AMENDED AND RESTATED

                              LETTER OF CREDIT AND

                              REIMBURSEMENT AGREEMENT

                         dated as of September 9, 1997

                as amended and restated as of August 21, 1998


                                    among


                         CONTIFINANCIAL CORPORATION


                    The Participating Banks Party Hereto



                         CREDIT SUISSE FIRST BOSTON,
                               NEW YORK BRANCH,
                                   as Agent


                                        and


                              DRESDNER BANK AG,
                              NEW YORK BRANCH,
                              as Issuing Bank

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




               CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH,
                                   and
               DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES,
                                   as Arrangers


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





<PAGE>





Page

                                    ARTICLE I

                                   Definitions

SECTION 1.01. Defined Terms .............................................. 2
SECTION 1.02. Computation of Time Periods.................................30
SECTION 1.03. Terms Generally.............................................30
SECTION 1.04. Accounting Terms; GAAP......................................31


ARTICLE II

Amount and Terms of the Letter of Credit

SECTION 2.01. The Letter of Credit........................................  31
SECTION 2.02. Commissions and Fees........................................  32
SECTION 2.03. Reimbursement...............................................  32
SECTION 2.04. Loans.......................................................  33
SECTION 2.05. Reimbursement of Issuing
                Bank, Etc. ...............................................  35
SECTION 2.06. Prepayments.................................................  37
SECTION 2.07. Increased Costs.............................................  39
SECTION 2.08. Break Funding Payments......................................  41
SECTION 2.09. Payments and Computations...................................  42
SECTION 2.10. Non-Business Days...........................................  43
SECTION 2.11. Termination; Reduction;
                Extension.................................................  43
SECTION 2.12. Evidence of Debt............................................  48
SECTION 2.13. Obligations Absolute........................................  48
SECTION 2.14. Taxes.......................................................  51
SECTION 2.15. Interest Elections..........................................  52


ARTICLE III

Representations and Warranties

SECTION 3.01. Organization; Powers........................................ 54
SECTION 3.02. Authorization; Enforceability............................... 54
SECTION 3.03. Governmental Approvals;
                No Conflicts.............................................. 54
SECTION 3.04. Financial Condition; No Material
                Adverse Change............................................ 55
SECTION 3.05. Properties.................................................. 55
SECTION 3.06. Litigation and Environmental
                Matters................................................... 55
SECTION 3.07. Compliance with Laws
                and Agreements............................................ 56
SECTION 3.08. Investment and Holding Company
                Status.................................................... 56
SECTION 3.09. Taxes....................................................... 56
SECTION 3.10. ERISA....................................................... 57
SECTION 3.11. Disclosure.................................................. 57
SECTION 3.12. Federal Reserve Regulations................................. 57
SECTION 3.13. Year 2000................................................... 58


ARTICLE IV

Conditions

SECTION 4.01. Effective Date.............................................. 58
SECTION 4.02. Issuance and Increases...................................... 60
SECTION 4.03. Each Loan................................................... 60


ARTICLE V

Affirmative Covenants

SECTION 5.01.Financial Statements and Other
               Information ..............................................  61
SECTION 5.02.Notices of Material Events..................................  63
SECTION 5.03.Existence; Conduct of Business..............................  64
SECTION 5.04.Payment of Obligations......................................  64
SECTION 5.05.Maintenance of Properties;
               Insurance.................................................  64
SECTION 5.06.Books and Records; Inspection
               and Audit Rights..........................................  65
SECTION 5.07.Compliance with Laws........................................  65
SECTION 5.08.Purpose.....................................................  65
SECTION 5.09.Related Documents...........................................  66
SECTION 5.10.Reimbursement Account.......................................  66


ARTICLE VI

Negative Covenants

SECTION 6.01. Limitation on Indebtedness and
                Preferred Stock of
                Restricted Subsidiaries................................... 66
SECTION 6.02. Limitation on Liens......................................... 67
SECTION 6.03. Limitation on Mergers and
                Consolidations............................................ 70
SECTION 6.04. Limitation on Sales of Assets and
                Subsidiary Stock.......................................... 71
SECTION 6.05. Limitation on Loans and
                Investments............................................... 72
SECTION 6.06. Limitation on Affiliate
                Transactions.............................................. 75
SECTION 6.07. Limitation on Restrictions on
                Distributions from
                Restricted Subsidiaries................................... 76
SECTION 6.08. Limitation on Investment
                Company Status............................................ 77
SECTION 6.09. Financial Covenants......................................... 77
SECTION 6.10. Limitation on Business of the
                Company................................................... 77
SECTION 6.11. Commercial Paper............................................ 77
SECTION 6.12. Issuing and Paying Agent and
                Depositary................................................ 78
SECTION 6.13. Related Documents........................................... 78


ARTICLE VII

              Events of Default........................................    79



ARTICLE VIII

The Agent; the Participating Banks;
      and the Issuing Bank........................................         83
--------------------------------------------------------------------------------


ARTICLE IX

Miscellaneous

SECTION 9.01.  Notices.....................................................86
SECTION 9.02.  Waivers; Amendments ........................................87
SECTION 9.03.  Expenses; Indemnity;
                 Damage Waiver.............................................88
SECTION 9.04.  Successors and Assigns......................................90
SECTION 9.05.  Survival....................................................94
SECTION 9.06.  Counterparts; Integration;
                 Effectiveness.............................................95
SECTION 9.07.  Severability................................................95
SECTION 9.08.  Right of Setoff.............................................95
SECTION 9.09.  Governing Law; Jurisdiction;
                 Consent to Service of Process.............................97
SECTION 9.10.  WAIVER OF JURY TRIAL........................................98
SECTION 9.11.  Headings....................................................98
SECTION 9.12.  Confidentiality                                             98


<PAGE>



                                                  SCHEDULES AND EXHIBITS

Schedule 2.01  Participating Banks
Schedule 3.06  Disclosed Matters
Schedule 6.01  Indebtedness and Preferred Stock
Schedule 6.02  Existing Liens
Schedule 6.06  Affiliate Transactions
Schedule 6.07  Existing Restrictions

Exhibit A      Form of Letter of Credit
Exhibit B      Form of Dealer Agreement
Exhibit C      Form of Issuing and Paying Agency and Depositary Agreement
Exhibit D      Form of Borrowing Base Certificate
Exhibit E      Form of Opinion of Pitney, Hardin, Kipp & Szuch
Exhibit F      Form of Opinion of Internal Counsel of the Company
Exhibit G      Form of Assignment and Acceptance

<PAGE>





<PAGE>




                                                  AMENDED AND RESTATED LETTER OF
                                    CREDIT AND REIMBURSEMENT AGREEMENT, dated as
                                    of  September   9,  1997,   as  amended  and
                                    restated  as  of  August  21,  1998,   among
                                    CONTIFINANCIAL       CORPORATION,        the
                                    PARTICIPATING  BANKS  party  hereto,  CREDIT
                                    SUISSE FIRST  BOSTON,  NEW YORK  BRANCH,  as
                                    Agent,   and  DRESDNER  BANK  AG,  NEW  YORK
                                    BRANCH, as Issuing Bank.


                  INTRODUCTORY  STATEMENTS:  (1) The Company (such term and each
other  capitalized term used but not otherwise defined herein having the meaning
assigned to such term in Article I), the Participating Banks party thereto,  the
Agent and the Issuing Bank  entered into this  Agreement as of September 9, 1997
(the "Original Agreement") pursuant to which the Participating Banks established
the credit facility  provided for herein in the amount of $275,000,000 to permit
the  issuance of a direct pay letter of credit to the  Issuing and Paying  Agent
and  Depositary  for the benefit of the  holders of the  Commercial  Paper.  The
Company has  requested  that the  Original  Agreement be amended in order to (a)
change the  Termination  Date and (b) provide for increases of up to $50,000,000
in the  aggregate  in the Stated  Amount at the  Company's  request and upon the
terms and conditions set forth herein.

                  (2) The Company and the CP Dealer have  entered  into a Dealer
Agreement  pursuant to which the CP Dealer will  purchase for its own account or
sell for the account of the Company the Commercial Paper.

                  (3) The Company,  the Issuing and Paying Agent and Depositary,
the Issuing Bank and the Agent have  entered  into an Issuing and Paying  Agency
and  Depositary  Agreement in connection  with the issuance from time to time of
the Commercial Paper.

                  (4) The  Issuing  Bank has  issued  its  direct  pay letter of
credit,  in  substantially  the form of Exhibit A (such letter of credit and any
successor letter of credit being the "Letter of Credit"),  for the Stated Amount
(the  Issuing  Bank's  obligation  to issue the Letter of Credit as  hereinafter
provided being hereinafter referred to as the "Commitment").

                  The  Participating  Banks are  willing  to amend the  Original
Agreement  and to  restate  the  Original  Agreement  as so  amended in the form
hereof, upon the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:


ARTICLE I

Definitions

                  SECTION 1.01.  Defined Terms.  As used in this Agreement, the
following terms have the meanings specified below:

                  "ABR",  when used in reference to any Loan,  refers to whether
such Loan bears interest at a rate determined by reference to the Alternate Base
Rate.

                  "Account" has the meaning assigned to such term in
Section 2.06(c).

                  "Additional  Assets"  means (a) any property or assets  (other
than Indebtedness and Capital Stock) used or useful in a Related  Business,  (b)
the Capital  Stock of a Person that becomes a Restricted  Subsidiary as a result
of the  acquisition  of such Capital Stock by the Company or another  Restricted
Subsidiary,  (c) Capital Stock  constitu ting a minority  interest in any Person
that at such time is a Restricted Subsidiary;  provided,  however, that any such
Restricted  Subsidiary  described  in clause  (b) or (c),  above,  is  primarily
engaged in a Related  Business or (d) the  Capital  Stock or  Indebtedness  of a
Strategic Alliance Client.

                  "Adjusted  LIBO Rate"  means,  with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, an interest rate per annum
equal  to (a)  the  Applicable  Percentage  plus  (b)  the  rate  determined  in
accordance with the following  formula (rounded  upwards,  if necessary,  to the
next 1/16 of 1%):

                         LIBO Rate

                  1.00 - Eurocurrency Reserve Requirements


                  "Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Agent.

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

                  "Agent"  means Credit Suisse First Boston  Corpora  tion,  New
York Branch, in its capacity as administrative agent for the Participating Banks
hereunder.

                  "Allocation"  means,  as of any date of determina  tion,  with
respect to any  Participating  Bank,  an amount equal to the product of (a) such
Participating Bank's Participation Percentage as of such date and (b) the Stated
Amount (without giving effect to any reductions  thereto other than  irrevocable
reductions) as of such date.

                  "Alternate  Base  Rate"  means,  for any day, a rate per annum
equal to the  greater  of (a) the  Prime  Rate in effect on such day and (b) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in
the  Alternate  Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such  change in the  Prime  Rate or the  Federal  Funds  Effective  Rate,
respectively.

                  "Amendment Effective Date" means the date on which the
conditions specified in Section 4.01 are  satisfied.

                  "Applicable  Percentage"  means as of any time the  percentage
per annum set forth below corresponding to the then-Applicable Rating Level:

   ===================================  ==============================
           Applicable Rating                     Adjustment
                 Level
   ===================================  ==============================
                   I                               0.400%
   ===================================  ==============================
                   II                              0.450%
   ===================================  ==============================
                  III                              0.500%
   ===================================  ==============================
                   IV                              0.625%
   ===================================  ==============================
                   V                               0.750%
   ===================================  ==============================
                   VI                              1.000%
   ===================================  ==============================


                  "Applicable Rating Level" shall be determined, for any day, in
accordance  with the following  table based upon the ratings by Moody's and S&P,
respectively, applicable on such date to the Company's Index Debt:


   =======================================  ====================
             Index Debt Ratings             Applicable Rating
                                                   Level
   =======================================  ====================
   Category 1                                        I
   A- or higher by S&P
   A3 or higher by Moody's
   =======================================  ====================
   Category 2                                       II
   BBB+ by S&P
   Baa1 by Moody's
   =======================================  ====================
   Category 3                                       III
   BBB by S&P
   Baa2 by Moody's
   =======================================  ====================
   Category 4                                       IV
   BBB- by S&P
   Baa3 by Moody's
   =======================================  ====================
   Category 5                                        V
   BB+ by S&P
   Bal by Moody's
   =======================================  ====================
   Category 6                                       VI
   Lower than BB+ by S&P
   Lower than Bal by Moody's
   =======================================  ====================


For purposes of the  foregoing,  (a) if either  Moody's or S&P shall not have in
effect a rating  for the  Company's  Index  Debt  (other  than by  reason of the
circumstances  referred to in the last sentence of this  definition),  then such
rating agency shall be deemed to have established a rating in Category 6; (b) if
the ratings  established  or deemed to have been  established by Moody's and S&P
for the  Company's  Index Debt  shall  fall  within  different  Categories,  the
Applicable Rating Level shall be based on the higher of the two ratings,  except
that (i) if the lower of such ratings is two Categories below the higher of such
ratings,  the Applicable  Rating Level shall be determined based on the Category
between the  Categories in which such ratings fall and (ii) if the lower of such
ratings  is more than two  Categories  below the  higher  of such  ratings,  the
Applicable  Rating  Level  shall be  determined  based on the  Category  that is
immediately above the Category in which the lower of such ratings falls; and (c)
if the ratings established or deemed to have been established by Moody's and S&P
for the  Company's  Index  Debt shall be  changed  (other  than as a result of a
change in the rating  system of Moody's or S&P),  such change shall be effective
as of the first  Business Day  following the  applicable  ratings  change.  Each
change in the Applicable  Rating Level shall apply during the period  commencing
on the date on which such  change is publicly  announced  and ending on the date
immediately  preceding the effective date of the next such change. If the rating
system of Moody's or S&P shall  change,  or if either such rating  agency  shall
cease to be in the  business  of rating  corporate  debt  obligations  or either
Moody's  or S&P shall  refuse to  provide a rating of the  Company's  Index Debt
(provided that the Company has used its best efforts to cause such rating agency
to provide such a rating, including the payment of any fees and the provision of
any information  requested or required thereby in the ordinary course conduct of
its rating business), the Company and the Participating Banks shall negotiate in
good faith to amend this definition to reflect such changed rating system or the
unavailability  of  ratings  from such  rating  agency  and,  pending  the effec
tiveness of any such amendment,  the Applicable Rating Level shall be determined
by  reference  to the rating  most  recently  in effect  prior to such change or
cessation.

                  "Asset Disposition" has the meaning assigned to it in
Section 6.04.

                  "Assignment and Acceptance" means an assignment and acceptance
entered into by a  Participating  Bank and an assignee  (with the consent of any
party whose consent is required by Section 9.04),  and accepted by the Agent, in
the form of Exhibit G or any other form approved by the Agent.

                  "Average Life" means,  as of the date of determina  tion, with
respect to any  Indebtedness  or  Preferred  Stock,  the  quotient  obtained  by
dividing  (a) the sum of the pro ducts of the  numbers of years from the date of
determination  to the dates of each successive  scheduled  principal  payment of
such  Indebtedness  or  redemption  or  similar  payment  with  respect  to such
Preferred  Stock  multiplied by the amount of such payment by (b) the sum of all
such payments.

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

                  "Board  of  Directors"  means the  Board of  Directors  of the
Company or any committee  thereof duly authorized to act on behalf of such Board
of Directors.

                  "Borrowing  Base"  means an  amount by which (a) two times the
sum, without duplication, of (i) 100% of Eligible Cash & Cash Equivalents,  (ii)
95% of Eligible  Receivables,  (iii) 85% of Eligible  Fixed Income  Investments,
(iv) 85% of Eligible  I/O Strip  Securities,  (v) 80% of Eligible  Perform  ance
Deposits,  (vi) 75% of  Capitalized  Servicing  Fees and (vii)  65% of  Eligible
Residuals  (in each case  excluding  any assets set forth in clauses (i) through
(vii) above that are not Eligible Assets),  exceeds (b) the sum of (i) two times
Outstanding Funded  Indebtedness plus (ii) the aggregate principal amount of all
loans outstanding  under the Credit Agreement.  The amount of the Borrowing Base
set forth in any Borrowing Base Certificate may be reduced by the Company at its
option  for any  reason,  including  any  failure  of the  Company to obtain the
relevant  information from newly- acquired  Restricted  Subsidiaries in a timely
manner.  The  Borrowing  Base at any  time in  effect  shall  be  determined  by
reference to the Borrowing Base Certificate most recently delivered to the Agent
pursuant  to  Sections  4.01(f)  and  5.01(g).   Notwithstanding  the  foregoing
provisions  of this  definition,  at any time when the  Company  shall  have out
standing Index Debt that shall be Investment  Grade,  the Borrowing Base will be
deemed to equal the Stated Amount in effect at such time.

                  "Borrowing Base Certificate" means a certificate in the form
of Exhibit D prepared by the Company.

                  "Business  Day" means a day that is not a Saturday,  Sunday or
other day on which  commercial  banks are required or authorized by law to close
in New York City; provided that when used in connection with any Eurodollar Loan
or Interest Period therefor,  "Business Day" shall also exclude any day on which
dealings in dollar deposits are not carried on in the London interbank market.

                  "Cancelation Date" has the meaning assigned to that term in
the Letter of Credit.

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

                  "Capital  Stock"  of any  Person  means  any and  all  shares,
interests,  share  capital,  rights  to  subscribe  for or  purchase,  warrants,
options,  participations  or other equiva  lents of or  interests or  membership
interests in (however designated) equity of such Person, including any Preferred
Stock,  any limited or general  partnership  interest and any limited  liability
company membership interest (but excluding any debt securities  convertible into
such equity), and any rights to subscribe for or purchase any thereof.

                  "Capitalized  Servicing Fees" means servicing fees capitalized
and carried at fair value in  accordance  with GAAP on the balance  sheet of the
Company and its Restricted Subsidiaries on a consolidated basis.

                  "Change in Control" means the occurrence of any of the
following events:

                           (a) any  "person"  (as such term is used in  Sections
         13(d) and 14(d) of the Exchange Act), other than any Permitted  Holder,
         is or becomes  the "bene  ficial  owner" (as defined in Rules 13d-3 and
         13d-5 under the Exchange  Act,  except that such person shall be deemed
         to have  "beneficial  ownership" of all shares that any such person has
         the right to acquire,  whether such right is exercisable immediately or
         only after the passage of time),  directly or indirectly,  of more than
         35% of the  total  voting  power of the  Voting  Stock of the  Company;
         provided,  however,  that the Permitted  Holders  beneficially  own (as
         defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),  directly
         or indirectly, in the aggregate a lesser percentage of the total voting
         power of the Voting  Stock of the Company than such other person and do
         not have the right or ability by voting power, contract or otherwise to
         elect or  designate  for  election a majority of the Board of Directors
         (for the purposes of this clause (i), such other person shall be deemed
         to beneficially  own any Voting Stock of a corporation  held by another
         corpora  tion (a "parent  corporation"),  if such  other  person is the
         beneficial  owner (as  defined  above  for such  person),  directly  or
         indirectly, of more than 35% of the voting power of the Voting Stock of
         such parent corporation and the Permitted Holders  beneficially own (as
         defined above for the Permitted  Holders),  directly or indirectly,  in
         the  aggregate a lesser  percentage  of the voting  power of the Voting
         Stock of such parent  corporation  and do not have the right or ability
         by voting  power,  contract  or  otherwise  to elect or  designate  for
         election  a  majority  of  the  board  of   directors  of  such  parent
         corporation);

                           (b)  during  any  period  of two  consecutive  years,
         individuals  who at the beginning of such period  constituted the Board
         of Directors  (together  with any new directors  whose election by such
         Board of Directors or whose nomination for election by the shareholders
         of the Company was  approved by a vote of 66-2/3% of the  directors  of
         the  Company  then still in office  who were  either  directors  at the
         beginning of such period or whose  election or nomination  for election
         was  previously  so  approved)  cease for any  reason to  constitute  a
         majority of the Board of Directors then in office; or

                           (c) the merger or  consolidation  of the Company with
         or into another Person or the merger of another Person with or into the
         Company,  or the sale of all or  substantially  all the  assets  of the
         Company to another  Person  (other than a Person that is  controlled by
         the  Permitted  Holders),  and,  in the  case  of any  such  merger  or
         consolidation,  the  securities  of the  Company  that are  outstanding
         immediately  prior to such  transaction and which represent 100% of the
         aggregate  voting  power of the Voting Stock of the Company are changed
         into or exchanged for cash, securities or property,  unless pursuant to
         such  transaction such securities are changed into or exchanged for, in
         addition  to any  other  consideration,  securities  of  the  surviving
         corporation that represent immediately after such transaction, at least
         a majority of the  aggregate  voting  power of the Voting  Stock of the
         surviving corporation;  provided, however, that the sale by the Company
         or its Restricted  Subsidiaries from time to time solely of Receivables
         to  a  trust  for  the  purpose   solely  of  effecting   one  or  more
         securitizations  shall  not be  treated  hereunder  as a sale of all or
         substantially all the assets of the Company.

                  "Change in Law"  means (a) the  adoption  of any law,  rule or
regulation after the date of this Agreement,  (b) any change in any law, rule or
regulation or in the interpreta tion or application  thereof by any Governmental
Authority   after  the  date  of  this   Agreement  or  (c)  compliance  by  any
Participating  Bank (or, for purposes of Section 2.07(b),  by any lending office
of such Participating Bank or by such Participating  Bank's holding company,  if
any) with any request,  guideline or directive  (whether or not having the force
of law) of any  Governmental  Authority  made or  issued  after the date of this
Agreement.

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

                  "Commercial Paper" means short-term promissory notes issued by
the Company pursuant to the Issuing and Paying Agency and Depositary Agreement.

                  "Commitment" has the meaning assigned to that term in the
fourth Introductory Statement hereto.

                  "Company" means ContiFinancial Corporation, a Delaware
corporation.
                  "Consolidated  EBIT"  for  any  period,  with  respect  to the
Company  and  its  Restricted  Subsidiaries  on a  consoli  dated  basis,  means
Consolidated  Net  Income  for such  period  plus,  to the  extent  deducted  in
computing  Consolidated Net Income for such period,  (a)  Consolidated  Interest
Expense for such period and (b)  foreign,  Federal,  state and local  income tax
expense for such period.

                  "Consolidated  Interest  Coverage  Ratio" for any period means
the ratio of Consolidated EBIT for such period to Consolidated  Interest Expense
for such period.

                  "Consolidated Interest Expense" for any period means the total
interest   expense  of  the  Company  and  its  Restricted   Subsidiaries  on  a
consolidated basis for such period.

                  "Consolidated  Leverage Ratio" as of any date of determination
means the ratio of (a) the aggregate  amount of all  Indebtedness of the Company
and its  Restricted  Subsi  diaries  on a  consolidated  basis  as of such  date
(excluding (i) Permitted Warehouse Indebtedness and (ii) any Indebted ness under
Hedging Agreements Incurred pursuant to Section 6.05(b)) to (b) Consolidated Net
Worth as of such date.

                  "Consolidated Net Income" means the net income from continuing
operations  (after  taxes)  of the  Company  and  its  Restricted  Subsidiaries,
determined on a consolidated basis in accordance with GAAP, excluding the effect
of extraordinary  or non-recurring  gains or losses (as such gains or losses are
determined in accordance with GAAP).

                  "Consolidated  Net Worth" means the total of the amounts shown
on the  balance  sheet  of the  Company  and its  Restricted  Subsidiaries  on a
consolidated  basis  as of the end of the  most  recent  fiscal  quarter  of the
Company for which financial  statements are available,  as (a) the par or stated
value of all  outstanding  Capital Stock of the Company plus (b) paid-in capital
or capital surplus relating to such Capital Stock plus (c) any retained earnings
or  earned  surplus  less  (i)  any  accumulated   deficit,   (ii)  any  amounts
attributable  to  Disqualified  Stock  and  (iii) any  amounts  attributable  to
deferred compensation  appropriately  classified as net worth in accordance with
GAAP.

                  "Continental Grain" means Continental Grain Company, a
Delaware corporation.

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

                  "CP Dealer" means Credit Suisse First Boston Corporation, a
Massachusetts corporation.

                  "Credit  Agreement"  means the  Credit  Agreement  dated as of
January 7, 1997,  among  ContiFinancial  Corpora tion, the lenders party thereto
and Credit Suisse First Boston, New York Branch, as administrative agent.

                  "Dealer   Agreement"   means  a  dealer  agreement  dated  the
Effective Date between the CP Dealer and the Company  substantially  in the form
of Exhibit B.

                  "Default"  means any event or condition  which  constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

                  "Default Rate" means 2% per annum plus the Alternate Base Rate
in effect from time to time.

                  "Disclosed  Matters" means the actions,  suits and proceedings
and the environmental matters disclosed in Schedule 3.06.

                  "Disqualified  Stock" means,  with respect to any Person,  any
Capital  Stock which by its terms (or by the terms of any security into which it
is  convertible  or for which it is  exchangeable)  or upon the happening of any
event (a)  matures  or is  mandatorily  redeemable  pursuant  to a sinking  fund
obligation or otherwise,  (b) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (c) is redeemable at the option of the holder thereof,  in
each  case in  whole  or in part on or prior  to the  first  anniversary  of the
Termination  Date;  provided,  however,  that any  Capital  Stock that would not
constitute  Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of a "change of control" occurring prior to the first anniversary
of the Termination Date shall not constitute  Disqualified  Stock if the "change
of control"  provisions  applicable to such Capital Stock are not more favorable
to the  holders  of such  Capital  Stock  than  the  Change  in  Control-related
provisions in Article VII.

                  "dollars" or "$" refers to lawful money of the United States
of America.

                  "Effective Date" means September 9, 1997.

                  "Eligible  Assets"  means  Eligible  Cash & Cash  Equivalents,
Eligible  Fixed  Income  Investments,  Eligible I/O Strip  Securities,  Eligible
Performance Deposits,  Eligible Receivables,  Eligible Residuals and Capitalized
Servicing  Fees, in each case which are free and clear of all Liens (except that
Eligible  Performance  Deposits  may be subject to a Lien in favor of the Person
providing the related Warehouse  Facility if such Lien was created in connection
with the provision of such  Warehouse  Facility and secures the  performance  of
assets relating to such Warehouse Facility).

                  "Eligible  Cash & Cash  Equivalents"  means  all  cash and all
Investments  of the Company and its  Restricted  Subsidiaries,  determined  on a
consolidated  basis in  accordance  with GAAP,  specified  in any of clauses (a)
through (d) of the definition of Permitted Investments.

                  "Eligible  Excess  Spread  Receivables"  means  Excess  Spread
Receivables  of the Company and its  Restricted  Subsidiaries  on a consolidated
basis created after the date hereof;  provided,  however,  that "Eligible Excess
Spread  Receivables" shall not include any Excess Spread Receivables  created as
the result of the securitization or sale of other Excess Spread Receivables.

                  "Eligible Fixed Income  Investments"  means all Investments of
the Company and its Restricted Subsidiaries,  determined on a consolidated basis
in accordance  with GAAP, of the type  specified in clause (e) of the definition
of Permitted Investments.

                  "Eligible  I/O Strip  Securities"  means the book value of all
I/O Strip Securities of the Company and its Restricted Subsidiaries,  determined
on a consolidated basis in accordance with GAAP, that are rated at least Baa3 by
Moody's or BBB- by S&P, Duff & Phelps Credit Rating Co. or Fitch.

                  "Eligible Performance Deposits" means the aggre gate amount of
all  Performance  Deposits  of the  Company  and  its  Restricted  Subsidiaries,
determined on a consolidated basis, other than Performance  Deposits relating to
Warehouse  Facilities if the Company or a Restricted  Subsidiary  has determined
(a) in the case of purchase and sale Warehouse Facilities, not to repurchase and
subsequently  securitize or sell the related  Receivables or assets,  and (b) in
the case of Warehouse  Facilities  in the form of a loan,  not to  securitize or
sell the related Receivables or assets.
                  "Eligible  Performance  Guarantees" means the aggregate amount
of all  Performance  Guarantees of the Company and its Restricted  Subsidiaries,
determined on a consolidated  basis, other than Performance  Guarantees relating
to Warehouse Facilities if the Company or a Restricted Subsidiary has determined
(a) in the case of purchase and sale Warehouse Facilities, not to repurchase and
subsequently  securitize or sell the related  Receivables or assets,  and (b) in
the case of Warehouse  Facilities  in the form of a loan,  not to  securitize or
sell the related Receivables or assets.

                  "Eligible  Receivables" shall mean all Receivables  (excluding
Performance Deposits,  Capitalized Servicing Fees and Excess Spread Receivables)
of the Company and its  Restricted  Subsidiaries,  determined on a  consolidated
basis in accordance  with GAAP,  which are held for sale and are not past due by
more than 90 days;  provided,  however,  that the  aggregate  amount of Eligible
Receivables at any time shall exclude (a) Eligible Receivables that are past due
by more  than 30 days  but  less  than  60  days  to the  extent  that  Eligible
Receivables  past due by more than 30 days but less than 60 days would otherwise
constitute more than 7% of such aggregate amount of Eligible Receivables at such
time, and (b) Eligible Receivables that are past due by 60 days or longer to the
extent that Eligible  Receivables  past due by 60 days or longer would otherwise
constitute more than 3% of such aggregate amount of Eligible Receivables at such
time.

                  "Eligible  Residuals" shall mean all Excess Spread Receivables
(other than  Eligible I/O Strip  Securities)  of the Company and its  Restricted
Subsidiaries,  determined on a consolidated basis, and carried at fair value, in
accordance with GAAP,  excluding any such Excess Spread  Receivables  created as
the result of the  securitization  of existing Excess Spread  Receivables or the
sale of Excess Spread Receivables.

                  "Environmental  Laws"  means  all  laws,  rules,  regulations,
codes, ordinances, orders, decrees, judgments,  injunctions,  notices or binding
agreements issued,  promul gated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or health and safety matters.

                  "Environmental  Liability" means any liability,  contingent or
otherwise   (including  any  liability  for  damages,   costs  of  environmental
remediation,  fines, penalties or indemnities), of the Company or any Restricted
Subsidiary directly or indirectly  resulting from or based upon (a) violation of
any  Environmental  Law,  (b) the  generation,  use,  handling,  transportation,
storage,  treatment or disposal of any Hazardous Materials,  (c) exposure to any
Hazardous  Materials,(d)  the  release or  threatened  release of any  Hazardous
Materials  into  the  environment  or  (e)  any  contract,  agreement  or  other
consensual  arrangement  pursuant to which  liability is assumed or imposed with
respect to any of the foregoing.

                  "Equity  Net  Proceeds"  means  the  cash  proceeds  from  the
issuance or sale by the  Company or any  Restricted  Subsidiary  (other than the
issuance or sale to the Company or any Wholly Owned  Restricted  Subsidiary)  of
any  equity  security  (or any  option,  warrant  or right to  subscribe  for or
security  convertible  into or  exchangeable  for any  equity  security)  of the
Company or any Restricted  Subsidiary  (other than sales of Capital Stock of the
Company to directors,  officers,  consultants or employees of the Company or any
Restricted  Subsidiary,  in connection with permitted employee  compensation and
incentive  arrangements),  net of all taxes  applicable to and  customary  fees,
commissions,  costs and other expenses incurred in connection with such issuance
or sale.

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

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

                  "ERISA Event" means (a) any "reportable  event", as defined in
Section 4043 of ERISA or the  regulations  issued  thereunder  with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an  "accumulated  funding  deficiency" (as
defined in  Section  412 of the Code or  Section  302 of ERISA),  whether or not
waived;  (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an  application  for a waiver of the minimum  funding  standard with
respect  to any Plan;  (d) the  incurrence  by the  Company  or any of its ERISA
Affiliates  of any  liability  under  Title  IV of  ERISA  with  respect  to the
termination of any Plan;  (e) the receipt by the Company or any ERISA  Affiliate
from the PBGC or a plan  administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer  any Plan; (f)
the  incurrence  by the Company or any of its ERISA  Affiliates of any liability
with  respect  to  the  withdrawal  or  partial  withdrawal  from  any  Plan  or
Multiemployer  Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any  notice,  or the receipt by any  Multiemployer  Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

                  "Eurocurrency  Reserve  Requirements"  means  for  any  day as
applied to a Eurodollar Loan, the aggregate  (without  duplication) of the rates
(expressed as a decimal fraction) of reserve  requirements in effect on such day
(including  basic,  supplemental,  marginal  and  emergency  reserves  under any
regulations of the Board or other  Governmental  Authority  having  jurisdiction
with  respect  thereto)  dealing  with  reserve   requirements   prescribed  for
Eurocurrency  funding  (currently  referred to as "Eurocurrency  Liabilities" in
Regulation D of such Board)  maintained by a member bank of the Federal  Reserve
System of the United States of America.

                  "Eurodollar",  when used in reference  to any Loan,  refers to
whether  such Loan bears  interest  at a rate  determined  by  reference  to the
Adjusted LIBO Rate.

                  "Event of Default" has the meaning assigned to such term in
Article VII.

                  "Excess   Spread"  means,   over  the  life  of  a  "pool"  of
Receivables  that have  been  sold by a Person  to a trust or other  Person in a
securitization  or sale,  the rights  retained  by such  Person or a  Restricted
Subsidiary  at or subsequent  to the closing of such  securitization  or sale to
receive for its benefit cash flows attributable to such "pool".

                  "Excess Spread  Receivables" of a Person means the contractual
or certificated right to Excess Spread capitalized on such Person's consolidated
balance  sheet (the  amount of which  shall be the  present  value of the Excess
Spread, calculated in accordance with GAAP).

                  "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  "Excluded  Taxes"  means,  with  respect  to  the  Agent,  any
Participating  Bank,  or any other  recipient of any payment to be made by or on
account of any  obligation  of the Company  hereunder,  (a) income or  franchise
taxes  imposed  on (or  measured  by) its net  income  by the  United  States of
America,  or by the  jurisdiction  under  the laws of which  such  recipient  is
organized  or in which its  principal  office is located  or, in the case of any
Participating  Bank, in which its applicable lending office is located,  (b) any
branch  profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Company is located and (c) in the
case of a Foreign  Partici  pating Bank  (other  than an assignee  pursuant to a
request by the Company  under  Section  9.04(i)),  any  withholding  tax that is
imposed on amounts payable to such Foreign  Participating  Bank at the time such
Foreign  Participating  Bank becomes a party to this  Agreement (or designates a
new lending  office) or is  attributable  to such Foreign  Participating  Bank's
failure to comply with Section  2.14(e),  except to the extent that such Foreign
Participating  Bank  (or its  assignor,  if any)  was  entitled,  at the time of
designation  of a new  lending  office (or  assignment),  to receive  additional
amounts  from the  Company  with  respect to such  withholding  tax  pursuant to
Section 2.14(a).

                  "Face  Amount"  means,  with respect to any Commer cial Paper,
(a) the aggregate face amount (if issued on a discount basis) of such Commercial
Paper or (b) the aggre gate principal  amount (if issued on an  interest-bearing
basis) of such Commercial  Paper together with the aggregate  amount of interest
to the stated maturity date thereof.

                  "Federal  Funds  Effective  Rate"  means,  for  any  day,  the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on  overnight  Federal  funds  transactions  with  members of the  Federal
Reserve  System  arranged by Federal  funds  brokers,  as  published on the next
succeeding  Business Day by the Federal  Reserve  Bank of New York,  or, if such
rate is not so  published  for  any day  that is a  Business  Day,  the  average
(rounded upwards,  if necessary,  to the next 1/100 of 1%) of the quotations for
the day of such  transactions  received  by the Agent from three  Federal  funds
brokers of recognized standing selected by it.

                  "Financial   Officer"  means  the  chief  financial   officer,
principal accounting officer, treasurer or controller of the Company.

                  "Fitch" means Fitch Investors Service, L.P. or any successor
thereto.

                  "Foreign  Participating  Bank" means any  Partici  pating Bank
that is organized under the laws of a jurisdic tion other than that in which the
Company is  located.  For  purposes  of this  definition,  the United  States of
America,  each State  thereof and the  District  of Columbia  shall be deemed to
constitute a single jurisdiction.

                  "GAAP" means generally accepted accounting principles in the
United States of America.

                  "Governmental  Authority"  means the  government of the United
States of  America,  any  other  nation or any  political  subdivision  thereof,
whether state or local, and any agency, authority,  instrumentality,  regulatory
body,  court,  central bank or other entity exercising  executive,  legislative,
judicial,  taxing,  regulatory  or  administrative  powers  or  functions  of or
pertaining to government.

                  "Guarantee"  of or by any Person (the  "guarantor")  means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of  guaranteeing  any  Indebtedness  or other  obligation of any
other  Person  (the  "primary  obligor")  in any  manner,  whether  directly  or
indirectly,  and including any obligation of the guarantor,  direct or indirect,
(a) to purchase or pay (or advance or supply  funds for the  purchase or payment
of) such  Indebtedness  or other  obligation  or to  purchase  (or to advance or
supply funds for the purchase of) any security for the payment  thereof,  (b) to
purchase or lease  property,  securities or services for the purpose of assuring
the owner of such  Indebtedness or other obligation of the payment thereof,  (c)
to maintain  working  capital,  equity capital or any other financial  statement
condition  or  liquidity  of the  primary  obligor so as to enable  the  primary
obligor to pay such  Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty  issued to support such
Indebtedness  or obligation;  provided that the term Guarantee shall not include
endorse ments for collection or deposit in the ordinary course of business.

                  "Hazardous  Materials"  means  all  explosive  or  radioactive
substances  or wastes and all  hazardous  or toxic  substances,  wastes or other
pollutants,  including petroleum or petroleum distillates,  asbestos or asbestos
containing  materials,  polychlorinated  biphenyls,  radon  gas,  infectious  or
medical  wastes  and all other  substances  or wastes  of any  nature  regulated
pursuant to any Environmental Law.

                  "Hedging   Agreement"   means  any  interest  rate  protection
agreement,  foreign  currency  exchange  agreement,  commodity price  protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.

                  "Incur"  means issue,  assume,  Guarantee,  incur or otherwise
become liable for; provided,  however, that any Indebtedness or Capital Stock of
a Person  existing  at the time  such  Person  becomes a  Restricted  Subsidiary
(whether by merger, consolidation,  acquisition or otherwise) shall be deemed to
be Incurred by such Person at the time it becomes a Restricted  Subsidiary.  The
term  "Incurrence"  when used as a noun shall have a  correlative  meaning.  The
accretion of  principal of a  non-interest  bearing or other  discount  security
shall be deemed the Incurrence of Indebtedness.

                  "Indebtedness"  means,  with respect to any Person on any date
of  determination  (without  duplication),  (a) the principal of and premium (if
any) in respect of (i)  indebtedness  of such Person for money borrowed and (ii)
indebtedness evidenced by notes, debentures,  bonds or other similar instruments
for the payment of which such Person is responsible  or liable;  (b) all Capital
Lease  Obligations of such Person;  (c) all obligations of such Person issued or
assumed  as the  deferred  purchase  price of  property,  all  conditional  sale
obligations  of such Person and all  obligations  of such Person under any title
retention  agreement (but excluding trade accounts  payable and expense accruals
arising in the ordinary course of business);  (d) all obligations of such Person
for  the  reimbursement  of  any  obligor  on any  letter  of  credit,  banker's
acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations  described in (a)
through (c),  above)  entered  into in the  ordinary  course of business of such
Person to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon,  such drawing is reimbursed no later than the tenth  Business
Day  following  receipt by such Person of a demand for  reimbursement  following
payment on the letter of  credit);  (e) the  amount of all  obligations  of such
Person with  respect to the  redemption,  repayment or other  repurchase  of any
Disquali  fied  Stock (but  excluding  any  accrued  dividends);  (f)  Warehouse
Indebtedness;  (g) in  connection  with each sale by such  Person of any  Excess
Spread  Receivables,  the maximum aggregate  contractual claim (if any) that the
purchaser  thereof could have against such Person if the amounts  anticipated at
the time of such sale to be received by such  purchaser in connection  with such
Excess  Spread  Receivables  are  not  received  by  such  purchaser;   (h)  all
obligations  of the type referred to in clauses (a) through (g) of other Persons
and all  dividends  of other  Persons for the payment of which,  in either case,
such  Person is  responsible  or liable,  directly  or  indirectly,  as obligor,
guarantor or otherwise, including by means of any Guarantee; (i) all obligations
of the type referred to in clauses (a) through (h) of other  Persons  secured by
any Lien on any property or asset of such Person (whether or not such obligation
is assumed by such Person), the amount of such obligation being deemed to be the
lesser of the value of such  property or assets or the amount of the  obligation
so secured  and (j) to the extent not  otherwise  included  in this  definition,
Hedging  Agreements of such Person.  The amount of Indebtedness of any Person at
any date  shall be the  outstanding  balance  at such date of all  unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation,  of any contingent obligations at
such  date.   Notwithstanding   the  foregoing,   any  securities  issued  in  a
securitization  by a special  purpose owner trust or similar entity formed by or
on behalf of a Person and to which Receivables or Excess Spread Receivables have
been  sold or  otherwise  transferred  by or on  behalf  of such  Person  or its
Subsidiaries  shall  not be  treated  as  Indebtedness  of  such  Person  or its
Subsidiaries  under this  Agreement,  regardless of whether such  securities are
treated as indebtedness for tax purposes.

                  "Indemnified Taxes" means Taxes other than Excluded Taxes.

                  "Index Debt" means senior,  unsecured,  long-term indebtedness
for borrowed  money of any Person that is not  guaranteed by any other Person or
subject to any other credit enhancement.

                  "Interest Election Request" has the meaning assigned to it in
Section 2.15(b).

                  "Interest  Payment  Date"  means (a) with  respect  to any ABR
Loan,  the last day of each March,  June,  September and December,  and (b) with
respect to any Eurodollar  Loan, the last day of the Interest Period  applicable
to such Eurodollar Loan.

                  "Interest  Period" means, with respect to any Eurodollar Loan,
the period  commencing  on the date of such Loan and  ending on the  numerically
corresponding  day in the  calendar  month  that is  one,  two or  three  months
thereafter, as the Company may elect.

                  "Investment"  in any  Person  means  any  direct  or  indirect
advance,  loan  (other than  advances to  customers  in the  ordinary  course of
business that are recorded as trade accounts on the balance sheet of the lender)
or other  exten  sions of  credit  (including  by way of  Guarantee  or  similar
arrangement)  or capital  contribution  to (by means of any  transfer of cash or
other property to others or any payment for property or services for the account
or use of others),  or any purchase or acquisition  of Capital  Stock,  Indebted
ness or other  similar  instruments  issued by such Person.  For purposes of the
definition of  "Unrestricted  Subsidiary",  (a)  "Investment"  shall include the
portion  (proportionate  to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any  Subsidiary at the time that such
Subsidiary is designated an Unrestricted  Subsidiary;  provided,  however,  that
upon a redesignation of such Subsidiary as a Restricted Subsidiary,  the Company
shall be deemed to continue to have a permanent  "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (i) the Company's "Investment" in
such  Subsidiary  at the  time of  such  redesignation  less  (ii)  the  portion
(proportionate  to the Company's equity interest in such Subsidiary) of the fair
market  value  of the  net  assets  of  such  Subsidiary  at the  time  of  such
redesignation;  and  (b) any  property  transferred  to or from an  Unrestricted
Subsidiary  shall  be  valued  at its  fair  market  value  at the  time of such
transfer, in each case as determined in good faith by the Board of Directors.

                  "Investment  Grade"  means,  when used with  reference  to the
Company's  Index Debt,  that such Index Debt shall be rated (a) at or above Baa3
(or the  equivalent) by Moody's and (b) at or above BBB- (or the  equivalent) by
S&P.  Each rating of the  Company's  Index Debt will be effective on the date on
which such rating is publicly  announced by the applicable rating agency. If the
rating  system of Moody's or S&P shall  change,  or if either such rating agency
shall cease to be in the business of rating  corporate  debt obli  gations,  the
Company and the Participating  Banks shall negotiate in good faith to amend this
definition  to reflect  such  changed  rating  system or the  unavailability  of
ratings  from such rating  agency and,  pending  the  effectiveness  of any such
amendment, the applicable rating shall be deter mined by reference to the rating
most recently in effect prior to such change or cessation.

                  "I/O  Strip  Securities"  means a  certificate  issued  to the
Company or a Restricted Subsidiary in a securitiza tion of a pool of Receivables
(other than Excess Spread Receivables) in the ordinary course of business of the
Company which pays a fixed or floating rate of interest on a notional  principal
amount.

                  "Issuing and Paying Agency and Depositary Agree ment" means an
issuing and paying  agency and  depositary  agreement  dated as of the Effective
Date  between  the  Issuing  and Paying  Agent and  Depositary  and the  Company
substantially in the form of Exhibit C.

                  "Issuing  and  Paying  Agent and  Depositary"  means The Chase
Manhattan Bank, a New York banking corporation,  as issuing and paying agent and
depositary under the Issuing and Paying Agency and Depositary Agreement,  or any
successor issuing and paying agent and depositary  appointed in accor dance with
this Agreement and the Issuing and Paying Agency and Depositary Agreement.

                  "Issuing Bank" means Dresdner Bank AG, New York Branch, in its
capacity as the issuer of the Letter of Credit hereunder,  and its successors in
such  capacity  as  provided in Section  9.04(j).  The Issuing  Bank may, in its
discretion, arrange for the Letter of Credit to be issued by an Affiliate of the
Issuing  Bank,  in  which  case the  term  "Issuing  Bank"  shall  include  such
Affiliate.

                  "Letter of Credit" has the meaning assigned to that term in
the fourth Introductory Statement thereto.

                  "LIBO Rate" means the rate per annum  determined  by the Agent
at  approximately  11:00 a.m.  (London time),  on the date which is two Business
Days prior to the beginning of the relevant  Interest Period by reference to the
British Bankers'  Association  Interest Settlement Rates for deposits in dollars
(as set forth by any service  selected by the Agent which has been  nominated by
the British  Bankers'  Association as an authorized  information  vendor for the
purpose of  displaying  such rates,  which is currently  equivalent to such rate
appearing on Page 3750 of Dow Jones Markets) for a period equal to such Interest
Period  (rounded  upward to the nearest whole  multiple of 1/16th of 1%, if such
rate is not such a multiple);  provided that to the extent that an interest rate
is not  ascertainable  pursuant to the foregoing  provisions of this definition,
the "LIBO Rate" shall be the interest rate per annum  determined by the Agent to
be the average (rounded upward to the nearest whole multiple of 1/16th of 1% per
annum,  if such  average is not such a multiple) of the rates per annum at which
deposits in dollars are offered for such relevant Interest Period to major banks
in the London  interbank  market in London,  England by the Reference  Banks, at
approximately  11:00 a.m.  (London  time) on the date which is two Business Days
prior to the beginning of such Interest  Period.  If any of the Reference  Banks
shall be unable or shall  otherwise  fail to supply such rates to the Agent upon
its request,  the rate of interest  shall,  subject to the provisions of Section
2.04(d), be determined on the basis of the quotations of the remaining Reference
Banks or Reference Bank.
                  "Lien"  means,  with respect to any asset,  (a) any  mortgage,
deed of trust,  lien,  pledge,  hypothecation,  encumbrance,  charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement,  capital lease or title retention  agreement (or
any financing lease having  substantially the same economic effect as any of the
foregoing)  relating to such asset, (c) in the case of securities,  any purchase
option,  call or similar right of a third party with respect to such  securities
and (d) any claim (whether  direct or indirect  through  subordination  or other
structural  encum brance)  against any Excess Spread  Receivable sold unless the
seller is not liable for any losses thereon.

                  "Loan" has the meaning assigned to such term in Section 2.04.

                  "Margin Stock" has the meaning given such term under
Regulation U.

                  "Material  Adverse Effect" means (a) a material adverse effect
on the  business,  assets,  operations,  prospects  or  condition,  financial or
otherwise,  of the Company and the Restricted Subsidiaries taken as a whole, (b)
a material  adverse  effect on the  ability of the Company to perform any of its
obligations  under this Agreement or (c) a material adverse effect on the rights
of or benefits available to the Participating Banks under this Agreement.

                  "Material  Indebtedness"  means  Indebtedness  (other than the
Loans and the  Letter of  Credit),  or  obligations  in  respect  of one or more
Hedging  Agreements,  of any  one or  more of the  Company  and  its  Restricted
Subsidiaries  in an aggregate  principal  amount  exceeding  $5,000,000  (or the
equivalent amount in any other currency).  For purposes of determining  Material
Indebtedness,  the "principal  amount" of the  obligations of the Company or any
Restricted  Subsidiary in respect of any Hedging  Agreement at any time shall be
the maximum aggregate amount (giving effect to any netting  agreements) that the
Company or such Restricted  Subsidiary  would be required to pay if such Hedging
Agreement were terminated at such time.

                  "Moody's" means Moody's Investors Service, Inc. or any
successor thereto.

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

                  "Net  Available  Cash"  from an Asset  Disposition  means cash
payments  received  therefrom  (including  any cash payments  received by way of
deferred  payment of principal  pursuant to a note or installment  receivable or
otherwise,  but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring  Person of  Indebtedness  or
other obligations relating to such properties or assets or received in any other
non-cash  form) in each  case net of (a) all  legal,  title  and  recording  tax
expenses,  commissions  and other fees and expenses  incurred,  and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Disposition, (b) all payments made on
any  Indebtedness  which  is  secured  by  any  assets  subject  to  such  Asset
Disposition,  in  accordance  with the terms of any Lien upon or other  security
agreement of any kind with  respect to such assets,  or which must by its terms,
or in order to obtain a neces  sary  consent to such  Asset  Disposition,  or by
applicable law, be repaid out of the proceeds from such Asset  Disposition,  (c)
all  distributions  and other payments  required to be made to minority interest
holders in Subsi diaries or joint ventures as a result of such Asset Disposition
and (d) the  deduction  of  appropriate  amounts  provided  by the  seller  as a
reserve,  in accordance with GAAP,  against any liabilities  associated with the
property or other assets  disposed of in such Asset  Disposition and retained by
the Company or any Restricted Subsidiary after such Asset Disposition;  provided
that "Net Available Cash" will be increased by the amount of any such reserve to
the extent such reserve is reversed.

                  "Non-Default  Disruption"  shall have the meaning  assigned to
such term in Section 2.04(a).

                  "Other  Taxes"  means any and all  present or future  stamp or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies arising from any payment made  hereunder or from the execution,  delivery
or enforce ment of, or otherwise  with  respect to, this  Agreement,  other than
Excluded Taxes.

                  "Outstanding"  means,  with respect to Commercial  Paper,  all
Commercial  Paper  issued at any time under the  Issuing  and Paying  Agency and
Depositary Agreement except (a) Commercial Paper which has been paid through the
Issuing and Paying Agent and  Depositary  and (b) matured  Commercial  Paper and
unmatured  Commercial  Paper which is deemed paid  pursuant to Sections 8(d) and
10(b), respectively, of the Issuing and Paying Agency and Depositary Agreement.

                  "Outstanding   Funded   Indebtedness"  means  all  outstanding
Indebtedness  of the Company and its Restricted  Subsidiaries  on a consolidated
basis excluding,  without duplication, (a) the aggregate principal amount of all
loans outstanding under the Credit Agreement, (b) any Indebtedness  constituting
Hedging  Agreement  obligations,  (c) 80% of the  aggregate  amount of  Eligible
Performance  Guarantees,  (d)  all  Permitted  Warehouse  Indebtedness,  (e) the
payment  obliga  tions of the  Company,  whether or not  contingent,  under this
Agreement and (f) the aggregate Face Amount of the Outstanding Commercial Paper.

                  "Participant" has the meaning assigned to such term in Section
9.04(e).

                  "Participating  Banks" means the banks listed on Schedule 2.01
hereof  under the  caption  "Participating  Banks"  and any other  Person  which
becomes a Participating Bank pursuant to Section 9.04.

                  "Participation   Percentage"   means,   as  of  any   date  of
determination,  (a) with  respect  to a  Participating  Bank  initially  a party
hereto,  the  percentage set forth  opposite such  Participating  Bank's name on
Schedule  2.01  hereof,  except as  provided in clause (c) below and as adjusted
pursuant  to Section  2.11(e),  (b) with  respect to a  Participating  Bank that
became a party hereto after the date hereof by  operation of Section  9.04,  the
percentage  partici pation interest assumed by such assignee  Participating Bank
as set forth in the instrument of assignment referred to in Section 9.04, except
as provided in clause (c) below and as adjusted pursuant to Section 2.11(e), and
(c) with respect to any Participating  Bank described in clause (a) or (b) above
that assigns a percentage of its  interests  after the date hereof in accordance
with Section 9.04, its participation  percentage as reduced by the percentage so
assigned and as adjusted pursuant to Section 2.11(e).

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.

                  "Performance  Deposits"  means the right of the Company or any
Restricted  Subsidiary  to receive from the  purchaser or lender  providing  any
Warehouse Facility an amount equal to (a) the face value of the assets which are
the  subject of such  Warehouse  Facility  less (b) the sum of (i) the amount of
cash actually received by the Company or such Restricted  Subsidiary as proceeds
of such  Warehouse  Facility and (ii) the  aggregate  amount of all  Performance
Guarantees provided in connection with such Warehouse Facility; provided that no
such Performance Deposit shall, when taken together with the aggregate amount of
all Performance Guarantees relating to the applicable Warehouse Facility, in any
event  exceed 10% of the face value of the assets  which are the subject of such
Warehouse Facility.

                  "Performance  Guarantee" means any Guarantee of the Company or
any  Restricted  Subsidiary  for the  benefit  of the  provider  of a  Warehouse
Facility  of  obligations  relating  to  Receivables  which are the subject of a
Warehouse  Facility in an amount which,  when taken  together with the aggregate
amount  of all  Performance  Deposits  relating  to the  appli  cable  Warehouse
Facility,  is no greater than 10% of the face value of the Receivables which are
the subject of such  Warehouse  Facility;  provided that such  Guarantee has the
same economic effect as a Performance Deposit.

                  "Permitted   Holders"   means  lineal   descendants  of  Jules
Fribourg, including any individual legally adopted; spouses of such descendants;
trusts,  the  beneficiaries  of which  are any of the  foregoing;  partnerships,
corporations,  or other entities in which any of the foregoing (individu ally or
collectively)  has  a  controlling   interest;   and  charitable   organizations
established by any of the foregoing.

                  "Permitted Investments" means:

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

                           (b)  investments  in commercial  paper,  maturing not
         more  than  180  days  after  the  date  of  acquisition,  issued  by a
         corporation  (other than an Affiliate of the Company)  organized and in
         existence under the laws of the United States of America or any foreign
         country recognized by the United States of America with a rating at the
         time as of which any  investment  therein is made of "P-1" (or  higher)
         according to Moody's or "A-1" (or higher) according to S&P;

                           (c)    investments   in   time   deposit    accounts,
         certificates of deposit and money market  deposits  maturing within 180
         days of the  date of  acquisition  thereof  issued  by a bank or  trust
         company  that is not an Affiliate of the Company and which is organized
         under the laws of the United  States of America,  any state  thereof or
         any foreign  country  recognized by the United  States of America,  and
         which bank or trust company has capital,  surplus and undivided profits
         aggregating  in  excess  of  $200,000,000   (or  the  foreign  currency
         equivalent  thereof)  and has  outstanding  debt which is rated "A" (or
         such similar  equivalent  rating) or higher by at least one  nationally
         recognized  statistical  rating  organization  (as  defined in Rule 436
         under the Securities Act of 1933, as amended) or any money-market  fund
         sponsored by a registered broker dealer or mutual fund distributor;

                           (d) fully collateralized repurchase agreements with a
         term of not more than 30 days for  securities  described  in clause (a)
         above and entered  into with a  financial  institution  satisfying  the
         criteria described in clause (c) above; and

                           (e)  investments in securities with maturities of six
         months or less from the date of acquisition  issued or fully guaranteed
         by any  state,  commonwealth  or  territory  of the  United  States  of
         America,  or by any political  subdivision or taxing authority thereof,
         and rated at least "A" by S&P or "A2" by Moody's.

                  "Permitted    Warehouse    Indebtedness"    means    Warehouse
Indebtedness in connection with a Warehouse Facility;  provided,  however,  that
(i) the assets as to which such Warehouse  Indebtedness relates are or, prior to
any funding  under the related  Warehouse  Facility  with respect to such assets
were,  eligible  to be  recorded  as held for sale on the  balance  sheet of the
Company and its  Restricted  Subsidiaries  in  accordance  with GAAP,  (ii) such
Warehouse  Indebtedness  will be deemed to be Permitted  Warehouse  Indebtedness
except to the extent the holders of such Warehouse Indebtedness have contractual
recourse  to the Company or its  Restricted  Subsidiaries  to satisfy  claims in
respect of such Warehouse  Indebtedness in excess of, without  duplication,  (a)
the realizable value of the assets to which such Warehouse  Indebtedness relates
and (b) any  Performance  Deposit  securing such Warehouse  Indebtedness  or any
Performance Guarantee supporting such Warehouse  Indebtedness and (iii) any such
Indebtedness has not been outstanding in excess of 364 days.

                  "Person"  means  any  natural  person,  corporation,   limited
liability company,  trust, joint venture,  associa tion,  company,  partnership,
Governmental Authority or other entity.

                  "Plan" means any employee  pension  benefit plan (other than a
Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA,  and in respect of which the Company or
any ERISA  Affiliate is (or, if such plan were  terminated,  would under Section
4069 of ERISA be deemed to be) an  "employer"  as  defined  in  Section  3(5) of
ERISA.

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

                  "Prime  Rate"  means the rate of interest  per annum  publicly
announced  from time to time by Credit Suisse as its prime rate in effect at its
principal  office in New York  City;  each  change in the  Prime  Rate  shall be
effective from and including the date such change is publicly announced as being
effective.

                  "Receivables"  means consumer and commercial loans, leases and
receivables purchased or originated by the Company, any Restricted Subsidiary or
a  Strategic  Alliance  Client in the  ordinary  course of  business;  provided,
however,  that for purposes of  determining  the amount of a  Receivable  at any
time,  such amount shall be  determined in  accordance  with GAAP,  consistently
applied, as of the most recent practicable date.

                  "Reference Banks" means Credit Suisse, Dresdner Bank AG and
The Bank of New York.

                  "Refinance"   means,  in  respect  of  any  Indebtedness,   to
refinance,  extend, renew, refund, repay, prepay,  redeem, defease or retire, or
to issue other  Indebtedness in exchange or replacement for, such  Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.

                  "Refinancing  Indebtedness" means Indebtedness that Refinances
any  Indebtedness  of the Company or any Restricted  Subsidiary  existing on the
date  hereof  or  Incurred  in  compliance   with  this   Agreement   (including
Indebtedness that Refinances Refinancing Indebtedness);  provided, however, that
(a) such  Refinancing  Indebtedness  has a Stated  Maturity no earlier  than the
Stated  Maturity of the  Indebtedness  being  Refinanced,  (b) such  Refinancing
Indebtedness  has an Average Life at the time such  Refinancing  Indebtedness is
Incurred  that is equal to or greater than the Average Life of the  Indebtedness
being  Refinanced  and (c)  such  Refinan  cing  Indebtedness  has an  aggregate
principal  amount (or if Incurred with  original  issue  discount,  an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with  original  issue  discount,  the  aggregate  accreted  value) then
outstanding  or committed  (plus fees and  expenses,  including  any premium and
defeasance  costs) under the Indebtedness  being  Refinanced;  provided further,
however,  that Refinancing  Indebtedness shall not include (i) Indebtedness of a
Subsidiary that Refinances  Indebtedness of the Company or another Subsidiary or
(ii)  Indebtedness  of the Company or a Restricted  Subsidiary  that  Refinances
Indebtedness of an Unrestricted Subsidiary.

                  "Related  Business"  means any consumer or commer cial finance
business or any financial service business.

                  "Related  Documents"  means the Letter of  Credit,  the Dealer
Agreement,  the Issuing and Paying Agency and Depositary Agreement and any other
agreement or instrument relating thereto.

                  "Related Parties" means, with respect to any specified Person,
such Person's  Affiliates and the  respective  directors,  officers,  employees,
agents and advisors of such Person and such Person's Affiliates.

                  "Required  Banks"  means,  on  any  date  of  determina  tion,
Participating  Banks  which,  collectively  on  such  date,  have  Participation
Percentages in the aggregate of more than 50%.

                  "Restricted Subsidiary" means any Subsidiary that is not an
Unrestricted Subsidiary.

                  "Rolling  Period" means,  at any time, the fiscal quarter most
recently ended and the three immediately  preceding fiscal quarters,  considered
as a single accounting period.

                  "S&P" means  Standard & Poor's Rating Group, a division of The
McGraw-Hill Companies Inc., or any successor thereto.

                  "Stated  Amount" means the amount of the Letter of Credit,  as
determined pursuant to Section 2.01, as such amount shall be, from time to time,
(a) reduced by each  payment made  pursuant to  paragraph  2(a) of the Letter of
Credit, (b) increased by each reimbursement made pursuant to paragraphs 3(a) and
(d) of the Letter of Credit  (subject,  in the case of any increase  pursuant to
Section  3(d) of the Letter of Credit,  to the  expiration  and  non-duplication
provisions  set forth in the  proviso  therein),  (c)  reduced or  increased  as
provided  in Section  2.11 or (d)  reduced or  increased  as provided in Section
2.06.

                  "Stated  Maturity"  means,  with  respect to any  security  or
Indebtedness,  the date specified in such security or  Indebtedness as the fixed
date on which  the  final  payment  of  principal  of such  security  is due and
payable, including pursuant to any mandatory redemption provision (but excluding
any provision providing for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency unless such contingency has
occurred).

                  "Strategic  Alliance  Client"  means any Person  (other than a
Restricted  Subsidiary)  engaged  in a Related  Business  to which  the  Company
provides,  or reasonably expects to provide,  financing or asset  securitization
expertise  in  return  for   asset-backed   underwriting   or  placement   agent
commitments.

                  "subsidiary"  means, with respect to any Person (the "parent")
at  any  date,  any  corporation,   limited  liability   company,   partnership,
association  or other  entity the accounts of which would be  consolidated  with
those of the parent in the parent's  consolidated  financial  statements if such
financial  statements  were prepared in accordance with GAAP as of such date, as
well  as  any  other  corporation,   limited  liability  company,   partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date,  otherwise  Controlled,  by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.

                  "Subsidiary" means any subsidiary of the Company.

                  "Taxes"  means any and all  present or future  taxes,  levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.

                  "Termination  Date" means August 20, 1999, as such date may be
extended from time to time pursuant to Section 2.11.

                  "Transactions"  means the execution,  delivery and performance
by the Company of this  Agreement,  the borrowing of the Loans,  the issuance of
the Letter of Credit and the issuance of the Commercial Paper and the use of the
proceeds thereof.

                  "Unrestricted Subsidiary" means (a) any Subsidiary that at the
time of  determination  shall be  designated an  Unrestricted  Subsidiary by the
Board of Directors in the manner  provided  below and (b) any  Subsidiary  of an
Unrestricted  Subsidiary.  The Board of Directors may desig nate any  Subsidiary
(including any newly acquired or newly formed  Subsidiary) to be an Unrestricted
Subsidiary  unless such Subsidiary or any of its  Subsidiaries  owns any Capital
Stock or  Indebtedness  of, or holds any Lien on any property of, the Company or
any  other  Subsidiary  that  is not a  Subsidiary  of the  Subsidiary  to be so
designated;  provided,  however,  that no  Default  shall have  occurred  and be
continuing  or would  occur  as a result  thereof  and each  representation  and
warranty  of the Company  contained  in Article III shall be true and correct in
all  material  respects  after  giving  effect  to such  designation.  Any  such
designation  by the Board of Directors  shall be evidenced by the Company to the
Agent by promptly  filing with the Agent a copy of the board  resolution  giving
effect to such designa tion and a certificate, signed by two executive officers,
certifying that such designation complied with the foregoing provisions.

                  "Voting  Stock" of a Person means all classes of Capital Stock
or other interests (including  partnership interests or membership interests) of
such  Person then  outstanding  and  normally  entitled  (without  regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof.

                  "Warehouse  Facility"  means any  funding  arrangement  with a
financial  institution  or other lender or purchaser  exclusively to finance the
purchase or  origination  of  Receivables  by the  Company,  a  Subsidiary  or a
Strategic  Alliance Client for the purpose of pooling such Receivables  prior to
securitization  or sale in the ordinary course of business,  including  purchase
and sale  facilities  pursuant  to  which  the  Company  or a  Subsidiary  sells
Receivables or debt of a Strategic  Alliance Client secured by Receivables owned
or financed by such Strategic  Alliance  Client to a financial  institution  and
retains a right of first refusal upon the subsequent  resale of such Receivables
or debt by such financial institution.

                  "Warehouse   Indebtedness"   means  the  greater  of  (a)  the
consideration  received by the Company or its  Restricted  Subsidiaries  under a
Warehouse  Facility  and (b) the  book  value  of the  assets  financed  under a
Warehouse  Facility with respect to Receivables or debt of a Strategic  Alliance
Client  secured by  Receivables  owned or  financed by such  Strategic  Alliance
Client until such time as such  Receivables  or debt are (i)  securitized,  (ii)
repurchased by the Company or its Restricted  Subsidiaries  or (iii) sold by the
counterparty under the Warehouse Facility to a Person who is not an Affiliate of
the Company.

                  "Wholly Owned  Subsidiary"  means a Restricted  Subsidiary all
the Capital Stock of which (other than directors'  qualifying  shares and shares
held by other Persons to the extent such shares are required by  applicable  law
to be held by a Person  other than the Company or a  Restricted  Subsidiary)  is
owned by the Company or one or more Wholly Owned Subsidiaries.

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

                  SECTION 1.02.  Computation of Time Periods. In this Agreement,
in the  computation  of a  period  of  time  from a  specified  date  to a later
specified  date,  the word "from" means "from and  including" and the words "to"
and "until" each means "to but excluding".

                  SECTION 1.03. Terms Generally. The definitions of terms herein
shall  apply  equally to the  singular  and plural  forms of the terms  defined.
Whenever the context may require,  any pronoun shall  include the  corresponding
mascu line,  feminine and neuter  forms.  The words  "include",  "includes"  and
"including"  shall be deemed to be followed by the phrase "without  limitation".
The word "will"  shall be  construed  to have the same meaning and effect as the
word "shall".  Unless the context  requires  otherwise (a) any  definition of or
reference  to any  agreement,  instrument  or  other  document  herein  shall be
construed as referring to such  agreement,  instrument or other document as from
time to  time  amended,  supplemented  or  otherwise  modified  (subject  to any
restrictions  on such  amendments,  supplements  or  modifi  cations  set  forth
herein),  (b) any  reference  herein to any Person shall be construed to include
such  Person's  succes sors and assigns,  (c) the words  "herein",  "hereof" and
"hereunder",  and words of similar  import,  shall be construed to refer to this
Agreement in its entirety and not to any particular  provision  hereof,  (d) all
references  herein  to  Articles,  Sections,  Exhibits  and  Schedules  shall be
construed to refer to Articles and Sections of, and Exhibits and  Schedules  to,
this  Agreement and (e) the words "asset" and  "property"  shall be construed to
have the same  meaning and effect and to refer to any and all tangible and intan
gible assets and properties,  including cash, securities,  accounts and contract
rights. The phrase "the date of this Agreement" or "the date hereof" or words to
similar effect shall mean the Amendment Effective Date.

                  SECTION  1.04.  Accounting  Terms;  GAAP.  Except as otherwise
expressly  provided herein, all terms of an accounting or financial nature shall
be construed in accor dance with GAAP, as in effect from time to time;  provided
that if the Company notifies the Agent that the Company requests an amendment to
any provision  hereof to eliminate the effect of any change  occurring after the
date  hereof in GAAP or in the  application  thereof  on the  operation  of such
provision (or if the Agent  notifies the Company that the Required Banks request
an amendment to any provision  hereof for such  purpose),  regardless of whether
any such  notice is given  before or after such change in GAAP or in the applica
tion thereof,  then such provision  shall be interpreted on the basis of GAAP as
in effect and applied immediately before such change shall have become effective
until  such  notice  shall  have been  withdrawn  or such  provision  amended in
accordance herewith.


ARTICLE II

Amount and Terms of
the Letter of Credit

                  SECTION 2.01.  The Letter of Credit.  The Issuing Bank agrees,
on the terms and conditions hereinafter set forth, to issue the Letter of Credit
to the Issuing and Paying  Agent and  Depositary  on any Business Day during the
period from the Effective  Date to but excluding the earlier of the  Termination
Date and the date of termination of the Commitment, which date of issuance shall
be  specified  in a notice  delivered by the Company to the Issuing Bank and the
Agent not fewer than one  Business  Day prior to such date  (unless such date is
the Effective Date). The Agent shall promptly transmit copies of such notice, if
any,  to the  Participating  Banks.  The  Letter of Credit  shall be in a Stated
Amount not to exceed the sum of $275,000,000 and (b) the aggregate amount of any
increases  pursuant to Section  2.11(e),  shall not exceed the Borrowing Base in
effect at the time of issuance and shall expire on the Cancelation Date.

                  SECTION 2.02.  Commissions and Fees. (a) The Company agrees to
pay the Agent, for the account of the Participating Banks, to be allocated among
them ratably in accordance with their respective  Participation  Percentages,  a
fee on the Stated  Amount,  without  regard to  reductions  thereof  pursuant to
Section  2.06(c)(iii),  from the Amendment  Effective Date until the Termination
Date, at a rate per annum equal to the  Applicable  Percentage as in effect from
time to time during such period, payable quarterly in arrears on the last day of
each March, June, September and December, commencing on the first such day after
the  Amendment  Effective  Date,  and on any  expiration or  termination  of the
Commitment or the Letter of Credit or reduction of the Stated Amount.

                  (b) The Company agrees to pay to the Agent for its own account
and that of the  Issuing  Bank fees in the amounts and at the times set forth in
the fee letter dated as of July 21, 1997, between the Company,  the Issuing Bank
and the Agent.

                  SECTION 2.03. Reimbursement.  Except as otherwise specified in
Section  2.04,  the Company  will  unconditionally  pay to the Issuing  Bank the
amount of each disbursement made by the Issuing Bank under the Letter of Credit,
together with accrued interest thereon,  if any, not later than one Business Day
after the Company  shall have  received  notice from the Issuing  Bank that such
disbursement has been made.  Unless the Company shall reimburse the Issuing Bank
for any such  disbursement  in full or  convert  such  disbursement  into a Loan
pursuant to Section  2.04 on the date of such  disbursement,  the unpaid  amount
thereof shall bear interest, payable on demand, (a) until the date on which such
amount is due pursuant to the first  sentence of this Section  2.03, at the rate
per annum that would  apply to such  amount if such  amount were an ABR Loan and
(b) thereafter,  until payment in full, at a fluctuating interest rate per annum
equal to the Default  Rate.  Upon  request from the Issuing and Paying Agent and
Depositary,  the Issuing Bank shall promptly notify the Issuing and Paying Agent
and  Depositary of all amounts due from the Company to the Issuing Bank pursuant
to this  Section  2.03.  Upon receipt of  repayment  for any such  disbursement,
together with accrued interest, if any, thereon,  pursuant to this Section 2.03,
the Issuing  Bank shall  promptly  deliver to the  Issuing and Paying  Agent and
Depositary a notice in accordance with paragraph 3(a) of the Letter of Credit.

                  SECTION  2.04.  Loans.  (a)  If  either  (i)  the  market  for
commercial  paper is  disrupted  or (ii) the  rating  by either  S&P or  Moody's
applicable to the Issuing Bank's Index Debt falls below AA or Aa2, respectively,
and, as a result,  either (A) the Company is unable to sell Commercial  Paper to
replace  maturing   Commercial  Paper  or  (B)  pricing   conditions  render  it
economically  disadvantageous  in any material  respect for the Company to issue
the Commercial Paper to replace  maturing  Commercial Paper (each of clauses (A)
and (B), individually, a "Non-Default Disruption"),  the Company may request the
Issuing  Bank to convert  any amount due under  Section  2.03 into a loan by the
Issuing Bank (a "Loan").  Each such Loan shall  initially  be an ABR Loan.  More
than one Loan may be outstanding at the same time, and, subject to the terms and
conditions set forth herein,  the Company may prepay the Loans. The Issuing Bank
agrees to make any Loan so  requested;  provided  that (x) the Agent  shall have
received a request therefor  pursuant to and in accordance with Section 4.03(b),
(y) the Company  shall have  satisfied  the  conditions  precedent  specified in
Section  4.03 on and as of the date of such  requested  Loan and (z) all amounts
available  in the  Reimbursement  Account  (as defined in the Issuing and Paying
Agency and Depositary Agreement) shall have first been applied to the repayment,
to the extent not otherwise provided for, of amounts due under Section 2.03. The
Issuing Bank shall  promptly  provide notice of any such Loan to the Issuing and
Paying Agent and Depositary.

                  (b) The principal amount of each Loan shall be due and payable
no later  than the  Termination  Date.  Interest  on each Loan  shall be due and
payable  initially in  accordance  with Section  2.04(c)(i)  and  thereafter  in
accordance with Section  2.04(c)(i) or (ii), as applicable.  The Interest Period
for each  Eurodollar  Loan shall begin on the effective  date of the most recent
conversion or  continuation  of such Eurodollar Loan and shall have the duration
specified by the Company in its notice given with  respect  thereto  pursuant to
Section  2.15(b).  No Interest  Period for a Eurodollar Loan shall end after the
Termination  Date, and any Interest  Period for a Loan that would other wise end
after the Termination Date shall be deemed to end on the Termination Date.

                  (c) The Company  shall pay  interest  on the unpaid  principal
amount  of each  Loan from the date of such  Loan  until  the  principal  amount
thereof is paid in full at the applicable rate set forth below:

                           (i) ABR Loans. The Company shall pay interest on each
         ABR Loan from the date of such ABR Loan  until such ABR Loan is paid in
         full or  converted  to a  Eurodollar  Loan,  payable in arrears on each
         Interest Payment Date for such ABR Loan at a fluctuating  interest rate
         per annum equal to the Alternate Base Rate in effect from time to time;
         and
                           (ii) Eurodollar Loans. The Company shall pay interest
         on each  Eurodollar  Loan at the  Adjusted  LIBO Rate for the  Interest
         Period for such  Eurodollar  Loan,  payable in arrears on each Interest
         Payment Date for such Eurodollar Loan;

provided  that (A) in the event of any  repayment  or  prepay  ment of any Loan,
accrued  interest on the principal  amount repaid or prepaid shall be payable on
the date of such repayment or prepayment,  (B) in the event of any conversion of
any Eurodollar Loan prior to the end of the current  Interest  Period  therefor,
accrued  interest  on such Loan shall be payable on the  effective  date of such
conversion and (C) all accrued  interest shall be payable upon the expiration or
termination of the Letter of Credit.

                  (d) If, prior to the commencement of any Interest Period for a
Eurodollar Loan:

                           (i)  the  Agent   determines  in  good  faith  (which
         determination  shall be conclusive absent manifest error) that adequate
         and reasonable  means do not exist for  ascertaining  the Adjusted LIBO
         Rate for such Interest Period; or

                           (ii) the Agent is advised by the Required  Banks that
         the Adjusted LIBO Rate for such Interest Period will not adequately and
         fairly  reflect  the cost to such Banks of making or  maintaining  such
         Eurodollar Loan for such Interest Period;

then the Agent  shall give notice  thereof to the Company and the  Participating
Banks by telephone or telecopy as promptly as practicable  thereafter and, until
the  Agent   notifies  the  Company  and  the   Participating   Banks  that  the
circumstances  giving rise to such notice no longer exist, any Interest Election
Request that requests the conversion of any ABR Loan to, or  continuation of any
Eurodollar Loan as, a Eurodollar Loan shall be ineffective.

                  (e) On and after the date on which the unpaid principal amount
of any Eurodollar Loan shall be reduced,  by payment or prepayment or otherwise,
to less than  $1,000,000,  the rate of  interest  applicable  on each day to the
unpaid  principal  amount of such Loan shall be the higher of the Adjusted  LIBO
Rate in effect for such Loan and the Alternate Base Rate.

                  SECTION 2.05.  Reimbursement  of Issuing Bank, Etc. (a) (i) By
the issuance of the Letter of Credit and without any further  action on the part
of the Issuing Bank or the  Participating  Banks, the Issuing Bank hereby grants
to each  Participating  Bank, and each such  Participating  Bank hereby acquires
from the Issuing  Bank,  a  participation  in the Letter of Credit equal to such
Participating  Bank's  Participation  Percentage from time to time of the Stated
Amount,  effective upon the issuance of the Letter of Credit.  In  consideration
and in furtherance of the foregoing,  each  Participating Bank hereby absolutely
and  unconditionally  agrees to pay to the Agent, for the account of the Issuing
Bank, the amounts set forth in this Section 2.05.

                  (ii) If the Issuing Bank (A) shall not have been reimbursed in
full for any payment  made by the Issuing Bank under the Letter of Credit on the
date of such payment or (B) shall make any Loan to the Company, the Issuing Bank
shall give the Agent  prompt  notice  thereof (an "LC Payment  Notice") no later
than 12:00 noon (New York City time) on the Business Day immediately  succeeding
the date of such  payment by the Issuing  Bank or the date of the  payment  that
gave  rise  to  such  Loan,  as  applicable,  and  the  Agent  shall  give  each
Participating  Bank prompt notice thereof (an "Agent  Payment  Notice") no later
than two hours  following the Agent's  receipt of the LC Payment  Notice at such
Participating Bank's address referred to in Section 9.01.

                  (iii)  Upon  receipt  of  an  Agent   Payment   Notice,   each
Participating  Bank severally agrees to pay to the Agent, for the account of the
Issuing  Bank,  an amount equal to such  Participating  Bank's  ratable  portion
(according  to  such  Participating  Bank's  Participation  Percentage)  of such
unreimbursed  amount or Loan paid or made by the Issuing Bank,  plus interest on
such amount at a rate per annum equal to the Federal Funds  Effective  Rate from
the date of payment by the  Issuing  Bank to the date of payment to the  Issuing
Bank by such  Participating  Bank;  provided  that,  with  respect  to any  such
unreimbursed  amount,  to the  extent  that the  Participating  Banks  have made
payments  pursuant to this  paragraph to reimburse the Issuing Bank, the Issuing
Bank shall, promptly following receipt by the Issuing Bank of any payment by the
Company  to  reimburse  such  unreimbursed   amount,   distribute  such  payment
(including  any amounts  received with respect to interest on such  unreimbursed
amount from the date of payment of such unreimbursed amount by the Issuing Bank)
to the  Participating  Banks as their  interests may appear.  The failure of the
Issuing Bank, the Agent or the Company to give such LC Payment Notice, the Agent
Payment Notice or the notice referred to in Section 4.03(b), as the case may be,
shall not affect any Participating  Bank's obligations  pursuant to this Section
2.05(a).

                  (iv) Each such payment by a  Participating  Bank shall be made
to the Agent, for the account of the Issuing Bank, at its address referred to in
Section 9.01 in dollars in same day funds (A) not later than 2:30 p.m. (New York
City  time)  on the day any  such  Agent  Payment  Notice  is  received  by such
Participating  Bank,  if such  notice is received at or prior to 12:00 noon (New
York City time) on a Business  Day; (B) not later than 4:30 p.m.  (New York City
time) on the day any such Agent Payment Notice is received by such Participating
Bank, if such notice is received after 12:00 noon (New York City time) but at or
prior to 2:30 p.m. (New York City time) on a Business Day; or (C) not later than
12:00 noon (New York City time) on the Business Day next  succeeding the day any
such Agent Payment Notice is received by such Participating Bank, if such notice
is  received  after  2:30 p.m.  (New York City  time) on a  Business  Day.  Each
Participating  Bank's obligation to make each such payment to the Agent, for the
account of the Issuing Bank,  and the Agent's right to receive the same, for the
account of the Issuing Bank, shall be absolute and  unconditional  and shall not
be affected by any  circumstance  whatsoever,  including,  without  limiting the
foregoing or the circum  stances set forth in Section  2.13,  the  occurrence or
continuance  of an Event of  Default or the  failure of any other  Participating
Bank to make any  payment  under this  Section  2.05.  Each  Participating  Bank
further  agrees  that  each  such  payment  shall be made  without  any  offset,
abatement, withholding or reduction whatsoever.

                  (b) The failure of any Participating  Bank to make any payment
to the Agent,  for the account of the Issuing Bank,  in accordance  with Section
2.05(a) shall not relieve any other Participating Bank of its obligation to make
payment,  but  neither  the  Issuing  Bank nor any  Participating  Bank shall be
responsible  for the  failure  of any  other  Participating  Bank  to make  such
payment.  If any Participating Bank shall fail to make any payment to the Agent,
for the account of the Issuing  Bank, in  accordance  with Section  2.05(a)(iv),
then such  Participating Bank agrees to pay to the Agent, for the account of the
Issuing  Bank,  forthwith  on  demand  by the  Agent or the  Issuing  Bank  such
corresponding  amount  together  with  interest  thereon  for the first two days
following the day upon which any such payment shall have been due and payable at
the Federal Funds  Effective Rate and  thereafter  until the date such amount is
paid to the Agent,  for the account of the Issuing Bank,  at the Alternate  Base
Rate plus 1% per annum.

                  (c) If any  Participating  Bank shall fail to make any payment
to the Agent,  for the account of the Issuing Bank,  in accordance  with Section
2.05(a),  then, in addition to other rights and remedies  which the Issuing Bank
may have, the Agent is hereby authorized, at the request of the Issuing Bank, to
withhold that portion of any payments received by the Agent that would otherwise
be payable to such  Participating  Bank and to apply such portion to the payment
of amounts owing by such  Participating Bank to the Issuing Bank and any related
interest thereon.

                  SECTION  2.06.  Prepayments.  (a) The Company may,  subject to
prior notice in accordance with Section 2.06(b),  prepay the outstanding  amount
of any Loan in whole or in part,  together with accrued  interest to the date of
such prepayment on the amount prepaid to the extent required by Section 2.04(c).

                  (b)  The  Company  shall  give  notice  to  the  Agent  of any
prepayment  hereunder (i) in the case of prepayment  of a Eurodollar  Loan,  not
later than 12:00 noon (New York City time) three  Business  Days before the date
of prepayment  and (ii) in the case of prepayment of an ABR Loan, not later than
12:00 noon (New York City time) one Business Day before the date of  prepayment.
Each such  notice  shall be irrevoc  able and shall  specify the  prepayment  or
payment  date and the  principal  amount of each Loan or  portion  thereof to be
prepaid  or  repaid;  provided  that,  if a  notice  of  prepayment  is given in
connection  with a conditional  notice of termination of the Letter of Credit as
contemplated  by Section 2.11,  then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.11.  Promptly
following  receipt of any such notice relating to a Loan, the Agent shall advise
the Participating Banks of the contents thereof.  Each partial prepayment of any
Loan (other than any prepayment  pursuant to Section  2.06(c)(i)) shall be in an
aggregate  amount that is an integral  multiple of $1,000,000  and not less than
$5,000,000.

                  (c) If at any time the aggregate principal amount of any Loans
outstanding  plus any principal of amounts due pursuant to Section 2.03 plus the
Stated Amount exceeds the Borrowing Base, the Company shall forthwith either (i)
pre pay the Loans in accordance  with this Section 2.06 or pay such principal of
amounts  due  pursuant  to Section  2.03 by an amount as shall be  necessary  to
eliminate such excess, (ii) deposit an amount in cash (or a cash equivalent that
is  satisfactory  in form and  substance  to the Issuing  Bank and the  Required
Banks) in an account  with the Agent (the  "Account"),  in the name of the Agent
and for the benefit of the Issuing Bank and the  Participating  Banks,  equal to
such  excess as of such date  plus any  accrued  and  unpaid  interest  thereon;
provided that such cash shall not include any assets which constituted  Eligible
Assets in the most recent Borrowing Base Certificate or any proceeds thereof, or
(iii)  reduce the Stated  Amount by such excess by delivery to the Issuing  Bank
(with a copy to the Agent) of a certificate in accordance with paragraph 2(b) of
the Letter of Credit; provided that the Stated Amount shall not be reduced to an
amount  less  than  the  aggregate  Face  Amount  of all  the  Commercial  Paper
Outstanding  at such time;  provided  further that, if at any time the Borrowing
Base exceeds the aggre gate principal  amount of any Loans  outstanding plus the
Stated Amount, the Company may so notify the Issuing Bank, whereupon the Issuing
Bank shall, subject to satisfaction of the conditions set forth in Section 4.02,
increase the Stated  Amount by an amount equal to such excess by delivery to the
Issuing and Paying Agent and  Depositary  (with a copy to the Agent) of a notice
in accordance with paragraph 3(c) of the Letter of Credit.  Notwithstanding  the
foregoing, the Stated Amount shall not be so increased to an amount greater than
(A) the sum of (1) the original  Stated Amount and (2) the  aggregate  amount of
all  increases of the Stated  Amount  pursuant to Section  2.11(e) minus (B) the
aggregate amount of all reductions of the Stated Amount pursuant to Section 2.11
(excluding  reductions  required  by clause  (iii)  above).  Each  reduction  or
increase of the Stated Amount  pursuant to this Section 2.06(c) shall be applied
ratably  among the  Participating  Banks in  accordance  with  their  respective
Participation Percentages.

                  (d) The Agent  shall  have  exclusive  dominion  and  control,
including the exclusive  right of withdrawal,  over the Account.  Other than any
interest earned on the invest ment of such deposits,  which investments shall be
made at the option and sole  discretion of the Agent and at the  Company's  risk
and expense  (except as a result of acts or  omissions  constituting  the wilful
misconduct  or gross  negligence  of the Agent),  such  deposits  shall not bear
interest.  Interest or profits,  if any, on such investments shall accumulate in
the  Account.  Moneys in the Account  shall be applied by the Agent to reimburse
the  Issuing  Bank for  payments  under  Section  2.03 for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Company for the Letter of Credit at such
time or, if the  maturity  of any  Loans has been  accelerated,  be  applied  to
satisfy other  obligations of the Company under this  Agreement.  If at any time
the  Borrowing  Base  exceeds  the  aggregate  principal  amount  of  any  Loans
outstanding  plus the Stated  Amount,  the Agent shall  return to the Company an
amount of cash (to the  extent  not  applied as  aforesaid)  equivalent  to such
excess within three Business Days.

                  (e)  The  Company  shall  promptly  notify  the  Agent  of the
cessation of any  Non-Default  Disruption  and, so long as no other  Non-Default
Disruptions  are continuing,  shall prepay all outstanding  Loans, in accordance
with this Section 2.06, (i) within 10 Business Days after any such cessation, in
the  case of all ABR  Loans,  or (ii) at the end of the  then  current  Interest
Period for any such Loan, in the case of all Eurodollar  Loans.  The Agent shall
promptly  notify the Issuing and Paying Agent and Depositary of all  prepayments
required  to be made by the  Company  pursuant  to this  Section  2.06(e).  Upon
receipt  of any  prepayment  pursuant  to this  Section  2.06,  the Agent  shall
promptly  notify the Issuing Bank of the amount of such  prepayment with respect
to the principal of Loans,  whereupon the Issuing Bank shall promptly deliver to
the  Issuing  and  Paying  Agent  and  Depositary  a notice in  accordance  with
paragraph 3(b) of the Letter of Credit.

                  SECTION 2.07.  Increased Costs.  (a)  If any Change in Law
 shall:

                           (i) impose,  modify or deem  applicable  any reserve,
         special  deposit or similar  requirement  against letters of credit (or
         participatory  interests  therein) issued by, commitments or assets of,
         or  deposits  with or for the account  of, or credit  extended  by, the
         Issuing  Bank  or any  Participating  Bank  (except  any  such  reserve
         requirement reflected in the Adjusted LIBO Rate); or

                           (ii) impose on the Issuing Bank or any Partici pating
         Bank or the London interbank market any other condition  affecting this
         Agreement,  the Letter of Credit, any amount  outstanding  hereunder or
         any Eurodollar Loan or participatory interests therein;

and the  result of any of the  foregoing  shall be to  increase  the cost to the
Issuing Bank or such Participating Bank, as applicable, of issuing,  maintaining
or participating in this Agreement,  the Letter of Credit or any Eurodollar Loan
(or agreeing to make or making,  funding or maintaining  any Eurodollar  Loan or
participatory  interest  therein) or to reduce the amount of any sum received or
receivable (whether of principal,  interest or otherwise) by the Issuing Bank or
such Participating Bank, as applicable,  then the Company shall pay to the Agent
for the account of the Issuing Bank or such  Participating  Bank, as applicable,
such  additional  amount or amounts as will  compensate the Issuing Bank or such
Participating  Bank,  as  applicable,  for such  additional  costs  incurred  or
reduction suffered (excluding the effect of any Excluded Taxes).

                  (b) If the Issuing Bank or any  Participating  Bank determines
that any Change in Law  regarding  capital  require  ments has or would have the
effect  of  reducing  the  rate  of  return  on  the  Issuing   Bank's  or  such
Participating  Bank's capital,  as applicable,  or on the capital of the Issuing
Bank's or such Participating Bank's holding company, as applicable, if any, as a
consequence  of this  Agreement,  the Letter of Credit,  any amount  outstanding
hereunder or any Loan or participating  interest therein,  to a level below that
which the Issuing Bank or such Participating Bank, as applicable, or the Issuing
Bank's or such Participating  Bank's holding company, as applicable,  could have
achieved  but for such  Change in Law  (taking  into  consideration  the Issuing
Bank's or such Participating Bank's policies, as applicable, and the policies of
the Issuing Bank's or such Participating  Bank's holding company, as applicable,
with respect to capital  adequacy),  then from time to time the Company will pay
to the Issuing Bank or such Participating  Bank, as applicable,  such additional
amount or amounts as will  compensate  the  Issuing  Bank or such  Participating
Bank, as applicable,  or the Issuing Bank's or such Participating Bank's holding
company, as applicable, for any such reduction suffered.

                  (c) A certificate of the Issuing Bank or a Participating  Bank
setting forth the amount or amounts  necessary to compensate the Issuing Bank or
such Partici pating Bank, as applicable, or its holding company, as the case may
be, as specified in Section 2.07(a) or (b) shall be delivered to the Company and
shall be conclusive  absent  manifest  error.  The Company shall pay the Issuing
Bank or such Participating  Bank, as applicable,  the amount shown as due on any
such certificate within 10 days after receipt thereof.

                  (d)  Failure or delay on the part of the  Issuing  Bank or any
Participating  Bank to demand  compensation  pursuant to this Section 2.07 shall
not  constitute  a waiver of the  Issuing  Bank's or such  Participating  Bank's
right,  as applicable,  to demand such  compensation;  provided that the Company
shall not be required to compensate the Issuing Bank or a Participating Bank, as
applicable,  pursuant to this Section 2.07 for any increased costs or reductions
incurred  more  than 270 days  prior to the date that the  Issuing  Bank or such
Participating  Bank,  as  applicable,  notifies the Company of the Change in Law
giving rise to such  increased  costs or reductions and of the Issuing Bank's or
such  Participating  Bank's  intention,  as  applicable,  to claim  compensation
therefor;  provided  further  that,  if the  Change in Law  giving  rise to such
increased costs or reductions is  retroactive,  then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.

                  SECTION 2.08. Break Funding Payments.  In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest  Period  applicable  thereto  (including  as a  result  of an  Event of
Default),  (b) the conversion of any Eurodollar  Loan other than on the last day
of the Interest Period applicable thereto,  (c) the failure to borrow,  convert,
continue  or  prepay  any Loan on the date  specified  in any  notice  delivered
pursuant hereto  (regardless of whether such notice may be revoked under Section
2.06(b) and is revoked in accordance  therewith),  or (d) the  assignment of any
Euro dollar Loan other than on the last day of the  Interest  Period  applicable
thereto as a result of a request by the  Borrower  pursuant to Section  9.04(i),
then, in any such event,  the Company shall compensate each  Participating  Bank
for the loss,  cost and expense  attributable  to such  event.  In the case of a
Eurodollar Loan, such loss, cost or expense to any  Participating  Bank shall be
deemed to  include an amount  determined  by such  Participating  Bank to be the
excess,  if any, of (i) the amount of interest  which would have  accrued on the
principal amount of such Loan had such event not occurred,  at the Adjusted LIBO
Rate that would have been  applicable to such Loan, for the period from the date
of such event to the last day of the then current  Interest Period therefor (or,
in the case of a failure to borrow,  convert or  continue,  for the period  that
would  have been the  Interest  Period for such  Loan),  over (ii) the amount of
interest  which  would  accrue on such  principal  amount for such period at the
interest  rate which such  Participating  Bank would bid were it to bid,  at the
commencement  of such period,  for dollar  deposits of a  comparable  amount and
period  from  other  banks  in  the  eurodollar  market.  A  certificate  of any
Participating  Bank  setting  forth any amount or amounts  (and,  in  reasonable
detail,  the  calculations  relating  thereto) that such  Participating  Bank is
entitled to receive  pursuant to this  Section  2.08 shall be  delivered  to the
Company and shall be conclusive  absent  manifest  error.  The Company shall pay
such  Participating  Bank the amount shown as due on any such certificate within
10 days after receipt thereof.

                  SECTION 2.09. Payments and Computations. (a) The Company shall
make each payment  hereunder to the Agent, at its address referred to in Section
9.01, on the day when due without setoff or  counterclaim in dollars in same day
funds not later than 12:00 noon (New York City  time);  provided  that  payments
pursuant to Sections 2.03,  2.07,  2.08, 2.14 and 9.03 shall be made directly to
the Persons entitled  thereto.  Any amounts received after such time on any date
may, in the discretion of the Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating  interest thereon. The Agent
will promptly  thereafter  cause to be  distributed  like funds  relating to the
payment  of  principal,   interest,   fees  or  other  amounts  payable  to  the
Participating  Banks to whom the same are payable at their respective  addresses
referred to in Section 9.01.

                  (b) If, after the Agent has paid to any Participating Bank any
amount pursuant to Section 2.09(a),  such payment is rescinded or must otherwise
be returned or must be paid over by the Agent or the Issuing Bank to any Person,
whether  pursuant  to any  bankruptcy  or  insolvency  law,  Section  9.08(d) or
otherwise,  such  Participating  Bank shall,  at the request of the Agent or the
Issuing Bank,  promptly  repay to the Agent or the Issuing Bank, as the case may
be, an amount equal to such payment,  together with any interest  required to be
paid by the Agent or the Issuing Bank with respect to such payment.

                  (c) If at any time  insufficient  funds  are  received  by and
available to the Agent to pay fully all amounts of principal,  interest and fees
then due hereunder,  such funds shall be applied (i) first,  towards  amounts to
reimburse the Issuing Bank for payments  under Section 2.03 for which it has not
been  reimbursed by the Company (but excluding any amounts with respect to which
the Issuing Bank has been reimbursed by the Participating  Banks or with respect
to which a Participating  Bank has failed to reim burse the Issuing Bank),  (ii)
second,  towards payment of interest and fees then due hereunder,  ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (iii) third, towards payment of principal then due
hereunder,  ratably among the parties  entitled  thereto in accordance  with the
amounts of principal then due to such parties.

                  (d)  Computations  of the Alternate Base Rate shall be made by
the Agent on the  basis of a year of 360 days (or 365 or 366  days,  as the case
may be, at times when the  Alternate  Base Rate is based on the Prime  Rate) for
the actual number of days  (including  the first day but excluding the last day)
elapsed.  Computations  of the Adjusted LIBO Rate and the  commissions  and fees
under Section 2.02 shall be made by the Agent on the basis of a year of 360 days
for the actual  number of days  (including  the first day but excluding the last
day) elapsed.

                  (e)  Notwithstanding any provision to the contrary herein, the
Company  shall pay  interest on all past-due  amounts of  principal  and (to the
fullest extent permitted by law) interest, costs, commissions, fees and expenses
here  under,  from the date when such  amounts  became  due until  paid in full,
payable on demand, at the Default Rate in effect from time to time.

                  SECTION 2.10.  Non-Business  Days.  Whenever any payment to be
made  hereunder  shall be  stated  to be due,  or  whenever  the last day of any
Interest  Period would  otherwise  occur,  on a day which is not a Business Day,
such  payment  shall be made,  and the last day of such  Interest  Period  shall
occur, on the next succeeding  Business Day, and such extension of time shall in
such case be included in the computation of interest,  commission or fee, as the
case may be; provided,  however,  that (a) if any Interest Period would end on a
day other than a Business  Day,  such  Interest  Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar  month, in which case such Interest Period shall end on the
next  preceding  Business  Day,  and (b) any  Interest  Period  pertaining  to a
Eurodollar  Loan that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically  corresponding  day in the last calen
dar month of such  Interest  Period)  shall end on the last  Business Day of the
last calendar month of such Interest Period.

                  SECTION 2.11.  Termination; Reduction; Extension; Increase.
(a)  Unless previously terminated,
the Commitment and the Letter of Credit shall terminate on the Termination Date.

                  (b) The Commitment shall terminate upon issuance of the Letter
of Credit and may be  terminated by the Company at any time prior to issuance of
the Letter of Credit.  The  Company  may (x) at any time cause the  Issuing  and
Paying Agent and  Depositary  to  terminate  the Letter of Credit by causing the
Issuing and Paying Agent and  Depositary  to deliver to the Issuing Bank (with a
copy to the Agent) the Letter of Credit and a  certificate  in  accordance  with
paragraph (1) of the Letter of Credit or (y) from time to time reduce the Stated
Amount  by  delivering  to the  Issuing  Bank  (with  a copy  to  the  Agent)  a
certificate in accordance with paragraph 2(b) of the Letter of Credit;  provided
that each such reduction  pursuant to this Section 2.11(b) shall be in an amount
that is an  integral  multiple  of  $5,000,000  and not less  than  $10,000,000;
provided  further  that (i) the  Company  shall not cause the Issuing and Paying
Agent and  Depositary to terminate the Letter of Credit so long as any Loans are
outstanding or any Commercial Paper is Outstanding at such time, any amounts are
due pursuant to Section 2.03 or any other amounts are due hereunder and (ii) the
Company  shall not reduce  the Stated  Amount  if,  after  giving  effect to any
concurrent  prepayment  of any Loans in  accordance  with  Section  2.06 and any
concurrent payment of principal due pursuant to Section 2.03, (A) the sum of (1)
the  aggregate   principal  amount  of,  and  accrued  interest  on,  the  Loans
outstanding  at such time plus (2) the aggregate  Face Amount of any  Commercial
Paper  Outstanding at such time plus (3) the aggregate  principal amount of, and
accrued  interest  on, any  disbursements  due  pursuant to Section 2.03 and any
other  amounts due hereunder  would exceed (B) the  difference of (1) the sum of
the original  Stated Amount of the Letter of Credit and the aggregate  amount of
all  increases of the Stated  Amount  pursuant to Section  2.11(e) minus (2) the
aggregate  amount of all  reductions  (including  the current  reduction) of the
Stated Amount pursuant to this Section 2.11.

                  (c) The Company shall give notice to the Agent of any election
to (i) cause the Issuing and Paying Agent and Depositary to terminate the Letter
of Credit or (ii) reduce the Stated Amount under  Section  2.11(b) at least five
Busi ness Days prior to the  effective  date of such  termination  or reduction,
specifying the effective date of such election.  Promptly  following  receipt of
any notice, the Agent shall advise the Issuing Bank and the Participating  Banks
of the contents  thereof.  Each notice delivered by the Company pursuant to this
Section 2.11(c) shall be  irrevocable;  provided that a notice of termination of
the Letter of Credit  delivered  by the  Company  may state that such  notice is
conditioned  upon the  effectiveness of other credit  facilities,  in which case
such notice may be revoked by the Company (by notice to the Agent on or prior to
the  specified  effective  date)  if  such  condition  is  not  satisfied.   Any
termination  of the Letter of Credit or reduction of the Stated Amount  pursuant
to this Section 2.11 shall be perma nent.  Each  reduction of the Stated  Amount
pursuant to this Section 2.11 shall be applied  ratably among the Partici pating
Banks in accordance with their respective Participation Percentages.

                  (d)(i) Not less than 60 days and not more than 75 days  before
the Termination Date at any time in effect (the "Current Termination Date"), the
Company may request  (each such  request  being  irrevocable)  the Agent and the
Issuing Bank in writing (with copies of such request simultaneously  provided to
each  Participating  Bank) to extend  (a) the  Termination  Date so that it will
occur 364 days after the Current  Termination  Date and (b) the Letter of Credit
to a date that is 364 days after the Current Termination Date; provided that the
Company may request no more than five such  extensions  pursuant to this Section
2.11(d).  The Agent shall notify each  Participating Bank of the receipt of such
request within five Business Days. The Issuing Bank and each  Participating Bank
shall,  by notice to the Agent  given not less than 30 days and not more than 60
days prior to the Current  Termination Date, advise the Agent in writing whether
it agrees to such extension. The Agent shall, no later than 30 days prior to the
Current  Termination Date, notify the Company (with a copy of such notice to the
Issuing and Paying Agent and  Depositary)  which of the Agent,  the Issuing Bank
and each  Participating  Bank consents to such request and the conditions to any
such  consent  (including  conditions  relating  to  legal  documentation).  The
granting of any such consent shall be in the sole and absolute discretion of the
Agent,  the Issuing Bank and each  Participating  Bank,  and the election of any
such party to such  extension  shall not obligate any other such party to agree.
If the Issuing Bank or any Participating  Bank shall not have notified the Agent
of its  agreement  to such  extension,  it shall be  deemed  not to have  agreed
thereto.  In the  event  there is at least one  Participating  Bank that has not
agreed to such  extension,  the Company may at its option  revoke its request by
giving notice of such revocation to the Agent not later than three Business Days
prior to the  Current  Termination  Date,  in  which  case no  extension  of the
Termination  Date shall be effected  pursuant to such  request.  The Agent shall
promptly  advise  the  Issuing  Bank  and the  Participating  Banks  of any such
revocation.

                  (ii)  If (and  only  if)  the  Agent,  the  Issuing  Bank  and
Participating  Banks  (including  Additional  Participating  Banks  (as  defined
below)) with aggregate  Participation  Percentages which, when multiplied by the
Stated  Amount (as reduced  only by any  irrevocable  reductions  by the Company
pursuant to Section  2.11(b) and any  reductions in previous  years  pursuant to
this Section 2.11(d) and as increased only by any increases  pursuant to Section
2.11(e)),  will equal or exceed  $200,000,000  shall  have  agreed to extend the
Termina  tion Date (and the Company  has not  revoked  its  request  pursuant to
subparagraph  (i)  above),  then the  Termination  Date  applicable  to all such
parties  that have so agreed shall be the day that is 364 days after the Current
Termination  Date;  provided  that  (A) no  Non-Default  Disrup  tion  shall  be
continuing on the Current  Termination  Date, (B) the Termination Date shall not
be extended  with  respect to any Loans  outstanding  at such time,  (C) no such
extension  shall  occur  if,  after  giving  effect  to  such   extension,   any
Participating  Bank shall have a  Participation  Percentage in excess of 25% and
(D) no such extension  shall occur if, after giving effect to such extension and
the following  sentence,  (1) the sum of (I) the aggregate  principal amount of,
and  accrued  interest  on,  the  Loans  outstanding  at such time plus (II) the
aggregate  Face Amount of any  Commercial  Paper  Outstanding  at such time plus
(III) the aggregate  principal  amount of, and accrued interest on, any disburse
ments due pursuant to Section  2.03 and any other  amounts due  hereunder  would
exceed (2) the  difference  of (I) the original  Stated  Amount of the Letter of
Credit minus (II) the aggregate amount of all reductions  (including the current
reduction) of the Stated Amount pursuant to Sections 2.11(b) and 2.11(d)(ii). In
the event of such extension,  (x) the participation of each  Participating  Bank
that has not so agreed shall terminate on the Current  Termination  Date and all
amounts  payable  hereunder  to such  Participating  Bank  shall  become due and
payable by the Company (or by the relevant  Additional  Participating  Bank,  if
applicable,  pursuant to  subparagraph  (iii) below) on the Current  Termination
Date and (y) the Stated Amount shall be  irrevocably  reduced by an amount equal
to the  product  of (1) the  aggregate  Participation  Percentages  of all  such
non-extending  Participating  Banks (to the  extent not  assumed  by  Additional
Participating  Banks) and (2) the Stated Amount.  Notwithstanding the foregoing,
no  extension of the  Termination  Date shall become  effective  unless,  on the
Current  Termination  Date,  the  conditions  set forth in Section 4.02 shall be
satisfied  (with all  references in such Section to the date of such issuance or
increase  being deemed to be references to the Current  Termination  Date),  the
Agent  shall have  received  a  certificate  to that  effect  dated the  Current
Termination  Date and  executed  by a  Financial  Officer of the Company and the
Company  shall have  delivered to the Issuing Bank a  certificate  in accordance
with  paragraph  2(b) of the Letter of Credit setting forth any reduction in the
Stated  Amount  required  by  the  immediately  preceding  sentence.   Upon  the
occurrence of any such extension,  the Issuing Bank shall deliver to the Issuing
and Paying Agent and Depositary a certificate  setting forth the new Termination
Date in accordance with paragraph 5 of the Letter of Credit.

                  (iii) In the event that the conditions of paragraph (ii) above
have been  satisfied,  the Company shall have the right on or before the Current
Termination Date, at its own expense, to require any Participating Bank that has
not  agreed to extend  the  Termination  Date to  transfer  and  assign  without
recourse  (except  as to  title  and the  absence  of Liens  created  by it) (in
accordance with and subject to the  restrictions  contained in Section 9.04) all
its interests,  rights and obligations under this Agreement to one or more other
banks or other financial institutions (which may include any Participating Bank,
each prior to the Current Termination Date an "Additional  Participating Bank");
provided  that  (x)  such  Additional  Participating  Bank,  if  not  already  a
Participating Bank hereunder, shall be subject to the approval of the Agent, the
Issuing Bank and the Company (such consent not to be unreasonably withheld), (y)
such assignment  shall become  effective as of the Current  Termination Date and
(z) the Additional  Participating Bank shall pay to such Participating Bank that
has not agreed to extend the Termination Date in immediately  available funds on
the effective  date of such  assignment  all amounts  accrued for its account or
owed to it  hereunder.  The Agent shall,  if  requested by the Company,  use its
reasonable  efforts to assist the  Company in finding  Additional  Participating
Banks.

                  (e)  Subject  only to the consent of the Agent and the Issuing
Bank and each  Participating  Bank whose  Alloca  tion is to be  increased,  the
Company may on one or more occasions,  upon not less than 30 days' notice to the
Agent and the Issuing Bank,  increase the Stated Amount by up to an amount equal
to (i) $50,000,000 minus (ii) the aggregate amount of all prior increases in the
Stated  Amount  pursuant  to this clause  (e).  Any such  increase in the Stated
Amount shall be effected by the execution and delivery of such  documentation as
the Agent shall reasonably specify (which documentation,  to be effective,  need
be executed  only by the Company,  the Agent and each  Participating  Bank whose
Allocation  is to be  increased),  and shall be subject to the  delivery of such
evidence of the Company's corporate authority,  legal opinions and other closing
documentation  as the Agent or its counsel shall  reasonably  request.  Upon any
increase in the Stated Amount after the date hereof pursuant to this clause (e),
the Participation  Percentage of each Participating  Bank immediately  following
such increase  shall be deemed equal to a percentage  that causes the Allocation
of such  Participating  Bank immediately  following such increase to be equal to
the Allocation of such  Participating  Bank  immediately  prior to such increase
(or, in the case of any Participating Bank which has consented to an increase in
its Allocation,  equal to such increased Allocation). Any increase in the Stated
Amount on the date hereof pursuant to this section 2.11(e) shall be reflected on
Schedule 2.01 hereof.

                  SECTION 2.12.  Evidence of Debt. The Agent shall maintain,  in
accordance  with its usual  practice,  an account  or  accounts  evidencing  the
indebtedness  of the Company  resulting  from each  drawing  under the Letter of
Credit and from each Loan made from time to time  hereunder  and the  amounts of
principal  and  interest  payable and paid from time to time  hereunder.  In any
legal action or  proceeding  in respect of this  Agreement,  the entries made in
such account or accounts  shall, in the absence of manifest error, be conclusive
evidence of the existence and amounts of the  obligations of the Company therein
recorded.

                  SECTION 2.13. Obligations Absolute. (a) The obligations of the
Company  hereunder shall be  unconditional  and  irrevocable,  and shall be paid
strictly  in  accordance  with the terms of this  Agreement  (as the same may be
amended  from time to time) under all  circumstances,  including  the  following
circumstances;  provided,  however,  that the same  shall not  limit,  diminish,
preclude  or  otherwise  adversely  affect  any claim that may be brought by the
Company under Section 2.13(d):

                           (i) any lack of validity or enforceability of the
Related Documents;

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

                           (iii) the existence of any claim, setoff,  defense or
         other right which the Company may have at any time  against the Issuing
         and  Paying  Agent  and  Depositary  or any other  beneficiary,  or any
         transferee,  of the  Letter  of  Credit  (or any  Persons  for whom the
         Issuing and Paying Agent and  Depositary,  any such  beneficiary or any
         such  transferee may be acting),  the Issuing Bank,  any  Participating
         Bank, or any other Person,  whether in connection  with this Agreement,
         the Transactions, or any unrelated transaction;

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

                           (v) payment by the  Issuing  Bank under the Letter of
         Credit against  presentation  of a draft or certifi cate which does not
         comply with the terms of the Letter of Credit;

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

                           (vii) the use of the  proceeds of any  drawing  under
         the Letter of Credit by the Issuing and Paying Agent and Depositary; or

                           (viii) any other  circumstance  or  happening  whatso
         ever, whether or not similar to any of the foregoing.

                  (b) The obligations of each  Participating  Bank under Section
2.05 shall be  unconditional  and  irrevocable,  and shall be paid  strictly  in
accordance  with the terms of this  Agreement  (as the same may be amended  from
time to time) under all circumstances, including the following circumstances:

                           (i) any lack of validity or enforceability of the
Related Documents;

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

                           (iii) the existence of any claim, setoff,  defense or
         other right which the Company may have at any time  against the Issuing
         and  Paying  Agent  and  Depositary  or any other  beneficiary,  or any
         transferee,  of the  Letter  of  Credit  (or any  Persons  for whom the
         Issuing and Paying Agent and  Depositary,  any such  beneficiary or any
         such  transferee may be acting),  the Issuing Bank,  any  Participating
         Bank, or any other Person,  whether in connection  with this Agreement,
         the Transactions, or any unrelated transaction;

                           (iv) any  statement or any other  document  presented
         under the Letter of Credit proving to be forged,  fraud ulent,  invalid
         or insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect;

                           (v) payment by the  Issuing  Bank under the Letter of
         Credit against  presentation  of a draft or certifi cate which does not
         comply with the terms of the Letter of Credit;

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

                           (vii) the use of the  proceeds of any  drawing  under
         the Letter of Credit by the Issuing and Paying Agent and Depositary; or

                           (viii) any other  circumstance  or  happening  whatso
         ever, whether or not similar to any of the foregoing.

                  (c) Without  limiting the effect of Section  2.13(a) or (b) or
any other provision hereof,  the Company and each  Participating Bank agree with
the Issuing Bank that the Issuing Bank is authorized to make payments  under the
Letter of Credit upon the presentation of the documents provided for therein and
without  regard  to  whether  the  Company  has  failed  to  fulfill  any of its
obligations  with respect to any Related  Document or other default has occurred
thereunder or hereunder.

                  (d) As between the Issuing  Bank and the Partici  pating Banks
on the one hand, and the Company on the other,  the Company assumes all risks of
the acts or  omissions of the Issuing and Paying  Agent and  Depositary  and any
other  beneficiary or transferee of the Letter of Credit with respect to its use
of the Letter of Credit.  None of the Issuing Bank, any  Participating  Bank and
any of their officers or directors  shall be liable or responsible  for: (i) the
use which may be made of the  Letter of Credit or any acts or  omissions  of the
Issuing and Paying Agent and Depositary and any other  beneficiary or transferee
in  connection  therewith;  (ii) the validity,  sufficiency  or  genuineness  of
documents, or of any endorsement thereon, even if such documents should prove to
be in any or all respects  invalid,  insufficient,  fraudulent or forged;  (iii)
payment by the Issuing  Bank  against  presentation  of  documents  which do not
comply  with  the  terms of the  Letter  of  Credit,  including  failure  of any
documents to bear any  reference or adequate  reference to the Letter of Credit;
or (iv) any other circumstances  whatsoever in making or failing to make payment
under the Letter of Credit,  except that the Company  shall have a claim against
the Issuing  Bank,  and the Issuing Bank shall be liable to the Company,  to the
extent of any  direct,  as opposed to  consequential,  damages  suffered  by the
Company which were caused by (A) the Issuing  Bank's wilful  misconduct or gross
negligence,  as determined by a court of competent jurisdiction,  in determining
whether  documents  presented  under the Letter of Credit are  genuine or comply
with the  terms of the  Letter of Credit  or (B) the  Issuing  Bank's  wilful or
grossly negligent failure,  as determined by a court of competent  jurisdiction,
to make lawful payment under the Letter of Credit after the  presentation  to it
by the  Issuing  and  Paying  Agent and  Depositary  of a draft and  certificate
strictly  complying  with the terms and  conditions of the Letter of Credit.  In
furtherance and not in limitation of the foregoing,  the Issuing Bank may accept
original  or  facsimile  (including  telecopy)  sight  drafts  and  accompanying
certificates  presented  under the Letter of Credit that appear on their face to
be in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.

                  SECTION 2.14. Taxes. (a) Any and all payments by or on account
of any obligation of the Company  hereunder  shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if the
Company  shall be required to deduct any  Indemnified  Taxes or Other Taxes from
such payments,  then (i) the sum payable shall be increased as necessary so that
after  making  all  required  deductions  (including  deductions  applicable  to
additional sums payable under this Section 2.14) the Agent or such Participating
Bank (as the case may be)  receives  an  amount  equal to the sum it would  have
received  had no such  deductions  been made,  (ii) the Company  shall make such
deductions  and (iii) the  Company  shall pay the full  amount  deducted  to the
relevant Governmental Authority in accor dance with applicable law.

                  (b) In addition,  the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

                  (c)  The   Company   shall   indemnify   the  Agent  and  each
Participating  Bank, within 10 days after written demand therefor,  for the full
amount  of any  Indemnified  Taxes  or  Other  Taxes  paid by the  Agent or such
Participating  Bank, as the case may be, on or with respect to any payment by or
on account of any obligation of the Company  hereunder  (inclu ding  Indemnified
Taxes or Other Taxes imposed or asserted on or  attributable  to amounts payable
under this Section 2.14) and any  penalties,  interest and  reasonable  expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were  correctly  or legally  imposed or asserted by the  relevant
Governmental  Authority.  A  certificate  as to the  amount of such  payment  or
liability  (showing  in  reasonable  detail  the  calculation  of  such  amount)
delivered  to the Company by a  Participating  Bank,  or by the Agent on its own
behalf or on behalf of a Participating Bank, shall be conclusive absent manifest
error.
                  (d) As soon as  practicable  after any payment of  Indemnified
Taxes or Other Taxes by the  Company to a  Governmental  Authority,  the Company
shall deliver to the Agent the original or a certified  copy of a receipt issued
by such  Governmental  Authority  evidencing such payment,  a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Agent.

                  (e) Any  Foreign  Participating  Bank that is  entitled  to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Company is located,  or any treaty to which such  jurisdiction is a
party,  with  respect to  payments  under this  Agreement  shall  deliver to the
Company  (with  a copy  to the  Agent),  at the  time  or  times  prescribed  by
applicable law, such properly completed and executed documentation prescribed by
appli  cable law or  reasonably  requested  by the  Company as will  permit such
payments to be made without withholding or at a reduced rate.

                  SECTION  2.15.  Interest  Elections.  (a) Each Loan  initially
shall be an ABR Loan. Thereafter,  the Company may elect to convert such Loan to
a different type or to continue such Loan and, in the case of a Eurodollar Loan,
may elect  Interest  Periods  therefor,  all as provided in this  Section  2.15;
provided that (i) no Loan with a principal  amount of less than $1,000,000 shall
be converted to, or continued as, a Eurodollar  Loan and (ii) there shall not at
any time be more than a total of three Eurodollar Loans outstanding.

                  (b) To make an election  pursuant to this  Section  2.15,  the
Company  shall  give  notice  to the  Agent  of such  election,  specifying  the
information  required pursuant to Section 2.15(c),  (i) if such Loan is to be an
ABR Loan, before 12:00 noon (New York City time) at least one Business Day prior
to the effective date of such  conversion or continuance or (ii) if such Loan is
to be a Eurodollar  Loan,  before 12:00 noon (New York City time) at least three
Business Days prior to the  effective  date of such  conversion  or  continuance
(each an "Interest Election Request"). Each such Interest Election Request shall
be irrevocable.

                  (c) Each Interest Election Request shall specify the following
information:

                           (i) the Loan to which such Interest Election Request
applies;

                           (ii) the effective date of the election made pursuant
         to such Interest Election Request, which shall be a Business Day;

                           (iii) whether the resulting Loan is to be an ABR Loan
or a Eurodollar Loan; and

                           (iv) if the resulting Loan is a Eurodollar  Loan, the
         Interest  Period to be  applicable  thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period".

If any such Interest  Election  Request  requests a Eurodollar Loan but does not
specify an Interest  Period,  then the Borrower shall be deemed to have selected
an Interest Period of one month's duration.

                  (d)  Promptly   following  receipt  of  an  Interest  Election
Request,  the Agent shall advise each  Participating Bank of the details thereof
and of such Participating Bank's portion of each resulting Loan.

                  (e) If the Company fails to deliver a timely Interest Election
Request  with  respect to a  Eurodollar  Loan  prior to the end of the  Interest
Period applicable thereto,  then, unless such Loan is repaid as provided herein,
at the end of such Interest  Period such Loan shall be converted to an ABR Loan.
Notwithstanding  any  contrary  provision  hereof,  if an Event of  Default  has
occurred and is continuing and the Agent,  at the request of the Required Banks,
so notifies the Company,  then, so long as an Event of Default is continuing (i)
no  outstanding  Loan may be converted to or continued as a Eurodollar  Loan and
(ii) unless repaid,  each  Eurodollar  Loan shall be converted to an ABR Loan at
the end of the Interest Period applicable thereto.


ARTICLE III

Representations and Warranties

                  The Company represents and warrants to the Participating Banks
that:

                  SECTION 3.01.  Organization;  Powers.  Each of the Company and
its Restricted  Subsidiaries  is duly  organized,  validly  existing and in good
standing  under the laws of the  jurisdiction  of its  organization  and has all
requisite power and authority to carry on its business as now conducted. Each of
the Company and its Restricted  Subsidiaries is qualified to do business in, and
is in good standing in, every jurisdiction where such qualification is required,
except where the failure to be so qualified or in good standing, individually or
in the  aggregate,  could not  reasonably  be  expected  to result in a Material
Adverse Effect.

                  SECTION 3.02. Authorization;  Enforceability. The Transactions
are within the Company's  corporate  powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This Agreement and the
Related  Documents  have been duly  executed  and  delivered  by the Company and
constitute legal, valid and binding obliga tions of the Company,  enforceable in
accordance  with their  terms,  subject to  applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other laws affecting  creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

                  SECTION  3.03.  Governmental  Approvals;  No  Conflicts.   The
Transactions  (a) do not require any consent or  approval  of,  registration  or
filing with, or any other action by, any Governmental Authority,  except such as
have  been  obtained  or made and are in full  force  and  effect,  (b) will not
violate  any  applicable  law or  regulation  or the  charter,  by-laws or other
organizational documents of the Company or any of its Restricted Subsidiaries or
any order of any  Governmental  Authority,  (c) will not  violate or result in a
default under any indenture or material agree ment or other  instrument  binding
upon the Company or any of its Restricted  Subsidiaries  or its assets,  or give
rise to a right  thereunder  to require any payment to be made by the Company or
any of its Restricted  Subsidiaries,  and (d) will not result in the creation or
imposition  of any Lien on any  asset of the  Company  or any of its  Restricted
Subsidiaries.

                  SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) The Company has heretofore  furnished to the Participating Banks the balance
sheets  and  statements  of  income,  stockholders  equity and cash flows of the
Company and its Restricted  Subsidiaries  on a consolidated  basis (i) as of and
for each of the fiscal years ended March 31, 1997 and March 31, 1998 reported on
by Arthur Andersen LLP,  independent public accountants,  and (ii) as of and for
the fiscal  quarter  and the  portion of the  fiscal  year ended June 30,  1998,
certified by its chief  financial  officer.  Such financial  statements  present
fairly,  in all  material  respects,  the  financial  condition  and  results of
operations and cash flows of the Company and its  Restricted  Subsi diaries on a
consolidated  basis as of such  dates and for such  periods in  accordance  with
GAAP,  subject to year-end audit adjustments and the absence of footnotes in the
case of the statements referred to in clause (ii), above.

                  (b) Since June 30,  1997,  there has been no material  adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Restricted Subsidiaries, taken as a whole.

                  SECTION  3.05.  Properties.  (a) Each of the  Company  and its
Restricted  Subsidiaries has good title to, or valid leasehold interests in, all
its real and  personal  property  material  to its  business,  except  for minor
defects in title that do not interfere  with its ability to conduct its business
as  currently  conducted  or to  utilize  such  properties  for  their  intended
purposes.

                  (b) Each of the Company and its Restricted  Subsidiaries owns,
or is licensed to use, all trademarks,  tradenames,  service marks,  copyrights,
patents and other  intellectual  property material to its business,  and the use
thereof by the Company and its  Restricted  Subsidiaries  does not infringe upon
the  rights  of any  other  Person,  except  for any  such  infringements  that,
individually or in the aggre gate, could not reasonably be expected to result in
a Material Adverse Effect.

                  SECTION 3.06. Litigation and Environmental  Matters. (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority  pending  against  or, to the  knowledge  of the  Company,  threatened
against or affecting the Company or any of its Restricted  Subsidiaries (i) that
could reasonably be expected,  individually or in the aggregate,  to result in a
Material Adverse Effect (other than the Disclosed  Matters) or (ii) that involve
this Agreement, the Related Documents or the Transactions.

                  (b) Except for the  Disclosed  Matters and except with respect
to  any  other  matters  that,  individually  or in  the  aggregate,  could  not
reasonably  be  expected  to result in a Material  Adverse  Effect,  neither the
Company nor any of its Restricted Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain,  maintain or comply with any permit,  license or
other approval required under any Environmental  Law, (ii) has become subject to
any  Environ  mental  Liability,  (iii) has  received  notice of any claim  with
respect  to any  Environmental  Liability  or (iv)  knows of any  basis  for any
Environmental Liability.

                  (c) Since the date of this Agreement, there has been no change
in the status of the Disclosed  Matters that,  individually or in the aggregate,
has resulted in, or materially  increased the likelihood of, a Material  Adverse
Effect.

                  SECTION 3.07.  Compliance  with Laws and Agree ments.  Each of
the Company and its  Restricted  Subsidiaries  is in  compliance  with all laws,
regulations  and orders of any  Governmental  Authority  applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its  property,  except  where  the  failure  to do  so,  individually  or in the
aggregate,  could not  reasonably  be expected  to result in a Material  Adverse
Effect. No Default has occurred and is continuing.

                  SECTION 3.08.  Investment and Holding Company Status.  Neither
the  Company  nor  any  of its  Restricted  Subsidiaries  is (a) an  "investment
company" as defined in, or subject to regulation  under, the Investment  Company
Act of 1940  (other  than any  Restricted  Subsidiary  which is not  subject  to
regulation  under such statute as a result of an exemption  therefrom)  or (b) a
"holding  company" as defined  in, or subject to  regulation  under,  the Public
Utility Holding Company Act of 1935.

                  SECTION 3.09.  Taxes.  Each of the Company and its  Restricted
Subsidiaries  has timely filed or caused to be filed all Tax returns and reports
required to have been filed and has paid or caused to be paid all Taxes required
to have been paid by it, except (a) Taxes that are being contested in good faith
by  appropriate  proceedings  and for  which  the  Company  or  such  Restricted
Subsidiary,  as appli  cable,  has set aside on its books  adequate  reserves in
accordance  with GAAP or (b) to the extent  that the  failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

                  SECTION  3.10.  ERISA.  No  ERISA  Event  has  occurred  or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably  expected to occur, could reasonably be
expected  to result in a  Material  Adverse  Effect.  The  present  value of all
accumulated  benefit  obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial  Accounting Standards No. 87) did not, as
of the date of the most recent  financial  statements  reflecting  such amounts,
exceed by more than  $10,000,000  the fair  market  value of the  assets of such
Plan,  and the  present  value of all  accumulated  benefit  obligations  of all
underfunded  Plans (based on the  assumptions  used for purposes of Statement of
Financial  Accounting  Standards  No.  87) did  not,  as of the date of the most
recent  financial  statements  reflecting  such  amounts,  exceed  by more  than
$10,000,000 the fair market value of the assets of all such underfunded Plans.

                  SECTION  3.11.  Disclosure.  The Company has  disclosed to the
Participating   Banks  all  agreements,   instruments  and  corporate  or  other
restrictions to which it or any of its Restricted  Subsidiaries is subject,  and
all other matters known to it, that,  individually  or in the  aggregate,  could
reasonably  be  expected  to result in a Material  Adverse  Effect.  None of the
reports, financial statements, certificates or other information furnished by or
on behalf of the Company to the Agent or any Partici  pating Bank in  connection
with the  negotiation of this  Agreement or delivered  hereunder (as modified or
supple  mented  by  other  information  so  furnished)   contains  any  material
misstatement  of fact or omits to state any material fact  necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made,  not  misleading;  provided  that,  with  respect to  projected  financial
information,  the Company  represents only that such information was prepared in
good faith  based upon  assump  tions  believed  to be  reasonable  at the time;
provided  further  that with  respect to  information  about  third  parties the
Company represents only that it has no actual knowledge that such information is
inaccurate or misleading.

                  SECTION 3.12.  Federal Reserve Regulations.  (a)  Neither the
Company nor any of the Restricted
Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.

                  (b) No part of the proceeds of any issuance of the  Commercial
Paper will be used,  whether  directly or indirectly,  and whether  immediately,
incidentally  or ultimately,  (i) to purchase or carry Margin Stock or to extend
credit to others for the purpose of  purchasing  or carrying  Margin Stock or to
refund indebtedness  originally incurred for such purpose, or (ii) in any event,
for any purpose  which  entails a violation  of, or is  inconsistent  with,  the
provisions of the Regulations of the Board, including Regulation U or X.

                  SECTION 3.13. Year 2000. Any reprogramming  required to permit
the proper  functioning,  in and  following  the year 2000,  of (i) the computer
systems  of the  Company  and its  Restricted  Subsidiaries  and (ii)  equipment
containing  embedded  microchips  (including  systems and equipment  supplied by
others or with which the systems of the Company and its Restricted  Subsidiaries
interface)  and  the  testing  of  all  such  systems  and   equipment,   as  so
reprogrammed,  will be completed  by June 30, 1999.  The cost to the Company and
its  Restricted  Subsidiaries  of  such  reprogramming  and  testing  and of the
reasonably  foreseeable  consequences  of  year  2000  to the  Company  and  its
Restricted  Subsidiaries  (including  reprogramming  errors  and the  failure of
others' systems or equipment) will not result in a Default or a Material Adverse
Effect.  Except  for  such of the  reprogramming  referred  to in the  preceding
sentence as may be necessary, the computer and management information systems of
the  Company and its  Restricted  Subsidiaries  are and,  with  ordinary  course
upgrading and  maintenance,  will continue for the term of this Agreement to be,
sufficient to permit the Company and its Restricted  Subsidiaries to conduct its
business without a Material Adverse Effect.


ARTICLE IV

Conditions

                  SECTION 4.01.  Effective  Date. This amendment and restatement
of the Original Credit  Agreement  shall not become  effective until the date on
which each of the  following  conditions  is satisfied  (or waived in accordance
with Section 9.02):

                           (a) The Agent (or its  counsel)  shall have  received
         from each  party  hereto  either (i) a counter  part of this  Agreement
         signed on behalf of such party or (ii) written evidence satisfactory to
         the  Agent  (which  may  include  telecopy  transmission  of  a  signed
         signature  page of  this  Agreement)  that  such  party  has  signed  a
         counterpart of this Agreement.

                           (b) The Agent shall have received a favorable written
         opinion (addressed to the Agent, the Issuing Bank and the Participating
         Banks and dated the Amend ment Effective Date) of Pitney,  Hardin, Kipp
         & Szuch and of  Michael  R.  Mayberry,  deputy  chief  counsel  for the
         Company,  substantially in the forms of Exhibits E and F, respectively,
         and  covering  such  other  matters  relating  to  the  Company,   this
         Agreement,  the Related  Documents or the  Transactions as the Required
         Banks shall  reasonably  request.  The  Company  hereby  requests  such
         counsel to deliver such opinion.

                           (c) The Agent shall have received such  documents and
         certificates  as  the  Agent  or its  counsel  may  reasonably  request
         relating  to the  organization,  existence  and  good  standing  of the
         Company,  the  authorization  of the  Transactions  and any other legal
         matters relating to the Company, this Agreement,  the Related Documents
         or the  Transactions,  all in form and  substance  satisfactory  to the
         Agent and its counsel.

                           (d) The Agent  shall  have  received  a  certificate,
         dated the Amendment Effective Date and signed by the President,  a Vice
         President or a Financial Officer of the Company,  confirming compliance
         with the conditions set forth in Section 4.02(a) and (b).

                           (e) The Agent shall have  received all interest  fees
         and other amounts  accrued under the Original  Agreement on or prior to
         the  Amendment  Effective  Date  (whether  or not at the  time  due and
         payable),  including, to the extent invoiced,  reimbursement or payment
         of all out-of-pocket  expenses required to be reimbursed or paid by the
         Company hereunder.

                           (f) The Agent and each  Participating Bank shall have
         received (i) the most recent  Borrowing  Base  Certificate  required to
         have been delivered  pursuant to Section  5.01(a),  and (ii) such other
         supporting  documentation  and  additional  reports with respect to the
         Borrowing Base as the Agent shall  reasonably  request in writing prior
         to the date hereof.

                           (g) The Commercial  Paper shall have received a short
         term rating from S&P,  Moody's and Fitch equiva lent to or greater than
         the long term rating on the Issuing  Bank's Index Debt, and in no event
         less than a rating of "A-1" from S&P, "P-1" from Moody's and "F-1" from
         Fitch.

                           (h) The Commercial  Paper shall not be required to be
         registered  with  the  Securities  and  Exchange  Commis  sion,  or any
         Governmental  Authority  succeeding  to any or all of the  functions of
         said Commission, or with any national securities exchange.

                  SECTION 4.02.  Issuance and Increases.  The obli gation of the
Issuing  Bank to issue the  Letter of Credit and the  ability of the  Company to
increase the Stated Amount  pursuant to Section  2.06(c)(iii) or Section 2.11(e)
are subject to the satisfaction of the following conditions:

                           (a) The representations and warranties of the Company
         set forth in this  Agreement  shall be true and correct in all material
         respects  on and as of the  date  of  such  issuance  or  increase,  as
         applicable.
                           (b)  At the  time  of and  immediately  after  giving
         effect to such issuance or increase,  as  applicable,  no Default shall
         have occurred and be continuing.

                           (c) The Agent  shall have  received  the most  recent
         Borrowing Base Certificate  required to have been delivered pursuant to
         Section 5.01(g).

The  issuance  of the Letter of Credit and each  increase  of the Stated  Amount
pursuant  to  Section  2.06(c)(iii)  or  Section  2.11(e)  shall  be  deemed  to
constitute a representa  tion and warranty by the Company on the date thereof as
to the matters specified in paragraphs (a), (b) and (c) of this Section 4.02.

                  SECTION 4.03.  Each Loan.  (a)  The obligation of the Issuing
Bank to make any Loan is subject
to the satisfaction of the following conditions:

                           (i) At the  time  of such  making  of  such  Loan,  a
         Non-Default Disruption shall have occurred and be continuing.

                           (ii) At the  time  of and  immediately  after  giving
         effect to such making of such Loan,  no Default shall have occurred and
         be continuing.

                           (iii) The Agent shall have  received  the most recent
         Borrowing Base Certificate  required to have been delivered pursuant to
         Section 5.01(g).

Each such making of a Loan shall be deemed to  constitute a  representation  and
warranty  by the  Company on the date  thereof as to the  matters  specified  in
subsections (i), (ii) and (iii) of this Section 4.03(a).

                  (b) The  obligation  of the  Issuing  Bank to  make  any  Loan
pursuant  to Section  2.04 shall be subject to the further  condition  precedent
that the Agent  shall  have  received  from the  Company a notice not later than
10:00 a.m.  (New York City time) on the Business Day on which such Loan is to be
made specifying the principal amount of such Loan.


ARTICLE V

Affirmative Covenants

                  Until the  Commitment and the Letter of Credit have expired or
been  terminated and the principal of and interest on each Loan and all fees and
other  amounts  payable  here under  shall have been paid in full,  the  Company
covenants and agrees with the Participating Banks that:

                  SECTION 5.01.  Financial Statements and Other Information.
The Company will furnish to the
Agent and each Participating Bank:

                           (a) within 90 days after the end of each  fiscal year
         of the Company,  (i) a copy of the audited  consoli dated balance sheet
         of the Company and its Restricted  Subsidiaries on a consolidated basis
         and the related statements of operations, stockholders' equity and cash
         flows,  as of the end of and for such year,  setting forth in each case
         in  comparative  form the figures as of the end of and for the previous
         fiscal  year,  all  reported  on  by  Arthur   Andersen  LLP  or  other
         independent public accountants of recognized national standing (without
         a "going  concern" or like  qualification  or exception and without any
         qualification or exception as to the scope of such audit) to the effect
         that  such  consolidated  financial  statements  present  fairly in all
         material respects the financial  condition and results of operations of
         the Company and its Restricted  Subsidiaries on a consolidated basis in
         accordance with GAAP consistently  applied, and (ii) a letter from such
         independent  public  accountants  certifying  that during the course of
         their audit  nothing came to their atten tion that would  indicate that
         the Borrowing  Base  Certificate,  if any,  relating to the last day of
         such fiscal year is inaccurate in any material respect;

                           (b) within 60 days after the end of each of the first
         three fiscal quarters of each fiscal year of the Company, a copy of the
         unaudited  consolidated balance sheet of the Company and its Restricted
         Subsidiaries  on a  consolidated  basis and the related  statements  of
         operations,  stockholders'  equity and cash flows, as of the end of and
         for such  fiscal  quarter  and the then  elapsed  portion of the fiscal
         year,  setting forth in each case in  comparative  form the figures for
         the corresponding  period or periods of (or, in the case of the balance
         sheet, as of the end of) the previous fiscal year, all certified by one
         of its Financial Officers as presenting fairly in all material respects
         the  financial  condition  and results of operations of the Company and
         its Restricted  Subsidiaries on a consolidated basis in accordance with
         GAAP consistently applied, subject to normal year-end audit adjustments
         and the absence of footnotes;

                           (c)  concurrently  with  any  delivery  of  financial
         statements  under  clause  (a) or  (b),  above,  a  certifi  cate  of a
         Financial  Officer (i)  certifying as to whether a Default has occurred
         and, if a Default has occurred,  specifying the details thereof and any
         action taken or proposed to be taken with respect thereto; (ii) setting
         forth reasonably detailed  calculations  demonstrating  compliance with
         Section  6.09;  (iii)  stating  whether  any  change  in GAAP or in the
         application  thereof  has  occurred  since  the  date  of  the  audited
         financial  statements  referred  to in  Section  3.04 and,  if any such
         change  has  occurred,  specifying  the  effect  of such  change on the
         financial  statements  accompanying such certificate;  and (iv) setting
         forth  the  aggregate  amount  of  all  Warehouse  Facilities  and  the
         aggregate   portions   thereof  provided  on  a  committed  and  on  an
         uncommitted basis;

                           (d)  concurrently  with  any  delivery  of  financial
         statements  under clause (a),  above,  a certificate  of the accounting
         firm that reported on such financial  statements  stating  whether they
         obtained  knowledge  during  the  course of their  examination  of such
         financial  statements of any Default (which  certificate may be limited
         to the extent required by accounting rules or guidelines);

                           (e)   promptly   after  the  same   become   publicly
         available,  copies of all periodic and other reports,  proxy statements
         and other materials  filed by the Company or any Restricted  Subsidiary
         with  the  Securities  and  Exchange  Commission,  or any  Governmental
         Authority succeeding to any or all of the functions of said Commission,
         or with any national securities exchange, as the case may be;

                           (f) promptly  following  any request  therefor,  such
         other  information  regarding  the  operations,  business  affairs  and
         financial  condition of the Company or any  Restricted  Subsidiary,  or
         compliance with the terms of this  Agreement,  as the Agent, on its own
         behalf or on behalf of any Participating Bank, may reasonably request;

                           (g) unless  the  Company's  Index Debt is  Investment
         Grade,  not later than 12:00 noon (New York City time) on the fifteenth
         Business Day of each month,  (i) a Borrowing Base  Certificate  showing
         the  Borrowing  Base as of the close of business on the last day of the
         immediately preceding month, each such certificate to be certified by a
         Financial Officer as complete and correct in all material respects, and
         (ii) such other supporting  documentation  and additional  reports with
         respect  to the  Borrowing  Base as the Agent  shall  from time to time
         reasonably request; and

                           (h)  immediately  upon  (i) any  revaluation,  or any
         event  that  under GAAP would  require a  revaluation,  in either  case
         resulting  from a  change  in  assumptions,  performance  or  valuation
         methodology  or any other  circumstance  not  arising  in the  ordinary
         course of the Company's  business,  of the Excess Spread Receivables on
         an aggregate  basis on a balance sheet  required to be delivered  under
         clause  (a)  or  (b),  above,  a  certificate  of a  Financial  Officer
         describing such revaluation and the reasons therefor and (ii) notice of
         any change of the rating of the Company's Index Debt.

                  SECTION 5.02.  Notices of Material Events.  The Company will
furnish to the Agent and each
Participating Bank prompt notice of the following:

                           (a) the occurrence of any Default;

                           (b) the filing or commencement of any action, suit or
         proceeding  by or before  any  arbitrator  or Govern  mental  Authority
         against or affecting  the Company or any  Affiliate  thereof that could
         reasonably be expected to result in a Material Adverse Effect;

                           (c) the occurrence of any ERISA Event that,  alone or
         together  with  any  other  ERISA  Events  that  have  occurred,  could
         reasonably  be expected to result in  liability  of the Company and its
         Restricted Subsidiaries in an aggregate amount exceeding $5,000,000;

                           (d) any other  development  that results in, or could
         reasonably be expected to result in, a Material Adverse Effect; and

                           (e) the occurrence of any Non-Default Disruption.

Each  notice  delivered  under  this  Section  5.02  shall be  accompanied  by a
statement  of a  Financial  Officer or other  executive  officer of the  Company
setting forth the details of the event or development  requiring such notice and
any action taken or proposed to be taken with respect thereto.

                  SECTION  5.03.  Existence;  Conduct of  Business.  The Company
will, and will cause each of its Restricted  Subsidiaries  to, do or cause to be
done all things  necessary to preserve,  renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business;  provided that the foregoing  shall not
prohibit (a) any merger,  consolidation,  liquidation or  dissolution  permitted
under Section 6.03 or (b) any Asset Disposition permitted under Section 6.04.

                  SECTION 5.04.  Payment of  Obligations.  The Company will, and
will  cause  each  of its  Restricted  Subsidiaries  to,  pay  its  obligations,
including Tax  liabilities,  that, if not paid,  could reasonably be expected to
result in a Material  Adverse Effect before the same shall become  delinquent or
in default,  except where (a) the validity or amount thereof is being  contested
in good faith by  appropriate  proceedings,  (b) the Company or such  Restricted
Subsidiary has set aside on its books adequate  reserves with respect thereto in
accordance  with GAAP and (c) the failure to make  payment  pending such contest
could not reasonably be expected to result in a Material Adverse Effect.

                  SECTION  5.05.  Maintenance  of  Properties;   Insurance.  The
Company will,  and will cause each of its Restricted  Subsidiaries  to, (a) keep
and  maintain  all  property  material  to the  conduct of its  business in good
working order and condition,  ordinary wear and tear excepted, and (b) maintain,
with  financially  sound and reputable  insurance  companies,  insurance in such
amounts  and  against  such risks as are  customarily  maintained  by  companies
engaged  in the same or  similar  businesses  operating  in the same or  similar
locations.

                  SECTION 5.06. Books and Records;  Inspection and Audit Rights.
(a) The Company will,  and will cause each of its  Restricted  Subsidiaries  to,
keep proper books of record and account in which full,  true and correct entries
are made of all  dealings  and  transactions  in  relation to its  business  and
activities. The Company will, and will cause each of its Restricted Subsidiaries
to,  permit any  representatives  designated  by the Agent or any  Participating
Bank, upon  reasonable  prior notice,  to visit and inspect its prop erties,  to
examine  and make  extracts  from its  books and  records,  and to  discuss  its
affairs, finances and condition with officers of the Company and its independent
accountants,  all at such reasonable times and as often as reasonably requested;
provided that any such discussions with such independent accountants pursuant to
this  paragraph  shall be held no more than once in any fiscal  year unless (and
shall be at the sole cost and expense of the  Company  if) a Default  shall have
occurred and be continuing. If the Company so elects, on any visit or inspection
or  during  any  discussion  pursuant  to this  Section  5.06,  such  designated
representatives  shall  be  accompanied  by one or more  representatives  of the
Company.

                  (b) At any time  upon  the  request  of the  Agent  made  with
reasonable  prior  notice,  the Company  will permit the Agent or  professionals
(including investment bankers, consultants, accountants, lawyers and appraisers)
retained by the Agent to conduct evaluations and appraisals of (i) the Company's
practices in the computation of the Borrowing Base, and (ii) the assets included
in the  Borrowing  Base,  and  will pay the  reasonable  fees  and  expenses  in
connection  therewith;  provided  that such persons shall be entitled to conduct
such  evaluations  and  appraisals  only if (A) a Default  has  occurred  and is
continuing or (B) the Agent, or the Required Banks through the Agent, determines
that a Material Adverse Effect has occurred since the Effective Date.

                  SECTION 5.07. Compliance with Laws. The Company will, and will
cause each of its  Restricted  Subsidiaries  to,  comply  with all laws,  rules,
regulations  and orders of any  Governmental  Authority  applicable to it or its
property,  except where the failure to do so,  individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

                  SECTION 5.08.  Purpose.  The Letter of Credit will be issued
only to support the issuance from
time to time of Commercial Paper to provide for the Company's financing
requirements.

                  SECTION 5.09.  Related Documents.  The Company shall comply
in all material respects with the
terms of the Related Documents.

                  SECTION  5.10.  Reimbursement  Account.  At any time after any
Commercial  Paper matures and a  disbursement  is to be made under the Letter of
Credit in connection therewith,  prior to any subsequent issuances of Commercial
Paper, the Company shall deposit in the Reimbursement Account (as defined in the
Issuing and Paying Agency and Depositary  Agreement) an amount, to be applied to
the  reimbursement of such disbursement or any related Loan, equal to the amount
by which the Face Amount of such  Commercial  Paper exceeds the proceeds of such
Commercial Paper to be deposited in the Reimbursement Account.


ARTICLE VI
Negative Covenants

                  Until the  Commitment and the Letter of Credit have expired or
been  terminated and the principal of and interest on each Loan and all fees and
other amounts  payable here under have been paid in full, the Company  covenants
and agrees with the Participating Banks that:

                  SECTION 6.01.  Limitation on Indebtedness  and Preferred Stock
of  Restricted  Subsidiaries.   The  Company  will  not  permit  any  Restricted
Subsidiary  to  Incur,  or  permit  to  exist  with  respect  to any  Restricted
Subsidiary, directly or indirectly, any Indebtedness or Preferred Stock except:

                           (a) Permitted Warehouse Indebtedness;

                           (b)  Indebtedness  or  Preferred  Stock issued to and
         held by the Company or a Wholly Owned  Subsidiary;  provided,  however,
         that any  subsequent  issuance or  transfer of any Capital  Stock which
         results  in any such  Wholly  Owned  Subsidiary  ceasing to be a Wholly
         Owned  Subsidiary or any subsequent  transfer of such  Indebtedness  or
         Preferred   Stock  (other  than  to  the  Company  or  a  Wholly  Owned
         Subsidiary)  shall be deemed,  in each case, to constitute the issuance
         of Indebted ness or Preferred Stock by the issuer thereof;

                           (c)  Indebtedness  or Preferred Stock of a Subsidiary
         Incurred  and  outstanding  on or  prior  to the  date  on  which  such
         Subsidiary  was  acquired by the Company  (other than  Indebtedness  or
         Preferred  Stock Incurred in connection  with, or to provide all or any
         portion of the funds or credit  support  utilized  to  consummate,  the
         transaction  or series of related  transactions  pursuant to which such
         Subsidiary became a Subsidiary or was acquired by the Company);

                           (d)  Indebtedness or Preferred  Stock  outstanding on
         the date hereof and set forth in Schedule 6.01 (other than Indebtedness
         described in clause (a), (b) or (c) of this Section 6.01); and

                           (e) Refinancing  Indebtedness  Incurred in respect of
         Indebtedness  or  Preferred  Stock  referred to in clause (c) or (d) of
         this Section or this clause (e); provided,  however, that to the extent
         such  Refinancing   Indebtedness   directly  or  indirectly  Refinances
         Indebtedness or Preferred Stock of a Subsidiary described in clause (c)
         of this Section,  such Refinancing  Indebtedness shall be Incurred only
         by such Subsidiary.

                  SECTION 6.02.  Limitation on Liens.  The Company will not, and
will not permit any  Subsidiary  to, Incur or permit to exist any Lien on any of
its properties  (including  Capital Stock of a Restricted  Subsidiary),  whether
owned on the date hereof or thereafter acquired, or on any income or revenues or
rights in respect of any  thereof,  or assign or transfer any income or revenues
or rights in respect thereof except:

                           (a) pledges or deposits by such Person under worker's
         compensation laws,  unemployment insurance laws or similar legislation,
         or good faith  deposits in  connection  with bids,  tenders,  contracts
         (other  than for the payment of  Indebtedness)  or leases to which such
         Person  is  a  party,   or  deposits  to  secure  public  or  statutory
         obligations  of such  Person  or  deposits  of cash  or  United  States
         government  bonds to secure surety or appeal bonds to which such Person
         is a party,  or  deposits  as security  for  contested  taxes or import
         duties  or for the  payment  of  rent,  in each  case  Incurred  in the
         ordinary course of business;

                           (b)  Liens   imposed  by  law,   such  as  carriers',
         warehousemen's  and mechanics' Liens, in each case for sums not yet due
         or being  contested in good faith by  appropriate  proceedings or other
         Liens  arising  out of  judgments  or awards  against  such Person with
         respect to which such Person shall then be proceeding with an appeal or
         other proceedings for review;

                           (c)  Liens for  property  taxes  not yet  subject  to
         penalties for  non-payment  or which are being  contested in good faith
         and by appropriate proceedings;

                           (d)  Liens in favor of  issuers  of  surety  bonds or
         letters of credit issued pursuant to the request of and for the account
         of such  Person  in the  ordinary  course  of its  business;  provided,
         however, that such letters of credit do not constitute Indebtedness;

                           (e)  minor  survey  exceptions,  minor  encumbrances,
         easements or reservations of, or rights of others for, licenses, rights
         of way,  sewers,  electric  lines,  tele graph and telephone  lines and
         other similar purposes,  or zoning or other  restrictions as to the use
         of real property or Liens  incidental to the conduct of the business of
         such  Person  or to the  ownership  of its  properties  which  were not
         Incurred  in  connection  with  Indebtedness  and  which  do not in the
         aggregate  materially  adversely affect the value of said properties or
         materially  impair  their use in the  operation of the business of such
         Person;

                           (f) Liens securing  Indebtedness  Incurred to finance
         the  construction,  purchase or lease of, or repairs,  improvements  or
         additions to,  property,  plant or equipment of such Person (and in any
         event excluding  Capital Stock of another Person);  provided,  however,
         that the Lien may not extend to any other asset owned by such Person or
         any of its  Subsidiaries  at the  time the  Lien is  Incurred,  and the
         Indebtedness secured by the Lien may not be Incurred more than 180 days
         after  the  later of the  acquisition,  completion  of  construc  tion,
         repair, improvement,  addition or commencement of full operation of the
         property subject to the Lien;

                           (g) Liens on Performance Deposits and any Receivables
         or other  assets  referred to in clause  (ii)(a) of the  definition  of
         Permitted Warehouse Indebtedness,  in each case owned by the Company or
         a  Restricted  Subsidiary,  as the case  may be,  to  secure  Permitted
         Warehouse Indebtedness;

                           (h) Liens on  Excess  Spread  Receivables  (or on the
         Capital Stock of any  Subsidiary of such Person  substan tially all the
         assets of which are Excess Spread Receivables); provided, however, that
         (i)(A) any such Liens shall not pertain to any Excess Spread Receivable
         existing on the date hereof,  which, if created there after, would have
         been an Eligible  Excess  Spread  Receivable  unless such Excess Spread
         Receivable was subject to a Lien on such date created by the Company in
         respect of the  financing  thereof  (a  "predecessor  Lien");  provided
         further,  however,  that in the case of any such  Liens (a  "subsequent
         Lien") on Excess Spread  Receivables  which were subject to predecessor
         Liens,  the  sum  of (x)  the  aggregate  book  value  of  subordinated
         interests  created  and  retained  by the  Company  or  its  Restricted
         Subsidiaries as a result of the sale or financing  associated with such
         subsequent  Liens and (y) the aggregate book value of any Excess Spread
         Receivables  which were subject to predecessor Liens but which are then
         no longer  subject to any Lien (other than  permitted  Liens  described
         under  another  clause  of this  Section)  shall  equal  at  least  the
         aggregate  book  value at such time of all such  Excess  Spread  Receiv
         ables  which  are then  subject  to  subsequent  Liens,  as  calculated
         immediately  prior  to the  creation  of  each  such  subsequent  Lien,
         multiplied by a fraction the  numerator of which is the aggregate  book
         value of the  subordinated  interests  associated  with all predecessor
         Liens on the date hereof,  and the  denominator  of which is the sum of
         (x) such  aggregate book value of such  subordinated  interests and (y)
         the  outstanding  balance on the date  hereof,  of the  related  senior
         interests;  and  (B)  any  such  Lien  on any  Eligible  Excess  Spread
         Receivables   shall  extend  to  Eligible  Excess  Spread   Receivables
         representing  no more than 50% of the amount of Eligible  Excess Spread
         Receivables  shown  on  the  balance  sheet  of  the  Company  and  its
         Restricted   Subsidiaries  on  a  consolidated  basis,  determined  and
         consolidated  in accordance  with GAAP, as of the later of (x) the date
         hereof and (y) the end of the most recent fiscal quarter of the Company
         prior to the creation of such Lien for which  financial  statements are
         available;  and (ii) for  purposes of this clause (h),  any Lien on the
         Capital Stock of any Person  substantially  all the assets of which are
         Excess  Spread  Receivables  shall be  treated  as a Lien on the Excess
         Spread Receivables of such Person;

                           (i) Liens  existing  on the date hereof and listed on
Schedule 6.02;

                           (j) Liens on property  or shares of Capital  Stock of
         another  Person at the time such other Person  becomes a Subsidiary  of
         such  Person;  provided,  however,  that such  Liens  are not  created,
         incurred or assumed in connection  with, or in  contemplation  of, such
         other Person  becoming such a Subsidiary;  provided  further,  however,
         that such  Lien may not  extend  to any  other  property  owned by such
         Person or any of its Subsidiaries;

                           (k) Liens on  property at the time such Person or any
         of its Subsidiaries acquires the property, including any acquisition by
         means  of a merger  or  consolidation  with or into  such  Person  or a
         Subsidiary of such Person;  provided,  however, that such Liens are not
         created,  incurred or assumed in connection  with, or in  contemplation
         of, such acquisition; provided further, however, that the Liens may not
         extend  to any  other  property  owned  by  such  Person  or any of its
         Subsidiaries;

                           (l) Liens securing  Indebtedness or other obligations
         of a  Subsidiary  of such Person  owing to such Person or a  Restricted
         Subsidiary of such Person;

                           (m)  Liens   (other   than  on  any   Excess   Spread
         Receivables) securing Hedging Agreements; and

                           (n) Liens to secure any  Refinancing  (or  successive
         Refinancings)  as a whole,  or in part, of any Indebted ness secured by
         any Lien  referred to in the  foregoing  clauses (f), (i), (j) and (k);
         provided,  however,  that (i) such new Lien  shall be limited to all or
         part of the same property that secured the original Indebted ness (plus
         improvements to or on such property), and (ii) the Indebtedness secured
         by such Lien at such time is not  increased to any amount  greater than
         the  sum of (A)  the  outstanding  principal  amount  or,  if  greater,
         committed  amount of the  Indebtedness  described  under the  foregoing
         clauses  (f),  (i),  (j) or (k),  as the case  may be,  at the time the
         original  Lien  became a Lien  permitted  by this  Section,  and (B) an
         amount  necessary  to pay any fees and  expenses,  including  premiums,
         related  to  such  refinancing,   refunding,   extension,   renewal  or
         replacement.

                  Notwithstanding the foregoing, clauses (f), (j) or (k), above,
will be deemed to  exclude  any Lien to the  extent  such  Lien  applies  to any
Additional  Assets  acquired  directly or  indirectly  with Net  Available  Cash
pursuant to Section 6.04.

                  SECTION 6.03.  Limitation on Mergers and  Consolidations.  The
Company will not consolidate with or merge with or into, or convey,  transfer or
lease,  in  one  transaction  or  a  series  of  related  transactions,  all  or
substantially all its assets to, any Person, unless:

                           (a) the Company shall be the surviving Person of any
such transaction;

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

                           (c)   immediately   after   giving   effect  to  such
         transaction, the successor company shall have Consolidated Net Worth in
         an amount  which is not less than  Consolidated  Net Worth  immediately
         prior to such transaction; and

                           (d) the Company  shall have  delivered to the Agent a
         certificate,  signed  by two  executive  officers,  and an  opinion  of
         counsel,  each  stating  that such  consolidation,  merger or  transfer
         complies with this Agreement.
                  Notwithstanding   the  foregoing  clauses  (b)  and  (c),  any
Restricted  Subsidiary may consolidate  with, merge into or transfer all or part
of its properties and assets to the Company or a Wholly Owned Subsidiary.

                  SECTION  6.04.  Limitation  on Sales of Assets and  Subsidiary
Stock.  The Company will not, and will not permit any Restricted  Subsidiary to,
directly  or  indirectly,   consummate  any  sale,  lease,   transfer  or  other
disposition (or series of related sales,  leases,  transfers or dispositions) by
the Company or any Restricted Subsidiary,  including any disposition by means of
a merger,  consolida  tion or  similar  transaction  (each  referred  to for the
purposes of this definition as an "Asset Disposition"), of:

                           (a) any  shares  of  Capital  Stock  of a  Restricted
         Subsidiary (other than directors'  qualifying shares or shares required
         by  applicable  law to be held by a Person  other than the Company or a
         Restricted Subsidiary);

                           (b)  all  or  substantially  all  the  assets  of any
         division  or  line  of  business  of  the  Company  or  any  Restricted
         Subsidiary;

                           (c) any other assets of the Company or any Restricted
         Subsidiary outside of the ordinary course of business of the Company or
         such Restricted Subsidiary;

                           (d) any Investment in a Strategic Alliance Client; or

                           (e) any Excess Spread Receivables;

other than,  in the case of (a),  (b),  (c),  (d) and (e),  above,  (i) an Asset
Disposition  by a  Restricted  Subsidiary  to the Company or by the Company or a
Restricted  Subsidiary to a Restricted  Subsidiary or (ii) an Asset  Disposition
(including related assets) for an aggregate consideration of $1,000,000 or less,
unless (A) the Company or such Restricted  Subsidiary receives  consideration at
the time of such  Asset  Disposition  at least  equal to the fair  market  value
(including the value of all non-cash consideration), as determined in good faith
by the Board of  Directors,  of the  shares  and  assets  subject  to such Asset
Disposition  and at least  85% of the  consideration  therefor  received  by the
Company  or  such  Restricted  Subsidiary  is  in  the  form  of  cash  or  cash
equivalents, and (B) an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or such Restricted  Subsidiary,  as
the case may be) (x) to the extent the  Company  elects,  to acquire  Additional
Assets, either directly or through a Restricted Subsidiary, within 180 days from
the  later of the date of such  Asset  Disposition  or the  receipt  of such Net
Available  Cash, and (y) to the extent of the balance of such Net Available Cash
after  application  in  accordance  with clause (x), to  permanently  reduce the
Commitments (as defined in the Credit Agreement) in accordance with Section 2.07
of the Credit Agreement and to make any prepayments  required by such Section in
connection with such reduction pursuant to the Credit Agreement.

                  Notwithstanding the foregoing  provisions of this Section, the
Company and the Restricted  Subsidiaries  shall not be required to apply any Net
Available  Cash in accor dance with this  Section  except to the extent that the
aggregate  Net  Available  Cash from all Asset  Dispositions  which has not been
applied  in  accordance  with  this  paragraph  exceeds   $10,000,000.   Pending
application of Net Available  Cash pursuant to this Section,  such Net Available
Cash shall be applied  (i) to prepay  outstanding  Loans under and as defined in
the Credit  Agreement and (ii) to the extent of the excess of Net Available Cash
over the  principal  amount of  outstanding  Loans  (as  defined  in the  Credit
Agreement), in Permitted Investments.

                  SECTION 6.05.  Limitation  on Loans and Invest ments.  (a) The
Company will not,  and will not permit any of its  Restricted  Subsidiaries  to,
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a Wholly  Owned  Subsidiary  prior to such  merger) any  Capital  Stock,
evidences of indebtedness or other securities (including any option,  warrant or
other  right to acquire  any of the  foregoing)  of, make or permit to exist any
loans or advances to,  Guarantee any  obligations of, or make or permit to exist
any  investment  or any other  interest  in, any other  Person,  or  purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:

                           (i) Permitted Investments;

                           (ii)  Investments  by the  Company or any  Restricted
         Subsidiary in a Restricted  Subsidiary or a Person that will,  upon the
         making of such Investment,  become a Restricted  Subsidiary;  provided,
         however,  that the primary business of such Restricted  Subsidiary is a
         Related Business;

                           (iii) a Strategic  Alliance Client to the extent such
         Investment  consists of options,  warrants or other securities that are
         convertible  or  exchangeable  for equity  securities of such Strategic
         Alliance  Client  and  is  received  by  the  Company  or a  Restricted
         Subsidiary  without  the  payment of any  consideration  other than the
         concurrent  provision by the Company or such  Restricted  Subsidiary to
         such Strategic  Alliance  Client of finan cing or asset  securitization
         expertise on terms deter mined by the Company to be fair and reasonable
         to the Company or such Restricted  Subsidiary from a financial point of
         view  without  taking into  consideration  any value that may inhere in
         such option, warrant or convertible or exchangeable security;

                           (iv)  another  Person if as a result  of such  Invest
         ment such  other  Person is merged  or  consolidated  with or into,  or
         transfers  or  conveys  all or  substantially  all its  assets  to, the
         Company  or a  Restricted  Subsidiary;  provided,  however,  that  such
         Person's primary business is a Related Business;

                           (v)   receivables   owing  to  the   Company  or  any
         Restricted  Subsidiary if created or acquired in the ordinary course of
         business and payable or discharge  able in  accordance  with  customary
         trade terms;

                           (vi)  payroll,  travel and similar  advances to cover
         matters that are expected at the time of such advances ultimately to be
         treated as expenses  for  accounting  purposes and that are made in the
         ordinary course of business;

                           (vii) loans or advances to  employees in the ordinary
         course of business in accordance with the past practices of the Company
         or  such  Restricted  Subsidiary,  but  in  any  event  not  to  exceed
         $10,000,000 in aggregate principal amount outstanding at any one time;

                           (viii) stock,  obligations or securities  received in
         settlement  of debts  created in the  ordinary  course of business  and
         owing to the Company or any Restricted Subsidiary or in satisfaction of
         judgments;

                           (ix)  any  Person  to  the  extent  such   Investment
         represents the non-cash  portion of the  consideration  received for an
         Asset Disposition;

                  (x) Receivables;

                           (xi) a Strategic  Alliance  Client to the extent such
         Investment  consists of (A)  Indebtedness  of such  Strategic  Alliance
         Client that is secured by Receivables owned by such Strategic  Alliance
         Client in an aggregate  principal amount at any time outstanding not to
         exceed  the  aggregate  market  value  of such  Receivables;  provided,
         however,  that such Receivables are eligible to be characterized  under
         GAAP as held for sale on the balance sheet of such  Strategic  Alliance
         Client and such  Indebtedness has not been outstanding in excess of 364
         days; and (B)  Indebtedness  of such Strategic  Alliance Client that is
         secured by Excess Spread  Receivables owned by such Strategic  Alliance
         Client;  provided,  however,  that such Excess Spread  Receivables  are
         attributed  solely  to one or more  "pools"  of  Receivables  that were
         securitized  in one or more  transactions  in which the  Company or its
         Restricted Subsidiaries either acted as underwriters or placement agent
         or provided all or a portion of the  financing for such "pool" prior to
         such securitization; and

                           (xii) Excess Spread Receivables;  provided,  however,
         that such Excess Spread Receivables  represent interests in one or more
         "pools"  of   Receivables   that  were   securitized  in  one  or  more
         transactions in which the Company or its Restricted  Subsidiaries acted
         as sponsor, underwriter or placement agent or provided all or a portion
         of the financing for such "pool" prior to such securitization.

                  (b) The  Company  will  not,  and will not  permit  any of its
Restricted Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements  entered into in the ordinary course of business to hedge or mitigate
risks to  which  the  Company  or any  Restricted  Subsidiary  or any  Strategic
Alliance  Client is exposed in the conduct of its business or the  management of
its liabilities;  provided that, in the case of Hedging Agreements relating to a
Strategic  Alliance Client,  (i) such Hedging Agreements are not for speculative
purposes of the Company or any  Restricted  Subsidiary,  and (ii) such Strategic
Alliance  Client  is  contractually  obligated  to  make  the  Company  or  such
Restricted  Subsidiary  whole  for  any  loss  suffered  thereby  in  connection
therewith.

                  SECTION 6.06.  Limitation on Affiliate Trans actions.  (a) The
Company will not,  and will not permit any of its  Restricted  Subsidiaries  to,
sell, lease or otherwise transfer any property or assets to, or purchase,  lease
or otherwise  acquire any property or assets  from,  or otherwise  engage in any
other  transactions  with, any of its  Affiliates  (an "Affiliate  Transaction")
unless  the terms  thereof  (i) are no less  favorable  to the  Company  or such
Restricted  Subsidiary  than those that  could be  obtained  at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate,
(ii) if such  Affiliate  Transaction  involves an amount in excess of $2,000,000
(or the equiva lent amount in any foreign currency) (A) are set forth in writing
and (B)  have  been  approved  by a  majority  of the  members  of the  Board of
Directors  having no personal stake in such Affiliate  Transaction  and (iii) if
such Affiliate  Transaction  involves an amount in excess of $10,000,000 (or the
equivalent amount in any foreign currency), have been determined by a nationally
recognized investment banking firm to be fair, from a financial  standpoint,  to
the Company and its Restricted Subsidiaries.

                  (b) The  provisions of Section  6.06(a) shall not prohibit (i)
any Permitted  Investment,  (ii) any issuance of securities,  or other payments,
awards or grants in cash,  securities  or otherwise  pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved by
the Board of Directors,  (iii) the grant of stock  options or similar  rights to
employees and directors of the Company  pursuant to plans  approved by the Board
of  Directors,  (iv) loans or advances to employees  in the  ordinary  course of
business in accordance  with the past practices of the Company or its Restricted
Subsidiaries,  but in any  event not to exceed  $10,000,000  (or the  equivalent
amount in any foreign currency) in aggregate principal amount outstanding at any
one time, (v) the payment of reasonable fees to directors of the Company and its
Restricted  Subsidiaries  who are not employees of the Company or its Restricted
Subsidiaries,   (vi)  any  Affiliate  Transaction  between  the  Company  and  a
Restricted Subsidiary or between consolidated  Restricted  Subsidiaries (in each
case other than any Restricted  Subsidiary  that is an "affiliate" (as such term
is defined in the  Exchange  Act) of any  Affiliate  (other than any  Restricted
Subsidiary) of the Company and (vii)  transactions  pursuant to any agreement as
in  existence  as of the date hereof and set forth in Schedule  6.06 between the
Company  or its  Restricted  Subsidiaries  and  Continental  Grain or one of its
subsidiaries.

                  SECTION 6.07. Limitation on Restrictions on Distributions from
Restricted  Subsidiaries.  The  Company  will  not,  and  will  not  permit  any
Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to
exist any agreement or other  arrangement  that prohibits,  restricts or imposes
any condition upon (a) the ability of the Company or any  Restricted  Subsidiary
to create,  incur or permit to exist any Lien upon any of its property or assets
or (b) the ability of any  Restricted  Subsidiary  to pay  dividends or make any
other  distributions  on its  Capital  Stock  to  the  Company  or a  Restricted
Subsidiary  or pay any  Indebtedness  owed to the Company,  to make any loans or
advances to the Company or a Restricted Subsidiary or to Guarantee  Indebtedness
of or to  transfer  any of its  property  or assets to the  Company or any other
Restricted  Subsidiary  that  owns  Capital  Stock  therein;  provided  that the
foregoing shall not apply to (i) restrictions  and conditions  imposed by law or
by this Agreement;  (ii) any encumbrance or restriction pursuant to an agreement
in effect at or entered into on the date hereof identified on Schedule 6.07 (but
shall apply to any  extension or renewal of, or any  amendment or modifica  tion
expanding  the  scope  of,  any  such  restriction  or  condition);   (iii)  any
encumbrance or restriction with respect to a Restricted  Subsidiary  pursuant to
an agreement applicable to such Restricted Subsidiary on or prior to the date on
which such  Restricted  Subsidiary  was  acquired by the Company  (other than an
agreement   entered  into  in  connection  with,  or  in  anticipation  of,  the
transaction or series of related transactions  pursuant to which such Restricted
Subsidiary  became a Restricted  Subsidiary  or was acquired by the Company) and
outstanding on such date; (iv) any such encumbrance or restriction consisting of
customary  non-assignment  provisions in leases governing leasehold interests to
the extent such  provisions  restrict  the transfer of the lease or the property
leased thereunder;  (v) in the case of a Restricted Subsidiary  transferring any
of its  property or assets to the  Company,  restrictions  contained in security
agreements or mortgages securing  Indebtedness of a Restricted Subsidiary to the
extent such  restrictions  restrict the transfer of the property subject to such
security  agreements or mortgages;  and (vi) any  restriction  with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or  substantially  all the Capital Stock or assets of such
Restricted  Subsidiary  pending  the  closing of such sale or  disposition;  and
provided   further  that  clause  (a)  of  the  foregoing  shall  not  apply  to
restrictions  or  conditions  imposed  by  any  agreement  relating  to  secured
Indebtedness  permitted by this  Agreement if such restric  tions or  conditions
apply only to the property or assets securing such Indebtedness.

                  SECTION 6.08.  Limitation on Investment  Company  Status.  The
Company will not take any action, or otherwise permit to exist any circumstance,
that would require the Company to register as an "investment  company" under the
Investment Company Act of 1940.

                  SECTION  6.09.  Financial  Covenants.  (a) Consoli-  dated Net
Worth shall not at any time be less than (i)  $400,000,000  plus (ii) an amount,
for each fiscal  quarter  which begins after June 30, 1997 and ends prior to the
date for which compliance with this Section 6.09 is being  determined,  equal to
the sum of (A) 75% of the aggregate of positive Consolidated Net Income (without
deduction for quarterly losses) and (B) 50% of Equity Net Proceeds.

                  (b) The  Consolidated  Leverage  Ratio  will  not at any  time
exceed 2.50 to 1.00.

                  (c)  The Consolidated Interest Coverage Ratio for the Rolling
Period shall at no time be less
than 1.50 to 1.00.

                  SECTION  6.10.  Limitation  on  Business of the  Company.  The
Company will not engage at any time in any business or business  activity  other
than the business currently conducted by it and Related Business.

                  SECTION  6.11.  Commercial  Paper.  (a) The Company  shall not
issue  Commercial  Paper (i) which will mature  later than two days prior to the
Termination  Date,  (ii) if as a result the Stated Amount in effect after giving
effect to the  application of the proceeds of such issuance and the  application
of funds made available at such time by the Company in the Reimbursement Account
(as defined in the Issuing and Paying Agency and  Depositary  Agreement) for the
reimbursement  of  principal of amounts due from the Company to the Issuing Bank
pursuant  to Section  2.03 would be less than the  aggregate  Face Amount of all
Commercial Paper Outstanding after giving effect to such issuance,  (iii) during
the  continuance of any Non-Default  Disruption or Event of Default,  (iv) other
than in  accordance  with  the  terms  of the  Issuing  and  Paying  Agency  and
Depositary  Agreement or (v) unless the condition  specified in paragraph (c) of
Section 4.02 is satisfied at the time of such issuance.

                  (b) The Company  shall not issue  Commercial  Paper or use the
proceeds thereof in any manner that would violate the Securities Act of 1933, as
amended, or any other applicable law or regulation.

                  (c) The Company  shall not amend the offering  documents  with
respect to the Commercial Paper without the prior written consent of the Issuing
Bank, which consent shall not be unreasonably withheld.

                  (d) The Company shall not issue any  promissory  note or other
obligation  which could  generally or commonly be regarded as commercial  paper,
unless such promissory note or other  obligation is in such form, and bears such
identification  and  is  issued  under  such  circumstances   (with  such  form,
identification  and  circumstances  to be acceptable to the Issuing Bank), as to
avoid  confusion  in the hands of the  holder  thereof or the  investing  public
between such promissory note or other obligation and the Commercial Paper and so
as not to indicate or imply that such  promissory  note or other  obligation  is
entitled to the benefits of the Letter of Credit.

                  SECTION  6.12.  Issuing and Paying Agent and  Depositary.  The
Company  shall not appoint a successor  issuing and paying agent and  depositary
with respect to the  Commercial  Paper without the prior written  consent of the
Issuing Bank and the Agent, which consents shall not be unreasonably withheld.

                  SECTION 6.13.  Related Documents.  The Company shall not amend
the terms of the Related
Documents without the consent of the Issuing Bank and the Agent, which consents
shall not be unreasonably
withheld.


ARTICLE VII

Events of Default

                  If any of the  following  events  ("Events of Default")  shall
occur:

                           (a) the  Company  shall  fail  to pay (i) any  amount
         under  Section  2.03 or (ii) any  principal of any Loan when and as the
         same shall become due and  payable,  whether at the due date thereof or
         at a date fixed for prepayment thereof or otherwise;

                           (b) the Company shall fail to pay any interest on any
         Loan or any fee or any other amount  (other than an amount  referred to
         in clause (a) of this Article VII) payable under this  Agreement,  when
         and as the same shall  become due and payable,  and such failure  shall
         continue unremedied for a period of three days;

                           (c) any  representation  or  warranty  made or deemed
         made by or on behalf of the Company or any Restricted  Subsidiary in or
         in  connection  with this  Agreement  or the Related  Documents  or any
         amendment  or  modification  hereof or thereof or waiver  hereunder  or
         thereunder, or in any report, certificate, financial statement or other
         document  furnished pursuant to or in connection with this Agreement or
         the  Related  Documents  or any  amendment  or  modification  hereof or
         thereof or waiver  hereunder  or  thereunder,  shall prove to have been
         materially incorrect when made or deemed made;

                           (d) the Company  shall fail to observe or perform any
         covenant,  condition or agreement contained in Section 5.02, 5.03 (with
         respect to the Company's existence) or 5.08 or in Article VI;

                           (e) the Company  shall fail to observe or perform any
         covenant,  condition or agreement  contained in this  Agreement  (other
         than those  specified in clause (a), (b) or (d) of this Article) or any
         Related  Document,  and such failure shall  continue  unremedied  for a
         period of 30 days after  notice  thereof  from the Agent to the Company
         (which notice will be given at the request of any Participating Bank);

                           (f) the Company or any  Restricted  Subsidiary  shall
         fail  to make  any  payment  (whether  of  principal  or  interest  and
         regardless of amount) in respect of any Material Indebtedness, when and
         as the same shall become due and payable;

                           (g) any event or condition occurs that results in any
         Material  Indebtedness  becoming due prior to its scheduled maturity or
         that  enables or permits  (with or  without  the giving of notice,  the
         lapse of time or both) the holder or holders of any  Material  Indebted
         ness or any  trustee  or  agent  on its or their  behalf  to cause  any
         Material  Indebtedness  to become due,  or to require  the  prepayment,
         repurchase,  redemption or defeasance  thereof,  prior to its scheduled
         maturity;  provided  that this  clause  (g) shall not apply to  secured
         Indebtedness  that becomes due as a result of the  permitted  voluntary
         sale or transfer of the property or assets securing such Indebtedness;

                           (h) an involuntary  proceeding  shall be commenced or
         an  involuntary  petition  shall  be  filed  seeking  (i)  liquidation,
         reorganization  or  other  relief  in  respect  of the  Company  or any
         Restricted  Subsidiary or its debts,  or of a  substantial  part of its
         assets,  under any Federal,  state or foreign  bankruptcy,  insolvency,
         receivership  or  similar  law now or  hereafter  in effect or (ii) the
         appointment   of  a   receiver,   trustee,   custodian,   sequestrator,
         conservator  or similar  official  for the  Company  or any  Restricted
         Subsidiary  or for a substantial  part of its assets,  and, in any such
         case,  such  proceeding or petition shall continue  undismissed  for 60
         days or an order or decree  approving or ordering any of the  foregoing
         shall be entered;
                           (i) the Company or any  Restricted  Subsidiary  shall
         (i)  voluntarily  commence any proceeding or file any petition  seeking
         liquidation, reorganization or other relief under any Federal, state or
         foreign bankruptcy, insolvency, receivership or similar law now or here
         after in effect, (ii) consent to the institution of, or fail to contest
         in  a  timely  and  appropriate  manner,  any  proceeding  or  petition
         described in clause (h) of this Article,  (iii) apply for or consent to
         the  appointment  of  a  receiver,  trustee,  custodian,  sequestrator,
         conservator  or similar  official  for the  Company  or any  Restricted
         Subsidiary or for a substantial part of its assets, (iv) file an answer
         admitting the material  allegations  of a petition  filed against it in
         any such proceeding,  (v) make a general  assignment for the benefit of
         creditors or (vi) take any action for the purpose of  effecting  any of
         the foregoing;

                           (j) the Company or any  Restricted  Subsidiary  shall
         become  unable,  admit in writing or fail generally to pay its debts as
         they become due;

                           (k) one or more judgments for the payment of money in
         an aggregate  amount not covered by  insurance in excess of  $5,000,000
         (or the equivalent  amount in any foreign  currency)  shall be rendered
         against the  Company,  any  Restricted  Subsidiary  or any  combination
         thereof  and the same  shall  remain  undischarged  for a period  of 60
         consecutive  days  during  which  execution  shall  not be  effectively
         stayed,  or any action shall be legally taken by a judgment creditor to
         attach  or levy  upon  any  assets  of the  Company  or any  Restricted
         Subsidiary to enforce any such judgment;

                           (l) an ERISA Event shall have  occurred  that, in the
         opinion of the Required Banks, when taken together with all other ERISA
         Events that have  occurred,  could  reasonably be expected to result in
         liability  of  the  Company  and  its  Restricted  Subsidiaries  in  an
         aggregate  amount  exceeding (i)  $5,000,000 for any fiscal year of the
         Company or (ii) $10,000,000 for all periods;

                           (m) a Change in Control shall occur; or

                           (n) any  provision  of this  Agreement or any Related
         Document  to which the Company is or is to be a party shall at any time
         for any reason cease to be valid and binding on the  Company,  or shall
         be declared to be null and void,  or the Company shall deny that it has
         any further liability or obligation hereunder or thereunder;
then the Agent and the Issuing  Bank shall  notify the Issuing and Paying  Agent
and Depositary of the  occurrence and  continuance of such Event of Default (and
thereafter  of the  cessation of any such Event of  Default),  and in every such
event (other than an event with  respect to the Company  described in clause (h)
or (i) of this Article),  and at any time  thereafter  during the continuance of
such event, the Agent may, and at the request of the Required Banks shall,  take
any or all of the following actions,  at the same or different times: (i) if the
Letter of Credit shall not have been  issued,  by notice to the Issuing Bank and
the Company,  declare the Commitment to be terminated,  whereupon the same shall
forthwith  terminate or (ii) if the Letter of Credit shall have been issued, (A)
by notice to the  Company,  declare any  disbursements  by the Issuing Bank that
have not yet been  reimbursed  by or on behalf of the Company and any Loans then
outstanding  to be due and  payable  in whole  (or in part,  in which  case such
disbursements  and any  principal  not so  declared  to be due and  payable  may
thereafter be declared to be due and payable),  and thereupon such disbursements
and the principal of the Loans so declared to be due and payable,  together with
accrued  interest  thereon  and all fees and other  obligations  of the  Company
accrued   hereunder,   shall  become  due  and  payable   immediately,   without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby  waived by the  Company,  and (B) demand the  deposit of cash  collateral
pursuant  to this  Article  VII,  in which case the  Company  shall  immediately
deposit  in an  account  with the Agent an amount in cash (or a cash  equivalent
that is  satisfactory  in form and substance to the Required Banks) equal to the
sum of (x) the  Stated  Amount at such  time,  (y) the  aggregate  amount of all
disbursements  by the Issuing  Bank that have not yet been  reimbursed  by or on
behalf of the Company at such time and (z) the aggregate principal amount of any
Loans then outstanding,  together with accrued interest thereon and all fees and
other   obligations  of  the  Company  accrued  hereunder   (collectively,   the
"Exposure");  and in the case of any event with respect to the Company described
in  clause  (h) or (i) of  this  Article,  the  Commitment  shall  automatically
terminate or any  disbursements  then outstanding and the principal of any Loans
then outstanding,  together with accrued interest thereon,  shall  automatically
become due and payable and the obligation to deposit such cash collateral  shall
become effective  immediately and such deposit shall become  immediately due and
payable,  as  applicable,  and all fees and  other  obligations  of the  Company
accrued  hereunder,  shall  automatically  become due and payable,  in each case
without presentment,  demand,  protest or other notice of any kind, all of which
are hereby waived by the Company.  Such deposit of cash collateral shall be held
by the Agent as collateral for the payment and performance of the obligations of
the Company under this  Agreement.  The Agent shall have exclusive  dominion and
control,  including the exclusive right of withdrawal,  over such account. Other
than any interest earned on the investment of such deposits,  which  investments
shall  be made  at the  option  and  sole  discretion  of the  Agent  and at the
Company's risk and expense (except as a result of acts or omissions constituting
the wilful misconduct or gross negligence of the Agent), such deposits shall not
bear interest. Interest or profits, if any, on such investments shall accumulate
in such  account.  Moneys  in such  account  shall be  applied  by the  Agent to
reimburse  the  Issuing  Bank  for  disbursements  for  which  it has  not  been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of the Company with respect to the Exposure. If
the Company is required to provide an amount of cash  collateral  hereunder as a
result of the occurrence of an Event of Default,  such amount (to the extent not
applied as  aforesaid)  shall be returned to the Company  within three  Business
Days after all Events of Default have been cured or waived. After the occurrence
and during the continuance of any Event of Default,  the Issuing Bank may direct
the Issuing and Paying Agent and  Depositary  in writing to make a drawing under
the  Letter of  Credit in the  amount  required  to pay in full all  Outstanding
Commercial  Paper upon  maturity and deposit such amount in the Note  Redemption
Account (as defined in the Issuing and Paying Agency and  Depositary  Agreement)
and apply such  amount in  accordance  with the terms of the  Issuing and Paying
Agency and Depositary  Agreement.  Notwithstanding  the  foregoing,  the Issuing
Bank's  obligations  under the Letter of Credit with  respect to any  Commercial
Paper  Outstanding  at the time that the Agent or the Issuing Bank  notifies the
Issuing and Paying  Agent and  Depositary  of any Event of Default  shall not be
limited in any way by such Event of Default.


ARTICLE VIII

The Agent; the Participating Banks;
and the Issuing Bank

                  Subject to the further provisions hereof,  each of the Issuing
Bank and the Participating  Banks hereby  irrevocably  appoints the Agent as its
agent and  authorizes  the  Agent to take  such  actions  on its  behalf  and to
exercise such powers as are delegated to the Agent by the terms hereof, together
with such actions and powers as are reasonably incidental thereto.

                  The bank  serving as the Agent and the bank serving as Issuing
Bank  hereunder  shall  have the same  rights and  powers in their  capacity  as
Participating Banks as any other Participating Bank and may exercise the same as
though  they were not the Agent and the  Issuing  Bank,  respectively,  and such
banks and their Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any Restricted  Subsidiary or
other  Affiliate  thereof  as if  they  were  not the  Agent  or  Issuing  Bank,
respectively, hereunder.

                  The Agent  shall not have any  duties  or  obligations  except
those  expressly  set forth  herein.  Without  limiting  the  generality  of the
foregoing,  (a) the Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing,  (b) the
Agent shall not have any duty to take any  discretionary  action or exercise any
discretionary   powers,   except   discretionary  rights  and  powers  expressly
contemplated  hereby  that the Agent is  required  to exercise in writing by the
Required Banks (or such other number or percentage of the Participating Banks as
shall be necessary under the circumstances as provided in Section 9.02), and (c)
except as  expressly  set  forth  herein,  the Agent  shall not have any duty to
disclose,  and shall not be liable for the failure to disclose,  any information
relating  to  the  Company  or  any  of  its  Restricted  Subsidiaries  that  is
communicated  to or  obtained  by  the  bank  serving  as  Agent  or  any of its
Affiliates in any  capacity.  The Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required  Banks (or
such other number or percentage of the Participating Banks as shall be necessary
under the  circumstances  as provided in Section  9.02) or in the absence of its
own gross negligence or wilful misconduct. The Agent shall be deemed not to have
knowledge of any Default  unless and until notice  thereof is given to the Agent
by the Company or a  Participating  Bank, and the Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation  made in or in  connection  with this  Agreement  or any  Related
Document,  (ii) the  contents  of any  certificate,  report  or  other  document
delivered  hereunder,  under any Related  Document or in  connection  therewith,
(iii) the performance or observance of any of the covenants, agreements or other
terms or  conditions  set forth herein or under any Related  Document,  (iv) the
validity,  enforce ability,  effectiveness or genuineness of this Agreement, any
Related  Document or any other  agreement,  instrument  or document,  or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm  receipt of items  expressly  required  to be  delivered  to the
Agent.

                  The Agent shall be entitled to rely upon,  and shall not incur
any liability  for relying  upon,  any notice,  request,  certificate,  consent,
statement,  instrument,  document or other writing  believed by it to be genuine
and to have been  signed or sent by the proper  Person.  The Agent also may rely
upon any  statement  made to it orally or by telephone  and believed by it to be
made by the  proper  Person,  and  shall not incur  any  liability  for  relying
thereon.  The Agent may consult with legal counsel (who shall be counsel for the
Company, internal counsel for the Agent or a Participating Bank, or a nationally
recognized law firm),  nationally recognized  independent  accountants and other
experts  selected  by it, and shall not be liable  for any  action  taken or not
taken by it in accordance  with the advice of any such counsel,  accountants  or
experts.

                  The Agent may perform any and all its duties and  exercise its
rights and  powers by or through  any one or more  sub-agents  appointed  (after
consultation  with the Company) by the Agent.  The Agent and any such  sub-agent
may perform any and all its duties and  exercise  its rights and powers  through
their respective  Related Parties.  The exculpatory  provisions of the preceding
paragraphs  shall apply to any such sub-agent and to the Related  Parties of the
Agent and any such sub-agent,  and shall apply to their respective activities in
connection with the  syndication of the credit  facility  provided for herein as
well as activities as Agent.

                  Subject to the appointment and acceptance of a successor Agent
as provided in this paragraph, the Agent may resign at any time by notifying the
Participating   Banks,  the  Issuing  Bank  and  the  Company.   Upon  any  such
resignation,  the Required Banks shall have the right, in consultation  with the
Company, to appoint a successor. If no successor shall have been so appointed by
the Required Banks and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Participating Banks and Issuing Bank, appoint a successor Agent
which shall be a bank. Upon the acceptance of its appointment as Agent hereunder
by a successor,  such successor  shall succeed to and become vested with all the
rights,  powers,  privileges and duties of the retiring Agent,  and the retiring
Agent shall be discharged  from its duties and obligations  hereunder.  The fees
payable by the Company to a successor  Agent shall be the same as those  payable
to its  predecessor  unless  otherwise  agreed  between  the  Company  and  such
successor.  After the Agent's  resignation  hereunder,  the  provisions  of this
Article VIII and Section  9.03 shall  continue in effect for the benefit of such
retiring Agent, its sub-agents and their  respective  Related Parties in respect
of any  actions  taken or omitted to be taken by any of them while it was acting
as Agent.

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

                  All  notices  received by the  Issuing  Bank  pursuant to this
Agreement or any other Related  Document (other than the Letter of Credit) shall
be promptly delivered to the Agent for distribution to the Participating Banks.

                  The  Issuing  Bank shall not amend or waive any  provision  or
consent to the amendment or waiver of any Related  Document  without the consent
of the Required Banks;  provided,  however,  that any waiver or amendment of any
provision  of the Letter of Credit or consent to the  amendment or waiver of the
Letter of Credit shall require the written  consent of all of the  Participating
Banks.


ARTICLE IX

Miscellaneous

                  SECTION 9.01. Notices. Except in the case of notices and other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy, as follows:

                           (a) if to the Company, to it at ContiFinancial
Corporation, 277 Park Avenue, New York,
         New York 10172, Attention of Chief Counsel and of Director of
Corporate Finance (Telecopy No. (212)
         207-2935);

                           (b) if to the Agent,  to Credit  Suisse First Boston,
         Eleven Madison  Avenue,  New York,  New York 10010  (Telecopy No. (212)
         325-8304), Attention of Jonathan Satran;

                           (c) if to the Issuing  Bank,  to it at Dresdner  Bank
         AG,  New York  Branch,  75 Wall  Street,  New  York,  New  York  10005,
         Attention of Claudia Zoy (Telecopy No. (212) 429-2130); and

                           (d)  if to  any  Participating  Bank,  to  it at  its
         address  (or   telecopy   number)  set  forth  in  its   Administrative
         Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications  hereunder by notice to the other parties hereto. All notices and
other  communica  tions  given  to any  party  hereto  in  accordance  with  the
provisions of this  Agreement  shall be deemed to have been given on the date of
receipt.

                  SECTION 9.02. Waivers;  Amendments. (a) No failure or delay by
the Agent, the Issuing Bank or any Participating Bank in exercising any right or
power here under  shall  operate  as a waiver  thereof,  nor shall any single or
partial   exercise  of  any  such  right  or  power,   or  any   abandonment  or
discontinuance of steps to enforce such a right or power,  preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and  remedies  of the  Agent,  the  Issuing  Bank  and the  Participating  Banks
hereunder  are  cumulative  and are not exclusive of any rights or remedies that
they would  otherwise  have.  No waiver of any  provision  of this Agree ment or
consent  to any  departure  by the  Company  therefrom  shall  in any  event  be
effective  unless the same shall be permitted  by paragraph  (b) of this Section
9.02,  and then such waiver or consent  shall be effective  only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, neither the making of a Loan nor issuance of the Letter of Credit
shall be construed as a waiver of any Default,  regardless of whether the Agent,
the Issuing Bank or any  Participating  Bank may have had notice or knowledge of
such Default at the time.

                  (b) Neither this  Agreement  nor any  provision  hereof may be
waived,  amended or modified  except  pursuant to an agreement or  agreements in
writing entered into by the Company and the Required Banks or by the Company and
the  Agent  with  the  consent  of the  Required  Banks;  provided  that no such
agreement shall (i) increase the  Participation  Percentage of any Participating
Bank  without the written  consent of such  Participating  Bank,  (ii) reduce or
forgive any amount due pursuant to Section 2.03 or the  principal  amount of any
Loan or  reduce  the rate of  interest  thereon,  or  reduce  any  fees  payable
hereunder,  without  the  written  consent  of each  Participating  Bank,  (iii)
postpone  the  scheduled  date of payment of any amount due  pursuant to Section
2.03 or the principal  amount of any Loan or any interest  thereon,  or any fees
payable hereunder,  or amend the definition of "Termination Date", or reduce the
amount of, waive or excuse any such payment,  or postpone the scheduled  date of
expiration of the Commitment  without the written consent of each  Participating
Bank affected  thereby,  (iv) change Section 2.09(c) or 9.08(c) in a manner that
would  alter the pro rata  sharing of  payments  required  thereby,  without the
written  consent of each  Participating  Bank, (v) except as provided in Section
2.11(e),  increase  the  Stated  Amount  without  the  written  consent  of each
Participating  Bank or (vi) change any of the  provisions of this Section or the
definition of "Required  Banks" or any other  provision  hereof  specifying  the
number or percentage of Participating  Banks required to waive,  amend or modify
any rights hereunder or make any  determination or grant any consent  hereunder,
without the written consent of each Participating Bank; provided further that no
such  agreement  shall (i)  increase any advance  rate used in  calculating  the
Borrowing Base or otherwise  change the computation of the Borrowing Base or the
definition of any constituent component of the Borrowing Base, without the prior
written  consent  of  Participating  Banks  representing  80% of  the  aggregate
Participation  Percentages or (ii) amend,  modify or otherwise affect the rights
or duties of the Agent or the Issuing Bank  hereunder  without the prior written
consent of the Agent or the Issuing Bank, as the case may be.

                  SECTION 9.03.  Expenses;  Indemnity;  Damage  Waiver.  (a) The
Company  shall pay (i) all  reasonable  out-of-pocket  expenses  incurred by the
Agent and its Affiliates and the Issuing Bank and its Affiliates,  including the
reasonable  fees,  charges  and  disbursements  of counsel for the Agent and the
Issuing Bank, in connection with the syndication of the credit facility provided
for herein, the preparation and administration of this Agreement,  the Letter of
Credit,  any amendments,  modifications or waivers of the provisions  hereof and
thereof or any increase in the Stated  Amount  (whether or not the  transactions
contemplated  hereby  or  thereby  shall be  consummated),  (ii) all  reasonable
out-of-  pocket  expenses  incurred by the Issuing Bank in  connection  with the
issuance,  amendment, renewal or extension of the Letter of Credit or any demand
for payment thereunder and (iii) all reasonable  out-of-pocket expenses incurred
by the Agent, the Issuing Bank or any  Participating  Bank,  including the fees,
charges and  disbursements of any counsel for the Agent, the Issuing Bank or any
Participating  Bank, in  connection  with the  enforcement  or protection of its
rights  in  connection  with this  Agreement  and any  other  Related  Document,
including its rights under this Section, or in connection with any Loans made or
the issuance of the Letter of Credit  hereunder,  including all such  reasonable
out-  of-pocket   expenses   incurred  during  any  workout,   restructuring  or
negotiations in respect of such Loans or such Letter of Credit.

                  (b) The Company shall  indemnify the Agent,  the Issuing Bank,
each  Participating  Bank and each Related Party of any of the foregoing Persons
(each  such  Person  being  called  an  "Indemnitee")  against,  and  hold  each
Indemnitee harmless from, any and all losses, claims,  damages,  liabilities and
related expenses,  including the fees,  charges and disbursements of any counsel
for any Indemnitee,  incurred by or asserted against any Indemnitee  arising out
of, in connection  with, or as a result of (i) the execution or delivery of this
Agreement,  the Related  Documents or any agreement or  instrument  contemplated
hereby,  the performance by the parties hereto of their  respective  obligations
hereunder or the  consummation  of the  Transactions  or any other  transactions
contemplated  hereby,  (ii) any Loan or the  Letter  of Credit or the use of the
proceeds therefrom  (including any refusal by the Issuing Bank to honor a demand
for payment  under a Letter of Credit if the  documents  presented in connection
with  such  demand  do not  strictly  comply  with the  terms of such  Letter of
Credit),  (iii) any actual or alleged presence or release of Hazardous Materials
on or  from  any  property  owned  or  operated  by  the  Company  or any of its
Restricted  Subsidiaries,  or any Environmental  Liability related in any way to
the  Company  or any of its  Restricted  Subsidiaries,  or (iv)  any  actual  or
prospective claim,  litigation,  investigation or proceeding  relating to any of
the  foregoing,  whether  based  on  contract,  tort  or any  other  theory  and
regardless  of whether any  Indemnitee  is a party  thereto;  provided that such
indemnity shall not, as to any Indemnitee,  be available to the extent that such
losses, claims, damages,  liabilities or related expenses have resulted from the
gross negligence or wilful misconduct of such Indemnitee.

                  (c) To the  extent  that the  Company  fails to pay any amount
required to be paid by it to the Agent or the Issuing Bank under  paragraph  (a)
or (b) of this Section 9.03, each  Participating Bank severally agrees to pay to
the Agent or the Issuing  Bank,  as the case may be, such  Participating  Bank's
Participation  Percentage  (determined  as  of  the  time  that  the  applicable
unreimbursed  expense or  indemnity  payment is sought) of such  unpaid  amount;
provided that the  unreimbursed  expense or  indemnified  loss,  claim,  damage,
liability  or related  expense,  as the case may be, was incurred by or asserted
against the Agent or the Issuing Bank in its capacity as such.

                  (d) To the extent  permitted by applicable law, no party shall
assert, and each party hereby waives,  any claim against any Indemnitee,  on any
theory of liability,  for special,  indirect,  consequential or punitive damages
(as opposed to direct or actual damages)  arising out of, in connection with, or
as a result of,  this  Agreement,  the Related  Documents  or any  agreement  or
instrument  contem plated hereby,  the  Transactions,  any Loan or the Letter of
Credit or the use of the proceeds  thereof;  provided  that this  paragraph  (d)
shall in no way limit the rights of any  Participating  Bank under Section 2.07,
2.08 or 2.14.

                  (e)  All amounts due under this Section shall be payable not
later than 10 days after written
demand therefor.

                  SECTION 9.04.  Successors  and Assigns.  (a) The provisions of
this  Agreement  shall be binding  upon and inure to the  benefit of the parties
hereto and their respective  successors and assigns  permitted hereby (including
any Affiliate of the Issuing Bank that issues the Letter of Credit), except that
the  Company  may  not  assign  or  otherwise  transfer  any  of its  rights  or
obligations  hereunder  without the prior written consent of each  Participating
Bank (and any  attempted  assignment  or transfer by the  Company  without  such
consent  shall  be null and  void).  Nothing  in this  Agreement,  expressed  or
implied,  shall be construed  to confer upon any Person  (other than the parties
hereto, their respective  successors and assigns permitted hereby (including any
Affiliate  of the  Issuing  Bank that  issues the Letter of Credit)  and, to the
extent expressly  contemplated hereby, the Related Parties of each of the Agent,
the Issuing  Bank and the  Participating  Banks) any legal or  equitable  right,
remedy or claim under or by reason of this Agreement.

                  (b) Any Participating Bank may assign to one or more assignees
all or a portion of its rights and obliga tions under this Agreement  (including
all or a portion of its Participation Percentage and any Loans at the time owing
to it); provided that (i) except in the case of an assignment to a Participating
Bank or an Affiliate of a Participating  Bank, each of the Company,  the Issuing
Bank and the Agent  must give their  prior  written  consent to such  assignment
(which consent shall not be unreasonably  withheld),  (ii) except in the case of
an assignment to a Participating Bank or an Affiliate of a Participating Bank or
an assignment  of the entire  remaining  amount of the  assigning  Participating
Bank's Participation  Percentage,  the amount of the Participation Percentage of
the assigning Participating Bank subject to each such assignment (deter mined as
of the date the  Assignment and  Acceptance  with respect to such  assignment is
delivered to the Agent) shall be an aggregate  amount that,  when  multiplied by
the Stated Amount  (without  giving effect to any reductions  thereto other than
irrevocable  reductions),  an integral  multiple of $1,000,000 and not less than
$10,000,000,  unless each of the Company and the Agent otherwise consent,  (iii)
each partial  assignment shall be made as an assignment of a proportionate  part
of all the  assigning  Participating  Bank's rights and  obligations  under this
Agreement,  (iv) the parties to each assignment shall execute and deliver to the
Agent an Assignment and  Acceptance,  together with a processing and recordation
fee of $3,500,  and (v) the assignee,  if it shall not be a Participating  Bank,
shall deliver to the Agent an Administrative Questionnaire; and provided further
that any consent of the Company  otherwise  required under this para graph shall
not be  required if an Event of Default  under  clause (h) or (i) of Article VII
has occurred and is  continuing.  Subject to acceptance  and  recording  thereof
pursuant to paragraph  (d) of this Section  9.04,  from and after the  effective
date specified in each Assignment and Acceptance the assignee  thereunder  shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance,  have the rights and  obligations of a Participating  Bank under
this Agreement,  and the assigning  Participating  Bank thereunder shall, to the
extent of the interest  assigned by such Assignment and Acceptance,  be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance  covering  all of  the  assigning  Participating  Bank's  rights  and
obligations under this Agreement,  such  Participating  Bank shall cease to be a
party hereto but shall continue to be entitled to the benefits of (and therefore
shall be treated as a  Participating  Bank for  determining  entitlement  to the
benefits of) Sections 2.07,  2.08,  2.14,  9.03 and 9.04(h)).  Any assignment or
transfer by a Participating  Bank of rights or obligations  under this Agreement
that does not comply with this  paragraph  shall be treated for purposes of this
Agreement as a sale by such Participating Bank of a participation in such rights
and obligations in accordance with paragraph (e) of this Section.

                  (c) The  Agent,  acting  for this  purpose  as an agent of the
Company,  shall maintain at one of its offices in the City of New York a copy of
each  Assignment and  Acceptance  delivered to it and a register for the recorda
tion  of  the  names  and  addresses  of  the   Participating   Banks,  and  the
Participation  Percentage  of, and principal  amount of any Loans owing to, each
Participating  Bank  pursuant  to the  terms  hereof  from  time  to  time  (the
"Register").  The entries in the Register shall be conclusive,  and the Company,
the Agent,  the Issuing Bank and the  Participating  Banks may treat each Person
whose  name is  recorded  in the  Register  pursuant  to the  terms  hereof as a
Participating  Bank  hereunder  for  all  purposes  of this  Agreement,  notwith
standing notice to the contrary.  The Register shall be available for inspection
by the Company,  the Issuing Bank and any Participating  Bank, at any reasonable
time and from time to time upon reasonable prior notice.

                  (d) Upon  its  receipt  of a duly  completed  Assign  ment and
Acceptance  executed by an assigning  Participating  Bank and an  assignee,  the
assignee's  completed  Administra tive Questionnaire  (unless the assignee shall
already be a Participating Bank hereunder),  the processing and recorda tion fee
referred to in  paragraph  (b) of this  Section and any written  consent to such
assignment  required by paragraph  (b) of this  Section,  the Agent shall accept
such Assignment and Acceptance and record the information  contained  therein in
the Register.  No assignment  shall be effective for purposes of this  Agreement
unless it has been recorded in the Register as provided in this paragraph.

                  (e) Any  Participating  Bank may,  without  the consent of the
Company, the Agent or the Issuing Bank, sell participations to one or more banks
or other entities (a  "Participant")  in all or a portion of such  Participating
Bank's rights and obligations  under this Agreement  (including all or a portion
of its  Participation  Percentage and any Loans owing to it);  provided that (i)
such  Participating   Bank's  obligations  under  this  Agreement  shall  remain
unchanged,  (ii) such  Participating Bank shall remain solely responsible to the
other  parties  hereto for the  performance  of such  obligations  and (iii) the
Company,  the Agent,  the Issuing Bank and the other  Participating  Banks shall
continue to deal solely and directly with such  Participating Bank in connection
with such Participating Bank's rights and obligations under this Agreement.  Any
agreement  or  instrument  pursuant to which a  Participating  Bank sells such a
participation  shall provide that such  Participating Bank shall retain the sole
right to enforce this  Agreement and to approve any amendment,  modification  or
waiver of any  provision  of this  Agreement;  provided  that such  agreement or
instrument  may  provide  that such  Participating  Bank will not,  without  the
consent  of the  Participant,  agree to any  amendment,  modification  or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject  to  paragraph  (f) of  this  Section,  the  Company  agrees  that  each
Participant  shall be entitled to the benefits of Sections 2.07,  2.08, 2.14 and
9.04(h) to the same extent as if it were a  Participating  Bank and had acquired
its interest by assignment  pursuant to paragraph  (b) of this  Section.  To the
extent permitted by law, each Participant also shall be entitled to the benefits
of  Section  9.08  as  though  it  were  a  Participating  Bank,  provided  such
Participant  agrees  to be  subject  to  Section  9.08(c)  as  though  it were a
Participating Bank.

                  (f) A Participant shall not be entitled to receive any greater
payment under  Section 2.14 or 9.04(h) than the  applicable  Participating  Bank
would have been  entitled to receive with respect to the  participation  sold to
such  Participant,  unless the sale of the  participation to such Participant is
made with the Company's  prior written  consent.  A Participant  that would be a
Foreign Participating Bank if it were a Participating Bank shall not be entitled
to  the  benefits  of  Section  2.14  unless  the  Company  is  notified  of the
Participation  sold to such  Participant and such  Participant  agrees,  for the
benefit  of the  Company,  to comply  with  Section  2.14(e) as though it were a
Participating Bank.

                  (g) Any Participating  Bank may at any time pledge or assign a
security  interest in all or any portion of its rights  under this  Agreement to
secure  obligations  of  such  Participating  Bank,   including  any  pledge  or
assignment to secure  obligations  to a Federal  Reserve Bank,  and this Section
shall  not  apply to any such  pledge  or  assignment  of a  security  interest;
provided that no such pledge or assignment of a security  interest shall release
a  Participating  Bank from any of its  obligations  hereunder or substitute any
such pledgee or assignee for such Participating Bank as a party hereto.

                  (h) If any  Participating  Bank  requests  compensa tion under
Section 2.07, or if the Company is required to pay any additional  amount to any
Participating  Bank  or  any  Governmental  Authority  for  the  account  of any
Participating  Bank pursuant to Section 2.14, then such Participating Bank shall
use reasonable  efforts,  including  designating a different  lending office for
funding or booking its Loans  hereunder,  to eliminate or reduce amounts payable
pursuant to Section  2.07 or 2.14,  as the case may be, in the future;  provided
that  any  such  action  would  not  subject  such  Participating  Bank  to  any
unreimbursed cost or expense and would not otherwise be  disadvantageous to such
Participating  Bank in any respect deemed  significant by it. The Company hereby
agrees to pay all reasonable  costs and expenses  incurred by any  Participating
Bank in connection with any such action.

                  (i) If any  Participating  Bank shall have delivered a notice,
certificate  or demand to the Company  described  in Sections  2.04(d),  2.07 or
2.14, or shall become a non-performing  Participating Bank under Section 2.05(b)
or shall not consent to any extension of the  Termination  Date requested by the
Company under Section 2.11, and if and so long as such  Participating Bank shall
not have  withdrawn  such notice,  certificate  or demand or corrected such non-
performance in accordance  with Section  2.05(b) or consented to such extension,
the Company,  at its sole expense and effort,  or the Agent may demand that such
Participating  Bank assign in accordance  with paragraph (b),  above,  to one or
more  assignees  designated  by either the Company or the Agent (and  reasonably
acceptable  to the  other)  all (but not less  than  all) of such  Participating
Bank's participation and other rights and obligations  hereunder;  provided that
(i) the Company  shall have  received  the prior  written  consent of the Agent,
which consent shall not be unreasonably withheld,  such Participating Bank shall
have  received  payment of an amount equal to the  outstanding  principal of its
Loans,  accrued interest thereon,  accrued and unpaid fees and all other amounts
payable to it  hereunder,  from the assignee (to the extent of such  outstanding
principal  and  accrued  interest  and fees) or the  Company (in the case of all
other  amounts) and (iii) in the case of any such  assignment  resulting  from a
claim for  compensation  under  Section  2.07 or  payments  required  to be made
pursuant to Section  2.14,  such  assignment  will result in a reduction in such
compensation or payments;  provided  further that the Issuing Bank may also make
such a demand of a Participating  Bank as provided in this Section if either (i)
such  Participating Bank shall no longer be affiliated with the Organization for
Economic  Cooperation  and Development or (ii) such  Participating  Bank's Index
Debt shall be rated  less than "A" by S&P or "A2" by  Moody's.  A  Participating
Bank shall not be required to make any such  assignment and delegation if, prior
thereto,  as a result of a waiver by such Participating  Bank or otherwise,  the
circumstances  entitling the Company to require such  assignment  and delegation
cease to apply.

                  (j) In  making  any  claim  under  Section  2.07  or  2.14  or
calculating any amounts due thereunder,  each Participating Bank shall treat the
Company no less favorably than the treatment afforded by such Participating Bank
to similarly situated borrowers in similar circumstances.

                  SECTION   9.05.   Survival.   All   covenants,   agree  ments,
representations   and  warranties   made  by  the  Company  herein  and  in  the
certificates  or other  instruments  delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the  execution  and delivery of this  Agreement and the
making of any Loans and  issuance  of the  Letter of Credit,  regardless  of any
investigation made by any such other party or on its behalf and notwith standing
that the Agent, the Issuing Bank or any  Participating  Bank may have had notice
or knowledge of any Default or incorrect  representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as
long as the  principal of or any accrued  interest on any Loan or any fee or any
other  amount  payable  under this  Agreement is  outstanding  and unpaid or the
Letter of Credit is outstanding and so long as the Commitment has not expired or
terminated.  The  provisions of Sections 2.07,  2.08,  2.14 and 9.03 and Article
VIII  shall  survive  and  remain in full  force and  effect  regardless  of the
consummation  of the  transactions  contemplated  hereby,  the  repayment of any
Loans,  the expiration or termination of the Letter of Credit and the Commitment
or the termination of this Agreement or any provision hereof.

                  SECTION 9.06. Counterparts;  Integration;  Effectiveness. This
Agreement may be executed in counter parts (and by different  parties  hereto on
different counterparts),  each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any  separate  letter  agreements  with  respect  to fees  payable  to the Agent
constitute the entire contract among the parties  relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written,  relating to the subject matter  hereof.  Except as provided in Section
4.01, this Agreement shall become  effective when it shall have been executed by
the Agent and when the Agent shall have received counterparts hereof which, when
taken  together,  bear the signatures of each of the other parties  hereto,  and
thereafter  shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.

                  SECTION 9.07.  Severability.  Any provision of this  Agreement
held to be invalid,  illegal or unenforceable  in any jurisdiction  shall, as to
such jurisdiction,  be ineffective to the extent of such invalidity,  illegality
or unenforceability without affecting the validity,  legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular  jurisdiction  shall not invalidate  such provision in any other
jurisdiction.

                  SECTION  9.08.  Right of  Setoff.  (a) If an Event of  Default
shall have occurred and be continuing, the Issuing Bank, each Participating Bank
and each of its  Affiliates  are hereby  authorized at any time and from time to
time, to the fullest  extent  permitted by law, to set off and apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and  other  obligations  at any  time  owing  by the  Issuing  Bank or such
Participating  Bank or  Affiliate,  as  applicable,  to or for the credit or the
account of the Company against any of and all the obligations of the Company now
or  hereafter  existing  under this  Agreement  held by the Issuing Bank or such
Participating  Bank, as applicable,  irrespective  of whether or not the Issuing
Bank or such Participating Bank, as applicable, shall have made any demand under
this Agreement and although such obligations may be unmatured. The rights of the
Issuing Bank and each Participating Bank under this Section 9.08 are in addition
to other  rights and  remedies  (including  other  rights of  setoff)  which the
Issuing Bank or such Participating Bank, as applicable, may have.

                  (b) The  Issuing  Bank  and  each  Participating  Bank  agrees
promptly to notify the Company after any such setoff and application referred to
in paragraph (a), above; provided that the failure to give such notice shall not
affect the validity of such setoff and application.

                  (c)  If  any  Participating  Bank  shall  obtain  any  payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise,  but  excluding  all  proceeds  received by  assignments  or sales of
participa tions in accordance with Section 9.04) on account of its participatory
interests  in any amounts  owed by the Company  pursuant to Section  2.03 or any
Loan made by the Issuing Bank  pursuant to Section 2.04 (other than  pursuant to
Sections 2.07 and 2.08) in excess of its ratable share of payments on account of
such amounts owed by the Company or such Loan obtained by all the  Participating
Banks,  such   Participating  Bank  shall  forthwith  purchase  from  the  other
Participating  Banks a participation  in the portions of such Loan owing to them
as shall be necessary to cause such purchasing  Participating  Bank to share the
excess payment ratably with each of them; provided,  however, that if all or any
portion of such excess  payment is  thereafter  recovered  from such  purchasing
Participating  Bank,  such  purchase  from  such  Participating  Bank  shall  be
rescinded   and  such   Participating   Bank  shall  repay  to  the   purchasing
Participating  Bank the purchase  price to the extent of such recovery  together
with an amount equal to such  Participating  Bank's ratable share  (according to
the proportion of (i) the amount of such Participating Bank's required repayment
to (ii) the total amount so recovered from the purchasing Participating Bank) of
any  interest or other  amount paid or payable by the  purchasing  Participating
Bank in respect of the total amount so recovered.

                  (d) Notwithstanding  the foregoing,  if any Participating Bank
shall obtain any such excess payment involuntarily, such Participating Bank may,
in lieu of  purchasing  participations  from the  other  Participating  Banks in
accordance  with  paragraph  (c),  above,  on the date of receipt of such excess
payment,  return such excess payment to the Agent for distribution in accordance
with Section 2.09(b).

                  SECTION 9.09. Governing Law; Jurisdiction;  Consent to Service
of  Process.  (a) This  Agreement  shall be  construed  in  accordance  with and
governed  by  the  law of  the  State  of New  York  (without  prejudice  to the
provisions of Section 5-1401 of the General  Obligations Law of the State of New
York,  excluding  such State's  principles  of conflicts of law).  The Letter of
Credit shall be construed in accordance with and governed by the Uniform Customs
and Practice for Documentary Credits (1993 Revision),  International  Chamber of
Commerce,  Publication  No. 500 (other than  Article 17 thereof)  (the  "Uniform
Customs")  and, as to matters not governed by the Uniform  Customs,  the laws of
the State of New York, including the Uniform Commercial Code as in effect in the
State of New York.

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

                  (c) The Company hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and  effectively do so, any objection which
it may now or  hereafter  have to the  laying  of venue of any  suit,  action or
proceeding arising out of or relating to this Agreement in any court referred to
in  paragraph  (b) of this  Section  9.09.  Each of the  parties  hereto  hereby
irrevocably  waives,  to the fullest extent  permitted by law, the defense of an
inconvenient  forum to the  maintenance of such action or proceeding in any such
court.

                  (d)  Each  party to this  Agreement  irrevocably  consents  to
service of process in the manner  provided for notices in Section 9.01.  Nothing
in this  Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

                  SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS  CONTEMPLATED  HEREBY (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREE MENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

                  SECTION 9.11.  Headings.  Article and Section headings and the
Table of Contents used herein are for  convenience  of reference  only,  are not
part of this  Agreement  and shall not affect the  construction  of, or be taken
into consideration in interpreting, this Agreement.

                  SECTION 9.12. Confidentiality.  Each of the Agent, the Issuing
Bank and the Participating  Banks agrees to maintain the  confidentiality of the
Information (as defined below),  except that Information may be disclosed (a) to
its Affiliates and to its and their directors,  officers,  employees and agents,
including  accountants,  legal counsel and other  advisors (it being  understood
that the  Persons  to whom  such  disclosure  is made  will be  informed  of the
confidential  nature of such Information and instructed to keep such Information
confidential)  solely  for  use  in  connection  with  this  Agreement  and  the
transactions  contemplated  hereby and the performance by the parties hereunder,
(b) to the  extent  requested  by any  regulatory  authority,  (c) to the extent
required by applicable  laws or  regulations or by any subpoena or similar legal
process,  (d) to any other party to this  Agreement,  (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to
this  Agreement  or the  enforcement  of rights  hereunder,  (f)  subject  to an
agreement containing provisions  substantially the same as those of this Section
9.12, to any assignee of or Participant  in, or any  prospective  assignee of or
Participant in, any of its rights or obligations under this Agreement,  (g) with
the  consent of the Company or (h) to the extent  such  Information  (i) becomes
publicly  available  other than as a result of a breach of this  Section or (ii)
becomes available to the Agent, the Issuing Bank or any Participating  Bank on a
nonconfidential  basis from a source other than the Company. For the purposes of
this Section, "Information" means all information received from the Company or a
Subsidiary  relating to any of the  Company or a  Restricted  Subsidiary  or its
business,  other than any such  information  that is available to the Agent, the
Issuing  Bank or any  Participa  ting Bank on a  nonconfidential  basis prior to
disclosure by the Company or such  Subsidiary.  Any Person  required to maintain
the  confidentiality  of  Information  as  provided  in this  Section  shall  be
considered  to have  complied  with its  obligation  to do so if such Person has
exercised  the same  degree  of care to  maintain  the  confidentiality  of such
Information as such Person would accord to its own confidential information. The
Participating  Banks  agree that the rights of the  Company  under this  Section
shall be enforceable by specific performance.


<PAGE>







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


CONTIFINANCIAL CORPORATION,

by
/s/ Daniel J. Willet Name: Daniel J. Willet
Title: SVP CFO

by
/s/ Frank W. Baier Name: Frank W. Baier
Title: VP & Treasurer


CREDIT SUISSE FIRST BOSTON, NEW YORK BRANCH, Individually,
and as Agent,

by
/s/ Jay Chall Name: Jay Chall
Title: Director

by
/s/ James H. Lee Name: James H. Lee
Title: Assistant Vice
President


DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES, Individually and as Co-Agent, and DRESDNER BANK AG, NEW
YORK BRANCH, as Issuing Bank,

by
/s/ Jonathan Wallin Name: Jonathan Wallin
Title: Vice President

by
/s/ J. Curtin Beaudouin Name: J. Curtin Beaudouin
Title: First Vice President



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


                           CONTIFINANCIAL CORPORATION,

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:


                    CREDIT SUISSE FIRST BOSTON, NEW  YORK BRANCH, Individually,
                    and as Agent,

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:


                 DRESDNER BANK AG, NEW  YORK AND   GRAND CAYMAN BRANCHES,
                 Individually, and DRESDNER BANK AG, NEW YORK BRANCH, as Issuing
                 Bank,

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:

                                                by
                                                    ---------------------------
                                      Name:
                                     Title:



<PAGE>







THE BANK OF NEW YORK,

by
/s/ Robert A. Tweed
Name: Robert A. Tweed
Title: Vice President


CREDIT AGRICOLE INDOSUEZ,

by
/s/ Whakyung Lee Name: Whakyung Lee
Title: Vice President

by
/s/ B. Lespinasse Name: B.
Lespinasse
Title: SVP


THE BANK OF NOVA SCOTIA,

by
/s/ Stephen E. Lockhart
Name: Stephen E. Lockhart
Title: Vice President


THE CHASE MANHATTAN BANK,

by
/s/ Gary L. Spevack Name: Gary L.
Spevack
Title: Vice President


NATIONSBANK, N.A.,

by
/s/ Bob Caston Name: Bob Caston
Title: Senior Vice President


CREDIT LYONNAIS NEW YORK BRANCH,

by
/s/ Vladimir Labun Name: Vladimir
Labun
Title: First Vice President- Manager



<PAGE>









SOCIETE GENERALE,

by
/s/ Janet M. Kagan Name: Janet M. Kagan
Title: Director


COMERICA BANK,

by
/s/ Von L. Ringger Name: Von L. Ringger
Title: First Vice President


UBS AG, NEW YORK BRANCH,

by
/s/ Hunter C. Smith Name: Hunter C. Smith
Title: Associate Director

by
/s/ Roger Liechti
Name: Roger Liechti
Title: Associate Director


THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH,

by
/s/ Kazuyoshi Ogawa Name: Kazuyoshi
Ogawa
Title: Joint General Manager


BW CAPITAL MARKETS, INC.

by
/s/ Robert B. Herber Name: Robert B.
Herber
Title: Managing Director





<PAGE>







SOUTHTRUST BANK, NATIONAL ASSOCIATION
by
/s/ Amy J. Nunneley
Name: Amy J. Nunneley
Title: Group Vice President


MANUFACTURERS AND TRADERS TRUST COMPANY

by
/s/ Kevin B. Quinn Name: Kevin B. Quinn
Title: Assistant Vice President









<TABLE>
<CAPTION>


                                                                  SCHEDULE 2.01

                          THIS SCHEDULE 2.01 IS BASED ON A STATED AMOUNT OF $317,500,000
                              AS OF AUGUST 21, 1998





                                         Contact Person, Address and                      Participation
  Participating Bank                     Telephone and Telecopy Numbers                     Percentage

<S>                                                                                        <C>
  Credit Suisse First Boston,            Jonathan Satran                                   11.0236221%
  New  York Branch                       11 Madison Avenue
                                         New York, NY 10010
                                         Tel:(212) 325-9936
                                         Fax:(212) 325-8304

  Dresdner Bank AG, New York and Grand   Curt Beaudouin                                    11.0236221%
  Cayman Branches                        75 Wall Street
                                         New York, NY 10005
                                         Tel:(212) 429-2120
                                         Fax:(212) 429-2524

  NationsBank, N.A.                      Beth Sorensen                                      9.4488189%
                                         901 Main Street
                                         51st floor
                                         P.O. Box 8301-01
                                         Dallas, TX 75202
                                         Tel:(214) 508-0967
                                         Fax:(214) 508-0338
  Credit Lyonnais New York Branch        Mary Collier                                       7.8740157%
                                         NY Corporate Group A
                                         1301 Avenue of the Americas
                                         New York, NY 10019
                                         Tel:(212) 261-7318
                                         Fax:(212) 459-3179

  The Bank of Nova Scotia                Roger Chu                                          7.8740157%
                                         One Liberty Plaza, 26th Floor
                                         New York, NY 10006
                                         Tel:(212) 225-5036
                                         Fax:(212) 225-5090

  SouthTrust Bank, National Association  Amy Nunneley                                       7.8740157%
                                         420 North 20th Street
                                         Birmingham, AL 35203
                                         Tel: (205) 254-6706
                                         Fax: (205) 581-8927

  Credit Agricole I                      Whakyung Lee                                       6.6929134%
  .ndosuez                               520 Madison Avenue
                                         New York, NY 10022
                                         Tel:(212) 418-2229
                                         Fax:(212) 418-2288
  The Bank of New York                   Robert A. Tweed                                    6.6929134%
                                         One Wall Street
                                         New York, NY 10286
                                         Tel:(212) 635-6465
                                         Fax:(212) 635-6468

  The Chase Manhattan Bank               Gary L. Spevack                                    6.2992126%
                                         270 Park Avenue
                                         23rd Floor
                                         New York, NY 10017
                                         Tel:(212) 270-5964
                                         Fax:(212) 270-8963

  Manufacturers and Traders Trust        Kevin Quinn                                        6.2992126%
  Company                                One Fountain Plaza,
                                         12th Floor
                                         Buffalo, NY 14203-1495
                                         Tel: (716) 848-7337
                                         Fax: (716) 848-7318
  Comercia Bank                          Von Ringger                                        4.7244094%
                                         500 Woodward Avenue MC 3256
                                         Detroit, MI 48226
                                         Tel:(313) 222-9285
                                         Fax:(313) 222-9295

  UBS AG,New York Branch                 Eva Rushkevich                                     4.7244094%
                                         299 Park Avenue
                                         New York, NY 10171
                                         Tel:(212) 821-3366
                                         Fax:(212) 821-4541

  BW Captial Markets, Inc.               Robert Herber                                      3.1496063%
                                         630 Fifth Avenue
                                         New York, NY 10111
                                         Tel:(212) 218-1805
                                         Fax:(212) 218-1810

  Societe Generale                       Janet Kagan                                        3.1496063%
                                         1221 Avenue of the Americas
                                         New York, NY 10020
                                         Tel: (212) 278-7049
                                         Fax: (212) 278-7614
  The Sumitomo Bank, Limited,            Betsy A. Sprenkle                                  3.1496063%
  New York Branch                        277 Park Avenue,
                                         6th Floor
                                         New York, NY 10172
                                         Tel: (212) 224-4154
                                         Fax: (212) 224-5188



</TABLE>