AMENDED AND RESTATED CREDIT AGREEMENT


                                      among


                          OMNIQUIP INTERNATIONAL, INC.,


                          VARIOUS LENDING INSTITUTIONS,


                      MORGAN STANLEY SENIOR FUNDING, INC.,
                      as Syndication Agent and Co-Arranger,


                                       and


                           FIRST UNION NATIONAL BANK,
                     as Administrative Agent and Co-Arranger


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


                    Dated as of November 17, 1997 and Amended
                      and Restated as of February 26, 1999

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

                                 $211,574,468.09


<PAGE>

                  AMENDED AND RESTATED  CREDIT  AGREEMENT,  dated as of February
26,  1999,  among  OMNIQUIP  INTERNATIONAL,  INC., a Delaware  corporation  (the
"Borrower"),  the Banks party hereto from time to time,  MORGAN  STANLEY  SENIOR
FUNDING,  INC., as Syndication  Agent and Co-Arranger,  and FIRST UNION NATIONAL
BANK, as Administrative Agent and Co-Arranger (all capitalized terms used herein
and defined in Section 11 are used herein as therein defined).

                              W I T N E S S E T H :

                  WHEREAS,  the Borrower,  certain of the Banks, the Syndication
Agent and the  Administrative  Agent are parties to a certain Credit  Agreement,
dated as of  November  17, 1997 (as amended to the date  hereof,  the  "Original
Credit Agreement"); and

                  WHEREAS,  the parties  hereto have agreed to amend and restate
in its entirety the Original Credit Agreement as provided herein;

                  NOW, THEREFORE, IT IS AGREED:

                  SECTION 1.  Amount and Terms of Credit.

                  1.01 The  Commitments.  (a)  Subject to and upon the terms and
conditions  set forth herein,  each Bank with a Term Loan  Commitment  severally
agrees to make, (x) on the Restatement Effective Date (in the case of Term Loans
other  than  Delayed-Draw  Term  Loans)  and (y) on or before  the  Delayed-Draw
Commitment Expiration Date (in the case of Delayed-Draw Term Loans), a term loan
or term loans (each a "Term Loan" and,  collectively,  the "Term  Loans") to the
Borrower, which Term Loans (i) shall, at the option of the Borrower, be incurred
and maintained as, and/or  converted into, Base Rate Loans or Eurodollar  Loans,
provided that (A) except as otherwise  specifically provided in Section 1.10(b),
all Term Loans  comprising the same Borrowing  shall at all times be of the same
Type and (B) no Term Loans  maintained as Eurodollar Loans may be incurred prior
to the  earlier of the fifth day after the  Restatement  Effective  Date and the
date on which the initial  syndication of the credit facilities  provided for in
this  Agreement is  completed,  as  determined  by the Agents (the  "Syndication
Date"), (ii) if made on the Restatement Effective Date, shall not exceed for any
Bank that amount  which  equals the Term Loan  Commitment  of such Bank less the
Delayed  Draw  Commitment  of such  Bank,  each as in effect on the  Restatement
Effective  Date  (before  giving  effect to any  reduction  thereto on such date
pursuant to Section 3.03(a)(i) but after giving effect to any reductions thereto
on or prior to such date pursuant to Section 3.03(a)(ii)),  and (iii) if made on
the Earnout  Payment  Date,  shall not exceed (A) for any Bank that amount which
equals the  Delayed-Draw  Commitment  of such Bank on the Earnout  Payment  Date
(before giving effect to any reduction  thereto on such date pursuant to Section
3.03(b)(i) but after giving effect to any reductions thereto on or prior to such
date  pursuant to Section  3.03(b)(ii))  and (B) for all Banks the amount of the
Earnout.  The  Delayed-Draw  Term  Loans may only be  incurred  on the date (the
"Earnout  Payment  Date") on which the  Earnout is paid and shall not exceed the
amount of the Earnout.  Once repaid,  Term Loans  incurred  hereunder may not be
reborrowed.

<PAGE>

                  (b)  Subject  to and upon the terms and  conditions  set forth
herein, each Bank with a Revolving Loan Commitment severally agrees, at any time
and from time to time on and after the  Restatement  Effective Date and prior to
the Revolving Loan Maturity  Date, to make a revolving  loan or revolving  loans
(each a  "Revolving  Loan"  and,  collectively,  the  "Revolving  Loans") to the
Borrower,  which Revolving  Loans (i) shall,  at the option of the Borrower,  be
incurred and maintained as, and/or converted into, Base Rate Loans or Eurodollar
Loans,  provided that (A) except as otherwise  specifically  provided in Section
1.10(b), all Revolving Loans comprising the same Borrowing shall at all times be
of the  same  Type  and (B) no  Borrowings  of  Revolving  Loans  maintained  as
Eurodollar Loans may be incurred prior to the earlier of the fifth day after the
Restatement  Effective  Date and the  Syndication  Date,  (ii) may be repaid and
reborrowed in accordance with the provisions hereof,  (iii) shall not exceed for
any such Bank at any time  outstanding  that aggregate  principal  amount which,
when added to the product of (x) such Bank's  Adjusted RL Percentage and (y) the
sum of (I) the aggregate amount of all Letter of Credit Outstandings  (exclusive
of Unpaid  Drawings  which are repaid with the proceeds  of, and  simultaneously
with the incurrence of, the  respective  incurrence of Revolving  Loans) at such
time and (II) the aggregate  principal  amount of all Swingline Loans (exclusive
of Swingline  Loans which are repaid with the  proceeds  of, and  simultaneously
with the  incurrence  of, the  respective  incurrence  of Revolving  Loans) then
outstanding,  equals the Revolving Loan Commitment of such Bank at such time and
(iv)  shall not  exceed  for all Banks at any time  outstanding  that  aggregate
principal  amount  which,  when  added to (I) the amount of all Letter of Credit
Outstandings  (exclusive of Unpaid  Drawings  which are repaid with the proceeds
of, and  simultaneously  with the incurrence  of, the  respective  incurrence of
Revolving  Loans) at such time and (II) the  aggregate  principal  amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and  simultaneously  with the incurrence  of, the  respective  incurrence of
Revolving Loans) then outstanding, equals the Total Revolving Loan Commitment at
such time.

                  (c)  Subject  to and upon the terms and  conditions  set forth
herein,  the Swingline Bank agrees to make, at any time and from time to time on
and after the Restatement Effective Date and prior to the Swingline Expiry Date,
a revolving loan or revolving loans (each a "Swingline Loan" and,  collectively,
the "Swingline Loans") to the Borrower,  which Swingline Loans (i) shall be made
and  maintained  as Base  Rate  Loans,  (ii) may be  repaid  and  reborrowed  in
accordance  with the  provisions  hereof,  (iii)  shall not exceed in  aggregate
principal  amount at any time  outstanding,  when  combined  with the  aggregate
principal  amount of all  Revolving  Loans  made by  Non-Defaulting  Banks  then
outstanding and the Letter of Credit  Outstandings at such time, an amount equal
to the Adjusted  Total  Revolving  Loan  Commitment  at such time (after  giving
effect to any reductions to the Adjusted Total Revolving Loan Commitment on such
date),  and (iv)  shall not  exceed in  aggregate  principal  amount at any time
outstanding  the  Maximum  Swingline  Amount.  Notwithstanding  anything  to the
contrary  contained in this Section  1.01(c),  the Swingline Bank shall not make
any Swingline Loan after it has received written notice from the Borrower or the
Required  Banks  stating  that a Default  or an Event of  Default  exists and is
continuing  until such time as the Swingline  Bank shall have  received  written
notice  (i) of  rescission  of all  such  notices  from  the  party  or  parties
originally  delivering such notice,  (ii) of the waiver of such Default or Event
of Default by the Required  Banks or (iii) that the Agents in good faith believe
that such Default or Event of Default no longer exists.

                                      -2-

<PAGE>

                  (d) On any Business Day, the  Swingline  Bank may, in its sole
discretion,  give notice to the Banks that its outstanding Swingline Loans shall
be funded with one or more  Borrowings of Revolving  Loans  (provided  that such
notice shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default  under  Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10), in which case one
or more  Borrowings of Revolving Loans  constituting  Base Rate Loans (each such
Borrowing,  a "Mandatory Borrowing") shall be made on the immediately succeeding
Business  Day by all Banks with a  Revolving  Loan  Commitment  (without  giving
effect to any reductions  thereto  pursuant to the last paragraph of Section 10)
pro rata based on each such Bank's  Adjusted RL  Percentage  (determined  before
giving effect to any termination of the Revolving Loan  Commitments  pursuant to
the last  paragraph  of Section 10) and the  proceeds  thereof  shall be applied
directly by the Swingline Bank to repay the Swingline Bank for such  outstanding
Swingline  Loans.  Each such Bank hereby  irrevocably  agrees to make  Revolving
Loans upon one Business Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner  specified  in the  preceding  sentence and on the date
specified in writing by the Swingline Bank  notwithstanding  (i) that the amount
of the  Mandatory  Borrowing  may not comply with the Minimum  Borrowing  Amount
otherwise  required  hereunder,  (ii) any  failure  to  satisfy  any  conditions
specified  in Section 6, (iii) any Default or Event of Default  existing on such
date, (iv) the date of such Mandatory  Borrowing and (v) the amount of the Total
Revolving  Loan  Commitment or the Adjusted Total  Revolving Loan  Commitment at
such time.  In the event that any Mandatory  Borrowing  cannot for any reason be
made on the date otherwise required above (including,  without limitation,  as a
result  of the  commencement  of a  proceeding  under the  Bankruptcy  Code with
respect  to the  Borrower),  then  each such Bank  hereby  agrees  that it shall
forthwith purchase (as of the date the Mandatory  Borrowing would otherwise have
occurred,  but adjusted for any payments received by the Swingline Bank from the
Borrower on or after such date and prior to such  purchase)  from the  Swingline
Bank  such  participations  in the  outstanding  Swingline  Loans  as  shall  be
necessary to cause such Banks to share in such  Swingline  Loans  ratably  based
upon their respective  Adjusted RL Percentages  (determined before giving effect
to any  termination  of the  Revolving  Loan  Commitments  pursuant  to the last
paragraph  of  Section  10),  provided  that  (x) all  interest  payable  on the
Swingline Loans shall be for the account of the Swingline Bank until the date as
of which the  respective  participation  is required to be purchased and, to the
extent  attributable  to the  purchased  participation,  shall be payable to the
participant  from and  after  such  date and (y) at the  time  any  purchase  of
participations  pursuant to this sentence is actually made, the purchasing  Bank
shall be required to pay the Swingline Bank interest on the principal  amount of
the  participation  purchased for each day from and including the day upon which
the Mandatory  Borrowing would otherwise have occurred to but excluding the date
of payment for such  participation,  at the overnight Federal Funds Rate for the
first  three  days and at the  rate  otherwise  applicable  to  Revolving  Loans
maintained as Base Rate Loans hereunder for each day thereafter.

                  1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each  Borrowing of Loans under a respective  Tranche shall not be less
than the Minimum Borrowing Amount for such Tranche and, if greater,  shall be in
integral  multiples of $100,000.  More than one  Borrowing may occur on the same
date,  but at no time shall there be outstanding  more than eight  Borrowings of
Eurodollar Loans.

                                      -3-

<PAGE>

                  1.03 Notice of  Borrowing.  Whenever the  Borrower  desires to
incur Loans  hereunder  (excluding  Swingline Loans and Revolving Loans incurred
pursuant to a Mandatory  Borrowing),  the Borrower shall give the Administrative
Agent at its Notice Office at least one Business Day's prior notice of each Base
Rate Loan and at least three Business Days' prior notice of each Eurodollar Loan
to be incurred hereunder,  provided that any such notice shall be deemed to have
been given on a certain day only if given  before 12:00 Noon  (Eastern  time) on
such day. Each such notice (each a "Notice of  Borrowing"),  except as otherwise
expressly  provided in Section 1.10,  shall be irrevocable and shall be given by
the Borrower in writing,  or by telephone promptly confirmed in writing,  in the
form of Exhibit A,  appropriately  completed to specify the aggregate  principal
amount of the Loans to be incurred pursuant to such Borrowing,  the date of such
Borrowing  (which  shall be a Business  Day),  whether the Loans being  incurred
pursuant to such Borrowing  shall  constitute Term Loans, or Revolving Loans and
whether the Loans being incurred  pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar  Loans, the
initial Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank which is required to make Loans of the Tranche specified
in the respective  Notice of Borrowing,  notice of such proposed  Borrowing,  of
such Bank's proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.

                  (b)(i) Whenever the Borrower  desires to incur Swingline Loans
hereunder,  the Borrower  shall give the Swingline  Bank no later than 1:00 P.M.
(Eastern  time) on the date that a  Swingline  Loan is to be  incurred,  written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred  hereunder.  Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing  (which shall be a Business Day) and (B) the
aggregate  principal  amount of the Swingline  Loans to be incurred  pursuant to
such Borrowing.

                  (ii)  Mandatory  Borrowings  shall  be made  upon  the  notice
specified in Section 1.01(d),  with the Borrower  irrevocably  agreeing,  by its
incurrence of any Swingline  Loan, to the making of the Mandatory  Borrowings as
set forth in Section 1.01(d).

                  (c) Without in any way limiting the obligation of the Borrower
to confirm in writing any  telephonic  notice of any  Borrowing or prepayment of
Loans, the  Administrative  Agent or the Swingline Bank, as the case may be, may
act without  liability upon the basis of telephonic  notice of such Borrowing or
prepayment,  believed by the Administrative  Agent or the Swingline Bank, as the
case  may be,  in good  faith  to be  from  the  Chief  Executive  Officer,  the
President,  the  Vice  President-Finance,   the  Chief  Financial  Officer,  the
Treasurer,  any Assistant  Treasurer or the Controller of the Borrower,  or from
any other  authorized  person  of the  Borrower  designated  in  writing  by the
Borrower to the  Administrative  Agent as being authorized to give such notices,
prior to receipt of written confirmation. In each such case, the Borrower hereby
waives the right,  absent manifest error, to dispute the Administrative  Agent's
or the Swingline  Bank's record of the terms of such  telephonic  notice of such
Borrowing or prepayment of Loans.

                  1.04  Disbursement of Funds. No later than 12:00 Noon (Eastern
time) on the date  specified in each Notice of Borrowing  (or (x) in the case of
Swingline  Loans,  no later than 3:00 P.M.  (Eastern time) on the date specified
pursuant to Section 1.03(b)(i),  or (y) in the case of 

                                      -4-

<PAGE>

Mandatory  Borrowings,  no later  than  12:00  Noon  (Eastern  time) on the date
specified in Section  1.01(d)),  each Bank with a Commitment  of the  respective
Tranche will make available its pro rata portion  (determined in accordance with
Section 1.07) of each such  Borrowing  requested to be made on such date (or, in
the case of Swingline  Loans,  the Swingline  Bank will make  available the full
amount  thereof).  All such  amounts  will be made  available  in Dollars and in
immediately  available funds at the Payment Office of the Administrative  Agent,
and the Administrative  Agent will make available to the Borrower at the Payment
Office the  aggregate of the amounts so made  available by the Banks (other than
in  respect  of  Mandatory  Borrowings)  by  delivery  of  such  amounts  to the
Borrower's Account.  Unless the Administrative Agent shall have been notified by
any Bank prior to the date of  Borrowing  that such Bank does not intend to make
available to the Administrative Agent such Bank's portion of any Borrowing to be
made on such date, the  Administrative  Agent may assume that such Bank has made
such amount available to the Administrative  Agent on such date of Borrowing and
the  Administrative  Agent may (but shall not be obligated to), in reliance upon
such assumption,  make available to the Borrower a corresponding amount. If such
corresponding  amount is not in fact made available to the Administrative  Agent
by such Bank,  the  Administrative  Agent  shall be  entitled  to  recover  such
corresponding  amount on demand  from such Bank.  If such Bank does not pay such
corresponding amount forthwith upon the Administrative  Agent's demand therefor,
the  Administrative  Agent shall  promptly  notify the Borrower and the Borrower
shall immediately pay such corresponding amount to the Administrative Agent. The
Administrative  Agent shall also be entitled to recover on demand from such Bank
or the Borrower,  as the case may be, interest on such  corresponding  amount in
respect of each day from the date such  corresponding  amount was made available
by the  Administrative  Agent to the Borrower until the date such  corresponding
amount is recovered by the  Administrative  Agent,  at a rate per annum equal to
(i) if recovered  from such Bank, the Federal Funds Rate for each day during the
period  consisting  of the first  three  Business  Days  following  such date of
availability  and thereafter at the Base Rate as in effect from time to time and
(ii) if recovered  from the  Borrower,  the rate of interest  applicable  to the
respective  Borrowing,  as determined  pursuant to Section 1.08. Nothing in this
Section  1.04 shall be deemed to relieve  any Bank from its  obligation  to make
Loans  hereunder or to prejudice  any rights which the Borrower may have against
any Bank as a result of any failure by such Bank to make Loans hereunder.

                  1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made by each Bank shall be evidenced  (i) if Term
Loans,  by  promissory  notes  duly  executed  and  delivered  by  the  Borrower
substantially  in  the  form  of  Exhibits  B-1  (each  an "A  Term  Note"  and,
collectively,  the  "A  Term  Notes")  and  B-2  (each  a  "B  Term  Note"  and,
collectively,  the "B Term Notes" and,  together  with the A Term Notes,  each a
"Term  Note" and,  collectively,  the "Term  Notes"),  in each case with  blanks
appropriately  completed in conformity  herewith,  (ii) if Revolving Loans, by a
promissory note duly executed and delivered by the Borrower substantially in the
form of Exhibit B-3, with blanks appropriately  completed in conformity herewith
(each a "Revolving Note" and, collectively,  the "Revolving Notes") and (iii) if
Swingline  Loans,  by a  promissory  note duly  executed  and  delivered  by the
Borrower  substantially  in the form of Exhibit B-4,  with blanks  appropriately
completed in conformity herewith (the "Swingline Note").

                                      -5-

<PAGE>

                  (b) The Term  Notes  issued  to each Bank that has a Term Loan
Commitment or outstanding Term Loans shall (i) be executed by the Borrower, (ii)
be payable to such Bank or its registered  assigns and be dated the  Restatement
Effective Date (or, if issued after the Restatement Effective Date, be dated the
date of the issuance  thereof),  (iii) be in a combined stated  principal amount
equal to the Term Loan Commitment of such Bank on the Restatement Effective Date
(before giving effect to the making of any Term Loans on such date by such Bank)
(or, if issued after the Restatement  Effective  Date, be in a stated  principal
amount equal to the outstanding  principal amount of any Term Loans of such Bank
at such time) and be payable in the outstanding  principal  amount of Term Loans
evidenced  thereby,  provided that the combined stated principal amount of the B
Term  Notes  shall be  $3,000,000  at all  times  during  which  the  Term  Loan
Commitments exist or Term Loans in excess of $3,000,000 remain outstanding, with
such B Term  Notes to be issued to each  Bank  with a Term  Loan  Commitment  or
outstanding  Term Loans in amounts  equal to such Bank's pro rata portion of the
Term Loan obligations  represented by such B Term Notes, (iv) mature on the Term
Loan Maturity Date, (v) bear interest as provided in the  appropriate  clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby,  (vi) be subject to voluntary  prepayment as provided
in Section 4.01,  and mandatory  repayment as provided in Section 4.02 and (vii)
be entitled to the benefits of this  Agreement  and the other Credit  Documents,
provided  that the A Term Notes  shall not be  entitled  to the  benefits of the
Minnesota Mortgage.

                  (c)  The  Revolving  Note  issued  to  each  Bank  that  has a
Revolving Loan  Commitment or outstanding  Revolving Loans shall (i) be executed
by the Borrower,  (ii) be payable to such Bank or its registered  assigns and be
dated the  Restatement  Effective  Date (or,  if  issued  after the  Restatement
Effective Date, be dated the date of the issuance thereof), (iii) be in a stated
principal  amount equal to the  Revolving  Loan  Commitment of such Bank (or, if
issued after the termination  thereof,  be in a stated principal amount equal to
the outstanding Revolving Loans of such Bank at such time) and be payable in the
outstanding  principal  amount of the Revolving  Loans evidenced  thereby,  (iv)
mature on the Revolving Loan Maturity Date, (v) bear interest as provided in the
appropriate  clause  of  Section  1.08 in  respect  of the Base  Rate  Loans and
Eurodollar  Loans,  as the case may be,  evidenced  thereby,  (vi) be subject to
voluntary  prepayment  as provided in Section 4.01,  and mandatory  repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.

                  (d) The Swingline  Note issued to the Swingline Bank shall (i)
be  executed  by the  Borrower,  (ii) be  payable to the  Swingline  Bank or its
registered  assigns and be dated the Restatement  Effective Date,  (iii) be in a
stated principal amount equal to the Maximum  Swingline Amount and be payable in
the outstanding  principal amount of the Swingline Loans evidenced  thereby from
time to time,  (iv) mature on the  Swingline  Expiry Date,  (v) bear interest as
provided in the  appropriate  clause of Section 1.08 in respect of the Base Rate
Loans evidenced thereby,  (vi) be subject to voluntary prepayment as provided in
Section 4.01,  and mandatory  repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.

                  (e) Each Bank will note on its internal  records the amount of
each Loan made by it and each  payment in respect  thereof and will prior to any
transfer of any of its Notes endorse

                                      -6-

<PAGE>

on the reverse side thereof the outstanding  principal amount of Loans evidenced
thereby.  Failure to make any such notation or any error in such notation  shall
not affect the Borrower's obligations in respect of such Loans.

                  1.06  Conversions.  The  Borrower  shall  have the  option  to
convert, on any Business Day occurring after the Restatement Effective Date, all
or a portion equal to at least the Minimum  Borrowing  Amount of the outstanding
principal  amount  of  Loans  (other  than  Swingline  Loans,  which  may not be
converted pursuant to this Section 1.06) made pursuant to one or more Borrowings
(so long as of the same  Tranche) of one or more Types of Loans into a Borrowing
(of the same  Tranche) of another  Type of Loan,  provided  that,  (i) except as
otherwise  provided in Section  1.10(b),  Eurodollar Loans may be converted into
Base Rate Loans only on the last day of an  Interest  Period  applicable  to the
Loans being converted and no such partial  conversion of Eurodollar  Loans shall
reduce the outstanding  principal  amount of such Eurodollar Loans made pursuant
to a single  Borrowing  to less than the  Minimum  Borrowing  Amount  applicable
thereto,  (ii) Base Rate Loans may only be converted into Eurodollar Loans if no
Default or Event of Default is in existence on the date of the  conversion,  and
(iii) no conversions of Base Rate Loans into Eurodollar Loans shall be permitted
prior to the earlier of (x) the fifth day after the  Restatement  Effective Date
and (y) the  Syndication  Date.  Each such  conversion  shall be effected by the
Borrower by giving the Administrative  Agent at its Notice Office prior to 12:00
Noon (Eastern  time) at least three  Business Days' prior notice (each a "Notice
of  Conversion")  specifying  the Loans to be so  converted,  the  Borrowing  or
Borrowings  pursuant to which such Loans were made and, if to be converted  into
Eurodollar Loans, the Interest Period to be initially  applicable  thereto.  The
Administrative  Agent  shall give each Bank prompt  notice of any such  proposed
conversion  affecting any of its Loans.  Upon any such  conversion  the proceeds
thereof will be deemed to be applied  directly on the day of such  conversion to
prepay the outstanding principal amount of the Loans being converted.

                  1.07 Pro Rata  Borrowings.  All  Borrowings  of Term Loans and
Revolving  Loans under this Agreement  shall be incurred from the Banks pro rata
on the basis of their Term Loan  Commitments or Revolving Loan  Commitments,  as
the case may be, provided,  that all Borrowings of Revolving Loans made pursuant
to a Mandatory  Borrowing  shall be incurred from the Banks with  Revolving Loan
Commitments  pro rata on the basis of their  Adjusted  RL  Percentages.  No Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans  hereunder and each Bank shall be obligated to make the Loans  provided to
be made by it hereunder, regardless of the failure of any other Bank to make its
Loans hereunder.

                  1.08  Interest.  (a) The  Borrower  agrees to pay  interest in
respect of the unpaid  principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrower until the earlier of (i) the
maturity  thereof (whether by acceleration or otherwise) and (ii) the conversion
of such Base Rate Loan into a Eurodollar  Loan  pursuant to Section  1.06,  at a
rate per  annum  which  shall be equal to the sum of the  Applicable  Base  Rate
Margin plus the Base Rate in effect from time to time.

                  (b) The  Borrower  agrees to pay  interest  in  respect of the
unpaid  principal  amount of each  Eurodollar  Loan  from the date the  proceeds
thereof are made available to the Borrower 

                                       -7-

<PAGE>

until the  earlier of (i) the  maturity  thereof  (whether  by  acceleration  or
otherwise) and (ii) the conversion of such Eurodollar Loan into a Base Rate Loan
pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which
shall,  during each Interest Period applicable  thereto,  be equal to the sum of
the  Applicable  Eurodollar  Margin plus the  Eurodollar  Rate for such Interest
Period.

                  (c) Overdue  principal  and, to the extent  permitted  by law,
overdue  interest in respect of each Loan and any other overdue  amount  payable
hereunder shall, in each case, bear interest at a rate per annum equal to 2% per
annum in  excess of the rate  otherwise  applicable  to Base  Rate  Loans of the
respective  Tranche of Loans from time to time,  provided  that at no time shall
any Loan bear interest  after maturity at a rate per annum which is less than 2%
in excess of the rate applicable  thereto at maturity without the application of
the  preceding  provisions  of this Section  1.08(c),  with such  interest to be
payable on demand.

                  (d) Accrued (and theretofore unpaid) interest shall be payable
(i) in respect of each Base Rate Loan,  quarterly  in arrears on each  Quarterly
Payment Date, (ii) in respect of each  Eurodollar  Loan, on the last day of each
Interest  Period  applicable  thereto and, in the case of an Interest  Period in
excess of three months,  on each date occurring at three month  intervals  after
the first day of such Interest  Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid),  at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.

                  (e) Upon each Interest  Determination Date, the Administrative
Agent shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar  Loans and shall promptly  notify the Borrower and the Banks thereof.
Each such  determination  shall,  absent manifest error, be final and conclusive
and binding on all parties hereto.

                  1.09  Interest  Periods.  At the time it gives  any  Notice of
Borrowing  or Notice of  Conversion  in respect of the making of, or  conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third  Business  Day prior to the  expiration  of an Interest
Period  applicable  to  such  Eurodollar  Loan  (in the  case of any  subsequent
Interest  Period),  the  Borrower  shall have the right to elect,  by giving the
Administrative  Agent notice  thereof,  the  interest  period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower (but subject to the limitation set forth in clause (B) of
the proviso in each of Sections 1.01(a)(i), and 1.01(b)(i), be a one, two, three
or six-month period, provided that:

                  (i) all Eurodollar  Loans  comprising a Borrowing shall at all
         times have the same Interest Period;

                  (ii) the initial Interest Period for any Eurodollar Loan shall
         commence on the date of Borrowing of such  Eurodollar  Loan  (including
         the date of any conversion thereto from a Loan of a different Type) and
         each Interest Period occurring thereafter in respect of such Eurodollar
         Loan  shall  commence  on the day on which  the  immediately  preceding
         Interest Period applicable thereto expires;

                                      -8-
<PAGE>

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

                  (iv)  if any  Interest  Period  for a  Eurodollar  Loan  would
         otherwise  expire on a day which is not a Business  Day,  such Interest
         Period  shall expire on the next  succeeding  Business  Day;  provided,
         however,  that if any  Interest  Period  for a  Eurodollar  Loan  would
         otherwise  expire on a day which is not a Business  Day but is a day of
         the month  after  which no further  Business  Day occurs in such month,
         such Interest Period shall expire on the next preceding Business Day;

                  (v) no  Interest  Period  may be  selected  at any time when a
         Default or an Event of Default is then in existence;

                  (vi) no  Interest  Period in respect of any  Borrowing  of any
         Tranche of Loans shall be selected  which extends beyond the respective
         Maturity Date for such Tranche of Loans; and

                  (vii) no Interest  Period in respect of any  Borrowing of Term
         Loans  shall be  selected  which  extends  beyond any date upon which a
         mandatory  repayment  of such Term  Loans will be  required  to be made
         under Section 4.02(b),  if the aggregate principal amount of Term Loans
         which have  Interest  Periods which will expire after such date will be
         in  excess  of the  aggregate  principal  amount  of  Term  Loans  then
         outstanding less the aggregate amount of such required repayment.

                  If upon the expiration of any Interest Period  applicable to a
Borrowing of  Eurodollar  Loans,  the  Borrower  has failed to elect,  or is not
permitted to elect,  a new Interest  Period to be applicable to such  Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such  Eurodollar  Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.

                  1.10 Increased Costs,  Illegality,  etc. (a) In the event that
any Bank shall have  determined  (which  determination  shall,  absent  manifest
error,  be final and  conclusive  and binding upon all parties  hereto but, with
respect to clause (i) below, may be made only by the Administrative Agent):

                  (i) on any Interest  Determination Date that, by reason of any
         changes  arising after the  Restatement  Effective  Date  affecting the
         interbank  Eurodollar market,  adequate and fair means do not exist for
         ascertaining the applicable  interest rate on the basis provided for in
         the definition of Eurodollar Rate; or

                  (ii) at any time,  that such Bank shall incur  increased costs
         or reductions  in the amounts  received or  receivable  hereunder  with
         respect to any Eurodollar Loan because of (x) any change since the date
         of  this  Agreement  in  any  applicable  law  or  governmental   rule,
         regulation,  order,  guideline  or request  (whether  or not having the
         force of law) or in

                                       -9-

<PAGE>

         the   interpretation  or  administration   thereof  and  including  the
         introduction of any new law or governmental  rule,  regulation,  order,
         guideline or request,  such as, for example,  but not limited to: (A) a
         change in the basis of taxation of payment to any Bank of the principal
         of or  interest  on the Notes or any other  amounts  payable  hereunder
         (except for changes in the rate of tax on, or  determined  by reference
         to,  the net  income or  profits  of such  Bank or any  change in a tax
         imposed  solely  on  deposits  or net  assets  of a Bank,  in each case
         pursuant to the laws of the jurisdiction in which it is organized or in
         which its principal  office or applicable  lending office is located or
         any subdivision thereof or therein) or (B) a change in official reserve
         requirements,  but, in all events,  excluding  reserves  required under
         Regulation  D  to  the  extent  included  in  the  computation  of  the
         Eurodollar Rate and/or (y) other  circumstances  since the date of this
         Agreement affecting the New York interbank Eurodollar market; or

                  (iii) at any  time,  that the  making  or  continuance  of any
         Eurodollar  Loan has been made (x) unlawful by any law or  governmental
         rule,  regulation or order, (y) impossible by compliance by any Bank in
         good faith with any  governmental  request (whether or not having force
         of law) or (z)  impracticable  as a result of a  contingency  occurring
         after the date of this Agreement which materially and adversely affects
         the interbank Eurodollar market;

then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone promptly confirmed
in writing) to the Borrower and,  except in the case of clause (i) above, to the
Administrative  Agent of such  determination  (which  notice the  Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above,  Eurodollar  Loans shall no longer be available  until
such time as the  Administrative  Agent notifies the Borrower and the Banks that
the  circumstances  giving  rise to such notice by the  Administrative  Agent no
longer exist,  and any Notice of Borrowing or Notice of Conversion  given by the
Borrower  with  respect to  Eurodollar  Loans  which have not yet been  incurred
(including by way of conversion) shall be deemed rescinded by the Borrower,  (y)
in the case of clause (ii) above, the Borrower shall,  subject to the provisions
of this Section  1.10(a) and Section  13.17 (to the extent  applicable),  pay to
such Bank,  within ten Business Days after such Bank's written request  therefor
and the delivery to the Borrower of the written notice  described  below in this
clause (y), such  additional  amounts (in the form of an increased rate of, or a
different method of calculating,  interest or otherwise as such Bank in its sole
discretion  shall determine (but without  duplication of any amounts that may be
payable to such Bank under  Section  1.10(c)  or 2.06) as shall be  required  to
compensate such Bank for such increased costs or reductions in amounts  received
or  receivable  hereunder  reasonably  determined  by such Bank in good faith (a
written  notice as to the  additional  amounts  owed to such  Bank,  showing  in
reasonable  detail  the  basis for the  calculation  thereof,  submitted  to the
Borrower by such Bank shall,  absent manifest error, be final and conclusive and
binding on all the parties  hereto) and (z) in the case of clause  (iii)  above,
the  Borrower  shall take one of the  actions  specified  in Section  1.10(b) as
promptly as possible and, in any event, within the time period required by law.

                  (b) At any time that any  Eurodollar  Loan is  affected by the
circumstances  described in Section  1.10(a)(ii) or (iii), the Borrower may (and
in the case of a  Eurodollar  Loan  affected by the  circumstances  described in
Section  1.10(a)(iii)  shall) either (x) if the affected 

                                      -10-

<PAGE>

Eurodollar  Loan is then being made  initially or pursuant to a  conversion,  by
giving the  Administrative  Agent  telephonic  notice  (confirmed in writing) as
promptly as practicable  and in any event within one Business Day after the date
that the Borrower was notified by the affected Bank or the Administrative  Agent
pursuant to Section  1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan
is then  outstanding,  upon at least three  Business Days' written notice to the
Administrative  Agent, require the affected Bank to convert such Eurodollar Loan
into a Base Rate Loan,  provided  that, if more than one Bank is affected at any
time,  then all affected Banks must be treated the same pursuant to this Section
1.10(b).

                  (c) If at any time after the  Restatement  Effective  Date any
Bank  determines that the  introduction of or any change (which  introduction or
change  shall  have  occurred  after  the  Restatement  Effective  Date)  in any
applicable law or governmental rule, regulation, order, guideline,  directive or
request (whether or not having the force of law) concerning capital adequacy, or
any change in  interpretation  or  administration  thereof  by any  governmental
authority,  central bank, the NAIC or comparable agency, will have the effect of
increasing  the amount of capital  required or expected to be maintained by such
Bank or any  corporation  controlling  such Bank based on the  existence of such
Bank's  Commitments  hereunder or its obligations  hereunder,  then the Borrower
shall,  subject to the provisions of this Section  1.10(c) and Section 13.17 (to
the extent  applicable),  pay to such Bank,  within ten Business  Days after its
written  demand  therefor,  such  additional  amounts  as shall be  required  to
compensate  such Bank or such other  corporation  for the increased cost to such
Bank or such other  corporation  or the  reduction in the rate of return to such
Bank or such other  corporation  as a result of such  increase  of capital  (but
without  duplication  of any  amounts  that may be  payable  to such Bank  under
Section 1.10(a) or 2.06). In determining such additional amounts, each Bank will
act reasonably and in good faith and will use averaging and attribution  methods
which are reasonable,  provided that such Bank's  determination  of compensation
owing under this Section  1.10(c) shall,  absent  manifest  error,  be final and
conclusive and binding on all the parties hereto.  Each Bank,  upon  determining
that any additional  amounts will be payable  pursuant to this Section  1.10(c),
will give prompt  written  notice  thereof to the  Borrower,  which notice shall
describe in reasonable detail the introduction of or change in applicable law or
governmental rule, regulation, order, guideline,  directive or request or change
in  interpretation  or  administration  and the  basis for  calculation  of such
additional amounts.

                  1.11 Breakage.  (a) The Borrower shall  compensate  each Bank,
within ten Business  Days after its written  request  (which  request  shall set
forth in reasonable detail the basis for requesting such compensation),  for all
reasonable losses, expenses and liabilities (including,  without limitation, any
loss, expense or liability incurred by reason of the liquidation or reemployment
of deposits or other funds  required by such Bank to fund its  Eurodollar  Loans
but excluding loss of anticipated  profits) which such Bank may sustain:  (i) if
for any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of, or conversion from or into,  Eurodollar  Loans does not occur on a
date  specified  therefor  in a Notice of  Borrowing  or  Notice  of  Conversion
(whether  or not  withdrawn  by the  Borrower  or deemed  withdrawn  pursuant to
Section 1.10(a));  (ii) if any repayment  (including any repayment made pursuant
to Section 4.01, 4.02 or as a result of an acceleration of the Loans pursuant to
Section 10) or conversion of any of its Eurodollar  Loans occurs on a date which
is not the last day of an Interest  Period with  

                                      -12-

<PAGE>

respect  thereto;  (iii) if any prepayment of any of its Eurodollar Loans is not
made on any date specified in a notice of prepayment  given by the Borrower;  or
(iv) as a  consequence  of (x) any other  default by the  Borrower  to repay its
Loans when required by the terms of this Agreement or any Note held by such Bank
or (y) any election  made pursuant to Section  1.10(b).  Each Bank agrees to use
commercially reasonable efforts to minimize its losses, expenses and liabilities
described in this Section 1.11(a).

                  (b) In addition to any  compensation  owing pursuant to clause
(a) of this Section 1.11, on the  Restatement  Effective Date the Borrower shall
compensate each Bank with Eurodollar Loans outstanding under the Original Credit
Agreement for all reasonable  losses,  expenses and liabilities  which such Bank
may sustain as a result of the refinancing or repayment of such Eurodollar Loans
on the Restatement Effective Date required pursuant to Section 5.07(b).

                  1.12  Change of Lending  Office.  Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section  1.10(a)(ii)  or
(iii), Section 1.10(c),  Section 2.06 or Section 4.04 with respect to such Bank,
it will (subject to overall policy considerations of such Bank), if requested by
the  Borrower,  designate  another  Lending  Office  for any Loans or Letters of
Credit  affected by such event,  provided that such  designation is made on such
terms  that such  Bank and its  Lending  Office  suffer  no  economic,  legal or
regulatory disadvantage which such Bank determines,  in its sole discretion,  to
be adverse in any material respect,  with the object of avoiding the consequence
of the event  giving  rise to the  operation  of such  Section.  Nothing in this
Section 1.12 shall affect or postpone any of the  obligations of the Borrower or
the right of any Bank provided in Sections 1.10, 2.06 and 4.04.

                  1.13   Replacement  of  Banks.  (a)  If  any  Bank  becomes  a
Defaulting  Bank or otherwise  defaults in its obligations to make Loans or fund
Unpaid  Drawings,  (b)  upon  the  occurrence  of an  event  giving  rise to the
operation of Section  1.10(a)(ii)  or (iii),  Section  1.10(c),  Section 2.06 or
Section 4.04 with respect to any Bank which results in such Bank charging to the
Borrower  increased costs materially in excess of those being generally  charged
by the other  Banks or (c) in the case of a refusal  by a Bank to consent to one
or more proposed  changes,  waivers,  discharges or terminations with respect to
this  Agreement  which have been  approved by the Required  Banks as (and to the
extent) provided in Section  13.12(b),  the Borrower shall have the right, if no
Default or Event of Default  then exists (or,  in the case of  preceding  clause
(c), no Default or Event of Default will exist  immediately  after giving effect
to such replacement), to either (i) replace such Bank (the "Replaced Bank") with
one or more other Eligible  Transferees (it being acknowledged that the Replaced
Bank shall be under no obligation  to identify or secure the  commitment of such
Eligible  Transferee or assist in identifying or securing the commitment of such
Eligible  Transferee),  none of whom shall  constitute a Defaulting  Bank at the
time of such replacement and each of whom shall be reasonably  acceptable to the
Administrative  Agent  (collectively,  the  "Replacement  Bank")  or (ii) at the
option of the Borrower,  replace only (x) the  Revolving  Loan  Commitment  (and
outstandings  pursuant thereto) of the Replaced Bank with an identical Revolving
Loan  Commitment  provided  by the  Replacement  Bank  or (y) in the  case  of a
replacement as provided in Section  13.12(b) where the consent of the respective
Bank is  required  with  respect  to less  than  all  Tranches  of its  Loans or
Commitments,  the  Commitments  and/or

                                      -13-

<PAGE>

outstanding Term Loans of such Bank in respect of each Tranche where the consent
of  such  Bank  would  otherwise  be  individually   required,   with  identical
Commitments  and/or  Term  Loans  of  the  respective  Tranche  provided  by the
Replacement Bank,  provided that (1) at the time of any replacement  pursuant to
this Section 1.13, the Replacement  Bank shall enter into one or more Assignment
and  Assumption  Agreements  pursuant  to  Section  13.04(b)  (and with all fees
payable  pursuant to said Section  13.04(b) to be paid by the Replacement  Bank)
pursuant to which the Replacement  Bank shall acquire all of the Commitments and
outstanding  Loans (or, in the case of the replacement of only (I) the Revolving
Loan Commitment,  the Revolving Loan Commitment and outstanding  Revolving Loans
and participations in outstanding  Letters of Credit and/or (II) the outstanding
Term Loans,  the Term Loans) of, and in each case  participations  in Letters of
Credit by, the Replaced Bank and, in connection therewith,  shall pay to (a) the
Replaced  Bank in respect  thereof  an amount  equal to the sum of (i) an amount
equal to the principal of, and all accrued  interest on, all  outstanding  Loans
(or of the Loans of the respective Tranche being replaced) of the Replaced Bank,
(ii) an amount  equal to all Unpaid  Drawings  that have been funded by (and not
reimbursed to) such Replaced Bank,  together with all then unpaid  interest with
respect  thereto  at such  time and (iii) an amount  equal to all  accrued,  but
theretofore  unpaid,  Fees owing to the Replaced  Bank (but only with respect to
the relevant  Tranche,  in the case of the replacement of less than all Tranches
of Loans then held by the  respective  Replaced  Bank) pursuant to Section 3.01,
(b) except in the case of the replacement of only the outstanding  Term Loans of
a Replaced  Bank,  each  Issuing Bank an amount  equal to such  Replaced  Bank's
Adjusted  RL  Percentage  (for this  purpose,  determined  as if the  adjustment
described  in clause (i) of the  immediately  succeeding  sentence had been made
with respect to such Replaced  Bank) of any Unpaid  Drawing  (which at such time
remains an Unpaid Drawing) to the extent such amount was not theretofore  funded
by such  Replaced  Bank to such  Issuing  Bank and (c) except in the case of the
replacement of only the outstanding Term Loans of a Replaced Bank, the Swingline
Bank an amount  equal to such  Replaced  Bank's  Adjusted RL  Percentage  of any
Mandatory Borrowing to the extent such amount was not theretofore funded by such
Replaced  Bank,  and (2) all  obligations  of the  Borrower due and owing to the
Replaced  Bank at such time (other than those  specifically  described in clause
(1) above in  respect of which the  assignment  purchase  price has been,  or is
concurrently  being,  paid)  shall  be  paid  in  full  to  such  Replaced  Bank
concurrently  with  such  replacement.  Upon  the  execution  of the  respective
Assignment  and  Assumption  Agreement,  the  payment of amounts  referred to in
clauses (1) and (2) above and, if so requested by the Replacement Bank, delivery
to the  Replacement  Bank of the  appropriate  Note  or  Notes  executed  by the
Borrower, (i) the Replacement Bank shall become a Bank hereunder and, unless the
respective  Replaced  Bank  continues  to  have  outstanding  Term  Loans  or  a
Commitment  hereunder,  the  Replaced  Bank  shall  cease to  constitute  a Bank
hereunder,   except  with  respect  to  indemnification  provisions  under  this
Agreement (including, without limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06
and 13.01),  which shall survive as to such Replaced Bank and (ii) except in the
case of the replacement of only  outstanding  Term Loans of a Replaced Bank, the
Adjusted RL  Percentages  of the Banks shall be  automatically  adjusted at such
time to give effect to such  replacement  (and to give effect to the replacement
of a  Defaulting  Bank  with  one or more  Non-Defaulting  Banks).  Replacements
pursuant  to this  Section  1.13 shall only be  effected  by  assignments  which
otherwise meet the applicable requirements of Section 13.04(b).

                                      -14-

<PAGE>

                  SECTION 2. Letters of Credit.

                  2.01 Letters of Credit.  (a) Subject to and upon the terms and
conditions  set forth  herein,  the  Borrower  may request that any Issuing Bank
issue, at any time and from time to time on and after the Restatement  Effective
Date and prior to the 30th day prior to the Revolving  Loan Maturity  Date,  (x)
for the  account  of the  Borrower  and for the  benefit  of any  holder (or any
trustee,  agent or other  similar  representative  for any such  holders) of L/C
Supportable  Obligations  of  the  Borrower  or  any  of  its  Subsidiaries,  an
irrevocable standby letter of credit, in a form customarily used by such Issuing
Bank or in such other form as has been  approved by such Issuing Bank (each such
standby letter of credit,  a "Standby  Letter of Credit") in support of such L/C
Supportable  Obligations  and (y) for the  account of the  Borrower  and for the
benefit  of  sellers  of goods  and  materials  used in the  ordinary  course of
business  of  the  Borrower  or any of its  Subsidiaries  an  irrevocable  sight
commercial  letter of credit in a form  customarily used by such Issuing Bank or
in such  other  form as has  been  approved  by such  Issuing  Bank  (each  such
commercial  letter of credit,  a "Trade  Letter of Credit",  and each such Trade
Letter of Credit and each  Standby  Letter of Credit,  a "Letter of  Credit") in
support of commercial  transactions  of the Borrower and its  Subsidiaries.  All
Letters of Credit shall be denominated in Dollars.

                  (b)  Subject  to and upon the terms and  conditions  set forth
herein,  each Issuing Bank hereby agrees that it will, at any time and from time
to time on and after the  Restatement  Effective  Date and prior to the 30th day
prior  to the  Revolving  Loan  Maturity  Date,  following  its  receipt  of the
respective Letter of Credit Request,  issue for the account of the Borrower, one
or more  Letters  of Credit (x) in the case of  Standby  Letters  of Credit,  in
support  of such  L/C  Supportable  Obligations  of the  Borrower  or any of its
Subsidiaries  as are permitted to remain  outstanding  without  giving rise to a
Default or an Event of Default  and (y) in the case of Trade  Letters of Credit,
in  support  of sellers of goods or  materials  used in the  ordinary  course of
business of the Borrower or any of its  Subsidiaries  as  referenced  in Section
2.01(a),  provided that the respective Issuing Bank shall be under no obligation
to issue any  Letter of  Credit of the types  described  above if at the time of
such issuance:

                  (i)  any  order,   judgment  or  decree  of  any  governmental
         authority  or  arbitrator  shall  purport  by its  terms to  enjoin  or
         restrain  such  Issuing  Bank from issuing such Letter of Credit or any
         requirement  of law  applicable  to such Issuing Bank or any request or
         directive   (whether   or  not  having  the  force  of  law)  from  any
         governmental  authority with  jurisdiction over such Issuing Bank shall
         prohibit,  or request that such Issuing Bank refrain from, the issuance
         of letters of credit  generally or such Letter of Credit in  particular
         or shall  impose upon such  Issuing Bank with respect to such Letter of
         Credit any  restriction  or reserve or capital  requirement  (for which
         such Issuing Bank is not  otherwise  compensated)  not in effect on the
         date hereof,  or any  unreimbursed  loss, cost or expense which was not
         applicable,  in  effect  or known to such  Issuing  Bank as of the date
         hereof and which such Issuing Bank  reasonably  and in good faith deems
         material to it; or

                  (ii) such  Issuing  Bank shall have  received  notice from the
         Required  Banks  prior to the  issuance of such Letter of Credit of the
         type described in the  penultimate  

                                      -15-

<PAGE>

         sentence of Section  2.03(b) and the matters  identified in such notice
         have not previously been waived or cured.

                  2.02 Maximum Letter of Credit Outstandings;  Final Maturities.
Notwithstanding  anything to the contrary  contained in this  Agreement,  (i) no
Letter of Credit shall be issued the Stated  Amount of which,  when added to the
Letter of Credit Outstandings  (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the  respective  Letter of Credit) at
such time would exceed either (x) $10,000,000 or (y) when added to the aggregate
principal  amount of all  Revolving  Loans  made by  Non-Defaulting  Banks  then
outstanding  and the  aggregate  principal  amount of all  Swingline  Loans then
outstanding,  an amount equal to the Adjusted Total Revolving Loan Commitment at
such time and (ii) each  Letter of  Credit  shall by its terms  terminate  on or
before (x) in the case of Standby Letters of Credit, the earlier of (A) the date
which occurs one year after the date of the issuance thereof  (although any such
Standby Letter of Credit may be extendible  for successive  periods of up to one
year, but not beyond the tenth Business Day prior to the Revolving Loan Maturity
Date,  on terms  acceptable  to the  Issuing  Bank  thereof)  and (B) the  tenth
Business Day prior to the  Revolving  Loan  Maturity Date and (y) in the case of
Trade Letters of Credit, the earlier of (A) the date which occurs one year after
the  date of  issuance  thereof  and (B) 30 days  prior  to the  Revolving  Loan
Maturity Date.

                  2.03 Letter of Credit  Requests.  (a)  Whenever  the  Borrower
desires  that a Letter of Credit be issued for its account,  the Borrower  shall
give the  Administrative  Agent and the  respective  Issuing  Bank at least five
Business  Days' (or such  shorter  period  as is  acceptable  to the  respective
Issuing  Bank)  written  notice  thereof.  Each  notice  shall be in the form of
Exhibit C (each a "Letter of Credit Request").

                  (b) The  making  of each  Letter of  Credit  Request  shall be
deemed to be a  representation  and warranty by the Borrower that such Letter of
Credit may be issued in accordance  with, and will not violate the  requirements
of, Section 2.02.  Unless the respective  Issuing Bank has received  notice from
the  Required  Banks before it issues a Letter of Credit that one or more of the
conditions specified in Section 5 are not satisfied on the Restatement Effective
Date or Section 6 are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.02, then,  subject to the terms and conditions of
this Agreement, such Issuing Bank shall issue the requested Letter of Credit for
the account of the Borrower in  accordance  with such  Issuing  Bank's usual and
customary  practices.  Upon the issuance of or amendment  or  modification  to a
Standby Letter of Credit,  the respective Issuing Bank shall promptly notify the
Borrower  and  the   Administrative   Agent  of  such  issuance,   amendment  or
modification and such notification  shall be accompanied by a copy of the issued
Standby Letter of Credit or amendment or modification.

                  2.04 Letter of Credit Participations. (a) Immediately upon the
issuance by the  respective  Issuing Bank of any Letter of Credit,  such Issuing
Bank shall be deemed to have sold and  transferred to each Bank with a Revolving
Loan  Commitment,  other than such Issuing Bank (each such Bank, in its capacity
under this Section 2.04, a  "Participant"),  and each such Participant  shall be
deemed irrevocably and  unconditionally to have purchased and received from 

                                      -16-

<PAGE>

such  Issuing  Bank,  without  recourse or warranty,  an undivided  interest and
participation,  to the extent of such Participant's  Adjusted RL Percentage,  in
such  Letter  of  Credit,  each  drawing  or  payment  made  thereunder  and the
obligations of the Borrower under this Agreement with respect  thereto,  and any
security  therefor  or  guaranty  pertaining  thereto.  Upon any  change  in the
Revolving  Loan  Commitments or Adjusted RL Percentages of the Banks pursuant to
Section 1.13 or 13.04, it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings, there shall be an automatic adjustment to
the participations  pursuant to this Section 2.04 to reflect the new Adjusted RL
Percentages of the assignor and assignee Bank, as the case may be.

                  (b) In determining  whether to pay under any Letter of Credit,
the respective Issuing Bank shall have no obligation relative to the other Banks
other than to confirm that any  documents  required to be  delivered  under such
Letter  of  Credit  appear  to have  been  delivered  and that  they  appear  to
substantially  comply on their  face  with the  requirements  of such  Letter of
Credit.  Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence  or willful  misconduct,  shall not create for such  Issuing Bank any
resulting  liability to the Borrower,  any other Credit  Party,  any Bank or any
other Person.

                  (c) In the event that any Issuing Bank makes any payment under
any Letter of Credit and the Borrower shall not have  reimbursed  such amount in
full to such Issuing Bank pursuant to Section  2.05(a),  such Issuing Bank shall
promptly  notify the  Administrative  Agent,  which shall  promptly  notify each
Participant  of  such  failure,   and  each   Participant   shall  promptly  and
unconditionally  pay to such  Issuing  Bank  the  amount  of such  Participant's
Adjusted RL Percentage of such  unreimbursed  payment in Dollars and in same day
funds. If the  Administrative  Agent so notifies,  prior to 11:00 A.M.  (Eastern
time) on any Business  Day, any  Participant  required to fund a payment under a
Letter of Credit,  such Participant shall make available to such Issuing Bank in
Dollars such Participant's  Adjusted RL Percentage of the amount of such payment
on such  Business Day in same day funds.  If and to the extent such  Participant
shall not have so made its Adjusted RL  Percentage of the amount of such payment
available to such Issuing Bank, such  Participant  agrees to pay to such Issuing
Bank, forthwith on demand such amount,  together with interest thereon, for each
day from such date until the date such  amount is paid to such  Issuing  Bank at
the  overnight  Federal  Funds Rate for the first three days and at the interest
rate  applicable to Revolving  Loans  maintained as Base Rate Loans for each day
thereafter.  The failure of any  Participant  to make  available to such Issuing
Bank its Adjusted RL  Percentage of any payment under any Letter of Credit shall
not relieve any other Participant of its obligation  hereunder to make available
to such Issuing Bank its Adjusted RL  Percentage  of any Letter of Credit on the
date required,  as specified above, but no Participant  shall be responsible for
the failure of any other Participant to make available to such Issuing Bank such
other Participant's Adjusted RL Percentage of any such payment.

                  (d)  Whenever  any  Issuing  Bank  receives  a  payment  of  a
reimbursement  obligation  as to which it has  received  any  payments  from the
Participants  pursuant to clause (c) above,  such Issuing Bank shall pay to each
Participant which has paid its Adjusted RL Percentage thereof, in Dollars and in
same day funds,  an amount  equal to such  Participant's  share  

                                      -17-

<PAGE>

(based  upon  the  proportionate  aggregate  amount  originally  funded  by such
Participant to the aggregate amount funded by all Participants) of the principal
amount of such reimbursement  obligation and interest thereon accruing after the
purchase of the respective participations.

                  (e) Upon the request of any  Participant,  each  Issuing  Bank
shall  furnish to such  Participant  copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.

                  (f) The  obligations of the  Participants  to make payments to
each  Issuing  Bank with  respect  to  Letters  of Credit  issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever (except
as otherwise  expressly  provided in the last  sentence of Section  2.04(b)) and
shall be made in  accordance  with the terms and  conditions  of this  Agreement
under all circumstances,  including,  without  limitation,  any of the following
circumstances:

                  (i) any lack of validity or  enforceability  of this Agreement
         or any of the other Credit Documents;

                  (ii) the  existence  of any  claim,  setoff,  defense or other
         right  which the  Borrower or any of its  Subsidiaries  may have at any
         time against a beneficiary named in a Letter of Credit,  any transferee
         of any Letter of Credit (or any Person for whom any such transferee may
         be acting),  the  Administrative  Agent, any Participant,  or any other
         Person,  whether  in  connection  with this  Agreement,  any  Letter of
         Credit,   the  transactions   contemplated   herein  or  any  unrelated
         transactions (including any underlying transaction between the Borrower
         or any Subsidiary of the Borrower and the beneficiary named in any such
         Letter of Credit);

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

                  (iv) the  surrender  or  impairment  of any  security  for the
         performance  or  observance  of any of the  terms of any of the  Credit
         Documents; or

                  (v) the occurrence of any Default or Event of Default.

                  2.05  Agreement  to Repay Letter of Credit  Drawings.  (a) The
Borrower  hereby  agrees to reimburse  the  respective  Issuing  Bank, by making
payment  to the  Administrative  Agent  in  immediately  available  funds at the
Payment Office,  for any payment or disbursement made by such Issuing Bank under
any Letter of Credit issued by it (each such amount,  so paid until  reimbursed,
an "Unpaid  Drawing"),  immediately after, and in any event on the date of, such
payment or  disbursement,  with  interest on the amount so paid or  disbursed by
such Issuing  Bank,  to the extent not  reimbursed  prior to 12:00 Noon (Eastern
time) on the date of such payment or  disbursement,  from and including the date
paid or disbursed to but excluding the date such Issuing Bank was  reimbursed by
the Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Base Rate Margin;  provided,  however, 

                                      -18-

<PAGE>

to the extent such amounts are not reimbursed prior to 12:00 Noon (Eastern time)
on the third  Business  Day  following  the receipt by the Borrower of notice of
such payment or  disbursement  or following  the  occurrence  of a Default or an
Event of Default under Section 10.05,  interest shall  thereafter  accrue on the
amounts so paid or disbursed by such Issuing Bank (and until  reimbursed  by the
Borrower)  at a rate per annum  which shall be the Base Rate in effect from time
to time plus the  Applicable  Base Rate Margin plus 2%, in each such case,  with
interest to be payable on demand.  The  respective  Issuing  Bank shall give the
Borrower  prompt  written  notice of each  Drawing  under any  Letter of Credit,
provided that the failure to give any such notice shall in no way affect, impair
or diminish the Borrower's obligations hereunder.

                  (b) The obligations of the Borrower under this Section 2.05 to
reimburse  the  respective   Issuing  Bank  with  respect  to  Unpaid   Drawings
(including,  in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff,  counterclaim or
defense to payment  which the  Borrower  may have or have had  against  any Bank
(including in its capacity as issuer of the Letter of Credit or as Participant),
including, without limitation, any defense based upon the failure of any drawing
under a Letter of  Credit  (each a  "Drawing")  to  conform  to the terms of the
Letter of Credit or any  nonapplication  or misapplication by the beneficiary of
the proceeds of such Drawing; provided,  however, that the Borrower shall not be
obligated  to reimburse  any Issuing Bank for any wrongful  payment made by such
Issuing  Bank  under a  Letter  of  Credit  as a  result  of  acts or  omissions
constituting  willful misconduct or gross negligence on the part of such Issuing
Bank.

                  2.06  Increased  Costs.  If at any time after the  Restatement
Effective  Date, the  introduction of or any change in any applicable law, rule,
regulation,   order,   guideline  or  request  or  in  the   interpretation   or
administration   thereof  by  any  governmental   authority   charged  with  the
interpretation or administration  thereof,  or compliance by any Issuing Bank or
any Participant  with any request or directive by any such authority  (including
the NAIC)  (whether  or not having the force of law),  shall  either (i) impose,
modify or make  applicable  any reserve,  deposit,  capital  adequacy or similar
requirement against letters of credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating,  directly or indirectly,  to this Agreement;  and the
result of any of the  foregoing  is to increase  the cost to any Issuing Bank or
any  Participant  of  issuing,  maintaining  or  participating  in any Letter of
Credit,  or reduce the amount of any sum received or  receivable  by any Issuing
Bank or any  Participant  hereunder  or reduce the rate of return on its capital
with respect to Letters of Credit  (except for changes in the rate of tax on, or
determined  by  reference  to, the net income or profits of such Issuing Bank or
such Participant or any change in a tax imposed solely on deposits or net assets
of the Issuing Bank or such  Participant,  in each case  pursuant to the laws of
the  jurisdiction  in which it is organized or in which its principal  office or
applicable  lending  office is located or any  subdivision  thereof or therein),
then,  within ten Business Days of the delivery of the  certificate  referred to
below to the Borrower by such Issuing Bank or any  Participant  (a copy of which
certificate  shall  be sent  by such  Issuing  Bank or such  Participant  to the
Agent),  the Borrower shall,  subject to the provisions of this Section 2.06 and
Section  13.17 (to the  extent  applicable),  pay to such  Issuing  Bank or such
Participant  such additional  amount or amounts as will compensate such Bank for
such  increased  cost or reduction in the amount  receivable or reduction on the
rate of  return  on its  capital.  Any  Issuing  Bank or

                                      -19-

<PAGE>

any Participant,  upon  determining that any additional  amounts will be payable
pursuant to this Section 2.06,  will give prompt  written  notice thereof to the
Borrower,  which notice shall include a certificate submitted to the Borrower by
such Issuing Bank or such Participant (a copy of which certificate shall be sent
by such  Issuing  Bank or such  Participant  to the  Agent),  setting  forth  in
reasonable  detail  the  introduction  of or change  in  applicable  law,  rule,
regulation,   order,   guideline  or  request  or  in  the   interpretation   or
administration  thereof  and the basis for the  calculation  of such  additional
amount or amounts necessary to compensate such Issuing Bank or such Participant.
In determining such additional  amounts,  each Issuing Bank and each Participant
will act reasonably and in good faith, provided that the certificate required to
be delivered  pursuant to this Section 2.06 shall,  absent  manifest  error,  be
final and conclusive and binding on the Borrower.

                  2.07 Existing Letters of Credit.  Notwithstanding  anything to
the contrary  above in this Section 2, all letters of credit  outstanding  under
the Original Credit  Agreement on the Restatement  Effective Date shall continue
in effect in  accordance  with their terms,  be deemed  issued  pursuant to this
Agreement on the Restatement Effective Date and constitute Letters of Credit for
all purposes hereunder.

                  SECTION  3.  Commitment   Commission;   Fees;   Reductions  of
Commitment.

                  3.01   Fees.   (a)  The   Borrower   agrees   to  pay  to  the
Administrative  Agent  for  distribution  to  each  Non-Defaulting  Bank  with a
Revolving  Loan   Commitment  a  commitment   commission  (the  "Revolving  Loan
Commitment  Commission")  for the  period  from and  including  the  Restatement
Effective  Date to but  excluding  the  Revolving  Loan  Maturity  Date (or such
earlier date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate for each day equal to the  Applicable  Commitment  Commission
Percentage on the daily average  Unutilized  Revolving  Loan  Commitment of such
Non-Defaulting  Bank. Accrued Revolving Loan Commitment  Commission shall be due
and  payable  quarterly  in arrears on each  Quarterly  Payment  Date and on the
Revolving Loan Maturity Date or such earlier date upon which the Total Revolving
Loan Commitment is terminated.

                  (b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on each such  Non-Defaulting  Bank's respective Adjusted RL Percentage) a fee in
respect of each Letter of Credit issued  hereunder (the "Letter of Credit Fee"),
for the period from and  including the date of issuance of such Letter of Credit
to and including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the  Applicable  Eurodollar  Margin on the
daily  Stated  Amount of such  Letter of Credit.  Accrued  Letter of Credit Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the first day after the  termination of the Total  Revolving Loan  Commitment
upon which no Letters of Credit remain outstanding.

                  (c) The Borrower  agrees to pay to each Issuing Bank,  for its
own  account,  a facing fee in respect of each  Letter of Credit  issued by such
Issuing Bank (the "Facing  Fee"),  for the period from and including the date of
issuance of such Letter of Credit to and including  the date of the  termination
of such Letter of Credit, computed at a rate equal to 1/4 of 1% per annum of the
daily Stated Amount of such Letter of Credit.  Accrued  Facing Fees shall be due
and 

                                      -20-

<PAGE>

payable  quarterly in arrears on each Quarterly  Payment Date and upon the first
day after the  termination of the Total  Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.

                  (d) The  Borrower  agrees  to pay,  upon each  drawing  under,
issuance of, or amendment to, any Letter of Credit,  such amount as shall at the
time of such event be the  administrative  charge which the  applicable  Issuing
Bank is generally  imposing in connection  with such  occurrence with respect to
letters of credit.

                  (e) The  Borrower  agrees to pay to the Agents,  for their own
account,  such other fees as have been agreed to in writing by the  Borrower and
the Agents.

                  (f) The Borrower agrees to pay to the Administrative Agent for
distribution  to  each  Non-Defaulting  Bank  with  a  Term  Loan  Commitment  a
commitment  commission  (the "Term Loan Commitment  Commission")  for the period
from and including  the  Restatement  Effective  Date to the earlier of: (i) the
Earnout  Payment  Date and (ii) the  Delayed-Draw  Commitment  Expiration  Date,
computed at a rate for each day equal to the  Applicable  Commitment  Commission
Percentage  on the  daily  average  Unutilized  Term  Loan  Commitment  of  such
Non-Defaulting  Bank.  Accrued Term Loan Commitment  Commission shall be due and
payable  quarterly  in  arrears  on  each  Quarterly  Payment  Date  and  on the
Delayed-Draw  Commitment  Expiration  Date or such  earlier  date upon which the
Total Term Loan Commitment is terminated.

                  3.02 Voluntary Termination of Unutilized Commitments. (a) Upon
at least one Business Day's prior written notice to the Administrative  Agent at
its Notice Office (which notice the Administrative Agent shall promptly transmit
to each of the Banks),  the Borrower  shall have the right,  at any time or from
time to time,  without  premium or penalty,  to terminate  the Total  Unutilized
Revolving  Loan  Commitment,  in whole  or in part,  in  integral  multiples  of
$1,000,000 in the case of partial  reductions to the Total Unutilized  Revolving
Loan   Commitment,   provided   that  (i)  each  such   reduction   shall  apply
proportionately to permanently reduce the Revolving Loan Commitment of each Bank
with such a Commitment and (ii) the reduction to the Total Unutilized  Revolving
Loan Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding  clause (i))
by an amount which exceeds the remainder of (x) the  Unutilized  Revolving  Loan
Commitment  of such Bank as in effect  immediately  before giving effect to such
reduction  minus  (y)  such  Bank's  Adjusted  RL  Percentage  of the  aggregate
principal amount of Swingline Loans then outstanding.

                  (b) Upon at least one Business  Day's prior written  notice to
the  Administrative  Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Borrower shall have the
right,  at any  time or from  time to  time,  without  premium  or  penalty,  to
terminate the Total  Unutilized  Term Loan  Commitment,  in whole or in part, in
integral  multiples of $1,000,000 in the case of partial reductions to the Total
Unutilized Term Loan  Commitment,  provided that each such reduction shall apply
proportionately to permanently reduce the Term Loan Commitment of each Bank with
such a Commitment.

                                      -21-

<PAGE>

                  (c) In the event of a refusal  by a Bank to  consent to one or
more proposed changes, waivers,  discharges or terminations with respect to this
Agreement  which have been approved by the Required Banks as (and to the extent)
provided in Section  13.12(b),  the Borrower may, subject to its compliance with
the requirements of Section 13.12(b), upon 5 Business Days' prior written notice
to  the   Administrative   Agent  at  its  Notice   Office   (which  notice  the
Administrative Agent shall promptly transmit to each of the Banks) terminate all
of the Revolving Loan  Commitment and Term Loan  Commitment of such Bank and, so
long as all Loans, together with accrued and unpaid interest, Fees and all other
amounts,  owing to such Bank (other than amounts owing in respect of any Tranche
of Loans  maintained by such Bank which are not being repaid pursuant to Section
13.12(b)) are repaid  concurrently  with the  effectiveness  of such termination
pursuant to Section  4.01(b) (at which time Schedule I shall be deemed  modified
to reflect such changed  amounts),  and at such time, unless the respective Bank
continues to have outstanding Loans of one or more Tranches hereunder, such Bank
shall no longer constitute a "Bank" for purposes of this Agreement,  except with
respect to indemnifications under this Agreement (including, without limitation,
Sections 1.10, 1.11,  2.06,  4.04,  12.06 and 13.01),  which shall survive as to
such repaid Bank.

                  3.03 Mandatory  Reduction of  Commitments.  (a) The Total Term
Loan  Commitment  (other  than the  Total  Delayed-Draw  Commitment)  shall  (i)
terminate in its entirety on the Restatement  Effective Date (immediately  after
giving  effect to the making of the Term Loans on such date) and (ii) be reduced
from time to time prior to such date to the extent required by Section 4.02.

                  (b) In addition to any other mandatory  commitment  reductions
pursuant to this  Section  3.03,  the Total  Delayed Draw  Commitment  shall (i)
terminate  in its  entirety  on the earlier of (x) the  Delayed-Draw  Commitment
Expiration  Date and (y) the Earnout  Payment  Date  (immediately  after  giving
effect to the  making  of the Term  Loans on such  date)  and (ii)  prior to the
termination of the Delayed-Draw Commitment,  be reduced from time to time to the
extent required by Section 4.02.

                  (c) In addition to any other mandatory  commitment  reductions
pursuant to this Section 3.03,  the Total  Revolving  Loan  Commitment  (and the
Revolving Loan  Commitment of each Bank) shall  terminate in its entirety on the
Revolving Loan Maturity Date.

                  (d) In addition to any other mandatory  commitment  reductions
pursuant to this Section 3.03, on each date after the Restatement Effective Date
upon which a mandatory  repayment of Term Loans or a mandatory  reduction to the
Total Term Loan  Commitment  pursuant to any of Sections  4.02(c)  through  (f),
inclusive,  is  required  (and  exceeds in amount  the sum of (i) the  aggregate
principal  amount of Term  Loans then  outstanding  and (ii) the Total Term Loan
Commitment  as then in  effect)  or would be  required  if Term  Loans were then
outstanding  or the Total Term Loan  Commitment  was then in  effect,  the Total
Revolving Loan Commitment shall be permanently reduced by the amount, if any, by
which the amount required to be applied pursuant to said Sections (determined as
if an unlimited amount of Term Loans were actually  outstanding) exceeds the sum
of (x) the aggregate principal amount of Term Loans then outstanding and (y) the
Total Term Loan Commitment as then in effect.

                                      -22-

<PAGE>

                  (e) Each  reduction to the Total Term Loan  Commitment and the
Total  Revolving Loan  Commitment  pursuant to this Section 3.03 (or pursuant to
Section 4.02) shall be applied  proportionately  to permanently  reduce the Term
Loan  Commitment or the Revolving Loan  Commitment,  as the case may be, of each
Bank with such a Commitment.

                  SECTION 4. Prepayments; Payments; Taxes.

                  4.01  Voluntary  Prepayments.  (a) The Borrower shall have the
right to prepay the Loans,  without  premium or penalty,  in whole or in part at
any time and from time to time on the following terms and conditions:

                  (i) the Borrower shall give the Administrative  Agent prior to
         12:00  Noon  (Eastern  time) at its  Notice  Office  (x) at  least  one
         Business  Day's prior written  notice (or  telephonic  notice  promptly
         confirmed  in  writing) of its intent to prepay Base Rate Loans and (y)
         at least three  Business  Days'  prior  written  notice (or  telephonic
         notice  promptly   confirmed  in  writing)  of  its  intent  to  prepay
         Eurodollar  Loans,  whether  Term Loans,  Revolving  Loans or Swingline
         Loans shall be prepaid,  the amount of such prepayment and the Types of
         Loans to be prepaid and, in the case of Eurodollar  Loans, the specific
         Borrowing  or  Borrowings  pursuant  to which  made,  which  notice the
         Administrative Agent shall promptly transmit to each of the Banks;

                  (ii) each prepayment shall be in an aggregate principal amount
         of at least (x) $1,000,000 in the case of Term Loans or Revolving Loans
         or (y) $100,000 in the case of Swingline  Loans,  and, in each case, if
         greater,  in  integral  multiples  of  $100,000,  provided  that if any
         partial  prepayment of Eurodollar  Loans made pursuant to any Borrowing
         shall reduce the outstanding  principal amount of Eurodollar Loans made
         pursuant to such Borrowing to an amount less than the Minimum Borrowing
         Amount applicable thereto,  then such Borrowing may not be continued as
         a Borrowing of Eurodollar  Loans and any election of an Interest Period
         with  respect  thereto  given by the  Borrower  shall  have no force or
         effect;

                  (iii)  prepayments  of Eurodollar  Loans made pursuant to this
         Section  4.01(a) may only be made on the last day of an Interest Period
         applicable  thereto  unless  such  prepayment  is  accompanied  by  any
         breakage  costs and any other amounts due such Bank in accordance  with
         Section 1.11;

                  (iv) each  prepayment in respect of any Loans made pursuant to
         a Borrowing shall be applied pro rata among such Loans,  provided that,
         at the  Borrower's  election,  in  connection  with any  prepayment  of
         Revolving Loans pursuant to this Section 4.01(a), such prepayment shall
         not be applied to any Revolving Loans of a Defaulting Bank; and

                  (v) each  voluntary  prepayment of Term Loans pursuant to this
         Section 4.01(a) shall be applied to reduce the then remaining Scheduled
         Repayments  pro  rata  based  upon the then  remaining  amount  of each
         Scheduled  Repayment  after  giving  effect  to  all  prior  reductions
         thereto.

                                      -23-

<PAGE>

                  (b) In the event of a refusal  by a Bank to  consent to one or
more proposed changes, waivers,  discharges or terminations with respect to this
Agreement  which have been approved by the Required Banks as (and to the extent)
provided in Section  13.12(b),  the Borrower  may,  upon 5 Business  Days' prior
written  notice to the  Administrative  Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans, together with accrued and unpaid interest,  Fees, and other amounts owing
to such Bank (or owing to such Bank with respect to each Tranche which gave rise
to the need to obtain such Bank's  individual  consent) in accordance  with, and
subject to the requirements of, said Section 13.12(b) so long as (i) in the case
of the repayment of Revolving  Loans of any Bank pursuant to this clause (b) the
Revolving  Loan  Commitment  of such Bank is terminated  concurrently  with such
repayment  pursuant to Section 3.02(c) (at which time Schedule I shall be deemed
modified to reflect the changed Revolving Loan Commitments), (ii) in the case of
the  repayment  of Term Loans of any Bank  pursuant  to this clause (b) the Term
Loan  Commitment  (if any) of such  Bank is  terminated  concurrently  with such
repayment  pursuant to Section 3.02(c) (at which time Schedule I shall be deemed
modified to reflect the changed Term Loan Commitments),  and (iii) the consents,
if any,  required by Section 13.12(b) in connection with the repayment  pursuant
to this clause (b) have been obtained.

                  4.02 Mandatory Repayments and Commitment  Reductions.  (a) (i)
On any day on which the sum of the aggregate outstanding principal amount of the
Revolving Loans made by Non-Defaulting Banks,  Swingline Loans and the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then
in effect, the Borrower shall prepay on such day principal of Swingline Loans in
an amount up to the amount of such excess and,  after all  Swingline  Loans have
been repaid in full,  Revolving Loans of Non-Defaulting Banks in an amount equal
to such excess minus the  principal  amount of Swingline  Loans so prepaid.  If,
after giving effect to the  prepayment of all  outstanding  Swingline  Loans and
Revolving Loans of  Non-Defaulting  Banks, the aggregate amount of the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan Commitment as then
in effect,  the Borrower  shall pay to the  Administrative  Agent at the Payment
Office on such day an amount of cash or Cash Equivalents  equal to the amount of
such excess (up to a maximum  amount equal to the Letter of Credit  Outstandings
at such time),  such cash or Cash  Equivalents  to be held as  security  for all
obligations  of the Borrower to the Issuing Banks and the  Non-Defaulting  Banks
hereunder in a cash collateral  account to be established by the  Administrative
Agent.

                  (ii) On any day on which the aggregate  outstanding  principal
amount of the Revolving  Loans made by any Defaulting Bank exceeds the Revolving
Loan Commitment of such  Defaulting  Bank, the Borrower shall prepay on such day
principal of Revolving  Loans of such Defaulting Bank in an amount equal to such
excess.

                  (b)  In  addition  to  any  other   mandatory   repayments  or
commitment  reductions  pursuant to this  Section  4.02,  on each date set forth
below,  the Borrower  shall be required to repay that  principal  amount of Term
Loans, to the extent then outstanding,  as is set forth opposite such date (each
such repayment,  as the same may be reduced as provided in Sections  4.01(a) and
4.02(h),  a "Scheduled  Repayment,"  and each such date, a "Scheduled  Repayment
Date"):


                                      -24-
<PAGE>

                  Scheduled Repayment Date                       Amount
                  ------------------------                       ------

                      February 28, 1999                       $3,750,000
                      May 31, 1999                            $5,250,000
                      August 31, 1999                         $5,250,000
                      November 30, 1999                       $5,250,000

                      February 28, 2000                       $5,250,000
                      May 31, 2000                            $5,500,000
                      August 31, 2000                         $5,500,000
                      November 30, 2000                       $5,500,000


                      February 28, 2001                       $8,000,000
                      May 31, 2001                            $8,000,000
                      August 31, 2001                         $8,000,000
                      November 30, 2001                       $8,000,000


                      February 28, 2002                       $8,000,000
                      May 31, 2002                            $8,000,000
                      August 31, 2002                         $8,000,000
                      November 30, 2002                       $8,000,000


                      February 28, 2003                       $8,000,000
                      May 31, 2003                            $9,000,000
                      August 31, 2003                         $9,000,000
                      November 30, 2003                       $9,000,000

                      February 28, 2004                       $10,000,000
                      May 31,2004                             $10,000,000
                      August 31, 2004                         $10,000,000
                      Term Loan Maturity Date                 Balance


                  (c)  In  addition  to  any  other   mandatory   repayments  or
commitment  reductions  pursuant to this Section  4.02, on each date on or after
the  Restatement   Effective  Date  upon  which  the  Borrower  or  any  of  its
Wholly-Owned  Subsidiaries receives any cash proceeds from any incurrence by the
Borrower or any of its  Wholly-Owned  Subsidiaries of Indebtedness  for borrowed
money  (other than  Indebtedness  for  borrowed  money  permitted to be incurred
pursuant to Section 9.04 (except for the  incurrence of New  Subordinated  Notes
pursuant to Section  9.04(vi),  the proceeds of which are required to be applied
as set forth in such  Section) as such  Section is in effect on the  Restatement
Effective  Date),  an  amount  equal  to 100% of the Net  Debt  Proceeds  of the
respective  incurrence of Indebtedness shall be applied as a mandatory repayment
of  principal  of  outstanding  Term  Loans  (and/or,  if the  Total  Term  Loan
Commitment has not yet been  terminated,  as a mandatory  reduction to the Total
Term Loan  Commitment) in accordance with the  requirements of Sections  4.02(g)
and (h).

                                      -25-

<PAGE>

                  (d)  In  addition  to  any  other   mandatory   repayments  or
commitment  reductions  pursuant to this Section  4.02, on each date on or after
the  Restatement   Effective  Date  upon  which  the  Borrower  or  any  of  its
Wholly-Owned  Subsidiaries receives cash proceeds from any Asset Sale, an amount
equal to 100% of the Net Sale Proceeds from the  respective  Asset Sale shall be
applied as a mandatory repayment of principal of outstanding Term Loans (and/or,
if the Total Term Loan  Commitment has not yet been  terminated,  as a mandatory
reduction to the Total Term Loan Commitment) in accordance with the requirements
of Sections  4.02(g) and (h),  provided  that, so long as no Default or Event of
Default then exists, up to $2,000,000 in the aggregate in any fiscal year of the
Borrower  of Net Sale  Proceeds  from Asset  Sales may be used or  contractually
committed to be used to purchase like assets  pursuant to Section 9.07(b) within
180 days  following  the date of the  respective  Asset  Sale  (and the Net Sale
Proceeds therefrom shall not be required to be applied on the date of receipt of
such Net Sale Proceeds pursuant to this Section 4.02(d)) so long as the Borrower
delivers  a  certificate  to the  Administrative  Agent on or prior to such date
stating that such Net Sale Proceeds shall be used or contractually  committed to
be used to purchase like assets within 180 days following the date of such Asset
Sale (which  certificate  shall set forth the estimates of the proceeds to be so
expended) and provided further,  that (1) if all or any portion of such Net Sale
Proceeds  are not so  reinvested  in like  assets  within such 180 day period or
contractually  committed to be so reinvested within such 180-day period, 100% of
such  remaining  portion  shall be  applied  on the last day of such  applicable
period as a  mandatory  repayment  of  principal  of  outstanding  Term Loans as
provided  above  in this  Section  4.02(d)  without  regard  to the  immediately
preceding  proviso and (2) if all or any portion of such Net Sale  Proceeds  are
not  required  to be  applied on the 180th day  referred  to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires  without such portion being so used,
then such remaining portion shall be applied within ten days of the date of such
termination  or expiration as a mandatory  repayment of principal of outstanding
Term Loans as provided in this Section 4.02(d) without regard to the immediately
preceding proviso.

                  (e) In addition to any other mandatory  repayments pursuant to
this Section  4.02,  on each Excess Cash Payment Date, an amount equal to 50% of
the Excess  Cash Flow for the  relevant  Excess  Cash  Payment  Period  shall be
applied as a mandatory  repayment  of  principal  of  outstanding  Term Loans in
accordance with the requirements of Sections 4.02(g) and (h).

                  (f)  In  addition  to  any  other   mandatory   repayments  or
commitment  reductions pursuant to this Section 4.02, within five days following
each date on or after the Restatement  Effective Date upon which the Borrower or
any of its  Wholly-Owned  Subsidiaries  receives  any  cash  proceeds  from  any
Recovery  Event in excess of $250,000 in the aggregate in any fiscal year of the
Borrower from all Recovery Events,  an amount equal to 100% of the Net Insurance
Proceeds of such  Recovery  Event shall be applied as a mandatory  repayment  of
principal of outstanding  Term Loans (and/or,  if the Total Term Loan Commitment
has not yet been  terminated,  as a mandatory  reduction  to the Total Term Loan
Commitment) in accordance  with the  requirements  of Sections  4.02(g) and (h),
provided  that,  so long as no  Default or Event of Default  then  exists,  such
proceeds  shall not be required to be so applied on such date to the extent that
the Borrower has delivered a certificate to the Administrative Agent on or prior
to such date stating that such proceeds shall be used or shall be  contractually
committed to be used

                                      -26-

<PAGE>

to replace or restore any properties or assets in respect of which such proceeds
were paid within 180 days  following  the date of the  receipt of such  proceeds
(which  certificate  shall set  forth the  estimates  of the  proceeds  to be so
expended), and provided further, that (1) if all or any portion of such proceeds
not required to be applied to the repayment of outstanding Term Loans (and/or as
a reduction to the Total Term Loan  Commitment) are not so used or contractually
committed  to be used  within  180 days  after the date of the  receipt  of such
proceeds,  then such remaining portion not used or contractually committed to be
used  shall be  applied on the date which is the 180th day after the date of the
receipt of such  proceeds as a mandatory  repayment of principal of  outstanding
Term Loans as  provided  above in this  Section  4.02(f)  without  regard to the
immediately preceding proviso and (2) if all or any portion of such proceeds are
not  required  to be  applied on the 180th day  referred  to in clause (1) above
because such amount is contractually committed to be used and subsequent to such
date such contract is terminated or expires  without such portion being so used,
then such remaining portion shall be applied within ten days of the date of such
termination  or expiration as a mandatory  repayment of principal of outstanding
Term Loans as provided in this Section 4.02(f) without regard to the immediately
preceding proviso.

                  (g) With respect to each  repayment of Loans  required by this
Section 4.02,  the Borrower may  designate the Types of Loans of the  respective
Tranche  which  are to be  repaid  and,  in the case of  Eurodollar  Loans,  the
specific  Borrowing or Borrowings of the  respective  Tranche  pursuant to which
made, provided that: (i) repayments of Eurodollar Loans pursuant to this Section
4.02 may only be made on the last day of an Interest Period  applicable  thereto
unless all  Eurodollar  Loans of the  respective  Tranche with Interest  Periods
ending  on such  date of  required  repayment  and all  Base  Rate  Loans of the
respective  Tranche have been paid in full;  (ii) if any repayment of Eurodollar
Loans  made  pursuant  to  a  single  Borrowing  shall  reduce  the  outstanding
Eurodollar  Loans made  pursuant  to such  Borrowing  to an amount less than the
Minimum Borrowing Amount applicable  thereto,  such Borrowing shall be converted
at the end of the then  current  Interest  Period into a Borrowing  of Base Rate
Loans;  and (iii) each repayment of any Loans made pursuant to a Borrowing shall
be applied pro rata among such Loans.  In the  absence of a  designation  by the
Borrower as described in the preceding sentence, the Administrative Agent shall,
subject  to  the  above,   make  such   designation  in  its  sole   discretion.
Notwithstanding the foregoing provisions of this Section 4.02(g), if at any time
a mandatory  repayment of Loans  pursuant to this Section  4.02(g) would result,
after giving effect to the procedures  set forth above in this Section  4.02(g),
in the  Borrower  incurring  breakage  costs under  Section  1.11 as a result of
Eurodollar  Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected  Eurodollar Loans"),  then the Borrower may in
its sole  discretion,  and upon notice to the  Administrative  Agent,  initially
deposit a portion (up to 100%) of the amount that otherwise would have been paid
in respect of the Affected Eurodollar Loans with the Administrative Agent (which
deposit must be equal in amount to the amount of the Affected  Eurodollar  Loans
not  immediately  repaid)  to be held as  security  for the  Obligations  of the
Borrower  pursuant  to  a  cash  collateral  arrangement   satisfactory  to  the
Administrative  Agent and the Borrower  which shall permit  investments  in Cash
Equivalents reasonably  satisfactory to the Administrative Agent, with such cash
collateral to be directly  applied upon the earlier of (x) the first  occurrence
(or occurrences)  thereafter of the last day of an Interest Period applicable to
the relevant  Affected  Eurodollar  Loans of the respective  Tranche or Tranches
that

                                      -27-

<PAGE>

were initially  required to be repaid (or such earlier date or dates as shall be
requested by the Borrower) and (y) the date which is 180 days after such initial
deposit,  to repay an  aggregate  principal  amount of such  Loans  equal to the
Affected  Eurodollar  Loans not  initially  repaid  pursuant  to this  sentence.
Notwithstanding  anything to the contrary contained in the immediately preceding
sentence,  all amounts deposited as cash collateral  pursuant to the immediately
preceding  sentence  shall be held first for the sole benefit of the Banks whose
Loans would otherwise have been  immediately  repaid with the amounts  deposited
and upon the  taking  of any  action  by the  Administrative  Agent or the Banks
pursuant to the  remedial  provisions  of Section  10, any amounts  held as cash
collateral  pursuant to this Section 4.02(g) shall first be immediately  applied
to such Loans and thereafter to the other Obligations of the Borrower.

                  (h) Each  amount  required  to be  applied to repay Term Loans
pursuant to Sections 4.02(c) through (f),  inclusive,  shall be applied to repay
the outstanding  principal  amount of the Term Loans with all such repayments to
be deemed to apply  first to repay  Term  Loans  evidenced  by the A Term  Notes
before any  obligations  of the  Borrower  evidenced  by the B Term Notes are so
reduced. The amount of each principal repayment of Term Loans (and the amount of
each reduction to the Term Loan  Commitments)  made as required by said Sections
4.02(c)  through (f),  inclusive,  shall be applied to reduce the then remaining
Scheduled  Repayments  pro rata  based  upon the then  remaining  amount of each
Scheduled  Repayment after giving effect to all prior reductions thereto. To the
extent the amount of any mandatory  repayment  exceeds the  aggregate  principal
amount of Term Loans then  outstanding,  such excess shall be applied (i) first,
to reduce the Total  Revolving Loan  Commitment  and (ii) second,  to reduce the
Total Delayed Draw Commitment.

                  (i) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit  Document,  all then  outstanding  Loans of any
Tranche shall be repaid in full on the respective Maturity Date for such Tranche
of Loans.

                  4.03  Method  and  Place  of  Payment.   Except  as  otherwise
specifically  provided  herein,  all payments  under this Agreement or under any
Note shall be made to the  Administrative  Agent for the  account of the Bank or
Banks entitled thereto not later than 12:30 p.m. (Eastern time) on the date when
due and shall be made in Dollars in immediately  available  funds at the Payment
Office of the Administrative Agent. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a  Business  Day,
the due date thereof shall be extended to the next succeeding  Business Day and,
with respect to payments of  principal,  interest  shall be payable  during such
extension at the applicable rate immediately prior to such extension.

                  4.04 Net Payments. All payments made by the Borrower hereunder
or under any Note will be made without  setoff,  counterclaim  or other defense.
Except as provided in Section  4.04(b),  all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies,  imposts,  duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political  subdivision or
taxing  authority  thereof  or  therein  with  respect  to  such  payments  (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net 

                                      -28-

<PAGE>

income or net profits of a Bank and any taxes imposed  solely on deposits or net
assets of a Bank, in each case pursuant to the laws of the jurisdiction in which
it is organized or the  jurisdiction in which the principal office or applicable
lending  office of such Bank is located or any  subdivision  thereof or therein)
and  all  interest,  penalties  or  similar  liabilities  with  respect  to such
non-excluded taxes, levies, imposts,  duties, fees, assessments or other charges
(all such non-excluded taxes,  levies,  imposts,  duties,  fees,  assessments or
other charges being referred to collectively as "NonExcluded Taxes").  Except as
otherwise provided in Section 4.04(b), if any NonExcluded Taxes are so levied or
imposed,  the Borrower agrees to pay the full amount of such NonExcluded  Taxes,
and such  additional  amounts as may be necessary  so that every  payment of all
amounts  due  under  this  Agreement  or under any Note,  after  withholding  or
deduction for or on account of any NonExcluded  Taxes, will not be less than the
amount  provided  for  herein or in such Note.  If any  amounts  are  payable in
respect of Non-Excluded Taxes pursuant to the preceding  sentence,  the Borrower
agrees to reimburse each Bank,  upon the written request of such Bank, for taxes
imposed on or measured by the net income or net profits of such Bank pursuant to
the laws of the  jurisdiction  in which such Bank is  organized  or in which the
principal  office or applicable  lending office of such Bank is located or under
the  laws  of  any  political  subdivision  or  taxing  authority  of  any  such
jurisdiction in which such Bank is organized or in which the principal office or
applicable  lending  office of such Bank is located and for any  withholding  of
taxes as such Bank shall  determine are payable by, or withheld from, such Bank,
in respect of such amounts so paid to or on behalf of such Bank  pursuant to the
preceding  sentence  and in respect of any amounts  paid to or on behalf of such
Bank pursuant to this sentence.  The Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any NonExcluded  Taxes is due
pursuant to applicable  law  certified  copies of tax receipts  evidencing  such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Bank,  and reimburse such Bank upon its written  request,  for the amount of any
NonExcluded Taxes so levied or imposed and paid by such Bank.

                  (b) Each Bank that is not a United States person (as such term
is defined  in  Section  7701(a)(30)  of the Code) for U.S.  Federal  income tax
purposes  agrees to deliver to the Borrower and the  Administrative  Agent on or
prior to the  Restatement  Effective  Date,  or in the case of a Bank that is an
assignee or transferee of an interest under this  Agreement  pursuant to Section
1.13  or  13.04  (unless  the  respective  Bank  was  already  a Bank  hereunder
immediately  prior  to  such  assignment  or  transfer),  on the  date  of  such
assignment  or transfer to such Bank,  (i) two accurate  and  complete  original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding  tax with  respect to payments to be made under this  Agreement  and
under  any  Note,  or (ii) if the Bank is not a "bank"  within  the  meaning  of
Section  881(c)(3)(A)  of the Code and cannot  deliver either  Internal  Revenue
Service  Form 1001 or 4224  pursuant  to clause  (i)  above,  (x) a  certificate
substantially  in the  form of  Exhibit  D (any  such  certificate,  a  "Section
4.04(b)(ii)  Certificate")  and (y) two accurate and  complete  original  signed
copies of Internal  Revenue Service Form W-8 (or successor  form)  certifying to
such Bank's  entitlement to a complete  exemption from United States withholding
tax with  respect to payments of  interest to be made under this  Agreement  and
under any Note.  In addition,  each Bank agrees that from time to time after the
Restatement  Effective  Date,  when a lapse in time or change  in  circumstances
renders the  previous  certification  obsolete  or  inaccurate  in any  material
respect, it will, promptly 

                                      -29-

<PAGE>

upon request by the  Borrower,  deliver to the  Borrower and the  Administrative
Agent two new accurate and complete  original signed copies of Internal  Revenue
Service Form 4224 or 1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as
the case may be, and such other  forms as may be required in order to confirm or
establish  the  entitlement  of  such  Bank  to a  continued  exemption  from or
reduction in United States  withholding  tax with respect to payments under this
Agreement  and any Note,  or it shall  immediately  notify the  Borrower and the
Administrative  Agent of its  inability to deliver any such Form or  Certificate
because a change in law or change in circumstance eliminates the availability to
the Bank of an  exemption  from United  States  withholding  tax with respect to
payments to be made under this  Agreement  or any Note,  in which case such Bank
shall not be required to deliver any such Form or  Certificate  pursuant to this
Section 4.04(b).  Notwithstanding  anything to the contrary contained in Section
4.04(a), but subject to Section 13.04(b), (x) the Borrower shall be entitled, to
the  extent it is  required  to do so by law,  to deduct or  withhold  income or
similar  taxes imposed by the United  States (or any  political  subdivision  or
taxing  authority  thereof or  therein)  from  interest,  Fees or other  amounts
payable  hereunder  for the  account  of any Bank  which is not a United  States
person (as such term is defined  in  Section  7701(a)(30)  of the Code) for U.S.
Federal income tax purposes to the extent that such Bank has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete exemption
from such deduction or  withholding  and (y) the Borrower shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up  payments to be made to a Bank in
respect of income or similar taxes imposed by the United States if (I) such Bank
has not provided to the Borrower the Internal  Revenue Service Forms required to
be provided to the Borrower pursuant to this Section 4.04(b) or (II) in the case
of a payment,  other than interest, to a Bank described in clause (ii) above, to
the  extent  that  such  Forms  do  not  establish  a  complete  exemption  from
withholding of such taxes.

                  SECTION 5. Conditions  Precedent.  The obligation of each Bank
to make  Loans,  and the  obligation  of any  Issuing  Bank to issue  Letters of
Credit, on the Restatement  Effective Date, is subject at the time of the making
of such Loans or the issuance of such Letters of Credit to the  satisfaction  of
the following conditions:

                  5.01 Execution of Agreement;  Notes. The Restatement Effective
Date shall have  occurred and there shall have been  delivered to the Agents for
the account of each of the Banks the  appropriate  Term Notes  and/or  Revolving
Note executed by the Borrower and to the  Swingline  Bank,  the  Swingline  Note
executed by the Borrower, in each case in the amount,  maturity and otherwise as
provided herein.

                  5.02 Officer's Certificate. On the Restatement Effective Date,
the Agents shall have received a certificate,  dated the  Restatement  Effective
Date and signed on behalf of the Borrower by the President or any Vice President
of the Borrower, stating that all of the conditions in Sections 5.06, 5.07, 5.08
and 6.01 have been satisfied on such date.

                  5.03 Opinions of Counsel.  On the Restatement  Effective Date,
the Agents shall have received  from (i)  Dickstein,  Shapiro,  Morin & Oshinsky
LLP, counsel to the Credit Parties,  an opinion addressed to the Agents and each
of the Banks and dated the Restatement  Effective Date, covering the matters set
forth  in  Exhibit  E and  such  other  matters  incident  to  the  

                                      -30-

<PAGE>

transactions  contemplated  herein as any Agent may reasonably  request and (ii)
local counsel  (reasonably  satisfactory to the Agents) opinions,  each of which
shall  (x) be  addressed  to the  Agents  and each of the  Banks  and  dated the
Restatement Effective Date, (y) be in form and substance reasonably satisfactory
to the Agents and (z) cover the  perfection  of the security  interests  granted
pursuant  to the  Security  Documents  and such other  matters  incident  to the
transactions contemplated hereby as any Agent may reasonably request.

                  5.04  Corporate  Documents;   Proceedings;  etc.  (a)  On  the
Restatement  Effective  Date, the Agents shall have received a certificate  from
each Credit Party, dated the Restatement Effective Date, signed by the President
or any Vice President of such Credit Party,  and attested to by the Secretary or
any  Assistant  Secretary  of such Credit  Party,  in the form of Exhibit F with
appropriate insertions, together with copies of the certificate of incorporation
(or equivalent organizational document) and by-laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate,  and each such
certificate  of  incorporation  and by-laws shall be in the form provided to the
Agents  prior to the  Restatement  Effective  Date or in such  other  form as is
reasonably  acceptable to the Agents, and the foregoing  resolutions shall be in
form and substance reasonably acceptable to the Agents.

                  (b) All corporate and legal  proceedings  and all  instruments
and  agreements  in  connection  with  the  transactions  contemplated  by  this
Agreement and the other Documents  shall be reasonably  satisfactory in form and
substance to the Agents,  and the Agents shall have received all information and
copies of all documents and papers,  including records of corporate proceedings,
governmental  approvals,  good standing certificates and bring-down telegrams or
facsimiles,  if any, which any Agent may have requested in connection therewith,
such documents and papers where  appropriate to be certified by proper corporate
or governmental authorities.

                  5.05  Employee   Benefit  Plans;   Shareholders'   Agreements;
Management Agreements;  Collective Bargaining Agreements;  Existing Indebtedness
Agreements. On or prior to the Restatement Effective Date, there shall have been
made available for review by the Agents true and correct copies of the following
documents:  

                  (i) all Plans (and for each Plan that is  required  to file an
         annual report on Internal Revenue Service Form  5500-series,  a copy of
         the most recent such report  (including,  to the extent  required,  the
         related  financial  and  actuarial  statements  and  opinions and other
         supporting statements, certifications,  schedules and information), and
         for each Plan that is a  "single-employer  plan," as defined in Section
         4001(a)(15) of ERISA, the most recently  prepared  actuarial  valuation
         therefor) and any other "employee benefit plans", as defined in Section
         3(3)  of  ERISA,   and  any  other   material   agreements,   plans  or
         arrangements, with or for the benefit of current or former employees of
         the  Borrower  or any  of  its  Subsidiaries  or  any  ERISA  Affiliate
         (collectively, the "Employee Benefit Plans");

                  (ii) all material  agreements  entered into by the Borrower or
         any of its Subsidiaries  governing the terms and relative rights of its
         capital stock and any 

                                      -31-

<PAGE>

         agreements  entered  into by  shareholders  relating to any such entity
         with respect to its capital  stock  (collectively,  the  "Shareholders'
         Agreements");

                  (iii) all material agreements with members of, or with respect
         to, the senior  management and management of the Borrower or any of its
         Subsidiaries (collectively, the "Management Agreements");

                  (iv) all collective bargaining agreements applying or relating
         to  any   employee  of  the   Borrower  or  any  of  its   Subsidiaries
         (collectively, the "Collective Bargaining Agreements");

                  (v) all agreements  evidencing or relating to  Indebtedness of
         the Borrower or any of its Subsidiaries  which is to remain outstanding
         after  giving  effect  to the  incurrence  of Loans on the  Restatement
         Effective  Date to the extent  such  Indebtedness  exceeds (or upon the
         utilization   of  any   unused   commitments   may   exceed)   $250,000
         (collectively, the "Existing Indebtedness Agreements"); and

                  (vi)  all  tax  sharing,  tax  allocation  and  other  similar
         agreements  entered  into by the  Borrower  or any of its  Subsidiaries
         (collectively, the "Tax Sharing Agreements").

all of  which  Employee  Benefit  Plans,  Shareholders'  Agreements,  Management
Agreements,  Collective Bargaining Agreements,  Existing Indebtedness Agreements
and Tax Sharing  Agreements shall be in full force and effect on the Restatement
Effective Date.

                  5.06  Indebtedness;  Original  Credit  Agreement.  (a)  On the
Restatement  Effective Date and after giving effect to the Loans incurred on the
Restatement  Effective  Date,  neither the Borrower nor any of its  Subsidiaries
shall have any Indebtedness  outstanding  except for (x) the Obligations and (y)
the Existing Indebtedness.  The Agents shall have received evidence, in form and
substance  reasonably  satisfactory  to them,  that the matters set forth in the
immediately  preceding  sentence  have  been  satisfied  as of  the  Restatement
Effective Date.

                  (b) On the  Restatement  Effective  Date,  all Loans under the
Original Credit Agreement shall have been repaid in full, together with interest
thereon and all accrued but unpaid  Fees,  in each case  whether or not then due
and payable. In addition,  the Borrower shall have reimbursed each Bank party to
the Original Credit Agreement for any amounts owing pursuant to Section 1.11(b).

                  5.07 Adverse  Change,  etc. (a) On or prior to the Restatement
Effective  Date,  nothing  shall have occurred (and the Agents shall have become
aware of no facts or conditions not previously known) which is reasonably likely
to have a material  adverse effect on the rights or remedies of the Banks or the
Agents,  or on the ability of the Borrower or its  Subsidiaries to perform their
obligations  to the Banks or which is  reasonably  likely  to have a  materially
adverse  effect  on  the  business,  property,  assets,  liabilities,  condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a  whole,  in each  case  after  giving  effect  to the  consummation  of the
Transaction.

                                      -32-

<PAGE>

                  (b) All necessary  governmental approvals and/or consents, all
necessary  shareholder and board of director approvals and/or consents,  in each
case in connection with the Transaction and the other transactions  contemplated
by the  Documents  and  otherwise  referred to herein or therein shall have been
obtained and remain in effect,  and all applicable  waiting periods with respect
thereto  shall have  expired  without any action  being  taken by any  competent
authority which restrains,  prevents or imposes  materially  adverse  conditions
upon, the consummation of the Transaction or the other transactions contemplated
by  the  Credit   Documents  or   otherwise   referred  to  herein  or  therein.
Additionally,  there shall not exist any  judgment,  order,  injunction or other
restraint  issued  or filed or a  hearing  seeking  injunctive  relief  or other
restraint  pending  or  notified  prohibiting  or  imposing  materially  adverse
conditions  upon the Transaction or the other  transactions  contemplated by the
Credit Documents.

                  5.08  Litigation.   On  the  Restatement  Effective  Date,  no
litigation  by  any  entity  (private  or  governmental)  shall  be  pending  or
threatened (i) with respect to the  Transaction or any Document or (ii) which is
reasonably likely to have a material adverse effect on the rights or remedies of
the Banks or the Agents,  or on the ability of the Borrower or its  Subsidiaries
to perform their  obligations to the Banks or which is reasonably likely to have
a materially  adverse  effect on the business,  property,  assets,  liabilities,
condition  (financial  or  otherwise)  or  prospects  of the  Borrower  and  its
Subsidiaries  taken  as a  whole,  in  each  case  after  giving  effect  to the
consummation of the Transaction.

                  5.09 Pledge Agreement. On the Restatement Effective Date, each
Credit  Party shall have duly  authorized,  executed  and  delivered  the Pledge
Agreement in the form of Exhibit G (as amended,  modified or  supplemented  from
time to time, the "Pledge Agreement") and shall have delivered to the Collateral
Agent, as Pledgee thereunder, all of the Pledged Securities, if any, referred to
therein  then owned by such Credit  Party,  (x) endorsed in blank in the case of
promissory notes constituting  Pledged Securities and (y) together with executed
and  undated  stock  powers in the case of capital  stock  constituting  Pledged
Securities.

                  5.10 Security  Agreement.  On the Restatement  Effective Date,
each  Credit  Party  shall have duly  authorized,  executed  and  delivered  the
Security  Agreement  in the form of  Exhibit  H (as  modified,  supplemented  or
amended from time to time, the "Security Agreement") covering all of such Credit
Party's present and future Security Agreement Collateral, together with:

                  (i) proper Financing Statements (Form UCC-1 or the equivalent)
         fully  executed  for filing under the UCC or other  appropriate  filing
         offices of each  jurisdiction as may be necessary or, in the reasonable
         opinion of the  Collateral  Agent,  desirable  to perfect the  security
         interests purported to be created by the Security Agreement;

                  (ii)  copies of  Requests  for  Information  or  Copies  (Form
         UCC-11),  or  equivalent  reports,   listing  all  effective  financing
         statements  that name any Credit  Party as debtor and that are filed in
         the jurisdictions referred to in clause (i) above, together with copies
         of such other financing statements that name any Credit Party as debtor
         (none  of  which  shall  cover  the  Collateral  except  to the  extent
         evidencing  Permitted Liens or in 

                                      -33-

<PAGE>

         respect of which the Collateral  Agent shall have received  termination
         statements (Form UCC-3) or such other  termination  statements as shall
         be required by local law fully executed for filing); and

                  (iii)  evidence  that all other  actions  necessary or, in the
         reasonable  opinion of the Collateral  Agent,  desirable to perfect and
         protect the security interests  purported to be created by the Security
         Agreement  have  been (or  within  10 days  following  the  Restatement
         Effective Date will be) taken.

                  5.11 Subsidiaries Guaranty. On the Restatement Effective Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered the
Subsidiaries  Guaranty  in the  form  of  Exhibit  I (as  amended,  modified  or
supplemented from time to time, the "Subsidiaries Guaranty").

                  5.12  Mortgages;   Title  Insurance;   Survey;   etc.  On  the
Restatement Effective Date, the Collateral Agent shall have received:

                  (i)  fully   executed   counterparts   of  amendments  to  the
         Mortgages, in form and substance reasonably satisfactory to the Agents,
         which  Mortgages  shall  cover the  Mortgaged  Properties  owned by the
         Credit  Parties on the  Restatement  Effective  Date as  designated  on
         Schedule  III,   together  with  evidence  that  counterparts  of  such
         Mortgages and  amendments  have been  delivered to the title  insurance
         company insuring the Lien of such Mortgages for recording in all places
         to the extent necessary or, in the reasonable opinion of the Collateral
         Agent,  desirable,  to effectively create a valid and enforceable first
         priority mortgage lien on each such Mortgaged  Property in favor of the
         Collateral  Agent (or such other  trustee as may be required or desired
         under local law) for the benefit of the Secured Creditors;

                  (ii) a mortgagee title insurance policy on each such Mortgaged
         Property  issued  by a title  insurer  reasonably  satisfactory  to the
         Agents (the "Mortgage  Policies") in amounts satisfactory to the Agents
         assuring the  Collateral  Agent that the Mortgages (as amended) on such
         Mortgaged  Properties are valid and enforceable first priority mortgage
         liens on the  respective  Mortgaged  Properties,  free and clear of all
         defects  and  encumbrances  except  Permitted   Encumbrances  and  such
         Mortgage  Policies shall otherwise be in form and substance  reasonably
         satisfactory  to the  Agents  and shall  include,  as  appropriate,  an
         endorsement  for future advances under this Agreement and the Notes and
         for any other matter that any Agent in its  reasonable  discretion  may
         reasonably request,  shall not include (to the extent permissible under
         applicable  state law) an exception  for  mechanics'  liens,  and shall
         provide for affirmative  insurance and such reinsurance as any Agent in
         its discretion may reasonably request;

                  (iii) a survey, in form and substance reasonably  satisfactory
         to the Agents, of each such Mortgaged Property, certified by a licensed
         professional surveyor reasonably satisfactory to the Agents; and

                                      -34-

<PAGE>


                  (iv) such landlord waivers and/or estoppel certificates as any
         Agent may have  reasonably  required,  which  landlord  waivers  and/or
         estoppel  certificates  shall  be  in  form  and  substance  reasonably
         satisfactory to the Agents.

                  5.13 Projections;  Pro Forma Balance Sheet. On or prior to the
Restatement  Effective  Date,  the  Agents  shall  have  received  copies of the
financial  statements   (including  the  pro  forma  financial  statements)  and
Projections referred to in Sections 7.05(a) and (d).

                  5.14  Solvency  Certificate;  Insurance  Certificates.  On the
Restatement Effective Date, the Borrower shall have delivered to the Agents:

                  (i) a solvency certificate from the Chief Financial Officer of
         the Borrower in the form of Exhibit J; and

                  (ii) certificates of insurance complying with the requirements
         of Section 8.03 for the business and properties of the Borrower and its
         Subsidiaries,  in form and  substance  satisfactory  to the  Agents and
         naming the Collateral Agent as an additional insured and as loss payee,
         and stating that such insurance shall not be cancelled without at least
         30 days prior written notice by the insurer to the Collateral Agent (or
         such shorter period of time as a particular insurance company generally
         provides).

                  5.15  Fees,  etc.  On  the  Restatement  Effective  Date,  the
Borrower  shall  have  paid to the  Agents  and each  Bank all  costs,  fees and
expenses (including, without limitation, legal fees and expenses) payable to the
Agents and such Bank to the extent then due.

                  SECTION 6.  Conditions  Precedent  to All Credit  Events.  The
obligation of each Bank to make Loans  (including  Loans made on the Restatement
Effective  Date),  and the obligation of any Issuing Bank to issue any Letter of
Credit (including  Letters of Credit issued on the Restatement  Effective Date),
is  subject,  at the time of each  such  Credit  Event  (except  as  hereinafter
indicated), to the satisfaction of the following conditions:

                  6.01 No Default;  Representations and Warranties.  At the time
of each such Credit Event and also after giving  effect  thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained  herein or in the other Credit  Documents shall be true and correct in
all material  respects with the same effect as though such  representations  and
warranties  had been made on the date of such Credit Event (it being  understood
and agreed that any  representation or warranty which by its terms is made as of
a  specified  date shall be  required  to be true and  correct  in all  material
respects only as of such specified date).

                  6.02 Notice of Borrowing;  Letter of Credit Request.  Prior to
the making of each Loan (other than a  Swingline  Loan or a Revolving  Loan made
pursuant to a Mandatory Borrowing), the Administrative Agent shall have received
a Notice of Borrowing meeting the requirements of Section 1.03(a).  Prior to the
making of each Swingline Loan, the Swingline Bank shall have received the notice
referred to in Section 1.03(b)(i).

                                      -35-

<PAGE>

                  (b)  Prior to the  issuance  of each  Letter  of  Credit,  the
Administrative  Agent and the  respective  Issuing  Bank shall  have  received a
Letter of Credit Request meeting the requirements of Section 2.03.

                  The  acceptance of the proceeds of each Loan and the making of
each Letter of Credit Request shall constitute a representation  and warranty by
the  Borrower  to the  Agents  and each of the  Banks  that  all the  conditions
specified  in  Section  5 (with  respect  to Credit  Events  on the  Restatement
Effective  Date) and in this  Section 6 (with  respect  to Credit  Events on and
after the Restatement  Effective Date) and applicable to such Credit Event exist
as of that  time.  All of the  Notes,  certificates,  legal  opinions  and other
documents  and papers  referred  to in Section 5 and in this  Section 6,  unless
otherwise  specified,  shall be  delivered  to the  Administrative  Agent at the
Notice Office for the account of each of the Banks and, except for the Notes, in
sufficient counterparts or copies for each of the Banks and shall be in form and
substance reasonably satisfactory to the Agents and the Required Banks.

                  SECTION 7.  Representations,  Warranties  and  Agreements.  In
order to induce  the Banks to enter into this  Agreement  and to make the Loans,
and issue (or  participate  in) the  Letters of Credit as provided  herein,  the
Borrower makes the following representations, warranties and agreements, in each
case after  giving  effect to the  Transaction,  all of which shall  survive the
execution  and  delivery of this  Agreement  and the Notes and the making of the
Loans and issuance of the Letters of Credit,  with the occurrence of each Credit
Event on or after the  Restatement  Effective  Date being deemed to constitute a
representation  and  warranty  that the matters  specified in this Section 7 are
true and correct in all material respects on and as of the Restatement Effective
Date and on the date of each such Credit Event (it being  understood  and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct only as of such specified date).

                  7.01 Corporate and Other Status. Each Credit Party and each of
its  Subsidiaries  (i) is a duly organized and validly  existing  corporation or
partnership,  as the  case  may  be,  in good  standing  under  the  laws of the
jurisdiction of its  organization,  (ii) has the corporate or partnership  power
and  authority  to own its  property  and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized  to do business and is in good  standing in each  jurisdiction
where the ownership,  leasing or operation of its property or the conduct of its
business  requires  such  qualifications  except for failures to be so qualified
which,  individually  or in the  aggregate,  could not reasonably be expected to
have a material adverse effect on the business,  operations,  property,  assets,
liabilities,  condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.

                  7.02  Corporate  and Other  Power and  Authority.  Each Credit
Party has the corporate or partnership  power and authority to execute,  deliver
and perform the terms and  provisions  of each of the  Documents  to which it is
party and has taken all necessary  corporate or partnership  action to authorize
the execution,  delivery and performance by it of each of such  Documents.  Each
Credit Party has duly executed and  delivered  each of the Documents to which it
is party,  and each of such Documents  constitutes its legal,  valid and binding
obligation  

                                      -36-

<PAGE>

enforceable  in  accordance  with  its  terms,  except  to the  extent  that the
enforceability  thereof  may be limited by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium or other similar laws generally affecting creditors'
rights and by equitable principles  (regardless of whether enforcement is sought
in equity or at law).

                  7.03  No  Violation.   Neither  the  execution,   delivery  or
performance  by any Credit Party of the  Documents  to which it is a party,  nor
compliance by it with the terms and provisions thereof,  (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality,  (ii) will conflict with
or result in any breach of any of the terms, covenants, conditions or provisions
of, or  constitute a default  under,  or result in the creation or imposition of
(or the  obligation  to create  or  impose)  any Lien  (except  pursuant  to the
Security Documents) upon any of the property or assets of the Borrower or any of
its  Subsidiaries  pursuant  to the terms of any  indenture,  mortgage,  deed of
trust,  credit  agreement or loan  agreement,  or any other material  agreement,
contract or instrument,  to which the Borrower or any of its  Subsidiaries  is a
party or by which it or any of its  property  or  assets is bound or to which it
may be  subject  or (iii) will  violate  any  provision  of the  certificate  of
incorporation,  by-laws or partnership  agreement (or equivalent  organizational
documents) of the Borrower or any of its Subsidiaries.

                  7.04  Approvals.  (a) No order,  consent,  approval,  license,
authorization  or  validation  of, or filing,  recording  or  registration  with
(except for those that have  otherwise  been obtained or made on or prior to the
Restatement  Effective  Date and which  remain in full  force and  effect on the
Restatement Effective Date, or to the extent not required to be obtained or made
on or prior to the Restatement Effective Date, as will be obtained or made on or
prior to the required  date  therefor),  or exemption  by, any  governmental  or
public body or authority,  or any subdivision thereof, is required to authorize,
or is required in connection  with, (i) the execution,  delivery and performance
of any Document or (ii) the legality, validity, binding effect or enforceability
of any such Document.

                  (b) All necessary  shareholder and board of director approvals
and/or consents and all material third party  non-governmental  approvals and/or
consents  required to be obtained by the Borrower,  SKL or any Credit Party,  in
each case in connection  with the  Transaction  and the execution,  delivery and
performance  of any Document have been  obtained by the  Borrower,  SKL and each
Credit  Party and remain in full force and effect on the  Restatement  Effective
Date.

                  7.05 Financial  Statements;  Financial Condition;  Undisclosed
Liabilities;  Projections;  etc. The consolidated  balance sheet of the Borrower
and its  Subsidiaries  at  September  30,  1997 and  September  30, 1998 and the
related  consolidated  statements of  operations,  cash flows and  shareholders'
equity of the Borrower and its  Subsidiaries  for the fiscal years ended on such
dates,  respectively,  copies of which have been furnished to the Banks prior to
the  Restatement  Effective Date,  present fairly the financial  position of the
Borrower and its Subsidiaries at the date of such balance sheets and the results
of the operations of the Borrower and its  Subsidiaries  for the periods covered
thereby.  After giving effect to the Transaction  (but for this purpose assuming
that the Transaction had occurred prior to September 30, 1998),  since September
30, 1998, there has been no material adverse change in the business, operations,

                                      -37-

<PAGE>

property, assets,  liabilities,  condition (financial or otherwise) or prospects
of the Borrower or the Borrower and its Subsidiaries taken as a whole.

                  (b) (i) On and as of the Restatement  Effective Date and after
giving effect to the Transaction and to all  Indebtedness  (including the Loans)
being  incurred or assumed and Liens created by the Credit Parties in connection
therewith,  (a)  the  sum of the  assets,  at a fair  valuation,  of each of the
Borrower on a stand alone basis and of the Borrower and its  Subsidiaries  taken
as a whole will  exceed its debts;  (b) each of the  Borrower  on a stand  alone
basis and the  Borrower and its  Subsidiaries  taken as a whole has not incurred
and does not intend to incur,  and does not believe that they will incur,  debts
beyond their ability to pay such debts as such debts mature; and (c) each of the
Borrower on a stand alone basis and the Borrower and its Subsidiaries taken as a
whole will have  sufficient  capital  with which to conduct  its  business.  For
purposes of this Section  7.05(b),  "debt" means any  liability on a claim,  and
"claim"  means (i) right to  payment,  whether or not such a right is reduced to
judgment,  liquidated,  unliquidated,  fixed,  contingent,  matured,  unmatured,
disputed,  undisputed,  legal, equitable, secured, or unsecured or (ii) right to
an  equitable  remedy for breach of  performance  if such breach gives rise to a
payment,  whether  or not such  right  to an  equitable  remedy  is  reduced  to
judgment, fixed, contingent,  matured, unmatured,  disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances  existing at
such time,  represents  the amount that can  reasonably be expected to become an
actual or matured liability.

                  (c)  Except as fully  disclosed  in the  financial  statements
delivered pursuant to Section 7.05(a) there were as of the Restatement Effective
Date no liabilities  or  obligations  with respect to the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute,  accrued, contingent or
otherwise and whether or not due) which,  either  individually  or in aggregate,
could  reasonably  be  expected  to have a material  and  adverse  effect on the
Borrower and its Subsidiaries taken as a whole. As of the Restatement  Effective
Date,  the Borrower does not know of any basis for the  assertion  against it or
any of its Subsidiaries of any liability or obligation of any nature  whatsoever
that is not fully disclosed in the financial  statements  delivered  pursuant to
Section 7.05(a) which, either individually or in the aggregate, could reasonably
be expected to be material to the Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  (d)  On  and  as  of  the  Restatement   Effective  Date,  the
Projections  delivered  to the  Agents  and the Banks  prior to the  Restatement
Effective  Date have been  prepared  in good  faith and are based on  reasonable
assumptions.  On the Restatement  Effective Date, the Borrower believes that the
Projections are  reasonable,  it being  understood that the Projections  include
assumptions  as to  future  events  that are not to be  viewed as facts and that
actual results may differ from the projected results and such differences may be
material.

                  7.06  Litigation.  There are no actions,  suits or proceedings
pending or, to the best  knowledge of the Borrower,  threatened (i) with respect
to any Document or (ii) that are  reasonably  likely to materially and adversely
affect  the  business,  operations,  property,  assets,

                                      -38-

<PAGE>

liabilities,  condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.

                  7.07 True and  Complete  Disclosure.  All factual  information
(taken as a whole)  furnished by any Credit Party in writing to any Agent or any
Bank (including, without limitation, all information contained in the Documents)
for purposes of or in connection with this Agreement, the other Credit Documents
or any transaction contemplated herein or therein is, and all other such factual
information  hereafter  furnished by or on behalf of any Credit Party in writing
to any Agent or any Bank will be, true and accurate in all material  respects on
the date as of which such  information  is dated or certified and not incomplete
by omitting to state any fact necessary to make such  information not misleading
in any material respect at such time in light of the  circumstances  under which
such information was provided.

                  7.08 Use of Proceeds; Margin Regulations.  (a) All proceeds of
the Term Loans will be used by the Borrower (i) to refinance Indebtedness of the
Borrower  outstanding  under the  Original  Credit  Agreement,  (ii) to  finance
payment  of the  Earnout  and  (iii)  to pay fees and  expenses  related  to the
Transaction.

                  (b) The  proceeds  of all  Revolving  Loans and all  Swingline
Loans will be used for the Borrower's and its  Subsidiaries'  general  corporate
and working capital purposes.

                  (c) No part of any Credit Event (or the proceeds thereof) will
be used to  purchase  or carry  any  Margin  Stock or to extend  credit  for the
purpose of purchasing  or carrying any Margin  Stock.  Neither the making of any
Loan nor the use of the proceeds  thereof nor the occurrence of any other Credit
Event will violate or be inconsistent  with the provisions of Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System.

                  7.09 Tax Returns and  Payments.  Each of the Borrower and each
of its  Subsidiaries  has filed all  federal  income tax  returns  and all other
material tax returns,  domestic and foreign,  required to be filed by it and has
paid all  material  taxes and  assessments  payable by it which have become due,
except for those  contested  in good faith and  adequately  disclosed  and fully
provided for on the financial statements of the Borrower and its Subsidiaries in
accordance with generally accepted accounting principles.  The Borrower and each
of its Subsidiaries  have at all times paid, or have provided  adequate reserves
(in the good faith  judgment of the  management of the Borrower) for the payment
of, all federal,  state and foreign income taxes applicable for all prior fiscal
years and for the  current  fiscal year to date.  There is no  material  action,
suit,  proceeding,  investigation,  audit,  or  claim  now  pending  or,  to the
knowledge  of  the  Borrower  or  any of  its  Subsidiaries,  threatened  by any
authority   regarding  any  taxes  relating  to  the  Borrower  or  any  of  its
Subsidiaries.  Neither the Borrower nor any of its Subsidiaries has entered into
an  agreement  or waiver or been  requested to enter into an agreement or waiver
extending  any statute of  limitations  relating to the payment or collection of
taxes  of  the  Borrower  or  any  of  its  Subsidiaries,  or is  aware  of  any
circumstances that would cause the taxable years or other taxable periods of the
Borrower or any of its Subsidiaries not to be subject to the normally applicable
statute of limitations.

                                      -39-

<PAGE>

                  7.10 Compliance with ERISA. (i) Each Plan and to the knowledge
of the  Borrower  each  Multiemployer  Plan (and each related  trust,  insurance
contract  or fund) is in  substantial  compliance  with its  terms  and with all
applicable laws,  including,  without limitation,  ERISA and the Code; each Plan
and to the knowledge of the Borrower each  Multiemployer  Plan (and each related
trust,  if any) which is intended to be qualified  under  Section  401(a) of the
Code has received a  determination  letter from the Internal  Revenue Service to
the effect that it meets the  requirements  of Sections 401(a) and 501(a) of the
Code; no Reportable  Event has occurred with respect to a Plan; to the knowledge
of the Borrower,  no Multiemployer  Plan is insolvent or in  reorganization;  no
Plan has an Unfunded  Current  Liability;  no Plan and to the  knowledge  of the
Borrower  no  Multiemployer  Plan which is subject to Section 412 of the Code or
Section 302 of ERISA has an accumulated funding  deficiency,  within the meaning
of such  sections of the Code or ERISA,  or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period,
within the  meaning of Section  412 of the Code or Section  303 or 304 of ERISA;
all material  contributions  required to be made by the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate with respect to a Plan or a Multiemployer
Plan have been timely  made;  neither the  Borrower  nor any  Subsidiary  of the
Borrower nor any ERISA Affiliate has incurred any material liability  (including
any  indirect or  secondary  liability)  to or on account of a Plan  pursuant to
Section  409,  502(i),  502(l),  4062,  4063,  4064 or 4069 of ERISA or  Section
401(a)(29),  4971 or 4975 of the  Code or  expects  to incur  any such  material
liability  under any of the foregoing  sections with respect to any Plan; to the
knowledge  of the  Borrower  and its  Subsidiaries,  no  condition  exists which
presents a material  risk to the Borrower or any  Subsidiary  of the Borrower or
any ERISA Affiliate of incurring a material liability to or on account of a Plan
pursuant to the foregoing  provisions of ERISA and the Code; no proceedings have
been  instituted to terminate or appoint a trustee to administer  any Plan which
is subject to Title IV of ERISA; no action, suit, proceeding,  hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than  routine  claims for  benefits) is pending or, to
the knowledge of the Borrower and its Subsidiaries,  threatened; using actuarial
assumptions  and  computation  methods  consistent  with Part 1 of subtitle E of
Title  IV  of  ERISA,  the  aggregate   liabilities  of  the  Borrower  and  its
Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the event of
a complete withdrawal therefrom,  as of the close of the most recent fiscal year
of each such Plan ended prior to the date of this  Agreement and with respect to
fiscal years ended prior to the date of each Credit Event would not be material;
each  group  health  plan (as  defined  in  Section  607(1) of ERISA or  Section
4980B(g)(2)  of the  Code)  which  covers  or has  covered  employees  or former
employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
has at all times been operated in substantial  compliance with the provisions of
Part 6 of subtitle B of Title I of ERISA and Section  4980B of the Code; no lien
imposed under the Code or ERISA on the assets of the Borrower or any  Subsidiary
of the Borrower or any ERISA  Affiliate  exists or is likely to arise on account
of any Plan;  neither the  Borrower nor any  Subsidiary  of the Borrower nor any
ERISA Affiliate has incurred any material  liability  (including any indirect or
secondary  liability)  under  Sections  515,  4201,  4202 or 4212 of ERISA  with
respect  to any  Multiemployer  Plan;  to the  knowledge  of  the  Borrower,  no
condition  exists  which  presents  a  material  risk  to  the  Borrower  or any
Subsidiary  of the  Borrower  or any ERISA  Affiliate  of  incurring  a material
liability to or on account of a  Multiemployer  Plan  pursuant to the  foregoing
provisions of ERISA; to the knowledge of the Borrower and its  Subsidiaries,  no
action, suit, proceeding, hearing, audit or

                                      -40-

<PAGE>

investigation with respect to the administration, operation or the investment of
assets of any  Multiemployer  Plan (other than routine claims for benefits) that
could  reasonably be expected to be material to the Borrower or the Borrower and
its Subsidiaries taken as a whole is pending or threatened; and the Borrower and
its  Subsidiaries do not maintain or contribute to any employee  welfare benefit
plan (as defined in Section 3(1) of ERISA),  which provides  benefits to retired
employees  or other former  employees  (other than as required by Section 601 of
ERISA) or any Plan or Multiemployer  Plan, the obligations with respect to which
could reasonably be expected to have a material adverse effect on the ability of
the Borrower or any of its Subsidiaries to perform their respective  obligations
under the Credit Documents.

                  (ii) To the  knowledge of the  Borrower and its  Subsidiaries,
each Foreign Pension Plan has been maintained in substantial compliance with its
terms and with the requirements of any and all applicable laws, statutes, rules,
regulations and orders and has been maintained, where required, in good standing
with applicable regulatory  authorities.  All material contributions required to
be made with respect to a Foreign  Pension  Plan have been timely made.  Neither
the Borrower nor any of its Subsidiaries has incurred any material obligation in
connection  with the termination of or withdrawal from any Foreign Pension Plan.
The Borrower and its  Subsidiaries  do not maintain or contribute to any Foreign
Pension Plan the obligations  with respect to which could reasonably be expected
to have a material adverse effect on the ability of the Borrower or the Borrower
and its  Subsidiaries  taken as a whole to perform their  obligations  under the
Credit Documents.

                  7.11  The  Security  Documents.  (a)  The  provisions  of  the
Security  Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Secured  Creditors a legal,  valid and  enforceable  security
interest in all right, title and interest of the Credit Parties party thereto in
the Security Agreement  Collateral  described therein, and the Collateral Agent,
for the benefit of the Secured  Creditors,  has a fully  perfected  lien on, and
security  interest  in, all right,  title and  interest  in all of the  Security
Agreement  Collateral  described  therein,  subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security  Interest in U.S.
Patents and  Trademarks  in the form  attached to the Security  Agreement in the
United States Patent and  Trademark  Office  together with filings on Form UCC-1
made pursuant to the Security Agreement will create, as may be perfected by such
filing and recordation,  a perfected security interest granted to the Collateral
Agent in the  trademarks and patents  covered by the Security  Agreement and the
recordation  of the  Assignment of Security  Interest in U.S.  Copyrights in the
form attached to the Security  Agreement with the United States Copyright Office
together with filings on Form UCC-1 made pursuant to the Security Agreement will
create, as may be perfected by such filing and recordation, a perfected security
interest  granted  to the  Collateral  Agent in the  copyrights  covered  by the
Security Agreement.

                  (b) The security  interests created in favor of the Collateral
Agent, as Pledgee,  for the benefit of the Secured  Creditors,  under the Pledge
Agreement  constitute first priority perfected security interests in the Pledged
Securities  described in the Pledge Agreement,  subject to no security interests
of any other Person.  No filings or recordings  are required in order to perfect
(or maintain the  perfection or priority of) the security  interests  created in
the Pledged Securities under the Pledge Agreement.

                                      -41-

<PAGE>

                  (c) The Mortgages create, for the obligations  purported to be
secured  thereby,  a valid and enforceable  perfected  security  interest in and
mortgage  lien on all of the  Mortgaged  Properties  in favor of the  Collateral
Agent (or such other  trustee as may be required or desired under local law) for
the benefit of the Secured Creditors, superior to and prior to the rights of all
third  persons  (except that the security  interest and mortgage lien created in
the Mortgaged  Properties may be subject to the Permitted  Encumbrances  related
thereto) and subject to no other Liens (other than Liens permitted under Section
9.01).  Schedule III  contains a true and  complete  list of each parcel of Real
Property owned or leased by the Borrower and its Subsidiaries on the Restatement
Effective  Date,  and the type of interest  therein held by the Borrower or such
Subsidiary.  The  Borrower  and  each of its  Subsidiaries  have  (i)  good  and
marketable  title to all  fee-owned  Real  Property  free and clear of all Liens
except those  described in the first  sentence of this  subsection  (c) and (ii)
valid leasehold title to all Leaseholds.

                  7.12 Representations and Warranties in Acquisition  Documents.
All representations  and warranties set forth in the Acquisition  Documents were
true and  correct at the time as of which such  representations  and  warranties
were (or are) made (or deemed made),  except for such inaccuracies which, either
individually or in the aggregate,  are not reasonably  likely to have a material
adverse  effect  on  the  business,  operations,   property,  assets,  condition
(financial or otherwise) or prospects of the Acquired Business.

                  7.13  Properties.  The Borrower  and each of its  Subsidiaries
have  good  and  marketable  title  to all  material  properties  owned by them,
including all material  property  reflected in the balance sheets referred to in
Section  7.05(a),  free and clear of all Liens,  other than Liens  permitted  by
Section 9.01.

                  7.14  Capitalization.  On the Restatement  Effective Date, the
authorized capital stock of the Borrower shall consist of (i) 100,000,000 shares
of common stock,  $.01 par value per share, of which  14,271,000  shares of such
common stock are issued and outstanding  and (ii) 1,500,000  shares of preferred
stock,  $.01 par value per value,  none of which shares of such preferred  stock
are  issued or  outstanding.  All  outstanding  shares of  capital  stock of the
Borrower have been duly and validly  issued,  are fully paid and  nonassessable.
Except  for  options  or  warrants  to  purchase  shares of common  stock of the
Borrower  held  by  employees  and  directors  of  the  Borrower  or  any of its
Subsidiaries,  as of the Restatement  Effective Date, the Borrower does not have
outstanding  any securities  convertible  into or  exchangeable  for its capital
stock or outstanding any rights to subscribe for or to purchase,  or any options
for the purchase of, or any agreement providing for the issuance  (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to,
its capital stock.

                  7.15 Subsidiaries.  As of the Restatement  Effective Date, the
Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule V.
Schedule V correctly  sets forth,  as of the  Restatement  Effective  Date,  the
percentage  ownership  (direct or  indirect)  of the  Borrower  in each class of
capital stock or other equity of each of its  Subsidiaries  and also  identifies
the direct owner thereof.

                                      -42-

<PAGE>

                  7.16 Compliance  with Statutes,  etc. Each of the Borrower and
each  of  its  Subsidiaries  is in  compliance  with  all  applicable  statutes,
regulations  and orders  of, and all  applicable  restrictions  imposed  by, all
governmental  bodies,  domestic  or  foreign,  in respect of the  conduct of its
business  and the  ownership  of its property  (including  applicable  statutes,
regulations,  orders and restrictions  relating to  environmental  standards and
controls),  except  such  noncompliances  as could not,  individually  or in the
aggregate,  reasonably  be  expected  to have a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  7.17 Investment  Company Act.  Neither the Borrower nor any of
its  Subsidiaries  is an "investment  company" or a company  "controlled"  by an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

                  7.18 Public Utility Holding Company Act.  Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a  "holding  company,"  or  an  "affiliate"  of  a  "holding  company"  or  of a
"subsidiary  company"  of a "holding  company"  within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

                  7.19 Environmental  Matters.  (a) The Borrower and each of its
Subsidiaries  have  complied  with,  and on the date of such Credit Event are in
compliance with, all applicable  Environmental  Laws and the requirements of any
permits issued under such  Environmental  Laws.  There are no pending or, to the
best  knowledge of the Borrower,  threatened  Environmental  Claims  against the
Borrower or any of its Subsidiaries (including any such claim arising out of the
ownership or operation  by the Borrower or any of its  Subsidiaries  of any Real
Property no longer owned or operated by the Borrower or any of its Subsidiaries)
or  any  Real  Property  owned  or  operated  by  the  Borrower  or  any  of its
Subsidiaries. There are no facts, circumstances,  conditions or occurrences with
respect to any Real  Property  owned or operated  by the  Borrower or any of its
Subsidiaries  (including  any Real  Property  formerly  owned or operated by the
Borrower  or any of its  Subsidiaries  but no longer  owned or  operated  by the
Borrower or any of its  Subsidiaries) or, to the best knowledge of the Borrower,
any  property  adjoining  or  adjacent  to any such  Real  Property  that  could
reasonably be expected (i) to form the basis of an  Environmental  Claim against
the Borrower or any of its  Subsidiaries  or any Real Property owned or operated
by the Borrower or any of its  Subsidiaries,  or (ii) to cause any Real Property
owned or operated by the  Borrower or any of its  Subsidiaries  to be subject to
any  restrictions on the ownership,  occupancy or  transferability  of such Real
Property  by  the  Borrower  or any of its  Subsidiaries  under  any  applicable
Environmental Law.

                  (b) Hazardous  Materials have not at any time been  generated,
used,  treated or stored on, or  transported to or from, any Real Property owned
or operated by the Borrower or any of its  Subsidiaries  where such  generation,
use,  treatment  or storage  has  violated  or could  reasonably  be expected to
violate any  Environmental  Law.  Hazardous  Materials have not at any time been
Released on or from any Real  Property  owned or operated by the Borrower or any
of its  Subsidiaries  where such  Release has  violated or could  reasonably  be
expected to violate any applicable Environmental Law.

                                      -43-

<PAGE>

                  (c)  Notwithstanding  anything to the contrary in this Section
7.19, the  representations  made in this Section 7.19 shall not be untrue unless
the  aggregate  effect of all  violations,  claims,  restrictions,  failures and
noncompliances of the types described above could reasonably be expected to have
a  material  adverse  effect  on the  business,  operations,  property,  assets,
liabilities,  condition (financial or otherwise) or prospects of the Borrower or
the Borrower and its Subsidiaries taken as a whole.

                  7.20 Labor  Relations.  Neither  the  Borrower  nor any of its
Subsidiaries  is engaged in any unfair labor  practice that could  reasonably be
expected to have a material  adverse  effect on the Borrower or the Borrower and
its  Subsidiaries  taken  as a  whole.  There is (i) no  unfair  labor  practice
complaint  pending  against the Borrower or any of its  Subsidiaries  or, to the
best knowledge of the Borrower or any of its  Subsidiaries,  threatened  against
any of them,  before the National  Labor  Relations  Board,  and no grievance or
arbitration  proceeding  arising  out  of or  under  any  collective  bargaining
agreement is so pending against the Borrower or any of its  Subsidiaries  or, to
the best  knowledge of the  Borrower,  threatened  against any of them,  (ii) no
strike, labor dispute,  slowdown or stoppage pending against the Borrower or any
of its  Subsidiaries  or, to the best  knowledge  of the  Borrower or any of its
Subsidiaries,  threatened  against the Borrower or any of its  Subsidiaries  and
(iii) no union  representation  question exists with respect to the employees of
the  Borrower or any of its  Subsidiaries,  except  (with  respect to any matter
specified in clause (i),  (ii) or (iii)  above,  either  individually  or in the
aggregate)  such as could not reasonably be expected to have a material  adverse
effect on the business,  operations,  property, assets,  liabilities,  condition
(financial or otherwise) or prospects of the Borrower or any of its Subsidiaries
and its Subsidiaries taken as a whole.

                  7.21 Patents,  Licenses,  Franchises and Formulas. Each of the
Borrower and each of its Subsidiaries owns all the patents, trademarks, permits,
service  marks,  trade  names,  copyrights,  licenses,  franchises,  proprietary
information  (including  but not  limited  to rights in  computer  programs  and
databases)  and  formulas,  or rights  with  respect to the  foregoing,  and has
obtained  assignments  of all  leases  and  other  rights  of  whatever  nature,
necessary for the present  conduct of its business,  without any known  conflict
with the rights of others which, or the failure to obtain which, as the case may
be, could  reasonably be expected to result in a material  adverse effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  7.22 Indebtedness.  Schedule VI sets forth a true and complete
list of all Indebtedness  (including Contingent Obligations) of the Borrower and
its  Subsidiaries  as of the  Restatement  Effective Date and which is to remain
outstanding  after giving effect to the  Transaction  (excluding the Loans,  the
Letters  of Credit and  Indebtedness  permitted  under  Section  9.04(iii),  the
"Existing  Indebtedness"),  in each case showing the aggregate  principal amount
thereof and the name of the  respective  borrower and any Credit Party or any of
its Subsidiaries which directly or indirectly guaranteed such debt.

                  7.23  Transaction.  At the time of consummation  thereof,  the
Transaction  shall have been  consummated  in  accordance  with the terms of the
respective  Documents  and all  applicable  laws.  At the  time of  consummation
thereof,  all material  consents and approvals of,

                                      -44-

<PAGE>

and filings and  registrations  with,  and all other  actions in respect of, all
governmental  agencies,  authorities or  instrumentalities  required in order to
make or  consummate  the  Transaction  to the  extent  then  required  have been
obtained,  given, filed or taken and are or will be in full force and effect (or
effective  judicial  relief  with  respect  thereto  has  been  obtained).   All
applicable  waiting periods with respect thereto have or, prior to the time when
required,  will have, expired without, in all such cases, any action being taken
by any  competent  authority  which  restrains,  prevents,  or imposes  material
adverse conditions upon the Transaction.  Additionally, there does not exist any
judgment,   order  or  injunction   prohibiting  or  imposing  material  adverse
conditions  upon the  Transaction,  or the occurrence of any Credit Event or the
performance by any Credit Party of its obligations  under the Documents to which
it  is  party.  All  actions  taken  by  each  Credit  Party  pursuant  to or in
furtherance  of the  Transaction  have been taken in  compliance in all material
respects with the respective Documents and all applicable laws.

                  SECTION  8.   Affirmative   Covenants.   The  Borrower  hereby
covenants and agrees that on and after the Restatement  Effective Date and until
the Total  Commitments  and all Letters of Credit have terminated and the Loans,
Notes  and  Unpaid  Drawings,   together  with  interest,  Fees  and  all  other
Obligations incurred hereunder and thereunder, are paid in full:

                  8.01 Information Covenants.  The Borrower will furnish to each
Bank:

                  (a) Quarterly Financial  Statements.  Within 45 days after the
         close of the first three  quarterly  accounting  periods in each fiscal
         year  of the  Borrower,  (i)  the  consolidated  balance  sheet  of the
         Borrower  and  its  Subsidiaries  as  at  the  end  of  such  quarterly
         accounting period and the related consolidated statements of income and
         retained  earnings  and  statement  of cash  flows  for such  quarterly
         accounting  period and for the elapsed portion of the fiscal year ended
         with the last day of such  quarterly  accounting  period,  in each case
         setting forth comparative  figures for the related periods in the prior
         fiscal year,  all of which shall be  certified  by the Chief  Financial
         Officer of the  Borrower  or another  senior  financial  officer of the
         Borrower,  subject  to  normal  year-end  audit  adjustments  and  (ii)
         management's  discussion and analysis of the important  operational and
         financial  developments during the quarterly and year-to-date  periods,
         it being  understood  that the delivery by the Borrower of its Form 10Q
         as filed with the SEC shall  satisfy the  requirements  of this Section
         8.01(a).

                  (b)  Annual  Financial  Statements.  Within 90 days  after the
         close of each fiscal year of the Borrower, (i) the consolidated balance
         sheet of the Borrower and its Subsidiaries as at the end of such fiscal
         year and the related  consolidated  statements  of income and  retained
         earnings  and  of  cash  flows  for  such  fiscal  year  setting  forth
         comparative  figures for the  preceding  fiscal year and  certified  by
         Price Waterhouse LLP, any other "Big Six" independent  certified public
         accountants or such other independent  certified public  accountants of
         recognized  national standing  reasonably  acceptable to the Agents, in
         each case to the  effect  that such  statements  fairly  present in all
         material  respects  the  financial  condition  of the  Borrower and its
         Subsidiaries  as of the  dates  indicated  and  the  results  of  their
         operations  and  changes  in its  financial  position  for the  periods
         indicated in conformity with generally accepted  accounting  principles
         applied  on 

                                      -45-

<PAGE>

         a basis  consistent  with prior years,  together with a certificate  of
         such accounting firm stating that in the course of its regular audit of
         the  business of the  Borrower  and its  Subsidiaries,  which audit was
         conducted in accordance with generally accepted auditing standards,  no
         Default or Event of Default  which has occurred and is  continuing  has
         come to their  attention  or, if such a Default  or an Event of Default
         has come to their attention a statement as to the nature thereof.

                  (c) Management  Letters.  Promptly after the Borrower's or any
         of its Subsidiaries' receipt thereof, a copy of any "management letter"
         received from its certified public accountants.

                  (d) Budgets. No later than the 30th day following the start of
         each fiscal year of the Borrower,  a budget in form satisfactory to the
         Agents (including budgeted statements of income and sources and uses of
         cash and balance  sheets,  with such  information  to be set forth on a
         quarterly basis) prepared by the Borrower for such fiscal year prepared
         in detail,  setting forth, with appropriate  discussion,  the principal
         assumptions upon which such budget was based.

                  (e) Officer's Certificates. At the time of the delivery of the
         financial  statements  provided  for in  Sections  8.01(a)  and (b),  a
         certificate of the Chief  Financial  Officer of the Borrower or another
         senior  financial  officer of the Borrower  acceptable to the Agents to
         the effect that, to the best of such officer's knowledge, no Default or
         Event of Default has occurred and is  continuing  or, if any Default or
         Event of Default has occurred and is continuing,  specifying the nature
         and extent thereof, which certificate shall (x) set forth in reasonable
         detail the calculations  required to establish whether the Borrower and
         its  Subsidiaries  were in compliance  with the  provisions of Sections
         9.08  through  9.10,  inclusive,  at the end of such fiscal  quarter or
         year,  as the  case  may be and (y) if  delivered  with  the  financial
         statements required by Section 8.01(b),  set forth in reasonable detail
         the  calculations  required to  establish  whether the Borrower and its
         Subsidiaries were in compliance with the provisions of Sections 4.02(e)
         and 9.07 as at the end of such  fiscal  year and the amount of (and the
         calculations  required to establish the amount of) Excess Cash Flow for
         the respective Excess Cash Payment Period.

                  (f) Notice of Default or Litigation. Promptly upon, and in any
         event  within  three  Business  Days after,  an officer of the Borrower
         obtains  knowledge  thereof,  notice of (i) the occurrence of any event
         which  constitutes  a  Default  or an  Event  of  Default  and (ii) any
         litigation or  governmental  investigation  or  proceeding  pending (x)
         against the Borrower or any of its Subsidiaries  which could reasonably
         be  expected  to  materially   and   adversely   affect  the  business,
         operations,  property,  assets,  liabilities,  condition  (financial or
         otherwise)  or  prospects  of the  Borrower  or the  Borrower  and  its
         Subsidiaries taken as a whole or (y) with respect to the Transaction or
         any Document.

                  (g) Other  Reports and Filings.  Promptly  after the filing or
         delivery thereof, copies of all financial information,  proxy materials
         and  reports,  if any,  which the  Borrower or any of its  Subsidiaries
         shall publicly file with the Securities and Exchange

                                      -46-

<PAGE>

         Commission or any  successor  thereto (the "SEC") or deliver to holders
         of  its  Indebtedness  pursuant  to  the  terms  of  the  documentation
         governing   such   Indebtedness   (or  any  trustee,   agent  or  other
         representative therefor).

                  (h)  Environmental  Matters.  Promptly  upon, and in any event
within ten Business  Days after,  an officer of the Borrower  obtains  knowledge
thereof,  notice of one or more of the following  environmental matters,  unless
such environmental  matters could not,  individually or when aggregated with all
other such  environmental  matters,  be reasonably  expected to  materially  and
adversely  affect  the  business,  operations,  property,  assets,  liabilities,
condition  (financial or otherwise) or prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole:

                  (i) any pending or threatened  Environmental Claim against the
         Borrower  or any of its  Subsidiaries  or any  Real  Property  owned or
         operated by the Borrower or any of its Subsidiaries;

                  (ii) any  condition or  occurrence on or arising from any Real
         Property  owned or operated by the Borrower or any of its  Subsidiaries
         that  (a)  results  in  noncompliance  by  the  Borrower  or any of its
         Subsidiaries  with  any  applicable  Environmental  Law  or  (b)  could
         reasonably  be  expected  to form the basis of an  Environmental  Claim
         against the  Borrower or any of its  Subsidiaries  or any such owned or
         operated Real Property;

                  (iii) any condition or  occurrence on any Real Property  owned
         or  operated  by the  Borrower  or any of its  Subsidiaries  that could
         reasonably be expected to cause such Real Property to be subject to any
         restrictions on the ownership, occupancy, use or transferability by the
         Borrower or any of its  Subsidiaries  of such Real  Property  under any
         Environmental Law; and

                  (iv) the taking of any removal or remedial  action in response
         to the actual or alleged presence of any Hazardous Material on any Real
         Property  owned or operated by the Borrower or any of its  Subsidiaries
         as  required  by any  Environmental  Law or any  governmental  or other
         administrative agency;  provided,  that in any event the Borrower shall
         deliver to each Bank all notices received by the Borrower or any of its
         Subsidiaries  from any  government or  governmental  agency  under,  or
         pursuant  to,  CERCLA  which  identify  the  Borrower  or  any  of  its
         Subsidiaries as potentially  responsible  parties for remediation costs
         which  reasonably  could  be  expected  to  exceed  $500,000  or  which
         otherwise  notify the Borrower or any of its  Subsidiaries of potential
         liability which  reasonably  could be expected to exceed $500,000 under
         CERCLA.

                  All such  notices  shall  describe  in  reasonable  detail the
nature of the claim, investigation, condition, occurrence or removal or remedial
action and the Borrower's or such Subsidiary's response thereto.

                                      -47-

<PAGE>

                  (i)  Other   Information.   From  time  to  time,  such  other
information or documents  (financial or otherwise)  with respect to the Borrower
or any of its Subsidiaries as any Agent or any Bank may reasonably request.

                  8.02 Books,  Records and  Inspections.  The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and accounts
in which full, true and correct  entries in conformity  with generally  accepted
accounting  principles and all requirements of law shall be made of all dealings
and  transactions  in relation to its business and  activities.  Upon reasonable
notice  to  the  Borrower,  the  Borrower  will,  and  will  cause  each  of its
Subsidiaries to, permit officers and designated  representatives of any Agent or
any Bank to visit and  inspect,  under  guidance of officers of the  Borrower or
such  Subsidiary,  any of the properties owned or leased by the Borrower or such
Subsidiary,  and to  examine  the  books  of  account  of the  Borrower  or such
Subsidiary  and discuss the  affairs,  finances  and accounts of the Borrower or
such  Subsidiary  with, and be advised as to the same by, its and their officers
and independent  accountants,  all at such reasonable times and intervals and to
such reasonable extent as such Agent or such Bank may request.

                  8.03 Maintenance of Property; Insurance. (a) Schedule VII sets
forth a true and complete  listing of all  insurance  maintained by the Borrower
and its  Subsidiaries as of the  Restatement  Effective Date. The Borrower will,
and will  cause each of its  Subsidiaries  to,  (i) keep all  property  owned or
leased by the  Borrower  and its  Subsidiaries  necessary to the business of the
Borrower and its  Subsidiaries  in reasonably  good working order and condition,
ordinary wear and tear  excepted,  (ii)  maintain,  with  financially  sound and
reputable  insurers,   insurance  on  all  such  property  (including,   without
limitation,  flood insurance to the extent  applicable) in at least such amounts
and against at least such risks as is consistent and in accordance with industry
practice for companies  similarly situated owning similar properties in the same
general  areas in which the Borrower or any of its  Subsidiaries  operates,  and
(iii) furnish to any Agent or any Bank, upon written  request,  full information
as to the insurance carried.

                  (b) The Borrower will, and will cause each of the other Credit
Parties to, at all times keep its property  insured,  with the Collateral  Agent
named as loss payee or additional insured,  and all policies (including Mortgage
Policies) or  certificates  (or certified  copies  thereof) with respect to such
insurance (and any other insurance  maintained by the Borrower and/or such other
Credit  Parties)  shall  (i) name the  Collateral  Agent  as loss  payee  and/or
additional  insured) and (ii) state that such  insurance  policies  shall not be
cancelled  without  at  least 30  days'  prior  written  notice  thereof  by the
respective  insurer to the Collateral Agent (or such shorter period of time as a
particular insurance company policy generally provides).

                  (c) If the Borrower or any of its  Subsidiaries  shall fail to
insure its property in accordance  with this Section 8.03, or if the Borrower or
any of its  Subsidiaries  shall fail to so name the  Collateral  Agent as a loss
payee or additional  insured with respect  thereto,  the Collateral  Agent shall
have the right (but shall be under no  obligation),  after  giving the  Borrower
prior  written  notice,  to procure such  insurance  and the Borrower  agrees to
reimburse  the  Collateral  Agent for all costs and expenses of  procuring  such
insurance or naming the Collateral  Agent as a loss payee or additional  insured
with respect thereto.

                                      -48-

<PAGE>

                  8.04 Corporate  Franchises.  The Borrower will, and will cause
each of its  Subsidiaries  to, do or cause to be done,  all things  necessary to
preserve  and keep in full  force and  effect  its  existence  and its  material
rights,  franchises,  licenses and patents;  provided,  however, that nothing in
this  Section  8.04  shall  prevent  (i)  sales of  assets,  mergers  and  other
transactions  by the  Borrower or any of its  Subsidiaries  in  accordance  with
Section 9.02 or (ii) the  withdrawal by the Borrower or any of its  Subsidiaries
of its  qualification as a foreign  corporation in any  jurisdiction  where such
withdrawal could not reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  8.05  Compliance  with  Statutes,  etc. The Borrower will, and
will cause each of its  Subsidiaries  to, comply with all  applicable  statutes,
regulations  and orders  of, and all  applicable  restrictions  imposed  by, all
governmental  bodies,  domestic  or  foreign,  in respect of the  conduct of its
business  and the  ownership  of its property  (including  applicable  statutes,
regulations,  orders and restrictions  relating to  environmental  standards and
controls),  except  such  noncompliances  as could not,  individually  or in the
aggregate,  reasonably  be  expected  to have a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  8.06 Compliance with Environmental Laws. (a) The Borrower will
comply,   and  will  cause  each  of  its  Subsidiaries  to  comply,   with  all
Environmental  Laws  applicable to the ownership or use of its Real Property now
or  hereafter  owned or  operated  by the  Borrower  or any of its  Subsidiaries
(except such  noncompliances  as could not,  individually  or in the  aggregate,
reasonably  be  expected  to have a  material  adverse  effect on the  business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects  of the  Borrower  or the  Borrower  and its  Subsidiaries  taken as a
whole), will promptly pay or cause to be paid all costs and expenses incurred in
connection with such compliance, and will keep or cause to be kept all such Real
Property  free and clear of any Liens  imposed  pursuant  to such  Environmental
Laws.  Neither the  Borrower nor any of its  Subsidiaries  will  generate,  use,
treat, store,  release or dispose of, or permit the generation,  use, treatment,
storage,  release or disposal of Hazardous Materials on any Real Property now or
hereafter  owned or operated  by the  Borrower  or any of its  Subsidiaries,  or
transport or permit the  transportation  of  Hazardous  Materials to or from any
such  Real  Property,  except  to the  extent  that  any such  generation,  use,
treatment,  storage,  release  or  disposal  could not,  individually  or in the
aggregate,  reasonably  be  expected  to have a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  (b) At the  written  request  of the  Agents  or the  Required
Banks,  which request shall specify in reasonable detail the basis therefor,  at
any time and from time to time,  the Borrower will provide,  at the sole expense
of the Borrower,  an environmental  site assessment  report  concerning any Real
Property owned or operated by the Borrower or any of its Subsidiaries,  prepared
by  an  environmental   consulting  firm  reasonably  approved  by  the  Agents,
indicating the presence or absence of Hazardous Materials and the potential cost
of any removal or remedial action in connection with such Hazardous Materials on
such Real  Property,  provided  that in no event shall

                                      -49-

<PAGE>

such  request be made more  often  than once every two years for any  particular
Real  Property  unless  either (i) the  Obligations  have been declared (or have
become) due and payable  pursuant to Section 10 or (ii) the Banks receive notice
under Section  8.01(h) of any event for which notice is required to be delivered
for any such Real Property.  If the Borrower fails to provide the same within 90
days after such  request  was made,  the Agents may order the same,  the cost of
which shall be borne by the  Borrower,  and the Borrower  shall grant and hereby
grants to the Agents and the Banks and their agents access to such Real Property
and  specifically  grants the Agents and the Banks an irrevocable  non-exclusive
license,  subject to the rights of tenants,  to undertake  such an assessment at
any reasonable time upon reasonable notice to the Borrower,  all at the sole and
reasonable expense of the Borrower.

                  8.07  ERISA.  As soon as possible  and,  in any event,  within
fifteen Business Days after the Borrower,  any Subsidiary of the Borrower or any
ERISA  Affiliate  knows of the occurrence of any of the following,  the Borrower
will deliver to each of the Banks a certificate of the Chief  Financial  Officer
of the Borrower  setting  forth the full details as to such  occurrence  and the
action,  if any, that the Borrower,  such  Subsidiary or such ERISA Affiliate is
required or proposes to take,  together with any notices required or proposed to
be  given  to or  filed  with or by the  Borrower,  the  Subsidiary,  the  ERISA
Affiliate,  the PBGC, a Plan participant or the Plan  administrator with respect
thereto:  that a Reportable  Event has  occurred;  that an  accumulated  funding
deficiency,  within the  meaning of  Section  412 of the Code or Section  302 of
ERISA,  has been incurred or an application may be or has been made for a waiver
or  modification  of  the  minimum  funding  standard  (including  any  required
installment  payments) or an extension of any amortization  period under Section
412 of the Code or  Section  303 or 304 of  ERISA  with  respect  to a Plan or a
Multiemployer  Plan;  that a contribution  for a material  amount required to be
made with respect to a Plan, a Multiemployer  Plan or a Foreign Pension Plan has
not been timely  made;  that a Plan or a  Multiemployer  Plan has been or may be
terminated under Section 4041(c) or 4042 of ERISA,  reorganized,  partitioned or
declared  insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability;  that  proceedings  may be or have been  instituted  to  terminate or
appoint a trustee to administer a Plan or a Multiemployer  Plan which is subject
to Title IV of ERISA; that a proceeding has been instituted  pursuant to Section
515 of ERISA to collect a delinquent  contribution to a Multiemployer Plan; that
the Borrower,  any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any material liability  (including any indirect or secondary liability) to
or on account of the  termination  of or  withdrawal  from a Plan under  Section
4062,  4063,  4064 or 4069 of  ERISA or with  respect  to a Plan  under  Section
401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or 502(l) of
ERISA or under Section  4980B(a) of the Code with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code or with respect to a Multiemployer Plan under Sections
4201,  4204 or 4212 of ERISA;  or that the  Borrower  or any  Subsidiary  of the
Borrower  may incur any  material  liability  pursuant to any  employee  welfare
benefit  plan (as defined in Section  3(1) of ERISA) that  provides  benefits to
retired  employees or other former  employees (other than as required by Section
601 of  ERISA)  or  any  Plan  which  is  subject  to  Title  IV of  ERISA,  any
Multiemployer  Plan or any Foreign  Pension  Plan.  Upon written  request of any
Agent,  the Borrower  will  deliver to each of the Banks a complete  copy of the
annual  report (on  Internal  Revenue  Service  Form  5500-series)  of each Plan
(including,  to  the  extent  required,  the  related  financial  and  actuarial
statements  and  opinions  and  other  supporting  

                                      -50-

<PAGE>

statements, certifications, schedules and information) required to be filed with
the Internal  Revenue  Service or any other material  financial  information the
Borrower  or any  Subsidiary  has with  respect to any Plan.  In addition to any
certificates  or notices  delivered to the Banks  pursuant to the first sentence
hereof,  copies of any  material  notices  pertaining  to the  foregoing  events
received by the Borrower,  any Subsidiary of the Borrower or any ERISA Affiliate
with respect to any Plan,  Multiemployer  Plan or Foreign  Pension Plan shall be
delivered  to the  Banks no later  than ten  Business  Days  after the date such
notice has been received by the Borrower, the Subsidiary or the ERISA Affiliate,
as applicable.

                  8.08 End of Fiscal Years;  Fiscal Quarters.  The Borrower will
cause (i) each of its,  and each of its  Subsidiaries',  fiscal  years to end on
September  30,  and  (ii)  each of its,  and each of its  Subsidiaries',  fiscal
quarters to end on December 31, March 31, June 30 and September 30.

                  8.09  Performance of Obligations.  The Borrower will, and will
cause each of its  Subsidiaries  to,  perform all of its  obligations  under the
terms of each mortgage,  indenture, security agreement, loan agreement or credit
agreement and each other material agreement,  contract or instrument by which it
is bound,  except such  non-performances  as could not,  individually  or in the
aggregate,  reasonably  be  expected  to have a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole.

                  8.10 Payment of Taxes.  The Borrower  will pay and  discharge,
and  will  cause  each of its  Subsidiaries  to pay and  discharge,  all  taxes,
assessments  and  governmental  charges  or levies  imposed  upon it or upon its
income or profits, or upon any properties  belonging to it, prior to the date on
which penalties attach thereto,  and all lawful claims for sums that have become
due and payable which,  if unpaid,  might become a Lien not otherwise  permitted
under  Section  9.01(i);  provided,  that  neither the  Borrower  nor any of its
Subsidiaries shall be required to pay any such tax, assessment,  charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained  adequate  reserves with respect thereto in accordance with generally
accepted accounting principles.

                  8.11 Interest Rate  Protection.  Within 90 days  following the
Restatement  Effective  Date,  the  Borrower  will  enter  into  and  thereafter
maintain,   Interest  Rate  Protection   Agreements  acceptable  to  the  Agents
establishing  a fixed or maximum  interest rate  acceptable to the Agents for an
aggregate amount equal to at least 50% of the aggregate  principal amount of all
Term Loans then outstanding.

                  8.12 Additional Security; Further Assurances. (a) The Borrower
will,  and  will  cause  each of the  Subsidiary  Guarantors  to,  grant  to the
Collateral Agent security  interests and mortgages in such assets and properties
(including Real Property) of the Borrower and such Subsidiary  Guarantors  which
are of the type  required  to be pledged or assigned  pursuant  to the  original
Security  Documents and as are not covered by such original Security  Documents,
and as may be requested  from time to time by the Agents or the  Required  Banks
(collectively, the "Additional Security Documents"). All such security interests
and mortgages shall be granted

                                      -51-

<PAGE>

pursuant to documentation  reasonably  satisfactory in form and substance to the
Agents and shall constitute valid and enforceable  perfected  security interests
and  mortgages  superior  to and prior to the  rights of all third  Persons  and
subject to no other Liens except for Permitted  Liens.  The Additional  Security
Documents or instruments  related thereto shall have been duly recorded or filed
in such manner and in such places as are required by law to establish,  perfect,
preserve and protect the Liens in favor of the  Collateral  Agent required to be
granted pursuant to the Additional  Security  Documents and all taxes,  fees and
other charges payable in connection therewith shall have been paid in full.

                  (b) The Borrower  will,  and will cause each of the Subsidiary
Guarantors  to,  at  the  expense  of  the  Borrower,  make,  execute,  endorse,
acknowledge,  file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments,  conveyances, financing
statements,  transfer  endorsements,  powers  of  attorney,  certificates,  real
property  surveys,  reports and other  assurances or  instruments  and take such
further  steps  relating  to the  collateral  covered  by  any  of the  Security
Documents as the  Collateral  Agent may  reasonably  require.  Furthermore,  the
Borrower  will cause to be delivered to the  Collateral  Agent such  opinions of
counsel,  title  insurance  and other  related  documents  as may be  reasonably
requested  by the  Agents  to assure  itself  that  this  Section  8.12 has been
complied with.

                  (c) On the Earnout  Payment Date, the Borrower will provide to
the Agents evidence of payment by the Borrower of the Earnout.

                  (d) The Borrower agrees that, unless specified otherwise, each
action  required  above by this Section  8.12 shall be completed  within 90 days
after such action is either  requested to be taken by the Agents or the Required
Banks or  required to be taken by the  Borrower  and the  Subsidiary  Guarantors
pursuant to the terms of this Section 8.12.

                  8.13 Foreign Subsidiaries  Security.  If following a change in
the relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder,  counsel for the
Borrower  reasonably  acceptable  to the Agents  does not within 30 days after a
request  from the Agents or the Required  Banks  deliver  evidence,  in form and
substance mutually satisfactory to the Agents and the Borrower,  with respect to
any  Foreign  Subsidiary  of the  Borrower  which has not already had all of its
stock pledged  pursuant to the Pledge  Agreement  that (i) a pledge of 662/3% or
more of the total combined  voting power of all classes of capital stock of such
Foreign  Subsidiary  entitled to vote,  (ii) the  entering  into by such Foreign
Subsidiary  of a security  agreement in  substantially  the form of the Security
Agreement and (iii) the entering  into by such Foreign  Subsidiary of a guaranty
in substantially the form of the Subsidiaries  Guaranty,  in any such case would
cause the  undistributed  earnings of such Foreign  Subsidiary as determined for
Federal  income tax purposes to be treated as a deemed  dividend to such Foreign
Subsidiary's  United States parent for Federal income tax purposes,  then in the
case of a failure to deliver the evidence described in clause (i) above,  unless
the Borrower  determines  in good faith and notifies the Agents that such action
will result in material  negative tax implications to the Borrower or any of its
Subsidiaries,  that portion of such  Foreign  Subsidiary's  outstanding  capital
stock not theretofore  pledged pursuant to the Pledge Agreement shall be pledged
to the Collateral Agent for the benefit of the Secured Creditors pursuant to the

                                     -52-

<PAGE>

Pledge Agreement (or another pledge agreement in substantially  similar form, if
needed),  and in the case of a failure  to deliver  the  evidence  described  in
clause (ii) above unless the Borrower  determines in good faith and notifies the
Agents that such action will result in material negative tax implications to the
Borrower or any of its Subsidiaries, such Foreign Subsidiary (to the extent that
same is a  Wholly-Owned  Foreign  Subsidiary  and would  otherwise  constitute a
Subsidiary  Guarantor)  will  execute  and deliver the  Security  Agreement  (or
another security agreement in substantially  similar form, if needed),  granting
the  Collateral  Agent for the  benefit  of the  Secured  Creditors  a  security
interest in all of such Foreign Subsidiary's assets and securing the Obligations
of the  Borrower  under  the  Credit  Documents  and  under  any  Interest  Rate
Protection   Agreement  or  Other  Hedging  Agreement  and,  in  the  event  the
Subsidiaries  Guaranty shall have been executed by such Foreign Subsidiary,  the
obligations of such Foreign Subsidiary thereunder,  and in the case of a failure
to deliver the  evidence  described  in clause  (iii) above  unless the Borrower
determines in good faith and notifies the Agents that such action will result in
material  negative tax implications to the Borrower or any of its  Subsidiaries,
such  Foreign  Subsidiary  (to the extent  that same is a  Wholly-Owned  Foreign
Subsidiary and would otherwise  constitute a Subsidiary  Guarantor) will execute
and deliver the  Subsidiaries  Guaranty  (or another  guaranty in  substantially
similar form, if needed), guaranteeing the Obligations of the Borrower under the
Credit  Documents  and under any  Interest  Rate  Protection  Agreement or Other
Hedging  Agreement,  in each  case to the  extent  that the  entering  into such
Security  Agreement  or  Subsidiaries  Guaranty is  permitted by the laws of the
respective  foreign  jurisdiction and with all documents  delivered  pursuant to
this Section 8.13 to be in form and  substance  reasonably  satisfactory  to the
Agents.

                  SECTION 9. Negative  Covenants.  The Borrower hereby covenants
and agrees that on and after the Restatement  Effective Date and until the Total
Commitments and all Letters of Credit have  terminated and the Loans,  Notes and
Unpaid Drawings, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:

                  9.01 Liens.  The Borrower will not, and will not permit any of
its Subsidiaries to, create,  incur,  assume or suffer to exist any Lien upon or
with  respect  to  any  property  or  assets  (real  or  personal,  tangible  or
intangible)  of the  Borrower or any of its  Subsidiaries,  whether now owned or
hereafter  acquired,  or  sell  any  such  property  or  assets  subject  to  an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts  receivable with recourse to the Borrower
or any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing  statement  under the UCC or any other similar notice of
Lien under any similar recording or notice statute; provided that the provisions
of this Section 9.01 shall not prevent the creation,  incurrence,  assumption or
existence of the  following  (Liens  described  below are herein  referred to as
"Permitted Liens"):

                  (i)  inchoate  Liens for taxes,  assessments  or  governmental
         charges  or  levies  not yet due or Liens  for  taxes,  assessments  or
         governmental  charges or levies  being  contested  in good faith and by
         appropriate   proceedings   for  which  adequate   reserves  have  been
         established   in  accordance   with   generally   accepted   accounting
         principles;

                                      -53-

<PAGE>


                  (ii) Liens in respect of property or assets of the Borrower or
         any of its  Subsidiaries  imposed by law,  which were  incurred  in the
         ordinary course of business and do not secure Indebtedness for borrowed
         money, such as carriers', warehousemen's,  materialmen's and mechanics'
         liens  and  other  similar  Liens  arising  in the  ordinary  course of
         business, and which (x) do not in the aggregate materially detract from
         the value of the Borrower's or such Subsidiary's  property or assets or
         materially  impair the use thereof in the  operation of the business of
         the  Borrower or such  Subsidiary  or (y) are being  contested  in good
         faith by appropriate proceedings,  which proceedings have the effect of
         preventing  the forfeiture or sale of the property or assets subject to
         any such Lien;

                  (iii) Liens in existence  on the  Restatement  Effective  Date
         which are  listed,  and the  property  subject  thereto  described,  in
         Schedule  VIII,  without  giving  effect to any  extensions or renewals
         thereof;

                  (iv) Permitted Encumbrances;

                  (v) Liens created  pursuant to this Agreement and the Security
         Documents;

                  (vi)  Liens  upon  assets  of  the  Borrower  or  any  of  its
         Subsidiaries  subject to  Capitalized  Lease  Obligations to the extent
         such Capitalized Lease Obligations are permitted by Section  9.04(iii),
         provided  that (x) such  Liens  only  serve to secure  the  payment  of
         Indebtedness  arising under such  Capitalized  Lease Obligation and (y)
         the Lien  encumbering  the asset giving rise to the  Capitalized  Lease
         Obligation  does not  encumber  any other asset of the  Borrower or any
         Subsidiary of the Borrower;

                  (vii) Liens placed upon  equipment  or  machinery  used in the
         ordinary course of business of the Borrower or any of its  Subsidiaries
         at the  time  of  acquisition  thereof  by  the  Borrower  or any  such
         Subsidiary to secure  Indebtedness  incurred to pay all or a portion of
         the purchase price thereof or to secure  Indebtedness  incurred  solely
         for the purpose of financing the  acquisition  of any such equipment or
         machinery  or  extensions,  renewals  or  replacements  of  any  of the
         foregoing  for the  same or a  lesser  amount,  provided  that  (x) the
         aggregate  outstanding  principal amount of all Indebtedness secured by
         Liens  permitted  by  this  clause  (vii),  when  added  to the  amount
         outstanding  under  clause  9.04(iii),  shall  not at any  time  exceed
         $10,000,000 and (y) in all events,  the Lien  encumbering the equipment
         or  machinery  so  acquired  does not  encumber  any other asset of the
         Borrower or such Subsidiary;

                  (viii) easements, rights-of-way,  restrictions,  encroachments
         and  other   similar   charges  or   encumbrances,   and  minor   title
         deficiencies, in each case not securing Indebtedness and not materially
         interfering  with the conduct of the business of the Borrower or any of
         its Subsidiaries;

                  (ix) Liens arising from precautionary UCC financing  statement
         filings regarding operating leases;

                                      -54-

<PAGE>

                  (x) Liens arising out of judgments, decrees or attachments not
         constituting an Event of Default under Section 10.09,  provided that no
         cash  or  other  property  shall  be  pledged  by the  Borrower  or any
         Subsidiary as security therefor;

                  (xi) statutory and common law landlords' liens under leases to
         which the Borrower or any of its Subsidiaries is a party;

                  (xii) Liens (other than Liens imposed under ERISA) incurred in
         the ordinary course of business in connection with workers compensation
         claims,  unemployment  insurance and social security benefits and Liens
         securing the performance of bids, tenders,  leases and contracts in the
         ordinary  course of  business,  statutory  obligations,  surety  bonds,
         performance  bonds and other  obligations of a like nature  incurred in
         the ordinary course of business (exclusive of obligations in respect of
         the payment for borrowed  money),  provided that the aggregate value of
         all cash and property encumbered by consensual Liens permitted pursuant
         to this clause (xii) shall not at any time exceed $750,000;

                  (xiii)  Liens on  property  or assets  acquired  pursuant to a
         Permitted Acquisition,  or on property or assets of a Subsidiary of the
         Borrower in existence at the time such Subsidiary is acquired  pursuant
         to a Permitted Acquisition,  provided that (x) any Indebtedness that is
         secured by such Liens is permitted to exist under Section 9.04(vii) and
         (y) such Liens are not incurred in connection with, or in contemplation
         or anticipation of, such Permitted Acquisition and do not attach to any
         other asset of the Borrower or any of its Subsidiaries; and

                  (xiv) Liens in existence  on the  Restatement  Effective  Date
         securing the IDB Financing to the extent such financing is permitted by
         Section 9.04.

                  In connection with the granting of Liens of the type described
in clauses (vi), (vii) and (xiii) of this Section 9.01 by the Borrower or any of
its  Subsidiaries,  the  Administrative  Agent and the Collateral Agent shall be
authorized to take any actions deemed appropriate by it in connection  therewith
(including,  without limitation,  by executing appropriate lien releases or lien
subordination  agreements  in favor of the holder or holders of such  Liens,  in
either  case  solely  with  respect to the item or items of  equipment  or other
assets subject to such Liens).

                  9.02 Consolidation,  Merger,  Purchase or Sale of Assets, etc.
The Borrower will not, and will not permit any of its  Subsidiaries to, wind up,
liquidate  or dissolve  its affairs or enter into any  transaction  of merger or
consolidation, or convey, sell, lease or otherwise dispose of all or any part of
its  property  or assets,  or enter  into any  sale-leaseback  transactions,  or
purchase or otherwise  acquire (in one or a series of related  transactions) any
part of the property or assets (other than  purchases or other  acquisitions  of
inventory,  materials and  equipment in the ordinary  course of business) of any
Person (or agree to do any of the foregoing at any future time), except that:

                  (i) Capital  Expenditures by the Borrower and its Subsidiaries
         shall be permitted to the extent permitted by Section 9.07;

                                      -55-

<PAGE>

                  (ii)  each of the  Borrower  and its  Subsidiaries  may in the
         ordinary  course of business  sell,  lease or otherwise  dispose of any
         equipment  or  materials  which,  in the  reasonable  judgment  of such
         Person, are obsolete, unusable or worn out;

                  (iii)  each of the  Borrower  and its  Subsidiaries  may  sell
         assets (other than the capital stock of any Subsidiary  Guarantor),  so
         long as (w) no Default or Event of Default  then exists or would result
         therefrom,  (x) each such sale is in an arms-length transaction and the
         Borrower  or the  respective  Subsidiary  receives at least fair market
         value (as determined in good faith by the Borrower or such  Subsidiary,
         as the case  may  be),  (y) at  least  80% of the  total  consideration
         received  by the  Borrower or such  Subsidiary  is cash and paid at the
         time of the  closing of such sale and (z) the  aggregate  amount of the
         proceeds  received  from all assets sold  pursuant to this clause (iii)
         shall not exceed $400,000 in any fiscal year of the Borrower;

                  (iv) each of the Borrower and its Subsidiaries may sell assets
         (other than the capital stock of any Subsidiary Guarantor),  so long as
         (v) no  Default  or Event  of  Default  then  exists  or  would  result
         therefrom, (w) each such sale is in an arm's-length transaction and the
         Borrower  or the  respective  Subsidiary  receives at least fair market
         value (as determined in good faith by the Borrower or such  Subsidiary,
         as the case  may  be),  (x) at  least  80% of the  total  consideration
         received by the Borrower or such  Subsidiary is cash and is paid at the
         time of the closing of such sale,  (y) the Net Sale Proceeds  therefrom
         are applied as (and to the extent)  required by Section 4.02(d) and (z)
         the  aggregate  amount of the  proceeds  received  from all assets sold
         pursuant to this clause (iv) shall not exceed $10,000,000 in any fiscal
         year of the Borrower;

                  (v) Investments may be made to the extent permitted by Section
         9.05;

                  (vi) each of the Borrower and its  Subsidiaries  may lease (as
         lessee) real or personal  property in the  ordinary  course of business
         (so  long as any  such  lease  does  not  create  a  Capitalized  Lease
         Obligation except to the extent permitted by Section 9.04(iv));

                  (vii) each of the Borrower and its Subsidiaries may make sales
         of inventory in the ordinary course of business;

                  (viii) the Transaction shall be permitted;

                  (ix) the  Borrower  and each of its  Subsidiaries  may acquire
         assets or the capital stock of any Person, including by merger, so long
         as the  survivor  of  such  merger  is,  or  becomes  at such  time,  a
         Subsidiary Guarantor (any such acquisition,  a "Permitted  Acquisition"
         and the date of consummation of any such  acquisition,  an "Acquisition
         Date"),  provided  that  (i) the sum of the  aggregate  cash  and  Cash
         Equivalents plus the aggregate market value of all other  consideration
         paid by the Borrower and its  Subsidiaries  (including any Indebtedness
         assumed by the Borrower or any  Subsidiary) in connection  with (x) any
         one such Permitted Acquisition shall not exceed $40,000,000 and (y) all
         such  Permitted  Acquisitions  shall not  exceed  $60,000,000;  (ii) no
         Default or Event of Default  exists at the time of such  acquisition or
         will exist as a result  thereof;  (iii) in

                                      -56-

<PAGE>

         respect of each Permitted Acquisition (or of all Permitted Acquisitions
         closing on the same date),  the  Borrower  shall have  delivered to the
         Agents an officer's  certificate  executed by an authorized  officer of
         the Borrower  demonstrating  that on a Pro Forma Basis determined as if
         such Permitted  Acquisition (or Acquisitions) had been consummated (and
         any  Indebtedness to be incurred to finance such Permitted  Acquisition
         had been  incurred)  on the first  day of the last  Test  Period of the
         Borrower  then last ended,  the Borrower  would have been in compliance
         with Sections 9.08 through 9.10,  inclusive,  for such Test Period; and
         (iv) the principal place of business of, and at least 80% of the assets
         of, each such Acquired Business shall be located in the United States;

                  (x) the  Borrower  may  transfer  any  assets to a  Subsidiary
         Guarantor,  and any Subsidiary of the Borrower may merge or consolidate
         with and into, or be liquidated into, or transfer any of its assets to,
         the Borrower or any Subsidiary Guarantor,  in each case, so long as (i)
         the Borrower or the  respective  Subsidiary  Guarantor is the surviving
         corporation  of any  such  transaction,  (ii) in the  case of any  such
         transaction   involving  a   non-Wholly-Owned   Subsidiary,   the  only
         consideration paid to third parties in connection  therewith are shares
         of  common  stock  of  the  Borrower  and  (iii)  in  the  case  of any
         transaction   between  or  among  the  Borrower   and  the   Subsidiary
         Guarantors, all Liens granted pursuant to the Security Documents on any
         property or assets involved shall remain in full force and effect (with
         at least the same priority as such Lien would have had if such transfer
         pursuant to this clause (x) had not occurred);

                  (xi) any  Foreign  Subsidiary  of the  Borrower  may  merge or
         consolidate  with and into, or be  liquidated  into, or transfer any of
         its assets to, the Borrower or any Foreign Subsidiary so long as in the
         case of any such merger or  consolidation,  the Borrower or any Foreign
         Subsidiary is the surviving corporation of any such transaction; and

                  (xii) each of the Borrower and its  Subsidiaries may sell Cash
         Equivalents  permitted to be held by them pursuant to Section  9.05(ii)
         so long as each  such  sale is for cash and at fair  market  value  (as
         determined  in good faith by the  Borrower or such  Subsidiary,  as the
         case may be).

                  To the extent the Required  Banks waive the provisions of this
Section 9.02 with respect to the sale of any  Collateral,  or any  Collateral is
sold as  permitted  by this  Section  9.02  (other  than  to the  Borrower  or a
Subsidiary  thereof),  such Collateral shall be sold free and clear of the Liens
created  by the  Security  Documents,  and  the  Administrative  Agent  and  the
Collateral  Agent shall be authorized to take any actions deemed  appropriate in
order to effect the foregoing.

                  9.03 Dividends. The Borrower will not, and will not permit any
of its Subsidiaries to, authorize,  declare or pay any Dividends with respect to
the Borrower or any of its Subsidiaries, except that:

                  (i) any  Subsidiary of the Borrower may pay cash  Dividends to
         the Borrower or any Subsidiary Guarantor;


                                      -57-

<PAGE>


                  (ii) so long as  there  shall  exist  no  Default  or Event of
         Default (both before and after giving  effect to the payment  thereof),
         the Borrower may repurchase  outstanding shares of its common stock (or
         options to purchase such common stock) following the death,  disability
         or termination of employment of employees of the Borrower or any of its
         Subsidiaries,  provided that the aggregate  amount of Dividends paid by
         the Borrower  pursuant to this clause (ii) shall not exceed $250,000 in
         any fiscal year of the Borrower; and

                  (iii) so long as there shall be no Default or Event of Default
         (both  before and after  giving  effect to the  payment  thereof),  the
         Borrower may pay cash Dividends to its shareholders in an amount not to
         exceed in the aggregate  for all such  Dividends,  the then  applicable
         Cumulative Net Income Amount.

                  9.04 Indebtedness.  The Borrower will not, and will not permit
any of its Subsidiaries to, contract,  create,  incur, assume or suffer to exist
any Indebtedness, except:

                  (i) Indebtedness  incurred  pursuant to this Agreement and the
         other Credit Documents;

                  (ii)  Existing  Indebtedness  outstanding  on the  Restatement
         Effective  Date and listed on Schedule VI, without giving effect to any
         subsequent extension, renewal or refinancing thereof;

                  (iii)  Indebtedness  of  the  Borrower  and  its  Subsidiaries
         evidenced by  Capitalized  Lease  Obligations  to the extent  permitted
         pursuant to Section 9.07, provided that in no event shall the aggregate
         principal  amount of Capitalized  Lease  Obligations  permitted by this
         clause  (iii),  when  added  to the  amount  outstanding  under  clause
         9.01(vii), exceed $10,000,000 at any time outstanding;

                  (iv)  Indebtedness  subject to Liens  permitted  under Section
         9.01(vii);

                  (v)  intercompany  Indebtedness  to the  extent  permitted  by
         Sections 9.05;

                  (vi) a single  issuance of one or more  tranches of  unsecured
         subordinated  Indebtedness  of  the  Borrower  (the  "New  Subordinated
         Notes"),  so long as (i) the  aggregate  outstanding  principal  amount
         thereof does not exceed  $100,000,000 (less any repayments of principal
         thereof), (ii) at least 10 Business Days prior to the issuance thereof,
         the Borrower  shall have  delivered to the Agents and each of the Banks
         substantially  final drafts of the documents  pursuant to which the New
         Subordinated  Notes are to be issued and with any changes  thereto made
         after the initial  delivery of such  documents  to be  delivered to the
         Agents and with any significant changes thereto made after such initial
         delivery to be delivered to each of the Banks at least three days prior
         to the  issuance  of such  New  Subordinated  Notes,  (iii)  the  final
         maturity  date  thereof  is at least  one  year  beyond  the Term  Loan
         Maturity  Date,  (iv)  there are no  required  amortization,  mandatory
         redemption  or  sinking  fund or similar  provisions  prior to the date
         which is one year  after the Term  Loan  Maturity  Date,  (v) all other
         terms and 

                                      -58-

<PAGE>

         conditions  thereof  (including,  without  limitation,  interest rates,
         covenants,   defaults,   remedies  and  subordination  provisions)  are
         reasonably  satisfactory  to the  Agents,  (vi) no  Default or Event of
         Default  then exists or would result  therefrom  and (vii) the Net Debt
         Proceeds  from such New  Subordinated  Notes  shall be applied to repay
         Term Loans to the extent  outstanding at the time of such issuance (or,
         if prior to the termination of the Term Loan Commitment,  to reduce the
         Total Term Loan  Commitment) with any remaining amount of such Net Debt
         Proceeds to be applied to reduce any outstanding  Revolving Loans (with
         no reduction in the respective commitments thereunder); and

                  (vii)  Indebtedness  assumed by the Borrower or any Subsidiary
         in  connection  with a Permitted  Acquisition,  provided  that (x) such
         Indebtedness was not incurred in connection with or in contemplation of
         such Permitted  Acquisition and (y) such  Indebtedness  does not exceed
         20% of the  aggregate  consideration  paid by the  Borrower  and/or its
         Subsidiaries in connection with such Permitted Acquisition;

                  (viii)  Indebtedness  of the  Borrower  and  its  Subsidiaries
         consisting of guaranty and repurchase  obligations  entered into in the
         ordinary  course of business in connection with their dealer floor plan
         and rental fleet financing arrangements;

                  (ix) the IDB Financing in an aggregate principal amount not to
         exceed  $4,700,000  at any time  outstanding,  less all  repayments  of
         principal made thereon;

                  (x)   Indebtedness  of  the  Borrower  and  its   Subsidiaries
         consisting  of  contingent  obligations  entered  into in the  ordinary
         course of  business  in  connection  with  customers'  lease  financing
         arrangements,  provided that in no event shall the aggregate  amount of
         such contingent obligations permitted by this clause (x) exceed, at any
         time, $20,000,000; and

                  (xi) additional unsecured Indebtedness of the Borrower and its
         Subsidiaries not to exceed $10,000,000 in aggregate principal amount at
         any time outstanding.

                  9.05 Advances,  Investments and Loans.  The Borrower will not,
and will not permit any of its  Subsidiaries  to,  directly or indirectly,  lend
money or credit or make  advances  to any  Person,  or  purchase  or acquire any
stock,  obligations  or  securities  of, or any other  interest  in, or make any
capital contribution to, any other Person, or purchase or own a futures contract
or  otherwise  become  liable  for the  purchase  or sale of  currency  or other
commodities  at a future date in the nature of a futures  contract,  or hold any
cash  or  Cash  Equivalents   (each  of  the  foregoing  an  "Investment"   and,
collectively, "Investments"), except that the following shall be permitted:

                  (i) the  Borrower  and its  Subsidiaries  may acquire and hold
         accounts  receivables  owing to any of them,  if created or acquired in
         the  ordinary  course of  business  and  payable  or  dischargeable  in
         accordance with customary  terms, and the Borrower and its Subsidiaries
         may own  Investments  received in  connection  with the  bankruptcy  or
         reorganization   of  suppliers  and  customers  and  in  settlement  of
         delinquent  obligations  of,

                                      -59-

<PAGE>

         and  other  disputes  with,  customers  and  suppliers  arising  in the
         ordinary course of business;

                  (ii) the Borrower and its Subsidiaries may acquire and hold or
         invest in cash and Cash Equivalents;

                  (iii)  the  Borrower  and  its   Subsidiaries   may  hold  the
         Investments  held  by  them  on  the  Restatement  Effective  Date  and
         described on Schedule IX, provided that any additional Investments made
         with respect thereto shall be permitted only if independently permitted
         under the other provisions of this Section 9.05;

                  (iv) the  Borrower  and its  Subsidiaries  may make  loans and
         advances  in the  ordinary  course  of  business  to  their  respective
         employees so long as the aggregate principal amount thereof at any time
         outstanding (determined without regard to any write-downs or write-offs
         of such loans and advances) shall not exceed  $1,000,000;  

                  (v) the Borrower may enter into Interest Protection Agreements
         in respect of the Obligations;

                  (vi)  the  Borrower  and the  Subsidiary  Guarantors  may make
         intercompany   loans  and   advances   between  or  among  one  another
         (collectively, "Intercompany Loans"), so long as each Intercompany Loan
         shall be  evidenced  by an  Intercompany  Note that is  pledged  to the
         Collateral Agent pursuant to the Pledge Agreement;

                  (vii) the Borrower and its  Subsidiaries  may hold  promissory
         notes issued by a purchaser in connection  with an asset sale permitted
         under Section 9.02(iii) and (iv);

                  (viii) the Borrower  and the  Subsidiary  Guarantors  may make
         Investments in addition to the loans and advances  described in Section
         9.05(vi) between or among one another;

                  (ix) the  Borrower  and its  Subsidiaries  may make  Permitted
         Acquisitions  effected in accordance  with the  requirements of Section
         9.02(ix); and

                  (x) the Borrower and its  Subsidiaries may make Investments in
         addition to the Investments described above in this Section 9.05 not to
         exceed $2,000,000 in aggregate amount at any time outstanding.

                  9.06 Transactions with Affiliates.  The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any  Affiliate  of the  Borrower or any of its  Subsidiaries,  other than in the
ordinary  course  of  business  and on terms  and  conditions  substantially  as
favorable to the Borrower or such Subsidiary as would  reasonably be obtained by
the  Borrower  or such  Subsidiary  at that  time in a  comparable  arm's-length
transaction with a Person other than an Affiliate,  except that the following in
any event shall be permitted:  (i) Dividends may be paid to the extent  provided
in Section 9.03,  (ii) loans may be made and other  

                                      -60-

<PAGE>

transactions  may be entered into by the Borrower  and its  Subsidiaries  to the
extent permitted by Sections 9.02, 9.04, 9.05 and 9.07, (iii) customary fees may
be paid to  non-officer  directors of the Borrower and (iv) the Borrower and its
Subsidiaries  may pay management,  advisory,  consulting and similar fees to the
Borrower,   any  WhollyOwned   Subsidiary  of  the  Borrower  and  Harbor  Group
Industries, Inc. and its Affiliates.

                  9.07 Capital Expenditures. (a) The Borrower will not, and will
not permit any of its  Subsidiaries  to, make any Capital  Expenditures,  except
that during any fiscal year of the Borrower  (taken as one  accounting  period),
the Borrower and its Subsidiaries  may make Capital  Expenditures so long as the
aggregate amount of such Capital  Expenditures  does not exceed  $20,000,000 for
any such fiscal year,  provided  that any such amount not utilized in any fiscal
year may be applied to Capital  Expenditures in the next succeeding fiscal year,
provided  further that any amounts so carried forward shall not be considered in
the  determination of amounts  available to be carried forward to any succeeding
year.

                  (b)  Notwithstanding  the  foregoing  paragraph  (a),  for the
Borrower's  fiscal  year  1999,  the  Borrower  and its  Subsidiaries  shall  be
permitted to make  Capital  Expenditures  in an  aggregate  amount not to exceed
$25,000,000 for such fiscal year,  provided that any amounts not utilized in the
1998 fiscal year may not be carried forward and applied to Capital  Expenditures
in the 1999 fiscal year.

                  (c)  Notwithstanding  the  foregoing,  the  Borrower  and  its
Subsidiaries   may  make   additional   Capital   Expenditures   (which  Capital
Expenditures  will not be included in any  determination  under Section 9.07(a))
with the Net Sale  Proceeds of Asset Sales to the extent such  proceeds  are not
required to be applied to repay Term Loans (or reduce the Total  Revolving  Loan
Commitment)  pursuant to Section  4.02(d) and such  proceeds are  reinvested  as
required by Section 4.02(d).

                  (d)  Notwithstanding  the  foregoing,  the  Borrower  and  its
Subsidiaries   may  make   additional   Capital   Expenditures   (which  Capital
Expenditures  will not be included in any  determination  under Section 9.07(a))
with the insurance  proceeds received by the Borrower or any of its Subsidiaries
from any Recovery Event so long as such Capital  Expenditures  are to replace or
restore any  properties or assets in respect of which such proceeds were paid or
contractually  committed  to be paid within 180 days  following  the date of the
receipt of such insurance proceeds to the extent such insurance proceeds are not
required to be applied to repay Term Loans (or reduce the Total  Revolving  Loan
Commitment) pursuant to Section 4.02(f).

                  (e)  Notwithstanding  the  foregoing,  the  Borrower  may make
additional Capital Expenditures (which Capital Expenditures will not be included
in any determination under Section 9.07(a)) constituting  Permitted Acquisitions
effected in accordance with the requirements of Section 9.02(viii).

                                      -61-

<PAGE>

                  9.08  Consolidated  Fixed Charge Coverage Ratio.  The Borrower
will not permit the Consolidated Fixed Charge Coverage Ratio for any Test Period
ending on the last day of a fiscal  quarter  set forth below to be less than the
ratio set forth opposite such fiscal quarter below:

                  Fiscal Quarter                       Ratio
                  --------------                       -----


                  March 31, 1999                       3.00:1.00

                  June 30, 1999                        3.00:1.00

                  September 30, 1999                   3.00:1.00

                  December 31, 1999                    3.50:1.00

                  March 31, 2000                       3.50:1.00

                  June 30, 2000                        4.00:1.00

                  Thereafter                           4.00:1.00


                  9.09  Consolidated  Interest Coverage Ratio. The Borrower will
not permit the Consolidated  Interest  Coverage Ratio for any Test Period ending
on the last day of a fiscal  quarter  set forth  below to be less than the ratio
set forth opposite such fiscal quarter below:

                  Fiscal Quarter                       Ratio
                  --------------                       -----

                  March 31, 1999                       4.50:1.00

                  June 30, 1999                        4.50:1.00

                  September 30, 1999                   4.50:1.00

                  December 31, 1999                    4.50:1.00

                  March 31, 2000                       5.00:1.00

                  Thereafter                           5.00:1.00


                  9.10 Maximum  Leverage Ratio. The Borrower will not permit the
Leverage  Ratio at any time during a period set forth  below to be greater  than
the ratio set forth opposite such period below:


                                      -62-

<PAGE>

                  Fiscal Quarter                        Ratio
                  --------------                        -----

                  March 31, 1999                        3.25:1.00

                  June 30, 1999                         3.25:1.00

                  September 30, 1999                    3.25:1.00

                  December 31, 1999                     3.00:1.00

                  March 31, 2000                        3.00:1.00

                  June 30, 2000                         2.75:1.00

                  September 30, 2000                    2.75:1.00

                  December 31, 2000                     2.50:1.00

                  March 31, 2001                        2.50:1.00

                  June 30, 2001                         2.25:1.00

                  September 30, 2001                    2.25:1.00

                  December 31, 2001                     2.00:1.00

                  March 31, 2002                        2.00:1.00

                  June 30, 2002                         1.75:1.00

                  Thereafter                            1.75:1.00



                  9.11  Limitation on Voluntary  Payments and  Modifications  of
Subordinated  Indebtedness;  Modifications of Certificate of  Incorporation  and
Certain Other Agreements; etc. The Borrower will not, and will not permit any of
its  Subsidiaries  to, (i) make (or give any notice in respect of) any voluntary
or optional  payment or prepayment on or redemption or acquisition for value of,
or make any  prepayment or  redemption as a result of any asset sale,  change of
control or similar event of (including, in each case, without limitation, by way
of depositing with the trustee with respect  thereto or any other Person,  money
or  securities  before  due  for  the  purpose  of  paying  when  due)  any  New
Subordinated Notes (after the issuance thereof) or the IDB Financing, (ii) amend
or modify,  or permit the amendment or modification of, any provision of the New
Subordinated  Notes or any New Subordinated  Note Documents,  in each case after
the issuance thereof,  (iii) amend, modify or change any IDB Financing Documents
or its  certificate of  incorporation  (including,  without  limitation,  by the
filing or modification  of any  certificate of  designation)  (or the equivalent
organizational  documents) or any  agreement  entered into by it with respect to
its capital stock (including any Shareholders' Agreement), or enter into any new
agreement   with  respect  to  its  capital   stock,   unless  such   amendment,
modification, change or 

                                      -63-

<PAGE>

other action  contemplated by this clause (iii) could not reasonably be expected
to be adverse to the  interests of the Banks in any material  respect,  and (iv)
amend, modify or change any provision of any Tax Sharing Agreement or enter into
any new tax sharing  agreement,  tax allocation  agreement or similar agreement,
unless such amendment, modification, change or other action contemplated by this
clause (iv) cannot  reasonably be expected to be adverse to the interests of the
Banks in any material respect.

                  9.12 Limitation on Certain  Restrictions on Subsidiaries.  The
Borrower will not, and will not permit any of its  Subsidiaries  to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance  or  restriction  on the ability of any such  Subsidiary  to (a) pay
dividends  or make any other  distributions  on its  capital  stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
the Borrower,  or pay any Indebtedness owed to the Borrower or any Subsidiary of
the  Borrower,  (b) make loans or advances to the Borrower or any  Subsidiary of
the Borrower or (c) transfer any of its  properties or assets to the Borrower or
any Subsidiary of the Borrower,  except for such  encumbrances  or  restrictions
existing under or by reason of (i)  applicable  law, (ii) this Agreement and the
other  Credit  Documents  and (iii)  restrictions  on the  transfer of any asset
subject to a Lien permitted by this Agreement.

                  9.13 Limitation on Issuance of Capital Stock. (a) The Borrower
will  not,  and  will not  permit  any of its  Subsidiaries  to,  issue  (i) any
preferred stock or (ii) any common stock  redeemable at the option of the holder
thereof.

                  (b) The Borrower  will not permit any of its  Subsidiaries  to
issue any capital  stock  (including  by way of sales of treasury  stock) or any
options or warrants to purchase, or securities  convertible into, capital stock,
except (i) for transfers and replacements of then outstanding  shares of capital
stock,  (ii) for  stock  splits,  stock  dividends  and  issuances  which do not
decrease the percentage  ownership of the Borrower or any of its Subsidiaries in
any class of the capital stock of such Subsidiary, (iii) to qualify directors to
the extent required by applicable law and (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this Agreement.

                  9.14 Business.  The Borrower will not, and will not permit any
of its  Subsidiaries  to, engage  (directly or indirectly) in any business other
than the  businesses in which the Borrower and its  Subsidiaries  are engaged on
the  Restatement  Effective  Date (after giving effect to the  Transaction)  and
reasonable  extensions  thereof and those  reasonably  related or  complementary
thereto.

                  9.15 Limitation on Creation of  Subsidiaries.  Notwithstanding
anything to the contrary contained in this Agreement, the Borrower will not, and
will not permit any of its Subsidiaries to,  establish,  create or acquire after
the Restatement  Effective Date any Subsidiary;  provided that, the (A) Borrower
and its  Wholly-Owned  Subsidiaries  shall be  permitted  to establish or create
Wholly-Owned  Subsidiaries so long as, in each case, (i) at least 15 days' prior
written notice thereof is given to the Agents (or such shorter period of time as
is acceptable to the Agents),  (ii) the capital stock of such new Subsidiary (or
65% of the  outstanding  capital  stock of 

                                      -64-

<PAGE>

a Foreign  Subsidiary)  is  promptly  pledged  pursuant  to,  and to the  extent
required by, this Agreement and the Pledge  Agreement and the  certificates,  if
any, representing such stock, together with stock powers duly executed in blank,
are delivered to the Collateral  Agent,  (iii) such new Subsidiary (other than a
Foreign  Subsidiary except to the extent otherwise  required pursuant to Section
8.13) promptly executes a counterpart of the Subsidiaries  Guaranty,  the Pledge
Agreement and the Security  Agreement,  and (iv) to the extent  requested by the
Agents or the Required  Banks,  takes all actions  required  pursuant to Section
8.12 and (B) Subsidiaries may be acquired pursuant to Permitted  Acquisitions so
long as, in each such case the actions  specified in preceding  clause (A) shall
be taken.  In  addition,  each new  Subsidiary  that is  required to execute any
Credit  Document  shall  execute  and  deliver,  or  cause  to be  executed  and
delivered,  all other relevant  documentation of the type described in Section 5
as such new Subsidiary  would have had to deliver if such new Subsidiary  were a
Credit Party on the Restatement Effective Date.

                  SECTION 10. Events of Default.  Upon the  occurrence of any of
the following specified events (each an "Event of Default"):

                  10.01 Payments.  The Borrower shall (i) default in the payment
when due of any  principal of any Loan or any Note,  or (ii)  default,  and such
default shall  continue for more than two Business Days, in the payment when due
of any interest on any Loan or Note, any Unpaid Drawing or any Fees or any other
amounts owing hereunder or thereunder; or

                  10.02  Representations,  etc. Any representation,  warranty or
statement made by any Credit Party herein or in any other Credit  Document or in
any  certificate  delivered to any Agent or any Bank pursuant  hereto or thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or

                  10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term,  covenant or agreement contained in
Section  8.01(f)(i),  8.08 or  8.11 or  Section  9 or  (ii)  default  in the due
performance  or  observance  by it of any  other  term,  covenant  or  agreement
contained in this Agreement or any other Credit  Document  (other than those set
forth in Sections  10.01 and 10.02) and such default shall  continue  unremedied
for a period of 30 days after written notice thereof to the defaulting  party by
any Agent or the Required Banks; or

                  10.04 Default Under Other Agreements.  (i) The Borrower or any
of its Subsidiaries shall (x) default in any payment of any Indebtedness  (other
than the  Notes)  beyond the period of grace or cure,  if any,  provided  in the
instrument or agreement under which such Indebtedness was created or (y) default
in the observance or  performance of any agreement or condition  relating to any
Indebtedness  (other than the Notes) or contained in any instrument or agreement
evidencing,  securing  or  relating  thereto,  or any other event shall occur or
condition  exist,  the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such  Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause  (determined  without regard
to whether any notice is  required,  but beyond the period of grace or cure,  if
any,  provided in the instrument or agreement under which such  Indebtedness was
created),  any such Indebtedness to become due prior to its stated maturity,  or
(ii) any  

                                      -65-

<PAGE>

Indebtedness  (other than the Notes) of the Borrower or any of its  Subsidiaries
shall be declared to be (or shall  become)  due and  payable,  or required to be
prepaid other than by a regularly  scheduled required  prepayment,  prior to the
stated maturity thereof,  provided that it shall not be a Default or an Event of
Default under this Section 10.04 unless the  aggregate  principal  amount of all
Indebtedness  as  described  in  preceding  clauses  (i) and  (ii)  is at  least
$2,000,000; or

                  10.05 Bankruptcy, etc. The Borrower or any of its Subsidiaries
shall commence a voluntary case  concerning  itself under Title 11 of the United
States  Code  entitled  "Bankruptcy,"  as now or  hereafter  in  effect,  or any
successor  thereto (the "Bankruptcy  Code"); or an involuntary case is commenced
against  the  Borrower  or any of its  Subsidiaries,  and  the  petition  is not
controverted  within  15  days,  or is  not  dismissed  within  60  days,  after
commencement of the case; or a custodian (as defined in the Bankruptcy  Code) is
appointed for, or takes charge of, all or  substantially  all of the property of
the  Borrower  or  any  of  its  Subsidiaries,  or  the  Borrower  or any of its
Subsidiaries   commences  any  other   proceeding   under  any   reorganization,
arrangement,  adjustment of debt, relief of debtors, dissolution,  insolvency or
liquidation  or similar  law of any  jurisdiction  whether now or  hereafter  in
effect  relating  to  the  Borrower  or any of its  Subsidiaries,  or  there  is
commenced  against the Borrower or any of its  Subsidiaries  any such proceeding
which remains undismissed for a period of 60 days, or the Borrower or any of its
Subsidiaries  is  adjudicated  insolvent or bankrupt;  or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Subsidiaries suffers any appointment of any custodian or the like for
it or any substantial part of its property to continue  undischarged or unstayed
for a period of 60 days;  or the  Borrower  or any of its  Subsidiaries  makes a
general  assignment  for the benefit of creditors;  or any  corporate  action is
taken by the  Borrower or any of its  Subsidiaries  for the purpose of effecting
any of the foregoing; or

                  10.06  ERISA.  (a) Any Plan shall fail to satisfy  the minimum
funding standard required for any plan year or part thereof under Section 412 of
the Code or Section 302 of ERISA or a waiver of such  standard or  extension  of
any  amortization  period is sought or granted  under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan or
Multiemployer  Plan which is  subject to Title IV of ERISA  shall have had or is
likely to have a trustee  appointed  to  administer  such Plan or  Multiemployer
Plan, any Plan or  Multiemployer  Plan which is subject to Title IV of ERISA is,
shall  have  been  or is  likely  to be  terminated  or to  be  the  subject  of
termination  proceedings under ERISA, any Plan or Multiemployer  Plan shall have
an Unfunded Current Liability,  a contribution  required to be made with respect
to a Plan, a  Multiemployer  Plan or a Foreign  Pension Plan has not been timely
made, the Borrower or any Subsidiary of the Borrower or any ERISA  Affiliate has
incurred  or is likely  to incur any  liability  to or on  account  of a Plan or
Multiemployer  Plan under Section 409,  502(i),  502(l),  515, 4062, 4063, 4064,
4069,  4201,  4204 or 4212 of ERISA or Section  401(a)(29),  4971 or 4975 of the
Code or on account of a group health plan (as defined in Section 607(1) of ERISA
or Section  4980B(g)(2) of the Code) under Section  4980B(a) of the Code, or the
Borrower or any  Subsidiary  of the  Borrower has incurred or is likely to incur
liabilities  pursuant to one or more employee  welfare benefit plans (as defined
in Section  3(1) of ERISA) that provide  benefits to retired  employees or other
former  employees  (other  than as required by Section 601 of ERISA) or Plans or
Foreign Pension Plans;  (b) there shall result from any such 

                                      -66-

<PAGE>

event or events the imposition of a lien,  the granting of a security  interest,
or a liability or a material  risk of incurring a liability;  and (c) such lien,
security interest or liability,  individually, and/or in the aggregate, has had,
or could  reasonably  be  expected  to have,  a material  adverse  effect on the
business,  operations,  property, assets,  liabilities,  condition (financial or
otherwise)  or prospects  of the  Borrower or the Borrower and its  Subsidiaries
taken as a whole; or

                  10.07 Security Documents.  At any time after the execution and
delivery thereof,  any of the Security Documents shall cease to be in full force
and effect,  or shall cease to give the Collateral  Agent for the benefit of the
Secured  Creditors  the Liens,  rights,  powers and  privileges  purported to be
created thereby (including,  without  limitation,  a perfected security interest
in,  and Lien on,  all of the  Collateral,  in  favor of the  Collateral  Agent,
superior to and prior to the rights of all third Persons (except as permitted by
Section  9.01),  and subject to no other Liens  (except as  permitted by Section
9.01); or

                  10.08 Subsidiaries  Guaranty.  At any time after the execution
and delivery thereof,  the Subsidiaries  Guaranty or any provision thereof shall
cease to be in full  force or  effect  as to any  Subsidiary  Guarantor,  or any
Subsidiary  Guarantor  or any Person  acting by or on behalf of such  Subsidiary
Guarantor shall deny or disaffirm such Subsidiary Guarantor's  obligations under
the Subsidiaries  Guaranty or any Subsidiary  Guarantor shall default in the due
performance  or observance of any term,  covenant or agreement on its part to be
performed or observed pursuant to the Subsidiaries Guaranty; or

                  10.09  Judgments.  One or more  judgments or decrees  shall be
entered against the Borrower or any Subsidiary of the Borrower  involving in the
aggregate for the Borrower and its  Subsidiaries  a liability (not paid or fully
covered by a reputable  and solvent  insurance  company) and such  judgments and
decrees  either  shall be final  and  non-appealable  or shall  not be  vacated,
discharged or stayed or bonded  pending  appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds $2,000,000; or

                  10.10 Change of Control. A Change of Control shall occur:

then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing,  the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower,  take any or all of
the following actions, without prejudice to the rights of any Agent, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided,
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrower,  the result which would occur upon the giving of written notice
by the  Administrative  Agent as  specified  in clauses (i) and (ii) below shall
occur  automatically  without  the giving of any such  notice):  (i) declare the
Total  Commitments  terminated,  whereupon  all  Commitments  of each Bank shall
forthwith  terminate  immediately and any Commitment  Commission shall forthwith
become due and payable  without any other  notice of any kind;  (ii) declare the
principal of and any accrued  interest in respect of all Loans and the Notes and
all Obligations  owing hereunder and thereunder to be,  whereupon the same shall
become, forthwith due and payable without presentment,  demand, protest or other
notice of any kind,  all of which are hereby waived by each Credit Party;  (iii)
terminate any Letter of Credit which may be  terminated  in accordance  with its
terms;  (iv)  direct the  Borrower  to pay (and the  Borrower  agrees  that upon
receipt of such notice,  or upon the 

                                      -67-

<PAGE>

occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower,  it will  pay) to the  Collateral  Agent at the  Payment  Office  such
additional amount of cash, to be held as security by the Collateral Agent, as is
equal to the  aggregate  Stated  Amount of all Letters of Credit  issued for the
account of the Borrower and then outstanding;  (v) enforce, as Collateral Agent,
all of the  Liens  and  security  interests  created  pursuant  to the  Security
Documents;  and (vi) apply any cash collateral held by the Administrative  Agent
pursuant to Section 4.02 to the repayment of the Obligations.

                  SECTION 11. Definitions and Accounting Terms.

                  11.01 Defined Terms. As used in this Agreement,  the following
terms shall have the following  meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

                  "A Term  Note"  shall  have the  meaning  provided  in Section
1.05(a).

                  "Additional   Security   Documents"  shall  have  the  meaning
provided in Section 8.12.

                  "Adjusted  Consolidated  Cash  Income"  shall  mean,  for  any
period,  Consolidated Net Income for such period plus, without duplication,  the
sum of the amount of all net non-cash charges  (including,  without  limitation,
depreciation, amortization, deferred tax expense, non-cash interest expense) and
net non-cash losses which were included in arriving at  Consolidated  Net Income
for such period less the sum of the amount of all net non-cash  gains which were
included in arriving at Consolidated Net Income for such period.

                  "Adjusted Consolidated Working Capital" at any time shall mean
Consolidated   Current  Assets  (but  excluding  therefrom  all  cash  and  Cash
Equivalents) less Consolidated Current Liabilities at such time.

                  "Adjusted RL Percentage" shall mean (x) at a time when no Bank
Default exists,  for each Bank, such Bank's RL Percentage and (y) at a time when
a Bank Default  exists,  (i) for each Bank that is a Defaulting  Bank,  zero and
(ii) for each Bank that is a Non-Defaulting  Bank, the percentage  determined by
dividing  such Bank's  Revolving  Loan  Commitment  at such time by the Adjusted
Total  Revolving  Loan  Commitment  at such time, it being  understood  that all
references herein to Revolving Loan Commitments and the Adjusted Total Revolving
Loan  Commitment at a time when the Total  Revolving Loan Commitment or Adjusted
Total Revolving Loan  Commitment,  as the case may be, has been terminated shall
be references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided  that (A) a Bank's  Adjusted RL  Percentage  shall only change upon the
occurrence of a Bank Default from that in effect  immediately prior to such Bank
Default to the extent that after  giving  effect to such Bank  Default,  and any
repayment  of  Revolving  Loans and  Swingline  Loans at such time  pursuant  to
Section 4.02(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of  Revolving  Loans of such Bank plus (ii) such  Bank's new  Adjusted RL
Percentage of the aggregate  outstanding principal amount of Swingline Loans and
the  Letter  of  Credit

                                      -68-

<PAGE>

Outstandings,  would not exceed the  Revolving  Loan  Commitment of such Bank at
such time; (B) the changes to the Adjusted RL Percentage  that would have become
effective  upon  the  occurrence  of a Bank  Default  but  that  did not  become
effective as a result of the preceding  clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate  outstanding  principal  amount of the Revolving  Loans of all
Non-Defaulting  Banks, plus (ii) the aggregate  outstanding  principal amount of
Swingline Loans,  plus (iii) the Letter of Credit  Outstandings,  is equal to or
less  than  the  Adjusted  Total  Revolving  Loan  Commitment;  and (C) if (i) a
Non-Defaulting  Bank's  Adjusted  RL  Percentage  is  changed  pursuant  to  the
preceding clause (B) and (ii) any repayment of such Bank's Revolving Loans or of
Unpaid  Drawings  or of  Swingline  Loans  that  were  made  during  the  period
commencing after the date of the relevant Bank Default and ending on the date of
such change to its Adjusted RL Percentage  must be returned to the Borrower as a
preferential or similar  payment in any bankruptcy or similar  proceeding of the
Borrower,  then the change to such Non-Defaulting  Bank's Adjusted RL Percentage
effected  pursuant to said clause (B) shall be reduced to that positive  change,
if any,  as would  have  been made to its  Adjusted  RL  Percentage  if (x) such
repayments  had not been  made and (y) the  maximum  change to its  Adjusted  RL
Percentage  would  have  resulted  in the sum of the  outstanding  principal  of
Revolving Loans made by such Bank plus such Bank's new Adjusted RL Percentage of
the  outstanding  principal  amount of  Swingline  Loans and of Letter of Credit
Outstandings  equaling  such  Bank's  Revolving  Loan  Commitment  at such time.

                  "Adjusted Total Revolving Loan  Commitment"  shall mean at any
time the Total  Revolving  Loan  Commitment  less the aggregate  Revolving  Loan
Commitments of all Defaulting Banks.

                  "Administrative  Agent" shall mean First Union  National Bank,
in its capacity as Administrative Agent for the Banks hereunder and Co-Arranger,
and shall include any successor to the  Administrative  Agent appointed pursuant
to Section 12.09.

                  "Affected Eurodollar Loans" shall have the meaning provided in
Section 4.02(g).

                  "Affiliate" shall mean, with respect to any Person,  any other
Person  directly or indirectly  controlling,  controlled  by, or under direct or
indirect common control with,  such Person.  A Person shall be deemed to control
another Person if such Person  possesses,  directly or indirectly,  the power to
direct or cause the  direction  of the  management  and  policies  of such other
Person,  whether  through the  ownership  of voting  securities,  by contract or
otherwise.

                  "Agent"  shall mean and include the  Administrative  Agent and
the Syndication Agent.

                  "Agreement"  shall  mean  this  Amended  and  Restated  Credit
Agreement, as modified, supplemented, amended, restated (including any amendment
and restatement hereof), extended,  renewed, refinanced or replaced from time to
time.

                  "Applicable  Base Rate Margin" from and after the first day of
any  Applicable  Pricing Period (the "Start Date") to and including the last day
of such  Applicable  Pricing Period 

                                      -69-

<PAGE>

(the "End Date"),  shall mean the  respective  percentage per annum set forth in
clause (A) or (B) below if,  but only if, as of the last day of the most  recent
fiscal quarter of the Borrower ended  immediately  prior to such Start Date (the
"Test Date") the condition in clause (A) or (B) below is met:

                  (A) 0.625% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be greater than 2.5:1.0; or

                  (B) 0.500% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.50:1.0 but greater than 2.25:1.0; or

                  (C) 0.375% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.25:1.0 but greater than 2.00:1.0; or

                  (D) 0.250% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.00:1.0 but greater than 1.75:1.0; or

                  (E) 0.125% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 1.75:1.0 but greater than 1.50:1.0; or

                  (F) 0.000% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 1.5:1.0.

                  Notwithstanding  anything to the contrary  contained  above in
this  definition,  (a) the  Applicable  Base Rate Margin  shall be 0.625% at all
times when financial  statements have not been delivered when required  pursuant
to Section  8.01(a) or (b), as the case may be, and (b) on and after the date on
which the Borrower has issued New Subordinated  Notes in an aggregate  principal
amount of at least $100,000,000,  each of the percentage margins set forth above
shall be reduced by 0.125% (but not below 0%).

                  "Applicable  Commitment  Commission  Percentage"  (i)  for any
calculation of the Commitment Commission payable in respect of Term Loans, shall
mean 0.375%,  and (ii) for any calculation of the Commitment  Commission payable
in respect of Loans other than Term Loans, after any Start Date to and including
the corresponding  End Date, shall mean the respective  percentage per annum set
forth in clause  (A) or (B) below if,  but only if, as of the Test Date for such
Start Date the condition set forth in clause (A) or (B) below is met:

                  (A) 0.375% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be greater than 2.00:1.00; or

                  (B) 0.250% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.00:1.00.

                                      -70-

<PAGE>

                  Notwithstanding  anything to the contrary  contained  above in
this definition, the Applicable Commitment Commission Percentage shall be 0.375%
at all times when  financial  statements  have not been  delivered when required
pursuant to Section 8.01(a) or (b), as the case may be.

                  "Applicable  Eurodollar  Margin" from and after any Start Date
to  and  including  the  corresponding  End  Date,  shall  mean  the  respective
percentage  per annum set forth in clause  (A)-(F)  below if, but only if, as of
the Test Date for such Start Date the condition in clause (A)-(F) below is met:

                  (A) 1.625% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be greater than 2.5:1.0; or

                  (B) 1.500% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.50:1.0 but greater than 2.25:1.0; or

                  (C) 1.375% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.25:1.0 but greater than 2.00:1.0; or

                  (D) 1.250% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 2.00:1.0 but greater than 1.75:1.0; or

                  (E) 1.125% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 1.75:1.0 but greater than 1.50:1.0; or

                  (F) 1.000% if, but only if, as of the Test Date for such Start
         Date,  the  Leverage  Ratio for the Test Period ended on such Test Date
         shall be equal to or less than 1.5:1.0.

                  Notwithstanding  anything to the contrary  contained  above in
this  definition,  (a) the Applicable  Eurodollar  Margin shall be 1.625% at all
times when financial  statements have not been delivered when required  pursuant
to Section  8.01(a) or (b), as the case may be, and (b) on and after the date on
which the Borrower has issued New Subordinated  Notes in an aggregate  principal
amount of at least $100,000,000,  each of the percentage margins set forth above
shall be reduced by 0.125%.

                  "Applicable Pricing Period" shall mean each period which shall
commence  on a date five  Business  Days  after the date on which the  financial
statements are delivered  pursuant to Section 8.01(a) or (b) and which shall end
on the  earlier  of (i) the date  five  Business  Days  after the date of actual
delivery of the next financial statements pursuant to Section 8.01(a) or (b) and
(ii) the latest date on which the next  financial  statements are required to be
delivered  pursuant to Section 8.01(a) or (b) if such financial  statements have
not been delivered on or prior to such date.

                                      -71-

<PAGE>

                  "Asset   Sale"   shall  mean  any  sale,   transfer  or  other
disposition by the Borrower or any of its Subsidiaries to any Person  (including
by  way  of  redemption  by  such  Person)  other  than  to  the  Borrower  or a
Wholly-Owned  Subsidiary  of the  Borrower  of  any  asset  (including,  without
limitation,  any capital stock or other  securities of, or equity  interests in,
another Person) of the Borrower or any of its Subsidiaries, other than any sale,
transfer or disposition permitted by Sections 9.02(ii),  (iii), (v), (vii), (xi)
and (xii).

                  "Assignment and Assumption Agreement" shall mean an Assignment
and Assumption  Agreement  substantially in the form of Exhibit K (appropriately
completed).

                  "B Term  Note"  shall  have the  meaning  provided  in Section
1.05(a).

                  "Bank" shall mean each Person listed on Schedule I, as well as
any  Person  which  becomes  a "Bank"  hereunder  pursuant  to  Section  1.13 or
13.04(b).

                  "Bank  Default" shall mean (i) the refusal (which has not been
retracted)  or the  failure  of a Bank  to make  available  its  portion  of any
Borrowing  (including  any  Mandatory  Borrowing)  or to fund its portion of any
unreimbursed  payment  under Section  2.04(c) or (ii) a Bank having  notified in
writing the  Borrower  and/or the  Administrative  Agent that such Bank does not
intend to comply with its obligations under Section 1.01(a),  1.01(b),  1.01(c),
1.04 or 2, in the case of either  clause (i) or (ii) as a result of any takeover
or control (including,  without limitation, as a result of the occurrence of any
event of the type  described in Section 10.05 with respect to such Bank) of such
Bank by any regulatory authority or agency.

                  "Bankruptcy  Code" shall have the meaning  provided in Section
10.05.

                  "Base Rate" at any time shall mean the higher of (i) 1/2 of 1%
in excess of the Federal Funds Rate and (ii) the Prime Lending Rate.

                  "Base Rate Loan" shall mean (i) each  Swingline  Loan and (ii)
each other Loan  designated or deemed  designated as such by the Borrower at the
time of the incurrence thereof or conversion thereto.

                  "Borrower"  shall  have  the  meaning  provided  in the  first
paragraph of this Agreement.

                  "Borrower's  Account"  shall  mean a  deposit  account  of the
Borrower  maintained with the Payment Office of the Administrative  Agent, which
is identified by the Borrower in the most recent Notice of Account  Designation,
substantially  in the form of Exhibit M hereto  delivered by the Borrower to the
Administrative  Agent as the Borrower's Account for receipt of proceeds of Loans
to the Borrower.

                  "Borrowing"  shall mean the borrowing of one Type of Loan of a
single Tranche from all the Banks having  Commitments of the respective  Tranche
(or from the Swingline Bank in the case of Swingline  Loans) on a given date (or
resulting  from a conversion or  conversions on such date) having in the case of
Eurodollar  Loans the same  Interest  Period,  provided  that  Base  

                                      -72-

<PAGE>

Rate Loans incurred  pursuant to Section 1.10(b) shall be considered part of the
related Borrowing of Eurodollar Loans.

                  "Business  Day" shall mean (i) for all purposes  other than as
covered by clause (ii) below, any day except Saturday,  Sunday and any day which
shall be in New York City, New York or Charlotte, North Carolina a legal holiday
or a day on which  banking  institutions  are  authorized  or required by law or
other  government  action to close  and (ii) with  respect  to all  notices  and
determinations  in connection  with,  and payments of principal and interest on,
Eurodollar  Loans, any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in the London interbank
Eurodollar market.

                  "Calculation Period" shall mean the period of four consecutive
fiscal  quarters of the Borrower  last ended  before the date of the  respective
Permitted  Acquisition  which  requires  calculations  to be made on a Pro Forma
Basis.

                  "Capital Expenditures" shall mean, with respect to any Person,
all  expenditures  by such Person which should be capitalized in accordance with
generally accepted accounting principles and, without duplication, the amount of
Capitalized Lease Obligations incurred by such Person.

                  "Capitalized  Lease  Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are or
will be required to be  capitalized  on the books of such  Person,  in each case
taken at the amount thereof  accounted for as  indebtedness  in accordance  with
such principles.

                  "Cash   Equivalents"   shall  mean,  as  to  any  Person,  (i)
securities  issued or  directly  and fully  guaranteed  or insured by the United
States or any agency or  instrumentality  thereof  (provided that the full faith
and credit of the United States is pledged in support thereof) having maturities
of not more than one year from the date of acquisition,  (ii) Dollar denominated
time deposits and  certificates  of deposit of any  commercial  bank having,  or
which is the principal  banking  subsidiary of a bank holding company having,  a
long-term  unsecured debt rating of at least "A" or the equivalent  thereof from
Standard  & Poor's  Ratings  Services  or "A2" or the  equivalent  thereof  from
Moody's Investors  Service,  Inc. with maturities of not more than one year from
the date of acquisition by such Person, (iii) repurchase obligations with a term
of not more than seven days for underlying  securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (ii) above, (iv) commercial paper issued by any Person incorporated in
the United  States  rated at least A-1 or the  equivalent  thereof by Standard &
Poor's  Ratings  Services  or at least P1 or the  equivalent  thereof by Moody's
Investors  Service,  Inc. and in each case maturing not more than 270 days after
the  date of  acquisition  by such  Person,  (v)  asset-backed  certificates  of
participation  representing a fractional  undivided  interest in the assets of a
trust,  which  certificates are rated at least A-1 or the equivalent  thereof by
Standard & Poor's Rating  Services or at least P-1 or the equivalent  thereof by
Moody's  Investors  Service,  Inc.,  and (vi)  investments in money market funds
substantially  all of whose  assets are  comprised  of  securities  of the types
described in clauses (i) through (v) above.

                                      -73-

<PAGE>

                  "CERCLA" shall mean the Comprehensive  Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.

                  "Change  of  Control"  shall  mean (i) any  Person or  "group"
(within the meaning of Rules 13d-3 or 13d-5 under the  Securities  Exchange  Act
(as in effect on the  Restatement  Effective  Date)),  other than the  Permitted
Holders,  shall (A) have acquired beneficial ownership of 25% or more on a fully
diluted basis of the voting and/or economic  interest in the Borrower's  capital
stock or (B) have  obtained  the power  (whether  or not  exercised)  to elect a
majority  of the  Borrower's  directors  or (ii) the Board of  Directors  of the
Borrower shall cease to consist of a majority of Continuing Directors.

                  "Co-Arrangers"  shall mean each of First Union  National  Bank
and Morgan  Stanley  Senior  Funding,  Inc. in their  respective  capacities  as
Co-Arrangers.  The  Co-Arrangers  shall incur no  liabilities  and shall have no
duties or responsibilities  under this Agreement or any other Credit Document in
such capacity.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended from time to time, and the  regulations  promulgated  and rulings issued
thereunder.  Section references to the Code are to the Code, as in effect at the
date of this  Agreement and any  subsequent  provisions of the Code,  amendatory
thereof, supplemental thereto or substituted therefor.

                  "Collateral"   shall  mean  all  property   (whether  real  or
personal)  with  respect to which any security  interests  have been granted (or
purport to be granted)  pursuant to any Security  Document,  including,  without
limitation,  all Pledge Agreement Collateral, all Security Agreement Collateral,
the  Mortgaged  Properties,  and all  cash  and Cash  Equivalents  delivered  as
collateral pursuant to Section 4.02 or 10.

                  "Collateral Agent" shall mean the Administrative  Agent acting
as  collateral  agent  for  the  Secured  Creditors  pursuant  to  the  Security
Documents.

                  "Collective  Bargaining  Agreements"  shall  have the  meaning
provided in Section 5.05.

                  "Commitment"  shall mean any of the  commitments  of any Bank,
i.e., whether the Term Loan Commitment or the Revolving Loan Commitment.

                  "Commitment   Commission"   shall  mean  the  Revolving   Loan
Commitment Commission.

                  "Consolidated  Current  Assets" shall mean,  at any time,  the
consolidated current assets of the Borrower and its Subsidiaries at such time.

                  "Consolidated  Current  Liabilities"  shall mean, at any time,
the  consolidated  current  liabilities of the Borrower and its  Subsidiaries at
such time, but excluding the current  

                                      -74-

<PAGE>

portion  of and  accrued  but unpaid  interest  on any  Indebtedness  under this
Agreement and any other long-term Indebtedness which would otherwise be included
therein.

                  "Consolidated  EBIT" shall mean, for any period,  Consolidated
Net Income before  Consolidated  Interest Expense and before provision for taxes
for such  period and without  giving  effect (w) to any  extraordinary  gains or
losses, (x) to any gains or losses from sales of assets other than from sales of
inventory  sold in the  ordinary  course  of  business  and (y) to any  expenses
related to or incurred by the Borrower in connection with the Transaction or any
Permitted  Acquisition,  provided,  however,  that with respect to any Permitted
Acquisition  which is accounted for as a "purchase," for the Calculation  Period
following such acquisition Consolidated EBIT shall include results of operations
of the company or assets so acquired  which amounts shall be determined on a Pro
Forma Basis.

                  "Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT for such period,  adjusted by adding thereto the amount of all amortization
and depreciation  expense of the Borrower and its Subsidiaries that was deducted
in arriving at Consolidated EBIT for such period.

                  "Consolidated Fixed Charge Coverage Ratio" shall mean, for any
period the ratio of (x)  Consolidated  EBITDA for such period less the amount of
all Capital  Expenditures  made by  Borrower  and its  Subsidiaries  during such
period pursuant to Section 9.07(a) to (y) Consolidated Interest Expense for such
period.

                  "Consolidated  Fixed  Charges"  for any period  shall mean the
sum, without duplication,  of (i) Consolidated Interest Expense for such period,
(ii) the amount of all cash payments  made by the Borrower and its  Subsidiaries
in respect  of taxes or tax  liabilities  during  such  period  (net of any cash
refunds  actually  received during such period),  (iii) the scheduled  principal
amount (after giving effect to any refinancing  thereof other than with proceeds
of Loans) of all  amortization  payments  made (or  required  to be made and not
made)  on  all  Indebtedness  (including,   without  limitation,  the  principal
component  of all  Capitalized  Lease  Obligations)  of  the  Borrower  and  its
Subsidiaries for such period plus the amount of all voluntary repayments of such
Indebtedness  during such period to the extent that any such  repayment  reduced
the amount of any such scheduled amortization payment and (iv) the amount of all
cash Dividends paid by the Borrower during such period.

                  "Consolidated  Indebtedness"  shall  mean,  at any  time,  the
principal  amount of all  Indebtedness  of the Borrower and its  Subsidiaries at
such  time  determined  on  a  consolidated   basis  to  the  extent  that  such
Indebtedness  would  be  accounted  for as debt  in  accordance  with  generally
accepted accounting principles plus, without duplication, (i) the maximum amount
available  to be drawn  under all  letters of credit  (including  any Letters of
Credit)  issued for the account of the  Borrower  and its  Subsidiaries  and all
unpaid  drawings  (including any Unpaid  Drawings) in respect of such letters of
credit,  (ii) the  principal  amount of all bonds issued by the Borrower and its
Subsidiaries  in  connection  with  workers'  compensation  obligations,   lease
obligations  and  similar  obligations,  (iii)  all  Indebtedness  set  forth on
Schedule  VI to the extent  outstanding  at such time and (iv) the amount of all
Contingent  Obligations  of the Borrower and 

                                      -75-

<PAGE>

its Subsidiaries  determined on a consolidated  basis in respect of Indebtedness
of other Persons of the type described above in this definition.

                  "Consolidated  Interest  Coverage  Ratio" shall mean,  for any
period, the ratio of (x) Consolidated EBITDA for such period to (y) Consolidated
Interest Expense for such Test Period.

                  "Consolidated  Interest  Expense"  shall mean, for any period,
the total consolidated interest expense of the Borrower and its Subsidiaries for
such  period  (calculated  without  regard  to any  limitations  on the  payment
thereof)  plus,   without   duplication,   that  portion  of  Capitalized  Lease
Obligations  of the  Borrower  and its  Subsidiaries  representing  the interest
factor for such period; provided that the amortization of fees and expenses with
respect  to  this  Agreement,   the  Indebtedness  incurred  hereunder  and  any
Indebtedness  incurred  under  Section  9.04(vi) or (vii) shall be excluded from
Consolidated  Interest  Expense to the extent  same  would  otherwise  have been
included therein.

                  "Consolidated  Net  Income"  shall  mean,  for any  Person and
period,  the net income (or loss) of such Person and its  Subsidiaries  for such
period,  determined  on a  consolidated  basis  (after  deduction  for  minority
interests) in accordance with generally accepted accounting principles, provided
that (i) in determining  Consolidated Net Income of the Borrower, the net income
(or loss) of any other Person  which is not a  Subsidiary  of the Borrower or is
accounted  for by the  Borrower  by the  equity  method of  accounting  shall be
included only to the extent of the payment of dividends or distributions by such
other Person to the Borrower or a Subsidiary thereof during such period and (ii)
the net income (or loss) of any other Person  acquired by such specified  Person
or a  Subsidiary  of such Person in a pooling of interests  transaction  for any
period prior to the date of such acquisition shall be excluded.

                  "Contingent  Obligation"  shall mean,  as to any  Person,  any
obligation of such Person as a result of such Person being a general  partner of
the  other  Person,   unless  the   underlying   obligation  is  expressly  made
non-recourse  as to such  general  partner,  and any  obligation  of such Person
guaranteeing or in effect  guaranteeing any Indebtedness,  leases,  dividends or
other  obligations  ("primary  obligations")  of any other Person (the  "primary
obligor") in any manner,  whether  directly or  indirectly,  including,  without
limitation,  any obligation of such Person,  whether or not  contingent,  (i) to
purchase any such primary  obligation  or any  property  constituting  direct or
indirect security therefor, (ii) to advance or supply funds (x) for the purchase
or payment of any such primary  obligation or (y) to maintain working capital or
equity capital of the primary  obligor or otherwise to maintain the net worth or
solvency  of the primary  obligor,  (iii) to purchase  property,  securities  or
services  primarily  for the purpose of assuring  the owner of any such  primary
obligation of the ability of the primary obligor to make payment of such primary
obligation  or (iv)  otherwise  to assure or hold  harmless  the  holder of such
primary obligation against loss in respect thereof; provided,  however, that the
term  Contingent  Obligation  shall not include  endorsements of instruments for
deposit or  collection  in the ordinary  course of  business.  The amount of any
Contingent  Obligation  shall be deemed to be an amount  equal to the  stated or
determinable  amount  of  the  primary  obligation  in  respect  of  which  such
Contingent  Obligation  is made or, if not stated or  determinable,  the maximum

                                      -76-

<PAGE>

reasonably  anticipated  liability in respect  thereof  (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.

                  "Continuing   Directors"  shall  mean  the  directors  of  the
Borrower on the  Restatement  Effective  Date and each other  director,  if such
other  director's  nomination  for  election  to the Board of  Directors  of the
Borrower is  recommended  by a majority of the then  Continuing  Directors or is
recommended  by a  committee  of the Board of  Directors  a majority of which is
composed of the then Continuing Directors.

                  "Credit  Documents"  shall mean this  Agreement and, after the
execution and delivery  thereof  pursuant to the terms of this  Agreement,  each
Note, the Subsidiaries Guaranty and each Security Document.

                  "Credit  Event"  shall  mean  the  making  of any  Loan or the
issuance of any Letter of Credit.

                  "Credit  Party" shall mean the  Borrower  and each  Subsidiary
Guarantor.

                  "Cumulative  Net Income  Amount"  shall  mean,  on any date of
determination, an amount equal to (i) 50% of Consolidated Net Income (determined
on a cumulative  basis) for all  Cumulative  Net Income  Periods ending prior to
such date of  determination  for which  Consolidated  Net  Income was a positive
number,  minus (ii) 100% of Consolidated Net Income  (determined on a cumulative
basis)  for all  Cumulative  Net  Income  Periods  ending  prior to such date of
determination for which Consolidated Net Income was a negative number.

                  "Cumulative   Net  Income   Period"  shall  mean  each  period
consisting of a fiscal quarter of the Borrower ending after October 1, 1997.

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

                  "Defaulting  Bank" shall mean any Bank with respect to which a
Bank Default is in effect.

                  "Delayed-Draw Commitment" shall mean for each Bank, such Banks
pro-rata share of the Total Delayed-Draw Commitment calculated according to such
Bank's pro-rata share of the Total Term Loan Commitment.

                  "Delayed-Draw  Commitment Expiration Date" shall mean June 30,
1999.

                  "Delayed-Draw  Term  Loans"  shall  mean a portion of the Term
Loans that may be borrowed by the  Borrower  on the Earnout  Payment  Date in an
aggregate amount not to exceed $40,000,000.

                  "Determination  Date" shall have the  meaning  provided in the
definition of "Pro Forma Basis."

                                      -77-

<PAGE>

                  "Dividend"  with  respect to any  Person  shall mean that such
Person has  declared or paid a dividend or  returned  any equity  capital to its
stockholders or partners or authorized or made any other  distribution,  payment
or delivery of property  (other than common stock of such Person) or cash to its
stockholders or partners as such, or redeemed,  retired,  purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any class of
its  capital  stock or any  partnership  interests  outstanding  on or after the
Restatement  Effective  Date (or any options or  warrants  issued by such Person
with  respect  to its  capital  stock),  or set  aside  any funds for any of the
foregoing purposes,  or shall have permitted any of its Subsidiaries to purchase
or otherwise  acquire for a consideration any shares of any class of the capital
stock or any  partnership  interests of such Person  outstanding on or after the
Restatement  Effective  Date (or any options or  warrants  issued by such Person
with respect to its capital stock). Without limiting the foregoing,  "Dividends"
with respect to any Person  shall also include all payments  made or required to
be made by such Person with  respect to any stock  appreciation  rights,  plans,
equity  incentive or achievement  plans or any similar plans or setting aside of
any funds for the foregoing purposes.

                  "Documents" shall mean the Credit  Documents,  the Acquisition
Documents and the Refinancing Documents.

                  "Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.

                  "Domestic  Subsidiary"  shall  mean  each  Subsidiary  of  the
Borrower  incorporated  or  organized  in the  United  States  or any  State  or
territory thereof.

                  "Drawing" shall have the meaning provided in Section 2.05(b).

                  "Earnout"  shall mean the  amounts  due to Figgie  pursuant to
Section 1.4(b) of the Figgie Asset Purchase Agreement.

                  "Earnout  Payment  Date"  shall have the  meaning  provided in
Section 1.01.

                  "Effective Date" shall mean the effective date of the Original
Credit Agreement (i.e., November 17, 1997).

                  "Eligible  Transferee"  shall  mean and  include a  commercial
bank,  insurance  company,  financial  institution,  fund or other  Person which
regularly purchases interests in loans or extensions of credit of the types made
pursuant to this Agreement, any other Person which would constitute a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act as
in effect on the Restatement  Effective Date or other "accredited  investor" (as
defined in Regulation D of the Securities Act).

                  "Employee  Benefit  Plans" shall have the meaning  provided in
Section 5.05.

                  "End Date" shall have the meaning  provided in the  definition
of Applicable Base Rate Margin.

                                      -78-

<PAGE>

                  "Environmental  Claims" shall mean any and all administrative,
regulatory or judicial  actions,  suits,  demands,  demand letters,  directives,
claims,  liens,  notices  of  noncompliance  or  violation,   investigations  or
proceedings  relating in any way to any  Environmental Law or any permit issued,
or any approval given, under any such  Environmental Law (hereafter,  "Claims"),
including,  without  limitation,  (a) any  and all  Claims  by  governmental  or
regulatory authorities for enforcement,  cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable  Environmental  Law, and (b)
any  and  all  Claims  by  any  third  party  seeking   damages,   contribution,
indemnification,  cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.

                  "Environmental Law" shall mean any Federal,  state, foreign or
local statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or  hereafter  in effect and in each case as amended,
and  any  judicial  or  administrative  interpretation  thereof,  including  any
judicial or administrative  order,  consent decree or judgment,  relating to the
environment,  employee  health and  safety or  Hazardous  Materials,  including,
without  limitation,  CERCLA;  RCRA; the Federal Water Pollution Control Act, 33
U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq.;  the Clean Air Act, 42 U.S.C.  ss. 7401 et seq.;  the Safe Drinking  Water
Act, 42 U.S.C.  ss. 3803 et seq.;  the Oil Pollution Act of 1990, 33 U.S.C.  ss.
2701 et seq.;  the  Emergency  Planning and the Community  Right-to-Know  Act of
1986, 42 U.S.C. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
U.S.C.  ss. 1801 et seq. and the  Occupational  Safety and Health Act, 29 U.S.C.
ss. 651 et seq.; and any state and local or foreign counterparts or equivalents,
in each case as amended from time to time.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974,  as amended  from time to time,  and the  regulations  promulgated  and
rulings  issued  thereunder.  Section  references  to ERISA are to ERISA,  as in
effect at the date of this  Agreement  and any  subsequent  provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.

                  "ERISA  Affiliate"  shall  mean each  person  (as  defined  in
Section 3(9) of ERISA) which  together  with the Borrower or a Subsidiary of the
Borrower would be deemed to be a "single employer" within the meaning of Section
414(b), (c), (m) or (o) of the Code.

                  "Eurodollar  Loan" shall mean each Loan  designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.

                  "Eurodollar  Rate" shall mean,  with respect to each  Interest
Period for a Eurodollar Loan, the London  Interbank  Offered Rate for borrowings
(rounded  upward to the nearest  1/16 of one percent) for deposits of Dollars in
minimum  amounts of at least the Minimum  Borrowing  Amount  applicable  to such
Eurodollar  Loan for a period  equivalent  to such period at or about 11:00 A.M.
(London time) on the second  Business Day before the first day of such period as
is  displayed  on Telerate  page 3750  (British  Bankers'  Association  Interest
Settlement  Rates)  (or such other  page as may  replace  such page 3750 on such
system,  provided  that if on  such  date no  such  rate  is so  displayed,  the
Eurodollar   Rate  for  such  period  shall  be  the  rate   determined  by  the

                                      -79-

<PAGE>

Administrative Agent to be the arithmetic average (rounded upward, if necessary,
to the nearest 1/16 of one  percent) of the rate per annum at which  deposits of
Dollars in an amount  approximately equal to the amount in relation to which the
Eurodollar  Rate is to be determined for a period  equivalent to such period are
being  offered by first class banks in the London  Interbank  Market at or about
11:00 A.M. (London time) on the second Business Day before the first day of such
period,  provided  further  that in each case the rate  obtained  above shall be
adjusted to take account of reserve  requirements  by dividing  such rate by the
Eurodollar Reserve Percentage (with such resulting rate to be rounded upward, if
necessary, to the nearest 1/100 of one percent).

                  "Eurodollar  Reserve  Percentage"  shall mean for any day, the
remainder  of one minus the  percentage  (expressed  as a  decimal  and  rounded
upwards, if necessary,  to the next higher 1/100th of 1%) which is in effect for
such day as  prescribed  by the Federal  Reserve  Board (or any  successor)  for
determining the maximum reserve  requirement  (including  without limitation any
basic,   supplemental   or  emergency   reserves)  in  respect  of  Eurocurrency
liabilities  or any  similar  category of  liabilities  for a member bank of the
Federal Reserve System in New York City.

                  "Event of Default" shall have the meaning  provided in Section
10.

                  "Excess Cash Flow" shall mean,  for any period,  the remainder
of (i) the sum of (a) Adjusted  Consolidated Cash Income for such period and (b)
the decrease,  if any, in Adjusted  Consolidated  Working Capital from the first
day of such period to the last day of such period, minus (ii) the sum of (a) the
amount of all Capital  Expenditures,  made by the Borrower and its  Subsidiaries
pursuant to Section  9.07(a)  during such period,  (b) the  aggregate  principal
amount of permanent principal payments of Indebtedness for borrowed money of the
Borrower and its Subsidiaries (other than repayments pursuant to which any other
Indebtedness  is  being  refinanced  with  proceeds  of   Indebtedness,   equity
issuances,  asset sales or insurance proceeds, and repayments of Loans, provided
that  repayments of Loans shall be deducted in  determining  Excess Cash Flow if
such  repayments  were (x) required as a result of a Scheduled  Repayment  under
Section  4.02(b)  or (y) made as a  voluntary  prepayment  (but in the case of a
voluntary  prepayment of Revolving Loans or Swingline Loans,  only to the extent
accompanied by a voluntary  reduction to the Total  Revolving Loan  Commitment))
during  such  period and (c) the  increase,  if any,  in  Adjusted  Consolidated
Working  Capital  from  the  first  day of such  period  to the last day of such
period.

                  "Excess  Cash Payment  Date" shall mean the date  occurring 90
days after the last day of each fiscal year of the Borrower  (beginning with its
fiscal year ending September 30, 1998).

                  "Excess Cash Payment  Period" shall mean,  with respect to the
repayment  required on each Excess Cash Payment Date, the immediately  preceding
fiscal year of the Borrower.

                  "Existing  Indebtedness"  shall have the  meaning  provided in
Section 7.22.

                                      -80-

<PAGE>


                  "Existing  Indebtedness  Agreements"  shall  have the  meaning
provided in Section 5.05.

                  "Facing  Fee"  shall  have the  meaning  provided  in  Section
3.01(c).

                  "Federal Funds Rate" shall mean for any period,  a fluctuating
interest  rate equal for each day during such period to the weighted  average of
the rates on overnight  Federal Funds  transactions  with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next  preceding  Business Day) by the
Federal  Reserve Bank of New York,  or, if such rate is not so published for any
day which is a Business Day, the average of the  quotations for such day on such
transactions  received  by the  Administrative  Agent from three  Federal  Funds
brokers of recognized standing selected by the Administrative Agent.

                  "Fees" shall mean all amounts payable  pursuant to or referred
to in Section 3.01.

                  "Figgie"  shall mean  Figgie  International  Inc.,  a Delaware
corporation.

                  "Figgie  Asset  Purchase   Agreement"  shall  mean  the  Asset
Purchase  Agreement,  dated as of July 19, 1997,  by and among  Figgie,  various
subsidiaries of Figgie and SKL and the amendment thereto dated as of November 9,
1997.

                  "Foreign  Pension Plan" shall mean any plan, fund  (including,
without   limitation,   any  superannuation   fund)  or  other  similar  program
established  or maintained  outside the United States of America by the Borrower
or any one or more of its Subsidiaries primarily for the benefit of employees of
the Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program  provides,  or results in,  retirement
income,  a deferral of income in  contemplation  of retirement or payments to be
made upon  termination of employment,  and which plan is not subject to ERISA or
the Code.

                  "Foreign   Subsidiary"  shall  mean  each  Subsidiary  of  the
Borrower other than a Domestic Subsidiary.

                  "Hazardous   Materials"   shall  mean  (a)  any  petroleum  or
petroleum products, radioactive materials, asbestos in any form that is friable,
urea formaldehyde foam insulation,  transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated  biphenyls, and radon gas;
(b) any  chemicals,  materials  or  substances  defined  as or  included  in the
definition of "hazardous  substances," "hazardous waste," "hazardous materials,"
"extremely   hazardous   substances,"   "restricted   hazardous  waste,"  "toxic
substances,"  "toxic  pollutants,"  "contaminants," or "pollutants," or words of
similar  import,  under  any  applicable  Environmental  Law;  and (c) any other
chemical, material or substance, the Release of which is prohibited,  limited or
regulated by any governmental authority.

                  "IDB  Financing"  shall mean the City of Oakes,  North  Dakota
Industrial Development Revenue Bonds Series 1999 (Omniquip  International,  Inc.
Project) dated February 25, 1999 in the aggregate amount of $4,500,000.

                                      -81-

<PAGE>

                  "IDB  Financing  Documents"  shall mean the Indenture of Trust
dated as of  February  25,  1999  between  the City of Oakes,  North  Dakota and
Norwest Bank Minnesota,  National  Association;  the Lease Agreement dated as of
February 25, 1999 between the City of Oakes, North Dakota and Oakes Enhancement,
Inc.;  the  Sublease  Agreement  dated as of  February  25, 1999  between  Oakes
Enhancement, Inc. and the Borrower; the Mortgage, Security Agreement and Fixture
Financing dated as of February 25, 1999 between Norwest Bank Minnesota, National
Association,  the City of Oakes, North Dakota and Oakes  Enhancement,  Inc.; the
Assignment  of Leases and Rents dated as of February  25, 1999  between  Norwest
Bank Minnesota,  National Association, the City of Oakes, North Dakota and Oakes
Enhancement,  Inc.;  and all other  agreements  and  documents  entered  into in
connection with the IDB Financing.

                  "Indebtedness"   shall  mean,   as  to  any  Person,   without
duplication,  (i) all  indebtedness  (including  principal,  interest,  fees and
charges) of such Person for borrowed money or for the deferred purchase price of
property or services,  (ii) the maximum  amount  available to be drawn under all
letters of credit issued for the account of such Person and all unpaid  drawings
in  respect  of such  letters of  credit,  (iii) all  Indebtedness  of the types
described  in clause (i),  (ii),  (iv),  (v),  (vi) or (vii) of this  definition
secured by any Lien on any property  owned by such  Person,  whether or not such
Indebtedness has been assumed by such Person (provided,  that, if the Person has
not assumed or otherwise  become  liable in respect of such  Indebtedness,  such
Indebtedness  shall be deemed to be in an amount  equal to the fair market value
of the property to which such Lien relates as  determined  in good faith by such
Person), (iv) the aggregate amount required to be capitalized under leases under
which such Person is the  lessee,  (v) all  obligations  of such person to pay a
specified  purchase  price for goods or  services,  whether or not  delivered or
accepted,  i.e.,  take-or-pay  and  similar  obligations,  (vi)  all  Contingent
Obligations  of such Person and (vii) all  obligations  under any Interest  Rate
Protection  Agreement,  any Other Hedging Agreement or under any similar type of
agreement.  Notwithstanding  the foregoing,  Indebtedness  shall not include (x)
trade payables and accrued  expenses  incurred by any Person in accordance  with
customary  practices  and in the ordinary  course of business of such Person and
(y) deferred compensation obligations of any Person.

                  "Indebtedness  to be Refinanced"  shall mean all  Indebtedness
set forth on Schedule IV.

                  "Initial  Borrowing  Date" shall mean the date occurring on or
after the Restatement  Effective Date on which the initial Borrowing of Loans or
issuance of a Letter of Credit occurs.

                  "Intercompany Loan" shall have the meaning provided in Section
9.05(vi).

                  "Intercompany  Note" shall mean a promissory note, in the form
of Exhibit L, evidencing Intercompany Loans.

                  "Interest  Determination Date" shall mean, with respect to any
Eurodollar  Loan,  the  second  Business  Day prior to the  commencement  of any
Interest Period relating to such Eurodollar Loan.

                                      -82-

<PAGE>

                  "Interest  Period" shall have the meaning  provided in Section
1.09.

                  "Interest Rate Protection  Agreement"  shall mean any interest
rate swap agreement,  interest rate cap agreement,  interest  collar  agreement,
interest rate hedging agreement or other similar agreement or arrangement.

                  "Investments" shall have the meaning provided in Section 9.05.

                  "Issuing  Bank" shall mean First Union  National  Bank and any
other Bank  which at the  request of the  Borrower  and with the  consent of the
Agents (which consent shall not be unreasonably withheld) agrees, in such Bank's
sole discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2. The sole Issuing Bank on the Restatement Effective
Date is First Union National Bank.

                  "Leaseholds" of any Person shall mean all the right, title and
interest  of such  Person  as  lessee or  licensee  in,  to and under  leases or
licenses of land, improvements and/or fixtures.

                  "L/C  Supportable  Obligations"  shall mean (i) obligations of
the Borrower or any of its  Subsidiaries  with respect to workers  compensation,
surety  bonds and  other  similar  statutory  obligations  and (ii)  such  other
obligations  of  the  Borrower  or  any of  its  Subsidiaries  as are  otherwise
permitted to exist  pursuant to (or  otherwise not  restricted  by) the terms of
this Agreement,  other than any Indebtedness for borrowed money unless consented
to by the Agents and the Issuing Bank.

                  "Lending  Office"  shall mean,  with respect to any Bank,  any
office, branch, subsidiary or affiliate of such Bank.

                  "Letter of Credit" shall have the meaning  provided in Section
2.01(a).

                  "Letter  of Credit  Fee" shall have the  meaning  provided  in
Section 3.01(c).

                  "Letter of Credit  Outstandings"  shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding  Letters of Credit and
(ii) the amount of all Unpaid Drawings.

                  "Letter of Credit Request" shall have the meaning  provided in
Section 2.03(a).

                  "Leverage  Ratio"  shall mean,  at any time,  the ratio of (x)
Consolidated  Indebtedness at such time to (y) Consolidated  EBITDA for the then
most recently ended Test Period.

                  "Lien"  shall  mean  any  mortgage,   pledge,   hypothecation,
assignment,  deposit  arrangement,   encumbrance,  lien  (statutory  or  other),
preference,  priority  or  other  security  agreement  of  any  kind  or  nature
whatsoever (including,  without limitation,  any conditional sale or other title
retention  agreement,  any financing or similar  statement or notice filed under
the

                                      -83-

<PAGE>

UCC or any other  similar  recording  or notice  statute,  and any lease  having
substantially the same effect as any of the foregoing).

                  "Loan" shall mean each Term Loan, each Revolving Loan and each
Swingline Loan.

                  "Majority   Banks"   of   any   Tranche   shall   mean   those
Non-Defaulting  Banks which would  constitute the Required  Banks under,  and as
defined in, this Agreement if all outstanding  Obligations of the other Tranches
under  this  Agreement  were  repaid in full and all  Commitments  with  respect
thereto were terminated.

                  "Management  Agreements"  shall have the  meaning  provided in
Section 5.05.

                  "Mandatory  Borrowing"  shall  have the  meaning  provided  in
Section 1.01(d).

                  "Margin  Stock" shall have the meaning  provided in Regulation
U.

                  "Maturity  Date"  shall mean,  with  respect to any Tranche of
Loans,  the Term Loan Maturity  Date,  the  Revolving  Loan Maturity Date or the
Swingline Expiry Date, as the case may be.

                  "Maximum Swingline Amount" shall mean $5,000,000.

                  "Minimum  Borrowing  Amount"  shall  mean (i) for Term  Loans,
$5,000,000,  (ii) for Revolving Loans, $1,000,000 and (iii) for Swingline Loans,
$250,000.

                  "Minnesota  Mortgage" shall mean the Mortgage  granted by Lull
International,  Inc. with respect to its real property and fixtures in the state
of Minnesota.

                  "Mortgage"  shall mean each  mortgage,  deed to secure debt or
deed of trust  pursuant  to which any Credit  Party  shall  have  granted to the
Collateral Agent a mortgage lien on such Credit Party's Mortgaged Property.

                  "Mortgage  Policy" shall have the meaning  provided in Section
5.12.

                  "Mortgaged  Property"  shall mean (i) each Real Property owned
by any Credit Party and  designated as a Mortgaged  Property on Schedule III and
(ii) each Real Property  owned or leased by any Credit Party and designated as a
Mortgaged Property pursuant to Section 8.12.

                  "MSSF" shall mean Morgan Stanley Senior Funding,  Inc., in its
individual capacity.

                  "Multiemployer  Plan"  shall mean a plan as defined in Section
4001(a)(3)  of ERISA with respect to which the Borrower,  any  Subsidiary of the
Borrower  or any ERISA  Affiliate  has an  obligation  to  contribute  to or any
liability.

                  "NAIC"  shall  mean  the  National  Association  of  Insurance
Commissioners.

                                      -84-

<PAGE>

                  "Net Debt Proceeds" shall mean, with respect to any incurrence
of  Indebtedness  for borrowed  money,  the cash proceeds  (net of  underwriting
discounts and  commissions,  commitment and other financing fees and other costs
associated  therewith)  received by the  respective  Person from the  respective
incurrence of such Indebtedness for borrowed money.

                  "Net  Insurance  Proceeds"  shall  mean,  with  respect to any
Recovery Event, the cash proceeds (net of costs and taxes incurred in connection
with such Recovery Event)  received by the respective  Person in connection with
the respective Recovery Event.

                  "Net Sale Proceeds"  shall mean, for any Asset Sale, the gross
cash proceeds  (including any cash received by way of deferred  payment pursuant
to a promissory  note,  receivable or otherwise,  but only as and when received)
received from such sale of assets, net of the costs of such sale (including fees
and commissions,  payments of unassumed  liabilities relating to the assets sold
and  required  payments of any  Indebtedness  (other than  Indebtedness  secured
pursuant to the Security Documents or any Indebtedness owed to the Borrower or a
Subsidiary  thereof) which is secured by the respective assets which were sold),
and the taxes paid or payable as a result of such Asset Sale.

                  "New   Subordinated   Note  Documents"   shall  mean  the  New
Subordinated Notes, any indenture or purchase agreement related thereto and each
of the other documents entered into in connection therewith.

                  "New  Subordinated  Notes" shall have the meaning  provided in
Section 9.04(vi).

                  "Non-Defaulting  Bank" shall mean and include  each Bank other
than a Defaulting Bank.

                  "Non-Excluded  Taxes"  shall  have  the  meaning  provided  in
Section 4.04(a).

                  "Note" shall mean each Term Note,  each Revolving Note and the
Swingline Note.

                  "Notice of  Borrowing"  shall  have the  meaning  provided  in
Section 1.03(a).

                  "Notice of  Conversion"  shall have the  meaning  provided  in
Section 1.06.

                  "Notice  Office"  shall mean the office of the  Administrative
Agent  located at One First  Union  Center,  301 South  College  Street,  TW-10,
Charlotte,  NC 28288-0608,  Attention:  Syndication Services, with copies to 301
South College  Street,  DC-5,  Charlotte,  NC 28288-0737,  Attention:  Leveraged
Finance,  or  such  other  office  as the  Administrative  Agent  may  hereafter
designate in writing as such to the other parties  hereto.  "Obligations"  shall
mean all amounts owing to any Agent,  the Collateral  Agent or any Bank pursuant
to the terms of this Agreement or any other Credit Document.

                  "Original Credit Agreement" shall have the meaning provided in
the preamble to this Agreement.

                                      -85-

<PAGE>

                  "Other  Creditor"  shall  have  the  meaning  provided  in the
Security Documents.

                  "Other  Hedging  Agreement"  shall mean any  foreign  exchange
contracts,  currency  swap  agreements,  commodity  agreements  or other similar
agreements  or  arrangements  designed to protect  against the  fluctuations  in
currency values.

                  "Participant"  shall  have the  meaning  provided  in  Section
2.04(a).

                  "Payment  Office" shall mean the office of the  Administrative
Agent  located at One First  Union  Center,  301 South  College  Street,  TW-10,
Charlotte, NC 28288-0608,  Attention: Syndication Services, or such other office
as the  Administrative  Agent may hereafter  designate in writing as such to the
other parties hereto.

                  "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.

                  "Permitted  Acquisition"  shall have the  meaning  provided in
Section 9.02(ix).

                  "Permitted  Encumbrance"  shall  mean,  with  respect  to  any
Mortgaged  Property,  such  exceptions  to title as are set  forth in the  title
insurance policy or title commitment delivered with respect thereto and accepted
by the Agents.

                  "Permitted  Holders" shall mean Harbor Group  Investments III,
L.P.,  Uniquip-HGI  Associates,  L.P., P. Enoch Stiff, Curtis Laetz, James Hook,
Philip Franklin, Paul Roblee and Robert Melin.

                  "Permitted  Liens" shall have the meaning  provided in Section
9.01.

                  "Person"  shall  mean  any  individual,   partnership,   joint
venture,  firm,  corporation,  association,  limited liability company, trust or
other  enterprise  or any  government  or political  subdivision  or any agency,
department or instrumentality thereof.

                  "Plan"  shall mean any pension plan as defined in Section 3(2)
of ERISA,  other than a multiemployer  plan as defined in Section  4001(a)(3) of
ERISA,  which  is  maintained  or  contributed  to by (or to  which  there is an
obligation to contribute  of) the Borrower or a Subsidiary of the Borrower or an
ERISA Affiliate or with respect to which any such entity has liability.

                  "Pledge  Agreement" shall have the meaning provided in Section
5.09.

                  "Pledge  Agreement  Collateral" shall mean all "Collateral" as
defined in the Pledge Agreement.

                  "Pledged Notes" shall have the meaning  provided in the Pledge
Agreement.

                  "Pledged  Securities"  shall mean all "Pledged  Securities" as
defined in the Pledge Agreement.

                                      -86-


<PAGE>

                  "Prime   Lending   Rate"   shall   mean  the  rate  which  the
Administrative  Agent announces from time to time as its prime lending rate, the
Prime Lending Rate to change when and as such prime  lending rate  changes.  The
Prime Lending Rate is a reference  rate and does not  necessarily  represent the
lowest or best rate actually charged to any customer.  The Administrative  Agent
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate.

                  "Pro Forma  Basis" shall mean,  with respect to any  Permitted
Acquisition, the calculation of the consolidated results of the Borrower and its
Subsidiaries  otherwise  determined in accordance  with this Agreement as if the
respective Permitted  Acquisition (and all Indebtedness incurred to finance such
Permitted Acquisition, and all other Permitted Acquisitions, effected during the
respective  Calculation  Period  or  thereafter  and on or  prior to the date of
determination) (each such date, a "Determination Date") had been effected on the
first  day  of  the  respective  Calculation  Period;  provided  that  all  such
calculations  shall  be made on a basis  consistent  with  the  requirements  of
Regulation  S-X under the  Securities  Act and the  Securities  Exchange Act and
shall take into account the following assumptions:

                  (i)  interest   expense   attributable   to  interest  on  any
         Indebtedness  (whether  existing or being incurred)  bearing a floating
         interest rate shall be computed as if the rate in effect on the date of
         computation (taking into account any Interest Rate Protection Agreement
         applicable  to such  Indebtedness  if  such  Interest  Rate  Protection
         Agreement  has a  remaining  term in excess of 12 months)  had been the
         applicable rate for the entire period; and

                  (ii)  pro  forma  effect  shall  be  given  to  all  Permitted
         Acquisitions  (by  excluding  or  including,  as the case  may be,  the
         historical financial results for the respective  properties) that occur
         during such  Calculation  Period or  thereafter  and on or prior to the
         Determination  Date (including any Indebtedness  assumed or acquired in
         connection  therewith) as if they had occurred on the first day of such
         Calculation  Period,  in each case to the extent that the occurrence of
         any such event required the financial  covenants  contained in Sections
         9.08 through 9.10, inclusive, to be recalculated on a Pro Forma Basis.

                  "Projections"  shall  mean  the  projections  prepared  by the
Borrower  relating to the  Transaction  and delivered to the Agents prior to the
Restatement Effective Date.

                  "Quarterly  Payment  Date"  shall mean each March 31, June 30,
September 30 and December 31 occurring after the Restatement Effective Date.

                  "RCRA" shall mean the Resource  Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C.ss. 6901 et seq.

                  "Real Property" of any Person shall mean all the right,  title
and interest of such Person in and to land, improvements and fixtures, including
Leaseholds.

                                      -87-

<PAGE>

                  "Recovery Event" shall mean the receipt by the Borrower or any
of its  Subsidiaries  of any cash  insurance  proceeds  or  condemnation  awards
payable (i) by reason of theft, loss, physical  destruction,  damage,  taking or
any other  similar  event with respect to any property or assets of the Borrower
or any of its Subsidiaries and (ii) under any policy of insurance required to be
maintained under Section 8.03.

                  "Refinancing"  shall  mean the  repayment  in full of, and the
termination of all commitments in respect of, the Indebtedness to be Refinanced.

                  "Refinancing  Documents"  shall mean all of the  documents and
agreements entered into in connection with the Refinancing.

                  "Register" shall have the meaning provided in Section 13.15.

                  "Regulation  D"  shall  mean  Regulation  D of  the  Board  of
Governors of the Federal  Reserve  System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.

                  "Regulation  G"  shall  mean  Regulation  G of  the  Board  of
Governors of the Federal  Reserve  System as from time to time in effect and any
successor to all or a portion thereof.

                  "Regulation  T"  shall  mean  Regulation  T of  the  Board  of
Governors of the Federal  Reserve  System as from time to time in effect and any
successor to all or a portion thereof.

                  "Regulation  U"  shall  mean  Regulation  U of  the  Board  of
Governors of the Federal  Reserve  System as from time to time in effect and any
successor to all or a portion thereof.

                  "Regulation  X"  shall  mean  Regulation  X of  the  Board  of
Governors of the Federal  Reserve  System as from time to time in effect and any
successor to all or a portion thereof.

                  "Release"  shall mean the disposing,  discharging,  injecting,
spilling,  pumping, leaking, leaching,  dumping, emitting,  escaping,  emptying,
pouring  or  migrating,  into or upon any land or  water  or air,  or  otherwise
entering into the environment.

                  "Replaced  Bank"  shall have the  meaning  provided in Section
1.13.

                  "Replacement  Bank" shall have the meaning provided in Section
1.13.

                  "Reportable  Event"  shall mean an event  described in Section
4043(c)  of ERISA  with  respect  to a Plan that is subject to Title IV of ERISA
other than those  events as to which the 30-day  notice  period is waived  under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 4043.

                  "Required  Banks" shall mean  Non-Defaulting  Banks the sum of
whose  outstanding  Term Loans (and, if prior to the termination  thereof,  Term
Loan  Commitments),  and Revolving Loan  Commitments  (or after the  termination
thereof,  outstanding  Revolving  Loans and Adjusted RL  Percentage of Swingline
Loans and Letter of Credit Outstandings) represent an 

                                      -88-

<PAGE>

amount greater than 50% of the sum of all outstanding  Term Loans (and, if prior
to the termination thereof, the Term Loan Commitments) of Non-Defaulting  Banks,
and the Adjusted  Total  Revolving  Loan  Commitment  (or after the  termination
thereof, the sum of the then total outstanding Revolving Loans of Non-Defaulting
Banks, and the aggregate Adjusted RL Percentages of all Non-Defaulting  Banks of
the total outstanding  Swingline Loans and Letter of Credit Outstandings at such
time).

                  "Restatement  Effective Date" shall have the meaning  provided
in Section 13.10.

                  "Revolving  Loan" shall have the  meaning  provided in Section
1.01(b).

                  "Revolving  Loan  Commitment"  shall mean,  for each Bank, the
amount set forth  opposite  such Bank's  name in  Schedule I directly  below the
column  entitled  "Revolving  Loan  Commitment," as same may be (x) reduced from
time to time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 13.04(b).

                  "Revolving Loan Commitment  Commission" shall have the meaning
provided in Section 3.01(a).

                  "Revolving Loan Maturity Date" shall mean November 17, 2004.

                  "Revolving  Note" shall have the  meaning  provided in Section
1.05(a).

                  "RL  Percentage" of any Bank at any time shall mean a fraction
(expressed  as a  percentage)  the  numerator  of  which is the  Revolving  Loan
Commitment of such Bank at such time and the  denominator  of which is the Total
Revolving  Loan  Commitment at such time,  provided that if the RL Percentage of
any Bank is to be determined  after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.

                  "Scheduled  Repayments"  shall have the  meaning  provided  in
Section 4.02(b).

                  "SEC" shall have the meaning provided in Section 8.01(g).

                  "Section  4.04(b)(ii)  Certificate"  shall  have  the  meaning
provided in Section 4.04(b)(ii).

                  "Secured  Creditors" shall have the meaning assigned that term
in the respective Security Documents.

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended, and the rules and regulations promulgated thereunder.

                  "Securities  Exchange Act" shall mean the Securities  Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.

                                      -89-

<PAGE>

                  "Security  Agreement"  shall  have  the  meaning  provided  in
Section 5.10.

                  "Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.

                  "Security  Document"  shall  mean  and  include  each  of  the
Security  Agreement,  the Pledge  Agreement  and each  Mortgage  and,  after the
execution and delivery thereof, each Additional Security Document.

                  "Shareholders'  Agreements" shall have the meaning provided in
Section 5.05.

                  "SKL"  shall  mean  Snorkel  International,  Inc.,  a Delaware
corporation, formerly known as SKL Lift, Inc.

                  "Standby Letter of Credit" shall have the meaning  provided in
Section 2.01(a).

                  "Start Date" shall have the meaning provided in the definition
of Applicable Base Rate Margin.

                  "Stated  Amount" of each Letter of Credit shall,  at any time,
mean  the  maximum  amount  available  to be  drawn  thereunder  (in  each  case
determined  without  regard to whether any  conditions  to drawing could then be
met).

                  "Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary  voting power to elect a majority of the directors of such  corporation
(irrespective  of  whether  or not at the time  stock of any class or classes of
such  corporation  shall  have or  might  have  voting  power by  reason  of the
happening of any  contingency) is at the time owned by such Person and/or one or
more  Subsidiaries of such Person and (ii) any partnership,  association,  joint
venture or other entity in which such Person and/or one or more  Subsidiaries of
such Person has more than a 50% equity interest at the time.

                  "Subsidiajry  Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary  of the Borrower and, to the extent  required by Section  8.13,  each
Wholly-Owned Foreign Subsidiary of the Borrower.

                  "Subsidiaries  Guaranty"  shall have the  meaning  provided in
Section   5.11.  

                  "Supermajority   Banks"  of  any  Tranche   shall  mean  those
Non-Defaulting  Banks which would  constitute the Required  Banks under,  and as
defined in,  this  Agreement  if (x) all  outstanding  Obligations  of the other
Tranches  under this  Agreement  were  repaid in full and all  Commitments  with
respect thereto were terminated and (y) the percentage  "50%" contained  therein
were changed to "66-2/3%."

                  "Swingline Bank" shall mean First Union National Bank.

                                      -90-

<PAGE>

                  "Swingline  Expiry  Date"  shall  mean the date  which is five
Business Days prior to the Revolving Loan Maturity Date.

                  "Swingline  Loan" shall have the  meaning  provided in Section
1.01(c).

                  "Swingline  Note" shall have the  meaning  provided in Section
1.05(a).

                  "Syndication  Agent"  shall  mean  MSSF,  in its  capacity  as
Syndication Agent and Co-Arranger for the Banks hereunder.

                  "Syndication  Date" shall have the meaning provided in Section
1.01(a).

                  "Tax Sharing  Agreements"  shall have the meaning  provided in
Section 5.05.

                  "Term  Loan"  shall  have  the  meaning  provided  in  Section
1.01(a).

                  "Term Loan  Commitment"  shall mean, for each Bank, the amount
set forth  opposite  such Bank's  name in  Schedule I directly  below the column
entitled  "Term Loan  Commitment,"  as same may be (x) reduced from time to time
pursuant to Sections  3.02,  3.03,  4.02 and/or 10 or (y) adjusted  from time to
time as a result of assignments to or from such Bank pursuant to Section 1.13 or
13.04(b).

                  "Term  Loan  Commitment  Commission"  shall  have the  meaning
provided in Section 3.01(f).

                  "Term Loan Maturity Date" shall mean November 17, 2004.

                  "Term Loan  Percentage"  shall mean,  at any time,  a fraction
(expressed  as a  percentage)  the numerator of which is equal to the sum of the
aggregate  principal amount of all Term Loans  outstanding at such time plus the
Total Term Loan Commitment at such time and the denominator of which is equal to
the sum of the aggregate  principal amount of all Term Loans outstanding at such
time plus the Total Term Loan Commitment at such time.

                  "Term  Note"  shall  have  the  meaning  provided  in  Section
1.05(a).

                  "Test Period" shall mean the period of four consecutive fiscal
quarters of the Borrower  then last ended (in each case taken as one  accounting
period).

                  "Total  Delayed Draw  Commitment"  shall mean a portion of the
Total Term Loan Commitment  equal to $40,000,000,  which shall only be permitted
to be borrowed on the Earnout Payment Date.

                  "Total  Commitments"  shall mean, at any time,  the sum of the
Commitments of each of the Banks.

                  "Total Revolving Loan Commitment" shall mean, at any time, the
sum of the Revolving Loan Commitments of each of the Banks.

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<PAGE>

                  "Total Term Loan Commitment"  shall mean, at any time, the sum
of the Term Loan Commitments of each of the Banks.

                  "Total  Unutilized  Revolving Loan Commitment"  shall mean, at
any time,  an amount  equal to the  remainder  of (x) the Total  Revolving  Loan
Commitment then in effect, less (y) the sum of the aggregate principal amount of
Revolving  Loans and Swingline  Loans then  outstanding  plus the then aggregate
amount of Letter of Credit Outstandings.

                  "Total  Unutilized  Term Loan  Commitment"  shall mean, at any
time,  an amount equal to the  remainder  of (x) the Total Term Loan  Commitment
then in effect, less (y) the sum of the aggregate principal amount of Term Loans
then outstanding.

                  "Trade  Letter of Credit"  shall have the meaning  provided in
Section 2.01(a).

                  "Tranche"  shall mean the respective  facility and commitments
utilized in making Loans  hereunder,  with there being three separate  Tranches,
i.e., Term Loans, Revolving Loans and Swingline Loans.

                  "Transaction"  shall  mean,  collectively,  (i) payment of the
Earnout, (ii) the refinancing of all Indebtedness  (including letters of credit)
outstanding under the Original Credit  Agreement,  (iii) the incurrence of Loans
on the  Restatement  Effective  Date,  and (iv) the payment of fees and expenses
owing in connection with the foregoing.

                  "Type" shall mean the type of Loan  determined  with regard to
the interest  option  applicable  thereto,  i.e.,  whether a Base Rate Loan or a
Eurodollar Loan.

                  "UCC" shall mean the Uniform  Commercial  Code as from time to
time in effect in the relevant jurisdiction.

                  "Unfunded  Current  Liability"  of any  Plan  shall  mean  the
amount,  if any, by which the actuarial  present value of the  accumulated  plan
benefits under the Plan as of the close of its most recent plan year exceeds the
fair market value of the assets allocable thereto, each determined in accordance
with  Statement  of  Financial  Accounting  Standards  No.  87,  based  upon the
actuarial  assumptions  used by the  Plan's  actuary in the most  recent  annual
valuation of the Plan.

                  "United  States" and "U.S." shall each mean the United  States
of America.

                  "Unpaid  Drawing"  shall  have  the  meaning  provided  for in
Section 2.05(a).

                  "Unutilized  Revolving  Loan  Commitment"  with respect to any
Bank, at any time, shall mean such Bank's Revolving Loan Commitment at such time
less the sum of (i) the  aggregate  outstanding  principal  amount of  Revolving
Loans  made by such Bank and (ii) such  Bank's  Adjusted  RL  Percentage  of the
Letter of Credit Outstandings.

                                      -92-

<PAGE>

                  "Unutilized Term Loan Commitment" with respect to any Bank, at
any time,  shall mean such  Bank's  Term Loan  Commitment  at such time less the
aggregate outstanding principal amount of Term Loans made by such Bank.

                  "U.S.  Internal  Revenue Service Forms" shall have the meaning
provided in Section 4.04(b).

                  "Wholly-Owned  Domestic  Subsidiary"  shall  mean,  as to  any
Person,  any  Wholly-Owned  Subsidiary  of  such  Person  which  is  a  Domestic
Subsidiary.

                  "Wholly-Owned  Foreign  Subsidiary"  shall  mean,  as  to  any
Person,  any  Wholly-Owned   Subsidiary  of  such  Person  which  is  a  Foreign
Subsidiary.

                  "Wholly-Owned  Subsidiary"  shall mean, as to any Person,  (i)
any corporation  100% of whose capital stock (other than  director's  qualifying
shares) is at the time  owned by such  Person  and/or  one or more  Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or  other  entity  in  which  such  Person  and/or  one  or  more   Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.

                  SECTION  12.  The  Administrative  Agent  and the  Syndication
Agent.

                  12.01  Appointment.  The Banks  hereby  designate  First Union
National Bank as Administrative Agent (for purposes of this Section 12, the term
"Administrative  Agent"  also shall  include  First Union  National  Bank in its
capacity  as  Co-Arranger  hereunder  and as  Collateral  Agent  pursuant to the
Security  Documents)  to act  as  specified  herein  and  in  the  other  Credit
Documents. The Banks hereby designate MSSF as Syndication Agent (for purposes of
this  Section 12, the term  "Syndication  Agent" also shall  include MSSF in its
capacity as  Co-Arranger)  to act as  specified  herein and in the other  Credit
Documents. Each Bank hereby irrevocably authorizes,  and each holder of any Note
by the  acceptance of such Note shall be deemed  irrevocably  to authorize,  the
Administrative Agent and the Syndication Agent to take such action on its behalf
under the provisions of this Agreement, the other Credit Documents and any other
instruments  and  agreements  referred to herein or therein and to exercise such
powers and to perform such duties  hereunder and thereunder as are  specifically
delegated to or required of the  Administrative  Agent and the Syndication Agent
by the  terms  hereof  and  thereof  and such  other  powers  as are  reasonably
incidental  thereto.  The  Administrative  Agent and the  Syndication  Agent may
perform any of their  duties  hereunder by or through its  respective  officers,
directors, agents, employees or affiliates.

                  12.02 Nature of Duties.  Neither the Administrative  Agent nor
the  Syndication  Agent in their  capacity  as such  shall  have any  duties  or
responsibilities  except those  expressly set forth in this Agreement and in the
other Credit Documents.  Neither the Administrative Agent, the Syndication Agent
in  their  capacity  as such nor any of their  respective  officers,  directors,
agents,  employees or affiliates shall be liable for any action taken or omitted
by it or them  hereunder  or under any other  Credit  Document or in  connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct.  The duties of the  Administrative  Agent and the Syndication  Agent
shall be mechanical and  administrative  in nature;  neither the

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<PAGE>

Administrative  Agent nor the  Syndication  Agent  shall  have by reason of this
Agreement or any other Credit  Document a fiduciary  relationship  in respect of
any Bank or the holder of any Note;  and nothing in this  Agreement or any other
Credit Document,  expressed or implied,  is intended to or shall be so construed
as to  impose  upon  the  Administrative  Agent  or the  Syndication  Agent  any
obligations in respect of this Agreement or any other Credit  Document except as
expressly set forth herein or therein.

                  12.03 Lack of  Reliance  on the  Administrative  Agent and the
Syndication  Agent.  Independently and without reliance upon the  Administrative
Agent or the  Syndication  Agent,  each Bank and the holder of each Note, to the
extent it deems  appropriate,  has made and shall  continue  to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its  Subsidiaries  in connection  with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the  creditworthiness  of the Borrower and its Subsidiaries
and, except as expressly provided in this Agreement,  neither the Administrative
Agent nor the Syndication  Agent shall have any duty or  responsibility,  either
initially  or on a  continuing  basis,  to provide any Bank or the holder of any
Note with any credit or other  information with respect thereto,  whether coming
into its  possession  before  the  making  of the  Loans or at any time or times
thereafter.  Neither the Administrative Agent nor the Syndication Agent shall be
responsible to any Bank or the holder of any Note for any recitals,  statements,
information,   representations   or  warranties   herein  or  in  any  document,
certificate  or  other  writing  delivered  in  connection  herewith  or for the
execution,  effectiveness,  genuineness, validity,  enforceability,  perfection,
collectibility,  priority or  sufficiency  of this Agreement or any other Credit
Document or the financial  condition of the Borrower or any of its  Subsidiaries
or be  required  to make  any  inquiry  concerning  either  the  performance  or
observance of any of the terms,  provisions  or conditions of this  Agreement or
any other Credit Document,  or the financial condition of the Borrower or any of
its Subsidiaries or the existence or possible  existence of any Default or Event
of Default.

                  12.04 Certain Rights of the Agents. If any Agent shall request
instructions  from  the  Required  Banks  with  respect  to any  act  or  action
(including failure to act) in connection with this Agreement or any other Credit
Document,  such Agent shall be entitled to refrain  from such act or taking such
action  unless and until such Agent shall have  received  instructions  from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining.  Without limiting the foregoing,  no Bank or the holder of any
Note shall have any right of action whatsoever  against any Agent as a result of
such Agent acting or refraining from acting  hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.

                  12.05 Reliance.  The Administrative  Agent and the Syndication
Agent shall be entitled to rely, and shall be fully  protected in relying,  upon
any note, writing, resolution, notice, statement,  certificate,  telex, teletype
or  telecopier  message,  cablegram,  radiogram,  order  or  other  document  or
telephone  message  signed,  sent or made by any Person that the  Administrative
Agent or the  Syndication  Agent  believed to be the proper  Person,  and,  with
respect to all legal matters  pertaining to this  Agreement and any other Credit
Document  and its  duties  hereunder  and 

                                      -94-

<PAGE>

thereunder,  upon advice of counsel selected by the Administrative  Agent or the
Syndication Agent, as the case may be.

                  12.06 Indemnification.  To the extent the Administrative Agent
or the  Syndication  Agent is not reimbursed and  indemnified by the Borrower or
any  of  its   Subsidiaries,   the  Banks  will   reimburse  and  indemnify  the
Administrative   Agent  and  the  Syndication  Agent,  in  proportion  to  their
respective  "percentages"  as used in determining  the Required  Banks,  for and
against  any and  all  liabilities,  obligations,  losses,  damages,  penalties,
claims, actions,  judgments, costs, expenses or disbursements of whatsoever kind
or  nature  which  may be  imposed  on,  asserted  against  or  incurred  by the
Administrative  Agent or the  Syndication  Agent in  performing  its  respective
duties hereunder or under any other Credit  Document,  in any way relating to or
arising out of this  Agreement or any other Credit  Document;  provided  that no
Bank shall be liable for any portion of such liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
resulting  from the  Administrative  Agent's or the  Syndication  Agent's  gross
negligence or willful misconduct.

                  12.07 The  Administrative  Agent and the Syndication  Agent in
Their  Individual  Capacity.  With respect to its  obligation to make Loans,  or
issue  or  participate  in  Letters  of  Credit,   under  this  Agreement,   the
Administrative  Agent and the Syndication Agent shall have the rights and powers
specified  herein for a "Bank" and may  exercise  the same  rights and powers as
though it were not performing the duties specified herein; and the term "Banks,"
"Required Banks," "Majority Banks," "Supermajority Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent and the Syndication Agent in their individual capacity.
The  Administrative  Agent and the  Syndication  Agent and their  affiliates may
accept  deposits  from,  lend  money  to,  and  generally  engage in any kind of
banking,  investment  banking,  trust or other  business  with,  or provide debt
financing,  equity  capital  or other  services  (including  financial  advisory
services)  to, any Credit  Party or any  Affiliate  of any Credit  Party (or any
Person  engaged in a similar  business  with any Credit  Party or any  Affiliate
thereof) as if they were not performing  the duties  specified  herein,  and may
accept fees and other  consideration  from any Credit Party or any  Affiliate of
any Credit Party for services in  connection  with this  Agreement and otherwise
without having to account for the same to the Banks.

                  12.08  Holders.  Any Agent may deem and treat the payee of any
Note as the owner  thereof for all  purposes  hereof  unless and until a written
notice of the assignment,  transfer or endorsement  thereof, as the case may be,
shall have been filed with the Administrative  Agent. Any request,  authority or
consent of any Person  who,  at the time of making  such  request or giving such
authority or consent,  is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee,  assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.

                  12.09  Resignation  by  the   Administrative   Agent  and  the
Syndication Agent. (a) The Administrative Agent and/or the Syndication Agent may
resign  from the  performance  of all  their  respective  functions  and  duties
hereunder  and/or  under the  other  Credit  Documents  at any time by giving 15
Business Days' prior written notice to the Banks and the Borrower (provided

                                      -95-

<PAGE>

that no such notice  shall be required to be given to the  Borrower if a Default
or an Event of  Default  of the type  described  in Section  10.05  exists  with
respect to the Borrower).  Such resignation,  in the case of the  Administrative
Agent,  shall take effect  upon the  appointment  of a successor  Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise  provided below, and
such  resignation,  in the case of the  Syndication  Agent,  shall  take  effect
immediately.

                  (b) Upon any such notice of resignation by the  Administrative
Agent,  the  Required  Banks  shall  appoint a  successor  Administrative  Agent
hereunder  or  thereunder  who  shall  be a  commercial  bank or  trust  company
reasonably  acceptable to the Borrower (it being  understood and agreed that any
Non-Defaulting Bank is deemed to be acceptable to the Borrower).

                  (c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative  Agent with the
consent of the Borrower  (which  consent shall not be  unreasonably  withheld or
delayed), shall then appoint a successor Administrative Agent who shall serve as
Administrative  Agent  hereunder or  thereunder  until such time, if any, as the
Required Banks appoint a successor Administrative Agent as provided above.

                  (d) If no successor  Administrative  Agent has been  appointed
pursuant  to clause (b) or (c) above by the 60th day after the date such  notice
of resignation was given by the  Administrative  Agent,  Administrative  Agent's
resignation  shall  become  effective  and the Required  Banks shall  thereafter
perform all the duties of the  Administrative  Agent hereunder  and/or under any
other Credit  Document  until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.

                  SECTION 13. Miscellaneous.

                  13.01  Payment of  Expenses,  etc.  The  Borrower  shall:  (i)
whether or not the transactions  herein  contemplated  are consummated,  pay all
reasonable  out-of-pocket  costs  and  expenses  (w) of the  Agents  (including,
without  limitation,  the  reasonable  fees  and  disbursements  of White & Case
(subject to the limitations agreed to by the Agents and the Borrower) and of the
Agents'  local counsel and  consultants)  in  connection  with the  preparation,
execution and delivery of this Agreement and the other Credit  Documents and the
documents  and  instruments  referred to herein and  therein,  (x) of the Agents
(including, without limitation, the reasonable fees and expenses of White & Case
or any other  single  law firm  retained  by the  Agents)  with  respect  to any
amendment,  waiver or consent relating to this Agreement and/or the other Credit
Documents,  (y) of the Agents in connection with their syndication  efforts with
respect to this  Agreement and (z) of the Agents and, after the occurrence of an
Event of Default,  each of the Banks in connection  with the enforcement of this
Agreement  and the other Credit  Documents  and the  documents  and  instruments
referred to herein and therein (including,  without  limitation,  the reasonable
fees and disbursements of counsel for the Agents and, after the occurrence of an
Event of Default,  for each of the  Banks);  (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp, excise and other
similar documentary taxes with respect to the foregoing matters and save each of
the Banks harmless from and against any and 

                                      -96-

<PAGE>

all  liabilities  with respect to or resulting from any delay or omission (other
than to the  extent  attributable  to such  Bank) to pay such  taxes;  and (iii)
indemnify  each  Agent and each  Bank,  and each of their  respective  officers,
directors,  employees,  representatives  and  agents  from and hold each of them
harmless  against any and all  liabilities,  obligations  (including  removal or
remedial actions),  losses,  damages,  penalties,  claims,  actions,  judgments,
suits, costs,  expenses and disbursements  (including  reasonable attorneys' and
consultants' fees and disbursements) incurred by, imposed on or assessed against
any of them as a result of, or arising  out of, or in any way  related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or not
any Agent or any Bank is a party  thereto)  related to the entering  into and/or
performance  of this  Agreement or any other  Credit  Document or the use of any
Letter of Credit or the proceeds of any Loans  hereunder or the  consummation of
the Transaction or any other  transactions  contemplated  herein or in any other
Credit  Document  or the  exercise of any of their  rights or remedies  provided
herein or in the other Credit  Documents,  or (b) the actual or alleged presence
of  Hazardous  Materials  in the air,  surface  water or  groundwater  or on the
surface or subsurface of any Real Property  owned or at any time operated by the
Borrower or any of its Subsidiaries,  the generation,  storage,  transportation,
handling or disposal of  Hazardous  Materials  at any  location,  whether or not
owned or operated by the Borrower or any of its Subsidiaries, the non-compliance
of any Real Property with foreign,  federal, state and local laws,  regulations,
and ordinances (including applicable permits thereunder)  applicable to any Real
Property,  or any Environmental Claim asserted against the Borrower,  any of its
Subsidiaries  or any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries,  including,  in each case, without  limitation,  the
reasonable fees and disbursements of counsel and other  consultants  incurred in
connection  with any such  investigation,  litigation or other  proceeding  (but
excluding  any losses,  liabilities,  claims,  damages or expenses to the extent
incurred by reason of the gross negligence,  bad faith or willful  misconduct of
the Person to be indemnified).  To the extent that the undertaking to indemnify,
pay or hold harmless any Agent or any Bank set forth in the  preceding  sentence
may be  unenforceable  because it is violative of any law or public policy,  the
Borrower shall make the maximum  contribution to the payment and satisfaction of
each of the indemnified liabilities which is permissible under applicable law.

                  13.02  Right of  Setoff.  In  addition  to any  rights  now or
hereafter  granted  under  applicable  law  or  otherwise,  and  not  by  way of
limitation of any such rights, upon the occurrence of an Event of Default,  each
Bank is hereby  authorized (to the extent not  prohibited by applicable  law) at
any time or from time to time,  without  presentment,  demand,  protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby  expressly  waived,  to set off and to appropriate  and apply any and all
deposits  (general or special)  and any other  Indebtedness  at any time held or
owing by such Bank (including,  without limitation,  by branches and agencies of
such Bank  wherever  located)  to or for the credit or the account of any Credit
Party against and on account of the  Obligations  and  liabilities of the Credit
Parties  to such Bank  under  this  Agreement  or under any of the other  Credit
Documents, including, without limitation, all interests in Obligations purchased
by such Bank pursuant to Section 13.06(b), and all other claims of any nature or
description  arising out of or connected with this Agreement or any other Credit
Document,  irrespective  of  whether or not such Bank shall have made any demand
hereunder and although said Obligations,  liabilities or claims, or any of them,
shall be  contingent  or  unmatured.  Notwithstanding  anything to the  contrary
contained  in this  Section  13.02,  no 

                                      -97-

<PAGE>

Bank shall  exercise any such right of set-off  without the prior consent of the
Agents or the Required Banks so long as the Obligations  shall be secured by any
Real  Property  located  in the State of  California,  it being  understood  and
agreed,  however,  that this  sentence is for the sole  benefit of the Banks and
(notwithstanding  anything to the contrary  contained  in Section  13.12) may be
amended,  modified or waived in any respect by the  Required  Banks  without the
requirement  of prior  notice to or  consent  by any  Credit  Party and does not
constitute  a waiver  of any right  against  any  Credit  Party or  against  any
Collateral.

                  13.03 Notices.  Except as otherwise expressly provided herein,
all notices and other communications  provided for hereunder shall be in writing
(including  telegraphic,  telex,  telecopier or cable communication) and mailed,
telegraphed,  telexed, telecopied,  cabled or delivered: if to any Credit Party,
at the address  specified  opposite its signature below or in the other relevant
Credit Documents; if to any Bank, at its address specified on Schedule II; if to
the Syndication  Agent,  at the address  specified on Schedule II; and if to the
Administrative  Agent,  at its Notice Office;  or, as to any Credit Party or any
Agent,  at such other  address as shall be designated by such party in a written
notice to the other  parties  hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written  notice to the Borrower and the
Administrative  Agent. All such notices and  communications  shall, when mailed,
telegraphed,  telexed,  telecopied,  or cabled or sent by overnight courier,  be
effective when deposited in the mails, delivered to the telegraph company, cable
company  or  overnight  courier,  as the  case  may  be,  or sent  by  telex  or
telecopier,  except that notices and  communications  to any Agent or any Credit
Party shall not be effective until received by such Agent or such Credit Party.

                  13.04 Benefit of Agreement; Assignments;  Participations.  (a)
This  Agreement  shall be  binding  upon  and  inure  to the  benefit  of and be
enforceable  by the  respective  successors  and assigns of the parties  hereto;
provided,  however,  the  Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the Banks
and, provided  further,  that,  although any Bank may transfer,  assign or grant
participations in its rights hereunder,  such Bank shall remain a "Bank" for all
purposes  hereunder  (and may not  transfer  or assign all or any portion of its
Commitments  hereunder except as provided in Sections 1.13 and 13.04(b)) and the
transferee,  assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
participation  under  which the  participant  shall have  rights to approve  any
amendment to or waiver of this Agreement or any other Credit  Document except to
the  extent  such  amendment  or waiver  would (i)  extend  the final  scheduled
maturity of any Loan,  Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Revolving Loan Maturity Date) in which such  participant
is  participating,  or reduce the rate or extend the time of payment of interest
or Fees thereon  (except in  connection  with a waiver of  applicability  of any
post-default increase in interest rates) or reduce the principal amount thereof,
or  increase  the  amount of the  participant's  participation  over the  amount
thereof  then in effect  (it being  understood  that a waiver of any  Default or
Event of Default or of a mandatory reduction in the Total Commitment,  shall not
constitute a change in the terms of such participation,  and that an increase in
any Commitment or Loan shall be permitted without the consent of any participant
if the participant's  participation is not increased as a result thereof),  (ii)
consent to the assignment or transfer by the Borrower of any of its rights

                                      -98-

<PAGE>

and obligations  under this Agreement or (iii) release all or substantially  all
of the  Collateral  under all of the  Security  Documents  (except as  expressly
provided in the Credit  Documents)  supporting the Loans hereunder in which such
participant  is  participating.  In the  case  of any  such  participation,  the
participant  shall not have any rights under this  Agreement or any of the other
Credit Documents (the participant's  rights against such Bank in respect of such
participation  to be those set forth in the  agreement  executed by such Bank in
favor of the  participant  relating  thereto)  and all  amounts  payable  by the
Borrower  hereunder  shall be  determined  as if such  Bank  had not  sold  such
participation.

                  (b)  Notwithstanding  the  foregoing,  any  Bank  (or any Bank
together  with one or more  other  Banks) may (x) assign all or a portion of its
Commitments and related outstanding  Obligations hereunder to its parent company
and/or  any  affiliate  of such Bank which is at least 50% owned by such Bank or
its parent  company or to one or more Banks or (y) assign  all,  or if less than
all, a portion  equal to at least  $5,000,000 in the aggregate for the assigning
Bank or assigning Banks, of such Commitments and related outstanding Obligations
hereunder to one or more Eligible  Transferees,  each of which  assignees  shall
become a party to this  Agreement as a Bank by execution  of an  Assignment  and
Assumption Agreement, provided that, (i) at such time Schedule I shall be deemed
modified to reflect the Commitments (or outstanding  Term Loans, as the case may
be) of such new Bank and of the existing  Banks,  (ii) upon the surrender of the
relevant  Notes  by  the  assigning   Bank  (or,  upon  such  assigning   Bank's
indemnifying   the  Borrower   for  any  lost  Note   pursuant  to  a  customary
indemnification  agreement) new Notes will be issued, at the Borrower's expense,
to such new Bank and to the assigning  Bank upon the request of such new Bank or
assigning  Bank,  such new Notes to be in conformity  with the  requirements  of
Section 1.05 (with  appropriate  modifications)  to the extent needed to reflect
the revised  Commitments (or outstanding  Term Loans, as the case may be), (iii)
the consent of the Agents shall be required in connection with any assignment to
an Eligible  Transferee pursuant to clause (y) above (which consent shall not be
unreasonably  withheld  or  delayed),  (iv) so long as no  Default  or  Event of
Default exists, the consent of the Borrower shall be required in connection with
any  assignment  to an Eligible  Transferee  pursuant to clause (y) above (which
consent  shall  not be  unreasonably  withheld  or  delayed,  provided  that the
Borrower may withhold its consent to a proposed  assignment  if such  assignment
would result in increased  costs to the Borrower  under  Section  1.10,  2.06 or
4.04),  (v) the  Administrative  Agent  shall  receive  at the time of each such
assignment, from the assigning or assignee Bank, the payment of a non-refundable
assignment  fee of  $3,500  and  (vi) no such  transfer  or  assignment  will be
effective until recorded by the Administrative Agent on the Register pursuant to
Section  13.15.  To the  extent  of any  assignment  pursuant  to  this  Section
13.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Commitments.  At the time of each assignment pursuant to
this  Section  13.04(b) to a Person  which is not already a Bank  hereunder  and
which  is not a United  States  person  (as  such  term is  defined  in  Section
7701(a)(30)  of the  Code) for  Federal  income  tax  purposes,  the  respective
assignee Bank shall,  to the extent  legally  entitled to do so,  provide to the
Borrower the appropriate  Internal Revenue Service Forms (and, if applicable,  a
Section 4.04(b) (ii)  Certificate)  described in Section 4.04(b).  To the extent
that an  assignment  of all or any portion of a Bank's  Commitments  and related
outstanding Obligations pursuant to Section 1.13 or this Section 13.04(b) would,
at the time of such  assignment,  result in increased  costs under Section 1.10,
2.06 or 4.04 from those being charged by the respective  assigning Bank 

                                      -99-

<PAGE>

prior to such  assignment,  then the Borrower shall not be obligated to pay such
increased costs  (although the Borrower,  in accordance with and pursuant to the
other  provisions  of this  Agreement,  shall  be  obligated  to pay  any  other
increased  costs of the type  described  above  resulting from changes after the
date of the respective assignment).

                  (c) Nothing in this  Agreement  shall  prevent or prohibit any
Bank from  pledging its Loans and Notes  hereunder to a Federal  Reserve Bank in
support of borrowings made by such Bank from such Federal Reserve Bank.

                  13.05 No Waiver;  Remedies Cumulative.  No failure or delay on
the part of the  Administrative  Agent or the  Syndication  Agent or any Bank in
exercising  any right,  power or  privilege  hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent, the Syndication Agent or any Bank shall operate as
a waiver thereof;  nor shall any single or partial exercise of any right,  power
or privilege  hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right,  power or privilege
hereunder or thereunder.  The rights, powers and remedies herein or in any other
Credit  Document  expressly  provided are  cumulative  and not  exclusive of any
rights, powers or remedies which the Administrative Agent, the Syndication Agent
or any Bank would  otherwise have. No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further notice or demand
in similar or other  circumstances  or  constitute a waiver of the rights of the
Administrative  Agent, the Syndication Agent or any Bank to any other or further
action in any circumstances without notice or demand.

                  13.06 Payments Pro Rata.  (a) Except as otherwise  provided in
this Agreement,  the Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of the Borrower in respect of any  Obligations
hereunder,  it shall  distribute  such payment to the Banks (other than any Bank
that has  consented in writing to waive its pro rata share of any such  payment)
pro rata based upon their  respective  shares,  if any, of the Obligations  with
respect to which such payment was received.

                  (b) Each of the Banks  agrees that,  if it should  receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by  counterclaim  or cross
action,  by  the  enforcement  of any  right  under  the  Credit  Documents,  or
otherwise),  which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings,  Commitment Commission or Letter of Credit Fees,
of a sum which with  respect to the related sum or sums  received by other Banks
is in a greater  proportion  than the total of such Obligation then owed and due
to such Bank bears to the total of such  Obligation  then owed and due to all of
the Banks  immediately  prior to such  receipt,  then such Bank  receiving  such
excess  payment  shall  purchase for cash without  recourse or warranty from the
other Banks an interest in the  Obligations  of the  respective  Credit Party to
such Banks in such amount as shall result in a proportional participation by all
the Banks in such  amount;  provided  that if all or any  portion of such excess
amount is thereafter  recovered from such Bank, such purchase shall be rescinded
and the  purchase  price  restored to the extent of such  recovery,  but without
interest.

                                      -100-

<PAGE>

                  (c) Notwithstanding anything to the contrary contained herein,
the  provisions of the preceding  Sections  13.06(a) and (b) shall be subject to
the express  provisions of this Agreement  which require,  or permit,  differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.

                  13.07  Calculations;   Computations;   Accounting  Terms.  The
financial  statements to be furnished to the Banks pursuant hereto shall be made
and prepared in accordance with generally accepted accounting  principles in the
United States  consistently  applied throughout the periods involved (except (i)
as set forth in the notes thereto,  (ii) for year-end adjustments in the case of
interim financial  statements and (iii) as otherwise disclosed in writing by the
Borrower to the Banks) and consistent  with those used to prepare the historical
financial  statements of the Borrower delivered to the Banks pursuant to Section
7.05(a).

                  (b) All  computations of interest,  Commitment  Commission and
other Fees  hereunder,  shall be made on the basis of a year of 360 days for the
actual number of days elapsed.

                  13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL.  (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND  OBLIGATIONS  OF THE  PARTIES  HEREUNDER  AND  THEREUNDER  SHALL,  EXCEPT AS
OTHERWISE  PROVIDED IN THE  MORTGAGES,  BE CONSTRUED IN  ACCORDANCE  WITH AND BE
GOVERNED  BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL  ACTION OR  PROCEEDING
WITH RESPECT TO THIS  AGREEMENT  OR ANY OTHER CREDIT  DOCUMENT MAY BE BROUGHT IN
THE  COURTS OF THE STATE OF NEW YORK OR OF THE UNITED  STATES  FOR THE  SOUTHERN
DISTRICT OF NEW YORK,  AND, BY EXECUTION  AND DELIVERY OF THIS  AGREEMENT OR ANY
OTHER CREDIT DOCUMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,  THE JURISDICTION OF THE
AFORESAID COURTS. THE BORROWER HEREBY FURTHER  IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER THE BORROWER,  AND AGREES NOT TO
PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENTS  BROUGHT IN ANY OF THE  AFOREMENTIONED  COURTS,  THAT
SUCH COURTS LACK PERSONAL  JURISDICTION OVER THE BORROWER.  THE BORROWER FURTHER
IRREVOCABLY  CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH  ACTION OR  PROCEEDING  BY THE  MAILING OF COPIES  THEREOF BY
REGISTERED OR CERTIFIED MAIL,  POSTAGE  PREPAID,  TO THE BORROWER AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH
SERVICE OF PROCESS  AND  FURTHER  IRREVOCABLY  WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY ACTION OR PROCEEDING  COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR

                                     -101-

<PAGE>

INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY BANK OR THE
HOLDER OF ANY NOTE TO SERVE  PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW OR TO
COMMENCE  LEGAL  PROCEEDINGS  OR OTHERWISE  PROCEED  AGAINST THE BORROWER IN ANY
OTHER JURISDICTION.

                  (b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR  HEREAFTER  HAVE TO THE  LAYING  OF VENUE OF ANY OF THE  AFORESAID
ACTIONS OR  PROCEEDINGS  ARISING OUT OF OR IN CONNECTION  WITH THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT  BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE
AND HEREBY  FURTHER  IRREVOCABLY,  TO THE EXTENT  PERMITTED BY  APPLICABLE  LAW,
WAIVES AND  AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH  ACTION
OR  PROCEEDING  BROUGHT  IN ANY SUCH COURT HAS BEEN  BROUGHT IN AN  INCONVENIENT
FORUM.

                  (c) EACH OF THE PARTIES TO THIS AGREEMENT  HEREBY  IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,  PROCEEDING  OR  COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT,  THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                  13.09  Counterparts.  This  Agreement  may be  executed in any
number  of  counterparts  and  by  the  different  parties  hereto  on  separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts  executed  by all the  parties  hereto  shall  be  lodged  with the
Borrower and the Administrative Agent.

                  13.10 Effectiveness.  This Agreement shall become effective on
the  date  (the  "Restatement  Effective  Date")  on  which  the  Borrower,  the
Administrative  Agent,  the  Syndication  Agent and each of the Banks shall have
signed a counterpart  hereof  (whether the same or different  counterparts)  and
shall have delivered the same to the  Administrative  Agent at its Notice Office
or, in the case of the  Banks,  shall  have  given to the  Administrative  Agent
telephonic  (confirmed in writing),  written or telex notice (actually received)
at  such   office  that  the  same  has  been  signed  and  mailed  to  it.  The
Administrative  Agent will give the Borrower and each Bank prompt written notice
of the occurrence of the Restatement Effective Date.

                  13.11  Headings  Descriptive.  The  headings  of  the  several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.

                  13.12 Amendment or Waiver; etc. Neither this Agreement nor any
other Credit  Document  nor any terms hereof or thereof may be changed,  waived,
discharged or terminated unless such change, waiver, discharge or termination is
in  writing  signed by the  respective  Credit  Parties  party  thereto  and the
Required Banks, provided that no such change,  waiver,  discharge or termination
shall,  without the consent of each Bank  (other than a  Defaulting  Bank) (with
Obligations  being directly  affected in the case of following  clause (i)), (i)
extend  the 

                                     -102-

<PAGE>

final  scheduled  maturity  of any Loan or Note or extend the stated  expiration
date of any Letter of Credit beyond the Revolving  Loan Maturity Date, or reduce
the rate of  interest or Fees or extend the time of payment of interest or Fees,
or reduce the principal amount thereof (except to the extent repaid in cash) (it
being understood that any amendment or modification to the financial definitions
in this Agreement or to Section 13.07(a) shall not constitute a reduction in the
rate of interest or any Fees for purposes of this clause (i)),  (ii) release all
or  substantially  all of the  Collateral  (except as expressly  provided in the
Credit Documents) under all the Security  Documents,  (iii) release a Subsidiary
Guarantor from the Subsidiaries  Guaranty  (except as expressly  provided in the
Subsidiaries  Guaranty  or in  connection  with  the  sale  of  such  Subsidiary
Guarantor in accordance with the terms of this Agreement), (iv) amend, modify or
waive any provision of this Section 13.12,  (v) reduce the percentage  specified
in the definition of Required Banks (it being  understood that, with the consent
of the  Required  Banks,  additional  extensions  of  credit  pursuant  to  this
Agreement  may  be  included  in the  determination  of the  Required  Banks  on
substantially  the same basis as the extensions of Term Loans and Revolving Loan
Commitments are included on the  Restatement  Effective Date) or (vi) consent to
the assignment or transfer by the Borrower of any of its rights and  obligations
under this Agreement;  provided further, that no such change, waiver,  discharge
or  termination  shall (u) increase the  Commitments of any Bank over the amount
thereof  then in effect  without the  consent of such Bank (it being  understood
that waivers or modifications of conditions  precedent,  covenants,  Defaults or
Events of Default or of a mandatory reduction in the Total Commitments shall not
constitute an increase of the  Commitment  of any Bank,  and that an increase in
the  available  portion of any  Commitment  of any Bank shall not  constitute an
increase  of the  Commitment  of such  Bank),  (v)  without  the consent of each
Issuing  Bank,  amend,  modify or waive any  provision of Section 2 or alter its
rights or obligations with respect to Letters of Credit, (w) without the consent
of each Agent,  amend,  modify or waive any provision of Section 12 or any other
provision  as same  relates  to the rights or  obligations  of the  Agents,  (x)
without  the  consent  of the  Collateral  Agent,  amend,  modify  or waive  any
provision  relating to the rights or obligations of the  Collateral  Agent,  (y)
without  the  consent  of the  Majority  Banks  of each  Tranche  which is being
allocated a lesser prepayment,  repayment or commitment reduction as a result of
the actions  described  below (or without the consent of the  Majority  Banks of
each Tranche in the case of an amendment to the  definition of Majority  Banks),
amend the  definition  of Majority  Banks (it being  understood  that,  with the
consent of the Required Banks,  additional extensions of credit pursuant to this
Agreement  may  be  included  in the  determination  of the  Majority  Banks  on
substantially  the same basis as the extensions of Term Loans and Revolving Loan
Commitments  are  included  on the  Restatement  Effective  Date) or  alter  the
required   application   of  any   prepayments   or  repayments  (or  commitment
reductions),  as between the various  Tranches,  pursuant to Section  4.01(a) or
4.02  (excluding  Section  4.02(b))  (although the Required Banks may waive,  in
whole or in part, any such  prepayment,  repayment or commitment  reduction,  so
long  as  the  application,  as  amongst  the  various  Tranches,  of  any  such
prepayment, repayment or commitment reduction which is still required to be made
is not  altered) or (z) without  the consent of the  Supermajority  Banks of the
respective  Tranche,  reduce the amount of, or extend the date of, any Scheduled
Repayment  or without the consent of the  Supermajority  Banks of each  Tranche,
amend the definition of Supermajority  Banks (it being understood that, with the
consent of the Required Banks,  additional extensions of credit pursuant to this
Agreement may be included in the 

                                     -103-

<PAGE>

determination of the Supermajority  Banks on substantially the same basis as the
extensions  of Term Loans and  Revolving  Loan  Commitments  are included on the
Restatement Effective Date).

                  (b) If,  in  connection  with  any  proposed  change,  waiver,
discharge  or  termination  to  any of  the  provisions  of  this  Agreement  as
contemplated  by clauses (i) through  (vi),  inclusive,  of the first proviso to
Section 13.12(a),  the consent of the Required Banks is obtained but the consent
of one or more of such other  Banks whose  consent is required is not  obtained,
then the  Borrower  shall have the right,  so long as all  non-consenting  Banks
whose individual  consent is required are treated as described in either clauses
(A) or (B) below, to either (A) replace each such  non-consenting  Bank or Banks
(or, at the option of the Borrower if the respective  Bank's consent is required
with  respect to less than all  Tranches of Loans (or related  Commitments),  to
replace only the respective  Tranche or Tranches of Commitments  and/or Loans of
the  respective  non-consenting  Bank which gave rise to the need to obtain such
Bank's  individual  consent)  with one or more  Replacement  Banks  pursuant  to
Section 1.13 so long as at the time of such  replacement,  each such Replacement
Bank consents to the proposed  change,  waiver,  discharge or termination or (B)
terminate  such  non-consenting  Bank's  Commitments  (if such Bank's consent is
required as a result of its Commitments)  and/or repay outstanding Term Loans of
such  Bank  which  gave  rise to the need to  obtain  such  Bank's  consent,  in
accordance  with Sections  3.02(b) and/or  4.01(b),  provided  that,  unless the
Commitments that are terminated,  and Loans repaid, pursuant to preceding clause
(B) are  immediately  replaced in full at such time  through the addition of new
Banks or the increase of the Commitments  and/or  outstanding  Loans of existing
Banks (who in each case must specifically consent thereto),  then in the case of
any action pursuant to preceding clause (B) the Required Banks (determined after
giving  effect to the  proposed  action)  shall  specifically  consent  thereto,
provided  further,  that in any event the  Borrower  shall not have the right to
replace a Bank,  terminate its Commitments or repay its Loans solely as a result
of the  exercise of such  Bank's  rights (and the  withholding  of any  required
consent by such Bank) pursuant to the second proviso to Section 13.12(a).

                  13.13 Survival.  All  indemnities set forth herein  including,
without  limitation,  in Sections 1.10,  1.11, 2.06, 4.04, 12.06 and 13.01 shall
survive the execution,  delivery and termination of this Agreement and the Notes
and the making and repayment of the Obligations.

                  13.14 Domicile of Loans.  Each Bank may transfer and carry its
Loans at, to or for the account of any of its Lending  Offices.  Notwithstanding
anything  to the  contrary  contained  herein,  to the extent that a transfer of
Loans pursuant to this Section 13.14 would, at the time of such transfer, result
in  increased  costs under  Section  1.10,  1.11,  2.06 or 4.04 from those being
charged by the respective  Bank prior to such transfer,  then the Borrower shall
not be obligated to pay such  increased  costs  (although the Borrower  shall be
obligated to pay any other increased costs of the type described above resulting
from changes after the date of the respective transfer).

                  13.15   Register.   The   Borrower   hereby   designates   the
Administrative  Agent to serve as the Borrower's  agent,  solely for purposes of
this Section  13.15,  to maintain a register (the  "Register")  on which it will
record the name and address of each Bank, the  Commitments  from time to time of
each of the  Banks,  the Loans made by each of the Banks and each  

                                     -104-

<PAGE>

repayment in respect of the principal amount of the Loans of each Bank.  Failure
to make any such recordation,  or any error in such recordation shall not affect
the Borrower's  obligations in respect of such Loans.  With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to the principal of,
and  interest  on,  any Loan  made  pursuant  to such  Commitments  shall not be
effective  until such  transfer is recorded on the  Register  maintained  by the
Administrative Agent with respect to ownership of such Commitments and Loans and
prior to such  recordation  all amounts owing to the transferor  with respect to
such   Commitments  and  Loans  shall  remain  owing  to  the  transferor.   The
registration  of  assignment or transfer of all or part of any  Commitments  and
Loans shall be recorded by the  Administrative  Agent on the Register  only upon
the acceptance by the Administrative  Agent of a properly executed and delivered
Assignment and Assumption  Agreement  pursuant to Section  13.04(b).  Coincident
with  the  delivery  of such  an  Assignment  and  Assumption  Agreement  to the
Administrative  Agent for acceptance and  registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Bank shall surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate  principal amount shall be issued to the
assigning  or  transferor  Bank  and/or  the new Bank.  The  Borrower  agrees to
indemnify the Administrative Agent from and against any and all losses,  claims,
damages and  liabilities of whatsoever  nature which may be imposed on, asserted
against or incurred by the Agent in  performing  its duties  under this  Section
13.15.

                  13.16 Confidentiality. (a) Subject to the provisions of clause
(b) of this Section  13.16,  each Bank agrees that it will not disclose  without
the prior  consent  of the  Borrower  (other  than to its  employees,  auditors,
advisors  or counsel or to another  Bank if the Bank or such  Bank's  holding or
parent company in its sole discretion determines that any such party should have
access to such  information,  provided  such  Persons  shall be  subject  to the
provisions  of  this  Section  13.16  to the  same  extent  as  such  Bank)  any
information with respect to the Borrower or any of its Subsidiaries which is now
or in the  future  furnished  pursuant  to this  Agreement  or any other  Credit
Document  and which is  designated  by the  Borrower  to the Banks in writing as
confidential,  provided that any Bank may disclose any such  information  (a) as
has become generally available to the public other than by virtue of a breach of
this  Section  13.16(a)  by the  respective  Bank,  (b) as  may be  required  or
reasonably  appropriate in any report,  statement or testimony  submitted to any
municipal,  state  or  Federal  regulatory  body  having  or  claiming  to  have
jurisdiction over such Bank or to the Federal Reserve Board, the Federal Deposit
Insurance Corporation,  the NAIC or similar organizations (whether in the United
States or elsewhere) or their  successors,  (c) as may be required or reasonably
appropriate  in respect to any  summons or subpoena  or in  connection  with any
litigation,  (d) in order to comply with any law,  order,  regulation  or ruling
applicable to such Bank, (e) to the Agents and (f) to any  prospective or actual
transferee  or  participant  in  connection  with any  contemplated  transfer or
participation of any of the Notes or Commitments or any interest therein by such
Bank and to any direct or indirect  contractual  counterparties in Interest Rate
Protection  Agreements  or Other  Hedging  Agreements  entered into by any Bank,
provided that such prospective transferee and each such contractual counterparty
agrees to be bound by the confidentiality  provisions  contained in this Section
13.16.

                  (b) The Borrower hereby acknowledges and agrees that each Bank
may share with any of its affiliates any information  related to the Borrower or
any of its Subsidiaries 

                                     -105-

<PAGE>

(including, without limitation, any nonpublic customer information regarding the
creditworthiness  of the Borrower and its  Subsidiaries,  provided  such Persons
shall be subject to the  provisions  of this Section 13.16 to the same extent as
such Bank).

                  13.17 Limitation on Increased Costs.  Notwithstanding anything
to the contrary  contained in Section 1.10,  1.11,  2.06 or 4.04,  unless a Bank
gives  notice to the  Borrower  that it is  obligated to pay an amount under any
such  Section  within 180 days after the later of (x) the date such Bank  incurs
the respective increased costs, Taxes, loss, expense or liability,  or reduction
in amounts  received or  receivable or reduction in return on capital or (y) the
date  such  Bank  has  actual  knowledge  of its  incurrence  of the  respective
increased costs,  Taxes,  loss,  expense or liability,  or reductions in amounts
received or receivable  or reduction in return on capital,  then such Bank shall
only be entitled to be compensated  for such amount by the Borrower  pursuant to
said Section  1.10,  1.11,  2.06 or 4.04,  as the case may be, to the extent the
costs,  Taxes, loss,  expense or liability,  or reduction in amounts received or
receivable  or  reduction  in return on capital  are  incurred or suffered on or
after the date which  occurs 180 days  prior to such Bank  giving  notice to the
Borrower  that it is obligated to pay the  respective  amounts  pursuant to said
Section 1.10,  1.11,  2.06 or 4.04, as the case may be. This Section 13.17 shall
have no  applicability  to any  Section of this  Agreement  or any other  Credit
Document other than said Sections 1.10, 1.11, 2.06 and 4.04.






                                     -106-

<PAGE>

                  IN WITNESS WHEREOF,  the parties hereto have caused their duly
authorized  officers to execute and deliver this  Agreement as of the date first
above written.


Address:

222 East Main Street                     OMNIQUIP INTERNATIONAL, INC.
Port Washington, Wisconsin
   53074
Telephone No.: (414) 268-8965
Telecopier No.: (414) 268-3100           By /s/ Allen J. Jablonsky
                                            ------------------------------------
Attention:  Vice President Finance and      Title:  Assistant Treasurer
                Chief Financial Officer


                                         MORGAN STANLEY SENIOR FUNDING,
                                          INC., Individually and as Syndication 
                                             Agent and Co-Arranger

                                         By /s/ Michael Hart
                                           ------------------------------------
                                           Title:  Principal


                                         FIRST UNION NATIONAL BANK,
                                          Individually and as Administrative
                                          Agent and Co-Arranger

                                         By /s/ George L. Woolsey
                                            ------------------------------------
                                            Title: Vice President


                                         BANK OF SCOTLAND


                                         By /s/Annie Chin Tat
                                            ------------------------------------
                                            Title: Senior Vice President


                                         CREDIT AGRICOLE INDOSUEZ


                                         By /s/ Dennis M. Toolan
                                            ------------------------------------
                                            Title: Senior Vice President

<PAGE>

                                         By /s/ David Bouhl
                                            ------------------------------------
                                            Title: Head of Corporate Banking
                                                   Chicago

                                         FIRST BANK


                                         By /s/ Ted Kraizer
                                            ------------------------------------
                                            Title: Vice President


                                         THE FIRST NATIONAL BANK OF CHICAGO

                                         By /s/ Jenny A. Gilpin
                                            ------------------------------------
                                            Title: Vice President


                                         FIRSTAR BANK MILWAUKEE, N.A.

                                         By /s/ Jeff Janza
                                            ------------------------------------
                                            Title: Assistant Vice President


                                         FLEET CAPITAL CORPORATION


                                         By /s/ Aleen M. Harte
                                            ------------------------------------
                                            Title: Vice President


                                         THE FUJI BANK, LIMITED

                                         By /s/ Peter L. Chinnici
                                            ------------------------------------
                                            Title: Joint General Manager


                                         HARRIS TRUST AND SAVINGS BANK

                                         By /s/ George Dluby
                                            ------------------------------------
                                            Title: Vice President


                                         M&I MARSHALL AND ILSLEY BANK

<PAGE>

                                         By /s/ Kathleen T. Coleman
                                            ------------------------------------
                                            Title: Vice President


                                         THE MITSUBISHI TRUST AND BANKING
                                          CORPORATION


                                         By /s/ Nobuo Tominaga
                                            ------------------------------------
                                            Title: Chief Manager


                                         NATIONAL CITY BANK


                                         By /s/ Barry C. Robinson
                                            ------------------------------------
                                            Title: Vice President


                                         WACHOVIA BANK, N.A.


                                         By /s/ Debra L. Coheley
                                            ------------------------------------
                                            Title: Senior Vice President



                                         RZB FINANCE LLC


                          By /s/ John A. Valiska    /s/ Christopher Hoedl
                             ---------------------------------------------------
                             John A. Valiska,           Christopher Hoedl
                             Vice President             Assistant Vice President


<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

SECTION 1.     Amount and Terms of Credit......................................2

     1.01      The Commitments.................................................2
     1.02      Minimum Amount of Each Borrowing................................4
     1.03      Notice of Borrowing.............................................4
     1.04      Disbursement of Funds...........................................5
     1.05      Notes...........................................................6
     1.06      Conversions.....................................................8
     1.07      Pro Rata Borrowings.............................................8
     1.08      Interest........................................................8
     1.09      Interest Periods................................................9
     1.10      Increased Costs, Illegality, etc...............................10
     1.11      Breakage.......................................................12
     1.12      Change of Lending Office.......................................13
     1.13      Replacement of Banks...........................................13

SECTION 2.     Letters of Credit..............................................14

     2.01      Letters of Credit..............................................14
     2.02      Maximum Letter of Credit Outstandings; Final Maturities........15
     2.03      Letter of Credit Requests......................................16
     2.04      Letter of Credit Participations................................16
     2.05      Agreement to Repay Letter of Credit Drawings...................18
     2.06      Increased Costs................................................19
     2.07      Existing Letters of Credit.....................................19

SECTION 3.     Commitment Commission; Fees; Reductions of Commitment..........19

     3.01      Fees...........................................................20
     3.02      Voluntary Termination of Unutilized Commitments................21
     3.03      Mandatory Reduction of Commitments.............................21

SECTION 4.     Prepayments; Payments; Taxes...................................22

     4.01      Voluntary Prepayments..........................................22
     4.02      Mandatory Repayments and Commitment Reductions.................23
     4.03      Method and Place of Payment....................................28
     4.04      Net Payments...................................................28

SECTION 5.     Conditions Precedent...........................................30

     5.01      Execution of Agreement; Notes..................................30



                                      (i)
<PAGE>
                                                                            Page
                                                                            ----

     5.02      Officer's Certificate..........................................30
     5.03      Opinions of Counsel............................................30
     5.04      Corporate Documents; Proceedings; etc..........................30
     5.05      Employee Benefit Plans; Shareholders' Agreements; Management
               Agreements; Collective Bargaining Agreements; Existing
               Indebtedness Agreements........................................31
     5.06      Indebtedness; Original Credit Agreement........................31
     5.07      Adverse Change, etc. ..........................................32
     5.08      Litigation.....................................................32
     5.09      Pledge Agreement...............................................32
     5.10      Security Agreement.............................................33
     5.11      Subsidiaries Guaranty..........................................33
     5.12      Mortgages; Title Insurance; Survey, etc. ......................33
     5.13      Projections; Pro Forma Balance Sheet...........................34
     5.14      Solvency Certificate; Insurance Certificates...................34
     5.15      Fees, etc......................................................34

SECTION 6.     Conditions Precedent to All Credit Events......................34

     6.01      No Default; Representations and Warranties.....................34
     6.02      Notice of Borrowing; Letter of Credit Request..................35

SECTION 7.     Representations, Warranties and Agreements.....................35

     7.01      Corporate and Other Status.....................................35
     7.02      Corporate and Other Power and Authority........................36
     7.03      No Violation...................................................36
     7.04      Approvals......................................................36
     7.05      Financial Statements; Financial Condition; Undisclosed
               Liabilities; Projections, etc. ................................37
     7.06      Litigation.....................................................38
     7.07      True and Complete Disclosure...................................38
     7.08      Use of Proceeds; Margin Regulations............................38
     7.09      Tax Returns and Payments.......................................38
     7.10      Compliance with ERISA..........................................39
     7.11      The Security Documents.........................................40
     7.12      Representations and Warranties in Acquisition Documents........41
     7.13      Properties.....................................................41
     7.14      Capitalization.................................................41
     7.15      Subsidiaries...................................................42
     7.16      Compliance with Statutes, etc. ................................42
     7.17      Investment Company Act.........................................42
     7.18      Public Utility Holding Company Act.............................42
     7.19      Environmental Matters..........................................42
     7.20      Labor Relations................................................43
     7.21      Patents, Licenses, Franchises and Formulas.....................43


                                      (ii)

<PAGE>
                                                                            Page
                                                                            ----

     7.22      Indebtedness...................................................43
     7.23      Transaction....................................................44

SECTION 8.     Affirmative Covenants..........................................44

     8.01      Information Covenants..........................................44
     8.02      Books, Records and Inspections.................................47
     8.03      Maintenance of Property; Insurance.............................47
     8.04      Corporate Franchises...........................................48
     8.05      Compliance with Statutes, etc. ................................48
     8.06      Compliance with Environmental Laws.............................48
     8.07      ERISA..........................................................49
     8.08      End of Fiscal Years; Fiscal Quarters...........................50
     8.09      Performance of Obligations.....................................50
     8.10      Payment of Taxes...............................................50
     8.11      Interest Rate Protection.......................................50
     8.12      Additional Security; Further Assurances........................50
     8.13      Foreign Subsidiaries Security..................................51

SECTION 9.     Negative Comments..............................................52

     9.01      Liens..........................................................52
     9.02      Consolidation, Merger, Purchase or Sale of Assets, etc. .......54
     9.03      Dividends......................................................56
     9.04      Indebtedness...................................................56
     9.05      Advances, Investments and Loans................................58
     9.06      Transactions with Affiliates...................................59
     9.07      Capital Expenditures...........................................59
     9.08      Consolidated Fixed Charge Coverage Ratio.......................61
     9.09      Consolidated Interest Coverage Ratio...........................61
     9.10      Maximum Leverage Ratio.........................................61
     9.11      Limitation on Voluntary Payments and Modifications of 
               Subordinated Indebtedness; Modifications of Certificate
               of Incorporation and Certain Other Agreements, etc. ...........62
     9.12      Limitation on Certain Restrictions on Subsidiaries.............63
     9.13      Limitation on Issuance of Capital Stock........................63
     9.14      Business.......................................................63
     9.15      Limitation on Creation of Subsidiaries.........................63

SECTION 10.    Events of Default..............................................64

     10.01     Payments.......................................................64
     10.02     Representations, etc. .........................................64
     10.03     Covenants......................................................64
     10.04     Default Under Other Agreements.................................64
     10.05     Bankruptcy, etc. ..............................................65
     10.06     ERISA..........................................................65


                                     (iii)

<PAGE>

                                                                            Page
                                                                            ----

     10.07     Security Documents.............................................66
     10.08     Subsidiaries Guaranty..........................................66
     10.09     Judgments......................................................66
     10.10     Change of Control..............................................66

SECTION 11.    Definitions and Accounting Terms...............................67

     11.01     Defined Terms..................................................67

SECTION 12.    The Administrative Agent and the Syndication Agent.............91
     
     12.01     Appointment....................................................91
     12.02     Nature of Duties...............................................92
     12.03     Lack of Reliance on the Administrative Agent and the
               Syndication Agent..............................................92
     12.04     Certain Rights of the Agents...................................92
     12.05     Reliance.......................................................93
     12.06     Indemnification................................................93
     12.07     The Administrative Agent and the Syndication Agent in
               Their Individual Capacity......................................93
     12.08     Holders........................................................94
     12.09     Resignation by the Administrative Agent and the 
               Syndication Agent..............................................94

SECTION 13.    Miscellaneous..................................................94

     13.01     Payment of Expenses, etc. .....................................94
     13.02     Right to Setoff................................................95
     13.03     Notices........................................................96
     13.04     Benefit of Agreement; Assignments; Participations..............96
     13.05     No Waiver; Remedies Cumulative.................................98
     13.06     Payments Pro Rata..............................................98
     13.07     Calculations; Computations; Accounting Terms...................99
     13.08     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
               WAIVER OF JURY TRIAL...........................................99
     13.09     Counterparts..................................................100
     13.10     Effectiveness.................................................100
     13.11     Headings Descriptive..........................................100
     13.12     Amendment or Waiver, etc. ....................................100
     13.13     Survival......................................................102
     13.14     Domicile of Loans.............................................102
     13.15     Register......................................................102
     13.16     Confidentiality...............................................103
     13.17     Limitation on Increased Costs.................................104

               SCHEDULE I        Commitments
               SCHEDULE II       Bank Addresses
               SCHEDULE III      Real Property
               SCHEDULE IV       Indebtedness to be Refinanced

                                      (iv)

<PAGE>

                                                                            Page
                                                                            ----

               SCHEDULE V        Subsidiaries
               SCHEDULE VI       Existing Indebtedness
               SCHEDULE VII      Insurance
               SCHEDULE VIII     Existing Liens
               SCHEDULE IX       Existing Investments

               EXHIBIT A  Notice of Borrowing  
               EXHIBIT B-1 Form of A Term Note
               EXHIBIT B-2 Form of B Term Note  
               EXHIBIT B-3 Form of Revolving Note  
               EXHIBIT B-4 Form of  Swingline  Note  
               EXHIBIT C Form of Credit Request 
               EXHIBIT D Section 4.04(b)(ii) Certificate
               EXHIBIT E Opinion of Dickstein,  Shapiro,  Morin &
                         Oshinsky   LLP,   counsel  to  the  Credit
                         Parties
               EXHIBIT F Officers'  Certificate  
               EXHIBIT G Form of  Pledge Agreement 
               EXHIBIT H Form of Security  Agreement 
               EXHIBIT I Form of  Subsidiaries  Agreement  
               EXHIBIT J Solvency  Certificate
               EXHIBIT K Assignment  and  Assumption  Agreement  
               EXHIBIT L Intercompany Note 
               EXHIBIT M Notice of Account Designation




                                       (v)