplated by this Agreement, contained, contains or will contain any untrue
statement of a material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. There is
no fact known to the Borrower (other than matters of a general economic nature)
that has had or could reasonably be expected to have a Material Adverse Effect
and that has not been disclosed herein or in such other documents, certificates
and statements furnished to the Lenders for use in connection with the
transactions contemplated by this Agreement.

                                   ARTICLE VI

                                    COVENANTS

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

         6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently applied,
and furnish to the Lenders:

                                      -37-
<PAGE>
 
                  (a) As soon as practicable and in any event within 90 days
         after the close of each of its Fiscal Years, an unqualified audit
         report certified by KPMG Peat Marwick or other independent certified
         public accountants, acceptable to the Lenders, prepared in accordance
         with Agreement Accounting Principles on a consolidated basis for itself
         and its Subsidiaries, including balance sheets as of the end of such
         period and related statements of income, retained earnings and cash
         flows.

                  (b) As soon as practicable and in any event within 60 days
         after the close of the first three Fiscal Quarters of each of its
         Fiscal Years, for itself and its Subsidiaries, consolidated unaudited
         balance sheets as at the close of each such period and consolidated
         statements of income, retained earnings and cash flows for the period
         from the beginning of such Fiscal Year to the end of such quarter, all
         certified by its chief financial officer or treasurer and prepared in
         accordance with Agreement Accounting Principles.

                  (c) concurrently with any delivery of financial statements
         under (a) or (b) above, a certificate of the chief financial officer or
         treasurer of the Borrower, substantially in the form of EXHIBIT H
         hereto, opining on or certifying such statements (i) certifying that no
         Default or Unmatured Default has occurred or, if such Default or
         Unmatured Default has occurred, specifying the nature and extent
         thereof and any corrective action taken or proposed to be taken with
         respect thereto and (ii) setting forth computations in reasonable
         detail satisfactory to the Administrative Agent demonstrating
         compliance with the covenants contained in SECTIONS 6.12.1, 6.12.2 AND
         6.12.3;

                  (d) As soon as possible and in any event within ten days after
         the Borrower knows that any Termination Event has occurred with respect
         to any Plan, a statement, signed by the chief financial officer or
         treasurer of the Borrower, describing said Termination Event and the
         action which the Borrower proposes to take with respect thereto.

                  (e) Promptly upon the furnishing thereof to the shareholders
         of the Borrower, copies of all financial statements, reports and proxy
         statements so furnished.

                  (f) Promptly upon the filing thereof, copies of all
         registration statements and annual, quarterly, monthly or other regular
         reports which the Borrower or any of its Subsidiaries files with the
         Securities and Exchange Commission.

                  (g) Such other information (including non-financial
         information) as the Administrative Agent or any Lender may from time to
         time reasonably request.

         6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances to meet the general corporate needs,
including commercial paper backup, of the Borrower and its Subsidiaries. The
Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds
of the Advances to purchase or carry any "margin stock" (as defined in
Regulation U) or to finance the Purchase of any Person which has not been

                                      -38-
<PAGE>
 
approved and recommended by the board of directors (or functional equivalent
thereof) of such Person.

         6.3. NOTICE OF DEFAULT. The Borrower will give prompt notice in writing
to the Lenders of the occurrence of (a) any Default or Unmatured Default and (b)
of any other event or development, financial or other, relating specifically to
the Borrower or any of its Subsidiaries (and not of a general economic or
political nature) which could reasonably be expected to have a Material Adverse
Effect.

         6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted, except where failure to
maintain such authority could not reasonably be expected to have a Material
Adverse Effect.

         6.5. TAXES. The Borrower will, and will cause each Subsidiary to,
timely file complete and correct United States federal and applicable foreign,
state and local tax returns required by applicable law and pay when due all
taxes, assessments and governmental charges and levies upon it or its income,
profits or Property, except those which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside.

         6.6. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply with all laws (including ERISA), rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be
subject, the failure to comply with which could reasonably be expected to have a
Material Adverse Effect.

         6.7. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.

         6.8. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, corporate books and
financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the Lenders may
designate. The Borrower will keep or cause to be kept, and cause each Subsidiary
to keep or cause to be kept, appropriate records and books of account in which
complete entries are to be made reflecting its and their business and financial

                                      -39-
<PAGE>
 
transactions, such entries to be made in accordance with Agreement Accounting
Principles consistently applied.

         6.9. MERGERS, SALES OF ASSETS, ETC.

                  (a) The Borrower will not consolidate with or merge into any
         other corporation or convey, transfer or lease its Property
         substantially as an entirety to any Person, unless:

                           (i) the corporation formed by such consolidation or
                  into which the Borrower is merged or the Person which acquires
                  by conveyance or transfer, or which leases, the Property of
                  the Borrower substantially as an entirety shall be a
                  corporation organized and existing under the laws of the
                  United States of America or any state or the District of
                  Columbia and shall expressly assume, by an agreement
                  supplemental hereto, executed and delivered to each other
                  party hereto, in form satisfactory to the Administrative
                  Agent, the due and punctual payment of the Obligations and the
                  performance or observance of every covenant of this Agreement
                  on the part of the Borrower to be performed or observed;

                           (ii) immediately after giving effect to such
                  transaction, no Default or Unmatured Default shall have
                  occurred and be continuing; and

                           (ii) the Borrower shall have delivered to the
                  Administrative Agent an officer's certificate and an opinion
                  of counsel, each stating that such consolidation, merger,
                  conveyance, transfer or lease and such supplemental agreement
                  comply with this paragraph (a) and that all conditions
                  precedent herein provided for relating to such transaction
                  have been complied with.

                  (b) Upon any consolidation by the Borrower with or merger by
         the Borrower into any other corporation or any conveyance, transfer or
         lease of the Property of the Borrower substantially as an entirety in
         accordance with paragraph (a) above, the successor corporation formed
         by such consolidation or into which the Borrower is merged or to which
         such conveyance, transfer or lease is made shall succeed to, and be
         substituted for, and may exercise every right and power of, the
         Borrower under the Loan Documents with the same effect as if such
         successor corporation had been named as the Borrower herein.

         6.10. LIENS. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or assume any Lien on the Property of the Borrower or any
Subsidiary to secure any obligation incurred, issued, assumed or guaranteed by
the Borrower or any Subsidiary, except:

                  (a) any Lien existing on any Property or shares of stock of a
         corporation at the time the corporation becomes a Subsidiary or merges
         into or consolidates with the Borrower or any Subsidiary;

                                      -40-
<PAGE>
 
                  (b) any Lien existing on any Property at the time the Borrower
         or any Subsidiary acquires such property; PROVIDED, HOWEVER, that such
         Lien may not extend to any other Property owned by the Borrower or any
         Subsidiary at the time (or after the time) such Lien is created,
         incurred or assumed;

                  (c) any Lien securing Indebtedness incurred to finance all or
         part of the purchase price or cost of construction of Property of the
         Borrower or any Subsidiary; PROVIDED that (i) such Lien does not extend
         to any other Property owned by the Borrower or any Subsidiary at the
         time (or after the time) the Lien is created, incurred or assumed,
         except that, in the case of a Lien incurred to finance construction on
         real property, such Lien may extend to unimproved real property on
         which the construction takes place and (ii) the Indebtedness secured by
         such Lien may not be incurred more than 120 days after the later of the
         acquisition, completion of construction or commencement of full
         operation of the Property subject to such Lien;

                  (d) any Lien securing Indebtedness of any Subsidiary owing to
         the Borrower or any other Subsidiary;

                  (e) Liens for taxes, assessments or governmental charges or
         levies on its Property if the same shall not at the time be delinquent
         or thereafter can be paid without penalty, or are being contested in
         good faith and by appropriate proceedings and for which adequate
         reserves shall have been set aside on its books in accordance with
         Agreement Accounting Principles;

                  (f) Liens imposed by law, such as carriers', warehousemen's
         and mechanics' liens and other similar liens arising in the ordinary
         course of business which secure payment of obligations not more than 60
         days past due or which are being contested in good faith by appropriate
         proceedings and for which adequate reserves shall have been set aside
         on its books;

                  (g) Liens arising out of pledges or deposits made in the
         ordinary course of business in connection with worker's compensation
         laws, unemployment insurance, old age pensions and other social
         security or retirement benefits, and statutory obligations and other
         similar obligations;

                  (h) any Lien arising out of a judgment, decree or court order,
         so long as any appropriate legal proceeding that may have been
         initiated for review shall not have been finally terminated or so long
         as the period within which such proceeding may be initiated shall not
         have expired or such Lien arises in connection with any other
         proceeding or action at law or in equity; PROVIDED that no proceeding
         to enforce such Lien has been commenced and the aggregate amount
         secured by all such Liens shall not at any time exceed $10,000,000;

                                      -41-
<PAGE>
 
                  (i) any Lien on chattel paper, instruments or other rights to
         payment of the Borrower or any Subsidiary, or cash deposited or
         otherwise subjected to such Lien, (i) as a basis for the issuance of
         Letters of Credit, to secure repurchase obligations arising in
         connection with securities repurchase agreements entered into in the
         ordinary course of business or in aid of other similar borrowing
         arrangements, or (ii) arising in connection with the Borrower's
         securitizations of such rights to payment conducted in the ordinary
         course of business;

                  (j) any Lien on Property (or any receivables arising in
         connection with the lease thereof) acquired by the Borrower or any
         Subsidiary through repossession, foreclosure or like proceeding, or
         securing Indebtedness incurred at the time of such acquisition or at
         any time thereafter to finance all or part of the cost of maintenance,
         improvement or construction relating thereto; PROVIDED that such Lien
         does not apply to any other Property of the Borrower or any Subsidiary,
         except that, in the case of any such Lien incurred to finance
         construction on real property, such Lien may extend to unimproved real
         property on which the construction takes place;

                  (k) any Lien incurred or deposit or pledge made or given in
         the ordinary course of business in connection with, or to secure
         payment of, indemnity, performance or other similar bonds;

                  (l) any encumbrance in the nature of zoning restrictions,
         easements and rights or restrictions of record on the use of real
         property, and landlord's liens under leases on the premises rented,
         which do not materially detract from the value of such property or
         impair the use thereof in the business of the Borrower and its
         Subsidiaries;

                  (m) any Lien (an "EXTENDED LIEN") extending, renewing or
         replacing in whole or in part another Lien (an "EXISTING LIEN")
         permitted by paragraphs (a) through (l) above; PROVIDED that (i) such
         Extended Lien shall not extend beyond (A) the Property subject to such
         Existing Lien and (B) improvements and construction on such Property,
         and (ii) the principal amount of the Indebtedness secured by such
         Extended Lien may not exceed the principal amount of the Indebtedness
         secured by such Existing Lien; or

                  (n) any Lien securing Indebtedness of the Borrower or any
         Subsidiary in a principal amount at any time outstanding that does not
         exceed the amount, if any, by which (i) 5% of Consolidated Net Tangible
         Assets exceeds (ii) the aggregate amount of all other Indebtedness of
         the Borrower and its Subsidiaries outstanding at such time that is
         secured by Liens on Property of the Borrower and its Subsidiaries,
         other than Indebtedness secured by Liens permitted by paragraphs (a)
         through (m) above.

         6.11. INCONSISTENT AGREEMENTS. The Borrower shall not, nor shall it
permit any Subsidiary to, enter into any indenture, agreement, instrument or
other arrangement which, (a) directly or indirectly prohibits or restrains, or
has the effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence of the Obligations, the granting of 

                                      -42-
<PAGE>
 
Liens to secure the Obligations, the amending of the Loan Documents or the
ability of any Subsidiary to (i) pay dividends or make other distributions on
its capital stock, (ii) make loans or advances to the Borrower or (iii) repay
loans or advances from the Borrower or (b) contains any provision which would be
violated or breached by the making of Advances or by the performance by the
Borrower of any of its obligations under any Loan Document.

         6.12. FINANCIAL COVENANTS. The Borrower on a consolidated basis with
its Subsidiaries shall:

                  6.12.1. NET WORTH. At all times after the date hereof,
         maintain a minimum Net Worth of at least $750,000,000.

                  6.12.2. FIXED CHARGE COVERAGE RATIO. For the twelve-month
         period ending on each Fiscal Quarter end, maintain a Fixed Charge
         Coverage Ratio of not less than 1.25:1.0.

                  6.12.3. DEBT TO EQUITY RATIO. At all times after the date
         hereof, maintain a Debt to Equity Ratio of not more than 5.0:1.0.


                                   ARTICLE VII

                                    DEFAULTS

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

         7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower to the Lenders or the Administrative Agent under or in
connection with this Agreement, any other Loan Document, any Loan, or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be false in any material respect on the date as of
which made.

         7.2. Nonpayment of (a) any principal of any Note when due, or (b) any
interest upon any Note or any facility or utilization fee or obligations under
any of the Loan Documents within five days after the same becomes due.

         7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, SECTION 6.3(A) or SECTIONS 6.9 through 6.12.

         7.4. The breach by the Borrower (other than a breach which constitutes
a Default under SECTION 7.1, 7.2 or 7.3) of any of the terms or provisions of
this Agreement which is not remedied within 30 days after written notice from
the Administrative Agent or any Lender.

         7.5. The default by the Borrower or any of its Subsidiaries in the
performance of any 

                                      -43-
<PAGE>
 
term, provision or condition contained in any agreement or
agreements under which any Indebtedness aggregating an amount equal to or in
excess of $25,000,000 was created or is governed, or the occurrence of any other
event or existence of any other condition, the effect of any of which is to
cause, or to permit the holder or holders of such Indebtedness to cause, such
Indebtedness to become due prior to its stated maturity; or any such
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid (other than by a regularly scheduled
payment) prior to the stated maturity thereof.

         7.6. The Borrower or any of its Subsidiaries shall (a) have an order
for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (d) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (e)
take any corporate action to authorize or effect any of the foregoing actions
set forth in this SECTION 7.6, (f) fail to contest in good faith any appointment
or proceeding described in SECTION 7.7 or (g) become unable to pay, not pay, or
admit in writing its inability to pay, its debts generally as they become due.

         7.7. Without the application, approval or consent of the Borrower or
any of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in SECTION 7.6(D)
shall be instituted against the Borrower or any of its Subsidiaries and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 30 consecutive days.

         7.8. For any period of 60 consecutive days there shall be outstanding
against the Borrower or any of its Subsidiaries any judgment(s) or order(s) for
the payment of money aggregating in excess of $25,000,000, which judgments or
orders have not been paid, bonded, otherwise discharged or stayed on appeal or
as to which any enforcement action has been commenced.

         7.9. The Unfunded Liabilities of all Plans shall exceed in the
aggregate $10,000,000.


                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

         8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7
occurs with respect to

                                      -44-
<PAGE>
 
the Borrower, the obligations of the Lenders to make Loans hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Administrative Agent
or any Lender. If any other Default occurs, the Majority Lenders may (or the
Administrative Agent, if so directed by the Majority Lenders, shall) terminate
or suspend the obligations of the Lenders to make Loans hereunder, or declare
the Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives.

         If, within ten Business Days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
SECTION 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Majority Lenders (in their sole discretion) shall so direct, the
Administrative Agent shall, by notice to the Borrower, rescind and annul such
acceleration and/or termination.

         8.2. AMENDMENTS. Subject to the provisions of this ARTICLE VIII, the
Majority Lenders (or the Administrative Agent with the consent in writing of the
Majority Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default or condition hereunder; PROVIDED, HOWEVER, that no such
supplemental agreement shall, without the consent of each Lender:

                  (a) Extend the final maturity of any Loan or Note or reduce
         the principal amount thereof, or reduce the rate or extend the time of
         payment of interest or fees (including facility fees and utilization
         fees) thereon;

                  (b) Change the percentage specified in the definition of
         Majority Lenders;

                  (c) Reduce the amount of or extend the date for the mandatory
         prepayments required under SECTION 2.9, or increase the amount of the
         Commitment of any Lender hereunder;

                  (d) Extend the Facility Termination Date; 

                  (e) Amend this SECTION 8.2;

                  (f) Permit any assignment by the Borrower of its Obligations
         or its rights hereunder (other than an assignment of such Obligations
         or rights occurring by operation of law pursuant to a merger or
         consolidation permitted pursuant to SECTION 6.9).

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
SECTION 12.3.2 without obtaining the consent of any other party to this
Agreement.

                                      -45-
<PAGE>
 
         8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to SECTION 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.


                                   ARTICLE IX

                               GENERAL PROVISIONS

         9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement or of the Borrower or any Subsidiary
contained in any Loan Document shall survive delivery of the Notes and the
making of the Loans herein contemplated.

         9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         9.3. TAXES. Any stamp, documentary or similar taxes, assessments or
charges payable or ruled payable by any governmental authority in respect of the
Loan Documents shall be paid by the Borrower, together with interest and
penalties, if any.

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

         9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Administrative Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof
other than the fee letter dated March 4, 1997 in favor of First Chicago.

         9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any

                                      -46-
<PAGE>
 
other (except to the extent to which the Administrative Agent is authorized to
act as such). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns.

         9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Administrative Agent for any costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Administrative
Agent, which attorneys may be employees of the Administrative Agent) paid or
incurred by the Administrative Agent in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Administrative Agent and the Lenders, which attorneys may be employees
of the Administrative Agent or the Lenders) paid or incurred by the
Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents. The Borrower further agrees to indemnify the
Administrative Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Administrative Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby or the direct or indirect application or proposed application of the
proceeds of any Loan hereunder except to the extent that they arise out of the
gross negligence or willful misconduct of the party seeking indemnification. The
obligations of the Borrower under this SECTION 9.7 shall survive the termination
of this Agreement.

         9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.

         9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

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

         9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower
and the Lenders and the Administrative Agent shall be solely that of borrower
and lender. Neither the

                                      -47-
<PAGE>
 
Administrative Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Administrative Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations. The Borrower
shall rely entirely upon its own judgment with respect to its business, and any
review, inspection or supervision of, or information supplied to the Borrower by
the Administrative Agent or the Lenders is for the protection of the
Administrative Agent and the Lenders and neither the Borrower nor any other
Person is entitled to rely thereon. The Borrower agrees that neither the
Administrative Agent nor any Lender shall have any liability with respect to,
and the Borrower hereby waives, releases and agrees not to sue for, any special,
indirect or consequential damages suffered by the Borrower in connection with,
arising out of, or in any way related to the Loan Documents or the transactions
contemplated thereby or the relationship established by the Loan Documents, or
any act, omission or event occurring in connection therewith. 

         9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

         9.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL
BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS; PROVIDED THAT SUCH PROCEEDINGS
MAY BE BROUGHT IN OTHER COURTS IF JURISDICTION MAY NOT BE OBTAINED IN A COURT IN
CHICAGO, ILLINOIS.

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

                                      -48-
<PAGE>
 
RELATIONSHIP ESTABLISHED THEREUNDER.

         9.15. DISCLOSURE. The Borrower and each Lender hereby (a) acknowledge
and agree that First Chicago and/or its Affiliates from time to time may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest rate
hedging instruments or agreements or swap transactions, and (b) waive any
liability of First Chicago or such Affiliate to the Borrower or any Lender,
respectively, arising out of or resulting from such investments, loans or
relationships other than liabilities arising out of the gross negligence or
willful misconduct of First Chicago or its Affiliates.

         9.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Administrative Agent and the Lenders and each party has notified
the Administrative Agent that it has taken such action.


                                    ARTICLE X

                            THE ADMINISTRATIVE AGENT

         10.1. APPOINTMENT. First Chicago is hereby appointed Administrative
Agent hereunder and under each other Loan Document, and each of the Lenders
authorizes the Administrative Agent to act as the agent of such Lender. The
Administrative Agent agrees to act as such upon the express conditions contained
in this ARTICLE X. The Administrative Agent shall not have a fiduciary
relationship in respect of the Borrower or any Lender by reason of this
Agreement.

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

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

         10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be ETC. responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty or representation made in connection

                                      -49-
<PAGE>
 
with any Loan Document or any borrowing hereunder, (b) the performance or
observance of any of the covenants or agreements of any obligor under any Loan
Document, including, without limitation, any agreement by an obligor to furnish
information directly to each Lender; (c) the satisfaction of any condition
specified in ARTICLE IV, except receipt of items required to be delivered to the
Administrative Agent and not waived at closing, or (d) the validity,
effectiveness, sufficiency, enforceability or genuineness of any Loan Document
or any other instrument or writing furnished in connection therewith. The
Administrative Agent shall have no duty to disclose to the Lenders information
that is not required to be furnished by the Borrower to the Administrative Agent
at such time, but is voluntarily furnished by the Borrower to the Administrative
Agent (either in its capacity as Administrative Agent or in its individual
capacity).

         10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Majority Lenders (or, to the extent required by
SECTION 8.2, all Lenders), and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Administrative Agent shall be fully justified in failing
or refusing to take any action hereunder and under any other Loan Document
unless it shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.

         10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any other
Loan Document by or through employees, agents and attorneys-in-fact and shall
not be answerable to the Lenders, except as to money or securities received by
it or its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.

         10.7. RELIANCE ON DOCUMENTS; COUNSEL. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.

         10.8. ADMINISTRATIVE AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been
terminated, in proportion to their Commitments immediately prior to such
termination) (a) for any amounts not reimbursed by the Borrower for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (b) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents, and (c) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature 

                                      -50-
<PAGE>
 
whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents; PROVIDED that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Administrative Agent. The obligations of the Lenders under
this SECTION 10.8 shall survive payment of the Obligations and termination of
this Agreement.

         10.9. NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured
Default hereunder unless the Administrative Agent has received written notice
from a Lender or the Borrower referring to this Agreement describing such
Default or Unmatured Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders.

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

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

         10.12. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower, such resignation to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has been
appointed, forty-five days after the retiring Administrative Agent gives notice
of its intention to resign. Upon any such resignation, the Majority Lenders
shall have the right to appoint, on behalf of the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and shall

                                      -51-
<PAGE>
 
have accepted such appointment within thirty days after the resigning
Administrative Agent's giving notice of its intention to resign, then the
resigning Administrative Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Administrative Agent. If the Administrative Agent has
resigned and no successor Administrative Agent has been appointed, the Lenders
may perform all the duties of the Administrative Agent hereunder and the
Borrower shall make all payments in respect of the Obligations to the applicable
Lender and for all other purposes shall deal directly with the Lenders. No
successor Administrative Agent shall be deemed to be appointed hereunder until
such successor Administrative Agent has accepted the appointment. Any such
successor Administrative Agent shall be a commercial bank having capital and
retained earnings of at least $50,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Administrative Agent. Upon the effectiveness of the resignation of the
Administrative Agent, the resigning Administrative Agent shall be discharged
from its duties and obligations hereunder and under the Loan Documents. After
the effectiveness of the resignation of an Administrative Agent, the provisions
of this ARTICLE X 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 the
Administrative Agent hereunder and under the other Loan Documents.

         10.13. CO-AGENTS. There shall be no rights, obligations or liabilities
imposed upon the Co-Agents identified on the signature pages of this Agreement
by virtue of their status as such.


                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS

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

         11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTION 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of such
Loans, such Lender agrees, promptly upon demand, to purchase a portion of the
Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the

                                      -52-
<PAGE>
 
benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made. If an amount to be setoff is to be applied to
Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by
any of the Notes held by such Lender, such amount shall be applied ratably to
such other Indebtedness and to the Indebtedness evidenced by such Notes.


                                   ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
         
         12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (a) the
Borrower shall not have the right to assign its rights or Obligations under the
Loan Documents (other than an assignment of such rights or Obligations occurring
by operation of law pursuant to a merger or consolidation permitted pursuant to
SECTION 6.9), and (b) any assignment by any Lender must be made in compliance
with SECTION 12.3. Notwithstanding CLAUSE (B) of this SECTION 12.1, any Lender
may at any time, without the consent of the Borrower or the Administrative
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; PROVIDED, HOWEVER, that no such assignment to a
Federal Reserve Bank shall release the transferor Lender from its obligations
hereunder. The Administrative Agent may treat the payee of any Note as the owner
thereof for all purposes hereof unless and until such payee complies with
SECTION 12.3 in the case of an assignment thereof or, in the case of any other
transfer, a written notice of the transfer is filed with the Administrative
Agent. Any assignee or transferee of a Note agrees by acceptance thereof to be
bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.

         12.2. PARTICIPATIONS.

         12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("PARTICIPANTS") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Loan
Documents.

                                      -53-
<PAGE>
 
         12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver which effects any of the modifications referenced in
clauses (a) through (f) of SECTION 8.2.

         12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in SECTION 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under the Loan Documents; PROVIDED that each Lender shall
retain the right of setoff provided in SECTION 11.1 with respect to the amount
of participating interests sold to each Participant. The Lenders agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in SECTION 11.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with SECTION 11.2 as if each Participant were a Lender.

         12.3. ASSIGNMENTS.

         12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course
of its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("PURCHASERS") all or any part of its rights and
obligations under the Loan Documents; PROVIDED, HOWEVER, that in the case of an
assignment to an entity which is not a Lender or an Affiliate of a lender, such
assignment shall be in a minimum amount of $10,000,000. Such assignment shall be
substantially in the form of EXHIBIT I hereto or in such other form as may be
agreed to by the parties thereto. The consent of the Administrative Agent and,
so long as no Default is continuing, the Borrower shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender
or an Affiliate thereof. Such consent shall not be unreasonably withheld.

         12.3.2. EFFECT; EFFECTIVE DATE. Upon (a) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as EXHIBIT I
to EXHIBIT I hereto (a "NOTICE OF ASSIGNMENT"), together with any consents
required by SECTION 12.3.1, and (b) payment of a $3,500 fee to the
Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
On and after the effective date of such assignment, (a) such Purchaser shall for
all purposes be a Lender party to this Agreement and any other Loan Document
executed by the Lenders and shall have all the rights and obligations of a
Lender under the Loan Documents, to the same extent as if it were an original
party hereto, and (b) the transferor Lender shall be released with respect to
the percentage of the Aggregate Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrower, the Lenders or the
Administrative Agent. Upon the consummation of any assignment to a Purchaser
pursuant to this SECTION 12.3.2, the transferor Lender, the Administrative Agent
and the Borrower shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,

                                      -54-
<PAGE>
 
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Revolving Credit Commitment, as adjusted pursuant to
such assignment.

         12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries.

         12.5. TAX TREATMENT. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of SECTION 2.18.


                                  ARTICLE XIII

                                     NOTICES

         13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.15 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing, by facsimile, first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with first class
postage prepaid, return receipt requested, shall be deemed given three Business
Days after deposit in the U.S. mail; any notice, if transmitted by facsimile,
shall be deemed given when transmitted; and any notice given by overnight
courier shall be deemed given when received by the addressee.

         13.2. CHANGE OF ADDRESS. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

                            [signature pages follow]





                                     -55-
<PAGE>
 
                                   EXHIBIT A

                                      NOTE
                                 (RATABLE LOAN)

$______________________                                _________________, _____


         Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of _______________________________
(the "Lender") the lesser of the principal sum of __________________ United
States Dollars ($_______________) or the aggregate unpaid principal amount of
all Ratable Loans made by the Lender to the Borrower pursuant to Sections
2.1.1(a) and 2.2 of the Agreement (as hereinafter defined), in immediately
available funds at the main office of The First National Bank of Chic ago in
Chicago, Illinois, as Administrative Agent, together with interest on the unpaid
principal amount hereof at the rates and on the dates set forth in the
Agreement. The Borrower shall pay the principal of and accrued and unpaid
interest on the Ratable Loans evidenced hereby in full on the Facility
Termination Date.

         The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date, amount, applicable interest rate or margin and Interest Period, if
applicable, of each Ratable Loan and the date and amount of each principal
payment hereunder; provided, however, that neither the failure to so record nor
any error in this recordation shall affect the Borrower's obligations under this
Note.

         This Note (Ratable Loan) is one of the Notes issued pursuant to, and is
entitled to the benefits of, the $750,000,000 (364-day) Credit Agreement, dated
as of April 29, 1997 (as the same may be amended, modified, restated or
supplemented and in effect from time to time, the "Agreement"), among the
Borrower, the lenders named therein, including the Lender, and The First
National Bank of Chicago, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions g overning this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated. Capitalized terms used but not otherwise defined
herein are used with the meanings attributed to them in the Agreement.

                                                GREEN TREE FINANCIAL CORPORATION

                                                By:
                                                   ---------------------------

                                                Title:
                                                      ------------------------
<PAGE>
 
                  SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
            NOTE (RATABLE LOAN) OF GREEN TREE FINANCIAL CORPORATION,
                         DATED ________________, ______




 
              Principal
              Amount of    Interest Rate      Principal     Unpaid
      Date      Loan       (or Margin)       Amount Paid    Balance
      ----    ---------    -------------     -----------    -------

 
<PAGE>
 
                                    EXHIBIT B

                                      NOTE
                             (COMPETITIVE BID LOAN)


                                                         ---------------, ------


         Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of ___________________________ (the
"Lender") the aggregate unpaid principal amount of all Competitive Bid Loans
made by the Lender to the Borrower pursuant to Section 2.3 of the Agreement (as
hereinafter defined), in immediately available funds at the main office of The
First National Bank of Chicago in Chicago, Illinois, as Administrative Agent,
together with interest on the unpaid principal amount hereof at the rates and on
the dates determined pursuant to Section 2.3 of the Agreement. The Borrower
shall pay the principal of and accrued and unpaid interest on the Competitive
Bid Loans evidenced hereby in full on the maturity date thereof.

         The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date, amount, applicable interest rate or margin and Interest Period of each
Competitive Bid Loan and the date and amount of each principal payment
hereunder; provided, HOWEVER, that neither the failure to so record nor any
error in this recordation shall affect the Borrower's obligations under this
Note.

         This Note (Competitive Bid Loan) is one of the Notes issued pursuant
to, and is entitled to the benefits of, the $750,000,000 (364-day) Credit
Agreement, dated as of April 29, 1997 (as the same may be amended, modified,
restated or supplemented and in effect from time to time, the "Agreement"),
among the Borrower, the lenders named therein, including the Lender, and The
First National Bank of Chicago, as Administrative Agent, to which Agreement
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated. Capitalized terms used but not
otherwise defined herein are used with the meanings attributed to them in the
Agreement.

                                     GREEN TREE FINANCIAL CORPORATION

                                     By:
                                        ------------------------------

                                     Title:
                                           ---------------------------
<PAGE>
 
                   SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
        NOTE (COMPETITIVE BID LOAN) OF GREEN TREE FINANCIAL CORPORATION,
                       DATED _____________________, ______



              Principal
              Amount of    Interest Rate      Principal     Unpaid
      Date      Loan       (or Margin)       Amount Paid    Balance
      ----    ---------    -------------     -----------    -------


















                                      -2-
<PAGE>
 
                                   EXHIBIT C


                         COMPETITIVE BID QUOTE REQUEST
                                (Section 2.3.2)

                                                          ________________, ____



To:    The First National Bank of Chicago, as Administrative Agent

From:  Green Tree Financial Corporation (the "Borrower")

Re:    $750,000,000 (3-year) Credit Agreement, dated as of April 29, 1997, among
       the Borrower, The First National Bank of Chicago, individually and as
       Administrative Agent, and the Lenders parties thereto (the
       "Agreement")


     We hereby give notice pursuant to Section 2.3.2 of the Agreement that we
request Competitive Bid Quotes for the following proposed Competitive Bid
Advance(s):


     Borrowing Date:  __________________________, _____________

     Principal Amount: $_____________________________________(1)

     Interest Period:  _____________________________________(2)


     Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate].

     Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of such date the representations and warranties made in
the Agreement to the extent specified in Section 4.2(b) thereof.  Capitalized
terms used but not otherwise defined herein are used with the meanings
attributed to them in the Agreement.


                              GREEN TREE FINANCIAL CORPORATION


                              By:
                                  -----------------------------------

                              Title:
                                     --------------------------------


(1)  Principal amount must be at least $10,000,000 and an integral multiple of
     $5,000,000.
(2)  One, two, three or six months (Eurodollar Auction) or at least 30 days and
     up to 180 days (Absolute Rate Auction), subject to the provisions of the
     definitions of Eurodollar Interest Period and Absolute Rate Interest
     Period.
<PAGE>
 
                                 EXHIBIT D


                     INVITATION FOR COMPETITIVE BID QUOTES

                                (Section 2.3.3)


                                                        _______________, _______


To:  [Name of Lender]

Re:  Invitation for Competitive Bid Quotes to Green Tree Financial Corporation
     (the "Borrower")


     Pursuant to Section 2.3.3 of the $750,000,000 (364-day) Credit Agreement,
dated as of April 29, 1997 (the "Agreement"), among the Borrower, the Lenders
parties thereto and the undersigned, as Administrative Agent, we are pleased on
behalf of the Borrower to invite you to submit Competitive Bid Quotes to the
Borrower for the following proposed Competitive Bid Advance(s):


     Borrowing Date:  ___________________, _____

     Principal Amount: $___________

     Interest Period:   ___________


     Such Competitive Bid Quotes should offer a [Competitive Bid Margin]
[Absolute Rate].  Your Competitive Bid Quote must comply with Section 2.3.4 of
the Agreement and the foregoing terms on which the Competitive Bid Quote Request
was made.  Capitalized terms used but not otherwise defined herein are used with
the meanings attributed to them in the Agreement.

     Please respond to this invitation by no later than 9:00 a.m., Chicago time,
on ____________, ____. .


                                       THE FIRST NATIONAL BANK OF CHICAGO,
                                       as Administrative Agent


                                       By:________________________________
                                          Authorized Officer
<PAGE>
 
                                   EXHIBIT E
                             COMPETITIVE BID QUOTE
                                (Section 2.3.4)



                                                         ________________, _____



To:  The First National Bank of Chicago, as Administrative Agent
  
        Attn:  ________________________
               Financial Services Department
               Fax No.: ________________


Re:  Competitive Bid Quote to Green Tree Financial Corporation (the "Borrower")

     In response to your invitation on behalf of the Borrower dated
________________, ________, we hereby make the following Competitive Bid Quote
pursuant to Section 2.3.4 of the Agreement (as hereinafter defined) and on the
following terms:

     1.  Quoting Lender: _________________________________

     2.  Person to contact at Quoting Lender:  ____________________

     3.  Borrowing Date: __________________________, _______(1)

     4.   We hereby offer to make Competitive Bid Loan(s) in the following
          principal amounts, for the following Interest Periods and at the
          following rates:



     Principal   Interest    [Competitive       [Absolute    Minimum
     Amount(2)   Period(3)   Bid Margin(4)]      Rate(5)]    Amount(6)
     ---------   ---------   --------------     ---------    --------   
     $




-------------------
(1) As specified in the related Invitation for Competitive Bid Quotes.
(2) Principal amount bid for each Interest Period may not exceed principal
    amount requested.  Principal amount bid must be at least $10,000,000 and an
    integral multiple of $5,000,000.
(3) One, two, three or six months (Eurodollar Auction) or at least 30 days and
    up to 180 days (Absolute Rate Auction), as specified in the related
    Invitation for Competitive Bid Quotes.
(4) Competitive Bid Margin over or under the Eurodollar Base Rate determined for
    the applicable Interest Period.  Specify percentage (rounded to the nearest
    1/100 of 1%) and specify whether "PLUS" or "MINUS".
(5) Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
(6) Specify minimum amount which the Borrower may accept (see Section
    2.3.4(b)(iv)).
<PAGE>
 
     We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the $750,000,000 (3-year)
Credit Agreement, dated as of April 29, 1997 (the "Agreement"), among the
Borrower, the Lenders parties thereto and yourself, as Administrative Agent,
irrevocably obligates us to make the Competitive Bid Loan(s) for which any
offer(s) are accepted, in whole or in part.



                                   Very truly yours,



                                   [NAME OF LENDER]



                                   By:
                                      --------------------------------------
                                       Authorized Officer


                                      -2-
<PAGE>
 
                                   EXHIBIT F

                                     NOTE
                               (SWING LINE LOAN)



$________________                                                 April __, 1997



          Green Tree Financial Corporation, a Delaware corporation (the
"Borrower"), promises to pay to the order of __________________________ (the
"Lender") the lesser of the principal sum of ______________________ United
States Dollars ($__________) or the aggregate unpaid principal amount of all
Swing Line Loans made by the Lender to the Borrower pursuant to Section 2.4 of
the Agreement (as hereinafter defined), in immediately available funds at the
main office of The First National Bank of Chicago in Chicago, Illinois, as
Administrative Agent, together with interest on the unpaid principal amount
hereof at the rates and on the dates set forth in the Agreement.

          The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Swing Line Loan and the date and amount of each
principal payment hereunder; provided, however, that neither the failure to so
record nor any error in this recordation shall affect the Borrower's obligations
under this Note.

          This Note (Swing Line Loan) is one of the Notes issued pursuant to,
and is entitled to the benefits of, the $750,000,000 (3-year) Credit Agreement,
dated as of April   , 1997 (as the same may be amended, modified, restated or
supplemented and in effect from time to time, the "Agreement") among the
Borrower, the lenders named therein, including the Lender, and The First
National Bank of Chicago, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated.  Capitalized terms used but not otherwise defined
herein are used with the meanings attributed to them in the Agreement.


                                       GREEN TREE FINANCIAL CORPORATION


                                       By:_________________________________

                                       Title:______________________________
<PAGE>
 
                  SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                      TO
          NOTE (SWING LINE LOAN) OF GREEN TREE FINANCIAL CORPORATION
                           DATED ____________, ____



 
 
              Principal
              Amount of    Interest Rate      Principal     Unpaid
      Date      Loan       (or Margin)       Amount Paid    Balance
      ----    ---------    -------------     -----------    -------
 
 
 










                                      -2-
<PAGE>
 
                                                              WINSTON & STRAWN
                                                              DRAFT DATED 4/7/97



                                  EXHIBIT G-1

                      Opinion of Counsel to the Borrower



                                April __, 1997


The First National Bank of Chicago, as Administrative Agent
One First National Plaza
Chicago, Illinois 60670

     and

Each of the Financial Institutions
identified on Schedule I hereto


Ladies and Gentlemen:


          We have acted as counsel for Green Tree Financial Corporation, a
Delaware corporation (the "Borrower"), in connection with the agreements listed
below, each dated the date hereof:

     (a)  the $750,000,000 [(364-day)] [(3-year)] Credit Agreement (the "Credit
          Agreement") by and among the Borrower, the financial institutions
          signatory thereto (the "Lenders") and The First National Bank of
          Chicago ("First Chicago"), as administrative agent (the
          "Administrative Agent");

     (b)  the Ratable Notes by the Borrower in favor of each of the Lenders (the
          "Ratable Notes")[; and]

     (c)  the Competitive Bid Notes by the Borrower in favor of each of the
          Lenders (the "Competitive Bid Notes")[; and

     (d)  the Swing Line Notes by the Borrower in favor of each of First Chicago
          and First Bank National Association (the "Swing Line Notes")](1)


The Credit Agreement, the Ratable Notes, [and] the Competitive Bid Notes[, and
the Swing Line Notes] are hereinafter referred to collectively as the
"Transaction Agreements".  Capitalized 



-------------------
(1) The 364-day Credit Agreement does not provide for Swing Line Notes.  Thus,
item (d) should be deleted from the opinion for that Credit Agreement.
<PAGE>
 
terms used but not otherwise defined herein have the meanings ascribed thereto
in the Credit Agreement.

     Pursuant to Section 4.1(e) of the Credit Agreement, this opinion letter is
delivered to the addresses hereof upon the express instructions and request of
our client, the Borrower.  For purposes of this opinion letter only, the
addresses hereof are deemed to be in privity with this firm.

     We have examined originals, or copies certified or otherwise identified to
our satisfaction, of such corporate records, agreements, instruments and
documents of the Borrower and certificates and other statements of public
officials and corporate officers, and have made such other investigation of fact
and law, as we have deemed necessary in connection with the opinions set forth
herein.  In our examination, we have assumed the genuineness of all documents
submitted to us as originals and the conformity to originals of all documents
submitted to us as copies.

     Based upon the foregoing, and subject to the comments and exceptions
hereinafter set forth, we are of the opinion that:

     1.  The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation.  The Borrower is
duly qualified, in good standing and  duly authorized to conduct business as a
foreign corporation in the State of Minnesota.

     2.  The Borrower has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Transaction
Agreements, to own its assets and to carry on its business as presently
conducted.

     3.  The execution, delivery and performance by the Borrower of each of the
Transaction Agreements and the consummation of the Closing Transactions do not
(a) violate any provision of law, rule or regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System), or of any order, writ, judgment, decree, determination or award
known to us which is presently in effect having applicability to the Borrower
and its Subsidiaries, (b) conflict with or result in a breach of, or constitute
a default under, the certificate or articles of incorporation or by-laws of the
Borrower, (c) conflict with or result in a breach of, or constitute a default
under, any indenture, loan or credit agreement or other agreement or instrument
known to us to which the Borrower is a party or by which the Borrower or any of
its property is bound, or (d) result in or require the creation or imposition of
any Lien of any nature (except Liens permitted under the Credit Agreement) upon
or with respect to any of the properties now owned or hereafter acquired by the
Borrower.

     4.  Each of the Transaction Agreements has been duly authorized, 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, subject to any applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors' rights
generally which may be in effect and to general principles of equity.
<PAGE>
 
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April   , 1997
Page 3


     5. No authorization, consent, approval, license, qualification or formal
exemption from, or filing, declaration or registration with, any court,
governmental agency or other regulatory authority or any securities exchange is
required in connection with the execution, delivery or performance by the
Borrower of the Transaction Agreements or the consummation of any of the Closing
Transactions, except such as have been previously obtained and remain in full
force and effect.

     6. There is no action, suit, proceeding, governmental investigation or
arbitration pending or, to our knowledge, threatened against the Borrower or any
of its material property before any court or arbitrator or any governmental or
administrative body, agency or official which challenges the validity, or seeks
to enjoin the performance of, any Transaction Agreement or the consummation of
any of the Closing Transactions.

     7. The Borrower is not an "investment company" or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     8.  A court applying the conflicts of laws principles applied by the courts
of the State of Minnesota will give effect to the choice of law provisions in
the Transaction Agreements pursuant to which such agreements are to be governed
by the laws of the State of Illinois.

     9.  The rates of interest provided in the Credit Agreement do not violate
any laws of the State of Minnesota relating to interest or usury.

     Our opinion is subject to the following additional qualifications:

          1.  We express no opinion with respect to whether any Administrative
     Agent, Lender or Participant is required to file a Notice of Business
     Activities Report under Minnesota Statutes Section 290.371.  Any party who
     is so required and does not file such a report has no cause of action upon
     which it may bring suit under Minnesota law, except for issues related to
     its Minnesota tax liability, unless and until it pays all taxes, interest,
     and civil penalties due the State of Minnesota for all periods, or provides
     for their payment by security or bond.  Insofar as our opinion may relate
     to the enforceability of any agreement under Minnesota law or in a
     Minnesota court, we have assumed that any party seeking to enforce such
     agreement has at all times been, and will continue at all times to be,
     exempt from the requirement of filing a Notice of Business Activities
     Report 
<PAGE>
 
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April   , 1997
Page 4


     or, if not exempt, has, prior to the date of such enforcement, made
     such filing and paid any such taxes, interest and civil penalties due.
     Subject to such restrictions upon the ability of the Administrative Agent
     or any Lender to enforce the Loan Documents prior to the filing of a Notice
     of Business Activities Report and the payment of any such taxes, interest
     and civil penalties, the failure of the Administrative Agent or any Lender
     to make such filing or to pay any such taxes, interest and civil penalties
     (a) does not and will not affect or impair the enforceability of any Loan
     Documents and (b) does not and will not affect the ability of the
     Administrative Agent or any Lender which has made such filing and paid any
     such taxes, interest and civil penalties to enforce the Loan Documents in
     accordance with their respective terms.

          2.  We express no opinion with respect to the validity and
     enforceability of (a) any remedies insofar as any party exercising such
     remedies may take any action which is arbitrary or capricious,
     unreasonable, not in good faith, or not commercially reasonable;
     (b) provisions to the effect that failure to exercise or delay in
     exercising rights or remedies will not operate as a waiver of any such
     right or remedy or which purport to render ineffective any waiver,
     modification or amendment not in writing; and (c) the waiver of
     inconvenient forum set forth in Section 9.13 of the Credit Agreement.

          3.  We express no opinion with respect to the ability of any party to
     collect or be reimbursed for costs and expenses, including attorneys' fees,
     to the extent (a) its rights may be limited to reasonable fees and expenses
     as determined by a court; or (b) it is not the prevailing party in the
     action.

          4.  With respect to our opinion in paragraph 8, above, we do not opine
     that a court applying Minnesota conflicts of laws principles would
     recognize the laws of the State of Illinois as the governing law with
     respect to every issue that might arise under the Transaction Agreements.
     Under Minnesota choice of law rules, a Minnesota court will apply Minnesota
     law to determine whether the law at issue is procedural or substantive and
     if procedural will apply Minnesota law.  If the law at issue is
     substantive, decisions are made on a case-by-case, issue-by-issue basis.
     Generally, Minnesota courts enforce contractual choice of law provisions,
     so long as application of the chosen law is consistent with constitutional
     requirements.

          5.  This opinion is limited to the laws of the State of Minnesota, the
     General Corporation Law of the State of Delaware and the federal laws of
     the United States of America.  With respect to matters involving the laws
     of the State of Illinois, we have assumed with your permission that the
     laws of such state are identical to the laws of the 
<PAGE>
 
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April   , 1997
Page 5


     State of Minnesota.

     This opinion is rendered solely for the benefit of the Lenders, the
Administrative Agent, and any party that becomes a Participant, Lender or
Administrative Agent under the Credit Agreement after the date hereof pursuant
to the Credit Agreement.  No copies of this opinion may be delivered or
furnished to any other party nor may all or portions of this opinion be quoted,
circulated or referred to in any other document without our prior written
consent, except that copies of this opinion may be provided to any party
entitled to rely upon this opinion or to any regulatory agency having
supervisory authority over any party entitled to rely upon this opinion, and
except that this opinion may be used in connection with the assertion of a
defense as to which this opinion is relevant and necessary or in response to a
court order.



                                    Very truly yours,



                                    Briggs and Morgan, P.A.
<PAGE>
 
                                  EXHIBIT G-2


                  Opinion of General Counsel to the Borrower


                                 April __, 1997


The First National Bank of Chicago, as Administrative Agent
One First National Plaza
Chicago, Illinois 60670

     and

Each of the Financial Institutions
identified on Schedule I hereto

Ladies and Gentlemen:

          I am the Senior Vice President and General Counsel of Green Tree
Financial Corporation, a Delaware corporation (the "Borrower"). In that capacity
I have reviewed the agreements listed below, each dated the date hereof:

     (a)  the $750,000,000 [(364-day)] [(3-year)] Credit Agreement (the "Credit
          Agreement") by and among the Borrower, the financial institutions
          signatory thereto (the "Lenders") and The First National Bank of
          Chicago ("First Chicago"), as administrative agent (the
          "Administrative Agent");

     (b)  the Ratable Notes by the Borrower in favor of each of the Lenders (the
          "Ratable Notes")[; and]

     (c)  the Competitive Bid Notes by the Borrower in favor of each of the
          Lenders (the "Competitive Bid Notes")[; and

     (d)  the Swing Line Notes by the Borrower in favor of each of First Chicago
          and First Bank National Association (the "Swing Line Notes")].(1)


The Credit Agreement, the Ratable Notes, [and] the Competitive Bid Notes[, and
the Swing Line Notes] are hereinafter referred to collectively as the
"Transaction Agreements."  Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the Credit Agreement.

--------------------
(1) The 364-day Credit Agreement does not provide for Swing Line Notes.  Thus
item (d) should be deleted from the opinion for that Credit Agreement.
<PAGE>
 
     This opinion is delivered to the addressees hereof pursuant to Section
4.1(e) of the Credit Agreement.

     I have examined originals, or copies certified or otherwise identified to
my satisfaction, of such corporate records, agreements, instruments and
documents of the Borrower and certificates and other statements of public
officials and corporate officers, and have made such other investigation of fact
and law, as I have deemed necessary in connection with the opinions set forth
herein.  In my examination, I have assumed the genuineness of all documents
submitted to me as originals and the conformity to originals of all documents
submitted to me as copies.

     Based upon the foregoing, and subject to the comments and exceptions
hereinafter set forth, I am of the opinion that:

     1.  The Borrower is duly qualified, in good standing and duly authorized to
conduct business as a foreign corporation in the jurisdictions specified in
Schedule II hereto.

     2.  The execution, delivery and performance by the Borrower of each of the
Transaction Agreements and the consummation of the Closing Transactions do not
(a) conflict with or result in a breach of, or constitute a default under, the
certificate or articles of incorporation or by-laws of any Subsidiary, (b)
conflict with or result in a breach of, or constitute a default under, any
indenture, loan or credit agreement or other agreement or instrument known to me
to which the Borrower or any Subsidiary is a party or by which the Borrower or
any Subsidiary or any of its property is bound, or (c) result in or require the
creation or imposition of any Lien of any nature (except Liens permitted under
the Credit Agreement) upon or with respect to any of the properties now owned or
hereafter acquired by the Borrower or any Subsidiary.

     3.  There is no action, suit, proceeding, governmental investigation or
arbitration pending or threatened against the Borrower or any of its material
property before any court or arbitrator or any governmental or administrative
body, agency or official which could reasonably be expected to have a Material
Adverse Effect.

     This opinion is rendered solely for the benefit of the Lenders, the
Administrative Agent, and any party that becomes a Participant, Lender or
Administrative Agent under the Credit Agreement after the date hereof pursuant
to the Credit Agreement.  No copies of this opinion may be delivered or
furnished to any other party nor may all or portions of this opinion be quoted,
circulated or referred to in any other document without my prior written
consent, except that copies of this opinion may be provided to any party
entitled to rely upon this opinion or to any regulatory agency having
supervisory authority over any party entitled to rely upon this opinion, and
except that this opinion may be used in connection with the assertion of a
defense as to which this opinion is relevant and necessary or in response to a
court order.



                                    Very truly yours,



                                    Joel H. Gottesman,
<PAGE>
 
The First National Bank of Chicago, as Administrative Agent
Financial Institutions Identified on Schedule I
April   , 1997
Page 3




                                    Senior Vice President
                                       and General Counsel
<PAGE>
 
                                 EXHIBIT H

                            COMPLIANCE CERTIFICATE

          I, _________________, certify that I am the [chief financial
officer/treasurer] of Green Tree Financial Corporation (the "Borrower"), and
that as such I am authorized to execute this Compliance Certificate on behalf of
the Borrower, and DO HEREBY FURTHER CERTIFY on behalf of the Borrower that:

     1.  I have reviewed the terms of that certain $750,000,000 (364-day) Credit
Agreement, dated as of April 29, 1997, among the Borrower, the financial
institutions named therein (the "Lenders") and The First National Bank of
Chicago, as administrative agent (the "Administrative Agent") (as amended,
restated, supplemented or modified from time to time, the "Credit Agreement"),
and I have made, or have caused to be made by employees or agents under my
supervision, a detailed review of the transactions and conditions of the
Borrower and its Subsidiaries (as this and other capitalized terms used but not
defined herein are defined in the Credit Agreement) during the accounting period
covered by the attached financial statements;

     2.  The examinations described in paragraph 1 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Compliance Certificate, except as set forth below; and

     3.  Schedule I attached hereto sets forth financial data and computations
evidencing compliance with the covenants set forth in Section 6.12 of the Credit
Agreement, all of which data and computations are true, complete and correct.

         Described below are the exceptions, if any, to paragraph 2, listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
<PAGE>
 
     The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Compliance
Certificate in support hereof, are made and delivered this ______ day of
______________, ____.



                                       GREEN TREE FINANCIAL CORPORATION


                                       By:
                                           ---------------------------------

                                       Title:
                                             -------------------------------
<PAGE>
 
                                  SCHEDULE I
                                  ----------

SECTION 6.12.1 -- NET WORTH
---------------------------

1.  Required Net Worth                                              $750,000,000
2.  Actual Net Worth                                                $
 
SECTION 6.12.2 -- FIXED CHARGE COVERAGE RATIO
---------------------------------------------
 
1.  Required Fixed Charge Coverage Ratio                            1.25 to 1.0
2.  Actual Fixed Charge Coverage Ratio:
 
    (a)  Net Income                                                 $
 
    (b)  income and franchise taxes paid or accrued                 $
  
    (c)  Interest Expense                                           $
 
    (d)  income from discontinued operations                        $
 
    (e)  extraordinary gains resulting from changes in the
         application of Agreement Account Principles                $
 
    (f)  Adjusted EBIT ((a) plus (b) plus (c) minus (d) 
         minus (e))                                                 $

    (g)  Ratio of (f) to (c)                                        _____ to 1.0
 
SECTION 6.12.3 -- DEBT TO EQUITY RATIO
--------------------------------------
 
1.  Required Debt to Equity Ratio                                   5.0 to 1.0

2.  Actual Debt to Equity Ratio:
 
    (a)  Consolidated Debt                                          $

    (b)  Net Worth                                                  $

    (c)  Ratio (a) to (b)                                           _____ to 1.0
 
<PAGE>
 
                                 EXHIBIT I

                             ASSIGNMENT AGREEMENT



     This Assignment Agreement (this "Assignment Agreement") between
_______________________________ (the "Assignor") and
_______________________________ (the "Assignee") is dated as of
____________________, ____. The parties hereto agree as follows:


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

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

     3.  EFFECTIVE DATE.  The effective date of this Assignment Agreement (the
"Effective Date") shall be the later of the date specified in Item 5 of Schedule
1 or two Business Days (or such shorter period agreed to by the Administrative
Agent) after a Notice of Assignment substantially in the form of Exhibit I
attached hereto has been delivered to the Administrative Agent.  Such Notice of
Assignment must include any consents required to be delivered to the
Administrative Agent pursuant to Section 12.3.1 of the Credit Agreement.  In no
event will the Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under Section 4 hereof are not
made on the proposed Effective Date.  The Assignor will notify the Assignee of
the proposed Effective Date no later than the Business Day prior to the proposed
Effective Date.  As of the Effective Date, (a) the Assignee shall have the
rights and obligations of a Lender under the Loan Documents with respect to the
rights and obligations assigned to the Assignee hereunder, and (b) the Assignor
shall relinquish its rights and be released from its corresponding obligations
under the Loan Documents with respect to the rights and obligations assigned to
the Assignee hereunder.

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

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

     5.  REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE 


                                      -2-
<PAGE>
 
ASSIGNOR'S LIABILITY. The Assignor represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim created by the
Assignor. It is understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the Assignor makes
no other representation or warranty of any kind to the Assignee. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (a) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any Loan Document,
[including, without limitation, documents granting the Assignor and the other
Lenders a security interest in assets of any Borrower or any guarantor], (b) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (c) the financial condition or creditworthiness of any Borrower
[or any guarantor], (d) the performance of or compliance with any of the terms
or provisions of any of the Loan Documents, (e) inspecting any of the Property,
books or records of any Borrower, [(f) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral securing or
purporting to secure the Loans], or (g) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.

*    include bracketed language if applicable.

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

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

     7.  INDEMNITY.  The Assignee agrees to indemnify and hold the Assignor
harmless 


                                      -3-
<PAGE>
 
against any and all losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's non-performance of
the obligations assumed under this Assignment Agreement. The obligations of the
Assignee under this Section 7 shall survive the payment of all amounts hereunder
and the termination of this Agreement.

     8.  SUBSEQUENT ASSIGNMENTS.  After the Effective Date, the Assignee shall
have the right pursuant to and in accordance with Section 12.3 of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person; provided that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained, and (b) unless
the prior written consent of the Assignor is obtained, the Assignee is not
thereby released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under Sections 4, 6
and 7 hereof.

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

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

     11.  GOVERNING LAW.  THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

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

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


                                    [NAME OF ASSIGNOR]




                                      -4-
<PAGE>
 
                                       By:
                                          --------------------------------
  
                                       Title:
                                             -----------------------------


                                       [NAME OF ASSIGNEE]


                                       By:
                                          --------------------------------

                                       Title:
                                             -----------------------------







                                      -5-
<PAGE>
 
                                  SCHEDULE 1
                            TO ASSIGNMENT AGREEMENT


1.  Description and Date of Credit Agreement:

          That certain $750,000,000 (364-day) Credit Agreement, dated as of
          April 29, 1997, among Green Tree Financial Corporation, the financial
          institutions named therein and The First National Bank of Chicago, as
          Administrative Agent.



2.  Date of Assignment Agreement:



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

    (a)  Total of Commitments (Loans)*
         under Credit Agreement                                 $
                                                                 ------------
    (b)  Assignee's percentage of the
         (Loans)* Commitments purchased
         under the Assignment Agreement**                                    %
                                                                 ------------

4.   Assignee's aggregate (Loan amount)*
     Commitment amount purchased hereunder:                     $
                                                                 ------------
5.   Proposed Effective Date:
                                                                 ------------

Accepted and Agreed:


[NAME OF ASSIGNOR]                    [NAME OF ASSIGNEE]


By:                                   By:
   ---------------------------------     ------------------------------------

Title:                                Title:
      ------------------------------        ---------------------------------

*    If a Commitment has been terminated, insert outstanding Loans in place of
     Commitment

**   Percentage taken to 10 decimal places
<PAGE>
 
               ATTACHMENT TO SCHEDULE 1 TO ASSIGNMENT AGREEMENT

        Attach Assignor's Administrative Information Sheet, which must
           include notice address for the Assignor and the Assignee
<PAGE>
 
                                   EXHIBIT I
                            TO ASSIGNMENT AGREEMENT



                             NOTICE OF ASSIGNMENT



                                                        ________________, ______



To:       Green Tree Financial Corporation
          500 Landmark Towers
          345 St. Peter Street
          St. Paul, MN  55102

          The First National Bank of Chicago
          One First National Plaza
          Chicago, IL  60670

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

          [NAME OF ASSIGNEE] (the "Assignee")


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

     2.  This Notice of Assignment (this "Notice") is given and delivered to the
Borrower and the Administrative Agent pursuant to Section 12.3.2 of the Credit
Agreement.

     3.  The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of __________________, ____  (the "Assignment"), pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor the percentage interest specified in Item 3 of
Schedule 1 of all outstandings, rights and obligations under the Credit
Agreement relating to the facilities listed in Item 3 of Schedule 1, including,
without limitation, such interest in the Assignor's Commitment (if applicable)
and the Loans owing to the Assignor  relating to such facilities.  The effective
date of the Assignment (the "Effective Date") shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such shorter period
as agreed to by the Administrative Agent) after this Notice of Assignment and
any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Administrative Agent; provided that the
Effective Date shall not occur if any condition precedent agreed to by the
Assignor and the Assignee has not been satisfied.

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

     5.  The Assignor or the Assignee shall pay to the Administrative Agent on
or before the Effective Date the processing fee of $3,500 required by Section
12.3.2 of the Credit Agreement.

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

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

     8.  Each party consenting to the Assignment in the space indicated below
hereby releases the Assignor from any obligations to it which have been assigned
to the Assignee.  The Assignee hereby represents and warrants that none of the
funds, monies, assets or other consideration being used to make the purchase
pursuant to the Assignment are "plan assets" as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be "plan
assets" under ERISA.

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



[NAME OF ASSIGNOR]                  [NAME OF ASSIGNEE]



By:                                   By:
   ---------------------------------     ------------------------------------

Title:                                Title:
      ------------------------------        ---------------------------------

                                      -2-
<PAGE>
 
ACKNOWLEDGED AND CONSENTED TO       ACKNOWLEDGED AND CONSENTED
BY THE FIRST NATIONAL BANK OF       TO BY GREEN TREE FINANCIAL
CHICAGO, as Administrative Agent    CORPORATION


By:                                 By:
   -------------------------------     ------------------------------------

Title:                              Title:
      ----------------------------        ---------------------------------


                [Attach photocopy of Schedule 1 to Assignment]







                                      -3-
<PAGE>
 
                                   EXHIBIT J

                          MONEY TRANSFER INSTRUCTIONS


The First National Bank of Chicago,
 as Administrative Agent under the
 Credit Agreement described below


Re:  $750,000,000 (364-day) Credit Agreement, dated as of April 29, 1997 (as the
     same may be amended, modified, supplemented or restated from time to time,
     the "Credit Agreement"), among Green Tree Financial Corporation (the
     "Borrower"), the Administrative Agent and the Lenders from time to time
     parties thereto.  Terms used but not otherwise defined herein have the
     meanings assigned thereto in the Credit Agreement


     The Administrative Agent is specifically authorized and directed to act
upon the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time until
receipt by the Administrative Agent of a specific written revocation of such
instructions by the Borrower; provided, however, that the Administrative Agent
may otherwise transfer funds as hereafter directed in writing by the Borrower in
accordance with Section 13.1 of the Credit Agreement or based on any telephonic
notice made in accordance with Section 2.13 of the Credit Agreement.


Customer/Account Name:
                       -------------------------------------------------------

Transfer Funds To:
                   ----------------------------------------------------------- 

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

                   ----------------------------------------------------------- 
For Account No.:
                   ----------------------------------------------------------- 
<PAGE>
 
Reference/Attention To:
                       ------------------------------------------------------- 


Authorized Officer
(Customer Representative)              Date:______________________, ______



                                       -----------------------------------
(Please Print)                         Signature


Bank Officer Name                      Date:______________________, ______


 
                                       -----------------------------------
(Please Print)                         Signature





                                      -2-
<PAGE>
 
                                                                  EXECUTION COPY


             AMENDMENT NO. 1 AND LIMITED WAIVER TO CREDIT AGREEMENT
             ------------------------------------------------------
                                   (364-DAY)

     This Amendment No. 1 and Limited Waiver (this "Amendment") is entered into
as of February 6, 1998 by The First National Bank of Chicago, individually and
as administrative agent (the "Administrative Agent"), the other financial
institutions signatory hereto and Green Tree Financial Corporation, a Delaware
corporation (the "Borrower").

                                    RECITALS
                                    --------

     A.   The Borrower, the Administrative Agent and the Lenders are party to
that certain $750,000,000 (364-day) Credit Agreement dated as of April 29, 1997
(as amended, the "Credit Agreement").  Unless otherwise specified herein,
capitalized terms used in this Amendment shall have the meanings set forth in
the Credit Agreement.

     B.   The Borrower, the Administrative Agent and the undersigned Lenders
wish to amend the Credit Agreement and temporarily waive certain provisions
thereof on the terms and conditions set forth below.

     Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:

     SECTION 1. REDUCTION OF COMMITMENTS. The Borrower hereby permanently
reduces the Aggregate Commitment to $375,000,000 from $750,000,000 in accordance
with the terms of Section 2.6(c) of the Credit Agreement and on the "Effective
Date" (as defined below) each Lender's Commitment will be reduced on a pro rata
basis such that the Commitment of such Lender shall be as specified opposite its
signature line on this Amendment. The Lenders hereby waive any requirement of
Section 2.6(c) of the Credit Agreement as to advance written notice of such
reduction.

     SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. Upon the "Effective Date" (as
defined below), the Credit Agreement shall be amended as follows:

          SECTION 2.1.  DEFINITIONS.

               (A)  AMENDED DEFINITIONS.  Article I shall be amended by amending
     the following definitions to read, in their entirety, as follows:

          "Aggregate Commitment" means the aggregate of the Commitments of all
     the 
<PAGE>
 
     Lenders hereunder.  The Aggregate Commitment as of the First Amendment
     Effective Date is $375,000,000.

          "Agreement Accounting Principles" means generally accepted accounting
     principles as in effect from time to time, applied in a manner consistent
     with those used in preparing the Financial Statements (except for the
     application during the Waiver Period (as defined in Section 3 of the First
     Amendment) of Statement of Financial Accounting Standards No. 125);
     provided, however, that for purposes of all computations required to be
     made with respect to compliance by the Borrower with Section 6.12, such
     term shall mean generally accepted accounting principles as in effect on
     the date hereof, applied in a manner consistent with those used in
     preparing the Financial Statements (except for the application during the
     Waiver Period (as defined in Section 3 of the First Amendment) of Statement
     of Financial Accounting Standards No. 125).

          "Applicable Eurodollar Margin" means, on any date, subject to the
     following sentence of this definition, 0.55%; provided that in the event
     that (a) the Debt Rating is either lower than Baa3 (or the equivalent) by
     Moody's or lower than BBB- (or the equivalent) by S&P or (b) the Borrower's
     senior, long-term, unsecured debt is unrated by either Moody's or S&P,
     "Applicable Eurodollar Margin" means 0.75%. Any change in the Applicable
     Eurodollar Margin shall be effective as of the date of the change in (or
     unavailability of ) the Debt Rating giving rise thereto and shall apply
     during the period commencing on the effective date of such change and
     ending on the date immediately preceding the effective date of the next
     such change.

          "Applicable Facility Fee Percentage" means, on any date, subject to
     the following sentence of this definition, 0.20%; provided that in the
     event that (a) the Debt Rating is either lower than Baa3 (or the
     equivalent) by Moody's or lower than BBB- (or the equivalent) by S&P or (b)
     the Borrower's senior, long-term, unsecured debt is unrated by either
     Moody's or S&P, "Applicable Facility Fee Percentage" means 0.25%.  Any
     change in the Applicable Facility Fee Percentage shall be effective as of
     the date of the change in (or unavailability of ) the Debt Rating giving
     rise thereto and shall apply during the period commencing on the effective
     date of such change and ending on the date immediately preceding the
     effective date of the next such change.

          "Applicable Utilization Fee Percentage" means zero.

          "Loan Documents" means this Agreement, the Notes, the Security
     Documents and the other documents and agreements contemplated hereby and
     executed by the Borrower in favor of the Administrative Agent, the
     Collateral Agent or any Lender.

               (b) NEW DEFINITIONS.  Article I shall be amended by adding the
                   following definitions to read, in their entirety, as follows:


                                      -2-
<PAGE>
 
          "Adjusted Tangible Net Worth" means, at any date, (i) Net Worth plus
     (ii) Subordinated Indebtedness minus (iii) Intangible Assets.

          "Asset Based Receivables" means all amounts payable to the Borrower
     pursuant to credit facilities between the Borrower or a Subsidiary and a
     dealer in order to finance the dealer's production, inventory or real
     property, secured by finished goods inventory, accounts receivable, certain
     work-in-process, raw materials, component parts, and, in the case of real
     property, Mortgages, as well as other assets of the dealer.

          "Borrowing Base" means, as of any date of determination ninety percent
     (90%) of the Collateral Value of Eligible Contracts (other than Asset Based
     Receivables and Other Eligible Receivables) plus eighty percent (80%) of
     the Collateral Value of Eligible Contracts consisting of Asset Based
     Receivables plus the applicable percentage determined by the Administrative
     Agent in its sole discretion (but in no event more than 90%) of the
     Collateral Value of Other Eligible Receivables in each case as reported on
     the Borrowing Base Certificate most recently delivered; provided that the
     portion of the Borrowing Base attributable to Eligible Contracts which are
     Wet Loans shall not at any time exceed 40% of the sum of (i) the Aggregate
     Commitment under the Agreement and (ii) the "Aggregate Commitment" under
     the Long Term Credit Agreement.  In connection with the Borrowing Base, the
     Administrative Agent is hereby authorized by the Lenders to grant temporary
     waivers of strict compliance by the Borrower with the eligibility
     requirements regarding qualification of any assets of the Borrower for the
     Borrowing Base, when the Administrative Agent deems it appropriate in its
     sole discretion, so long as the aggregate amount of deviation from strict
     compliance, based on the Collateral Value so included in the Borrowing
     Base, does not exceed $10,000,000 at any time.

          "Borrowing Base Certificate" means a certificate executed by the chief
     financial officer of the Borrower or the treasurer (or other employees of
     the Borrower so authorized in writing, an original of which shall be
     delivered to the Administrative Agent and the Collateral Agent, by the
     chief financial officer or treasurer) substantially in the form attached as
     Exhibit A to the First Amendment.

          "Cash Equivalents" means (a) cash, (b) short-term obligations of, or
     fully guaranteed by, the United States of America, (c) commercial paper
     rated A-1 or better by S&P or P-1 or better by Moody's, (d) demand deposit
     accounts maintained in the ordinary course of business, (e) certificates of
     deposit issued by and time deposits with commercial banks (whether domestic
     or foreign) having capital and surplus in excess of $100,000,000 and (f)
     funds which invest solely in any obligations described in clauses (a)
     through (f); provided that (1) such "Cash Equivalents" are not and would
     not be designated as "restricted" on the consolidated balance sheet of the
     Borrower and its Subsidiaries prepared in accordance with Agreement
     Accounting Principles and (2) such "Cash Equivalents" are not Investor
     Payables.


                                      -3-
<PAGE>
 
          "Collateral" has the meaning set forth in the Security Agreement

          "Collateral Agent" means the "Collateral Agent" as defined in the
     Security Agreement.

          "Collateral Value" means with respect to each Contract included in the
     Borrowing Base on any given day, the lesser of (a) the principal amount of
     the Contract and (b) the book value of the Contract on the consolidated
     balance sheet of the Borrower and its Subsidiaries, in accordance with
     generally accepted accounting principles and, with respect to Interest Only
     Securities, the book value thereof in accordance with generally accepted
     accounting principles.

          "Consumer Products" means goods consisting of motorcycles, marine
     products (including boats, boat trailers and outboard motors), pianos and
     organs, horse trailers, sport vehicles (including snowmobiles, personal
     watercraft and all-terrain vehicles), trucks, aircraft, recreational
     vehicles, other consumer goods financed by the Borrower and its
     Subsidiaries and included in asset securitization transactions of the
     Borrower or its Subsidiaries, all in the ordinary course of business, and
     any other asset as shall be acceptable to the Administrative Agent in its
     sole discretion.

          "Consumer Products Contracts" means retail installment sales contracts
     and promissory notes evidencing the financing of, and the grant of a
     security interest in, a Consumer Product, purchased or originated by the
     Borrower, or by a Subsidiary and transferred for value to the Borrower, in
     the ordinary course of business

          "Contracts" means Consumer Products Contracts, Home Equity Contracts,
     Home Improvement Contracts, MH Contracts, Floor Plan Receivables, Asset
     Based Receivables and Other Eligible Receivables.

          "Eligible Contracts" means Contracts that meet the respective criteria
     for each type of Contract set forth in Exhibit B to the First Amendment.

          "First Amendment" means that certain Amendment No. 1 and Limited
     Waiver to Credit Agreement dated as of February 6, 1998.

          "First Amendment Effective Date" means the "Effective Date" as defined
     in the First Amendment.

          "Floor Plan Agreement" shall mean an agreement, entered into by the
     Borrower or a Subsidiary and a manufacturer, as amended or modified from
     time to time, pursuant to which such manufacturer agrees, among other
     matters, to repurchase from the Borrower or a Subsidiary, Floor Plan
     Products sold by such manufacturer to any of its dealers and financed by
     the Borrower or a Subsidiary under a Wholesale Financing Agreement if the
 
                                      -4-
<PAGE>
 
     Borrower or a Subsidiary acquires possession of such Floor Plan Products
     because of a default by such dealer under such Wholesale Financing
     Agreement, voluntary surrender or other circumstances.

          "Floor Plan Products" means the commercial and consumer goods financed
     by the Borrower and its Subsidiaries for dealers pursuant to a Wholesale
     Financing Agreement.

          "Floor Plan Receivables" means all amounts payable (including
     interest, finance charges and other charges) to the Borrower pursuant to a
     revolving credit agreement between a dealer and the Borrower or its
     Subsidiaries to finance such dealer's inventory of Floor Plan Products, and
     the obligation to pay such amounts, in respect of advances made by the
     Borrower to or on behalf of such dealer, together with the group of
     writings evidencing such amounts and the security interest created in
     connection therewith and all of the rights, remedies, powers and privileges
     thereunder (including under the related Wholesale Financing Agreement)
     purchased or originated by the Borrower, or by a Subsidiary and transferred
     for value to the Borrower, in the ordinary course of business .

          "Funded Senior Debt" means, at any date, Consolidated Debt, including,
     without limitation, Indebtedness secured by Liens permitted pursuant to
     Section 6.10(n) minus Subordinated Indebtedness.

          "Home Equity Contracts" means closed-end home equity loans, each
     secured by a Mortgage, purchased or originated by the Borrower, or by a
     Subsidiary and transferred for value to the Borrower, in the ordinary
     course of business.

          "Home Improvement Contracts" means home improvement contracts and
     promissory notes, including Secured Home Improvement Contracts, purchased
     or originated by the Borrower, or by a Subsidiary and transferred for value
     to the Borrower, in the ordinary course of business.

          "Intangible Assets" means, at any date, the assets of the Borrower and
     its consolidated Subsidiaries which would be treated as intangibles in
     accordance with Agreement Accounting Principles.

          "Interest Only Securities" means, at any date, (i) the guaranty fees
     payable to the Borrower under certain asset pooling and servicing
     agreements with respect to asset securitization transactions entered into
     by the Borrower and its Subsidiaries, (ii) the net interest margin or
     residual interest payable to the Borrower or a wholly-owned Subsidiary of
     the Borrower with respect to asset securitization transactions entered into
     by the Borrower and its Subsidiaries and (iii) Servicing Rights.

          "Investor Payables" means all amounts held by the Borrower in trust
     for the benefit of investors in asset securitization transactions.

                                      -5-
<PAGE>
 
          "Land-and-Home Contract" means a MH Contract that is secured by a
     Mortgage on the real estate on which the related Manufactured Home is
     situated, and which Manufactured Home is considered or classified as part
     of the real estate under the laws of the jurisdiction in which it is
     located.

          "Long Term Credit Agreement" means that certain Credit Agreement (3-
     year) dated as of April 29, 1997 among the Borrower, the administrative
     agent named therein and the lenders parties thereto, as amended.

          "Manufactured Home" means a unit of manufactured housing, including
     all accessions thereto, securing the indebtedness of the obligor under the
     related Contract.

          "MH Contracts" means the manufactured housing installment sales
     contracts and installment loan agreements with consumers with respect to
     Manufactured Homes, including Land-and-Home Contracts, originated or
     purchased by the Borrower, or by a Subsidiary and transferred for value to
     the Borrower, in the ordinary course of business.

          "Mortgage" means a mortgage, deed of trust, security deed or similar
     evidence of a lien on real property.

          "Other Eligible Receivables" means a type of receivable or contract of
     Borrower incurred in the ordinary course of business which is approved by
     the Administrative Agent and the Collateral Agent in their sole discretion
     for inclusion in the Borrowing Base, provided, however that the Collateral
     Value of such Other Eligible Receivables shall not exceed 5% of the
     Aggregate Commitment under the Agreement plus the "Aggregate Commitment"
     under the Long Term Credit Agreement unless Administrative Agent shall have
     notified the Lenders of the Borrower's request to include such type of
     Collateral in the Borrowing Base, together with the applicable advance rate
     and eligibility criteria proposed to be applicable to such Collateral at
     least 10 Business Days prior to any inclusion of such Collateral in the
     Borrowing Base and the Administrative Agent during such 10 business day
     period shall not have received written notice from the Lenders holding more
     than 33% of the Aggregate Commitments that such Lenders object to the
     inclusion of such Collateral on such proposed terms.  In connection with
     the Administrative Agent's and Collateral Agent's approval of any type of
     such receivable or contract, the Administrative Agent shall determine in
     its sole discretion the criteria for eligibility, and shall notify the
     Borrower and the Lenders in writing, of such criteria whereupon such
     criteria shall be incorporated by reference into Exhibit B to the First
     Amendment.

          "Restated Financial Statements" means, as of any date, the "Restated
     Financial Statements" as defined in the First Amendment.

                                      -6-
<PAGE>
 
          "Secured Home Improvement Contracts" means Home Improvement Contracts
     secured by a Mortgage owned by the Borrower.

          "Security Agreement" means that certain Security Agreement dated as of
     the First Amendment Effective Date, satisfactory to the Administrative
     Agent and the Collateral Agent, granting, upon the occurrence of a Security
     Event, a first security interest in the assets of the Borrower included in
     the Borrowing Base, duly executed and delivered by the Borrower in favor of
     the Collateral Agent, on behalf of the Administrative Agent, the Collateral
     Agent and the Lenders, as the same may be amended, supplemented or
     otherwise modified from time to time.

          "Security Documents" means, collectively the Security Agreement and
     all other agreements, assignments, security agreements, instruments and
     documents executed pursuant thereto, in each case as the same may at any
     time be amended, supplemented, restated or otherwise modified and in
     effect.  For purposes of this Agreement, "Security Documents" shall also
     include all guaranties, security agreements, mortgages, pledge agreements,
     collateral assignments, subordination agreements and other collateral
     documents in the nature of any thereof entered into by Borrower or any
     Subsidiary of Borrower after the date of this Agreement in favor of the
     Administrative Agent or the Collateral Agent for the benefit of the Lenders
     in satisfaction of the requirements of this Agreement or any other Security
     Document.

          "Security Event" means the occurrence of any of the following events:
     (i) the occurrence of a Default or (ii) (A) the Debt Rating is either lower
     than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
     equivalent) by S&P or (B) the Borrower's long-term, senior, unsecured debt
     is unrated by either Moody's or S&P.

          "Security Perfection Date" means the date as soon as practicable
     following the occurrence of a Security Event that the Borrower can complete
     the actions specified in Section 6.13 and in no event later than the date
     that is twenty one (21) days after the date of the occurrence of a Security
     Event.

          "Servicing Rights" means the amount reflected as such on a
     consolidated balance sheet of the Borrower prepared in accordance with
     generally accepted accounting principles.

          "Subordinated Indebtedness" means, at any time, any Indebtedness of
     the Borrower the payment of which is contractually subordinated to payment
     of the Obligations to the written satisfaction of the Administrative Agent.
     Subordinated Indebtedness shall include, without limitation, (i) the
     Indebtedness in respect of those certain 10-1/4% Senior Subordinated Notes
     due June 1, 2002 issued pursuant to that certain Indenture by and between
     the Borrower and First Wisconsin Trust Company dated as of March 15, 1992
     and (ii) any other Indebtedness of the Borrower issued on substantially
     similar subordination terms and on other terms reasonably satisfactory to
     the 

                                      -7-
<PAGE>
 
     Administrative Agent.

          "UCC" means the Uniform Commercial Code as in effect in the applicable
     jurisdiction.

          "Wet Loans" means, after the occurrence of a Security Event, Contracts
     which are included in a "Borrowing Base Addition Report" and as to which
     the Collateral Agent is to receive the "Required Documents" (each of such
     terms, as defined in the Security Agreement) within 10 Business Days after
     origination (or purchase from an unaffiliated Person) of such Contract.

          "Wholesale Financing Agreement" shall mean a wholesale financing
     agreement entered into by the Borrower or a Subsidiary and a dealer in
     order to finance Floor Plan Products purchased by such dealer from a
     manufacturer, as amended from time to time.

               (c)  DELETED DEFINITIONS.  Article I shall be amended by deleting
     the definitions "Level I Status", "Level II Status", "Level III Status" and
     "Level IV Status" in their entirety.

          SECTION 2.2.   FACILITY AMOUNT; MINIMUM LOAN AMOUNTS; MANDATORY
     PREPAYMENTS.

          (a) FACILITY AMOUNT.  Section 2.1.2 shall be amended to read, in its
     entirety, as follows:

               "2.1.2.  Facility Amount.  In no event may the aggregate
          principal amount of all outstanding Advances (including the Ratable
          Advances and the Competitive Bid Advances) at any time exceed the
          lesser of (i) the Aggregate Commitment and (ii) the amount of (1) the
          Borrowing Base minus (2) the aggregate principal balance of the
          "Loans" outstanding under the Long Term Credit Agreement.

          (b) REDUCTION IN MINIMUM LOAN AMOUNTS.  Section 2.7 shall be amended
     by deleting the reference to"$10,000,000" and replacing it with
     "$5,000,000" and by deleting the reference to "$5,000,000" and replacing it
     with "$1,000,000".

          (c) MANDATORY PREPAYMENTS.  Section 2.9 shall be amended to read, in
     its entirety as follows:

               "2.9.  Mandatory Prepayments.  If at any time the aggregate
     principal balance of the Loans outstanding exceeds the lesser of (A) the
     Aggregate Commitment and (B) the amount of (1) the Borrowing Base minus (2)
     the aggregate principal balance of the "Loans" outstanding under the Long
     Term Credit Agreement, the Borrower shall repay immediately its then
     outstanding Loans or outstanding "Loans" under the Long Term Credit
     Agreement in such 

                                      -8-
<PAGE>
 
     amount as may be necessary to eliminate such excess."

          SECTION 2.3.   ADDITIONAL REPRESENTATIONS AND WARRANTIES.  Article V
shall be amended by adding the following additional Sections 5.15, 5.16 and 5.17
to read, in their entirety, as follows:

               "5.15 Security. Upon the occurrence of a Security Event, the
          provisions of the Security Documents are effective to create in favor
          of the Collateral Agent, for the benefit of the Lenders, as security
          for the repayments of the obligations secured thereby, a legal, valid
          and enforceable security interest in all right, title and interest of
          the Borrower in the Collateral, and at all times after the Security
          Perfection Date will create with respect to the Borrower a fully
          perfected first lien on, and security interest in, all right, title
          and interest of the Borrower in all of the Collateral (except for
          Collateral consisting of Wet Loans which shall become perfected in
          accordance with the terms of the Security Agreement).

               5.16  No Material adverse Change.  Since December 31, 1996 as
          reflected on the Restated Financial Statements, and except as
          disclosed in any press release on or before February 6, 1998, no
          material adverse change in the business, Property, conditions
          (financial or otherwise), performance, prospects or results of
          operations, of the Borrower and its Subsidiaries taken as a whole, has
          occurred.

               5.17.  Incorporation of Representations and Warranties of First
          Amendment The representations and warranties of the Borrower set forth
          in the First Amendment, which are hereby incorporated herein by
          reference, are true and correct as of the First Amendment Effective
          Date."

          SECTION 2.4.   FINANCIAL REPORTING.

          (a) MONTHLY FINANCIAL STATEMENTS AND BORROWING BASE CERTIFICATE.
     Sections 6.1(c), 6.1(d), 6.1(e) , 6.1(f) and 6.1(g), respectively, shall be
     amended to be

                                      -9-
<PAGE>
 
     designated as Sections 6.1(f), 6.1(g), 6.1(h) , 6.1(i) and
     6.1(j), respectively.   Section 6.1 shall be amended to add new Sections
     6.1(c), 6.1(d) and 6.1(e) to read, in their entirety, as follows:

               "(c)  As soon as practicable and in any event within 30 days
          after the close of each calendar month, for itself and its
          Subsidiaries, consolidated unaudited balance sheets as at the close of
          each such period and consolidated statements of income, retained
          earnings and cash flows for the period from the beginning of the
          relevant Fiscal Year to the end of such month, all certified by its
          chief financial officer or controller and prepared in accordance with
          Agreement Accounting Principles.

               (d) Within 15 days after the end of each month, and concurrently
          with each Ratable Borrowing Notice, Competitive Bid Borrowing Notice,
          and at any other time as the Administrative Agent shall reasonably
          request, a fully completed Borrowing Base Certificate to the
          Administrative Agent and the Collateral Agent.

               (e) Within 30 days after the First Amendment Effective Date, (i)
          for the Fiscal Year ended December 31, 1996, a restated, unqualified
          audit report certified by KPMG Peat Marwick or other independent
          certified public accountants acceptable to the Lenders, prepared in
          accordance with generally accepted accounting principles on a
          consolidated basis for itself and its Subsidiaries, including balance
          sheets as of the end of such period and related statements of income,
          retained earnings and cash flows and (ii) for each of the first three
          quarters of its Fiscal Year ended December 31, 1997, restated
          unaudited consolidated balance sheets as at the close of each such
          period and consolidated statements of income, retained earnings and
          cash flow for each of the periods from the beginning of such Fiscal
          Year to the end of such quarter, all certified by its chief financial
          officer or controller and prepared in accordance with generally
          accepted accounting principles except for the absence of footnotes.

          (b) MONTHLY COVENANT COMPLIANCE CERTIFICATE.  Redesignated Section
     6.1(f) shall be further amended (1) by deleting the reference to "(a) and
     (b) above" and replacing it with "(a), (b) and (c) above" and (2) by
     deleting the reference to "Sections 6.12.1, 6.12.2, and 6.12.3" and
     replacing it with "Section 6.12".

          SECTION 2.5.    ALLOWANCE FOR LIENS UNDER THE SECURITY DOCUMENTS,
     ALLOWANCE FOR OTHER SECURED FINANCING OF INTEREST ONLY SECURITIES; NO LIENS
     ON BORROWING BASE.

          (a) Sections 6.10(m) and (n) are amended to be designated as
     paragraphs (o) and (p), respectively, and by deleting the references to
     "paragraphs (a) through (l)" and "paragraphs (a) 


                                     -10-
<PAGE>
 
     through (m)", respectively, and replacing them with "paragraphs (a) through
     (o)" and "paragraphs (a) through (p)", respectively.

          (b)  Section 6.10 shall be amended by adding new Section 6.10 (m) and
     (n) as follows:

                    "(m) Liens in favor of the Collateral Agent arising under
               the Security Documents;

                    "(n) Liens in favor of parties other than the Collateral
               Agent upon Interest Only Securities (or the stock of Subsidiaries
               holding assets consisting solely of Interest Only Securities) of
               the Borrower or any Subsidiary securing Indebtedness for money
               borrowed after the First Amendment Effective Date provided,
               however, that to the extent the covenants set forth in the
               agreement with respect to Indebtedness are more restrictive than
               the covenants set forth herein, such covenants and all related
               provisions shall be deemed to be incorporated by reference into
               this Agreement.

          (c) Section 6.10 shall be further amended by adding at the end the
     following sentence:

               "Notwithstanding anything in this Section 6.10 to the contrary,
               the Borrower will not, and will not permit any Subsidiary to, at
               any time create, incur or assume any Lien on any Property of the
               Borrower or any Subsidiary included in the Borrowing Base at such
               time."

          (d) Section 6.11 shall be amended by adding at the end of Section
     6.11(a)(i) the following:

               ", provided that the Borrower may, and may permit any Subsidiary
               to, enter into an indenture, agreement, instrument or other
               arrangement which may restrict the ability of such Subsidiary to
               pay dividends or make other distributions on its capital stock
               but only to the extent that the terms of such arrangement
               restrict the transfer of the property subject to a Lien permitted
               by Section 6.10(n)"
 
          SECTION 2.6.  ADJUSTED TANGIBLE NET WORTH.  Section 6.12.1 shall be
     amended in its entirety to read as follows:

               "6.12.1. Adjusted Tangible Net Worth.  At all times after the
          date hereof, maintain a minimum Adjusted Tangible Net Worth of at
          least $1,422,292,000."

          SECTION 2.7.  MAXIMUM FUNDED SENIOR DEBT.   A new Section 6.12.4 shall
     be 


                                     -11-
<PAGE>
 
     added to the Credit Agreement which reads as follows:

               "6.12.4. Funded Senior Debt.  At all times after the date hereof,
          not permit its Funded Senior Debt to exceed the sum of (without
          duplication) (A) 100% of cash and Cash Equivalents, plus (B) 90% of
          "lease receivables", "commercial finance receivables" (less
          "commercial finance payables"), "revolving credit receivables" and
          "other receivables" and "contracts and collateral", as such assets are
          reflected on the consolidated balance sheet of the Borrower, which has
          been prepared in a manner consistent with the Borrower's September 30,
          1997 balance sheet, plus (C) the lesser of (x) 50% of the Collateral
          Value of Interest Only Securities and (y) the amount of Indebtedness
          secured by Liens permitted pursuant to Section 6.10(n).

          SECTION 2.8.  SECURITY EVENT   A new Section 6.13 shall be added to
     the Credit Agreement which reads as follows:

               "6.13.  Security Event.  If a Security Event occurs, as promptly
          as practicable after the occurrence of such Security Event, and in any
          event on or before the Security Perfection Date in respect thereof,
          the Borrower shall take or cause to be taken the following actions:

                    (a) take all actions required (including where required,
               physical delivery to the Collateral Agent of any of the
               Collateral, filing of UCC financing statements and execution and
               delivery of any other Security Documents reasonably requested by
               the Administrative Agent or the Collateral Agent, to the extent
               such actions have not already been taken) to cause the Collateral
               to be delivered under the Security Agreement;

                    (b) deliver to the Administrative Agent, with a counterpart
               for each Lender, executed legal opinions of such counsel to the
               Borrower and its Subsidiaries as shall be reasonably acceptable
               to the Administrative Agent confirming, as of a date not more
               than 10 days prior to the Security Perfection Date, the opinions
               rendered on the First Amendment Effective Date by such respective
               counsel in respect of the creation and perfection of the
               Collateral Agent's security interest in the Collateral, with such
               changes therein as the Administrative Agent or the Collateral
               Agent shall reasonably approve or reasonably request;

          and thereafter from time to time promptly take or cause to be taken
          all such further actions as shall be requested by the Administrative
          Agent or the Collateral Agent in order to ensure that the provisions
          of the Security Agreement are satisfied and the representations and
          warranties therein with respect to the Collateral are true and
          correct.

                                     -12-
<PAGE>
 
          SECTION 2.9.   DEFAULTS.

               (a) Section 7.3 is amended by deleting the reference to "Sections
     6.9 through 6.12" and replacing it with "Sections 6.9 through 6.13".

               (b) Section 7.5 is amended by deleting the reference to
     "$25,000,000" and replacing it with "$5,000,000".

               (c) Section 7.8 by deleting the reference to "$25,000,000" and
     replacing it with "$10,000,000".

               (d) A new Sections 7.10 is added to the Credit Agreement as
     follows:
 
          "7.10.  (a) any "Default", as such term is defined in the Security
          Agreement shall occur or (b) the Security Agreement shall fail to
          remain in full force or effect or any action shall be taken to
          discontinue or to assert the invalidity or unenforceability of the
          Security Agreement.

          SECTION 2.10.  RELEASE OF COLLATERAL. A new Section 8.4 shall be added
      as follows:

               "8.4  Release of Collateral.  Except as set forth in the Security
          Agreement, any amendment or modification of the Security Agreement
          which provides for the release of all or substantially all of the
          Collateral shall require the written consent of each Lender. "

          SECTION 2.11.  COLLATERAL AGENT.  Section 10.1 shall be amended by
      adding at the end the following sentence:

          "In addition to the foregoing, the Lenders hereby appoint the
          Collateral Agent to act as such under the terms of the Security
          Documents and authorize the Collateral Agent to enter into the
          Security Documents and all obligations of the Lenders thereunder shall
          be binding upon each Lender as if such Lender had executed the
          Security Documents.  Except as specifically otherwise provided in the
          Security Agreement, all provisions in this Article X with respect to
          the Administrative Agent shall also apply to the Collateral Agent."

     SECTION 3. WAIVER. The undersigned Lenders hereby, for the period
commencing with the "Effective Date" (as defined below) and ending on April 28,
1998 (the "Waiver Period"), waive only during the Waiver Period (a) any breach
of Section 5.5 or 5.14 of the Credit Agreement arising solely out of either (i)
the restatement of the Borrower's 1996 audited financial statements as more
fully described in the Borrower's January 27, 1998 press release or

                                     -13-
<PAGE>
 
(ii) the impact of such adjustment and the application of Statement of Financial
Accounting Standards No. 125 upon the consolidated unaudited financial
statements of the Borrower and its Subsidiaries for the first three Fiscal
Quarters of Fiscal Year 1997 provided to the Lenders by the Borrower pursuant to
Section 6.1 of the Credit Agreement (any such breach being a "Representation
Breach"), (b) any failure of the Financial Statements or any other financial
statements of the Borrower and its Subsidiaries delivered to the Lenders since
December 31, 1996 to have been prepared in accordance with Agreement Accounting
Principles so long as such statements were prepared in a manner consistent with
the Restated Financial Statements (as defined below), (c) any Default under
Section 7.1 of the Credit Agreement which may have heretofore arisen out of any
Representation Breach and (d) any condition to borrowing set forth in Section
4.2(b) of the Credit Agreement which would be satisfied but for any
Representation Breach. At the conclusion of the Waiver Period, the waivers set
forth above shall be of no further force or effect and all rights of the Lenders
with respect to the subject matter thereof shall be reinstated.

     SECTION 4.     [RESERVED]

     SECTION 5.     REPRESENTATIONS AND WARRANTIES OF THE BORROWER.  The
Borrower represents and warrants that:

               (a) The execution, delivery and performance by the Borrower of
     this Amendment and the Security Documents have been duly authorized by all
     necessary corporate action and this Amendment and the Security Documents
     are legal, valid and binding obligations of the Borrower enforceable
     against the Borrower in accordance with their terms, except as the
     enforcement thereof may be subject to the effect of any applicable
     bankruptcy, insolvency, reorganization, moratorium or similar law affecting
     creditors' rights generally;

               (b) Each of the representations and warranties contained in
     Article V of the Credit Agreement (other than Section 5.6 or with respect
     to the Representation Breach) is true and correct in all material respects
     on and as of the date hereof as if made on the date hereof;

               (c) None of the execution, delivery or performance by the
     Borrower of this Amendment and the Security Documents nor the consummation
     of the transactions contemplated hereby or thereby, nor compliance with the
     provisions of the Loan Documents, or at the relevant time did, (a) violate
     any law, rule, regulation (including Regulations G, T, U and X), order,
     writ, judgment, injunction, decree or award binding on the Borrower or any
     Subsidiary or the Borrower's or any Subsidiary's charter, articles or
     certificate of incorporation or by-laws, (b) violate the provisions of or
     require the approval or consent of any party to any indenture, instrument
     or agreement to which the Borrower or any Subsidiary is a party or is
     subject, or by which it, or its respective property, is bound, or conflict
     with or constitute a default thereunder, or result in the 

                                     -14-
<PAGE>
 
     creation or imposition of any Lien (other than Liens permitted by the Loan
     Documents) in, of or on the property of the Borrower or any Subsidiary
     pursuant to the terms of any such indenture, instrument or agreement, or
     (c) require any consent of the stockholders of any Person, except for
     approvals or consents which will be obtained on or before the Effective
     Date and are disclosed in writing to the Lenders;

               (d) Attached hereto as Exhibit C are the December 31, 1996,
     unaudited annual restated consolidated financial statements of the Borrower
     and its Subsidiaries (the "Restated Financial Statements"), prepared in
     accordance with generally accepted accounting principles except for the
     absence of accompanying footnotes and prior to giving effect to adjustments
     relating to reduced compensation under the CEO bonus plan as a consequence
     of the Restated Financial Statements.  Each of the Restated Financial
     Statements was prepared in accordance with generally accepted accounting
     principles and fairly presents the consolidated financial condition and
     operations of the Borrower and its Subsidiaries at such dates and the
     consolidated results of their operations for the periods then ended; and

               (e) After giving effect to this Amendment no Default or Unmatured
     Default has occurred and is continuing.

     SECTION 6. EFFECTIVE DATE. This Amendment shall become effective upon (a)
the execution and delivery by the Majority Lenders (without respect to whether
it has been executed and delivered by all Lenders) and the Borrower of this
Amendment, (b) the payment by the Borrower to the Administrative Agent for the
ratable benefit of all of the Lenders of an amendment fee equal to 0.05% of the
Commitment (as amended by this Amendment) of each Lender and (c) the
satisfaction of all of the following additional conditions (the "Effective
Date"):

          (i) Charter Documents; Good Standing Certificates.  Copies of the
     certificate of incorporation of the Borrower, together with all amendments
     thereto, certified by the appropriate governmental officer in its
     jurisdiction of incorporation, together with a good standing certificate
     issued by the Secretary of State of the jurisdiction of its incorporation
     and such other jurisdictions as shall be requested by the Administrative
     Agent or a certificate executed by the Secretary or Assistant Secretary of
     the Borrower to the effect that its certificate of incorporation has not
     changed since April 29, 1997.

          (ii) By-Laws and Resolutions.  Copies, certified by the Secretary or
     Assistant Secretary of the Borrower, of its by-laws and of its Board of
     Directors' resolutions authorizing the execution, delivery and performance
     of the Loan Documents to which the Borrower is a party or a certificate
     executed by the Secretary or Assistant Secretary of the Borrower to the
     effect that such by-laws and resolutions have not changed since April 29,
     1997.

                                     -15-
<PAGE>
 
          (iii)  Secretary's Certificate.  An incumbency certificate, executed
     by the Secretary or Assistant Secretary of the Borrower, which shall
     identify by name and title and bear the signature of the officers of the
     Borrower authorized to sign this Amendment, the Security Documents and the
     other documents contemplated hereby and thereby, upon which certificate the
     Administrative Agent and the Lenders shall be entitled to rely until
     informed of any change in writing by the Borrower.

          (iv) Officer's Certificate.  A certificate, dated the Effective Date,
     signed by an Authorized Officer of the Borrower, in form and substance
     satisfactory to the Administrative Agent, to the effect that: (i) on such
     date (after giving effect to this Amendment), no Default or Unmatured
     Default has occurred and is continuing; (ii) no injunction or temporary
     restraining order which would prohibit the entering into of this Amendment
     or the consummation of any of the other transactions contemplated hereby,
     or other litigation which could reasonably be expected to have a Material
     Adverse Effect is pending or, to the best of such Person's knowledge,
     threatened; and (iii) each of the representations and warranties set forth
     in Article V of the Credit Agreement (other than Section 5.6 or with
     respect to the Representation Breach) is true and correct on and as of such
     date.

          (v) Legal Opinions.  A written opinion of each of (i) Briggs and
     Morgan, counsel to the Borrower, and (ii) Joel H. Gottesman, general
     counsel of the Borrower, both in form reasonably satisfactory to the
     Administrative Agent.

          (vi) Security Documents and Other Documents.  Executed originals of
     each of the Security Documents, together with all schedules, exhibits,
     certificates, instruments, opinions and documents required to be delivered
     pursuant to this Amendment and the Security Documents.

          (vii)  Other Amendment.   Evidence satisfactory to the Administrative
     Agent that the First Amendment (as defined in the Short Term Credit
     Agreement) is, or simultaneously with this Amendment will be, effective.
 
     SECTION 7.     REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

               (a) Except as specifically amended or waived above, the Credit
     Agreement and the other Loan Documents shall remain in full force and
     effect and are hereby ratified and confirmed.

               (b) The execution, delivery and effectiveness of this Amendment
     shall not operate as a waiver of any right, power or remedy of the
     Administrative Agent or any Lender under the Credit Agreement or any Loan
     Document, nor constitute a waiver of any provision of the Credit Agreement
     or any Loan Document, except as specifically set forth herein.  Upon the
     effectiveness of this Amendment, each reference in the Credit 

                                     -16-
<PAGE>
 
     Agreement and any other Loan Document to "this Agreement", "hereunder",
     "hereof", "herein" or words of similar import shall mean and be a reference
     to the Credit Agreement as amended hereby.

     SECTION 8.     COSTS AND EXPENSES.

               (a) The Borrower hereby affirms its obligation under Section 9.7
     of the Credit Agreement to reimburse the Administrative Agent for all
     reasonable costs, internal charges and out-of-pocket expenses paid or
     incurred by the Administrative Agent in connection with the preparation,
     negotiation, execution and delivery of this Amendment, including but not
     limited to the attorneys' fees and time charges of attorneys for the
     Administrative Agent with respect thereto.

               (b) The Borrower hereby agrees that the Borrower shall pay First
     Chicago Capital Markets, Inc. (the "Arranger") an additional amendment fee
     pursuant to that certain fee letter dated on or before the date hereof
     between the Arranger and the Borrower with respect this Amendment.

     SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

     SECTION 10. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

     SECTION 11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.


                            [signature pages follow]




                                     -17-
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.

                              GREEN TREE FINANCIAL CORPORATION


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
Commitments: $[23,125,000]    THE FIRST NATIONAL BANK OF CHICAGO,
-----------                   Individually and as Administrative Agent

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


 
             $[18,125,000]    THE BANK OF TOKYO-MITSUBISHI, LTD.,
                              CHICAGO BRANCH
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


 
             $[23,125,000]    FIRST BANK NATIONAL ASSOCIATION
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



                                     -18-
<PAGE>
 
             $[23,125,000]    MORGAN GUARANTY TRUST COMPANY
                              OF NEW YORK


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[18,125,000]    COMMERZBANK AG, CHICAGO BRANCH


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------
 


             $[18,125,000]    FIRST UNION NATIONAL BANK OF
                              NORTH CAROLINA
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[18,125,000]    FLEET BANK N.A.


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
                                     -19-
<PAGE>
 
             $[18,125,000]    NATIONSBANK OF TEXAS, N.A.
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------
 
 
             $[18,125,000]    UNION BANK OF SWITZERLAND NEW YORK
                              BRANCH


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------
 
             $[18,125,000]    WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                              NEW YORK BRANCH
 
 
                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


 
                                     -20-
<PAGE>
 
             $[12,500,000]    THE BANK OF MONTREAL

 
                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[12,500,000]    THE BANK OF NEW YORK
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[12,500,000]    BANQUE NATIONALE DE PARIS
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[12,500,000]    CANADIAN IMPERIAL BANK OF COMMERCE
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


                                     -21-
<PAGE>
 
             $[12,500,000]    THE CHASE MANHATTAN BANK
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[12,500,000]    COMERICA BANK
 
 
                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[12,500,000]    CREDIT LYONNAIS, NEW YORK BRANCH
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[6,250,000]     THE ASAHI BANK, LTD.

 
                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



                                     -22-
 
<PAGE>
 
             $[6,250,000]     BANCA MONTE DEI PASCHI DI SIENA SpA


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



             $[6,250,000]     BAYERISCHE VEREINSBANK
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[6,250,000]     THE DAI-ICHI KANGYO BANK, LTD.,
                              CHICAGO BRANCH


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[6,250,000]     DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
                              CAYMAN ISLAND BRANCH
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


                                     -23-
 
<PAGE>
 
             $[6,250,000]     FIRST HAWAIIAN BANK


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[6,250,000]     FIRSTAR BANK MILWAUKEE, N.A.


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[6,250,000]     THE FUJI BANK, LIMITED


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[6,250,000]     THE INDUSTRIAL BANK OF JAPAN, LIMITED
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



                                     -24- 
<PAGE>
 
             $[6,250,000]     THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
                              CHICAGO BRANCH


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[6,250,000]     NORDDEUTSCHE LANDESBANK
                              GIROZENTRALE


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

 
             $[6,250,000]     NORWEST BANK MINNESOTA,
                              NATIONAL ASSOCIATION


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



             $[6,250,000]     THE SUMITOMO BANK, LIMITED,
                              CHICAGO BRANCH


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------
 
 
                                     -25- 
<PAGE>
 
             $[5,000,000]     ARAB BANK, Plc
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------


             $[5,000,000]     BANK HAPOALIM
 

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------

                              By:
                                 ----------------------------------------

                              Print Name:
                                         --------------------------------

                              Title:
                                    -------------------------------------



Aggregate
 Commitment  $[375,000,000]


                                     -26-
<PAGE>
 
                                                                  EXECUTION COPY


            AMENDMENT NO. 2   AND LIMITED WAIVER TO CREDIT AGREEMENT
            --------------------------------------------------------
                                    (3-YEAR)

     This Amendment No. 2 and Limited Waiver (this "Amendment") is entered into
as of February 6, 1998 by The First National Bank of Chicago, individually and
as administrative agent (the "Administrative Agent"), the other financial
institutions signatory hereto and Green Tree Financial Corporation, a Delaware
corporation (the "Borrower").

                                    RECITALS
                                    --------

     A. The Borrower, the Administrative Agent and the Lenders are party to that
certain $750,000,000 (3-year) Credit Agreement dated as of April 29, 1997 (as
amended, the "Credit Agreement"). Unless otherwise specified herein, capitalized
terms used in this Amendment shall have the meanings set forth in the Credit
Agreement.

     B. The Borrower, the Administrative Agent and the undersigned Lenders wish
to amend the Credit Agreement and temporarily waive certain provisions thereof
on the terms and conditions set forth below.

     Now, therefore, in consideration of the mutual execution hereof and other
good and valuable consideration, the parties hereto agree as follows:

     SECTION 1. REDUCTION OF COMMITMENTS. The Borrower hereby permanently
reduces the Aggregate Commitment to $375,000,000 from $750,000,000 in accordance
with the terms of Section 2.6(c) of the Credit Agreement and on the "Effective
Date" (as defined below) each Lender's Commitment will be reduced on a pro rata
basis such that the Commitment of such Lender shall be as specified opposite its
signature line on this Amendment. The Lenders hereby waive any requirement of
Section 2.6(c) of the Credit Agreement as to advance written notice of such
reduction.

     SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. Upon the "Effective Date" (as
defined below), the Credit Agreement shall be amended as follows:

          SECTION 2.1.  DEFINITIONS.

               (A)  AMENDED DEFINITIONS.  Article I shall be amended by amending
     the following definitions to read, in their entirety, as follows:

          "Aggregate Commitment" means the aggregate of the Commitments of all
     the 
<PAGE>
 
     Lenders hereunder.  The Aggregate Commitment as of the Second Amendment
     Effective Date is $375,000,000.

          "Agreement Accounting Principles" means generally accepted accounting
     principles as in effect from time to time, applied in a manner consistent
     with those used in preparing the Financial Statements (except for the
     application during the Waiver Period (as defined in Section 3 of the Second
     Amendment) of Statement of Financial Accounting Standards No. 125);
     provided, however, that for purposes of all computations required to be
     made with respect to compliance by the Borrower with Section 6.12, such
     term shall mean generally accepted accounting principles as in effect on
     the date hereof, applied in a manner consistent with those used in
     preparing the Financial Statements (except for the application during the
     Waiver Period (as defined in Section 3 of the Second Amendment) of
     Statement of Financial Accounting Standards No. 125).

          "Applicable Eurodollar Margin" means, on any date, subject to the
     following sentence of this definition, 0.55%; provided that in the event
     that (a) the Debt Rating is either lower than Baa3 (or the equivalent) by
     Moody's or lower than BBB- (or the equivalent) by S&P or (b) the Borrower's
     senior, long-term, unsecured debt is unrated by either Moody's or S&P,
     "Applicable Eurodollar Margin" means 0.75%. Any change in the Applicable
     Eurodollar Margin shall be effective as of the date of the change in (or
     unavailability of ) the Debt Rating giving rise thereto and shall apply
     during the period commencing on the effective date of such change and
     ending on the date immediately preceding the effective date of the next
     such change.

          "Applicable Facility Fee Percentage" means, on any date, subject to
     the following sentence of this definition, 0.20%; provided that in the
     event that (a) the Debt Rating is either lower than Baa3 (or the
     equivalent) by Moody's or lower than BBB- (or the equivalent) by S&P or (b)
     the Borrower's senior, long-term, unsecured debt is unrated by either
     Moody's or S&P, "Applicable Facility Fee Percentage" means 0.25%.  Any
     change in the Applicable Facility Fee Percentage shall be effective as of
     the date of the change in (or unavailability of ) the Debt Rating giving
     rise thereto and shall apply during the period commencing on the effective
     date of such change and ending on the date immediately preceding the
     effective date of the next such change.

          "Applicable Utilization Fee Percentage" means zero.

          "Loan Documents" means this Agreement, the Notes, the Security
     Documents and the other documents and agreements contemplated hereby and
     executed by the Borrower in favor of the Administrative Agent, the
     Collateral Agent or any Lender.

               (B) NEW DEFINITIONS.  Article I shall be amended by adding the
                   following definitions to read, in their entirety, as follows:


                                      -2-
<PAGE>
 
          "Adjusted Tangible Net Worth" means, at any date, (i) Net Worth plus
     (ii) Subordinated Indebtedness minus (iii) Intangible Assets.

          "Asset Based Receivables" means all amounts payable to the Borrower
     pursuant to credit facilities between the Borrower or a Subsidiary and a
     dealer in order to finance the dealer's production, inventory or real
     property, secured by finished goods inventory, accounts receivable, certain
     work-in-process, raw materials, component parts, and, in the case of real
     property, Mortgages, as well as other assets of the dealer.

          "Borrowing Base" means, as of any date of determination ninety percent
     (90%) of the Collateral Value of Eligible Contracts (other than Asset Based
     Receivables and Other Eligible Receivables) plus eighty percent (80%) of
     the Collateral Value of Eligible Contracts consisting of Asset Based
     Receivables plus the applicable percentage determined by the Administrative
     Agent in its sole discretion (but in no event more than 90%) of the
     Collateral Value of Other Eligible Receivables in each case as reported on
     the Borrowing Base Certificate most recently delivered; provided that the
     portion of the Borrowing Base attributable to Eligible Contracts which are
     Wet Loans shall not at any time exceed 40% of the sum of (i) the Aggregate
     Commitment under the Agreement and (ii) the "Aggregate Commitment" under
     the Short Term Credit Agreement.  In connection with the Borrowing Base,
     the Administrative Agent is hereby authorized by the Lenders to grant
     temporary waivers of strict compliance by the Borrower with the eligibility
     requirements regarding qualification of any assets of the Borrower for the
     Borrowing Base, when the Administrative Agent deems it appropriate in its
     sole discretion, so long as the aggregate amount of deviation from strict
     compliance, based on the Collateral Value so included in the Borrowing
     Base, does not exceed $10,000,000 at any time.

          "Borrowing Base Certificate" means a certificate executed by the chief
     financial officer of the Borrower or the treasurer (or other employees of
     the Borrower so authorized in writing, an original of which shall be
     delivered to the Administrative Agent and the Collateral Agent, by the
     chief financial officer or treasurer) substantially in the form attached as
     Exhibit A to the Second Amendment.

          "Cash Equivalents" means (a) cash, (b) short-term obligations of, or
     fully guaranteed by, the United States of America, (c) commercial paper
     rated A-1 or better by S&P or P-1 or better by Moody's, (d) demand deposit
     accounts maintained in the ordinary course of business, (e) certificates of
     deposit issued by and time deposits with commercial banks (whether domestic
     or foreign) having capital and surplus in excess of $100,000,000 and (f)
     funds which invest solely in any obligations described in clauses (a)
     through (f); provided that (1) such "Cash Equivalents" are not and would
     not be designated as "restricted" on the consolidated balance sheet of the
     Borrower and its Subsidiaries prepared in accordance with Agreement
     Accounting Principles and (2) such "Cash Equivalents" are not Investor
     Payables.

                                      -3-
<PAGE>
 
          "Collateral" has the meaning set forth in the Security Agreement

          "Collateral Agent" means the "Collateral Agent" as defined in the
     Security Agreement.

          "Collateral Value" means with respect to each Contract included in the
     Borrowing Base on any given day, the lesser of (a) the principal amount of
     the Contract and (b) the book value of the Contract on the consolidated
     balance sheet of the Borrower and its Subsidiaries, in accordance with
     generally accepted accounting principles and, with respect to Interest Only
     Securities, the book value thereof in accordance with generally accepted
     accounting principles.

          "Consumer Products" means goods consisting of motorcycles, marine
     products (including boats, boat trailers and outboard motors), pianos and
     organs, horse trailers, sport vehicles (including snowmobiles, personal
     watercraft and all-terrain vehicles), trucks, aircraft, recreational
     vehicles, other consumer goods financed by the Borrower and its
     Subsidiaries and included in asset securitization transactions of the
     Borrower or its Subsidiaries, all in the ordinary course of business, and
     any other asset as shall be acceptable to the Administrative Agent in its
     sole discretion.

          "Consumer Products Contracts" means retail installment sales contracts
     and promissory notes evidencing the financing of, and the grant of a
     security interest in, a Consumer Product, purchased or originated by the
     Borrower, or by a Subsidiary and transferred for value to the Borrower, in
     the ordinary course of business

          "Contracts" means Consumer Products Contracts, Home Equity Contracts,
     Home Improvement Contracts, MH Contracts, Floor Plan Receivables, Asset
     Based Receivables and Other Eligible Receivables.

          "Eligible Contracts" means Contracts that meet the respective criteria
     for each type of Contract set forth in Exhibit B to the Second Amendment.

          "Floor Plan Agreement" shall mean an agreement, entered into by the
     Borrower or a Subsidiary and a manufacturer, as amended or modified from
     time to time, pursuant to which such manufacturer agrees, among other
     matters, to repurchase from the Borrower or a Subsidiary, Floor Plan
     Products sold by such manufacturer to any of its dealers and financed by
     the Borrower or a Subsidiary under a Wholesale Financing Agreement if the
     Borrower or a Subsidiary acquires possession of such Floor Plan Products
     because of a default by such dealer under such Wholesale Financing
     Agreement, voluntary surrender or other circumstances.

          "Floor Plan Products" means the commercial and consumer goods financed
     by the Borrower and its Subsidiaries for dealers pursuant to a Wholesale
     Financing Agreement.


                                      -4-
<PAGE>
 
          "Floor Plan Receivables" means all amounts payable (including
     interest, finance charges and other charges) to the Borrower pursuant to a
     revolving credit agreement between a dealer and the Borrower or its
     Subsidiaries to finance such dealer's inventory of Floor Plan Products, and
     the obligation to pay such amounts, in respect of advances made by the
     Borrower to or on behalf of such dealer, together with the group of
     writings evidencing such amounts and the security interest created in
     connection therewith and all of the rights, remedies, powers and privileges
     thereunder (including under the related Wholesale Financing Agreement)
     purchased or originated by the Borrower, or by a Subsidiary and transferred
     for value to the Borrower, in the ordinary course of business .

          "Funded Senior Debt" means, at any date, Consolidated Debt, including,
     without limitation, Indebtedness secured by Liens permitted pursuant to
     Section 6.10(n) minus Subordinated Indebtedness.

          "Home Equity Contracts" means closed-end home equity loans, each
     secured by a Mortgage, purchased or originated by the Borrower, or by a
     Subsidiary and transferred for value to the Borrower, in the ordinary
     course of business.

          "Home Improvement Contracts" means home improvement contracts and
     promissory notes, including Secured Home Improvement Contracts, purchased
     or originated by the Borrower, or by a Subsidiary and transferred for value
     to the Borrower, in the ordinary course of business.

          "Intangible Assets" means, at any date, the assets of the Borrower and
     its consolidated Subsidiaries which would be treated as intangibles in
     accordance with Agreement Accounting Principles.

          "Interest Only Securities" means, at any date, (i) the guaranty fees
     payable to the Borrower under certain asset pooling and servicing
     agreements with respect to asset securitization transactions entered into
     by the Borrower and its Subsidiaries, (ii) the net interest margin or
     residual interest payable to the Borrower or a wholly-owned Subsidiary of
     the Borrower with respect to asset securitization transactions entered into
     by the Borrower and its Subsidiaries and (iii) Servicing Rights.

          "Investor Payables" means all amounts held by the Borrower in trust
     for the benefit of investors in asset securitization transactions.

          "Land-and-Home Contract" means a MH Contract that is secured by a
     Mortgage on the real estate on which the related Manufactured Home is
     situated, and which Manufactured Home is considered or classified as part
     of the real estate under the laws of the jurisdiction in which it is
     located.

                                      -5-
<PAGE>
 
          "Manufactured Home" means a unit of manufactured housing, including
     all accessions thereto, securing the indebtedness of the obligor under the
     related Contract.

          "MH Contracts" means the manufactured housing installment sales
     contracts and installment loan agreements with consumers with respect to
     Manufactured Homes, including Land-and-Home Contracts, originated or
     purchased by the Borrower, or by a Subsidiary and transferred for value to
     the Borrower, in the ordinary course of business.

          "Mortgage" means a mortgage, deed of trust, security deed or similar
     evidence of a lien on real property.

          "Other Eligible Receivables" means a type of receivable or contract of
     Borrower incurred in the ordinary course of business which is approved by
     the Administrative Agent and the Collateral Agent in their sole discretion
     for inclusion in the Borrowing Base, provided, however that the Collateral
     Value of such Other Eligible Receivables shall not exceed 5% of the
     Aggregate Commitment under the Agreement plus the "Aggregate Commitment"
     under the Short Term Credit Agreement unless Administrative Agent shall
     have notified the Lenders of the Borrower's request to include such type of
     Collateral in the Borrowing Base, together with the applicable advance rate
     and eligibility criteria proposed to be applicable to such Collateral at
     least 10 Business Days prior to any inclusion of such Collateral in the
     Borrowing Base and the Administrative Agent during such 10 business day
     period shall not have received written notice from the Lenders holding more
     than 33% of the Aggregate Commitments that such Lenders object to the
     inclusion of such Collateral on such proposed terms.  In connection with
     the Administrative Agent's and Collateral Agent's approval of any type of
     such receivable or contract, the Administrative Agent shall determine in
     its sole discretion the criteria for eligibility, and shall notify the
     Borrower and the Lenders in writing, of such criteria whereupon such
     criteria shall be incorporated by reference into Exhibit B to the Second
     Amendment.

          "Restated Financial Statements" means, as of any date, the "Restated
     Financial Statements" as defined in the Second Amendment.

          "Second Amendment" means that certain Amendment No. 2 and Limited
     Waiver to Credit Agreement dated as of February 6, 1998.

          "Second Amendment Effective Date" means the "Effective Date" as
     defined in the Second Amendment.

          "Secured Home Improvement Contracts" means Home Improvement Contracts
     secured by a Mortgage owned by the Borrower.

          "Security Agreement" means that certain Security Agreement dated as of
     the 

                                      -6-
<PAGE>
 
     Second Amendment Effective Date, satisfactory to the Administrative Agent
     and the Collateral Agent, granting, upon the occurrence of a Security
     Event, a first security interest in the assets of the Borrower included in
     the Borrowing Base, duly executed and delivered by the Borrower in favor of
     the Collateral Agent, on behalf of the Administrative Agent, the Collateral
     Agent and the Lenders, as the same may be amended, supplemented or
     otherwise modified from time to time.

          "Security Documents" means, collectively the Security Agreement and
     all other agreements, assignments, security agreements, instruments and
     documents executed pursuant thereto, in each case as the same may at any
     time be amended, supplemented, restated or otherwise modified and in
     effect.  For purposes of this Agreement, "Security Documents" shall also
     include all guaranties, security agreements, mortgages, pledge agreements,
     collateral assignments, subordination agreements and other collateral
     documents in the nature of any thereof entered into by Borrower or any
     Subsidiary of Borrower after the date of this Agreement in favor of the
     Administrative Agent or the Collateral Agent for the benefit of the Lenders
     in satisfaction of the requirements of this Agreement or any other Security
     Document.

          "Security Event" means the occurrence of any of the following events:
     (i) the occurrence of a Default or (ii) (A) the Debt Rating is either lower
     than Baa3 (or the equivalent) by Moody's or lower than BBB- (or the
     equivalent) by S&P or (B) the Borrower's long-term, senior, unsecured debt
     is unrated by either Moody's or S&P.

          "Security Perfection Date" means the date as soon as practicable
     following the occurrence of a Security Event that the Borrower can complete
     the actions specified in Section 6.13 and in no event later than the date
     that is twenty one (21) days after the date of the occurrence of a Security
     Event.

          "Servicing Rights" means the amount reflected as such on a
     consolidated balance sheet of the Borrower prepared in accordance with
     generally accepted accounting principles.

          "Short Term Credit Agreement" means that certain Credit Agreement
     (364-day) dated as of April 29, 1997 among the Borrower, the administrative
     agent named therein and the lenders parties thereto, as amended.

          "Subordinated Indebtedness" means, at any time, any Indebtedness of
     the Borrower the payment of which is contractually subordinated to payment
     of the Obligations to the written satisfaction of the Administrative Agent.
     Subordinated Indebtedness shall include, without limitation, (i) the
     Indebtedness in respect of those certain 10-1/4% Senior Subordinated Notes
     due June 1, 2002 issued pursuant to that certain Indenture by and between
     the Borrower and First Wisconsin Trust Company dated as of March 15, 1992
     and (ii) any other Indebtedness of the Borrower issued on 

                                      -7-
<PAGE>
 
     substantially similar subordination terms and on other terms reasonably
     satisfactory to the Administrative Agent.

          "UCC" means the Uniform Commercial Code as in effect in the applicable
     jurisdiction.

          "Wet Loans" means, after the occurrence of a Security Event, Contracts
     which are included in a "Borrowing Base Addition Report" and as to which
     the Collateral Agent is to receive the "Required Documents" (each of such
     terms, as defined in the Security Agreement) within 10 Business Days after
     origination (or purchase from an unaffiliated Person) of such Contract.

          "Wholesale Financing Agreement" shall mean a wholesale financing
     agreement entered into by the Borrower or a Subsidiary and a dealer in
     order to finance Floor Plan Products purchased by such dealer from a
     manufacturer, as amended from time to time.

               (C)  DELETED DEFINITIONS.  Article I shall be amended by deleting
     the definitions "Level I Status", "Level II Status", "Level III Status" and
     "Level IV Status" in their entirety.

          SECTION 2.2.   FACILITY AMOUNT; MINIMUM LOAN AMOUNTS; MANDATORY
     PREPAYMENTS.

          (A) FACILITY AMOUNT.  Section 2.1.2 shall be amended to read, in its
     entirety, as follows:

               "2.1.2.  Facility Amount.  In no event may the aggregate
          principal amount of all outstanding Advances (including the Ratable
          Advances[, the Swing Line Advances] and the Competitive Bid Advances)
          at any time exceed the lesser of (i) the Aggregate Commitment and (ii)
          the amount of (1) the Borrowing Base minus (2) the aggregate principal
          balance of the "Loans" outstanding under the Short Term Credit
          Agreement.

          (B) REDUCTION IN MINIMUM LOAN AMOUNTS.  Section 2.7 shall be amended
     by deleting the reference to"$10,000,000" and replacing it with
     "$5,000,000" and by deleting the reference to "$5,000,000" and replacing it
     with "$1,000,000".

          (C) MANDATORY PREPAYMENTS.  Section 2.9 shall be amended to read, in
     its entirety as follows:

               "2.9. Mandatory Prepayments. If at any time the aggregate
     principal balance of the Loans outstanding exceeds the lesser of (A) the
     Aggregate Commitment and (B) the amount of (1) the Borrowing Base minus (2)
     the 

                                      -8-
<PAGE>
 
     aggregate principal balance of the "Loans" outstanding under the Short
     Term Credit Agreement, the Borrower shall repay immediately its then
     outstanding Loans or outstanding "Loans" under the Short Term Credit
     Agreement in such amount as may be necessary to eliminate such excess."

     SECTION 2.3. ADDITIONAL REPRESENTATIONS AND WARRANTIES. Article V shall be
amended by adding the following additional Sections 5.15, 5.16 and 5.17 to read,
in their entirety, as follows:

               "5.15 Security. Upon the occurrence of a Security Event, the
          provisions of the Security Documents are effective to create in favor
          of the Collateral Agent, for the benefit of the Lenders, as security
          for the repayments of the obligations secured thereby, a legal, valid
          and enforceable security interest in all right, title and interest of
          the Borrower in the Collateral, and at all times after the Security
          Perfection Date will create with respect to the Borrower a fully
          perfected first lien on, and security interest in, all right, title
          and interest of the Borrower in all of the Collateral (except for
          Collateral consisting of Wet Loans which shall become perfected in
          accordance with the terms of the Security Agreement).

               5.16  No Material adverse Change.  Since December 31, 1996 as
          reflected on the Restated Financial Statements, and except as
          disclosed in any press release on or before February 6, 1998, no
          material adverse change in the business, Property, conditions
          (financial or otherwise), performance, prospects or results of
          operations, of the Borrower and its Subsidiaries taken as a whole, has
          occurred.

               5.17.  Incorporation of Representations and Warranties of Second
          Amendment  The representations and warranties of the Borrower set
          forth in the Second Amendment, which are hereby incorporated herein by
          reference, are true and correct as of the Second Amendment Effective
          Date."

          SECTION 2.4.   FINANCIAL REPORTING.


                                      -9-
<PAGE>
 
          (A) MONTHLY FINANCIAL STATEMENTS AND BORROWING BASE CERTIFICATE.
     Sections 6.1(c), 6.1(d), 6.1(e) , 6.1(f) and 6.1(g), respectively, shall be
     amended to be designated as Sections 6.1(f), 6.1(g), 6.1(h) , 6.1(i) and
     6.1(j), respectively.   Section 6.1 shall be amended to add new Sections
     6.1(c), 6.1(d) and 6.1(e) to read, in their entirety, as follows:

               "(c)  As soon as practicable and in any event within 30 days
          after the close of each calendar month, for itself and its
          Subsidiaries, consolidated unaudited balance sheets as at the close of
          each such period and consolidated statements of income, retained
          earnings and cash flows for the period from the beginning of the
          relevant Fiscal Year to the end of such month, all certified by its
          chief financial officer or controller and prepared in accordance with
          Agreement Accounting Principles.

               (d) Within 15 days after the end of each month, and concurrently
          with each Ratable Borrowing Notice, Competitive Bid Borrowing Notice
          and request for any Swing Line Advance, and at any other time as the
          Administrative Agent shall reasonably request, a fully completed
          Borrowing Base Certificate to the Administrative Agent and the
          Collateral Agent.

               (e) Within 30 days after the Second Amendment Effective Date, (i)
          for the Fiscal Year ended December 31, 1996, a restated, unqualified
          audit report certified by KPMG Peat Marwick or other independent
          certified public accountants acceptable to the Lenders, prepared in
          accordance with generally accepted accounting principles on a
          consolidated basis for itself and its Subsidiaries, including balance
          sheets as of the end of such period and related statements of income,
          retained earnings and cash flows and (ii) for each of the first three
          quarters of its Fiscal Year ended December 31, 1997, restated
          unaudited consolidated balance sheets as at the close of each such
          period and consolidated statements of income, retained earnings and
          cash flow for each of the periods from the beginning of such Fiscal
          Year to the end of such quarter, all certified by its chief financial
          officer or controller and prepared in accordance with generally
          accepted accounting principles except for the absence of footnotes.

          (B) MONTHLY COVENANT COMPLIANCE CERTIFICATE.  Redesignated Section
     6.1(f) shall be further amended (1) by deleting the reference to "(a) and
     (b) above" and replacing it with "(a), (b) and (c) above" and (2) by
     deleting the reference to "Sections 6.12.1, 6.12.2, and 6.12.3" and
     replacing it with "Section 6.12".

          SECTION 2.5.    ALLOWANCE FOR LIENS UNDER THE SECURITY DOCUMENTS,
     ALLOWANCE FOR OTHER SECURED FINANCING OF INTEREST ONLY SECURITIES; NO LIENS
     ON BORROWING BASE.


                                     -10-
<PAGE>
 
          (A) Sections 6.10(m) and (n) are amended to be designated as
     paragraphs (o) and (p), respectively, and by deleting the references to
     "paragraphs (a) through (l)" and "paragraphs (a) through (m)",
     respectively, and replacing them with "paragraphs (a) through (o)" and
     "paragraphs (a) through (p)", respectively.

          (B)  Section 6.10 shall be amended by adding new Section 6.10 (m) and
     (n) as follows:

                    "(m) Liens in favor of the Collateral Agent arising under
               the Security Documents;

                    "(n) Liens in favor of parties other than the Collateral
               Agent upon Interest Only Securities (or the stock of Subsidiaries
               holding assets consisting solely of Interest Only Securities) of
               the Borrower or any Subsidiary securing Indebtedness for money
               borrowed after the Second Amendment Effective Date provided,
               however, that to the extent the covenants set forth in the
               agreement with respect to Indebtedness are more restrictive than
               the covenants set forth herein, such covenants and all related
               provisions shall be deemed to be incorporated by reference into
               this Agreement.

          (C) Section 6.10 shall be further amended by adding at the end the
     following sentence:

               "Notwithstanding anything in this Section 6.10 to the contrary,
               the Borrower will not, and will not permit any Subsidiary to, at
               any time create, incur or assume any Lien on any Property of the
               Borrower or any Subsidiary included in the Borrowing Base at such
               time."

          (D) Section 6.11 shall be amended by adding at the end of Section
     6.11(a)(i) the following:

               ", provided that the Borrower may, and may permit any Subsidiary
               to, enter into an indenture, agreement, instrument or other
               arrangement which may restrict the ability of such Subsidiary to
               pay dividends or make other distributions on its capital stock
               but only to the extent that the terms of such arrangement
               restrict the transfer of the property subject to a Lien permitted
               by Section 6.10(n)"
 
          SECTION 2.6.  ADJUSTED TANGIBLE NET WORTH.  Section 6.12.1 shall be
     amended in its entirety to read as follows:

                                     -11-
<PAGE>
 
               "6.12.1. Adjusted Tangible Net Worth.  At all times after the
          date hereof, maintain a minimum Adjusted Tangible Net Worth of at
          least $1,422,292,000."

          SECTION 2.7.  MAXIMUM FUNDED SENIOR DEBT.   A new Section 6.12.4 shall
     be added to the Credit Agreement which reads as follows:

               "6.12.4. Funded Senior Debt.  At all times after the date hereof,
          not permit its Funded Senior Debt to exceed the sum of (without
          duplication) (A) 100% of cash and Cash Equivalents, plus (B) 90% of
          "lease receivables", "commercial finance receivables" (less
          "commercial finance payables"), "revolving credit receivables" and
          "other receivables" and "contracts and collateral", as such assets are
          reflected on the consolidated balance sheet of the Borrower, which has
          been prepared in a manner consistent with the Borrower's September 30,
          1997 balance sheet, plus (C) the lesser of (x) 50% of the Collateral
          Value of Interest Only Securities and (y) the amount of Indebtedness
          secured by Liens permitted pursuant to Section 6.10(n).

          SECTION 2.8.  SECURITY EVENT   A new Section 6.13 shall be added to
     the Credit Agreement which reads as follows:

               "6.13.  Security Event.  If a Security Event occurs, as promptly
          as practicable after the occurrence of such Security Event, and in any
          event on or before the Security Perfection Date in respect thereof,
          the Borrower shall take or cause to be taken the following actions:

                    (a) take all actions required (including where required,
               physical delivery to the Collateral Agent of any of the
               Collateral, filing of UCC financing statements and execution and
               delivery of any other Security Documents reasonably requested by
               the Administrative Agent or the Collateral Agent, to the extent
               such actions have not already been taken) to cause the Collateral
               to be delivered under the Security Agreement;

                    (b) deliver to the Administrative Agent, with a counterpart
               for each Lender, executed legal opinions of such counsel to the
               Borrower and its Subsidiaries as shall be reasonably acceptable
               to the Administrative Agent confirming, as of a date not more
               than 10 days prior to the Security Perfection Date, the opinions
               rendered on the Second Amendment Effective Date by such
               respective counsel in respect of the creation and perfection of
               the Collateral Agent's security interest in the Collateral, with
               such changes therein as the Administrative Agent or the
               Collateral Agent shall reasonably approve or reasonably request;

          and thereafter from time to time promptly take or cause to be taken
          all such 

                                     -12-
<PAGE>
 
          further actions as shall be requested by the Administrative Agent or
          the Collateral Agent in order to ensure that the provisions of the
          Security Agreement are satisfied and the representations and
          warranties therein with respect to the Collateral are true and
          correct.

          SECTION 2.9.   DEFAULTS.

               (a) Section 7.3 is amended by deleting the reference to "Sections
     6.9 through 6.12" and replacing it with "Sections 6.9 through 6.13 or
     Section 4 of the Second Amendment".

               (b) Section 7.5 is amended by deleting the reference to
     "$25,000,000" and replacing it with "$5,000,000".

               (c) Section 7.8 by deleting the reference to "$25,000,000" and
     replacing it with "$10,000,000".

               (d) A new Sections 7.10 is added to the Credit Agreement as
     follows:
 
          "7.10.  (a) any "Default", as such term is defined in the Security
          Agreement shall occur or (b) the Security Agreement shall fail to
          remain in full force or effect or any action shall be taken to
          discontinue or to assert the invalidity or unenforceability of the
          Security Agreement.

          SECTION 2.10.  RELEASE OF COLLATERAL. A new Section 8.4 shall be added
     as follows:

               "8.4  Release of Collateral.  Except as set forth in the Security
          Agreement, any amendment or modification of the Security Agreement
          which provides for the release of all or substantially all of the
          Collateral shall require the written consent of each Lender. "

          SECTION 2.11.  COLLATERAL AGENT.  Section 10.1 shall be amended by
     adding at the end the following sentence:

          "In addition to the foregoing, the Lenders hereby appoint the
          Collateral Agent to act as such under the terms of the Security
          Documents and authorize the Collateral Agent to enter into the
          Security Documents and all obligations of the Lenders thereunder shall
          be binding upon each Lender as if such Lender had executed the
          Security Documents.  Except as specifically otherwise provided in the
          Security Agreement, all provisions in this Article X with respect to
          the Administrative Agent shall also apply to the Collateral Agent."

                                     -13-
<PAGE>
 
     SECTION 3. WAIVER. The undersigned Lenders hereby, for the period
commencing with the "Effective Date" (as defined below) and ending on April 28,
1998 (the "Waiver Period"), waive only during the Waiver Period (a) any breach
of Section 5.5 or 5.14 of the Credit Agreement arising solely out of either (i)
the restatement of the Borrower's 1996 audited financial statements as more
fully described in the Borrower's January 27, 1998 press release or (ii) the
impact of such adjustment and the application of Statement of Financial
Accounting Standards No. 125 upon the consolidated unaudited financial
statements of the Borrower and its Subsidiaries for the first three Fiscal
Quarters of Fiscal Year 1997 provided to the Lenders by the Borrower pursuant to
Section 6.1 of the Credit Agreement (any such breach being a "Representation
Breach"), (b) any failure of the Financial Statements or any other financial
statements of the Borrower and its Subsidiaries delivered to the Lenders since
December 31, 1996 to have been prepared in accordance with Agreement Accounting
Principles so long as such statements were prepared in a manner consistent with
the Restated Financial Statements (as defined below), (c) any Default under
Section 7.1 of the Credit Agreement which may have heretofore arisen out of any
Representation Breach and (d) any condition to borrowing set forth in Section
4.2(b) of the Credit Agreement which would be satisfied but for any
Representation Breach. At the conclusion of the Waiver Period, the waivers set
forth above shall be of no further force or effect and all rights of the Lenders
with respect to the subject matter thereof shall be reinstated.

     SECTION 4. ACTION BY BORROWER AT THE END OF THE WAIVER PERIOD. The Borrower
hereby acknowledges and agrees with the Lenders that, on the first Business Day
after the expiration of the Waiver Period, the Borrower shall either (a) have
obtained an extension of the Waiver Period or (b) unless waived in writing by
the Majority Lenders, prepay all outstanding Loans and all of the other
Obligations under the Credit Agreement.

     SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:

               (a) The execution, delivery and performance by the Borrower of
     this Amendment and the Security Documents have been duly authorized by all
     necessary corporate action and this Amendment and the Security Documents
     are legal, valid and binding obligations of the Borrower enforceable
     against the Borrower in accordance with their terms, except as the
     enforcement thereof may be subject to the effect of any applicable
     bankruptcy, insolvency, reorganization, moratorium or similar law affecting
     creditors' rights generally;

               (b) Each of the representations and warranties contained in
     Article V of the Credit Agreement (other than Section 5.6 or with respect
     to the Representation Breach) is true and correct in all material respects
     on and as of the date hereof as if made on the date hereof;

               (c) None of the execution, delivery or performance by the
     Borrower of this Amendment and the Security Documents nor the consummation
     of the transactions 

                                     -14-
<PAGE>
 
     contemplated hereby or thereby, nor compliance with the
     provisions of the Loan Documents, or at the relevant time did, (a) violate
     any law, rule, regulation (including Regulations G, T, U and X), order,
     writ, judgment, injunction, decree or award binding on the Borrower or any
     Subsidiary or the Borrower's or any Subsidiary's charter, articles or
     certificate of incorporation or by-laws, (b) violate the provisions of or
     require the approval or consent of any party to any indenture, instrument
     or agreement to which the Borrower or any Subsidiary is a party or is
     subject, or by which it, or its respective property, is bound, or conflict
     with or constitute a default thereunder, or result in the creation or
     imposition of any Lien (other than Liens permitted by the Loan Documents)
     in, of or on the property of the Borrower or any Subsidiary pursuant to the
     terms of any such indenture, instrument or agreement, or (c) require any
     consent of the stockholders of any Person, except for approvals or consents
     which will be obtained on or before the Effective Date and are disclosed in
     writing to the Lenders;

               (d) Attached hereto as Exhibit C are the December 31, 1996,
     unaudited annual restated consolidated financial statements of the Borrower
     and its Subsidiaries (the "Restated Financial Statements"), prepared in
     accordance with generally accepted accounting principles except for the
     absence of accompanying footnotes and prior to giving effect to adjustments
     relating to reduced compensation under the CEO bonus plan as a consequence
     of the Restated Financial Statements.  Each of the Restated Financial
     Statements was prepared in accordance with generally accepted accounting
     principles and fairly presents the consolidated financial condition and
     operations of the Borrower and its Subsidiaries at such dates and the
     consolidated results of their operations for the periods then ended; and

               (e) After giving effect to this Amendment no Default or Unmatured
     Default has occurred and is continuing.

     SECTION 6. EFFECTIVE DATE. This Amendment shall become effective upon (a)
the execution and delivery by the Majority Lenders (without respect to whether
it has been executed and delivered by all Lenders) and the Borrower of this
Amendment, (b) the payment by the Borrower to the Administrative Agent for the
ratable benefit of all of the Lenders of an amendment fee equal to 0.05% of the
Commitment (as amended by this Amendment) of each Lender and (c) the
satisfaction of all of the following additional conditions (the "Effective
Date"):

          (i) Charter Documents; Good Standing Certificates.  Copies of the
     certificate of incorporation of the Borrower, together with all amendments
     thereto, certified by the appropriate governmental officer in its
     jurisdiction of incorporation, together with a good standing certificate
     issued by the Secretary of State of the jurisdiction of its incorporation
     and such other jurisdictions as shall be requested by the Administrative
     Agent or a certificate executed by the Secretary or Assistant Secretary of
     the Borrower to the effect that its certificate of incorporation has not
     changed since April 29, 1997.


                                     -15-
<PAGE>
 
          (ii) By-Laws and Resolutions.  Copies, certified by the Secretary or
     Assistant Secretary of the Borrower, of its by-laws and of its Board of
     Directors' resolutions authorizing the execution, delivery and performance
     of the Loan Documents to which the Borrower is a party or a certificate
     executed by the Secretary or Assistant Secretary of the Borrower to the
     effect that such by-laws and resolutions have not changed since April 29,
     1997.

          (iii)  Secretary's Certificate.  An incumbency certificate, executed
     by the Secretary or Assistant Secretary of the Borrower, which shall
     identify by name and title and bear the signature of the officers of the
     Borrower authorized to sign this Amendment, the Security Documents and the
     other documents contemplated hereby and thereby, upon which certificate the
     Administrative Agent and the Lenders shall be entitled to rely until
     informed of any change in writing by the Borrower.

          (iv) Officer's Certificate.  A certificate, dated the Effective Date,
     signed by an Authorized Officer of the Borrower, in form and substance
     satisfactory to the Administrative Agent, to the effect that: (i) on such
     date (after giving effect to this Amendment), no Default or Unmatured
     Default has occurred and is continuing; (ii) no injunction or temporary
     restraining order which would prohibit the entering into of this Amendment
     or the consummation of any of the other transactions contemplated hereby,
     or other litigation which could reasonably be expected to have a Material
     Adverse Effect is pending or, to the best of such Person's knowledge,
     threatened; and (iii) each of the representations and warranties set forth
     in Article V of the Credit Agreement (other than Section 5.6 or with
     respect to the Representation Breach) is true and correct on and as of such
     date.

          (v) Legal Opinions.  A written opinion of each of (i) Briggs and
     Morgan, counsel to the Borrower, and (ii) Joel H. Gottesman, general
     counsel of the Borrower, both in form reasonably satisfactory to the
     Administrative Agent.

          (vi) Security Documents and Other Documents.  Executed originals of
     each of the Security Documents, together with all schedules, exhibits,
     certificates, instruments, opinions and documents required to be delivered
     pursuant to this Amendment and the Security Documents.

          (vii)  Other Amendment.   Evidence satisfactory to the Administrative
     Agent that the Second Amendment (as defined in the Short Term Credit
     Agreement) is, or simultaneously with this Amendment will be, effective.
 
     SECTION 7.     REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

               (a) Except as specifically amended or waived above, the Credit


                                     -16-
<PAGE>
 
     Agreement and the other Loan Documents shall remain in full force and
     effect and are hereby ratified and confirmed.

               (b) The execution, delivery and effectiveness of this Amendment
     shall not operate as a waiver of any right, power or remedy of the
     Administrative Agent or any Lender under the Credit Agreement or any Loan
     Document, nor constitute a waiver of any provision of the Credit Agreement
     or any Loan Document, except as specifically set forth herein.  Upon the
     effectiveness of this Amendment, each reference in the Credit Agreement and
     any other Loan Document to "this Agreement", "hereunder", "hereof",
     "herein" or words of similar import shall mean and be a reference to the
     Credit Agreement as amended hereby.

     SECTION 8. COSTS AND EXPENSES.

               (a) The Borrower hereby affirms its obligation under Section 9.7
     of the Credit Agreement to reimburse the Administrative Agent for all
     reasonable costs, internal charges and out-of-pocket expenses paid or
     incurred by the Administrative Agent in connection with the preparation,
     negotiation, execution and delivery of this Amendment, including but not
     limited to the attorneys' fees and time charges of attorneys for the
     Administrative Agent with respect thereto.

               (b) The Borrower hereby agrees that the Borrower shall pay First
     Chicago Capital Markets, Inc. (the "Arranger") an additional amendment fee
     pursuant to that certain fee letter dated on or before the date hereof
     between the Arranger and the Borrower with respect this Amendment.

     SECTION 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

     SECTION 10. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

     SECTION 11. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.


                           [signature pages follow]



                                     -17-
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first above written.

                              GREEN TREE FINANCIAL CORPORATION



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
Commitments:   $[23,125,000]  THE FIRST NATIONAL BANK OF CHICAGO,
-----------                   Individually and as Administrative Agent



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[18,125,000]  THE BANK OF TOKYO-MITSUBISHI, LTD.,
                              CHICAGO BRANCH
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[23,125,000]  FIRST BANK NATIONAL ASSOCIATION
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

                                     -18-
<PAGE>
 
               $[23,125,000]  MORGAN GUARANTY TRUST COMPANY
                              OF NEW YORK
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[18,125,000]  COMMERZBANK AG, CHICAGO BRANCH
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 

               $[18,125,000]  FIRST UNION NATIONAL BANK OF
                              NORTH CAROLINA
 

                              
                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------
 

               $[18,125,000]  FLEET BANK N.A.
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


                                     -19-
<PAGE>
 
               $[18,125,000]  NATIONSBANK OF TEXAS, N.A.
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[18,125,000]  UNION BANK OF SWITZERLAND NEW YORK
                              BRANCH
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------
 
 
               $[18,125,000]  WESTDEUTSCHE LANDESBANK GIROZENTRALE,
                              NEW YORK BRANCH
 
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

                                     -20-
<PAGE>
 
                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------
 

               $[12,500,000]  THE BANK OF MONTREAL
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[12,500,000]  THE BANK OF NEW YORK
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[12,500,000]  BANQUE NATIONALE DE PARIS
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[12,500,000]  CANADIAN IMPERIAL BANK OF COMMERCE
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

                                     -21- 
<PAGE>
 
               $[12,500,000]  THE CHASE MANHATTAN BANK
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[12,500,000]  COMERICA BANK
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[12,500,000]  CREDIT LYONNAIS, NEW YORK BRANCH
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[6,250,000]   THE ASAHI BANK, LTD.


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

                                     -22- 
<PAGE>
 
               $[6,250,000]   BANCA MONTE DEI PASCHI DI SIENA SpA


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------




                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[6,250,000]   BAYERISCHE VEREINSBANK

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[6,250,000]   THE DAI-ICHI KANGYO BANK, LTD.,
                              CHICAGO BRANCH


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[6,250,000]   DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
                              CAYMAN ISLAND BRANCH
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


                                     -23-
<PAGE>
 
               $[6,250,000]   FIRST HAWAIIAN BANK



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[6,250,000]   FIRSTAR BANK MILWAUKEE, N.A.



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[6,250,000]   THE FUJI BANK, LIMITED


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

 
               $[6,250,000]   THE INDUSTRIAL BANK OF JAPAN, LIMITED
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------

                                     -24- 
<PAGE>
 
               $[6,250,000]   THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
                              CHICAGO BRANCH



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[6,250,000]   NORDDEUTSCHE LANDESBANK
                              GIROZENTRALE
 


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


 
               $ [6,250,000]  NORWEST BANK MINNESOTA,
                              NATIONAL ASSOCIATION


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[6,250,000]   THE SUMITOMO BANK, LIMITED,
                              CHICAGO BRANCH



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


                                     -25-
<PAGE>
 
               $[5,000,000]   ARAB BANK, Plc
 

                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


               $[5,000,000]   BANK HAPOALIM


                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------



                              By:
                                 -------------------------------------

                              Print Name:
                                         -----------------------------

                              Title:
                                    ----------------------------------


 

Aggregate
 Commitment  $[375,000,000]
<PAGE>
 
                                   EXHIBIT A


                           BORROWING BASE CERTIFICATE


     Reference is made to that certain Credit Agreement (the "Credit Agreement")
dated as of April 29, 1997 among  Green Tree Financial Corporation (the
"Borrower"), the lenders named therein (the "Lenders") and The First National
Bank of Chicago, as administrative agent for the Lenders, as amended.
Capitalized terms not otherwise defined herein are used with the same meanings
as in the Credit Agreement.

Borrowing Base:
-------------- 

<TABLE>
<S>                                                               <C>
--------------------------------------------------------------------------------
1. Eligible Contracts (excluding Asset Based Receivables and
   Other Eligible Receivables) (Collateral Value)
--------------------------------------------------------------------------------
   (a)  Eligible Consumer Products Contracts                      $
--------------------------------------------------------------------------------
   (b)  Eligible Home Equity Contracts                            $
--------------------------------------------------------------------------------
   (c)  Eligible Home Improvement Contracts                       $
--------------------------------------------------------------------------------
   (d)  Eligible MH Contracts (real property)                     $
--------------------------------------------------------------------------------
   (e)  Eligible MH Contracts (not real property)                 $
--------------------------------------------------------------------------------
   (f)  Eligible Floor Plan Receivables                           $
--------------------------------------------------------------------------------
   (g)  Total Eligible Contracts (sum of (a) through (f)          $
--------------------------------------------------------------------------------
   (h)  Borrowing Base percentage                                       90%
--------------------------------------------------------------------------------
   (i)  Borrowing Base with respect to Contracts ((g) times (h))  $
--------------------------------------------------------------------------------
2. Asset Based Receivables (Collateral Value)
--------------------------------------------------------------------------------
   (a)  Eligible Asset Based Receivables                          $
--------------------------------------------------------------------------------
   (b)  Borrowing Base percentage                                       80%
--------------------------------------------------------------------------------
   (c)  Borrowing Base with respect to Asset Based Receivables    $
        ((a) times (b))
--------------------------------------------------------------------------------
3. Other Receivables (Collateral Value) (as determined pursuant
   to the definition of "Other Eligible Receivables")
--------------------------------------------------------------------------------
</TABLE>

                                       1
<PAGE>
 
<TABLE>
<S>                                                               <C>
--------------------------------------------------------------------------------
   (a)  Eligible Other Receivables                                $
--------------------------------------------------------------------------------
   (b)  Borrowing Base percentage (as determined pursuant to the            %
        definition of "Other Eligible Receivables")
--------------------------------------------------------------------------------
   (c)  Borrowing Base with respect to Other Receivables          $
        ((a) times (b))
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
   BORROWING BASE (sum of (1.) and (2.) and (3.))                 $
--------------------------------------------------------------------------------
</TABLE>


     Certification: The Borrower hereby certifies to The First National Bank of
Chicago for the benefit of lenders under the Credit Agreement that:  (a) the
above information is, and the computations are accurate and complete and in
accordance with the requirements of the Credit Agreement, and (b) as of the date
hereof, (1) the representations and warranties contained in Article V (other
than Section 5.6 and with respect to the Restatement Breach) of the Credit
Agreement are true and correct and (2) there does not exist a Default or an
Unmatured Default under the Credit Agreement.

     IN WITNESS WHEREOF, the Borrower has caused this Borrowing Base Certificate
to be executed and delivered by its duly authorized officer this ___ day of
___________, 199__.



                                       GREEN TREE FINANCIAL CORPORATION


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





                                       2
<PAGE>
 
                                   EXHIBIT B


                                  DEFINITIONS
                                  -----------

For purposes of this Exhibit B to Amendment and Limited Waiver to Credit
Agreement, capitalized terms not defined in the Credit Agreement or the Security
Agreement shall have the respective meanings set forth below:

          "Electronic Ledger" means to the electric master record of installment
     sale contracts of the Grantor.

          "FHA" means the Federal Housing Administration of HUD.

          "FHA/VA MH Contracts" means MH Contracts that are insured by the FHA
     or guaranteed  by the Department of Veterans Affairs.

          "HUD" means the U.S. Department of Housing and Urban Development.

          "Step-Up Rate Contract" means a Contract bearing interest during an
     initial period at a fixed rate that is lower than the fixed rate borne
     thereafter.

          "Title I Loan" means a Home Improvement Contract insured under the
     FHA's Title I Program.
<PAGE>
 
                                                                        PART A-1
                                                                        --------


Eligibility Criteria with respect to MH Contracts (not Land-and-Home Contracts)
-------------------------------------------------------------------------------


     A. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the obligor (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.

     B. No Waivers. The terms of the MH Contract have not been waived, altered
or modified in any respect, except by instruments or documents which are among
the Required Documents or the Additional Required Documents.

     C. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights in general.

     D. No Defenses. The MH Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the MH Contract or the exercise of any right
thereunder will not render the MH Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.

     E. Insurance. The Grantor or its agent has monitored the existence of a
hazard insurance policy with respect to the Manufactured Home securing a MH
Contract and if the Grantor has determined that no such policy exists, the
Grantor has arranged for such insurance and has billed the related obligor
through its loan account.

     F. Origination. The MH Contract was originated by a manufactured housing
dealer or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a manufactured housing dealer, was purchased by the Grantor in
the regular course of its business.

     G. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Collateral Agent or the ownership of the MH Contracts by
the Collateral Agent unlawful.

     H. Compliance With Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the MH Contract have been complied with and such
compliance is not affected by the holding of the MH Contracts by the Collateral
Agent or the Collateral Agent's ownership of the MH Contracts, and the Grantor
shall maintain in its possession, available for the Collateral Agent's
inspection, and shall deliver to the Collateral Agent upon demand, evidence of
<PAGE>
 
compliance with all such requirements.

     I.   MH Contract In Force.  The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured Home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.

     J.   Valid Security Interest.  The MH Contract creates a valid and
enforceable perfected first priority security interest in favor of the Grantor
in the Manufactured Home covered thereby as security for payment of the
outstanding principal balance of such MH Contract and all other obligations of
the obligor under such MH Contract; if the Security Perfection Date has
occurred, such security interest has been assigned by the Grantor to the
Collateral Agent, and the Collateral Agent has and will have a valid and
perfected and enforceable first priority security interest in such Manufactured
Home.

     K.   Capacity Of Parties.  All parties to the MH Contract had capacity to
execute the MH Contract.

     L.   Good Title.  The Grantor is the sole owner of the MH Contract and has
the authority to sell, transfer and assign the MH Contract.  In the case of a MH
Contract purchased from a manufactured housing dealer, the Grantor purchased the
MH Contract for fair value and took possession thereof in the ordinary course of
its business, without knowledge that the MH Contract was subject to a security
interest.  The Grantor has not sold, assigned or pledged the MH Contract to any
Person other than the Collateral Agent.

     M.   No Defaults.  There was no default, breach, violation or event
permitting acceleration existing under the MH Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such MH
Contract.  The Grantor has not waived any such default, breach, violation or
event permitting acceleration.

     N.   No Liens.  There are, to the best of the Grantor's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Manufactured Home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH Contract.

     O.   Installment Payments.  The MH Contract either has a fixed rate, a
variable rate or is a Step-Up Rate Contract and provides for monthly principal
payments which fully amortize the loan over its term.

     P.   Enforceability.  The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.

     Q.   One Original.  There is only one original executed MH Contract, which
is held by 
<PAGE>
 
the Grantor, its agent or the Collateral Agent.

     R.   Loan-to-value Ratio.  At the time of its origination each MH Contract
had a loan-to-value ratio not greater than 95%; if the related Manufactured Home
was new at the time such MH Contract was originated, the original principal
balance of such MH Contract was not in excess of that permitted by the Grantor's
underwriting guidelines in effect at the time the MH Contract was originated.

     S.   Primary Resident.  At the time of origination of the MH Contract the
obligor was the primary resident of the related Manufactured Home or the primary
resident was the child of the obligor.

     T.   Not Real Estate.  The related Manufactured Home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located and such Manufactured Home is, to the
best of the Grantor's knowledge, free of damage and in good repair.

     U.   Notation of Security Interest. If the related Manufactured Home is
located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the title
document shows, or if a new or replacement title document with respect to such
Manufactured Home is being applied for such title document will be issued within
180 days and will show, the Grantor as the holder of a first priority security
interest in such Manufactured Home.  If the related Manufactured Home is located
in a state in which the filing of a financing statement under the UCC is
required to perfect a security interest in manufactured housing, such filings or
recordings have been duly made and show the Grantor as secured party.  In either
case, if the Security Perfection Date has occurred, the Collateral Agent has the
same rights as the secured party of record would have (if such secured party
were still the owner of the MH Contract) against all Persons claiming an
interest in such Manufactured Home.

     V.   FHA/VA MH Contracts.  If the MH Contract is a FHA/VA MH Contract, the
MH Contract has been serviced in accordance with the regulations of the FHA/VA,
the insurance or guarantee of the MH Contract under regulations of the FHA/VA
and related laws is in full force and effect, and no event has occurred which,
with or without notice or lapse of time or both, would impair such insurance or
guarantee.

     W.   No Adverse Selection.  Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the MH Contracts.

     X.   Holding Period.  The MH Contract was not originated more than 180 days
previously.

     Y.   Other Criteria.  Such other eligibility criteria as the Administrative
Agent shall 



                                     A-1-3
<PAGE>
 
reasonably require and notify to the Grantor.








                                     A-1-4
<PAGE>
 
                                                                        PART A-2
                                                                        --------

  ELIGIBILITY CRITERIA WITH RESPECT TO MH CONTRACTS (LAND-AND-HOME CONTRACTS)
  ---------------------------------------------------------------------------

     B. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the obligor (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.

     C. No Waivers. The terms of the MH Contract have not been waived, altered
or modified in any respect, except by instruments or documents which are among
the Required Documents or Additional Required Documents.

     D. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights general.

     E. No Defenses. The MH Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the MH Contract or the exercise of any right
thereunder will not render the MH Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.

     F. Insurance. The Grantor or its agent has monitored the existence of a
hazard insurance policy with respect to the Manufactured Home securing a MH
Contract and if Grantor has determined that no such policy exists, the Grantor
has arranged for such insurance and has billed the related obligor through its
loan account

     G. Origination. The MH Contract was originated by a manufactured housing
dealer or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a manufactured housing dealer, was purchased by the Grantor in
the regular course of its business.

     H. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Collateral Agent or the ownership of the MH Contracts by
Collateral Agent unlawful.

     I. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the MH Contract have been complied with and such
compliance is not affected by the holding of the MH Contracts by the Collateral
Agent or the Collateral Agent's security interest in the MH Contracts, and the
Grantor shall maintain in its possession, available for the Buyer's inspection,
and shall deliver to the Buyer upon demand, evidence of compliance with all such
requirements.
<PAGE>
 
     J. MH Contract in Force. The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Manufactured Home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.

     K. Interest in Real Property. Each Mortgage is a valid first lien in favor
of the Grantor on real property securing the amount owed by the obligor under
the related MH Contract subject only to (a) the lien of current real property
taxes and assessments, (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording of
such Mortgage, such exceptions appearing of record being acceptable to Mortgage
lending institutions generally in the area wherein the property subject to the
Mortgage is located or specifically reflected in the appraisal obtained in
connection with the origination of the related MH Contract obtained by the
Grantor and (c) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security intended to
be provided by such Mortgage. If the Security Perfection Date has occurred, (1)
the Grantor has assigned all of its right, title and interest in such MH
Contract and related Mortgage, including the security interest in the
Manufactured Home covered thereby, to the Collateral Agent and (2) the
Collateral Agent has and will have a valid and perfected and enforceable first
priority security interest in such MH Contract. The MH Contract creates a valid
and enforceable perfected first priority security interest in favor of the
Grantor in the Manufactured Home covered thereby (to the extent such
Manufactured Home is not considered real property) as security for payment of
the outstanding principal balance of such MH Contract and all other obligations
of the obligor under such MH Contract; if the Security Perfection Date has
occurred, such security interest has been assigned by the Grantor to the
Collateral Agent, and the Collateral Agent has and will have a valid and
perfected and enforceable first priority security interest in such Manufactured
Home.

     L. Capacity of Parties. All parties to the MH Contract had capacity to
execute the MH Contract.

     M. Good Title. The Grantor is the sole owner of the MH Contract and has the
authority to sell, transfer and assign the MH Contract. In the case of a MH
Contract purchased from a manufactured housing dealer, the Grantor purchased the
MH Contract for fair value and took possession thereof in the ordinary course of
its business, without knowledge that the MH Contract was subject to a security
interest. The Grantor has not sold, assigned or pledged the MH Contract to any
Person other than the Collateral Agent.

     N. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the MH Contract and no event which, with notice and
the expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such MH Contract. The
Grantor has not waived any such default, breach, violation or event permitting
acceleration.

     O. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the
Manufactured Home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH
<PAGE>
 
Contract.

     P. Installments Payments. The MH Contract either has a fixed rate, variable
rate or is a Step-Up Rate Contract and provides for monthly principal payments
which fully amortize the loan over its term.

     Q. Enforceability. The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.

     R. One Original. There is only one original executed MH Contract, which is
held by the Grantor, its agent or the Collateral Agent.

     S. Loan-to-Value Ratio. At the time of its origination each MH Contract had
a loan-to-value ratio not greater than 95%; if the related Manufactured Home was
new at the time such MH Contract was originated, the original principal balance
of such MH Contract was not in excess of that permitted by the Grantor's
underwriting guidelines in effect at the time the MH Contract was originated.

     T. Primary Resident. At the time of origination of the MH Contract the
obligor was the primary resident of the related Manufactured Home or the primary
resident was the child of the obligor.

     U. Good Repair. The related Manufactured Home is, to the best of the
Grantor's knowledge, free of damage and in good repair.

     V. FHA/VA MH Contracts. If the MH Contract is a FHA/VA MH Contract, the MH
Contract has been serviced in accordance with the regulations of the FHA/VA, the
insurance or guarantee of the MH Contract under the regulations of the FHA/VA
and related laws is in full force and effect, and no event has occurred which,
with or without notice or lapse of time or both, would impair such insurance or
guarantee.

     W. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the MH Contracts.

     X. Holding Period. The MH Contract was not originated more than 180 days
previously.

     Y. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.


                                     A-2-3
<PAGE>
 
                                                                          PART B
                                                                          ------

           Eligibility Criteria with respect to Home Equity Contract
           ---------------------------------------------------------

     B. Payments. The scheduled payment of principal and interest due under the
Home Equity Contract with respect to the prior due date was made on or before
such due date by or on behalf of the obligor (without any advance from the
Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days after such due date.

     C. No Waivers. The terms of the Home Equity Contract have not been waived,
altered or modified in any respect, except by instruments or documents which are
among the Required Documents or Additional Required Documents. All costs, fees
and expenses incurred in making, closing and perfecting the lien and/or security
interest, as applicable, of the Home Equity Contract have been paid.

     D. Binding Obligation. The Home Equity Contract is the legal, valid and
binding obligation of the obligor thereunder and is enforceable in accordance
with its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally. If the Security Perfection Date
has occurred, the Grantor has delivered, or caused to be delivered, to the
Collateral Agent the original Mortgage, with evidence of recording thereon, or
if the original Mortgage has not yet been returned from the recording office, a
true copy of the Mortgage which has been delivered for recording in the
appropriate recording office of the jurisdiction in which the real property is
located.

     E. No Defenses. The Home Equity Contract is not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Equity Contract or the
exercise of any right thereunder will not render the Home Equity Contract
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.

     F. Insurance. At origination of the relevant Home Equity Contract, all
improvements on the related real property are covered by a hazard insurance
policy. To the Grantor's knowledge, such insurance has not been canceled.

     G. Origination. The Home Equity Contract was originated by a home equity
lender or the Grantor or a Subsidiary in the regular course of its business and,
if originated by a home equity lender, was purchased by the Grantor in the
regular course of its business.

     H. Lawful Assignment. The Home Equity Contract was not originated in and is
not subject to the laws of any jurisdiction whose laws would make the transfer
of the Home Equity Contract to Collateral Agent or the security interest in the
Home Equity Contract by the Collateral Agent thereof unlawful or make the Home
Equity Contract unenforceable.
<PAGE>
 
     I. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the Home Equity Contract have been complied with
and such compliance is not affected by the holding of the Home Equity Contract
by Collateral Agent or the Collateral Agent's ownership of the Home Equity
Contract, and the Grantor maintains in its possession, available for Collateral
Agent's inspection, and shall deliver to Collateral Agent upon demand, evidence
of compliance with all such requirements.

     J. Home Equity Contract in Force. The Home Equity Contract has not been
satisfied or subordinated in whole or in part or rescinded, and the real
property securing the Home Equity Contract has not been released from the lien
of the Home Equity Contract in whole or in part.

     K. Valid Lien. The Home Equity Contract has been duly executed and
delivered by the obligor and the related Mortgage is a valid and subsisting
first, second or third lien on the property therein described; if the Security
Perfection Date has occurred, any related Mortgage has been assigned by the
Grantor to Collateral Agent, and Collateral Agent has and will have a valid and
subsisting lien on the property therein described. The Grantor has full right to
sell and assign the Home Equity Contract to the Collateral Agent.

     L. Capacity of Parties. All parties to the Home Equity Contract had
capacity to execute the Home Equity Contract.

     M. Good Title. The Grantor is the sole owner of the Home Equity Contract
and has the authority to sell, transfer and assign the Home Equity Contract. The
Grantor has not sold, assigned or pledged the Home Equity Contract to any Person
other than the Collateral Agent.

     N. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Home Equity Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Home
Equity Contract. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.

     O. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the real
property securing the Home Equity Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the Home Equity Contract.

     P. Installment Payments. The Home Equity Contract has a fixed rate, or a
variable rate and provides for monthly principal payments which fully amortize
the loan over its term.

     Q. Enforceability. The Home Equity Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the 

                                      B-2
<PAGE>
 
realization against the collateral of the benefits of the security provided
thereby.

     R. One Original. There is only one original executed Home Equity Contract
note, and it has been delivered to the Collateral Agent.

     S. Primary Resident. At the time of origination of the Home Equity
Contract, the obligor was the primary resident of the related real property.

     T. Proceedings. There is no proceeding pending or, to the Grantor's
knowledge, threatened for the total or partial condemnation of collateral
securing a Home Equity Contract.

     U. Marking Records. If the Security Perfection Date has occurred, the
Grantor has caused the portions of the Electronic Ledger relating to the Home
Equity Contract to be clearly and unambiguously marked to indicate that the
Collateral Agent holds a security interest in such Home Equity Contract in
accordance with the terms of the Security Agreement.

     V. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Home Equity Contract.

     W. Real Property. Each mortgaged property is improved by a single family
dwelling which constitutes real property under state law and is the principal
residence of the obligor.

     X. Holding Period. The Home Equity Contract was not originated more than
180 days previously.

     Y. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.






                                      B-3
<PAGE>
 
                                                                          PART C
                                                                          ------


        Eligibility Criteria with respect to Consumer Products Contracts
        ----------------------------------------------------------------

     B. Payments. The most recent scheduled payment was made by or on behalf of
the obligor (without any advance from the Grantor or any Person acting at the
request of the Grantor) or was not delinquent for more than 30 days.

     C. No Waivers. The terms of the Consumer Products Contract have not been
waived, altered or modified in any respect, except by instruments or documents
which are among the Required Documents or Additional Required Documents.

     D. Binding Obligation. The Consumer Products Contract is the legal, valid
and binding obligation of the obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally.

     E. No Defenses. The Consumer Products Contract is not subject to any right
of rescission, setoff, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Consumer Products Contract or the
exercise of any right thereunder will not render the Consumer Products Contract
unenforceable in whole or in part or subject to any right of rescission, setoff,
counterclaim or defense, including the defense of usury, and no such right of
rescission, setoff, counterclaim or defense has been asserted with respect
thereto.

     F. Origination. Each Consumer Products Contract was originated by a dealer
of goods of a class including the Consumer Product subject to the Consumer
Products Contract, or by the Grantor or a Subsidiary, in the regular course of
its business and, if originated by a dealer, was purchased by the Grantor or a
Subsidiary in the regular course of its business.

     G. Lawful Assignment. The Consumer Products Contract was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Consumer Products Contract to the Collateral Agent unlawful or
render the Consumer Products Contract unenforceable.

     H. Compliance with Law. At the date of origination of the Consumer Products
Contract, all requirements of any federal and state laws, rules and regulations
applicable to the Consumer Products Contract, including, without limitation,
usury, truth in lending and equal credit opportunity laws, have been complied
with, and the Grantor shall maintain its possession, available for the
Collateral Agent's inspection, and shall deliver to the Collateral Agent upon
demand, evidence of compliance with all such requirements.

     I. Consumer Products Contract in Force. The Consumer Products Contract has
not been satisfied or subordinated in whole or in part or rescinded, and the
Consumer Product or real
<PAGE>
 
property, if any, securing the Consumer Products Contract has not been released
in whole or in part.

     J. Valid Security Interest or Lien. (a) the Consumer Products Contract
creates a valid and enforceable perfected first priority security interest in
favor of the Grantor in the Consumer Product covered thereby as security for
payment of the outstanding principal balance of such Consumer Products Contract;
(b) if the Security Perfection Date has occurred, the Grantor has assigned all
of its right, title and interest in such Consumer Products Contract, including
the security interest in the Consumer Product covered thereby to the Collateral
Agent; and (c) if the Security Perfection Date has occurred, the Collateral
Agent has and will have a valid and perfected and enforceable first priority
security interest in such Consumer Product.

     K. Capacity of Parties. The signature(s) of the obligor(s) on the Consumer
Products Contract are genuine and all parties to the Consumer Products Contract
had full legal capacity to execute the Consumer Products Contract.

     L. Good Title. The Grantor is the sole owner of the Consumer Products
Contract and has the authority to sell, transfer and assign the Consumer
Products Contract. In the case of a Consumer Products Contract purchased from a
dealer, home improvement contractor or home equity lender, the Grantor purchased
the Consumer Products Contract for fair value and took possession thereof in the
ordinary course of its business, without knowledge that the Consumer Products
Contract was subject to a security interest. The Grantor has not sold, assigned
or pledged the Consumer Products Contract to any Person and prior to the
transfer of the Consumer Products Contract by the Grantor to the Collateral
Agent, the Grantor had good and marketable title thereto free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest and was
the sole owner thereof with full right to transfer the Consumer Products
Contract to the Collateral Agent. No financing statement describing or referring
to any Consumer Products Contract (other than any financing statement naming the
Collateral Agent as secured party, or filed by the Grantor as secured party to
perfect its interest in a Consumer Products Contract purchased from a dealer) is
on file in any public office.

     M. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Consumer Products Contract and no event which,
with notice and the expiration of any grace or cure period, would constitute
such a default, breach, violation or event permitting acceleration under such
Consumer Products Contract (except payment delinquencies permitted by clause
(A.) above). The Grantor has not waived any such default, breach, violation or
event permitting acceleration except payment delinquencies permitted by clause
(A.) above. The related Consumer Product is, to the best of the Grantor's
knowledge, free of damage and in good repair.

     N. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the Consumer
Product securing the Consumer Products Contract which are or may be liens prior
to, or equal or coordinate with, the lien of the Consumer Products Contract.
<PAGE>
 
     O. Installment Payments. Each Consumer Products Contract has a fixed
interest rate or a variable interest rate and provides for regular principal
payments which fully amortize the loan over its term.

     P. Enforceability. The Consumer Products Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security.

     Q. One Original. There is only one original executed Consumer Products
Contract (other than an original in the possession of the relevant obligor),
which, if the Security Perfection Date has occurred, has been delivered to the
Collateral Agent and has been stamped to reflect the assignment of such Consumer
Products Contract to the Collateral Agent.

     R. Notation of Security Interest. With respect to each Consumer Products
Contract, if the related Consumer Product is located in a state in which
notation of a security interest on the title document is required or permitted
to perfect such security interest, the title document shows, or if a new or
replacement title document with respect to such Consumer Product is being
applied for such title document will be issued within 180 days and will show,
the Grantor as the holder of a first priority security interest in such Consumer
Product; if the related Consumer Product is located in a state in which the
filing of a financing statement under the UCC is required to perfect a security
interest in goods of the type including the Consumer Product, such filings or
recordings have been duly made and show the Grantor as secured party; and if the
related Consumer Product is an aircraft subject to registration with the Federal
Aviation Administration's Aircraft Registry, and the recordation of a Mortgage,
security agreement or similar conveyance with such Registry is required to
perfect the lien created thereby, such recordation has been duly made and shows
the Grantor as secured party or mortgagee. In any case, if the Security
Perfection Date has occurred, the Collateral Agent has the same rights as the
secured party of record would have against all Persons (including the Grantor
and any trustee in bankruptcy of the Grantor) claiming an interest in such
Consumer Product.

     S. No Government Consumer Products Contracts. No obligor is the United
States government or an agency, authority, instrumentality or other political
subdivision of the United States government.

     T. Holding Period. The Consumer Products Contract was not originated more
than 180 days previously.

     U. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.

                                      C-3
<PAGE>
 
                                                                          PART D
                                                                          ------


        Eligibility Criteria with respect to Home Improvement Contracts
        ---------------------------------------------------------------

     B. Payments. The scheduled payment of principal and interest due under the
Home Improvement Contract with respect to the prior due date was made on or
before such Due Date by or on behalf of the obligor (without any advance from
the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days after such Due Date.

     C. No Waivers. The terms of the Home Improvement Contract have not been
waived, altered or modified in any respect, except by instruments or documents
which are among Required Documents or Additional Required Documents. All costs,
fees and expenses incurred in making, closing and perfecting the lien and/or
security interest, as applicable, of the Home Improvement Contract have been
paid.

     D. Binding Obligation. The Home Improvement Contract is the legal, valid
and binding obligation of the obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally. In the case of Secured
Home Improvement Contract other than Home Improvement Contract, if the Security
Perfection Date has occurred, the Grantor has delivered, or caused to be
delivered, to the Collateral Agent the original Mortgage, with evidence of
recording thereon, or if the original Mortgage has not yet been returned from
the recording office, a true copy of the Mortgage which has been delivered for
recording in the appropriate recording office of the jurisdiction in which the
Real Property is located.

     E. No Defenses. The Home Improvement Contract is not subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Improvement Contract or the
exercise of any right thereunder will not render the Home Improvement Contract
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.

     F. Insurance. At origination of the relevant Secured Home Improvement
Contract, all improvements on the related real property are covered by a hazard
insurance policy. To the knowledge of the Grantor, such insurance has not been
canceled.

     G. Title I Loans. Each Title I Loan was originated in compliance with FHA
regulations and is insured, without set-off, surcharge or defense, by FHA
insurance. The Grantor has, in conformity with the regulations of the FHA, filed
all reports necessary for the Title I Loan to be registered for FHA insurance.
Following assignment of the Title I Loan to Collateral Agent, on behalf of the
Secured Parties, Collateral Agent will be entitled to the full benefits of the
FHA insurance.
<PAGE>
 
     H. Origination. The Home Improvement Contract was originated by a home
improvement contractor or the Grantor or a Subsidiary in the regular course of
its business and, if originated by a home improvement contractor, was purchased
by the Grantor or a Subsidiary in the regular course of its business.

     I. Lawful Assignment. The Home Improvement Contract was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Home Improvement Contract to Collateral Agent or the security
interest in the Home Improvement Contract by the Grantor thereof unlawful or
make the Home Improvement Contract unenforceable.

     J. Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws and the regulations of the FHA, applicable to the Home
Improvement Contract have been complied with and such compliance is not affected
by the holding of the Home Improvement Contract by Collateral Agent or the
Collateral Agent's security interest in the Home Improvement Contract, and the
Grantor maintains in its possession, available for Collateral Agent's
inspection, and shall deliver to Collateral Agent upon demand, evidence of
compliance with all such requirements.

     K. Home Improvement Contract in Force. The Home Improvement Contract has
not been satisfied or subordinated (except for such subordination as may be
allowed under FHA regulations) in whole or in part or rescinded, and, in the
case of a Secured Home Improvement Contract, the real property securing the Home
Improvement Contract, as applicable, has not been released from the lien of the
Home Improvement Contract in whole or in part.

     L. Valid Lien. The Home Improvement Contract has been duly executed and
delivered by the obligor and either the related Mortgage is a valid and
subsisting first, second or third lien on the property therein described or the
Home Improvement Contract is an unsecured borrowing of the obligor; if the
Security Perfection Date has occurred, any related Mortgage has been assigned by
the Grantor to Collateral Agent, and Collateral Agent has and will have a valid
and subsisting lien on the property therein described. The Grantor has full
right to grant a security interest in the Home Improvement Contract in favor of
Collateral Agent.

     M. Capacity of Parties. All parties to the Home Improvement Contract had
capacity to execute the Home Improvement Contract.

     N. Good Title. The Grantor is the sole owner of the Home Improvement
Contract and has the authority to sell, transfer and assign the Home Improvement
Contract. The Grantor has not sold, assigned or pledged the Home Improvement
Contract to any Person other than the Collateral Agent.

     O. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Home Improvement Contract and no event which,
with notice and  

                                      D-2
<PAGE>
 
the expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Home Improvement
Contract. The Grantor has not waived any such default, breach, violation or
event permitting acceleration.

     P. No Liens. In the case of Secured Home Improvement Contracts, there are,
to the best of the Grantor's knowledge, no liens or claims which have been filed
for work, labor or materials affecting the real property securing the Home
Improvement Contract which are or may be liens prior to, or equal or coordinate
with, the lien of the Home Improvement Contract.

     Q. Installment Payments. The Home Improvement Contract has a fixed rate or
a variable rate and provides for monthly principal payments which fully amortize
the loan over its term.

     R. Enforceability. The Home Improvement Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security provided thereby.

     S. One Original. There is only one original executed Home Improvement
Contract and note, and, if the Security Perfection Date has occurred, each of
which has been delivered to the Collateral Agent.

     T. Primary Resident. At the time of origination of the Home Improvement
Contract, the obligor was the primary resident of the related real property.

     U. Proceedings. There is no proceeding pending or, to the Grantor's 
knowledge, threatened for the total or partial condemnation of collateral 
securing a Home Improvement Contact.

     V. Marking Records. If the Security Perfection Date has occurred, the
Grantor has caused the portions of the Electronic Ledger relating to the
Mortgage Loans to be clearly and unambiguously marked to indicate that the
Collateral Agent holds in security interest such Home Improvement Contract in
accordance with the terms of the Security Agreement.

     W. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Home Improvement Contract.

     Holding Period. The Home Improvement Contract was not originated more than
180 days previously.

     X. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.


                                      D-3
<PAGE>
 
                                                                          PART E
                                                                          ------

          Eligibility Criteria with respect to Floor Plan Receivables
          -----------------------------------------------------------

     A. "Eligible Account". The Floor Plan Receivable has arisen under an
"Eligible Account". An "Eligible Account" with respect to Floor Plan Receivables
is an arrangement to provide an extension of credit by the Grantor or a
Subsidiary to a borrower (i) in order to finance the purchase by the borrower of
consumer or commercial product inventory or (ii) as a line of credit secured by
unencumbered assets of such borrower, made in the regular course of the
Grantor's or its Subsidiary's business and, if originated by a another, was
purchased by the Grantor or a Subsidiary in the regular course of its business.

     B. Payments. The scheduled payment of principal and interest for the most
recent due date was made by or on behalf of the borrower (without any advance
from the Grantor or any Person acting at the request of the Grantor) or was not
delinquent for more than 30 days.

     C. Binding Obligation. The Floor Plan Receivable is the legal, valid and
binding obligation of the borrower thereunder and is enforceable in accordance
with its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally.

     D. No Defenses. The Floor Plan Receivable is not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Floor Plan Receivable or the
exercise of any right thereunder will not render the Floor Plan Receivable
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.

     E. Lawful Assignment. The Floor Plan Receivable was not originated in and
is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Floor Plan Receivable to the Grantor or the security interest in
the Floor Plan Receivable in favor of the Collateral Agent unlawful or
unenforceable.

     F. Valid Security Interest. The Floor Plan Receivable is secured by a first
perfected security interest in the applicable commercial or consumer goods.

     G. Compliance with Law. The Floor Plan Receivable was created in compliance
with all federal, state or local law applicable thereto.

     H. Capacity of Parties. The borrower had the capacity to enter into the
Floor Plan Agreement.

     I. Good Title. The Grantor is the sole owner of the Floor Plan Receivable
and has the 
<PAGE>
 
authority to sell, transfer and assign the Floor Plan Receivable. The Grantor
has not sold, assigned or pledged the Floor Plan Receivable to any Person other
than the Collateral Agent.

     J. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Floor Plan Receivable and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Floor
Plan Receivable. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.

     K. Manufacturer Agreement. The related agreement between the Grantor or
subsidiaries and the manufacturer of the consumer or commercial products
financed by the Grantor or a Subsidiary under the Floor Plan Agreement with the
borrower provides, subject to the terms and limitations thereof, that the
manufacturer is obligated to repurchase the products securing the Floor Plan
Receivable upon repossession thereof by the Grantor or a Subsidiary upon the
related borrower's default.

     L. No Liens. There are, to the best of the Grantor's knowledge, no liens or
claims affecting the assets securing the Floor Plan Receivable other than the
lien, if any, in favor of the Collateral Agent.

     M. No Waivers. The terms of the Floor Plan Receivable have not been waived,
altered or modified in any respect, except by instruments or documents which are
among the Required Documents or the Additional Required Documents.

     N. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Floor Plan Receivable.

     O. Holding Period. The Floor Plan Receivable was not originated more than
180 days previously, unless the Floor Plan Agreement provides for revolving
credit.

     P. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.

                                      E-3
<PAGE>
 
                                                                          PART F
                                                                          ------

          Eligibility Criteria with respect to Asset Based Receivables
          ------------------------------------------------------------

     A.   Asset Based Receivables.  The Asset Based Receivables are receivables
or amounts payable arising from extensions of credit by the Grantor or a
Subsidiary to finance a borrower's or dealer's production or inventory (which
may include goods held for sale, interests in real estate or chattel paper) or
to provide working capital, and are secured by finished goods inventory,
accounts receivable, certain work-in-process, raw materials, component parts, or
interests in real property or other assets of the borrower or dealer, in all
cases, made, or if originated by another, purchased (whether in whole or in
part, including via participation) by the Grantor or a Subsidiary in the regular
course of its business.

     B.   Payments.  The scheduled payment of principal and interest for the
most recent due date was made by or on behalf of the borrower (without any
advance from the Grantor or any Person acting at the request of the Grantor) or
was not delinquent for more than 30 days.

     C.   Binding Obligation.   The Asset Based Receivable is the legal, valid
and binding obligation of the borrower thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by laws
affecting the enforcement of creditors' rights generally.

     D.   No Defenses.  The Asset Based Receivable is not subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Asset Based Receivable or the
exercise of any right thereunder will not render the Asset Based Receivable
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.

     E.   Lawful Assignment.  The Asset Based Receivable was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Asset Based Receivable to Collateral Agent or the security
interest in the Asset Based Receivable by the Grantor thereof unlawful or
unenforceable.

     F.   Valid Security Interest or Mortgage.  The Asset Based Receivable is
secured by a first perfected security interest or Mortgage in the assets
financed by the Grantor or a Subsidiary and the perfection of such security
interest is governed by the laws of one or more of the states of the United
States.

     G.   Compliance with Law.  The Asset Based Receivable and the underlying
financing agreement were created in compliance with all federal, state or local
law applicable thereto.

     H.   Capacity of Parties.  The borrower had the capacity to enter into the
Asset Based Agreement.
<PAGE>
 
     I. Good Title. The Grantor is the sole owner of the Asset Based Receivable
and has the authority to sell, transfer and assign the Asset Based Receivable.
The Grantor has not sold, assigned or pledged the Asset Based Receivable to any
Person other than the Collateral Agent.

     J. No Defaults. There was no default, breach, violation or event permitting
acceleration existing under the Asset Based Receivable and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Asset
Based Receivable. The Grantor has not waived any such default, breach, violation
or event permitting acceleration.

     K. No Liens. There are, to the best of the Grantor's knowledge, no liens
or claims affecting the assets securing the Asset Based Receivable other than
the lien, if any, in favor of the Collateral Agent.

     L. No Waivers. The terms of the Asset Based Receivable have not been
waived, altered or modified in any respect, except by instruments or documents
which are among the Required Documents or the Additional Required Documents.

     M. No Adverse Selection. Except for the effect of the representations and
warranties made hereunder, no adverse selection procedures have been employed in
selecting the Asset Based Receivable.

     N. Holding Period. The Asset Based Receivable was not originated more than
180 days previously, unless the Asset Based Agreement provides for revolving
credit.

     O. Other Criteria. Such other eligibility criteria as the Administrative
Agent shall reasonably require and notify to the Grantor.

                                      F-3
<PAGE>
 
                                                                          PART G
                                                                          ------

        Eligibility Criteria with respect to Other Eligible Receivables
        ---------------------------------------------------------------

Other similar eligibility criteria for Other Receivables to be determined in the
reasonable discretion of the Collateral Agent and within customary terms for
secured financings of such Collateral, including, without limitation, the
criteria of not delinquent for more than 30 days, all as agreed between the
Administrative Agent, the Collateral Agent and the Grantor within 30 days after
the [First][Second] Amendment Effective Date; provided that no such Collateral
shall be included in the Borrowing Base until the Administrative Agent, the
Collateral Agent and the Grantor have so agreed in writing whereupon such
revised eligibility criteria shall be deemed incorporated herein.
<PAGE>
 
                              SECURITY AGREEMENT
                              ------------------


     This Agreement is made as of February ___, 1998 by and between Green Tree
Financial Corporation, a Delaware corporation (the "Grantor"), and THE FIRST
NATIONAL BANK OF CHICAGO, as Collateral Agent (as hereinafter defined) for the
Lenders (as hereinafter defined).

                                R E C I T A L S:
                                --------------- 

     A.   Pursuant to the Long Term Credit Agreement and the Short Term Credit
Agreement (each, as hereinafter defined), the Lenders have agreed to make
certain loans to the Grantor; and

     B.   Pursuant to the Second Amendment to the Long Term Credit Agreement and
the First Amendment to the Short Term Credit Agreement (collectively, the
"Amendments"), and as a condition to entering into the Amendments, the
Administrative Agent, the Collateral Agent and the Lenders have requested that
the Grantor grant to the Collateral Agent, on behalf of the Secured Parties (as
hereinafter defined), a security interest in the Collateral (as hereinafter
defined) upon the terms and conditions as set forth herein;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


1.   DEFINITIONS.
     ----------- 

     Terms defined in the UCC (as hereinafter defined) are used herein as
therein defined.  As used in this Agreement, capitalized terms defined in the
Credit Agreements and not otherwise defined herein have the meanings given in
the Credit Agreements, and the following terms have the meanings specified below
(such meanings being equally applicable to both the singular and plural forms of
the terms defined):

     "Additional Required Documents" has the meaning set forth in Section 4.1 of
this Agreement.

     "Administrative Agent" means The First National Bank of Chicago, a national
banking association, as administrative agent for the Lenders pursuant to Section
10.1 of the Credit Agreements, and the successors and assigns thereof as
administrative agent for the Lenders.

     "Agreement" means this Security Agreement, as it may be amended, modified
or 
<PAGE>
 
supplemented from time to time.

     "Collateral" has the meaning set forth in Section 3.1 hereof.

     "Collateral Agent" means The First National Bank of Chicago, a national
banking association, as collateral agent for the Secured Parties pursuant to the
terms hereof, and the successors and assigns thereof as such collateral agent.

     "Collateral Security" means:

               With respect to any Contract, (i) the security interests, if any,
     granted by or on behalf of the related obligor with respect thereto,
     including a first priority perfected security interest in the related
     Manufactured Home if an MH Contract, a first priority perfected security
     interest in the related Product if a Consumer Product Contract, a first
     priority security interest in the related Floor Plan Products or assets, if
     a Floor Plan Receivable, and a Mortgage if a Home Equity Contract, Secured
     Home Improvement Contract, or Land-and-Home Contract, (ii) all other
     security interests or liens and property subject thereto from time to time
     purporting to secure payment of such Contract, whether pursuant to the
     agreement giving rise to such Contract or otherwise, together with all
     financing statements signed by the obligor describing any collateral
     securing such Contract, (iii) all guarantees, insurance and other
     agreements or arrangements of whatever character from time to time
     supporting or securing payment of such Contract whether pursuant to the
     agreement giving rise to such Contract or otherwise, and (iv) all records
     in respect of such Contract and all documents comprising the Required
     Documents or the Additional Required Documents, (v) all rights under any
     FHA/VA Regulations in respect of each FHA/VA Contract, (vi) all rights
     under any hazard, flood or other individual insurance policy for the
     benefit of the creditor of the Contract on any real estate, Manufactured
     Home Consumer Product or other tangible property securing the Contract,
     (vii) all rights the Grantor may have against the originating contractor or
     lender if originated by a contractor or lender other than the Grantor,
     (viii) all rights under any title insurance policy, if applicable, on any
     property securing the Contract.

     "Contracts" means Consumer Product Contracts, Home Equity Contracts, Home
Improvement Loans, MH Contracts, Asset-Based Receivables, Floor Plan Receivables
and Other Eligible Receivables.

     "Credit Agreements" means the Long Term Credit Agreement and the Short Term
Credit Agreement and ,after the expiration of the Short Term Credit Agreement,
the Long Term Credit Agreement.

     "Default" means any one or more of the events described in Section 12
hereof.

     "Grantor" means Green Tree Financial Corporation, a Delaware corporation,
and its 
<PAGE>
 
successors.

     "Indemnitee" means any Person entitled to be indemnified by the Grantor
pursuant to Section 15 hereof.

     "Lenders" means, collectively, the "Lenders" as defined under each of the
Credit Agreements and their respective successors and assigns.

     "Long Term Credit Agreement" means  that certain Credit Agreement (3-year)
dated as of April 29, 1997 among the Grantor, the Administrative Agent and the
lenders party thereto, as heretofore or hereafter amended, renewed, modified or
supplemented from time to time.

     "Proceeds" shall mean "proceeds," as such term is defined in Section 9-
306(l) of the UCC, and, in any event, includes, without limitation, (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to the
Grantor from time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to the Grantor from
time to time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), and (c)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.

     "Required Documents" is defined in Section 4.1.

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

     "Secured Obligations" shall mean, collectively, the unpaid principal of and
interest on the Loans and any Notes and all other obligations and liabilities of
the Grantor and to the Secured Parties (including, without limitation, all
"Obligations" (as defined in the Credit Agreements) and all interest accruing at
the then applicable rate provided in the Credit Agreements after the maturity of
the Loans and interest accruing at the then applicable rate provided in the
Credit Agreements after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Grantor, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreements, the Loans, any
Notes, this Agreement, the other Loan Documents or any other document made,
delivered or given in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to any of the Secured Parties that are required to be paid by the
Grantor pursuant to the terms of the Credit Agreements, this Agreement or any
other Loan Document).


                                      -3-
<PAGE>
 
     "Secured Parties" shall mean, collectively, the Lenders, the Collateral
Agent and the Administrative Agent.

     "Short Term Credit Agreement" means that certain Credit Agreement (364-day)
dated as of April 29 1997 among the Grantor, the Administrative Agent and the
lenders party thereto, as heretofore or hereafter amended, renewed, modified or
supplemented from time to time.

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


2.   APPOINTMENT OF COLLATERAL AGENT.
     ------------------------------- 

     Pursuant to the Credit Agreement, the Collateral Agent has been appointed
to act as secured party, agent, bailee and custodian for the exclusive benefit
of the Secured Parties with respect to the Collateral.  The Collateral Agent
hereby acknowledges that it has accepted such appointment and agrees to maintain
and hold all Collateral at any time delivered to it as secured party, agent,
bailee and custodian for the exclusive benefit of the Secured Parties.  The
Collateral Agent acknowledges and agrees that it is acting and will act with
respect to the Collateral for the exclusive benefit of the Secured Parties and
is not, and shall not any time in the future be, subject, with respect to the
Collateral, in any manner or to any extent, to the direction or control of the
Grantor, except as expressly permitted hereunder and under the other Loan
Documents.  The Collateral Agent agrees to act in accordance with this Agreement
and in accordance with any written instructions from the Administrative Agent
delivered pursuant to either Credit Agreement.  Under no circumstances shall the
Collateral Agent deliver possession of Collateral to the Grantor or any other
Person (other than the Administrative Agent) or otherwise release any Collateral
from the Lien created hereby, except in accordance with the express terms of
this Agreement or otherwise upon the written instructions of the Administrative
Agent.


3.   GRANT OF SECURITY INTEREST
     --------------------------

     3.1  GRANT OF SECURITY INTEREST.  Effective upon the occurrence of a
Security Event, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Grantor hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in all right, title and interest of the Grantor in the following
Property now owned or at any time hereafter acquired by the Grantor or in which
the Grantor now has or at any time in the future may acquire any right, title or
interest (collectively, the "Collateral"):

               (a)  all Contracts identified by Grantor pursuant to a Borrowing
          Base Addition Report for inclusion in the Borrowing Base including,
          without 


                                      -4-
<PAGE>
 
          limitation, all Collateral Security with respect thereto;

               (b) to the extent relating to the foregoing, all files,
          documents, agreements, instruments, deeds, chattel paper, inventory,
          insurance policies, personal property, contract rights, accounts,
          general intangibles, records, surveys, certificates, correspondence,
          appraisals, computer records, tapes, discs, cards accounting records
          and other books, records, information and data of the Grantor
          (including all such items necessary or helpful in the administration
          or servicing of the Collateral) of whatever kind or nature whatsoever
          relating to the foregoing or the servicing of the foregoing or any
          other Collateral, and all other documents or instruments delivered to
          the Collateral Agent in respect of the Collateral, including, without
          limitation, the right to receive all insurance proceeds and
          condemnation awards which may be payable in respect of any of the
          Property; and

               (c) to the extent not otherwise included, all Proceeds of each of
          the foregoing and all accessions to, substitutions and replacements
          for, and rents, profits and products of, each of the foregoing.


4.   DELIVERY OF ELIGIBLE COLLATERAL FOR INCLUSION IN BORROWING BASE; RELEASE OF
     COLLATERAL; COLLATERAL AGENT VERIFICATION
     -----------------------------------------

     4.1  DELIVERY OF ELIGIBLE COLLATERAL.  From time to time, the Grantor shall
deliver or cause to be delivered to the Collateral Agent or its bailee
Collateral to be included in the Borrowing Base as permitted or required
pursuant to the Credit Agreements, by delivering to the Collateral Agent (with a
copy to the Administrative Agent) a Borrowing Base Addition Report in the form
of Exhibit 4(a) hereto, with all blanks completed in conformity therewith,
together with any financial statement reasonably requested by the Collateral
Agent.  From and after the date of a Security Event, each Borrowing Base
Addition Report shall be accompanies by those documents, instruments and
agreements described on Exhibit 4(b) hereto with respect to each type of
Eligible Contract described in the Borrowing Base Addition Report (the "Required
Documents") and a financing statement meeting the requirements of the UCC or
other documents necessary to perfect the interest of the Collateral Agent in the
Eligible Contract described in the Borrowing Base.  Additionally, if required by
the Collateral Agent or the Administrative Agent, the Grantor shall use diligent
efforts to promptly deliver to the Collateral Agent the items described on
Exhibit 4(c) hereto (the "Additional Required Documents").  Whenever the Grantor
shall deliver a Borrowing Base Addition Report, the Grantor shall be deemed to
have represented and warranted that (i) if the date is on or after the date of a
Security Event, it has delivered to the Collateral Agent the Required Documents
(or in the case of Wet Loans, it will deliver such Required Documents with 10
business days of origination (or acquisition from an unaffiliated Person) of the
related Contract, (ii) if the date is on or after the date of a Security Event,
it has delivered, holds in its possession or is using diligent efforts to obtain
possession of the 

                                      -5-
<PAGE>
 
Additional Required Documents and to deliver the Additional Required Documents
to the Collateral Agent, (iii) that each item of Collateral or Contract
constitutes an Eligible Contract as set forth in the Credit Agreement or if such
Contract does not constitute an Eligible Contract, that the Borrowing Base
(calculated as if the Collateral Value for such ineligible Contract is zero) is
not less than the outstanding amount of Loans and other Secured Obligations then
due and payable and (iv) that each of the representations and warranties set
forth in Section 6 hereof are true and correct as of such date. The Grantor
shall hold the Additional Required Documents in its possession in trust for the
benefit of the Secured Parties until delivery thereof to the Collateral Agent as
provided herein.

     4.2  COLLATERAL AGENT OFFICE.  The Collateral Agent shall hold all
documentation relating to or constituting Collateral delivered to it from time
to time under this Agreement or any other Loan Document in accordance with the
provisions hereof and of the other Loan Documents in a fire resistant vault,
drawer or other suitable depository in an office maintained by the Collateral
Agent on premises owned or leased or subleased by it and occupied and controlled
solely by the Collateral Agent (the "Collateral Agent Office"), which
documentation shall (x) be conspicuously marked to show the Collateral Agent's
and the other Secured Parties' interests therein and (y) not be commingled with
any other assets or property of, or held by, the Collateral Agent.  The
Collateral Agent Office may, in the discretion of the Collateral Agent, be
located on premises leased or subleased to the Collateral Agent by the Grantor
or an Affiliate of the Grantor, and may be adjacent to or in the same office
building as offices maintained and occupied by the Grantor or its Affiliates;
provided, however, that (i) any such lease or sublease shall be in a form
customary in the location of such premises for arms'-length leases or subleases
of office premises between unrelated parties, and subject to clause (vi), shall
provide that the Collateral Agent shall enjoy exclusive occupancy of such
premises with no right of access being granted to or retained by the Grantor or
its other Affiliates pursuant to such lease or sublease (other than any such
right which is customary for unaffiliated, third-party landlords to be granted
in order to respond to emergencies, or in order to conduct inspection of the
premises upon reasonable notice to the Collateral Agent and in the presence of
the Collateral Agent), (ii) there shall be no doorway or other physical access
to the Collateral Agent Office directly from premises occupied exclusively by
the Grantor or any of its other Affiliates, (iii) the public entrance to the
Collateral Agent Office shall be accessible from the street, a public lobby or
other public space, and entrance by the public into the Collateral Agent Office
shall not require access to space occupied exclusively by the Grantor or any of
its other Affiliates, (iv) the public entrance to the Collateral Agent Office
shall be conspicuously marked with the name of the Collateral Agent to identify
such premises as being premises of the Collateral Agent, and there shall be no
reference in such markings to the Grantor or any of its other Affiliates, (v)
the Collateral Agent Office shall be staffed solely by employees, officers or
agents of the Collateral Agent and not of the Grantor or any of its other
Affiliates, which employees, officers and agents will be under the sole
supervision and direction of the Collateral Agent, and (vi) the Grantor shall
have access to the Collateral Agent Office, under the supervision of the
Collateral Agent, during normal business hours, which access shall be not
greater than that afforded to similar Persons in an arm's-length custodial
transaction.

                                      -6-
<PAGE>
 
     4.3  RELEASE OF COLLATERAL.  In the event that no Default or Unmatured
Default has occurred and is continuing and in the further event that the
outstanding principal amount of Loans and other then due and owing Secured
Obligations is less than the Borrowing Base (and will continue to be less than
the Borrowing Base immediately after giving effect to any request under this
Section 4.3), the Grantor may request, by delivery to the Administrative Agent
and the Collateral Agent of a Borrowing Base Deletion Request in the form of
Exhibit 4.3 hereto, with all blanks completed in conformity therewith, that
certain specifically identified Contracts or Collateral be removed from the
Borrowing Base, and after the occurrence of a Security Event, released from the
Lien granted pursuant hereto.  Delivery of a Borrowing Base Deletion Request
shall be deemed a representation and warranty by the Grantor that the above
conditions are satisfied and that no Default or Unmatured Default will exist
after giving effect to the request.  Upon receipt of a Borrowing Base Deletion
Request prior to the occurrence of a Security Event and upon confirmation by the
Administration Agent that the above conditions are satisfied (or will be
contemporaneously therewith), the Contracts identified in such Borrowing Base
Deletion Request shall be deemed deleted from the Borrowing Base.  Upon receipt
of a Borrowing Base Deletion Request after the occurrence of a Security Event
and upon confirmation by the Administrative Agent that the above conditions are
satisfied (or will be contemporaneously with the release), the Collateral Agent
shall release all or a portion of the Collateral identified in the Borrowing
Base Deletion Request from the Lien in favor of the Collateral Agent for the
benefit of the Secured Parties hereunder and, as evidence of such release of
Lien, shall execute and deliver to the Grantor (i) a confirmation of such
release, (ii) such UCC termination statements as are necessary to terminate all
existing UCC-1 financing statements covering the released Collateral filed by
the Collateral Agent on behalf of the Secured Parties and (iii) where relevant,
shall deliver to Grantor all original and other documents pertaining solely to
the Collateral requested to be released.

     4.4  MASTER BORROWING BASE LIST.  The Grantor will maintain a master list
(which may be in electronic form) (the "Master Collateral Report") of Collateral
or Contracts which at any time constitute a part of the Borrowing Base and
within 2 Business Days after delivery of a Borrowing Base Addition Report or a
Borrowing Base Deletion report shall deliver a revised copy of the Master
Collateral Report to the Collateral Agent.  The Company will cause the portions
of its electronic records relating to the Collateral to be clearly and
unambiguously marked to indicate that such Contracts or Collateral constitutes
part of the Borrowing Base and after the occurrence of a Security Event, is
pledged to the Collateral Agent, as security for the Secured Obligations.

     4.5  If the Collateral Agent is First Bank National Association or an
affiliate, the Collateral Agent will, after the occurrence of a Security Event
and upon the written request and direction of the Grantor, confirm, to the
extent the Collateral Agent's electronic records allow it to so, whether:

          (A) Any Contract constituting Collateral is pledged by the Grantor to
     any other 

                                      -7-
<PAGE>
 
     party for whom the Collateral Agent maintains records; or

          (B) Any Contract pledged or to be pledged or sold by the Grantor to
     any other party (for whom the Collateral Agent maintains records),
     constitutes Collateral.

     4.6  COLLATERAL AGENT'S REVIEW OF COLLATERAL

          (a) Review of Collateral.  Upon receipt of Required Documents
     specified in Exhibit 4(b) hereto for any Collateral, the Collateral Agent
     shall promptly review the same and verify that:

               (i) all Required Documents appear regular on their face and
          remain in the Collateral Agent's possession;

               (ii) all documents submitted are consistent with the information
          provided in the schedules attached to the Borrowing Base Addition
          Report as to the obligor's name, face amount and loan or account
          number;

               (iii)  any note or Mortgage each bears an original signature or
          signatures which appear to be those of the person or persons named as
          the maker or mortgagor or trustor, or in the case of a copy of a
          Mortgage, such copy bears what appears to be a reproduction of such
          signature or signatures; and

               (iv) such other matters as may be reasonably requested by
          Administrative Agent in writing and agreed to by Collateral Agent.

     Such verification of Collateral delivered during any period covered by a
status report referred to in Section 4.6 (c) hereof shall be set forth in such
report.  If the Collateral Agent (x) notes any exception in the review described
in subsections (i) through (vi) above, (y) determines that any item of
Collateral does not satisfy the requirements of the Required Documents for
inclusion in Eligible Contracts or (z) questions, in its reasonable discretion,
the genuineness, regularity, propriety, or accuracy of any item of Collateral,
the Collateral Agent shall note the same as not constituting an Eligible
Contract and promptly advise Grantor thereof.  Until such exception is cured,
such Contract shall not constitute an Eligible Contract.  Notwithstanding the
foregoing as to any financing statements or other documentation which is not
specifically described such that Collateral Agent can, without reference to any
other information, determine if such Required Document has been delivered,
Collateral Agent shall be entitled to rely on the representation of Grantor that
such Required Document has been delivered.

          (b) Borrowing Base Determination; Determination Assumptions.  On any
Business Day after the occurrence of a Security Event, the Collateral Agent
shall at the request of the Administrative Agent use its best effort to compute
the value of the Borrowing Base and notify the Administrative Agent of any such
determination.  In the event either the Collateral 

                                      -8-
<PAGE>
 
Agent determines that a discrepancy exists with the Borrowing Base as most
recently determined by the Grantor or is unable to determine such Borrowing
Base, the Grantor shall cooperate with the Collateral Agent to reconcile such
discrepancy or determine such Borrowing Base promptly but in any event not later
than the following Business Day and prior to any delivery of a Borrowing Base
Certificate to the Administrative Agent. In making any Borrowing Base
Determination or other calculation involving a determination of the value of the
Borrowing Base, the Collateral Agent shall be permitted to rely, without
independent investigation of the correctness thereof, on the information
supplied by the Grantor to the Collateral Agent on the related Borrowing Base
Certificate.

          (c) Reports.  After the occurrence of a Security Event, the Collateral
Agent shall deliver to:  (i) the Administrative Agent and the Grantor, (A)
within three Business Days after the end of the each month, a basic status
report in form and substance reasonably acceptable to the Administrative Agent
and the Collateral Agent with respect to the status of the Borrowing Base
("Basic Status Report") as of the end of the preceding month and (B) within one
Business Day after the end of each week, a report in form and substance
acceptable to the Administrative Agent with respect to exceptions noted by the
Collateral Agent in accordance with Section 4.5(a) above outstanding as of the
end of the preceding week (an "Outstanding Exceptions Report"), and (ii) to the
Administrative Agent and the Lenders, from time to time, such other reports and
information as the Administrative Agent or the Majority Lenders may from time to
time reasonably request.  In preparing such reports, the Collateral Agent shall
be entitled to rely, without independent investigation (other than the review
steps described in Section 4.5 (a) above), on information supplied to the
Collateral Agent by the Grantor.


5.   RIGHTS OF COLLATERAL AGENT AND SECURED PARTIES; LIMITATIONS ON COLLATERAL
     AGENT'S AND SECURED PARTIES' OBLIGATIONS.
     -----------------------------------------

     5.1.  GRANTOR REMAINS LIABLE.  It is expressly agreed by the Grantor that
anything herein or therein to the contrary notwithstanding, the Grantor shall
remain liable under the Collateral and all agreements relating to the Collateral
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of the Collateral
and in accordance with the terms of any agreements giving rise thereto.  Neither
the Collateral Agent nor any Secured Party shall have any obligation or
liability under any instrument, agreement, contract or other document by reason
of or arising out of this Agreement or the receipt by the Collateral Agent or
any such Secured Party pursuant hereto or thereto of any payment relating to any
Collateral, nor shall the Collateral Agent or any other Secured Party be
obligated in any manner to perform any of the obligations of the Grantor
thereunder, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Collateral or any agreement giving rise
thereto, to present or file any claim, to take any action to enforce any
performance or to collect the payment or any amount which may have been assigned
to it or to which it may be 


                                      -9-
<PAGE>
 
entitled at any time.

     5.2  COLLECTIONS ON COLLATERAL.  Subject to the provisions of Sections 14.1
and 14.2, the Collateral Agent hereby authorizes the Grantor to collect all sums
in respect of the Collateral, subject, so long as the Grantor has rights in the
Collateral, to the Collateral Agent's direction and control after the occurrence
of a Security Event, and the Collateral Agent may, so long as the Grantor has
rights in the Collateral, curtail or terminate said authority at any time after
the occurrence and during the continuance of a Security Event and a Default or
Unmatured Default of the type specified in Section 7.7 of the Credit Agreements.
All Proceeds constituting collections in respect of the Collateral while held by
the Collateral Agent (or by the Grantor in trust for the Collateral Agent and
the Lenders) shall continue to be collateral security for all of the Secured
Obligations.

     5.3  NOTICE TO CONTRACTING PARTIES.  Upon the request of the Collateral
Agent at any time after the occurrence and during the continuance of an event of
Default or Unmatured Default of the type specified in Section 7.7 of the Credit
Agreement, the Grantor shall promptly notify parties to any contract
constituting Collateral that such contract has been assigned to the Collateral
Agent. The Collateral Agent may from time to time during the continuance of a
Default communicate with parties to any such contract.


6.   REPRESENTATIONS AND WARRANTIES.
     ------------------------------ 

     The Grantor represents and warrants to the Collateral Agent, on behalf of
the Secured Parties, which representations and warranties shall survive the
execution and delivery of this Agreement and any investigation by or on behalf
of the Collateral Agent or any Secured Party, as follows:

     6.1  CORPORATE EXISTENCE AND STANDING.  The Grantor is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified and in good standing as a
foreign corporation and is duly authorized to conduct its business in each
jurisdiction in which its business is conducted or proposed to be conducted,
except where the failure to be so qualified may not reasonably be expected to
have a Material Adverse Effect.

     6.2  AUTHORIZATION AND VALIDITY.  The Grantor has the requisite power and
authority (corporate and otherwise) and legal right to execute and deliver this
Agreement and to perform its obligations hereunder.  The execution and delivery
by the Grantor of this Agreement and the performance of its obligations
hereunder have been duly authorized by proper corporate proceedings, and this
Agreement constitutes the legal, valid and binding obligation of the Grantor
enforceable against the Grantor in accordance with its terms and, after the
occurrence of a Security Event, creates a valid security interest which will
thereafter be enforceable against the Grantor in the Collateral, except as
enforceability may be limited by bankruptcy, insolvency or 

                                     -10-
<PAGE>
 
similar laws affecting the enforcement of creditors' rights generally.

     6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery by
the Grantor of this Agreement, the creation and perfection of a security
interest in the Collateral as contemplated hereby, nor compliance with the
provisions hereof, will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Grantor or the Grantor's
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Grantor is a party or is subject, or by
which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien (except to the
extent created by this Agreement) in, of or on the property of the Grantor
pursuant to the terms of any such indenture, instrument or agreement. No
authorization, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required either for the execution
and delivery by the Grantor of this Agreement or for the performance by the
Grantor of its obligations under this Agreement except for filings expressly
contemplated hereby.

     6.4  PRINCIPAL LOCATION.  The Grantor's mailing address, and location of
its chief executive office and the locations at which Grantor maintains books
and records relating to the Collateral, are set forth on Exhibit 6.4 hereto.

     6.5  TITLE; NO OTHER LIENS.  Except for the Lien granted after the
occurrence of a Security Event to the Collateral Agent hereunder, the Grantor
has good and marketable title, to each item of Collateral, free and clear of any
and all Liens or claims of others.  No security agreement, financing statement
or other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as may have been filed in
favor of the Collateral Agent, for the ratable benefit of the Secured Parties,
pursuant to this Agreement.

     6.6  PERFECTION OF LIENS.  On and after the Security Perfection Date, all
filings, registrations, recordings and actions necessary or appropriate to
create, preserve, protect and perfect the security interest granted by the
Grantor to the Collateral Agent, on behalf of the Secured Parties, hereby in
respect of the Collateral have been accomplished and the security interest
granted to the Collateral Agent, on behalf of the Secured Parties, pursuant to
this Agreement in and to the Collateral constitutes a perfected security
interest (except for Collateral consisting of Wet Loans which security interest
shall constitute a perfected security interest within 10 Business Days after the
origination (or purchase from an unaffiliated person) thereof), superior and
prior to the rights of all other Persons therein and subject to no other Liens
and is entitled to all the rights, priorities and benefits afforded by the UCC
or other relevant law as enacted in any relevant jurisdiction which relates to
perfected security interests.


7.   COVENANTS.
     --------- 

     From the date of this Agreement, and thereafter until this Agreement is
terminated pursuant to Section 16.12:


                                     -11-
<PAGE>
 
     7.1  FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL PAPER.  At
any time and from time to time after the occurrence of a Security Event, upon
the written request of the Collateral Agent, and at the sole expense of the
Grantor, the Grantor will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Collateral Agent
may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, using its best efforts to secure all consents and
approvals necessary or appropriate for the assignment to the Collateral Agent of
any Collateral held by the Grantor or in which the Grantor has any rights not
heretofore assigned the filing of any financing or continuation statements under
the UCC in effect in any jurisdiction with respect to the Liens created hereby,
and, at any time when a Default is continuing, the filing or recording of any
other assignments, instruments and documents under applicable real property law
relating to the Collateral, to the extent that the Collateral Agent has not
become satisfied, through receipt of appropriate legal opinions or otherwise,
that the filing or recording of such assignments, instruments or documents is
not required under applicable real property law.  The Grantor also hereby
authorizes the Collateral Agent to file any such financing or continuation
statement without the signature of the Grantor to the extent permitted by
applicable law.  A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement of filing in any jurisdiction.
After the occurrence of a Security Event, the Grantor will deliver to the
Collateral Agent (a) the originals of all instruments, documents and chattel
paper which are evidenced by certificates included in the Collateral endorsed in
blank, marked with such legends and assigned as the Collateral Agent shall
specify, and (b) hold in trust for the Collateral Agent, on behalf of the
Secured Parties, upon receipt and immediately thereafter deliver to the
Collateral Agent, on behalf of the Secured Parties, any instrument or document
evidencing or constituting Collateral.

     7.2  INSPECTION.  The Grantor will permit the Collateral Agent and the
Secured Parties, by their representatives and agents, to inspect the Collateral,
to examine and make copies of the records of the Grantor relating thereto, and
to discuss the Collateral and the records of the Grantor with respect thereto
with, and to be advised as to the same by, the Grantor's officers and employees
and, in the case of any item of Collateral, with any person or entity which is
or may be obligated thereon, all upon reasonable prior notice from the
Collateral Agent and at such reasonable times and intervals as the Collateral
Agent may determine, all at the Grantor's expense with the same rights to, and
limited to, expense reimbursement as provided in accordance with Section 9.7 of
the Credit Agreements or inspections permitted thereby.

     7.3  RECORDS AND REPORTS.  The Grantor will keep and maintain at its own
cost and expense satisfactory and complete records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral.
After the occurrence of a Security Event, the Grantor will mark its books and
records pertaining to the Collateral to evidence this Agreement and the Lien and
security interests granted hereby.  For the Collateral Agent's and the other
Secured Parties' further security, the Grantor agrees that after the occurrence
of a Security Event, the Collateral 

                                     -12-
<PAGE>
 
Agent and the other Secured Parties shall have a special property interest in
all of the Grantor's books and records pertaining to the Collateral and, upon
the occurrence and during the continuance of any Default or Unmatured Default,
the Grantor shall deliver and turn over any such books and records to the
Collateral Agent or to its representatives at any time on demand of the
Collateral Agent.

     7.4  COMPLIANCE WITH LAWS, ETC.  The Grantor will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any Governmental Authority, applicable to the Collateral or any part thereof or
to the operation of the Grantor's business; provided, however, that the Grantor
may contest any act, regulation, order, decree or direction in any reasonable
manner which shall not, in the sole opinion of the Collateral Agent, adversely
affect the Collateral Agent's rights hereunder or adversely affect the first
priority of its Lien on and security interest in the Collateral for the benefit
of the Secured Parties.

     7.5  PAYMENT OF OBLIGATIONS.  The Grantor will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom and all claims of
any kind (including, without limitation, claims for labor, materials and
supplies), except that no such charge need be paid if (i) such non-payment does
not involve any danger of the sale, forfeiture or loss of any of the Collateral
or any interest therein and is being contested in good faith by appropriate
proceedings, and (ii) such charge is adequately reserved against in accordance
with and to the extent required by Agreement Accounting Principles.

     7.6  COMPLIANCE WITH TERMS OF AGREEMENTS, ETC.  In all material respects,
the Grantor will comply with and perform with all obligations, covenants,
conditions and other agreements with respect to any of the Collateral and all
other agreements related thereto to which it is a party or by which it is bound.

     7.7  LIMITATION ON LIENS ON COLLATERAL.  The Grantor will not create,
permit or suffer to exist, and will defend the Collateral against and take such
other action as is necessary to remove, any Lien on the Collateral except the
Liens created under this Agreement and the other Loan Documents, and will defend
the right, title and interest of the Collateral Agent and the other Secured
Parties in and to any of the Grantor's rights in and under the Collateral and in
and to the Proceeds thereof against the claims and demands of all Persons
whomsoever.

     7.8  LIMITATIONS ON DISPOSITION.  At any time when the Borrowing Base is
less than or equal to the amount of Loans and other Secured Obligations then due
and payable, the Grantor will not sell, lease, transfer or otherwise dispose of
any of the Collateral, or contract to do so (unless the contract or the related
documentation provides that simultaneously with the consummation thereof any
Loans secured by the Collateral will be prepaid to the extent required by the
Credit Agreement).

     7.9  FURTHER IDENTIFICATION OF COLLATERAL.    After the occurrence of a
Security Event, 

                                     -13-
<PAGE>
 
the Grantor will, if so requested by the Collateral Agent, furnish to the
Collateral Agent as often as the Collateral Agent reasonably requests,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.

     7.10.  NOTICES.  The Grantor will advise the Collateral Agent promptly, in
reasonable detail, (i) of any Lien or claim made or assessed against any of the
Collateral, (ii) of any material change in the composition of the Collateral,
and (iii) of the occurrence of any other event which would have a material
adverse effect on the aggregate value of the Collateral or on the security
interests created hereunder.

     7.11.  CHANGE IN LOCATION OR NAME.  The Grantor will not (a) change its
principal place of business or chief executive offices to a location other than
a location specified on Exhibit 6.4 hereto, (b) change its name, or (c) change
its mailing address, unless the Grantor shall have given the Collateral Agent
not less than thirty (30) days' prior written notice thereof, and the Collateral
Agent shall have determined that after giving effect to any such change of name,
address or chief executive offices and the making of any additional filings,
registrations or recordings as the Collateral Agent shall determine necessary,
the Collateral Agent, for the benefit of the Lenders, shall have a valid and
continuing, first perfected security interest in the Collateral.

     7.12.  OTHER FINANCING STATEMENTS.  The Grantor will not sign or authorize
the signing on its behalf of any financing statement naming it as debtor
covering all or any portion of the Collateral, except financing statements
naming the Collateral Agent, on behalf of the Secured Parties, as secured party.

     7.13.  FURTHER ACTIONS.    After the occurrence of a Security Event, the
Grantor will, at its own expense, make, execute, endorse, acknowledge, file
and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, as the Collateral Agent may reasonably require.


8.   STANDARD OF CARE OF COLLATERAL AGENT; DUTIES;
     INDEMNIFICATION.
     --------------- 

     The Collateral Agent is a bailee for hire and shall hold the Collateral in
accordance with customary standards for those engaged as custodians of
commercial documents or other Collateral in similar capacities.  Nothing
contained herein or in the Credit Agreements shall be construed to make the
Collateral Agent a trustee or other fiduciary for the Administrative Agent or
any other Secured Party.  Notwithstanding anything to the contrary contained
herein:


                                     -14-
<PAGE>
 
     (a) The provisions of the Credit Agreements, this Agreement and the
schedules, exhibits and attachments hereto set forth the exclusive duties of the
Collateral Agent and no implied duties or obligations shall be read into this
Agreement against the Collateral Agent.  The Collateral Agent shall not be bound
in any way by any agreement or contract other than this Agreement and the
schedules, the exhibits and the attachments hereto and any other agreement to
which it is a party. The Collateral Agent shall not be required to ascertain or
inquire as to the performance or observance of any or the conditions or
agreements to be performed or observed by any other party, except as
specifically provided in this Agreement and the annexes, schedules, exhibits and
attachments hereto.  The Collateral Agent disclaims any responsibility for the
validity or accuracy of the recitals to this Agreement and any representations
and warranties contained herein, unless specifically identified as recitals,
representations or warranties of the Collateral Agent.

     (b) Throughout the term of this Agreement, except as expressly set forth
herein, the Collateral Agent shall have no responsibility for ascertaining the
value, collectability, insurability, enforceability, effectiveness or
suitability of any Collateral, the title of any party therein, the validity or
adequacy of the security afforded thereby or the validity of this Agreement
(except as to Collateral Agent's authority to enter into this Agreement and to
perform its obligations hereunder).

     (c) The Collateral Agent shall not be under any duty to examine or pass
upon the genuineness, validity, or legal sufficiency of any of the documents
constituting part of any Collateral file, including, without limitation, whether
any document purporting to be an assignment is in recordable form or whether any
loan or document is in compliance with Regulation Z or other applicable law, and
shall be entitled to assume that all documents constituting part of such files
are genuine and valid and that they are what they purport to be and that any
endorsements or assignments thereof are genuine and valid.  The Collateral Agent
may rely upon and shall be protected in acting in good faith upon any notice,
resolution, request, consent, order, certificate, report, statement or other
paper or document appearing on its face to be genuine and to have been signed or
presented by the proper party or parties or by a person or persons authorized to
act on behalf of the proper party or parties.  The Collateral Agent shall not be
liable for any action or omission to act as bailee, except for its own gross
negligence or willful misconduct.

     (d) No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if, in its judgment, it shall believe that repayment of such
funds or adequate indemnity against such risk or liability is not assured to it.

     (e) The Collateral Agent is not responsible for preparing or filing any
reports or returns relating to federal, state or local income taxes with respect
to this Agreement, other than for the Collateral Agent's compensation or for
reimbursement of expenses.


                                     -15-
<PAGE>
 
     (f) The Grantor agrees to reimburse, indemnify and hold harmless the
Collateral Agent and its directors, officers, employees, Affiliates and agents
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, reasonable attorneys' fees and disbursements and allocated costs of
internal counsel) or disbursements of any kind or nature that may be imposed on,
incurred by or asserted against the Collateral Agent and its directors,
officers, employees, Affiliates and agents arising from or connected with the
Collateral Agent's execution and performance of this Agreement, including, but
not limited, to, the claims of any third parties, including any assignee.  The
foregoing shall apply regardless of whether such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements are in any way or to any extent caused, in whole or in part, by
any negligent act or omission of any kind by the Collateral Agent; provided that
the Grantor shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments' suits, costs,
expenses or disbursements resulting from gross negligence or willful misconduct
on the part of the Collateral Agent.  This provision shall survive the
termination of this Agreement.

     (g) The Collateral Agent shall have the power to employ such agents as it
may deem necessary or appropriate in the performance of its duties and the
exercise of its powers under this Agreement.

9.   FEES AND EXPENSES OF COLLATERAL AGENT.
     ------------------------------------- 

     The Collateral Agent shall notify the Grantor of all reasonable fees,
expenses, and charges of the Collateral Agent arising out of the Collateral
Agent's entering into this Agreement and performing its duties and obligations
under this Agreement (including in connection with the enforcement of remedies
hereunder and realization upon the Collateral), and (except as set forth in
Section 8(g) hereof) such fees, expenses and charges shall be paid promptly by
the Grantor or, if already paid by the Collateral Agent, the Grantor shall
reimburse the Collateral Agent promptly therefor.  The Collateral Agent shall
receive reasonable additional compensation from the Grantor for services
rendered beyond those specifically enumerated in this Agreement; provided that
the Collateral Agent shall, to the extent possible, provide reasonable advance
notice to the Grantor of such services and its estimate of fees, expenses and
charges in connection therewith.  The Collateral Agent may employ, at the
Grantor's expense, such legal counsel and other experts as it reasonably deems
necessary in connection with entering into this Agreement and performing its
duties and obligations under this Agreement.  The Collateral Agent may rely upon
and shall be protected if acting in good faith upon the advice of such legal
counsel or experts.

10.  REMOVAL OR RESIGNATION OF COLLATERAL AGENT.
     ------------------------------------------ 

     Either Administrative Agent, upon the direction of the Lenders under the
applicable Credit Agreement, may, at any time, remove and discharge the
Collateral Agent from the 


                                     -16-
<PAGE>
 
performance of its duties under this Agreement, effective (a) immediately if
such termination is for cause or (b) upon not less than thirty (30) days' prior
written notice to the Collateral Agent and the Grantor if such termination is
without cause. In addition, the Collateral Agent may, at any time, terminate its
agreement to act as the Collateral Agent hereunder, effective upon sixty (60)
days' prior written notice to the Grantor, the Administrative Agent and the
Lenders. Upon the effective date of any such termination, the Collateral Agent
shall promptly deliver the Collateral then held by it and any and all books and
records (or copies thereof) relating thereto, to the Administrative Agent or to
such other person or entity as the Administrative Agent may direct in writing,
and shall cooperate with the Administrative Agent and any successor Collateral
Agent in order to effect the orderly transfer of the Collateral and the rights
and obligations of the Collateral Agent hereunder to any successor Collateral
Agent. Upon resignation or removal of the Collateral Agent hereunder, the
Administrative Agent and the Majority Lenders shall appoint a successor
Collateral Agent; provided, however, that The First National Bank of Chicago may
assign its rights and obligations under this Agreement as Collateral Agent to
First Bank National Association at any time without the consent of any Person.
The indemnification obligations of the Grantor with respect to the Collateral
Agent (both as set forth herein and in the Credit Agreements) shall survive any
termination of this Agreement, the Credit Agreements or any assignment by the
Collateral Agent of its rights and obligations hereunder. If no successor
Collateral Agent shall have been so appointed, and shall have accepted such
appointment, before the end of the thirty (30) or sixty (60) day period referred
to above, as the case may be, then the Administrative Agent (or, at the
discretion of the Administrative Agent, an Affiliate of the Administrative
Agent) shall succeed as Collateral Agent.

11.  THE COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
     ------------------------------------------------------ 

     (a) The Grantor hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Grantor and in the name of the Grantor or in its own
name, from time to time in the Collateral Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which the Collateral Agent may deem necessary or desirable to
accomplish the purposes of this Security Agreement and, without limiting the
generality of the foregoing, hereby gives the Collateral Agent the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor to
do the following:

          (i) at any time, (A) to execute on behalf of the Grantor as debtor and
     to file financing statements necessary or desirable in the Collateral
     Agent's sole discretion to perfect and to maintain the perfection and
     priority of the Collateral Agent's security interest in the Collateral, on
     behalf of the Secured Parties or (B) to file a carbon, photographic or
     other reproduction of this Agreement or any financing statement with
     respect to the Collateral as a financing statement in such offices as the
     Collateral Agent in its sole discretion deems necessary or desirable to
     perfect and to maintain the perfection and priority of the Collateral
     Agent's security interest in the Collateral;


                                     -17-
<PAGE>
 
          (ii)  after the occurrence of a Security Event, to ask, demand,
     collect, receive and give acquittances and receipts for any and all moneys
     due and to become due under any Collateral and, in the name of the Grantor
     or in its own name or otherwise, to take possession of and endorse and
     collect any checks, drafts, notes, acceptances or other instruments for the
     payment of moneys due under any Collateral and to file any claim or to take
     any other action or proceeding in any court of law or equity or otherwise
     deemed appropriate by the Collateral Agent for the purpose of collecting
     any and all such moneys due under any Collateral whenever payable and to
     file any claim or to take any other action or proceeding in any court of
     law or equity or otherwise deemed appropriate by the Collateral Agent for
     the purpose of collecting any and all such moneys due under any Collateral
     whenever payable;

          (iii)  after the occurrence of a Security Event, to pay or discharge
     taxes, Liens, security interests or other encumbrances levied or placed on
     or threatened against the Collateral, to effect any insurance called for by
     the terms of this Security Agreement and to pay all or any part of the
     premiums therefor and the costs thereof; and

          (iv) after the occurrence of a Security Event, (A) to direct any party
     liable for any Collateral payment under any of the Collateral to make any
     and all Collateral payments due and to become due thereunder, directly to
     the Collateral Agent or as the Collateral Agent shall direct; (B) to
     receive payment of and receipt for any and all moneys, claims and other
     amounts due and to become due at any time, in respect of or arising out of
     any Collateral; (C) to sign and indorse any invoices, freight or express
     bills, bills of lading, storage, trust or warehouse receipts, drafts
     against debtors, assignments, verifications and notices in connection with
     accounts and other documents constituting or relating to the Collateral;
     (D) to commence and prosecute any suits, actions or proceedings at law or
     in equity in any court of competent jurisdiction to collect the Collateral
     or any part thereof and to enforce any other right in respect of any
     Collateral; (E) to defend any suit, action or proceedings brought against
     the Grantor with respect to any Collateral; (F) to settle, compromise or
     adjust any suit, action or proceeding described above and, in connection
     therewith, to give such discharges or releases as the Collateral Agent may
     deem appropriate; (G) to license or, to the extent permitted by an
     applicable license, sublicense, whether general, special or otherwise, and
     whether on an exclusive or non-exclusive basis, any patent or trademark
     constituting Collateral, throughout the world for such term or terms, on
     such conditions, and in such manner, as the Collateral Agent shall in its
     sole discretion determine; and (H) generally to sell, transfer, pledge,
     make any agreement with respect to or otherwise deal with any of the
     Collateral as fully and completely as though the Collateral Agent were the
     absolute owner thereof for all purposes, and to do, at the Collateral
     Agent's option and the Grantor's expense, at any time, or from time to
     time, all acts and things which the Collateral Agent reasonably deems
     necessary to protect, preserve or realize upon the Collateral and the
     Collateral Agent's and the other Secured Parties' Lien therein, in order to
     effect the intent 


                                     -18-
<PAGE>
 
     of this Agreement, all as fully and effectively as the Grantor might do.

     (b) The Collateral Agent agrees that, except upon the occurrence and during
the continuance of any Default or Unmatured Default, it will forbear from
exercising the power of attorney or any rights granted to the Collateral Agent
pursuant to this Section 11.  The Grantor hereby ratifies, to the extent
permitted by law, all that any said attorney shall lawfully do or cause to be
done by virtue hereof.  The power of attorney granted pursuant to this Section
11, being coupled with an interest, shall be irrevocable until the Secured
Obligations are indefeasibly paid in full.

     (c) The powers conferred on the Collateral Agent hereunder are solely to
protect the Collateral Agent's and the other Secured Parties' interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
The Collateral Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agent shall be responsible to the Grantor
for any act or failure to act, except for its own gross negligence or willful
misconduct.

     (d) The Grantor also authorizes the Collateral Agent, at any time and from
time to time upon the occurrence and during the continuance of a Default or
Unmatured Default, (i) to communicate in its own name with any party to any
contract, instrument, agreement or document constituting Collateral with regard
to the assignment of the right, title and interest of the Grantor therein and
thereunder and other matters relating thereto and (ii) to execute, in connection
with the sale provided for in Section 12.3 hereof, any indorsements, assignments
or other instruments of conveyance or transfer with respect to the Collateral.


12.  DEFAULT.
     ------- 

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

          (a) Any representation or warranty made or deemed made by or on behalf
     of the Grantor to the Collateral Agent or the Secured Parties under or in
     connection with this Agreement shall be false in any material respect as of
     the date on which made.

 
          (b) The breach by the Grantor of any of the terms or provisions of
     Sections 7.4, 7.7 or 7.8 hereof.

          (c) The breach by the Grantor (other than a breach which constitutes a
     Default under Section 12.1(a) or 12.1(b)hereof) of any of the terms or
     provisions of this Agreement which is not remedied within thirty (30) days
     after the giving of written notice 

                                     -19-
<PAGE>
 
     by the Collateral Agent.

          (d) The occurrence of any "Default" under, and as defined in, either
     of the Credit Agreements.

          Notwithstanding the foregoing, in the event of any breach hereunder
arising due to one or more Contracts ceasing to constitute Eligible Contracts,
Grantor shall have a period of 5 business days after learning thereof to provide
substitute Collateral in accordance with the provisions of Section 4.1 to cure
such breach.

     12.2. ACCELERATION AND REMEDIES. If any Default described in Section 7.6 or
7.7 of the Credit Agreements occurs, the Secured Obligations shall immediately
become due and payable without any election or action on the part of the
Collateral Agent or any Lender. If any other Default occurs, the Secured
Obligations may be declared to be due and payable in accordance with the Credit
Agreements, whereupon the Secured Obligations shall become immediately due and
payable, without presentment, demand, protest or notice of any kind, all of
which the Grantor hereby expressly waives.

     12.3. REMEDIES; OBTAINING THE COLLATERAL UPON DEFAULT. The Grantor agrees
that, if any Default shall have occurred and be continuing, then and in every
such case, the Collateral Agent may (and upon the direction of the
Administrative Agent under either of the Credit Agreements (acting upon the
direction of the Majority Lenders under the applicable Credit Agreement) shall):

          (a) personally, or by agents or attorneys, immediately take possession
     of the Collateral or any part thereof, from the Grantor or any other Person
     who then has possession of any part thereof with or without notice or
     process of law (unless the same shall be required by applicable law), and
     for that purpose may enter in an orderly and lawful manner upon the
     Grantor's premises where any of the Collateral is located and remove the
     same and use in connection with such removal any and all services,
     supplies, aids and other facilities of the Grantor;

          (b) instruct the obligor or obligors on any contract, agreement,
     instrument or other obligation constituting the Collateral to make any
     payment required by the terms of such instrument or agreement directly to
     the Collateral Agent, on behalf of the Secured Parties;

          (c) sell or otherwise liquidate, or direct the Grantor to sell or
     otherwise liquidate, any or all investments made in whole or in part with
     the Collateral or any part thereof, and take possession of the proceeds of
     any such sale or liquidation;

          (d) with respect to Secured Obligations which are contingent and
     cannot be accelerated by their nature, require the Grantor to deposit cash
     or other acceptable 

                                     -20-
<PAGE>
 
     collateral in an amount sufficient to cover principal, interest and fees
     which will have accrued by the maturity date on said Secured Obligations to
     be held as security for said Secured Obligations in the special collateral
     account referred to in Section 14.2 hereof; and

          (e) take possession of the Collateral or any part thereof, by
     directing the Grantor in writing to deliver the same to the Collateral
     Agent, on behalf of the Secured Parties, at any reasonable place or places
     designated by the Collateral Agent, in which event the Grantor shall at its
     own expense:

               (i) forthwith cause the same to be moved to the place or places
          so designated by the Collateral Agent and there delivered to the
          Collateral Agent, on behalf of the Secured Parties;

               (ii) store and keep any Collateral so delivered to the Collateral
          Agent, on behalf of the Secured Parties, at such place or places
          pending further action by the Collateral Agent; and

               (iii)  while the Collateral shall be so stored and kept, provide
          such guards and maintenance services as shall be necessary to protect
          the same and to preserve and maintain them in good condition;

     it being understood that the Grantor's obligation so to deliver the
     Collateral is of the essence of this Agreement and that, accordingly, upon
     application to a court of equity having jurisdiction, the Collateral Agent,
     on behalf of the Secured Parties, shall be entitled to a decree requiring
     specific performance by the Grantor of said obligation.

     12.4.  DISPOSITION OF THE COLLATERAL.
            ----------------------------- 

          (a) Any Collateral repossessed by the Collateral Agent, on behalf of
     the Secured Parties, under or pursuant to Section 12.3 hereof and any other
     Collateral whether or not so repossessed by the Collateral Agent, on behalf
     of the Secured Parties, upon the occurrence of a Default may be sold,
     leased or otherwise disposed of under one or more contracts or as an
     entirety and without the necessity of gathering at the place of sale the
     property to be sold, and in general in such manner, at such time or times,
     at such place or places and on such terms and for such prices as the
     Collateral Agent may determine to be commercially reasonable.  Upon the
     occurrence and during the continuance of any Default, the Collateral Agent,
     on behalf of the Secured Parties, shall have the power to foreclose the
     Grantor's right of redemption in the Collateral by sale, lease or other
     disposition of the Collateral in accordance with the Uniform Commercial
     Code as enacted in each state where the Collateral is located.  Any of the
     Collateral may be sold, leased or otherwise disposed of in the condition in
     which the same existed when taken by the Collateral Agent, on behalf of the
     Secured Parties, or after any overhaul or 

                                     -21-
<PAGE>
 
     repair which the Collateral Agent shall determine to be commercially
     reasonable and the Collateral Agent shall be entitled to reimbursement for
     the payment of any costs or expenses of such overhaul or repair. Any such
     disposition which shall be a private sale or other private proceeding
     permitted by the requirements of applicable law shall be made after written
     notice to the Grantor specifying the time at which such disposition is to
     be made and the intended sale price or other consideration therefor. Any
     such disposition which shall be a public sale permitted by such
     requirements of applicable law shall be made after written notice to the
     Grantor specifying the time and place of such sale and, in the absence of
     applicable requirements of law, shall be by public auction. To the extent
     permitted by any such requirement of law, the Collateral Agent, on behalf
     of the Secured Parties, may itself bid for and become the purchaser of the
     Collateral or any item thereof, offered for sale in accordance with this
     Section 12.4 without accountability to the Grantor. In the payment of the
     purchase price of the Collateral the purchaser shall be entitled to have
     credit on account of the purchase price thereof of amounts owing to such
     purchaser on account of any of the Secured Obligations held by such
     purchaser and any such purchaser may deliver notes, claims for interest, or
     claims for other payment with respect to such Secured Obligations in lieu
     of cash up to the amount which would, upon distribution of the net proceeds
     of such sale, be payable thereon. Such notes, if the amount payable
     hereunder shall be less than the amount due thereon, shall be returned to
     the holder thereof after being appropriately stamped to show partial
     payment. If, under mandatory requirements of applicable law, the Collateral
     Agent, on behalf of the Secured Parties, shall be required to make
     disposition of the Collateral within a period of time which does not permit
     the giving of notice to the Grantor as hereinabove specified, the
     Collateral Agent need give the Grantor only such notice of disposition as
     shall be reasonably practicable in view of such mandatory requirements of
     applicable law.

          (b) No notification need be given to the Grantor if it has signed,
     after an Unmatured Default or Default, a statement renouncing or modifying
     any right to notification of sale or other intended disposition.  In
     addition to the rights and remedies granted to it in this Agreement and in
     the Credit Agreements, the Collateral Agent, on behalf of the Secured
     Parties, shall have all the rights and remedies of a secured party under
     the Uniform Commercial Code of the state in which the Collateral is
     located.

13.  WAIVERS, AMENDMENTS AND REMEDIES.
     -------------------------------- 

     (a) No delay or omission of the Collateral Agent, the Administrative Agent
or any Lender to exercise any right or remedy granted under this Agreement shall
impair such right or remedy or be construed to be a waiver of any Default or
Unmatured Default or an acquiescence therein, and any single or partial exercise
of any such right or remedy shall not preclude other or further exercise thereof
or the exercise of any other right or remedy.  No waiver, amendment or other
variation of the terms, conditions or provisions of this Agreement whatsoever
shall be valid unless in writing signed by the Collateral Agent and the
Administrative Agent (with the consent of the Majority Lenders under each of the
Credit Agreements) (if so required by the Credit 

                                     -22-
<PAGE>
 
Agreements), and then only to the extent specifically set forth in such writing;
provided, however, that any amendment purporting to release all or substantially
all of the Collateral other than in accordance with Section 4.3 shall be valid
only if consented to by each of the Lenders

     (b) The Grantor, the Collateral Agent and the Administrative Agent, at any
time and from time to time, may enter into additional security documents or one
or more agreements supplemental hereto for the purpose of subjecting additional
property to liens in favor of the Collateral Agent for the benefit of the
Secured Parties.

     (c)  Notwithstanding the provisions of Section 13(a) hereof,  and without
the consent of any Person, the Collateral Agent (at the direction of the
Administrative Agent) and the Grantor may, from time to time, enter into written
agreements supplemental hereto or to the other Security Documents for the
purpose of (w) modifying the obligations of or other provisions relating to the
Collateral Agent hereunder in a manner which is not adverse to the interests of
the Secured Parties, (x) making any ministerial or clarifying modification to
this Agreement or any Security Documents, including, but not limited to,
clarifying or correcting clerical or typographical errors in this Agreement or
any Security Document; (y)  releasing Collateral from the security interest of
this Agreement pursuant to the terms of Section 4.3 hereof or (z) modifying the
Exhibits and Schedules hereto, including without limitation changes to Exhibits
4(b) and 4(c) as to the items constituting Required Documents or Additional
Required Documents.

     (d) All rights and remedies contained in this Agreement or by law afforded
shall be cumulative and all shall be available to the Collateral Agent and the
Secured Parties until the Secured Obligations have been paid in full.

14.  PROCEEDS; COLLECTION.
     -------------------- 

     14.1  COLLECTION.  The Collateral Agent may at any time when a Default has
occurred and is continuing in its sole discretion by giving the Grantor written
notice, elect to require that payments with respect to the Collateral be paid
directly to the Collateral Agent, on behalf of the Secured Parties.  In such
event, the Grantor shall, and shall permit the Collateral Agent to, promptly
notify the account debtors or obligors under the Collateral of the Collateral
Agent's and the Secured Parties' interest therein and direct such account
debtors or obligors to make payment of all amounts then or thereafter due under
the Collateral directly to the Collateral Agent.  Upon receipt of any such
notice from the Collateral Agent, the Grantor shall thereafter hold in trust for
the Collateral Agent and the Secured Parties all amounts and proceeds received
by it with respect to the Collateral and immediately and at all times thereafter
deliver to the Collateral Agent, on behalf of the Secured Parties, all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements.  The Collateral Agent shall
hold and apply funds so received as provided by the terms of Sections 14.3 and
14.4 hereof.


                                     -23-
<PAGE>
 
     14.2. SPECIAL COLLATERAL ACCOUNT. The Collateral Agent may require all cash
proceeds of the Collateral received by the Collateral Agent, on behalf of the
Secured Parties, to be deposited in a special interest bearing cash collateral
account with the Collateral Agent and held there as security for the Secured
Obligations. Prior to a Default or Unmatured Default, the Grantor, upon advance
written notice to the Collateral Agent, may direct investment of the collected
balances said cash collateral account in cash and Cash Equivalents (as such term
is defined in the Credit Agreements) reasonably acceptable to the Collateral
Agent; provided, however, upon the occurrence and during the continuance of a
Default or Unmatured Default, the Grantor shall have no control whatsoever over
said cash collateral account or the investment thereof. The Collateral Agent
shall from time to time, in its sole discretion, either deposit the collected
balances in said cash collateral account into the Grantor's general operating
account with the Collateral Agent or apply the collected balances in said cash
collateral account to the payment of the Secured Obligations whether or not the
Secured Obligations shall then be due.

     14.3. APPLICATION OF PROCEEDS. The proceeds of the Collateral paid to the
Collateral Agent shall be applied by the Collateral Agent to payment of the
Secured Obligations in the following order unless a court of competent
jurisdiction shall otherwise direct:

          (a) FIRST, to payment of all reasonable costs and expenses of the
     Administrative Agent or the Collateral Agent incurred in connection with
     the collection and enforcement of the Secured Obligations or of the
     security interest granted to the Collateral Agent pursuant to this
     Agreement, including all costs and expenses of any sale pursuant to
     Sections 12.3 and 12.4 hereof, and of any judicial or private proceedings
     in which such sale may be made, and of all other expenses, liabilities and
     advances made or incurred by the Administrative Agent or the Collateral
     Agent and the agents and attorneys of each of them, together with interest
     at the Default Rate on such costs, expenses and liabilities and on all
     advances made by the Administrative Agent, the Collateral Agent or any
     Lender from the date any such cost, expense or liability is due, owing or
     unpaid or any such advance is made, in each case until paid in full;

          (b) SECOND, ratably to payment of that portion of the Secured
     Obligations constituting accrued and unpaid interest (including, if
     applicable, interest owing thereon at the Default Rate) and fees from the
     date due, owing or unpaid until paid in full;

          (c) THIRD, ratably to payment of the principal of the Secured
     Obligations, then due, owing or unpaid in respect of any Advances pursuant
     to the Credit Agreements or the Notes with interest on such unpaid
     principal at the Default Rate from and after the happening of any Default
     until paid in full;

          (d) FOURTH, ratably to payment of any other Secured Obligations due,
     owing or unpaid until paid in full including, without limitation, any
     Secured Obligations incurred pursuant to Section 16.3 hereof; and

                                     -24-
<PAGE>
 
          (e) FIFTH, the balance, if any, after all of the Secured Obligations
     have been satisfied, shall be remitted as required by law.

     14.4.  REMEDIES CUMULATIVE.  Each and every right, power and remedy hereby
specifically given to the Collateral Agent, for the benefit of the Secured
Parties, shall be in addition to every other right, power and remedy
specifically given under this Agreement, the Credit Agreements or any other Loan
Document now or hereafter existing at law or in equity, or by statute and each
and every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Collateral Agent.  All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise any of the others.  No delay or omission of the Collateral Agent in the
exercise of any such right, power or remedy and no renewal or extension of any
of the Secured Obligations shall impair any such right, power or remedy or shall
be construed to be a waiver of any Default or an acquiescence therein.  In the
event that the Collateral Agent, the Administrative Agent or any Lender shall
bring any suit to enforce any of its rights hereunder and shall be entitled to
judgment, then in such suit the Collateral Agent, the Administrative Agent or
such Lender may recover reasonable expenses, including attorneys' fees, which
attorneys may be employees of the Collateral Agent, the Administrative Agent or
such Lender, and the amounts thereof shall be included in such judgment.

     14.5.  DISCONTINUANCE OF PROCEEDINGS.  In case the Collateral Agent, the
Administrative Agent or any Lender shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Collateral Agent, the Administrative Agent or such Lender, then and in every
such case the Grantor and the Collateral Agent or such Lender shall be restored
to their respective former positions and rights hereunder with respect to the
Collateral, and all rights, remedies and powers of the Collateral Agent or such
Lender shall continue as if no such proceeding had been instituted.

15.  INDEMNITY.
     --------- 

     15.1.  INDEMNITY.

          (a) The Grantor agrees to indemnify the Collateral Agent and other
     Secured Parties and their respective successors, assigns, directors,
     employees, agents and servants (each an "Indemnitee") as provided by
     Section 9.7 of the Credit Agreements as if such Section 9.7 were fully set
     forth herein with the Collateral Agent being identified as being entitled
     to indemnification thereunder.


          (b) Without limiting the application of Section 15.1(a) hereof, the
     Grantor 

                                     -25-
<PAGE>
 
     agrees to pay, or reimburse the Collateral Agent for any and all
     reasonable fees (including, without limitation, reasonable attorneys' fees,
     which attorneys may be employees of the Collateral Agent), costs and
     expenses of whatever kind or nature incurred in connection with the
     creation, preservation or protection of the Collateral Agent's security
     interest in the Collateral, including, without limitation, all fees and
     taxes in connection with the recording or filing of instruments and
     documents in public offices, payment or discharge of any taxes (excluding
     income, franchise taxes or other taxes levied on gross earnings, profits or
     the like) or Liens upon or in respect of the Collateral, premiums for
     insurance with respect to the Collateral (except to the extent that the
     Grantor has already paid any such premiums in compliance with the Credit
     Agreements) and all other reasonable fees, costs and expenses in connection
     with preparing, executing, delivering or administering this Agreement and
     in connection with protecting, maintaining or preserving the Collateral and
     the Collateral Agent's interest therein, whether through judicial
     proceedings or otherwise, or in defending or prosecuting any actions, suits
     or proceedings arising out of or relating to the Collateral.

          (c) Without limiting the application of Section 15.1(a) or (b) hereof,
     the Grantor agrees to pay, indemnify and hold each Indemnitee harmless from
     and against any losses, costs, damages and expenses which such Indemnitee
     may suffer, expend or incur as a consequence or growing out of any
     misrepresentation by the Grantor in this Agreement or the Credit Agreements
     or in any statement or writing contemplated by, made or delivered pursuant
     to or in connection with this Agreement or the Credit Agreements, except to
     the extent that any such loss arises out of the gross negligence or willful
     misconduct of such Indemnitee.

          (d) If and to the extent that the obligations of the Grantor under
     this Section are unenforceable for any reason, the Grantor hereby agrees to
     make the maximum contribution to the payment and satisfaction of such
     obligations which is permissible under applicable law.

          (e) The obligations of the Grantor contained in this Section 15.1
     shall survive the termination of this Agreement and the discharge of the
     Grantor's other obligations hereunder.

     15.2.  INDEMNITY OBLIGATION SECURED BY COLLATERAL; SURVIVAL.  Any amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Secured Obligations secured by the Collateral.
The indemnity obligations of the Grantor contained in this Agreement shall
continue in full force and effect notwithstanding the full payment of all
amounts owing under the Credit Agreements and all of the other Secured
Obligations and notwithstanding the discharge thereof and the termination of
this Agreement.

     15.3.  DISCRETIONARY ACTION.  With respect to any discretionary action
hereunder (including, in any exhibit or schedule hereto), the Collateral Agent
shall be entitled to rely upon 


                                     -26-
<PAGE>
 
the direction of the Administrative Agent and shall have no liability to the
Secured Parties in so acting.

16.  GENERAL PROVISIONS.
     ------------------ 

     16.1.  NOTICE OF DISPOSITION OF COLLATERAL.  The Grantor hereby agrees that
any notice of the time and place of any public sale or the time after which any
private sale or other disposition of all or any part of the Collateral shall be
deemed reasonable if sent to the Grantor, addressed as set forth in Section 17
hereof, at least ten (10) days prior to any such public sale or the time after
which any such private sale or other disposition may be made.

     16.2.  COMPROMISES AND COLLECTION OF COLLATERAL.  The Grantor, the
Administrative Agent, the Collateral Agent and the Lenders recognize that
setoffs, counterclaims, defenses and other claims may be asserted by obligors
with respect to certain of the Collateral, that certain of the Collateral may be
or become uncollectible in whole or in part and that the expense and probability
of success in litigating a disputed portion of the Collateral may exceed the
amount that reasonably may be expected to be recovered with respect to any
Collateral.  In view of the foregoing, the Grantor agrees that the Collateral
Agent, on behalf of the Secured Parties, may at any time and from time to time,
if a Default has occurred and is continuing, compromise with the obligor on any
portion of the Collateral, accept in full payment of any portion of the
Collateral such amount as the Collateral Agent in its sole discretion shall
determine or abandon any portion of the Collateral, and any such action by the
Collateral Agent shall be commercially reasonable so long as the Collateral
Agent acts in good faith based on information known to it at the time it takes
any such action.

     16.3. SECURED PARTY PERFORMANCE OF GRANTOR OBLIGATIONS. Without having any
obligation to do so, upon either (a) notice to the Grantor or (b) the occurrence
of an Unmatured Default or a Default, the Collateral Agent may perform or pay
any obligation which the Grantor has agreed to perform or pay in this Agreement
and the Grantor shall reimburse the Collateral Agent for any amounts paid by the
Collateral Agent pursuant to this Section 16.3. The Grantor's obligation to
reimburse the Collateral Agent pursuant to the preceding sentence shall be an
obligation payable on demand.

     16.4.  SPECIFIC PERFORMANCE OF CERTAIN COVENANTS.  The Grantor acknowledges
and agrees that a breach of any of the covenants contained in Sections 12.3, 14
and 16.6 hereof will cause irreparable injury to the Collateral Agent and the
Secured Parties and that the Collateral Agent and the Lenders have no adequate
remedy at law in respect of such breaches and therefore agrees, without limiting
the right of the Collateral Agent and the Secured Parties to seek and obtain
specific performance of other obligations of the Grantor contained in this
Agreement, that the covenants of the Grantor contained in the Sections referred
to in this Section 16.4 shall be specifically enforceable against the Grantor.

     16.5.  USE AND POSSESSION OF CERTAIN PREMISES.  Upon the occurrence of a
Default or 

                                     -27-
<PAGE>
 
Unmatured Default, the Collateral Agent shall be entitled to occupy and use any
premises owned or leased by the Grantor where records relating to the Collateral
are located until the Secured Obligations are paid, without any obligation to
pay the Grantor or any other Person for such use and occupancy. 


     16.6. DISPOSITIONS NOT AUTHORIZED. The Grantor is not authorized to sell or
otherwise dispose of the Collateral except as permitted by this Agreement and
notwithstanding any course of dealing between the Grantor and the Collateral
Agent or any Secured Party or other conduct of the Collateral Agent or any
Secured Party , no authorization to sell or otherwise dispose of the Collateral
(except as set forth in this Agreement or in the Credit Agreements) shall be
binding upon the Collateral Agent or any Secured Party unless such authorization
is in writing signed as required by Section 13 hereof.

     16.7. DEFINITION OF CERTAIN TERMS. Terms defined in the Illinois Uniform
Commercial Code which are not otherwise defined in this Agreement are used in
this Agreement as defined in the Illinois Uniform Commercial Code as in effect
on the date hereof.

     16.8. BENEFIT OF AGREEMENT. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the Grantor, the
Administrative Agent, the Collateral Agent and the Lenders and each such
Person's successors and assigns, except that the Grantor shall not have the
right to assign its rights under this Agreement or any interest herein without
the prior written consent of the Collateral Agent. The Collateral Agent may,
subject to the provisions of Section 10, assign its rights and obligations
hereunder. The First National Bank of Chicago may assign all of its rights and
obligations as Collateral Agent hereunder to First Bank National Association at
any time without the consent of any other Person.

     16.9. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Grantor contained in this Agreement shall survive the execution and delivery
of this Agreement.

     16.10. TAXES AND EXPENSES. Any taxes (excluding income taxes, franchise
taxes or other taxes levied on gross earnings, profits or the like) payable or
ruled payable by any Federal or State authority in respect of this Agreement
shall be paid by the Grantor, together with interest and penalties, if any. The
Grantor shall reimburse the Collateral Agent for any and all reasonable out-of-
pocket expenses and internal charges (including reasonable attorneys', auditors'
and accountants' fees and reasonable time charges of attorneys, auditors and
accountants who may be employees of the Collateral Agent or the Lenders) paid or
incurred by the Collateral Agent in connection with the preparation, execution,
delivery, administration, collection and enforcement of this Agreement and in
the audit, analysis, administration, collection, preservation or sale of the
Collateral (including the expenses and charges associated, with any periodic or
special audit of the Collateral). The Grantor shall reimburse the other Secured
Parties for any and all reasonable out-of-pocket expenses and internal charges
(including reasonable attorneys', auditors' and accountants' fees and reasonable
time charges of attorneys, auditors and accountants who may be employees of the
Collateral Agent or the Secured Parties) paid or incurred by any Secured Party

                                     -28-
<PAGE>
 
in connection with the enforcement of this Agreement.

     16.11. HEADINGS. The title of and section headings in this Agreement are
for convenience of reference only, and shall not govern the interpretation of
any of the terms and provisions of this Agreement.

     16.12. TERMINATION. This Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations or commitments therefor outstanding) until the payment in full of
the Secured Obligations and the termination of the Credit Agreements in
accordance with its terms and all commitments of the Lenders thereunder, at
which time the security interests granted hereby shall terminate and any and all
rights to the Collateral shall revert to the Grantor. Upon such termination, the
Collateral Agent shall promptly return to the Grantor, at the Grantor's expense,
such of the Collateral held by the Collateral Agent as shall not have been sold
or otherwise applied pursuant to the terms hereof. The Collateral Agent will
promptly execute and deliver to the Grantor such other documents as the Grantor
shall reasonably request to evidence such termination.

     16.13. ENTIRE AGREEMENT. This Agreement, the Credit Agreements and the
other Loan Documents embody the entire agreement and understanding among the
Grantor, the Collateral Agent and the Secured Parties relating to the Collateral
and supersede all prior written and oral agreements and understandings among the
Grantor, the Collateral Agent and the Lenders relating to the subject matter
hereof.

     16.14. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     16.15. DISTRIBUTION OF REPORTS. The Grantor authorizes the Collateral Agent
and each Secured Party, as the Collateral Agent or such Secured Party may elect
in its sole discretion, to discuss with and furnish to any other Person having
an interest in the Secured Obligations (whether as a guarantor, pledgor of
collateral, participant or otherwise) all financial statements, audit reports
and other information pertaining to the Grantor or the Collateral whether such
information was provided by the Grantor or prepared or obtained by the
Collateral Agent or such Secured Party. Neither the Collateral Agent nor any
Secured Party, nor any of such Person's employees, officers, directors or agents
makes any representation or warranty regarding any audit reports or other
analyses of the Grantor's condition which the Collateral Agent or such Secured
Party may in its sole discretion prepare and elect to distribute, nor shall the
Collateral Agent or any Secured Party, nor any such Person's employees,
officers, directors or agents be liable to any person or entity receiving a copy
of such reports or analyses for any inaccuracy or omission contained in or
relating thereto.

                                     -29-
<PAGE>
 
17.  NOTICES.
     ------- 

     17.1 SENDING NOTICES. Any notice required or permitted to be given under
this Agreement shall be given in accordance with Section 13.1 of the Credit
Agreements.

     17.2 CHANGE IN ADDRESS FOR NOTICES. Each of the Grantor and the Collateral
Agent may change the address for service of notice upon it by a notice in
writing to the other party hereto.






                                     -30-
<PAGE>
 
     IN WITNESS WHEREOF, the Grantor has executed this Agreement as of the date
first above written.



                                       GREEN TREE FINANCIAL CORPORATION


                                       By:
                                          --------------------------------

                                       Title:
                                             -----------------------------
  


Accepted and Agreed to:
---------------------- 

THE FIRST NATIONAL BANK OF CHICAGO,
  as Collateral Agent


By:
   --------------------------------

Title:
      -----------------------------



                                     -31-
<PAGE>
 
                                  EXHIBIT 6.4
                                  -----------


Principal Place of Business and Mailing Address:

 
 
 
 
          Attention:
                     ---------------------------------
<PAGE>
 
                                  EXHIBIT 4(a)
                             to Security Agreement

                            [letterhead of Grantor]

                         BORROWING BASE ADDITION REPORT

                                     [date]
[Administrative Agent]
[Address]

[Collateral Agent]
[Address]

Ladies and Gentlemen:

          Pursuant to the terms of the Credit Agreement [(364-day)][(3-year)]
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), dated as of April 29, 1997, among Green Tree Financial Corporation
(the "Grantor"), The First National Bank of Chicago individually and as
administrative agent (the "Administrative Agent") and the other financial
institutions signatory thereto and the Security Agreement (as amended,
supplemented or otherwise modified from time to time, the  "Security
Agreement"), dated as of February 6, 1998 between the Grantor and The First
National Bank of Chicago as Collateral Agent (the "Collateral Agent"), we hereby
add the Contracts listed on the Schedule A attached hereto to the Borrowing Base
and agree, that if a Security Event occurs, such Contracts, unless otherwise
released pursuant to the terms of the Security Agreement shall constitute
"Collateral" as defined in the Security Agreement.  The capitalized terms used
herein by not defined shall have the respective meanings as set forth in the
Credit Agreement or the Security Agreement.

The Grantor, with respect to each of the Contracts listed on the attached
Schedule A hereby certifies that, (i) if the date is on or after the date of a
Security Event, it has delivered to the Collateral Agent the Required Documents
(or in the case of Wet Loans, it will deliver such Required Documents within 10
business days of origination (or acquisition from an unaffiliated Person)) of
the related Contract, (ii) if the date is on or after the date of a Security
Event, it has delivered, holds in its possession or is using diligent efforts to
obtain possession of the Additional Required Documents and to deliver the
Additional Required Documents to the Collateral Agent, (iii) each Contract
constitutes an Eligible Contract as set forth in the Credit Agreement or if such
Contract does not constitute an Eligible Contract, that the Borrowing Base
(calculated as if the Collateral Value for such ineligible Contract is zero) is
not less than the outstanding amount of Loans and other Secured Obligations then
due and payable and (iv) each of the representations and warranties set forth in
Section 6 of the Security Agreement are true and correct as of such date.

         The Grantor hereby confirms that, if a Security Event occurs, the
Contracts listed on the attached Schedule A, unless released pursuant to the
terms of the Security Agreement, (1) shall be deemed to be "Collateral" as
defined in the Security Agreement and (2) shall be pledged to the Collateral
Agent under the Security Agreement for the benefit of the Secured Parties as
security for the Secured Obligations. We acknowledge and agree that the
inclusion of such Contracts in the Borrowing Base constitutes "new value" as
that term is used in Section 9-304(4) of the UCC.

                              GREEN TREE FINANCIAL CORPORATION


                              By: __________________________________
                                  Name:
                                  Title:
<PAGE>
 
                                 EXHIBIT 4(b)-1
                             to Security Agreement

                               REQUIRED DOCUMENTS
                          FOR LAND-AND-HOME CONTRACTS
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original of the MH Contract;

2.   the original Mortgage with evidence of recording thereon, or if the
     original Mortgage has not yet been returned from the recording office, a
     copy of the original Mortgage, which copy shall be replaced by the original
     Mortgage as soon as practicable after the original Mortgage is returned
     from the recording office;

3.   any title document for the related Manufactured Home, or if such title
     document has not yet been issued, a copy of the title application;

4.   the blanket assignment of the Mortgage, assigned in blank, which assignment
     shall be in form and substance acceptable for recording.  In the event that
     the MH Contract was acquired by the Grantor in a merger, the assignment
     must be by "[Grantor], successor by merger to [name of predecessor]"; and
     in the event that the MH Contract was acquired or originated by the Grantor
     while doing business under another name, the assignment must be by
     "[Grantor], formerly known as [previous name]";

5.   the assignment of the MH Contract from the originator (if other than the
     Grantor) to the Grantor;

6.   if such MH Contract was originated by the Grantor, an endorsement of such
     MH Contract by the Grantor;

7.   any extension, modification or waiver agreement(s); and

8.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-2
                             to Security Agreement

                               REQUIRED DOCUMENTS
                 FOR MH CONTRACTS (NOT LAND-AND-HOME CONTRACTS)
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original copy of the MH Contract;

2.   either (a) the original title document for the Manufactured Home or a
     duplicate certified by the appropriate governmental authority which issued
     the original thereof or the application for such title document [unless the
     application for title was made less than 180 days earlier] or  (b) if the
     laws of the jurisdiction in which the related Manufactured Home is located
     do not provide for the issuance of title documents for manufactured homes,
     other evidence of ownership of the Manufactured Home which is customarily
     relied upon in such jurisdiction as evidence of title to a Manufactured
     Home;

3.   evidence of one or more of the following types of perfection of the
     security interest in the Manufactured Home granted by such MH Contract, as
     appropriate:

     (a)  notation of such security interest on the title document [unless the
          application for title was made less than 180 days earlier];

     (b)  a financing statement meeting the requirements of the UCC, with
          evidence of recording indicated thereon (if required to perfect a
          security interest in a Manufactured Home under the UCC); or

     (c)  such other evidence of perfection of a security interest in
          manufactured homes as is customarily relied upon in the jurisdiction
          in which the Manufactured Home is located;

4.   A blanket assignment of all other instruments and agreements securing the
     whole or any part of the MH Contracts (including but not limited to all
     guaranties, insurance assignments and stock pledges), assigned in blank,
     which assignment shall be in form and substance acceptable for recording or
     filing if recordation or filing is necessary for effecting or perfecting
     such assignment including without limitation, where a UCC-1 financing
     statement or similar filing, exists in favor of Grantor, a UCC-3 statement
     (or similar filing) assigning such financing statement to the Collateral
     Agent.;

5.   the assignment of the MH Contract from the originator (if other than the
     Grantor) to the Grantor;

6.   any extension, modification or waiver agreement(s);

7.   if required by the Collateral Agent, in its sole discretion, evidence of
     any insurance the Grantor or any Subsidiary may carry or may have applied
     for, or may require the obligor to carry or to apply for, with respect to
     the Manufactured Home;

8.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-3
                             to Security Agreement

                               REQUIRED DOCUMENTS
                        FOR CONSUMER PRODUCTS CONTRACTS
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original copy of the Consumer Products Contract, including the executed
     evidence of the obligation of the obligor;

2.   either (a) the original title document for the related Consumer Product or
     a duplicate certified by the appropriate governmental authority which
     issued the original thereof or the application for such title document or
     (b) if the laws of the jurisdiction in which the related Consumer Product
     is located do not provide for the issuance of title documents for goods of
     the type including the Consumer Product, other evidence of ownership of the
     related Consumer Product, if any, which is customarily relied upon in such
     jurisdiction as evidence of title to such goods;

3.   evidence of one or more of the following types of perfection of the
     security interest in the related Consumer Product granted by such Consumer
     Products Contract , as appropriate: (a) notation of such security interest
     on the title document;(b) a financing statement meeting the requirements of
     the UCC, with evidence of recording indicated thereon (if required to
     perfect a security interest in the related Consumer Product under the UCC);
     (c) in the case of a Consumer Products Contract  secured by a security
     interest in an aircraft, evidence of filing with the Federal Aviation
     Administration Aircraft Registry; or (d) such other evidence of perfection
     of a security interest in goods of the type including the Consumer Product
     as is customarily relied upon in the jurisdiction in which the related
     Consumer Product is located;

4.   A blanket assignment of all other instruments and agreements securing the
     whole or any part of the Floor Plan Receivables (including but not limited
     to all guaranties, insurance assignments and stock pledges), assigned in
     blank, which assignment shall be in form and substance acceptable for
     recording or filing if recordation or filing is necessary for effecting or
     perfecting such assignment including without limitation, where a UCC-1
     financing statement or similar filing, exists in favor of Grantor, a UCC-3
     statement (or similar filing) assigning such financing statement to the
     Collateral Agent.;

5.   the assignment of the Consumer Products Contract from the originator (if
     other than the Grantor) to the Grantor;

6.   any extension, modification or waiver agreement(s);

7.   a credit application signed by the obligor, or a copy thereof;

8.   if required by the Collateral Agent, in its sole discretion, evidence of
     any insurance the Grantor or any Subsidiary may carry or may have applied
     for, or may require the obligor to carry or to apply for, with respect to
     the Consumer Product;

9.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-4
                             to Security Agreement

                               REQUIRED DOCUMENTS
                           FOR HOME EQUITY CONTRACTS
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original contract and note relating to the Home Equity Contract, with
     the note endorsed by the Grantor in blank;

2.   the original Mortgage with evidence of recording thereon, or if the
     original Mortgage has not yet been returned from the recording office, a
     copy of the original Mortgage, which copy shall be replaced by the original
     Mortgage as soon as practicable after the original Mortgage is returned
     from the recording office;

3.   the blanket assignment of the Mortgage, assigned in blank, which assignment
     shall be in form and substance acceptable for recording.  In the event that
     the Home Equity Contract was acquired by the Grantor in a merger, the
     assignment must be by "[Grantor], successor by merger to [name of
     predecessor]"; and in the event that the Home Equity Contract  was acquired
     or originated by the Grantor while doing business under another name, the
     assignment must be by "[Grantor], formerly known as [previous name]";

4.   if such Home Equity Contract was originated by a contractor or lender other
     than the Grantor, the original or a copy of an assignment of the Mortgage;
     and

5.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-5
                             to Security Agreement

                               REQUIRED DOCUMENTS
                         FOR HOME IMPROVEMENT CONTRACTS
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original contract and note relating to the Home Improvement Contract,
     with the note endorsed by the Grantor in blank;

2.   if a Secured Home Improvement Contract, the original Mortgage with evidence
     of recording thereon, or if the original Mortgage has not yet been returned
     from the recording office, a copy of the original Mortgage, certified as
     true and complete by such recording office which copy shall be replaced by
     the original Mortgage as soon as practicable after the original Mortgage is
     returned from the recording office;

3.   if a Secured Home Improvement Contract, the blanket assignment of the
     Mortgage, assigned in blank, which assignment shall be in form and
     substance acceptable for recording.  In the event that the Home Equity
     Contract  was acquired by the Grantor in a merger, the assignment must be
     by "[Grantor], successor by merger to [name of predecessor]"; and in the
     event that the Home Equity Contract  was acquired or originated by the
     Grantor while doing business under another name, the assignment must be by
     "[Grantor], formerly known as [previous name]";

4.   if a Secured Home Improvement Contract, and if originated by a contractor
     or a lender other than the Grantor, the original or a copy of the Mortgage;
     and

5.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-6
                             to Security Agreement

                               REQUIRED DOCUMENTS
                           FOR FLOOR PLAN RECEIVABLES
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   a fully executed original of the Floor Plan Agreement ;

2.   the documents evidencing or related to any insurance policy benefitting the
     Grantor and that the Grantor may require providing loss or physical damage,
     theft or similar coverage with respect to the Floor Plan Products;

3.   evidence of perfection of the security interest of Grantor in the related
     Floor Plan Product financed by such Floor Plan Receivable, as appropriate:
     (a) notation of such security interest on the title document; (b) a
     financing statement meeting the requirements of the UCC, with evidence of
     recording indicated thereon (if required to perfect a security interest in
     the related Floor Plan Product under the UCC); (c) in the case of a Floor
     Plan Receivable secured by a security interest in an aircraft, evidence of
     filing with the Federal Aviation Administration Aircraft Registry; or (d)
     such other evidence of perfection of a security interest in goods of the
     type including the Floor Plan Product as is customarily relied upon in the
     jurisdiction in which the related Floor Plan Product is located;

4.   A blanket assignment of all other instruments and agreements securing the
     whole or any part of the Floor Plan Receivables (including but not limited
     to all guaranties, insurance assignments and stock pledges), assigned in
     blank, which assignment shall be in form and substance acceptable for
     recording or filing if recordation or filing is necessary for effecting or
     perfecting such assignment including without limitation, where a UCC-1
     financing statement or similar filing, exists in favor of Grantor, a UCC-3
     statement (or similar filing) assigning such financing statement to the
     Collateral Agent.;

5.   any extension, modification and waiver agreement(s); and

6.   other documentation (including information contained in electronic,
     microfilm or other medium) as the Collateral Agent or the Administrative
     Agent may reasonably deem appropriate. 
<PAGE>
 
                                 EXHIBIT 4(b)-8
                             to Security Agreement

                               REQUIRED DOCUMENTS
                          FOR ASSET BASED RECEIVABLES
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

A.   Originations
     ------------

1.   the original loan and security documentation, and note relating to the
     Asset Based Receivable, with the note endorsed by the Grantor in blank;

2.   if secured by an interest in real estate, the original Mortgage or other
     collateral assignment document with evidence of recording thereon, or if
     the original Mortgage or other collateral assignment has not yet been
     returned from the recording office, a copy of the original Mortgage or
     other collateral assignment, certified as true and complete by such
     recording office which copy shall be replaced by the original mortgage or
     collateral assignment as soon as practicable after the original Mortgage is
     returned from the recording office;

3.   if secured by an interest in real estate, a blanket assignment of the
     Mortgage or other collateral assignment, assigned in blank, which
     assignment shall be in form and substance acceptable for recording;

4.   such other documents, that the Grantor or a Subsidiary keeps on file in
     accordance with its customary procedures indicating that the Floor Plan
     Products are subject to a first priority perfected security interest in
     favor of the Grantor as secured party;

5.   A blanket assignment of all other instruments and agreements securing the
     whole or any part of the Asset Based Receivables (including but not limited
     to all guaranties, insurance assignments and stock pledges), assigned in
     blank, which assignment shall be in form and substance acceptable for
     recording or filing if recordation or filing is necessary for effecting or
     perfecting such assignment including without limitation, where a UCC-1
     financing statement or similar filing, exists in favor of Grantor, a UCC-3
     statement (or similar filing) assigning such financing statement to the
     Collateral Agent.;

6.   any extension, modification or waiver agreement(s);

7.   if required by the Administrative Agent or the Collateral Agent, in its
     sole discretion, evidence of any insurance the Grantor or any Subsidiary
     may carry or may have applied for, or may required the obligor to carry or
     apply for, with respect to the collateral described in the Mortgage, other
     collateral assignment or other instruments or agreements securing all or
     any part of the Asset Based Receivable; and

8.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.

     [continued]
<PAGE>
 
B.   Participations
     --------------

1.   original participation agreement or certificate relating to the Asset Based
     Receivable; and

2.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                 EXHIBIT 4(b)-8
                             to Security Agreement

                               REQUIRED DOCUMENTS
                             FOR OTHER RECEIVABLES
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   documentation similar to that required under other parts of this Exhibit
     4(b), to the extent applicable, and such other documentation (including
     information contained in electronic, microfilm or other medium) to be
     determined in the reasonable discretion of the Administrative Agent and the
     Collateral Agent and within customary terms for secured financings of such
     Collateral; provided that no such Collateral shall be included in the
     Borrowing Base until the Administrative Agent, the Collateral Agent and the
     Grantor have so agreed in writing whereupon such revised required
     documentation shall be deemed incorporated herein.
<PAGE>
 
                                  EXHIBIT 4(c)
                             to Security Agreement

                         ADDITIONAL REQUIRED DOCUMENTS
                          FOR LAND-AND-HOME CONTRACTS,
                           HOME EQUITY CONTRACTS and
                       SECURED HOME IMPROVEMENT CONTRACTS
                            SUBMITTED FOR INCLUSION
                             IN THE BORROWING BASE

1.   the original Mortgage securing the Contract;

2.   if required pursuant to the current underwriting standards of the Grantor,
     a copy of which has been provided to the Administrative Agent for its
     review and approval with respect to title insurance requirements, a copy of
     the title insurance policy (or a binding commitment of the title company
     therefor) covering at least the face amount of the Contract with the
     original policy of title insurance insuring the Mortgage as a first or
     second lien, as applicable, on the related Manufactured Home or other real
     property written by a title company and containing exceptions reasonably
     acceptable to the Collateral Agent;

3.   if in the Grantor's possession, evidence of the applicable FHA commitment
     for insurance with respect to each FHA-insured Contract, or VA commitment
     for guaranty with respect to each VA-guaranteed Contract, and of the
     applicable commitment for private mortgage loan insurance with respect to
     each conventional Mortgage note having a loan-to-value ration in excess of
     80%;

4.   if required pursuant to the current underwriting standards of the Grantor,
     a copy of which has been provided to the Administrative Agent for its
     review and approval with respect to insurance requirements, evidence of
     fire and extended coverage insurance in an amount not less than the lower
     of the following: (a) the amount of the Contract and (b) 100% of the
     insurable value of the improvements with such insurance written by a
     company satisfactory to the Collateral Agent;

5.   if required pursuant to the current underwriting standards of the Grantor,
     a copy of which has been provided to the Administrative Agent for its
     review and approval with respect to appraisal requirements, a copy of any
     appraisal of the related real estate;

6.   other documentation (including information contained in electronic,
     microfilm or other medium) in the possession of the Grantor as the
     Collateral Agent or the Administrative Agent may reasonably deem
     appropriate.
<PAGE>
 
                                  EXHIBIT 4.3
                             to Security Agreement

                        BORROWING BASE DELETION REQUEST

                                     [date]

[Administrative Agent]
[Address]

[Collateral Agent]
[Address]

Ladies and Gentlemen:

          Pursuant to the terms of the Credit Agreement [(364-day)][(3-year)]
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), dated as of April 29, 1997, among Green Tree Financial Corporation
(the "Grantor"), The First National Bank of Chicago individually and as
administrative agent (the "Administrative Agent") and the other financial
institutions signatory thereto (the "Lenders") and the Security Agreement (as
amended, supplemented or otherwise modified from time to time, the  "Security
Agreement"), dated as of February 6, 1998 between the Grantor and The First
National Bank of Chicago as Collateral Agent (the "Collateral Agent"), we hereby
request that the Administrative Agent and the Collateral Agent delete from the
Borrowing Base the Contracts listed on the Schedule A attached hereto.  The
capitalized terms used herein but not defined shall have the respective meanings
as set forth in the Credit Agreement or the Security Agreement.

          The Grantor hereby certifies that as of the date of the release of
such Collateral, (1) no Default or Unmatured Default has occurred and is
continuing, (2) upon the release of such Collateral the outstanding principal
amount of Loans and other then due and owing Secured Obligations is (or will be
due to a simultaneous prepayment) less than the Borrowing Base as set forth in
the pro forma Borrowing Base Certificate attached hereto.


                              GREEN TREE FINANCIAL CORPORATION


                              By: __________________________________
                                  Name:
                                  Title:
<PAGE>
 
                                  EXHIBIT 6.4
                             to Security Agreement



Principal Place of Business and Mailing Address:


          _________________________________

          _________________________________

          _________________________________

          Attention:  _____________________