<PAGE>   1
                                                                   EXHIBIT 10.2
                                                                   ------------


                                                                  EXECUTION COPY

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                                CREDIT AGREEMENT

                                      AMONG

                             NOVELLUS SYSTEMS, INC.

                                       AND

                            THE LENDERS NAMED HEREIN

                                       AND

                               ABN AMRO BANK N.V.,
                            AS AGENT FOR THE LENDERS

                                  JUNE 9, 1997








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<PAGE>   2
                                CREDIT AGREEMENT

                               Table of Contents
                               -----------------

<TABLE>
<S>                  <C>                                                               <C>
SECTION I.           INTERPRETATION
    1.01.            Definitions....................................................    1
    1.02.            GAAP...........................................................   21
    1.03.            Headings.......................................................   21
    1.04.            Plural Terms...................................................   21
    1.05.            Time...........................................................   21
    1.06.            Governing Law..................................................   21
    1.07.            Construction...................................................   22
    1.08.            Entire Agreement...............................................   22
    1.09.            Calculation of Interest and Fees...............................   22
    1.10.            Other Interpretive Provisions..................................   22
                                                                                       
SECTION II.          CREDIT FACILITY                                                   
    2.01.            Revolving Loans................................................   23
    2.02.            Notice of Borrowing............................................   23
    2.03.            Interest Rates.................................................   24
    2.04.            LIBOR Loan Interest Periods....................................   24
    2.05.            Scheduled Loan Payments........................................   25
    2.06.            Purpose........................................................   25
    2.07.            Commitment Reductions, Etc.....................................   25
    2.08.            Fees...........................................................   26
    2.09.            Prepayments....................................................   26
    2.10.            Other Payment Terms............................................   27
    2.11.            Notes and Interest Account.....................................   28
    2.12.            Loan Funding...................................................   28
    2.13.            Pro Rata Treatment.............................................   29
    2.14.            Change of Circumstances........................................   31
    2.15.            Taxes on Payments..............................................   33
    2.16.            Funding Loss Indemnification...................................   35
    2.17.            Replacement of Lenders.........................................   36
                                                                                       
SECTION III.         CONDITIONS PRECEDENT                                              
    3.01.            Initial Conditions Precedent...................................   36
    3.02.            Conditions Precedent to Each Credit Event......................   36
    3.03.            Covenant to Deliver............................................   37
                                                                                       
SECTION IV.          REPRESENTATIONS AND WARRANTIES                                    
    4.01.            Borrower's Representations and Warranties......................   37
    4.02.            Reaffirmation..................................................   42
                                                                                       
SECTION V.           COVENANTS                                                         
    5.01.            Affirmative Covenants..........................................   42
    5.02.            Negative Covenants.............................................   46
    5.03.            Financial Covenants............................................   54
                                                                                       
SECTION VI.          DEFAULT                                                           
    6.01.            Events of Default..............................................   55
    6.02.            Remedies.......................................................   58
</TABLE>





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<TABLE>
<S>                 <C>                                                                <C>
SECTION VII.         THE AGENT AND RELATIONS AMONG LENDERS

    7.01.            Appointment, Powers and Immunities.............................   58
    7.02.            Reliance by Agent..............................................   59
    7.03.            Defaults.......................................................   59
    7.04.            Indemnification................................................   60
    7.05.            Non-Reliance...................................................   60
    7.06.            Resignation or Removal of Agent................................   61
    7.07.            Authorization..................................................   61 
    7.08.            Agent in its Individual Capacity...............................   61
                                                                               
SECTION VIII.        MISCELLANEOUS                                             
    8.01.            Notices........................................................   61
    8.02.            Expenses.......................................................   62
    8.03.            Indemnification................................................   63
    8.04.            Waivers; Amendments............................................   63
    8.05.            Successors and Assigns.........................................   64
    8.06.            Setoff.........................................................   68
    8.07.            No Third Party Rights..........................................   68
    8.08.            Partial Invalidity.............................................   68
    8.09.            Jury Trial.....................................................   68
    8.10             Counterparts...................................................   69
    8.11.            Confidentiality................................................   69
                                                                                       
SCHEDULES                                                                              
                                                                                       
    I                Lenders
    1.01             Pricing Grid                                                            
    3.01             Initial Conditions Precedent                                            
    4.01(g)          Litigation
    4.01(g)          Subsidiaries
    5.02(a)          Existing Indebtedness 
    5.02(b)          Existing Liens
    5.02(e)          Existing Investments 
                                                                                       
EXHIBITS                                                                               
                                                                                       
    A                Notice of Borrowing (2.02))                                                 
    B                Notice of Interest Period Selection (2.04(b))                               
    C                Note (2.11(a))                                                              
    D                Assignment Agreement (8.05(c))                                              
</TABLE>











                                       ii
<PAGE>   4

                                CREDIT AGREEMENT

          THIS CREDIT AGREEMENT, dated as of June 9, 1997, is entered into by
and among:

                    (1) NOVELLUS SYSTEMS, INC., a California corporation
          ("Borrower");

                    (2) Each of the financial institutions from time to time
          listed in Schedule I hereto, as amended from time to time (such
          financial institutions to be referred to herein collectively as the
          "Lenders"); and

                    (3) ABN AMRO BANK N.V., acting through its San Francisco
          International Branch, as agent for the Lenders (in such capacity,
          "Agent").

                                    RECITALS

         A. Borrower has requested the Lenders to provide a revolving loan
facility to Borrower.

         B. The Lenders are willing to provide such a facility upon the terms
and subject to the conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION I. INTERPRETATION.

         1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Credit Document, each term set forth below, when used in this Agreement or
any other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other document, instrument or
agreement referenced below.

                  "ABN AMRO" shall mean ABN AMRO Bank N.V.

                  "Acquired Varian Assets" shall mean the "Assets" as defined in
         the Varian Purchase Agreement.

                  "Adjusted Net Income, shall mean, with respect to Borrower
         for any period, the sum, determined on a consolidated basis in
         accordance with GAAP, of the following:



<PAGE>   5



                  (a) The net income or net loss of Borrower and its
         Subsidiaries for such period before provision for income taxes;

                                      plus

                  (b) The sum (to the extent deducted in calculating net income
         or loss in clause (a) above) of (i) all Interest Expenses of Borrower
         and its Subsidiaries accruing during such period, (ii) all depreciation
         and amortization expenses of Borrower and its Subsidiaries accruing
         during such period, and (iii) all rental expenses of Borrower and its
         Subsidiaries accruing during such period;

                                      minus

                  (c) Fifty percent (50%) of all Capital Expenditures of
         Borrower and its Subsidiaries accruing during such period;

                                      plus

                  (d) In calculating the Adjusted Net Income of Borrower for any
         period that includes the fiscal quarter ending June 30, 1997, the
         lesser of (i) the sum (to the extent deducted in calculating net income
         or loss in clause (a) above) of all charges taken by Borrower during
         the fiscal quarter ending June 30, 1997 in connection with the
         settlement by Borrower of its patent litigation with Applied Materials,
         Inc. relating to Applied's Patent No. 5,362,526, and (ii) $84,000,000;

                                      plus

                  (e) In calculating the Adjusted Net Income of Borrower for any
         period that includes the fiscal quarter ending June 30, 1997, the
         lesser of (i) the sum (to the extent deducted in calculating net income
         or loss in clause (a) above) of all charges taken by Borrower during
         the fiscal quarter ending June 30, 1997 in connection with the
         write-off of in-process research and development charges relating to
         Borrower's purchase of the Acquired Varian Assets, and (ii)
         $115,000,000;

                                      plus

                  (f) In calculating the Adjusted Net Income of Borrower for any
         period that includes the fiscal quarter ending June 30, 1997, September
         30, 1997 or December 31, 1997, the lesser of (i) the sum (to the extent
         deducted in calculating net income or loss in clause (a) above) of all
         other non-recurring, non-cash









                                       2


<PAGE>   6



         charges taken by Borrower during the period between the date of this
         Agreement and December 31, 1997, and (ii) $40,000,000.

         "Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of any class of
Equity Securities of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person or any Affiliate of such Person
or (c) each of such Person's officers, directors, joint venturers and partners;
provided, however, that in no case shall Agent or any Lender be deemed to be an
Affiliate of Borrower or any of its Subsidiaries for purposes of this Agreement.
For the purpose of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or otherwise.

         "Agent" shall have the meaning given to that term in clause (3) of the
introductory paragraph hereof.

         "Agent's Fee Letter" shall mean the letter agreement dated as of May 9,
1997 between Borrower and Agent.

         "Agreement" shall mean this Credit Agreement.

         "Applicable Lending Office" shall mean, with respect to any Lender, (a)
in the case of its Base Rate Loans, its Domestic Lending Office, and (b) in the
case of its LIBOR Loans, its Euro-Dollar Lending Office.

         "Applicable Margin" shall mean, with respect to any Loan at any time,
the per annum margin which is determined pursuant to the Pricing Grid and added
to the Base Rate or LIBO Rate, as the case may be, for such Loan; provided,
however, that each Applicable Margin determined pursuant to the Pricing Grid
shall be increased by two percent (2.00%) on the date an Event of Default occurs
and shall continue at such increased rate unless and until such Event of Default
is waived in accordance with this Agreement. The Applicable Margins shall be
determined as provided in the Pricing Grid and may change for each Pricing
Period.

         "Assignee Lender" shall have the meaning given to that term in
Subparagraph 8.05(c).

         "Assignment" shall have the meaning given to that term in Subparagraph
8.05(c).

         "Assignment Agreement" shall have the meaning given to that term in
Subparagraph 8.05(c).










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<PAGE>   7



         "Assignment Effective Date" shall have, with respect to each Assignment
Agreement, the meaning set forth therein.

         "Assignor Lender" shall have the meaning given to that term in
Subparagraph 8.05(c).

         "Base Rate" shall mean, on any day, the greater of (a) the Prime Rate
in effect on such date and (b) the Federal Funds Rate for such day plus one-half
percent (0.50%).

         "Base Rate Loan" shall mean, at any time, a Loan which then bears
interest as provided in Subparagraph 2.03(a).

         "Borrower" shall have the meaning given to that term in clause (1) of
the introductory paragraph hereof.

         "Borrowing" shall mean a borrowing by Borrower consisting of the Loans
made by each of the Lenders on the same date and of the same Type pursuant to a
single Notice of Borrowing.

         "Business Day" shall mean any day on which (a) commercial banks are not
authorized or required to close in San Francisco, California or New York, New
York and (b) if such Business Day is related to a LIBOR Loan, dealings in Dollar
deposits are carried out in the London interbank market.

         "Capital Adequacy Requirement" shall have the meaning given to that
term in Subparagraph 2.14(d).

         "Capital Asset shall mean, with respect to any Person, any tangible
fixed or capital asset owned or leased (in the case of a Capital Lease) by such
Person, or any expense incurred by such Person that is required by GAAP to be
reported as a non-current asset on such Person's balance sheet.

         "Capital Expenditures" shall mean, with respect to any Person and any
period, all expenses accrued by such Person during such period for the
acquisition of Capital Assets (including all indebtedness incurred or assumed in
connection with Capital Leases).

         "Capital Leases" shall mean any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a lessee.

         "Cash Equivalents" shall mean:

                  (a) Direct obligations of, or obligations the principal and
         interest on which are unconditionally guaranteed by, the United States
         of America or










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<PAGE>   8


         obligations of any agency of the United States of America to the extent
         such obligations are backed by the full faith and credit of the United
         States of America, in each case maturing within one year from the date
         of acquisition thereof;

                  (b) Certificates of deposit maturing within one year from the
         date of acquisition thereof issued by a commercial bank or trust
         company organized under the laws of the United States of America or a
         state thereof or that is a Lender, provided that (A) such deposits are
         denominated in Dollars, (B) such bank or trust company has capital,
         surplus and undivided profits of not less than $100,000,000 and (C)
         such bank or trust company has certificates of deposit or other debt
         obligations rated at least A-1 (or its equivalent) by Standard and
         Poor's Ratings Group or P-1 (or its equivalent) by Moody's Investors
         Service, Inc.;

                  (c) Open market commercial paper maturing within 270 days from
         the date of acquisition thereof issued by a corporation organized under
         the laws of the United states of America or a state thereof, provided
         such commercial paper is rated at least A-1 (or its equivalent) by
         Standard and Poor's Ratings Group or P-1 (or its equivalent) by Moody's
         Investors Service, Inc.; and

                  (d) Any repurchase agreement entered into with a commercial
         bank or trust company organized under the laws of the United States of
         America or a state thereof or that is a Lender, provided that (A) such
         bank or trust company has capital, surplus and undivided profits of not
         less than $100,000,000, (B) such bank or trust company has certificates
         of deposit or other debt obligations rated at least A-1 (or its
         equivalent) by Standard and Poor's Ratings Group or P-1 (or its
         equivalent) by Moody's Investors Service, Inc., (C) the repurchase
         obligations of such bank or trust company under such repurchase
         agreement are fully secured by a perfected security interest in a
         security or instrument of the type described in clause (a), (b) or (c)
         above and (D) such security or instrument so securing the repurchase
         obligations has a fair market value at the time such repurchase
         agreement is entered into of not less than 100% of such repurchase
         obligations.

         "Change of Control" shall mean, with respect to Borrower, (a) the
acquisition by any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934 (as amended, the "Exchange Act"))
of (i) beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Exchange Act) of twenty-five
percent










                                       5

<PAGE>   9



(25%) or more of the outstanding Equity Securities of Borrower entitled to vote
for members of the board of directors, or (ii) all or substantially all of the
assets of Borrower and its Subsidiaries taken as a whole; or (b) during any
period of twelve (12) consecutive calendar months, individuals who are directors
of Borrower on the first day of such period ("Initial Directors") and any
directors of Borrower who are specifically approved by two-thirds of the Initial
Directors and previously-approved Directors shall cease to constitute a majority
of the Board of Directors of Borrower before the end of such period.

         "Change of Law" shall have the meaning given to that term in
Subparapraph 2.14(b).

         "Closing Date" shall mean the date, not later than July 15, 1997
designated by Borrower in the initial Notice of Borrowing as the date for the
initial Borrowing.

         "Commitment" shall mean, with respect to any Lender at any time, such
Lender's Proportionate Share at such time of the Total Commitment at such time.

         "Commitment Fee Percentage" shall mean, with respect to the Unused
Commitment at any time, the per annum rate which is determined pursuant to the
Pricing Grid and used to calculate the Commitment Fees.

         "Commitment Fees" shall have the meaning given to that term in
Subparagraph 2.08(b).

         "Compliance Certificate" shall have the meaning given to that term in
Subparagraph 5.01(a).

         "Contingent Obligation" shall mean, with respect to any Person, (a) any
Guaranty Obligation of that Person; and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person (i) in respect of any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments, (ii) as a partner or
joint venturer in any partnership or joint venture, (iii) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (iv) in respect to any Rate Contract that is not
entered into in connection with a bona fide hedging operation that provides
offsetting benefits to such Person. The amount of any Contingent Obligation
shall (subject, in the case of Guaranty Obligations, to the last sentence of





                                       6

<PAGE>   10


the definition of "Guaranty Obligation") be deemed equal to the maximum
reasonably anticipated liability in respect thereof, and shall, with respect to
item (b)(iv) of this definition be marked to market on a current basis.

         "Contractual Obligation" of any Person shall mean, any indenture, note,
lease, loan agreement, security, deed of trust, mortgage, security agreement,
guaranty, instrument, contract, agreement or other form of contractual
obligation or undertaking to which such Person is a party or by which such
Person or any of its property is bound.

         "Credit Documents" shall mean and include this Agreement, the Notes and
the Agent's Fee Letter; all other documents, instruments and agreements
delivered to Agent or any Lender pursuant to Paragraph 3.01; and all other
documents, instruments and agreements required to be delivered by Borrower or
any of its Subsidiaries to Agent or any Lender in connection with this Agreement
on or after the date of this Agreement.

         "Credit Event" shall mean the making of any Loan; or the selection of
a new Interest Period for any LIBOR Loan.

         "Debt Service Coverage Ratio" shall mean, with respect to Borrower for
any period, the ratio, determined on a consolidated basis in accordance with
GAAP, of:

                  (a) The Adjusted Net Income of Borrower for such period;

                                       to

                  (b) The sum of (i) all Interest Expenses of Borrower and its
         Subsidiaries accruing during such period, (ii) all rental expenses of
         Borrower and its Subsidiaries accruing during such period, and (iii)
         all payments of principal (or, in the case of Capital Leases, amounts
         attributable to principal) of Funded Indebtedness paid or scheduled to
         be paid by Borrower and its Subsidiaries during such period.

         "Default" shall mean an Event of Default or any event or circumstance
not yet constituting an Event of Default which, with the giving of any notice or
the lapse of any period of time or both, would become an Event of Default.


         "Defaulting Lender" shall mean a Lender which has failed to fund its
portion of any Borrowing which it is required to fund under this Agreement
and has continued in such failure for three (3) Business Days after written
notice from Agent.







                                       7
<PAGE>   11



         "Dollars" and "$" shall mean the lawful currency of the United States
of America and, in relation to any payment under this Agreement, same day or
immediately available funds.

         "Domestic Lending Office" shall mean, with respect to any Lender, (a)
initially, its office designated as such in Schedule I (or, in the case of any
Lender which becomes a Lender by an assignment pursuant to Subparagraph 8.05(c),
its office designated as such in the applicable Assignment Agreement) and (b)
subsequently such other office or offices as such Lender may designate to Agent
as the office at which such Lender's Base Rate Loans will thereafter be
maintained and for the account of which all payments of principal of, and
interest on such Lender's Base Rate Loans will thereafter be made.

         "EBITDA" shall mean, with respect to Borrower for any period, the sum,
determined on a consolidated basis in accordance with GAAP, of the following:

                  (a) The net income or net loss of Borrower and its
         Subsidiaries for such period before provision for income taxes;

                                      plus

                  (b) The sum (to the extent deducted in calculating net income
         or loss in clause (a) above) of (i) all Interest Expenses of Borrower
         and its Subsidiaries accruing during such period and (ii) all
         depreciation and amortization expenses of Borrower and its Subsidiaries
         accruing during such period;

                                      plus

                  (c) In calculating EBITDA of Borrower for any period that
         includes the fiscal quarter ending June 30, 1997, the lesser of (i) the
         sum (to the extent deducted in calculating net income or loss in clause
         (a) above) of all charges taken by Borrower during the fiscal quarter
         ending June 30, 1997 in connection with the settlement by Borrower of
         its patent litigation with Applied Materials, Inc. relating to
         Applied's Patent No. 5,362,526, and (ii) $84,000,000;

                                      Plus

                  (d) In calculating EBITDA of Borrower for any period that
         includes the fiscal quarter ending June 30, 1997, the lesser of (i) the
         sum (to the extent deducted in calculating net income or loss in clause
         (a) above) of all charges taken by Borrower during the fiscal quarter
         ending June 30, 1997 in connection with the










                                       8

<PAGE>   12


         write-off of in-process research and development charges relating to
         Borrower's purchase of the Acquired Varian Assets, and (ii)
         $115,000,000;

                                      plus

                  (e) In calculating EBITDA of Borrower for any period that
         includes the fiscal quarter ending June 30, 1997, September 30, 1997 or
         December 31, 1997, the lesser of (i) the sum to the extent deducted in
         calculating net income or loss in clause (a) above) of all other
         non-recurring, non-cash charges taken by Borrower during the period
         between the date of this Agreement and December 31, 1997, and (ii)
         $40,000,000.

         "Eligible Assignee" shall mean (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank organized
under the laws of any other country which is a member of the organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision of
any such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting through a branch or agency
located in the United States; or (c) a Person that is primarily engaged in the
business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary.

         "Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of section 3(3) of ERISA maintained or contributed to by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.

         "Environmental Laws" shall mean the Clean Air Act, 42 U.S.C. Section
7401 et seq; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et seq; the Comprehensive Environment Response, Compensation and Liability Act
of 1980 (including the Superfund Amendments and Reauthorization Act of 1986,
"CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, 30 U.S.C.
Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; and all other Governmental Rules relating to the protection of human
health and the environment, including all Governmental Rules pertaining to
reporting, licensing, permitting, transportation, storage, disposal,
investigation, and




                                       9

<PAGE>   13

remediation of emissions, discharges, releases, or threatened releases of
Hazardous Materials into the air, surface water, groundwater, or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials.

         "Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended or supplemented, including any
rules or regulations issued in connection therewith.

         "ERISA Affiliate" shall mean any Person which is treated as a single
employer with Borrower under Section 414 of the IRC.

         "Euro-Dollar Lending Office" shall mean, with respect to any Lender,
(a) initially, its office designated as such in Schedule I (or, in the case of
any Lender which becomes a Lender by an assignment pursuant to Subparagraph
8.05(c), its office designated as such in the applicable Assignment Agreement)
and (b) subsequently, such other office or offices as such Lender may designate
to Agent as the office at which such Lender's LIBOR Loans will thereafter be
maintained and for the account of which all payments of principal of, and
interest on, such Lender's LIBOR Loans will thereafter be made.

         "Event of Default" shall have the meaning given to that term in
Paragraph 6.01.

         "Federal Funds Rate" shall mean, for any day, the rate per annum set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor publication, "H.15 (519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day, such rate is not yet
published in H.15 (519), the rate for such day shall be the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day, such rate is not yet published in
either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day





                                       10


<PAGE>   14



shall be the arithmetic means, as determined by Agent, of the rates quoted to
Agent for such day by three (3) Federal funds brokers of recognized standing
selected by Agent.

         "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.

         "Financial Statements" shall mean, with respect to any accounting
period for any Person, statements of income, shareholders' equity and cash flows
of such Person for such period, and a balance sheet of such Person as at the end
of such period, setting forth in each case-in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

         "Funded Indebtedness" shall mean of any Person shall mean, without
duplication:

                  (a) All obligations of such Person evidenced by notes, bonds,
         debentures or other similar instruments and all other obligations of
         such Person for borrowed money (including obligations to repurchase
         receivables and other assets sold with recourse);

                  (b) All obligations of such Person for the deferred purchase
         price of property or services (including obligations under letters of
         credit and other credit facilities which secure or finance such
         purchase price and obligations under synthetic leases), other than
         trade payables incurred by such Person in the ordinary course of its
         business on ordinary terms and not overdue;

                  (c) All obligations of such Person under conditional sale or
         other title retention agreements with respect to property acquired by
         such Person (to the extent of the value of such property if the rights
         and remedies of the seller or lender under such agreement in the event
         of default are limited solely to repossession or sale of such
         property); and

                  (d) All obligations of such Person as lessee under or with
         respect to Capital Leases.

         "Funded Indebtedness/Capital Ratio" shall mean, with respect to
Borrower at any time, the ratio, determined on a consolidated basis in
accordance with GAAP, of:

                  (a) The Funded Indebtedness of Borrower and its Subsidiaries
         at such time;









                                       11

<PAGE>   15

                                       to

                  (b) The sum of (i) the Funded Indebtedness of Borrower and its
         Subsidiaries at such time, plus (ii) the Tangible Net Worth of Borrower
         and its Subsidiaries at such time.

         "Funded Indebtedness/EBITDA Ratio" shall mean, with respect to Borrower
for any consecutive four-fiscal quarter period, the ratio, determined on a
consolidated basis in accordance with GAAP, of: 

                  (a) The Funded Indebtedness of Borrower and its Subsidiaries
         on the last day of such period; to

                  (b) The EBITDA of Borrower and its Subsidiaries for such
         period.

         "GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied.

         "Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, the
Comptroller of the Currency, any central bank or any comparable authority.

         "Governmental Charges" shall mean, with respect to any Person, all
levies, assessments, fees, claims or other charges imposed by any Governmental
Authority upon such Person or any of its property or otherwise payable by such
Person.

         "Governmental Rule" shall mean any law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

         "Guaranty Obligation" shall mean, with respect to any Person, any
direct or indirect liability of that Person with respect to any indebtedness,
lease, dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (a) to purchase,
repurchase or otherwise acquire such primary obligations or any Property
constituting direct or indirect security therefor, or (b) to advance or provide
funds






                                       12

<PAGE>   16

(i) for the payment or discharge of any such primary obligation, or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet item, level of income
or financial condition of the primary obligor, or (c) 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 (d) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof. The amount of
any Guaranty Obligation shall be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably anticipated
liability in respect thereof.

         "Hazardous Materials" shall mean all materials, substances and wastes
which are classified or regulated as "hazardous," "toxic" or similar
descriptions under any Environmental Law or which are hazardous, toxic, harmful
or dangerous to human health.

         "Indebtedness" of any Person shall mean, without duplication:

                  (a) All obligations of such Person evidenced by notes, bonds,
         debentures or other similar instruments and all other obligations
         of-such Person for borrowed money (including obligations to repurchase
         receivables and other assets sold with recourse);

                  (b) All obligations of such Person for the deferred purchase
         price of property or services (including obligations under letters of
         credit and other credit facilities which secure or finance such
         purchase price and obligations under "synthetic" leases);

                  (c) All obligations of such Person under conditional sale or
         other title retention agreements with respect to property acquired by
         such Person (to the extent of the value of such property if the rights
         and remedies of the seller or lender under such agreement in the event
         of default are limited solely to repossession or sale of such
         property);

                  (d) All obligations of such Person as lessee under or with
         respect to Capital Leases;

                  (e) All non-contingent payment or reimbursement obligations of
         such Person under or with respect to Surety Instruments;










                                       13

<PAGE>   17


                  (f) All net obligations of such Person, contingent or
         otherwise, under or with respect to Rate Contracts;

                  (g) All Guaranty Obligations of such Person With respect to
         the obligations of other Persons of the types described in clauses (a)
         - (f) above and all other Contingent Obligations of such Person; and

                  (h) All obligations of other Persons of the types described in
         clauses (a) - (f) above to the extent secured by (or for which any
         holder of such obligations has an existing right, contingent or
         otherwise, to be secured by) any Lien in any property (including
         accounts and contract rights) of such Person, even though such Person
         has not assumed or become liable for the payment of such obligations.

         "Interest Account" shall have the meaning given to that term in
Subparagraph 2.11(b).

         "Interest Expenses" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with GAAP, of
(a) all interest accruing on the Indebtedness of such Person during such period
(including, without limitation, interest attributable to Capital Leases) plus
(b) all fees in respect of outstanding letters of credit payable by such Person
and accruing during such period.

         "Interest Period" shall mean, with respect to any LIBOR Loan, the time
period selected by Borrower pursuant to Paragraph 2.02 which commences on the
first day of such Loan or the effective date of any conversion and ends on the
last day of such time period, and thereafter, each subsequent time period
selected by Borrower pursuant to Paragraph 2.04 which commences on the last day
of the immediately preceding time period and ends on the last day of that time
period.

         "Investment" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such Person
for moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including
any Guaranty Obligations of such Person and any indebtedness of such Person of
the type described in clause (h) of the definition of "Indebtedness" on behalf
of any other Person); provided, however, that Investments shall not include (a)
accounts receivable or other indebtedness owed by customers of such Person which
are current assets, not overdue and arose from sales of inventory in the
ordinary








                                       14



<PAGE>   18

course of such Person's business or (b) prepaid expenses of such Person incurred
and prepaid in the ordinary course of business.

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

         "Lenders" shall have the meaning given to that term in clause (2) of
the introductory paragraph hereof.

         "LIBO Rate" shall mean with respect to any Interest Period for the
LIBOR Loans in any Borrowing consisting of LIBOR Loans, a rate per annum equal
to the quotient of (a) the arithmetic mean (rounded upward if necessary to the
nearest 1/16 of one percent) of the rates per annum appearing on the Telerate
Page 3750 (or any successor publication) on the second Business Day prior to the
first day of such Interest Period at or about 11:00 A.M. (London time) (for
delivery on the first day of such Interest Period) for a term comparable to such
Interest Period, divided by (b) one minus the Reserve Requirement for such Loans
in effect from time to time. If for any reason rates are not available as
provided in clause (a) of the preceding sentence, the rate to be used in 
clause (a) shall be the arithmetic mean (rounded upward if necessary to the
nearest 1/16 of one percent) of the rates per annum at which Dollar deposits are
offered by each of the Reference Banks to prime banks in the London interbank
market on the second Business Day prior to the first day of such Interest Period
at or about 11:00 A.M. (London time) (for delivery on the first day of such
Interest Period) in an amount substantially equal to such Reference Bank's LIBOR
Loan in such Borrowing and for a term comparable to such Interest Period. The
LIBO Rate shall be adjusted automatically as to all LIBOR Loans then outstanding
as of the effective date of any change in the Reserve Requirement.

         "Lien" shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, charge or other encumbrance in, of, or on such property
or the income therefrom, including, without limitation, the interest of a vendor
or lessor under a conditional sale agreement, Capital Lease or other title
retention agreement, or any agreement to provide any of the foregoing, and the
filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.

         "LIBOR Loan" shall mean, at any time, a Loan which then bears interest
as provided in Subparagraph 2.03(b).

         "Loan" shall have the meaning given to that term in Paragraph 2.01.







                                       15


<PAGE>   19



         "Margin Stock" shall have the meaning given to that term in Regulation
issued by the federal Reserve Board, as amended from time to time, and any
Successor regulation thereto.

         "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrower and its Subsidiaries, taken as a whole; (b) the ability of Borrower to
pay or perform the obligations in accordance with the terms of this Agreement
and the other Credit Documents; or (c) the ability of Agent or any Lender to
exercise any of its rights or remedies under this Agreement, the other Credit
Documents or any related document, instrument or agreement.

         "Material Subsidiary" shall mean, as of any date, each Subsidiary of
Borrower whose assets on the last day of the immediately preceding fiscal year
equalled or exceeded five percent (5%) of the consolidated total assets of
Borrower and all of its Subsidiaries on such day. As used herein, "assets" shall
mean the net book value of assets calculated in accordance with GAAP.

         "Maturity" shall mean, with respect to any Loan, interest, fee or other
amount payable by Borrower under this Agreement or the other Credit Documents,
the date such Loan, interest, fee or other amount becomes due, whether upon the
stated maturity or due date, upon acceleration or otherwise.

         "Maturity Date" shall mean June 28, 2002.

         "Multiemployer Plan" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.

         "Net Proceeds" shall mean, with respect to any sale or issuance of any
Equity Security or any other security by any Person, the aggregate consideration
received by such Person from such sale or issuance less the sum of the actual
amount of the customary fees and commissions payable to Persons other than such
Person or any Affiliate of such Person, the reasonable legal expenses and the
other customary costs and expenses directly related to such sale or issuance
that are to be paid by such Person.

         "Note" shall have the meaning given to that term in Subparagraph
2.11(a).

         "Notice of Borrowing" shall have the meaning given to that term in
Paragraph 2.02.

         "Notice of Interest Period Selection" shall have the meaning given to
that term in Subparagraph 2.04 (b).










                                       16

<PAGE>   20


         "Obligations" shall mean and include, with respect to Borrower, all
loans, advances, debts, liabilities, and obligations, howsoever arising, owed by
Borrower to Agent or any Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising pursuant to the terms of this Agreement or any of
the other Credit Documents, including without limitation all interest, fees,
charges, expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower hereunder or thereunder.

         "Participant" shall have the meaning given to that term in Subparagraph
8.05(b).

         "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.

         "Permitted Indebtedness" shall have the meaning given to that term in
Subparagraph 5.02(a).

         "Permitted Liens" shall have the meaning given to that term in
Subparagraph 5.02(b).

         "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority. 

         "Pricing Grid" shall mean Schedule 1.01.

         "Pricing Period" shall mean (a) the period commencing on the date of
this Agreement and ending on March 31, 1998, (b) the two-calendar month period
commencing April 1, 1998 and ending May 31, 1998, (c) the three-calendar month
period commencing June 1, 1998 and ending August 31, 1998 and (c) each
consecutive three-calendar month period thereafter which commences on the day
following the last day of the immediately preceding three-calendar month period
and ends on the last day of that time period.

         "Prime Rate" shall mean the per annum rate publicly announced by ABN
AMRO from time to time at its Chicago Office. The Prime Rate is determined by
ABN AMRO from time to time as a means of pricing credit extensions to some
customers and is neither directly tied to any external rate of interest or index
nor necessarily the lowest rate of interest charged by ABN AMRO at any given
time for any particular class of customers or credit extensions. Any change in
the Base Rate resulting from a change in the Prime Rate shall become effective
on the Business Day on which each change in the Prime Rate occurs.











                                       17

<PAGE>   21

         "Proportionate Shares" shall mean, with respect to each Lender, the
percentage set forth under the caption "Proportionate Share" opposite such
Lender's name on Schedule I, or, if changed, such percentage as may be set forth
for such Lender in the Register.

         "Quick Ratio" shall mean, with respect to Borrower at any time, the
ratio, determined on a consolidated basis in accordance with GAAP, of:

                  (a) The remainder of (i) the sum (without duplication) of all
         cash, Cash Equivalents and net accounts receivable of Borrower and its
         subsidiaries at such time, minus (ii) the sum (without duplication) of
         all such cash, Cash Equivalents and net accounts receivable that are
         subject to a Lien or are otherwise restricted;

                                       to

                  (b) The current liabilities of Borrower and its Subsidiaries 
         at such time (including current liabilities of Borrower and its
         Subsidiaries in connection with synthetic leases and other off-balance
         sheet Funded Indebtedness).

         "Rate Contracts" shall mean swap agreements (as that term is defined in
Section 101 of the Federal Bankruptcy Reform Act of 1978, as amended) and any
other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.

         "Reference Banks" shall mean ABN AMRO or, at any time other banks are
Lenders, ABN AMRO and an additional Lender or additional Lenders (but not more
than two additional Lenders) acceptable to Borrower and Agent.

         "Related Lease" shall mean the Lease Agreement dated as of June 9, 1997
between Borrower, as lessee, and Lease Plan North America, Inc., as lessor.

         "Related Lease Documents" shall mean the Related Lease, the Related
Lease Participation Agreement and the other "Operative Documents," as such term
is defined in the Related Lease Participation Agreement.

         "Related Lease Obligations" shall mean the "Lessee Obligations," as
such term is defined in the Related Lease Participation Agreement.

         "Related Lease Participation Agreement" shall mean the Participation
Agreement dated as of June 9, 1997 among Borrower, Lease Plan North America,
Inc., the financial





                                       18

<PAGE>   22

institutions from time to time parties thereto, and ABN AMRO as agent for such
financial institutions.

         "Register" shall have the meaning given to that term in Subparagraph
8.05 (d).

         "Reportable Event" shall have the meaning given to that term in ERISA
and applicable regulations thereunder.

         "Required Lenders" shall mean (a) at any time Loans are outstanding,
Lenders holding sixty-six and two-thirds percent (66 2/3%) or more of the
aggregate principal amount of such Loans and (b) at any time no Loans are
outstanding, Lenders whose Proportionate Shares equal or exceed sixty-six and
two-thirds percent (66 2/3%).

         "Requirement of Law" applicable to any Person shall mean (a) the
Articles or Certificate of Incorporation and By-laws, Partnership Agreement or
other organizational or governing documents of such Person, (b) any Governmental
Rule applicable to such Person, (c) any license, permit, approval or other
authorization granted by any Governmental Authority to or for the benefit of
such Person or (d) any judgment, decision or determination of any Governmental
Authority or arbitrator, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

         "Reserve Requirement" shall mean, with respect to any day in an
Interest Period for a LIBOR Loan, the aggregate of the reserve requirement rates
(expressed as a decimal) in effect on such day for eurocurrency funding
(currently referred to as "Eurocurrency liabilities" in Regulation D of the
Federal Reserve Board) maintained by a member bank of the Federal Reserve
System. As used herein, the term "reserve requirement" shall include, without
limitation, any basic, supplemental or emergency reserve requirements imposed on
Lender by any Governmental Authority.

         "Senior Officer" shall mean, with respect to Borrower, the Chief
Executive Officer, the Chief Financial Officer, the Executive Vice President of
Operations, the Executive Vice President of Sales or the Treasurer of Borrower.

         "Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent,
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such









                                       19

<PAGE>   23

Person's ability to pay as such debts and liabilities mature and (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would constitute an
unreasonably small capital.

         "Subsidiary" of any Person shall mean (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, (b) any partnership, joint venture, or
other association of which more than 50% of the equity interest having the power
to vote, direct or control the management of such partnership, joint venture or
other association is at the time owned and controlled by such Person, by such
Person and one or more of the other Subsidiaries or by one or more of such
Person's other Subsidiaries or (c) any other Person included in the Financial
Statements of such Person on a consolidated basis.

         "Surety Instruments" shall mean all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.

         "Tangible Net Worth" shall mean, with respect to Borrower at any time,
the remainder at such time, determined on a consolidated basis in accordance
with GAAP, of (a) the total assets of Borrower and its Subsidiaries, minus (b)
the sum (without limitation and without duplication of deductions) of (i) the
total liabilities of Borrower and its Subsidiaries, (ii) all reserves
established by Borrower and its Subsidiaries for anticipated losses and expenses
(to the extent not deducted in calculating total assets in Clause (a) above) and
(iii) all intangible assets of Borrower and its Subsidiaries (to the extent
included in calculating total assets in clause (a) above), including, without
limitation, goodwill (including any amounts, however designated on the balance
sheet, representing the cost of acquisition of businesses and investments in
excess of underlying tangible assets), trademarks, trademark rights, trade name
rights, copyrights, patents, patent rights, licenses, Unamortized debt discount,
marketing expenses, organizational expenses, non-compete agreements and deferred
research and development.

         "Taxes" shall have the meaning given to such term in Subparagraph
2.15(a).








                                       20


<PAGE>   24



                  "Total Commitment" shall mean, at any time, One Hundred
         Twenty-Five Million Dollars ($125,000,000) or, if such amount is
         reduced pursuant to Subparagraph 2.07(a), the amount to which so
         reduced and in effect at such time.

                  "Type" shall mean, with respect to any Loan or Borrowing at
         any time, the classification of such Loan or Borrowing by the type of
         interest rate it then bears, whether an interest rate based upon the
         Base Rate or the LIBOR Rate.

                  "Unused Commitment" shall mean, at any time, the remainder of
         (a) the Total Commitment at such time minus (b) the aggregate principal
         amount of all Loans outstanding at such time.

                  "Varian Purchase Agreement" shall mean the Asset Purchase
         Agreement dated as of May 7, 1997 between Varian Associates, Inc. and
         Borrower.

         1.02. GAAP. Unless otherwise indicated in this Agreement or any other
Credit Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be computed, in accordance with GAAP. If Borrower
changes its accounting practices during the term of this Agreement such that any
covenants contained herein would then be calculated in a different manner or
with different components, Borrower, the Lenders and Agent agree to negotiate in
good faith to amend this Agreement in such respects as are necessary to conform
those covenants as criteria for evaluating Borrower's financial condition to
substantially the same criteria as were effective prior to such change in GAAP;
provided, however, that, until Borrower, the Lenders and Agent so amend this
Agreement, all such covenants shall be calculated in accordance with Borrower's
accounting practices as in effect on the date of this Agreement.

         1.03. Headings. Headings in this Agreement and each of the other Credit
Documents are for convenience of reference only and are not part of the
substance hereof or thereof.

         1.04. Plural Terms. All terms defined in this Agreement or any other
Credit Document in the singular form shall have comparable meanings when used in
the plural form and vice versa.

         1.05. Time. All references in this Agreement and each of the other
Credit Documents to a time of day shall mean San Francisco, California time,
unless otherwise indicated.

         1.06. Governing Law. This Agreement and each of the other Credit
Documents (unless otherwise provided in such other Credit Documents) shall be
governed by and construed in












                                       21



<PAGE>   25


accordance with the laws of the State of California without reference to
conflicts of law rules.

         1.07. Construction. This Agreement is the result of negotiations among,
and has been reviewed by, Borrower, each Lender, Agent and their respective
counsel. Accordingly, this Agreement shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Borrower, any Lender or Agent.

         1.08. Entire Agreement. This Agreement and each of the other Credit
Documents, taken together, constitute and contain the entire agreement of
Borrower, the Lenders and Agent and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof
(including the commitment letter dated as of May 9, 1997 between Borrower and
ABN AMRO).

         1.09. Calculation of Interest and Fees. All calculations of interest
and fees under this Agreement and the other Credit Documents for any period (a)
shall include the first day of such period and exclude the last day of such
period and (b) shall be calculated on the basis of a year of 360 days for actual
days elapsed, except that during any period any Loan bears interest based upon
the Prime Rate, such interest shall be calculated on the basis of a year of 365
or 366 days, as appropriate, for actual days elapsed.

         1.10. Other Interpretive Provisions. References in this Agreement to
"Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits" and
"Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits and
schedules herein and hereto unless otherwise indicated. References in this
Agreement and each of the other Credit Documents to any document, instrument or
agreement (a) shall include all exhibits, schedules and other attachments
thereto, (b) shall include all documents, instruments or agreements issued or
executed in replacement thereof, and (c) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified and
supplemented from time to time and in effect at any given time. References in
this Agreement and each of the other Credit Documents to any statute or other
law (i) shall include any successor statute or law, (ii) shall include all rules
and regulations promulgated under such statute or law (or any successor statute
or law), and (iii) shall mean such statute or law (or successor statute or law)
and such rules and regulations, as amended, modified, codified or reenacted from
time to time and in effect at any given time. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement or any other
Credit Document shall refer to this Agreement or such other Credit Document, as
the case may be, as a whole and not to any particular provision of this
Agreement or such other Credit Document, as the case may be. The words




                                       22

<PAGE>   26



"include" and  "including" and words of similar import when used in this
Agreement or any other Credit Document shall not be construed to be limiting or
exclusive. In the event of any inconsistency between the terms of this Agreement
and the terms of any other Credit Document, the terms of this Agreement shall
govern.

SECTION II. CREDIT FACILITY.

         2.01. Revolving Loans. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to advance to Borrower from time to time
during the period beginning on the Closing Date and ending on the Maturity Date
such loans as Borrower may request under this Section II (individually, a
"Loan"); provided, however, that,(a) the aggregate principal amount of all Loans
made by such Lender at any time outstanding shall not exceed such Lender's
Commitment at such time and (b) the aggregate principal amount of all Loans made
by all Lenders at any time outstanding shall not exceed the Total Commitment at
such time. All Loans shall be made on a pro rata basis by the Lenders in
accordance with their respective Proportionate Shares, with each Borrowing to be
comprised of a Loan by each Lender equal to such Lender's Proportionate Share of
such Borrowing. Except as otherwise provided herein, Borrower may borrow, repay
and reborrow Loans until the Maturity Date.

         2.02. Notice of Borrowing. Borrower shall request each Borrowing by
delivering to Agent an irrevocable written notice in the form of Exhibit A,
appropriately completed (a "Notice of Borrowing"), which specifies, among other
things:

                  (a) Amount. The principal amount of the requested Borrowing,
         which shall be in the amount of (A) $1,000,000 or an integral multiple
         of $100,000 in excess thereof in the case of a Borrowing consisting of
         Base Rate Loans; or (B) $2,500,000 or an integral multiple of $500,000
         in excess thereof in the case of a Borrowing consisting of LIBOR Loans;

                  (b) Type. Whether the requested Borrowing is to consist of
         Base Rate Loans or LIBOR Loans;

                  (c) Interest Period. If the requested Borrowing is to consist
         of LIBOR Loans, the initial Interest Periods selected by Borrower for
         such Loans in accordance with Subparagraph 2.04; and

                  (d) Date. The date of the requested Borrowing, which shall be
         a Business Day; 

Provided, however, that all Borrowings made during the period commencing on the
date of this Agreement and ending three (3) Business Days thereafter shall
consist solely of Base Rate Loans.





                                       23

<PAGE>   27

Borrower shall give each Notice of Borrowing to Agent at least three (3)
Business Days before the date of the requested Borrowing in the case of a
Borrowing consisting of LIBOR Loans and at least one (1) Business Day before the
date of the requested Borrowing in the case of a Borrowing consisting of Base
Rate Loans. Each Notice of Borrowing shall be delivered by first-class mail or
facsimile to Agent at the office or facsimile number and during the hours
specified in Paragraph 8.01; provided, however, that Borrower shall promptly
deliver to Agent the original of any Notice of Borrowing initially delivered by
facsimile. Agent shall promptly notify each Lender of the contents of each
Notice of Borrowing and of the amount and Type of (and, if applicable, the
Interest Period for) each Loan to be made by such Lender as part of
the requested Borrowing.

         2.03. Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until the maturity
thereof, at one of the following rates per annum:

                  (a) Base Rate Loans. During such periods as such Loan is a
         Base Rate Loan, at a rate per annum equal to the Base Rate plus the
         Applicable margin therefor, such rate to change from time to time as
         the Base Rate or Applicable Margin shall change; and

                  (b) LIBOR Loans. During such periods as such Loan is a LIBOR
         Loan, at a rate per annum equal at all times during each Interest
         Period for such LIBOR Loan to the LIBO Rate for such Interest Period
         plus the Applicable Margin therefor, such rate to change from time to
         time during such Interest Period as the Applicable Margin shall change.

All Loans in each Borrowing shall, at any given time prior to maturity, bear
interest at one, and only one, of the above rates. The number of Borrowings
consisting of LIBOR Loans shall not exceed five (5) at any time.

         2.04. LIBOR Loan Interest Periods.

                  (a) Terms. The initial and each subsequent Interest Period
         selected by Borrower for a LIBOR Loan shall be one (1), two (2), three
         (3) or six (6) months; provided, however, that (i) any Interest Period
         which would otherwise end on a day which is not a Business Day shall be
         extended to the next succeeding Business Day unless such next Business
         Day falls in another calendar month, in which case such Interest Period
         shall end on the immediately preceding Business Day; (ii) any Interest
         Period which begins on the last Business Day of a calendar month (or on
         a day for which there is no numerically corresponding day in the
         calendar month at the end of such Interest Period) shall end on the
         last Business Day of a calendar month; (iii) no Interest Period shall
         end after the Maturity Date; and (iv) no











                                       24

<PAGE>   28

         Interest Period that commences during the first three (3) months after
         the date of this Agreement shall exceed one (1) month.

                  (b) Notice of Interest Period Selection. Borrower shall notify
         Agent by an irrevocable written notice in the form of Exhibit B,
         appropriately completed (a "Notice of Interest Period Selection"), at
         least three (3) Business Days prior to the last day of each Interest
         Period for LIBOR Loans of the Interest Period selected by Borrower for
         the next succeeding Interest Period for such Loans. Each Notice of
         Interest Period Selection shall be given by first-class mail or
         facsimile to the office or the facsimile number and during the hours
         specified in Paragraph 8.01; provided, however, that Borrower shall
         promptly deliver to Agent the original of any Notice of Interest Period
         Selection initially delivered by facsimile. If Borrower fails to notify
         Agent of the next Interest Period for LIBOR Loans in accordance with
         this Subparagraph 2.04, such Loans shall automatically convert to Base
         Rate Loans on the last day of the current Interest Period therefor.

         2.05. Scheduled Loan Payments. Borrower shall repay the principal
amount of the Loans on the Maturity Date. Borrower shall pay accrued interest on
the unpaid principal amount of each Loan in arrears (a) in the case of a Base
Rate Loan, on the last day in each March, June, September and December, (b) in
the case of a LIBOR Loan, on the last day of each Interest Period therefor (and,
if any such Interest Period is longer than three (3) months, every three (3)
months); and (c) in the case of all Loans, upon prepayment (to the extent
thereof) and at maturity.

         2.06. Purpose. Borrower shall use the proceeds of the Loans to pay all
or a portion of the purchase price for the Acquired Varian Assets and for
Borrower's general corporate needs.

         2.07. Commitment Reductions. Etc,

                  (a) Reduction or Cancellation of Commitments. Borrower may,
         upon five (5) Business Days written notice to Agent, permanently reduce
         the Total Commitment by the amount of Five Million Dollars ($5,000,000)
         or an integral multiple thereof or cancel the Total Commitment in its
         entirety; provided, however, that:

                           (i) Borrower may not reduce the Total Commitment
                  prior to the Maturity Date, if, after giving effect to such
                  reduction, the aggregate principal amount of Loans then
                  outstanding would exceed the Total Commitment; and

                           (ii) Borrower may not cancel the Total Commitment
                  prior to the Maturity Date, if, after giving effect to



                                       25
<PAGE>   29


                  such cancellation, any Loan would then remain outstanding.

                  (b) Effect Of Commitment Reductions. From the effective date
         of any reduction of the Total Commitment, the Commitment Fees payable
         pursuant to Subparagraph 2.08(b) shall be computed on the basis of the
         Total Commitment as so reduced. Once reduced or cancelled, the Total
         Commitment may not be increased or reinstated without the prior written
         consent of all Lenders. Any reduction of the Total Commitment pursuant
         to Subparagraph 2.07(a) shall be applied ratably to reduce each
         Lender's Commitment in accordance with clause (i) of Subparagraph
         2.13(a).

         2.08. Fees.

                  (a) Agent's Fee. Borrower shall pay to Agent, for its own
         account, agent's fees and other compensation in the amounts and at the
         times set forth in the Agent's Fee Letter.

                  (b) Commitment Fees. Borrower shall pay to Agent, for the
         ratable benefit of the Lenders as provided in clause (iv) of
         Subparagraph 2.13(a), nonrefundable commitment fees (the "Commitment
         Fees") equal to the Commitment Fee Percentage on the daily average
         Unused Commitment for the period beginning on the earlier of June 16,
         1997 and the Closing Date and ending on the Maturity Date. The
         Commitment Fee Percentage shall be determined as provided in the
         Pricing Grid and, as provided in the Pricing Grid, may change for each
         Pricing Period. Borrower shall pay the Commitment Fees in arrears on
         the last day in each March, June, September and December and on the
         Maturity Date (or if the Total Commitment is cancelled on a date prior
         to the Maturity Date, on such prior date).

         2.09. Prepayments.

                  (a) Terms of all Prepayments. Upon the prepayment of any Loan
         (whether such prepayment is an optional prepayment under Subparagraph
         2.09(b), a mandatory prepayment required by Subparagraph 2,09(c) or a
         mandatory prepayment required by any other provision of this Agreement
         or the other Credit Documents, including, without limitation, a
         prepayment upon acceleration), Borrower shall pay to the Lender which
         made such Loan (i) all accrued interest to the date of such prepayment
         on the amount prepaid and (ii) if such prepayment is the prepayment of
         a LIBOR Loan on a day other than the last day of an Interest Period for
         such LIBOR Loan, all amounts payable to such Lender pursuant to
         Paragraph 2.16.

                  (b) Optional Prepayments. At its option, Borrower may, upon
         one (1) Business Day notice to Agent in the case of Base Rate Loans and
         three (3) Business Days notice to







                                       26

<PAGE>   30



         Agent in the case of LIBOR Loans, prepay the Loans in any Borrowing in
         part, in an aggregate principal amount of $1,000,000 or an integral
         multiple thereof, or in whole.

                  (c) Mandatory Prepayments. If, at any time, the aggregate
         principal amount of all Loans then outstanding exceeds the Total
         Commitment at such time, Borrower shall immediately prepay Loans in an
         aggregate principal amount equal to such excess.

         2.10. Other Payment Terms.

                  (a) Place and Manner. Borrower shall make all payments due to
         each Lender or Agent hereunder by payments to Agent at Agent's office
         located at the address specified in Paragraph 8.01, with each payment
         due to a Lender to be for the account of such Lender and such Lender's
         Applicable Lending Office. Borrower shall make all payments hereunder
         in lawful money of the United States and in same day or immediately
         available funds not later than 11:00 a.m. on the date due. Agent shall
         promptly disburse to each Lender each payment received by Agent for the
         account of such Lender.

                  (b) Date. Whenever any payment due hereunder shall fall due on
         a day other than a Business Day, such payment shall be made on the next
         succeeding Business Day, and such extension of time shall be included
         in the computation of interest or fees, as the case may be.

                  (c) Late Payments. If any amounts required to be paid by
         Borrower under this Agreement or the other Credit Documents (including,
         without limitation, principal or interest payable on any Loan, any fees
         or other amounts) remain unpaid after such amounts are due, Borrower
         shall pay interest on the aggregate, outstanding balance of such
         amounts from the date due until those amounts are paid in full at a per
         annum rate equal to the Base Rate plus two percent (2.0%), such rate to
         change from time to time as the Base Rate shall change.

                  (d) Application of Payments. All payments hereunder shall be
         applied first to unpaid fees, costs and expenses then due and payable
         under this Agreement or the other Credit Documents, second to accrued
         interest then due and payable under this Agreement or the other Credit
         Documents and finally to reduce the principal amount of outstanding
         Loans.

                  (e) Failure to Pay Agent. Unless Agent shall have received
         notice from Borrower at least one (1) Business Day prior to the date on
         which any payment is due to the Lenders hereunder that Borrower will
         not make such payment in full, Agent shall be entitled to assume that
         Borrower has made or








                                       27

<PAGE>   31

         will make such payment in full to Agent on such date and Agent may, in
         reliance upon such assumption, cause to be paid to the Lenders on such
         due date an amount equal to the amount then due such Lenders. If and to
         the extent Borrower shall not have so made such payment in full to
         Agent, each such Lender shall repay to Agent forthwith on demand such
         amount distributed to such Lender together with interest thereon, for
         each day from the date such amount is distributed to such Lender until
         the date such Lender repays such amount to Agent, at (i) the Federal
         Funds Rate for the first three (3) days and (ii) the per annum rate
         applicable to Base Rate Loans thereafter. A certificate of Agent
         submitted to any Lender with respect to any amounts owing by such
         Lender under this Subparagraph 2.10(e) shall be conclusive absent
         manifest error.

         2.11. Notes and Interest Account.

                  (a) Notes. The obligation of Borrower to repay the Loans made
         by each Lender and to pay interest thereon at the rates provided herein
         shall be evidenced by a promissory note in the form of Exhibit C
         (individually, a "Note") which note shall be (i) payable to the order
         of such Lender, (ii) in the amount of such Lender's Commitment, (iii)
         dated the Closing Date and (iv) otherwise appropriately completed.
         Borrower authorizes each Lender to record on the schedule annexed to
         such Lender's Note the date and amount of each Loan made by such Lender
         and of each payment or prepayment of principal thereon made by
         Borrower, and agrees that all such notations shall constitute prima
         facie evidence of the matters noted; provided, however, that any
         failure by a Lender to make any such notation shall not affect the
         Obligations. Borrower further authorizes each Lender to attach to and
         make a part of such Lender's Note continuations of the schedule
         attached thereto as necessary.

                  (b) Interest Account. Borrower authorizes Agent to record in
         an account or accounts maintained by Agent on its books (the "Interest
         Account") (i) the interest rates applicable to all Loans and the
         effective dates of all changes thereto, (ii) the Interest Period for
         each LIBOR Loan, (iii) the date and amount of each principal and
         interest payment on each Loan and (iv) such other information as Agent
         may determine is necessary for the computation of interest payable by
         Borrower hereunder.

         2.12. Loan Funding.

                  (a) Lender Funding and Disbursement to Borrower. Each Lender
         shall, before 11:00 a.m. on the date of each Borrowing, make available
         to Agent at Agent's office specified in Paragraph 8.01, in same day or
         immediately available funds, such Lender's Proportionate Share of such
         Borrowing. After Agent's receipt of such funds and upon





                                       28

<PAGE>   32

         satisfaction of the applicable conditions set forth in Section III,
         Agent shall promptly disburse such funds to Borrower in same day or
         immediately available funds. Unless otherwise directed by Borrower,
         Agent shall disburse the proceeds of each Borrowing by disbursement to
         the account or accounts specified in the applicable Notice of
         Borrowing.

                  (b) Lender Failure to Fund. Unless Agent shall have received
         notice from a Lender prior to the date of any Borrowing that such
         Lender will not make available to Agent such Lender's Proportionate
         Share of such Borrowing, Agent shall be entitled to assume that such
         Lender has made or will make such portion available to Agent on the
         date of such Borrowing in accordance with Subparagraph 2.12(a), and
         Agent may on such date, in reliance upon such assumption, disburse or
         otherwise credit to Borrower a corresponding amount. If any Lender does
         not make the amount of its Proportionate Share of any Borrowing
         available to Agent on or prior to the date of such Borrowing, such
         Lender shall pay to Agent, on demand, interest which shall accrue on
         such amount from the date of such Borrowing until such amount is paid
         to Agent at rates equal to (i) the daily Federal Funds Rate during the
         period from the date of such Borrowing through the third Business Day
         thereafter and (ii) the rate applicable to Base Rate Loans thereafter.
         A certificate of Agent submitted to any Lender with respect to any
         amounts owing under this Subparagraph 2.12(b) shall be conclusive
         absent manifest error. If the amount of any Lender's Proportionate
         Share of any Borrowing is not paid to Agent by such Lender within three
         (3) Business Days after the date of such Borrowing, Borrower shall
         repay such amount to Agent, on demand, together with interest thereon,
         for each day from the date such amount was disbursed to Borrower until
         the date such amount is repaid to Agent, at the interest rate
         applicable at the time to the Loans comprising such Borrowing.

                  (c) Lenders' Obligations Several. The failure of any Lender to
         make the Loan to be made by it as part of any Borrowing shall not
         relieve any other Lender of its obligation hereunder to make its Loan
         on the date of such Borrowing, but no Lender shall be obligated in any
         way to make any Loan which another Lender has failed or refused to make
         or otherwise be in any way responsible for the failure or refusal of
         any other Lender to make any Loan required to be made by such other
         Lender on the date of any Borrowing.

         2.13. Pro Rata Treatment.

                  (a) Borrowings, commitment Reductions, Etc. Except as
         otherwise provided herein:

                           (i) Each Borrowing and each reduction of the Total
                  Commitment shall be made or shared among the




                                       29
<PAGE>   33

                  Lenders pro rata according to their respective Proportionate
                  Shares;

                           (ii) Each payment of principal of Loans in any
                  Borrowing shall be shared among the Lenders which made or
                  funded the Loans in such Borrowing pro rata according to the
                  respective unpaid principal amounts of such Loans so made or
                  funded by such Lenders;

                           (iii) Each payment of interest on Loans in any
                  Borrowing shall be shared among the Lenders which made or
                  funded the Loans in such Borrowing pro rata according to (A)
                  the respective unpaid principal amounts of such Loans so made
                  or funded by such Lenders and (B) the-dates on which such
                  Lenders so made or funded such Loans;

                           (iv) Each payment of Commitment Fees shall be shared
                  among the Lenders pro rata according to (A) their respective
                  Proportionate Shares and (B) in the case of each Lender which
                  becomes a Lender hereunder after the date hereof, the date
                  upon which such Lender so became a Lender;

                           (v) Each payment of interest (other than interest on
                  Loans) shall be shared among the Lenders and Agent owed the
                  amount upon which such interest accrues pro rata according to
                  (A) the respective amounts so owed such Lenders and Agent and
                  (B) the dates on which such amounts became owing to such
                  Lenders and Agent; and

                           (vi) All other payments under this Agreement and the
                  other Credit Documents shall be for the benefit of the Person
                  or Persons specified.

                  (b) Sharing of Payments, Etc. If any Lender shall obtain any
         payment (whether voluntary, involuntary, through the exercise of any
         right of setoff, or otherwise) on account of Loans owed to it in excess
         of its ratable share of payments on account of such Loans obtained by
         all Lenders entitled to such payments, such Lender shall forthwith
         purchase from the other Leaders such participations in the Loans as
         shall be necessary to cause such purchasing Lender to share the excess
         payment ratably with each of them; provided, however, that if all or
         any portion of such excess payment is thereafter recovered from such
         purchasing Lender, such purchase shall be rescinded and each other
         Lender shall repay to the purchasing Lender the purchase price to the
         extent of such recovery together with an amount equal to such other
         Lender's ratable share (according to the proportion of (i) the amount
         of such other Lender's required repayment to (ii) the total amount so
         recovered from the purchasing Lender) of any interest or other amount
         paid or payable by the purchasing Lender in respect of the total









                                       30

<PAGE>   34

         amount so recovered. Borrower agrees that any Lender so purchasing a
         participation from another Lender pursuant to this Subparagraph
         2.13(b) may, to the fullest extent permitted by law, exercise all its
         rights of payment (including the right of setoff) with respect to such
         participation as fully as if such Lender were the direct creditor of
         Borrower in the amount of such participation.

         2.14. Change of Circumstances.

                  (a) Inability to Determine Rates. If, on or before the first
         day of any Interest Period for any LIBOR Loan, (i) any Lender shall
         advise Agent that the LIBO Rate for such Interest Period cannot be
         adequately and reasonably determined due to the unavailability of
         funds in or other circumstances affecting the London interbank market
         or (ii) any Lender shall advise Agent that the rate of interest for
         such Loan does not adequately and fairly reflect the cost to such
         Lender of making or maintaining such LIBOR Loan, Agent shall
         immediately give notice of such condition to Borrower and the other
         Lenders. After the giving of any such notice and until Agent shall
         otherwise notify Borrower that the circumstances giving rise to such
         condition no longer exist, Borrower's right to request the making of,
         and the Lenders' obligations to make LIBOR Loans shall be suspended.
         Any LIBOR Loans outstanding at the commencement of any such suspension
         shall be prepaid at the end of the then current Interest Period for
         such LIBOR Loans (whether from the proceeds of a Base Rate Borrowing or
         otherwise), unless such suspension has then ended.

                  (b) Illegality.  If, after the date of this Agreement, the
         adoption of any Governmental Rule, any change in any Governmental Rule
         or the application or requirements thereof (whether such change occurs
         in accordance with the terms of such Governmental Rule as enacted, as a
         result of amendment or otherwise), any change in the interpretation or
         administration of any Governmental Rule by any Governmental Authority,
         or compliance by any Lender with any request or directive (whether or
         not having the force of law) of any Governmental Authority (a "Change
         of Law") shall make it unlawful or impossible for any Lender to make or
         maintain any LIBOR Loan, such Lender shall immediately notify Agent and
         Borrower of such Change of Law. Upon receipt of such notice, (i)
         Borrower's right to request the making and such Lender's obligation to
         make LIBOR Loans shall be terminated, and (ii) Borrower shall, at the
         request of such Lender, prepay any such LIBOR Loans then outstanding
         (whether from the proceeds of a Base Rate Borrowing or otherwise) at
         the end of the current Interest Periods for such LIBOR Loans or, if
         such Lender shall notify Borrower that such Lender may not lawfully
         continue to fund and maintain such LIBOR Loans, immediately. Any
         prepayment of LIBOR Loans made pursuant to the preceding sentence prior
         to the last day of an Interest






                                       31


<PAGE>   35

         Period for such LIBOR Loans shall be deemed a prepayment thereof for
         Purposes of Paragraph 2.16. After an Lender notifies Agent and Borrower
         of such a Change of Law and until such Lender notifies Agent and
         Borrower that it is no longer unlawful or impossible for such Lender to
         make or maintain a LIBOR Loan, all Loans of such Lender shall be Base
         Rate Loans.

                  (c) Increased costs. If, after the date of this Agreement, any
         Change of Law:

                           (i) Shall subject any Lender to any tax, duty or
                  other charge with respect to any LIBOR Loan, or shall change
                  the basis of taxation of payments by Borrower to any Lender on
                  such a LIBOR Loan or in respect to such a LIBOR Loan under
                  this Agreement (except for changes in the rate of taxation on
                  the overall net income of any Lender imposed by its
                  jurisdiction of incorporation or the jurisdiction in which its
                  Euro-Dollar Lending Office is located); or

                           (ii) Shall impose, modify or hold applicable any
                  reserve (excluding any Reserve Requirement or other reserve to
                  the extent included in the calculation of the LIBO Rate for
                  any Loans), special deposit or similar requirement against
                  assets held by, deposits or other liabilities in or for the
                  account of, advances or loans by, or any other acquisition of
                  funds by any Lender for any LIBOR Loan; or

                           (iii) Shall impose on any Lender any other condition
                  related to any LIBOR Loan or such Lender's Commitment;

         And the effect of any of the foregoing is to increase the cost to such
         Lender of making, issuing, renewing, or maintaining any such LIBOR Loan
         or its Commitment or to reduce any amount receivable by such Lender
         hereunder; then Borrower shall from time to time, within five (5)
         Business Days after demand by such Lender, pay to such Lender
         additional amounts sufficient to reimburse such Lender for such
         increased costs or to compensate such Lender for such reduced amounts.
         A certificate as to the amount of such increased costs or reduced
         amounts, submitted by such Lender to Borrower shall, in the absence of
         manifest error, be conclusive and binding on Borrower for all purposes.
         The obligations of Borrower under this Subparagraph 2.14(c) shall
         survive the payment and performance of the Obligations and the
         termination of this Agreement.

                  (d) Capital Requirements. If, after the date of this
         Agreement, any Lender determines that (i) any Change of Law affects the
         amount of capital required or expected to be maintained by such Lender
         or any Person controlling such




                                       32

<PAGE>   36

         Lender (a "Capital Adequacy Requirement") and (ii) the amount of
         capital maintained by such Lender or such Person which is attributable
         to or based upon the Loans, the Letters of Credit, the Commitments or
         this Agreement must be increased as a result of such Capital Adequacy
         Requirement (taking into account such Lender's or such Person's
         policies with respect to capital adequacy), Borrower shall pay to such
         Lender or such Person, within five (5) Business Days after demand of
         such Lender, such amounts as such Lender or such Person shall determine
         are necessary to compensate such Lender or such Person for the
         increased costs to such Lender or such Person of such increased
         capital. A certificate of any Lender setting forth in reasonable detail
         the computation of any such increased costs, delivered by such Lender
         to Borrower shall, in the absence of manifest error, be conclusive and
         binding on Borrower for all purposes. The obligations of Borrower under
         this Subparagraph 2.14(d) shall survive the payment and performance of
         the Obligations and the termination of this Agreement.

                  (e) Mitigation. Any Lender which becomes aware of (i) any
         Change of Law which will make it unlawful or impossible for such Lender
         to make or maintain any LIBOR Loan or (ii) any Change of Law or other
         event or condition which will obligate Borrower to pay any amount
         pursuant to Subparagraph 2.14(c) or Subparagraph 2.14(d) shall notify
         Borrower and Agent thereof as promptly as practical. If any Lender has
         given notice of any such Change of Law or other event or condition and
         thereafter becomes aware that such Change of Law or other event or
         condition has ceased to exist, such Lender shall notify Borrower and
         Agent thereof as promptly as practical. Each Lender affected by any
         Change of Law which makes it unlawful or impossible for such Lender to
         make or maintain any LIBOR Loan or to which Borrower is obligated to
         pay any amount pursuant to Subparagraph 2.14(c) or Subparagraph 2.14(d)
         shall use reasonable commercial efforts (including changing the
         jurisdiction of its Applicable Lending Office) to avoid the effect of
         such Change of Law or to avoid or materially reduce any amounts which
         Borrower is obligated to pay pursuant to Subparagraph 2.14(c) or
         Subparagraph 2.14(d) if, in the reasonable opinion of such Lender, such
         efforts would not be disadvantageous to such Lender or contrary to such
         Lender's normal banking practices.

         2.15. Taxes on Payments.

                  (a) Payments Free of Taxes. All payments made by Borrower
         under this Agreement and the other Credit Documents shall be made free
         and clear of, and without deduction or withholding for or on account
         of, any present or future income, stamp or other taxes, levies,
         imposts, duties, charges, fees, deductions or withholdings, now or
         hereafter imposed, levied, collected, withheld or assessed by any






                                    33
<PAGE>   37
         Governmental Authority (except net income taxes and franchise taxes in
         lieu of net income taxes imposed on Agent or any Lender by its
         jurisdiction of incorporation or the jurisdiction in which its
         Applicable Lending Office is located) (all such non-excluded taxes,
         levies, imposts, duties, charges, fees, deductions and withholdings
         being hereinafter called "Taxes"). If any Taxes are required to be
         withheld from any amounts payable to Agent or any Lender hereunder or
         under the other Credit Documents, the amounts so payable to Agent or
         such Lender shall be increased to the extent necessary to yield to
         Agent or such Lender (after payment of all Taxes) interest or any such
         other amounts payable hereunder at the rates or in the amounts
         specified in this Agreement and the other Credit Documents. Whenever
         any Taxes are payable by Borrower, as promptly as possible thereafter,
         Borrower shall send to Agent for its own account or for the account of
         such Lender, as the case may be, a certified copy of an original
         official receipt received by Borrower showing payment thereof. If
         Borrower fails to pay any Taxes when due to the appropriate taxing
         authority or fails to remit to Agent the required receipts or other
         required documentary evidence, Borrower shall indemnify Agent and the
         Lenders for any incremental taxes, interest or penalties that may
         become payable by Agent or any Lender as a result of any such failure.
         The obligations of Borrower under this Subparagraph 2.15(a) shall
         survive the payment and performance of the Obligations and the
         termination of this Agreement.

             (b) Withholding Exemption Certificates. On or prior to the date of
         the initial Borrowing or, if such date does not occur within thirty
         (30) days after the date of this Agreement, by the end of such 30-day
         period, each Lender which is not organized under the laws of the United
         States of America or a state thereof shall deliver to Borrower and
         Agent two duly completed copies of United States Internal Revenue
         Service Form 1001 or 4224 (or successor applicable form), as the case
         may be, certifying in each case that such Lender is entitled to receive
         payments under this Agreement without deduction or withholding of any
         United States federal income taxes. Each Lender which delivers to
         Borrower and Agent a Form 1001 or 4224 pursuant to the immediately
         preceding sentence further undertakes to deliver to Borrower and Agent
         two further copies of Form 1001 or 4224 (or successor applicable
         forms), as the case may be, on or before the date that any such form
         expires or becomes obsolete or after the occurrence of any event
         requiring a change in the most recent form previously delivered by such
         Lender to Borrower and Agent, certifying that such Lender is entitled
         to receive payments under this Agreement without deduction or
         withholding of any United States federal income taxes. Each Lender
         which is not organized under the laws of the United States of America
         or a state thereof further agrees (i) promptly to notify Agent and
         Borrower of any



                                       34
<PAGE>   38
         change of circumstances (including without limitation any change in any
         treaty, law or regulation) which would prevent such Lender from
         receiving payments hereunder without any deduction or withholding of
         United States federal income tax and (ii) to furnish to Agent and
         Borrower any other manner of certification as Agent or Borrower may
         reasonably request to establish the right of such Lender to receive
         payments hereunder without any deduction or withholding of United
         States federal income tax.

             (c) Mitigation. If Agent or any Lender claims any additional
         amounts to be payable to it pursuant to this Paragraph 2.15, such
         Person shall use reasonable commercial efforts to file any certificate
         or document requested in writing by Borrower (including without
         limitation copies of Internal Revenue Service Form 1001 (or
         successor forms) reflecting a reduced rate of withholding) or to change
         the jurisdiction of its Applicable Lending Office if the making of such
         a filing or such change in the jurisdiction of its Applicable Lending
         Office would avoid the need for or materially reduce the amount of any
         such additional amounts which may thereafter accrue and if, in the
         reasonable opinion of such Person, in the case of a change in the
         jurisdiction of its Applicable Lending Office, such change would not be
         disadvantageous to such Person or contrary to such Person's normal
         banking practices.

             (d) Tax Returns. Nothing contained in this Paragraph 2.15 shall
         require Agent or any Lender to make available any of its tax returns
         (or any other information relating to its taxes which it deems to be
         confidential).

         2.16. Funding Loss Indemnification. If Borrower shall (a) repay or
prepay any LIBOR Loan on any day other than the last day of an Interest Period
therefor (whether a scheduled payment, an optional prepayment or conversion, a
mandatory prepayment or conversion, a payment upon acceleration or otherwise) or
(b) fail to borrow any LIBOR Loan for which a Notice of Borrowing has been
delivered to Agent (whether as a result of the failure to satisfy any applicable
conditions or otherwise), Borrower shall, upon demand by any Lender, reimburse
such Lender for and hold such Lender harmless from all costs and losses incurred
by such Lender as a result of such repayment, prepayment or failure. Borrower
understands that such costs and losses may include, without limitation, losses
incurred by a Lender as a result of funding and other contracts entered into by
such Lender to fund a LIBOR Loan. Each Lender demanding payment under this
Paragraph 2.16 shall deliver to Borrower, with a copy to Agent, a certificate
setting forth the amount of costs and losses for which demand is made, which
certificate shall set forth in reasonable detail the calculation of the amount
demanded. Such a certificate so delivered to Borrower shall constitute prima
facie evidence of such costs and losses. The obligations of Borrower under this



                                       35
<PAGE>   39
Paragraph 2.16 shall survive the payment and performance of the Obligations and
the termination of this Agreement.

        2.17. Replacement of Lenders. If any Lender shall (a) become a
Defaulting Lender more than two (2) times in a period of twelve (12) consecutive
months, (b) continue as a Defaulting Lender for more than five (5) Business Days
at any time, (c) suspend its obligation to make or maintain LIBOR Loans pursuant
to Subparagraph 2.14(b) for a reason which is not applicable to Required Lenders
or (d) demand any payment under Subparagraph 2.14(c), 2.14(d) 2.15(a) for a
reason which is not applicable to Required Lenders, then Agent may (or upon the
written request of Borrower, shall) replace such Lender (the "affected Lender"),
or cause such affected Lender to be replaced, with another lender (the
"replacement Lender") satisfying the requirements of an Assignee Lender under
Subparagraph 8.05 (c), by having the affected Lender sell and assign all of its
rights and obligations under this Agreement and the other Credit Documents to
the replacement Lender pursuant to Subparagraph 8.05(c); provided, however, that
if Borrower seeks to exercise such right, it must do so within sixty (60) days
after it first knows or should have known of the occurrence of the event or
events giving rise to such right, and neither Agent nor any Lender shall have
any obligation to identify or locate a replacement Lender for Borrower. Upon
receipt by any affected Lender of a written notice from Agent stating that Agent
is exercising the replacement right set forth in this Paragraph 2.17, such
affected Lender shall sell and assign all of its rights and obligations under
this Agreement and the other Credit Documents to the replacement Lender pursuant
to an Assignment Agreement and Subparagraph 8.05(c) for a purchase price equal
to the sum of the principal amount of the affected Lender's Loans so sold and
assigned, all accrued and unpaid interest thereon and its ratable share of all
fees to which it is entitled.

SECTION III.    CONDITIONS PRECEDENT.

         3.01. Initial Conditions Precedent. The obligations of the Lenders to
make the Loans comprising the initial Borrowing are subject to receipt by Agent,
on or prior to the Closing Date, of each item listed in Schedule 3.01, each in
form and substance satisfactory to Agent and each Lender, and with sufficient
copies for, Agent and each Lender.

         3.02. Conditions Precedent to Each Credit Event. The occurrence of each
Credit Event (including the initial Borrowing) is subject to the further
conditions that:

             (a) Borrower shall have delivered to Agent the Notice of Borrowing
         or Notice of Interest Period Selection, as the case may be, for such
         Credit Event in accordance with this Agreement; and



                                       36
<PAGE>   40
             (b) On the date such Credit Event is to occur and after giving
         effect to such Credit Event, the following shall be true and correct:

                 (i) The representations and warranties set forth in Paragraph
             4.01 and in the other Credit Documents are true and correct in all
             material respects as if made on such date (except for
             representations and warranties expressly made as of a specified
             date, which shall be true as of such date);

                 (ii) No Default has occurred and is continuing or will result
             from such Credit Event; and

                 (iii) All of the Credit Documents are in full force and effect.

         The submission by Borrower to Agent of each Notice of Borrowing and
         each Notice of Interest Period Selection shall be deemed to be a
         representation and warranty by Borrower that each of the statements set
         forth above in this Subparagraph 3.02(b) is true and correct as of the
         date of such notice.

         3.03. Covenant to Deliver. Borrower agrees (not as a condition but as a
covenant) to deliver to Agent each item required to be delivered to Agent as a
condition to the occurrence of any Credit Event if such Credit Event occurs.
Borrower expressly agrees that the occurrence of any such Credit Event prior to
the receipt by Agent of any such item shall not constitute a waiver by Agent or
any Lender of Borrower's obligation to deliver such item.

SECTION IV.     REPRESENTATIONS AND WARRANTIES.

         4.01. Borrower's Representations and Warranties. In order to induce
Agent and the Lenders to enter into this Agreement, Borrower hereby represents
and warranties to Agent and the Lenders as follows:

             (a) Due Incorporation, Qualification, etc. Each of Borrower and
         Borrower's Subsidiaries (i) is a corporation duly organized, validly
         existing and in good standing under the laws of its state of
         incorporation; (ii) has the power and authority to own, lease and
         operate its properties and carry on its business as now conducted; and
         (iii) is duly qualified, licensed to do business and in good standing
         as a foreign corporation in each jurisdiction where the failure to be
         so qualified or licensed is reasonably likely to have a Material
         Adverse Effect.

             (b) Authority. The execution, delivery and performance by Borrower
         of each Credit Document executed, or



                                       37
<PAGE>   41
         to be executed, by Borrower and the consummation of the transactions
         contemplated thereby (i) are within the power of Borrower and (ii) have
         been duly authorized by all necessary actions on the part of Borrower.

             (c) Enforceability. Each Credit Document executed, or to be
         executed, by Borrower has been, or will be, duly executed and delivered
         by Borrower and constitutes, or will constitute, a legal, valid and
         binding obligation of Borrower, enforceable against Borrower in
         accordance with its terms, except as limited by bankruptcy, insolvency
         or other laws of general application relating to or affecting the
         enforcement of creditors, rights generally and general principles of
         equity.

             (d) Non-Contravention. The execution and delivery by Borrower of
         the Credit Documents executed by Borrower and the performance and
         consummation of the transactions contemplated thereby do not (i)
         violate any Requirement of Law applicable to Borrower; (ii) violate any
         provision of, or result in the breach or the acceleration of, or
         entitle any other Person to accelerate (whether after the giving of
         notice or lapse of time or both), any Contractual Obligation of
         Borrower; or (iii) result in the creation or imposition of any Lien (or
         the obligation to create or impose any Lien) upon any property, asset
         or revenue of Borrower (except such Liens as may be created in favor of
         Agent pursuant to this Agreement or the other Credit Documents).

             (e) Approvals. No consent, approval, order or authorization of, or
         registration, declaration or filing with, any Governmental Authority or
         other Person (including, without limitation, the shareholders of any
         Person) is required in connection with the execution and delivery of
         the Credit Documents executed by Borrower and the performance and
         consummation by Borrower of the transactions contemplated thereby,
         except such as have been made or obtained and are in full force and
         effect.

             (f) No Violation or Default. Neither Borrower nor any of its
         Subsidiaries is in violation of or in default with respect to (i) any
         Requirement of Law applicable to such Person; (ii) any Contractual
         Obligation of such Person (nor is there any waiver in effect which,
         if not in effect, would result in such a violation or default), where,
         in each case, such violation or default is reasonably likely to have a
         Material Adverse Effect. Without limiting the generality of the
         foregoing, neither Borrower nor any of its Subsidiaries (A) has
         violated any Environmental Laws, (B) has any liability under any
         Environmental Laws or (C) has received notice or other communication of
         an investigation or is under investigation by any Governmental
         Authority having authority to enforce Environmental Laws, where such
         violation, liability or investigation is reasonably likely



                                       38
<PAGE>   42
         to have a Material Adverse Effect.  No Default has occurred and is
         continuing.

             (g) Litigation. Except as set forth (with estimates of the dollar
         amounts involved) in Schedule 4.01(g), no actions (including, without
         limitation, derivative actions), suits, proceedings or investigations
         are pending or, to the knowledge of Borrower, threatened against
         Borrower or any of its Subsidiaries at law or in equity in any court or
         before any other Governmental Authority which (i) is reasonably likely
         (alone or in the aggregate) to have a Material Adverse Effect or (ii)
         seeks to enjoin, either directly or indirectly, the execution, delivery
         or performance by Borrower of the Credit Documents or the transactions
         contemplated thereby.

             (h) Title; Possession Under Leases. Borrower and its Subsidiaries
         own and have good and marketable title, or a valid leasehold interest
         in, all their respective properties and assets as reflected in the most
         recent Financial Statements delivered to Agent (except those assets and
         properties disposed of in the ordinary course of business or otherwise
         in compliance with this Agreement since the date of such Financial
         Statements) and all respective assets and properties acquired by
         Borrower and its Subsidiaries since such date (except those disposed of
         in the ordinary course of business or otherwise in compliance with this
         Agreement), except in any case where the failure so to own or to have
         such title is not reasonably likely to have a Material Adverse Effect.
         Such assets and properties are subject to no Lien, except for Permitted
         Liens. Each of Borrower and its Subsidiaries has complied with all
         material obligations under all material leases to which it is a party
         and all such leases are in full force and effect. Each of Borrower and
         its Subsidiaries enjoys peaceful and undisturbed possession under such
         leases.

             (i) Financial Statements. The Financial Statements of Borrower and
         its Subsidiaries which have been delivered to Agent, (i) are in
         accordance with the books and records of Borrower and its Subsidiaries,
         which have been maintained in accordance with good business practice;
         (ii) have been prepared in conformity with GAAP; and (iii) fairly
         present the financial conditions and results of operations of Borrower
         and its Subsidiaries as of the date thereof and for the period covered
         thereby. Neither Borrower nor any of its Subsidiaries has any
         Contingent Obligations, liability for taxes or other outstanding
         obligations which are material in the aggregate, except as disclosed
         in the audited Financial Statements dated December 31, 1996, furnished
         by Borrower to Agent prior to the date hereof, or in the Financial
         Statements delivered to Agent pursuant to clause (i) or (ii) of
         Subparagraph 5.01(a).



                                       39
<PAGE>   43
             (j) Equity Securities. All outstanding Equity Securities of
         Borrower are duly authorized, validly issued, fully paid and
         non-assessable. All Equity Securities of Borrower have been offered and
         sold in compliance with all federal and state securities laws and all
         other Requirements of Law.

             (k) No Agreements to sell Assets; Etc. Neither Borrower nor any of
         its Subsidiaries has any legal obligation, absolute or contingent, to
         any Person to sell the assets of Borrower or any of its Subsidiaries
         (other than sales in the ordinary course of business), or to effect any
         merger, consolidation or other reorganization of Borrower or any of its
         Subsidiaries or to enter into any agreement with respect thereto,
         except for sales permitted by Subparagraph 5.02(c). 

             (1) Employee Benefit Plans.

                 (i) Based on the latest valuation of each Employee Benefit Plan
             that either Borrower or any ERISA Affiliate maintains or
             contributes to, or has any obligation under (which occurred within
             twelve months of the date of this representation), the aggregate
             benefit liabilities of such plan within the meaning of Section 4001
             of ERISA did not exceed the aggregate value of the assets of such
             plan. Neither Borrower nor any ERISA Affiliate has any liability
             with respect to any post-retirement benefit under any Employee
             Benefit Plan which is a welfare plan (as defined in section 3(1) of
             ERISA), other than liability for health plan continuation coverage
             described in Part 6 of Title I(B) of ERISA, which liability for
             health plan contribution coverage is not reasonably likely to have
             a Material Adverse Effect.

                 (ii) Each Employee Benefit Plan complies, in both form and
             operation, in all material respects, with its terms, ERISA and the
             IRC, and no condition exists or event has occurred with respect to
             any such plan which would result in the incurrence by either
             Borrower or any ERISA Affiliate of any material liability, fine or
             penalty. Each Employee Benefit Plan, related trust agreement,
             arrangement and commitment of Borrower or any ERISA Affiliate is
             legally valid and binding and in full force and effect. No Employee
             Benefit Plan is being audited or investigated by any government
             agency or is subject to any pending or threatened claim or suit.
             Neither Borrower nor any ERISA Affiliate nor any fiduciary of any
             Employee Benefit Plan has engaged in a prohibited transaction under
             section 406 of ERISA or section 4975 of the IRC.



                                       40
<PAGE>   44
                 (iii) Neither Borrower nor any ERISA Affiliate contributes to
             or has any material contingent obligations to any Multiemployer
             Plan. Neither Borrower nor any ERISA Affiliate has incurred any
             material liability (including secondary liability) to any
             Multiemployer Plan as a result of a complete or partial withdrawal
             from such Multiemployer Plan under Section 4201 of ERISA or as a
             result of a sale of assets described in Section 4204 of ERISA.
             Neither Borrower nor any ERISA Affiliate has been notified that any
             Multiemployer Plan is in reorganization or insolvent under and
             within the meaning of Section 4241 or Section 4245 of ERISA or that
             any Multiemployer Plan intends to terminate or has been terminated
             under Section 4041A of ERISA.

             (m) Other Regulations. Borrower is not subject to regulation under
         the Investment Company Act of 1940, the Public Utility Holding Company
         Act of 1935, the Federal Power Act, the Interstate Commerce Act, any
         state public utilities code or to any other Governmental Rule limiting
         its ability to incur indebtedness.

             (n) Patent and Other Rights. Borrower and its Subsidiaries own,
         license or otherwise have the right to use, under validly existing
         agreements, all patents, licenses, trademarks, trade names, trade
         secrets, service marks, copyrights and all rights with respect thereto,
         which are required to conduct their businesses as now conducted.

             (o) Governmental Charges. Borrower and its Subsidiaries have filed
         or caused to be filed all tax returns which are required to be filed by
         them. Borrower and its Subsidiaries have paid, or made provision for
         the payment of, all taxes and other Governmental Charges which have or
         may have become due pursuant to said returns or otherwise and all other
         indebtedness, except such Governmental Charges or indebtedness, if any,
         which are being contested in good faith and as to which adequate
         reserves (determined in accordance with GAAP) have been provided or
         which are not reasonably likely to have a Material Adverse Effect if
         unpaid.

             (p) Margin Stock. Borrower owns no Margin Stock which, in the
         aggregate, would constitute a substantial part of the assets of
         Borrower, and no proceeds of any Loan will be used to purchase or
         carry, directly or indirectly, any Margin Stock or to extend credit,
         directly or indirectly, to any Person for the purpose of purchasing or
         carrying any Margin Stock.

             (Q) Subsidiaries, etc. Set forth in Schedule 4.01(g) (as
         supplemented by Borrower from time to time in a written notice to
         Agent) is a complete list of all of Borrower's



                                       41
<PAGE>   45
         Subsidiaries, the jurisdiction of incorporation of each, the classes of
         Equity Securities of each and the number of shares and percentages of
         shares of each such class owned directly or indirectly by Borrower.
         Except for such Subsidiaries, Borrower has no Subsidiaries, is not a
         partner in any partnership or a joint venturer in any joint venture.

             (r) Catastrophic Events. Neither Borrower nor any of its
         Subsidiaries and none of their properties is or has been affected by
         any fire, explosion, accident, strike, lockout or other labor dispute,
         drought, storm, hail, earthquake, embargo, act of God or other casualty
         that is reasonably likely to have a Material Adverse Effect. There are
         no disputes presently subject to grievance procedure, arbitration or
         litigation under any of the collective bargaining agreements,
         employment contracts or employee welfare or incentive plans to which
         Borrower or any of its Subsidiaries is a party, and there are no
         strikes, lockouts, work stoppages or slowdowns, or, to the best
         knowledge of Borrower, jurisdictional disputes or organizing activities
         occurring or threatened which alone or in the aggregate are reasonably
         likely to have a Material Adverse Effect.

             (s) No Material Adverse Effect. No event has occurred and is
         continuing and no condition exists which is reasonably likely to have a
         Material Adverse Effect.

             (t) Accuracy of Information Furnished. None of the Credit Documents
         and none of the other certificates, statements or information furnished
         to Agent or any Lender by or on behalf of Borrower or any of its
         Subsidiaries in connection with the Credit Documents or the
         transactions contemplated thereby contains or will contain any untrue
         statement of a material fact or omits or will omit to state a material
         fact necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading.

         4.02. Reaffirmation. Borrower shall be deemed to have reaffirmed, for
the benefit of the Lenders and Agent, each representation and warranty contained
in Paragraph 4.01 on and as of the date of each Credit Event (except for
representations and warranties expressly made as of a specified date, which
shall be true as of such date).

SECTION V.       COVENANTS.

         5.01. Affirmative Covenants. Until the termination of this Agreement
and the satisfaction in full by Borrower of all Obligations, Borrower will
comply, and will cause compliance, with the following affirmative covenants,
unless Required Lenders shall otherwise consent in writing:



                                       42
<PAGE>   46
             (a) Financial Statements, Reports, etc. Borrower shall furnish to
         Agent, with sufficient copies for each Lender, the following, each in
         such form and such detail as Agent or the Required Lenders shall
         reasonably request:

                 (i) As soon as available and in no event later than fifty (50)
             days after the last day of each fiscal quarter of Borrower (other
             than the last quarter in any fiscal year), a copy of the Financial
             Statements of Borrower and its Subsidiaries (prepared on a
             consolidated basis) for such quarter and for the fiscal year to
             date, certified by the president or chief financial officer of
             Borrower to present fairly the financial condition, results of
             operations and other information reflected therein and to have been
             prepared in accordance with GAAP (subject to normal year-end audit
             adjustments);

                 (ii) As soon as available and in no event later than one
             hundred (100) days after the close of each fiscal year of Borrower,
             (A) copies of the audited Financial Statements of Borrower and its
             Subsidiaries (prepared on a consolidated basis) for such year,
             prepared by Ernst & Young or by other independent certified public
             accountants of recognized national standing acceptable to Agent,
             (B) copies of the unqualified opinions (or qualified opinions
             reasonably acceptable to Required Lenders) and management letters
             delivered by such accountants in connection with all such Financial
             Statements and (C) certificates of such accountants to Agent
             stating that in making the examination necessary for their opinion
             they have reviewed this Agreement and have obtained no knowledge of
             any Default which has occurred and is continuing, or if, in the
             opinion of such accountants, a Default has occurred and is
             continuing, a statement as to the nature thereof;

                 (iii) Contemporaneously with the quarterly and year-end
             Financial Statements required by the foregoing clauses (i) and
             (ii), a compliance certificate of the president or chief financial
             officer of Borrower which (A) states that no Default has occurred
             and is continuing, or, if any such Default has occurred and is
             continuing, a statement as to the nature thereof and what action
             Borrower proposes to take with respect thereto and (B) sets forth,
             for the quarter or year covered by such Financial Statements or as
             of the last day of such quarter or year (as the case may be), the
             calculation of the financial ratios and tests provided in Paragraph
             5.03;

                 (iv) As soon as available and in no event later than fifty (50)
             days after the last day of each fiscal



                                       43
<PAGE>   47
             quarter of Borrower, a certificate of the chief financial officer
             of Borrower which sets forth the calculation of the Funded
             Indebtedness/EBITDA Ratio for the consecutive four-quarter period
             ending on such day;

                 (v) As soon as possible and in no event later than five (5)
             Business Days after any Senior Officer of Borrower knows of the
             occurrence or existence of (A) any Reportable Event under any
             Employee Benefit Plan or Multiemployer Plan; (B) any actual or
             threatened litigation, suits, claims or disputes against Borrower
             or any of its Subsidiaries involving potential monetary damages
             payable by Borrower or its Subsidiaries of $2,500,000 or more
             (alone or in the aggregate); (C) any other event or condition which
             is reasonably likely to have a Material Adverse Effect; or (D) any
             Default; the statement of the president or chief financial officer
             of Borrower setting forth details of such event, condition or
             Default and the action which Borrower proposes to take with respect
             thereto;

                 (vi) As soon as available and in no event later than five (5)
             Business Days after they are sent, made available or filed, copies
             of (A) all registration statements and reports filed by Borrower or
             any of its Subsidiaries with any securities exchange or the
             Securities and Exchange Commission (including, without limitation,
             all 10-Q, 10-K and 8-Q reports); (B) all reports, proxy statements
             and financial statements sent or made available by Borrower or any
             of its Subsidiaries to its security holders; and (C) all press
             releases and other similar public, concerning any material
             developments in the business of Borrower or any of its Subsidiaries
             made available by Borrower or any of its Subsidiaries to the public
             generally;

                 (vii) As soon as available and in no event later than five (5)
             Business Days after they are filed, copies of all IRS Form 5500
             reports for all Employee Benefit Plans required to file such form;

                 (viii) As soon as available and in no event later than ten (10)
             days before the first day of each fiscal year of Borrower, the
             consolidated plan and forecast of Borrower and its Subsidiaries for
             such fiscal year, including quarterly cash flow projections and
             quarterly projections of Borrower's compliance with each of the
             covenants set forth in Paragraph 5.03;

                 (ix) As soon as possible and in no event later than (A) ten
             (10) days prior to the acquisition by Borrower or any of its
             Subsidiaries of any new



                                       44
<PAGE>   48
             Subsidiary or all or substantially all of the assets of any other
             Person, written notice thereof; and

                 (x) Such other instruments, agreements, certificates, opinions,
             statements, documents and information relating to the operations or
             condition (financial or otherwise) of Borrower or its Subsidiaries,
             and compliance by Borrower with the terms of this Agreement and the
             other Credit Documents as Agent may from time to time reasonably
             request.

         For the purposes of this Subparagraph 5.01(a), (1) the timely delivery
         by Borrower to Agent pursuant to clause (vi) of a copy of the Form 10-Q
         report filed by Borrower with the Securities and Exchange Commission
         for any quarter shall satisfy the requirements of clause (i) for such
         quarter and (2) the timely delivery by Borrower to Agent pursuant to
         clause (vi) of a copy of the Form 10-K report filed by Borrower with
         the Securities and Exchange Commission for any year shall satisfy the
         requirements of clause (ii)(A) for such year, provided that such
         reports are required to contain the same information as required by
         clause (ii)(A), respectively.

             (b) Books and Records. Borrower and its Subsidiaries shall at all
         times keep proper books of record and account in which full, true and
         correct entries will be made of their transactions in accordance with
         GAAP.

             (c) Inspections. Borrower and its Subsidiaries shall permit any
         Person designated by any Lender, upon reasonable notice and during
         normal business hours, to visit and inspect any of the properties and
         offices of Borrower and its Subsidiaries, to examine the books and
         records of Borrower and its Subsidiaries and make copies thereof and to
         discuss the affairs, finances and business of Borrower and its
         Subsidiaries with, and to be advised as to the same by, their officers,
         auditors and accountants, all at such times and intervals as any Lender
         may reasonably request.

             (d) Insurance. Borrower and its Subsidiaries shall:

                 (i) Carry and maintain insurance of the types and in the
             amounts customarily carried from time to time during the term of
             this Agreement by others engaged in substantially the same business
             as such Person and operating in the same geographic area as such
             Person, including, but not limited to, fire, public liability,
             property damage and worker's compensation; and

                 (ii) Carry and maintain each policy for such insurance with
             financially sound insurers.



                                       45
<PAGE>   49
             (e) Governmental Charges and other Indebtedness. Borrower and its
         Subsidiaries shall promptly pay and discharge when due (i) all taxes
         and other Governmental Charges prior to the date upon which penalties
         accrue thereon, (ii) all indebtedness which, if unpaid, could become a
         Lien upon the property of Borrower or its Subsidiaries and (iii)
         subject to any subordination provisions applicable thereto, all other
         Indebtedness which, if unpaid, is reasonably likely to have a Material
         Adverse Effect, except such Indebtedness as may in good faith be
         contested or disputed, or for which arrangements for deferred payment
         have been made, provided that in each such case appropriate reserves as
         required by GAAP are maintained.

             (f) Use of Proceeds. Borrower shall use the proceeds of the Loans
         only for the purposes set forth in Subparagraph 2.01(f). Borrower shall
         not use any part of the proceeds of any Loan, directly or indirectly,
         for the purpose of purchasing or carrying any Margin Stock or for the
         purpose of purchasing or carrying or trading in any securities under
         such circumstances as to involve Borrower, any Lender or Agent in a
         violation of Regulations G, T, U or X issued by the Federal Reserve
         Board.

             (g) General Business Operations. Each of Borrower and its
         Subsidiaries shall (i) preserve and maintain its corporate existence
         and all of its rights, privileges and franchises reasonably necessary
         to the conduct of its business, (ii) conduct its business activities in
         compliance with all Requirements of Law and Contractual Obligations
         applicable to such Person, the violation of which is reasonably likely
         to have a Material Adverse Effect and (iii) keep all property useful
         and necessary in its business in good working order and condition,
         ordinary wear and tear excepted; provided, however, that Borrower and
         its Subsidiaries may dissolve or liquidate any Subsidiary if such
         Subsidiary is not a Material Subsidiary and such dissolution or
         liquidation is not reasonably likely to have a Material Adverse Effect.
         Borrower shall maintain its chief executive office and principal place
         of business in the United States and shall not relocate its chief
         executive office or principal place of business outside of California
         except upon not less than thirty (30) days prior written notice to
         Agent.

         5.02. Negative Covenants. Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower will comply,
and will cause compliance, with the following negative covenants, unless
Required Lenders shall otherwise consent in writing:

             (a) Indebtedness. Neither Borrower nor any of its Subsidiaries
         shall create, incur, assume or permit to exist



                                       46
<PAGE>   50
         any Indebtedness except for the following ("Permitted Indebtedness"):

                 (i) The Obligations of Borrower under the Credit Documents;

                 (ii) The Related Lease Obligations;

                 (iii) Indebtedness of Borrower and its Subsidiaries listed in
             Schedule 5.02(a) and existing on the date of this Agreement;

                 (iv) Indebtedness of Borrower and its Subsidiaries arising from
             the endorsement of instruments for collection in the ordinary
             course of Borrower's or a Subsidiary's business;

                 (v) Indebtedness of Borrower and its Subsidiaries for trade
             accounts payable, provided that (A) such accounts arise in the
             ordinary course of business and (B) no material part of any such
             account is more than ninety (90) days past due (unless subject to a
             bona fide dispute and for which adequate reserves as required by
             GAAP have been established);

                 (vi) Indebtedness of Borrower and its Subsidiaries under Rate
             Contracts, provided that all such Rate Contracts are entered into
             in connection with bona fide hedging operations and not for
             speculation;

                 (vii) Indebtedness of Borrower and its Subsidiaries under
             purchase money loans and Capital Leases incurred by Borrower or any
             of its Subsidiaries to finance the acquisition by such Person of
             real property, fixtures or equipment provided that in each case,
             (A) such Indebtedness is incurred by such Person at the time of, or
             not later than thirty (30) days after, the acquisition by such
             Person of the property so financed, (B) such Indebtedness does not
             exceed the purchase price of the property so financed, and (C) no
             Default has occurred and is continuing at the time such
             Indebtedness is incurred or will occur after giving effect to such
             Indebtedness;

                 (viii) Indebtedness of Borrower and its Subsidiaries under
             initial or successive refinancings of any Indebtedness permitted by
             clause (iii) above, provided that (A) the principal amount of any
             such refinancing does not exceed the principal amount of the
             Indebtedness being refinanced (except to the extent otherwise
             permitted by clause (x) below) and (B) the material terms and
             provisions of any such refinancing (including maturity, redemption,
             prepayment, default



                                       47
<PAGE>   51
             and subordination provisions) are no less favorable to the Lenders
             than the Indebtedness being refinanced;

                 (ix) Indebtedness of Borrower and its Subsidiaries with respect
             to surety, appeal, indemnity, performance or other similar bonds in
             the ordinary course of business; and

                 (x) Other Indebtedness of Borrower and its Subsidiaries,
             provided that the aggregate principal amount of all such other
             Indebtedness does not exceed $25,000,000 at any time.

             (b) Liens. Neither Borrower nor any of its Subsidiaries shall
         create, incur, assume or permit to exist' any Lien on or with respect
         to any of its assets or property of any character, whether now owned or
         hereafter acquired, except for the following ("Permitted Liens"):
 
                 (i) Liens in favor of Agent or any Lender securing the
             Obligations;

                 (ii) Liens in favor of the lessor, participants or agent under
             the Related Lease Participation Agreement securing the Related
             Lease Obligations;

                 (iii) Liens listed in Schedule 5.02(b) and existing on the date
             of this Agreement;

                 (iv) Liens for taxes or other Governmental Charges not at the
             time delinquent or thereafter payable without penalty or being
             contested in good faith, provided that adequate reserves for the
             payment thereof as required by GAAP have been established;

                 (v) Liens of carriers, warehousemen, mechanics, materialmen,
             vendors, and landlords and other similar Liens imposed by law
             incurred in the ordinary course of business for sums not overdue or
             being contested in good faith, provided that adequate reserves for
             the payment thereof as required by GAAP have been established;

                 (vi) Deposits under workers' compensation, unemployment
             insurance and social security laws or to secure the performance of
             bids, tenders, contracts (other than for the repayment of borrowed
             money) or leases, or to secure statutory obligations of surety or
             appeal bonds or to secure indemnity, performance or other similar
             bonds in the ordinary course of business;

                 (vii) Zoning restrictions, easements, rights-of-way, title
             irregularities and other similar encumbrances, which alone or in
             the aggregate are not



                                       48
<PAGE>   52
             substantial in amount and do not materially detract from the value
             of the property subject thereto or interfere with the ordinary
             conduct of the business of Borrower or any of its Subsidiaries;

                 (viii) Banker's Liens and similar Liens (including set-off
             rights) in respect of bank deposits;

                 (ix) Liens on property or assets of any corporation which
             becomes a Subsidiary of Borrower or on any property or assets
             acquired by Borrower or any of its Subsidiaries after the date of
             this Agreement, provided that (A) such Liens exist at the time the
             stock of such corporation or such assets or property is or are
             acquired by Borrower and (B) such Liens were not created in
             contemplation of such acquisition by Borrower;

                 (x) Judgement Liens, provided that such Liens do not have a
             value in excess of $2,500,000 or such Liens are released, stayed,
             vacated or otherwise dismissed within twenty (20) days after issue
             or levy and, if so stayed, such stay is not thereafter removed;

                 (xi) Rights of vendors or lessors under conditional sale
             agreements, Capital Leases or other title retention agreements,
             provided that, in each case, (A) such rights secure or otherwise
             relate to Permitted Indebtedness, (B) such rights do not extend to
             any property other than property acquired with the proceeds of such
             Permitted Indebtedness and (C) such rights do not secure any
             Indebtedness other than such Permitted Indebtedness;

                 (xii) Liens in favor of customs and revenue authorities arising
             as a matter of law to secure payment of customs duties and in
             connection with the importation of goods in the ordinary course of
             Borrower's and its Subsidiaries' businesses;

                 (xiii) Liens securing Indebtedness which constitutes Permitted
             Indebtedness under clause (vii) of Subparagraph 5.02(a) provided
             that, in each case, such Lien (A) covers only those assets, the
             acquisition of which was financed by such Permitted Indebtedness,
             and (B) secures only such Permitted Indebtedness;

                 (xiv) Liens on the property or assets of any Subsidiary of
             Borrower in favor of Borrower or any other Subsidiary of Borrower;

                 (xv) Liens incurred in connection with the extension, renewal
             or refinancing of the Indebtedness secured by the Liens described
             in clause (iii) above,



                                       49
<PAGE>   53
             provided that any extension, renewal or replacement Lien (A) is
             limited to the property covered by the existing Lien and (B)
             secures Indebtedness which is no greater in amount and has material
             terms no less favorable to the Lenders than the Indebtedness
             secured by the existing Lien;

                 (xvi) Liens on insurance proceeds in favor of insurance
             companies with respect to the financing of insurance premiums;

                 (xvii) Permitted Property Liens (as defined in the Related
             Lease Participation Agreement) in the Property (as defined in the
             Related Lease Participation Agreement); and

                 (xviii) Other Liens on the property of Borrower and its
             Subsidiaries, provided that the aggregate principal amount of all
             Indebtedness secured by such other Liens does not exceed at any
             time ten percent (10%) of the consolidated total assets of Borrower
             and its Subsidiaries at such time.

             (c) Asset Dispositions. Neither Borrower nor any of its
         Subsidiaries shall sell, lease, transfer or otherwise dispose of any of
         its assets or property, whether now owned or hereafter acquired, except
         for the following:

                 (i) Sales of inventory by Borrower and its Subsidiaries in the
             ordinary course of their businesses;

                 (ii) Sales of surplus, damaged, worn or obsolete equipment or
             inventory for not less than fair market value;

                 (iii) Sales or other dispositions of Investments permitted by
             clauses (i) and (iii) of Subparagraph 5.02(e) for not less than
             fair market value;

                 (iv) Sales or assignments of defaulted receivables to a
             collection agency in the ordinary course of business;

                 (v) Licenses by Borrower or its Subsidiaries of its patents,
             copyrights, trademarks, trade names and service marks in the
             ordinary course of its business provided that, in each case, the
             terms of the transaction are terms which then would prevail in the
             market for similar transactions between unaffiliated parties
             dealing at arm's length;

                 (vi) Sales or other dispositions of assets and property by
             Borrower to any of Borrower's Subsidiaries



                                       50
<PAGE>   54
             or by any of Borrower's Subsidiaries to Borrower or any of its
             other Subsidiaries, provided that the terms of any such sales or
             other dispositions by or to Borrower are terms which are no less
             favorable to Borrower then would prevail in the market for similar
             transactions between unaffiliated parties dealing at arm's length;

                 (vii) Sales of accounts receivable of Borrower and its
             Subsidiaries, provided that (A) each such sale is (1) for not less
             than fair market value and (2) for cash, and (B) the aggregate book
             value of all such accounts receivable so sold in any consecutive
             four-quarter period does not exceed ten percent (10%) of the
             consolidated total accounts receivable of Borrower and its
             Subsidiaries on the last day immediately preceding such
             four-quarter period; and

                 (viii) other sales, leases, transfers and disposals of assets
             and property for not less than fair market value, provided that the
             aggregate book value of all such assets and property so sold,
             leased, transferred or otherwise disposed of in any consecutive
             four-quarter period does not exceed five percent (5%) of the
             consolidated total assets of Borrower and its Subsidiaries on the
             last day immediately preceding such four-quarter period.

             (d) Mergers, Acquisitions, Etc. Neither Borrower nor any of its
         Subsidiaries shall consolidate with or merge into any other Person or
         permit any other Person to merge into it, establish any new Subsidiary,
         acquire any Person as a new Subsidiary or acquire all or substantially
         all of the assets of any other Person, except for the following:

                 (i) Any Subsidiary of Borrower may merge or consolidate with
             any other Subsidiary of Borrower;

                 (ii) Any Subsidiary of Borrower may merge or consolidate with
             Borrower, provided that Borrower is the surviving corporation; and

                 (iii) Borrower may merge or consolidate with any other
             corporation, establish a new Subsidiary, acquire any Person as a
             new Subsidiary or acquire all or substantially all of the assets of
             any other Person, provided that:

                       (A) In the case of any merger or consolidation, either
                 (1) Borrower is the surviving corporation or (2) the surviving
                 corporation (y) is a Solvent United States corporation with a
                 financial condition equal to or better than the financial
                 condition of Borrower immediately prior to such merger or
                 consolidation



                                       51
<PAGE>   55
                 and (z) assumes all of the obligations in a manner reasonably
                 acceptable to the Required Lenders;

                       (B) No Default has occurred and is continuing at the time
                 of such merger, consolidation, establishment or acquisition or
                 will occur after giving effect to such merger, consolidation or
                 acquisition; and

                       (C) The aggregate cost of any such merger, consolidation,
                 establishment or acquisition does not exceed the amounts
                 permitted under Subparagraph 5.02(e)(iv).

             (e) Investments. Neither Borrower nor any of its Subsidiaries shall
         make any Investment except for Investments in the following:

                 (i) Investments of Borrower and its Subsidiaries in Cash
             Equivalents;

                 (ii) Any transaction permitted by Subparagraph, 5.02(a);

                 (iii) Money market mutual funds registered with the Securities
             and Exchange Commission, meeting the requirements of Rule 2a-7
             promulgated under the Investment Company Act of 1940;

                 (iii) Investments listed in Schedule 5.02(2) existing on the
             date of this Agreement; and

                 (iv) Other Investments, provided that the aggregate amount of
             such other Investments plus the aggregate cost of all mergers and
             consolidations consummated, Subsidiaries established and
             Subsidiaries and assets acquired by Borrower pursuant to
             Subparagraph 5.02(d) does not exceed in any fiscal year (A)
             $100,000,000 for any amounts paid in cash and (B) $500,000,000 for
             any amounts paid with shares of common stock of Borrower (as
             determined according to the stock price of such shares on the date
             of transfer) and accounted for on a pooling basis in accordance
             with GAAP.

             (f) Dividends, Redemptions, Etc. Neither Borrower nor any of its
         Subsidiaries shall pay any dividends or make any distributions on its
         Equity Securities; purchase, redeem, retire, defease or otherwise
         acquire for value any of its Equity Securities; return any capital to
         any holder of its Equity Securities as such; make any distribution of
         assets, Equity Securities, obligations or securities to any holder of
         its Equity Securities as such; or set apart any sum for any such
         purpose; except as follows:



                                       52
<PAGE>   56
                 (i) Either Borrower or any of its Subsidiaries may pay
             dividends on its capital stock payable solely in such Person's own
             capital stock;

                 (ii) Any Subsidiary of Borrower may pay dividends to Borrower;

                 (iii) Borrower may purchase shares of its capital stock for its
             employee stock option plans, provided that (A) the aggregate amount
             of such purchases does not exceed $50,000,000 in any fiscal year
             and (B) no Default has occurred and is continuing at the time of
             such purchase or will occur after giving effect to such purchase;
             and

                 (iv) Borrower may purchase shares of its capital stock with the
             proceeds received by it from a substantially concurrent issue of
             new shares of its capital stock.

             (g) Change in Business. Neither Borrower nor any of its
         Subsidiaries shall engage, either directly or indirectly through
         Affiliates, in any material line of business other than the
         semiconductor capital equipment business and other businesses
         incidental or reasonably related thereto.

             (h) ERISA. Neither Borrower nor any ERISA Affiliate shall (i) adopt
         or institute any Employee Benefit Plan that is an employee pension
         benefit plan within the meaning of Section 3(2) of ERISA, (ii) take any
         action which will result in the partial or complete withdrawal, within
         the meanings of sections 4203 and 4205 of ERISA, from a Multiemployer
         Plan, (iii) engage or permit any Person to engage in any transaction
         prohibited by section 406 of ERISA or section 4975 of the IRC involving
         any Employee Benefit Plan or multiemployer Plan which would subject
         either Borrower or any ERISA Affiliate to any tax, penalty or other
         liability including a liability to indemnity, (iv) incur or allow to
         exist any accumulated funding deficiency (within the meaning of section
         412 of the IRC or section 302 of ERISA), (v) fail to make full payment
         when due of all amounts due as contributions to any Employee Benefit
         Plan or Multiemployer Plan, (vi) fail to comply with the requirements
         of section 4980B of the IRC or Part 6 of Title I(B) of ERISA, or (vii)
         adopt any amendment to any Employee Benefit Plan which would require
         the posting of security pursuant to section 401(a)(29) of the IRC,
         where singly or cumulatively, the above would have a Material Adverse
         Effect.

             (i) Transactions With Affiliates. Neither Borrower nor any of its
         Subsidiaries shall enter into any Contractual Obligation with any
         Affiliate or engage in any other transaction with any Affiliate except
         upon terms at least as



                                       53
<PAGE>   57
         favorable to Borrower or such Subsidiary as an arms-length transaction
         with unaffiliated Persons.

             (j) Accounting Changes. Neither Borrower nor any of its
         Subsidiaries shall change (i) its fiscal year (currently January 1
         through December 31) or (ii) its accounting practices except as
         permitted by GAAP.

         5.03. Financial Covenants. Until the termination of this Agreement and
the satisfaction in full by Borrower of all obligations, Borrower will comply,
and will cause compliance, with the following financial Covenants, unless
Required Lenders shall otherwise consent in writing:

             (a) Funded Indebtedness/Capital-Ratio. Borrower shall not permit
         its Funded Indebtedness/Capital Ratio on any day set forth below to be
         greater than the ratio set forth opposite such day below:

<TABLE>
               <S>                                                <C>
               June 30, 1997;
                    September 30, 1997...........................  0.55 to 1.00;

               December 31, 1997;
                    March 31, 1998;
                    June 30, 1998................................  0.50 to 1.00;

               September 30, 1998;
                    December 31, 1998
                    March 31, 1999
                    June 30, 1999................................  0.45 to 1.00;

               The last day of each
                    fiscal quarter thereafter....................  0.40 to 1.00.
</TABLE>

             (b) Quick Ratio. Borrower shall not permit its Quick Ratio to be
         less than 1.50 to 1.00 on the last day of any fiscal quarter.

             (c) Debt Service Coverage Ratio. Borrower shall not permit its Debt
         Service Coverage Ratio for any fiscal quarter ending on any day set
         forth below to be less than the ratio set forth opposite such day
         below:

<TABLE>
               <S>                                                <C>
               June 30, 1997;
                    September 30, 1997;
                    December 31, 1997;
                    March 31, 1998;
                    June 30, 1998;
                    September 30, 1998...........................  2.50 to 1.00;

               December 31, 1998;
                    March 31, 1999...............................  3.50 to 1.00;
</TABLE>



                                       54
<PAGE>   58
<TABLE>
               <S>                                                <C>
               The last day of each
                    fiscal quarter thereafter..................... 4.50 to 1.00.
</TABLE>

             (d) Tangible Net Worth. Borrower shall not permit its Tangible Net
         Worth on the last day of any fiscal quarter (such date to be referred
         to herein as a "determination date") which occurs after June 30, 1997
         (such date to be referred to herein as the "base date") to be less than
         the sum on such determination date of the following:

                 (i) Ninety percent (90%) of the Tangible Net worth of Borrower
             and its Subsidiaries on the base date;

                                      plus

                 (ii) Seventy-five percent (75%) of the sum of Borrower's
             consolidated quarterly net income (ignoring any quarterly losses)
             for each fiscal quarter after the base date through and including
             the fiscal quarter ending on the determination date;

                                       plus

                 (iii) One hundred percent (100%) of the Net Proceeds of all
             Equity Securities issued by Borrower and its Subsidiaries (to
             Persons other than Borrower or its Subsidiaries) during the period
             commencing on the base date and ending on the determination date;

                                      plus

                 (iv) One hundred percent (100%) of the principal amount of all
             debt securities of Borrower and its Subsidiaries converted into
             Equity Securities of Borrower and its Subsidiaries during the
             period commencing on the base date and ending on the determination
             date;

                                      minus

                 (v) The lesser of (A) the sum of all non-recurring, non-cash
             charges taken by Borrower and its Subsidiaries during the period
             commencing on the base date and ending on the earlier of the
             determination date and December 31, 1997 and (B) $40,000,000.

SECTION VI.      DEFAULT.

         6.01. Events of Default. The occurrence or existence of any one or more
of the following shall constitute an "Event of Default" hereunder:



                                       55
<PAGE>   59
             (a) Non-Payment. Borrower shall (i) fail to pay when due any
         principal of any Loan, (ii) fail to pay at the maturity of the Loans
         any interest, fees or other amount then due under the terms of this
         Agreement or any of the other Credit Documents, or (iii) fail to pay
         within five (5) days after the same becomes due any other interest,
         fees or other amounts required under the terms of this Agreement or any
         of the other Credit Documents; or

             (b) Specific Defaults. Borrower or any of its Subsidiary shall fail
         to observe or perform any covenant, obligation, condition or agreement
         set forth in Paragraph 5.02 or Paragraph 5.03; or

             (c) Other Defaults. Borrower or any of its Subsidiaries shall fail
         to observe or perform any other covenant, obligation, condition or
         agreement contained in this Agreement or the other Credit Documents and
         such failure shall continue for thirty (30) days; or

             (d) Representations and Warranties. Any representation, warranty,
         certificate, information or other statement (financial or otherwise)
         made or furnished by or on behalf of Borrower or any of its
         Subsidiaries to Agent or any Lender in or in connection with this
         Agreement or any of the other Credit Documents, or as an inducement to
         Agent or any Lender to enter into this Agreement, shall be false,
         incorrect, incomplete or misleading in any material respect when made
         or furnished; or

             (e) Cross-Default. (i) Borrower or any of its Subsidiaries shall
         fail to make any payment when due on account of any Indebtedness of
         such Person (other than the Obligations) and such failure shall
         continue beyond any period of grace provided with respect thereto, if
         the amount of such Indebtedness exceeds $2,500,000 or the effect of
         such failure is to cause, or permit the holder or holders thereof to
         cause, Indebtedness of Borrower and its Subsidiaries (other than the
         Obligations) in an aggregate amount exceeding $2,500,000 to become due
         or (ii) Borrower or any of its Subsidiaries shall otherwise fail to
         observe or perform any agreement, term or condition contained in any
         agreement or instrument relating to any Indebtedness of such Person
         (other than the Obligations), or any other event shall occur or
         condition shall exist, if the effect of such failure, event or
         condition is to cause, or permit the holder or holders thereof to
         cause, Indebtedness of Borrower and its Subsidiaries (other than the
         Obligations) in an aggregate amount exceeding $2,500,000 to become due
         (and/or to be secured by cash collateral); or

             (f) Insolvency, Voluntary Proceedings. Borrower or any of its
         Material Subsidiaries shall (i) apply for or consent to the appointment
         of a receiver, trustee,



                                       56
<PAGE>   60
         liquidator or custodian of itself or of all or a substantial part of
         its property, (ii) be unable, or admit in writing its inability, to pay
         its debts generally as they mature, (iii) make a general assignment for
         the benefit of its or any of its creditors, (iv) be dissolved or
         liquidated in full or in part, (v) become insolvent (as such term may
         be defined or interpreted under any applicable statute), (vi) commence
         a voluntary case or other proceeding seeking liquidation,
         reorganization or other relief with respect to itself or its debts
         under any bankruptcy, insolvency or other similar law now or hereafter
         in effect or consent to any such relief or to the appointment of or
         taking possession of its property by any official in an involuntary
         case or other proceeding commenced against it, or (vi) take any action
         for the purpose of effecting any of the foregoing; or

             (g) Involuntary Proceedings. Proceedings for the appointment of a
         receiver, trustee, liquidator or custodian of Borrower or any of its
         Material Subsidiaries or of all or a substantial part of the property
         thereof, or an involuntary case or other proceedings seeking
         liquidation, reorganization or other relief with respect to Borrower
         or any of its Material Subsidiaries or the debts thereof under any
         bankruptcy, insolvency or other similar law now or hereafter in effect
         shall be commenced and an order for relief entered or such proceeding
         shall not be dismissed or discharged within thirty (30) days of
         commencement; or

             (h) Judgements. (i) One or more judgments, orders, decrees or
         arbitration awards requiring Borrower and/or its Subsidiaries to pay an
         aggregate amount of $2,500,000 or more (exclusive of amounts covered by
         insurance issued by an insurer not an Affiliate of Borrower and
         otherwise satisfying the requirements set forth in Subparaqraph 5.01(d)
         shall be rendered against Borrower and/or any of its Subsidiaries in
         connection with any single or related series of transactions, incidents
         or circumstances and the same shall not be vacated or stayed for a
         period of twenty (20) consecutive days; (ii) any judgment, writ,
         assessment, warrant of attachment, tax lien or execution or similar
         process shall be issued or levied against a substantial part of the
         property of Borrower or any of its Subsidiaries and the same shall not
         be released, stayed, vacated or otherwise dismissed within twenty (20)
         days after issue or levy; or (iii) any other judgments, orders,
         decrees, arbitration awards, writs, assessments, warrants of
         attachment, tax liens or executions or similar processes which, alone
         or in the aggregate, are reasonably likely to have a Material Adverse
         Effect are rendered, issued or levied; or

             (i) Credit Documents. Any Credit Document or any material term
         thereof shall cease to be, or be asserted by Borrower or any of its
         Subsidiaries not to be, a legal,



                                       57
<PAGE>   61
         valid and binding obligation of Borrower or any of its Subsidiaries
         enforceable in accordance with its terms; or

             (j) ERISA. Any Reportable Event which constitutes grounds for the
         termination of any Employee Benefit Plan by the PBGC or for the
         appointment of a trustee by the PBGC to administer any Employee Benefit
         Plan shall occur, or any Employee Benefit Plan shall be terminated
         within the meaning of Title IV of ERISA or a trustee shall be appointed
         by the PBGC to administer any Employee Benefit Plan; or

             (k) Change of Control. Any Change of Control shall occur; or

             (1) Material Adverse Effect. Any event(s) or conditions which
         is(are) reasonably likely to have a Material Adverse Effect shall occur
         and be continuing or exist.

         6.02. Remedies. At any time after the occurrence and during the
continuance of any Event of Default (other than an Event of Default referred to
in Subparagraph 6.01(f) or 6.01(g) Agent may, with the consent of the Required
Leaders, or shall, upon instructions from the Required Lenders, by written
notice to Borrower, (a) terminate the Commitments and the obligations of the
Lenders to make Loans, and/or (b) declare all outstanding Obligations payable by
Borrower to be immediately due and payable without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the contrary notwithstanding. Upon
the occurrence or existence of any Event of Default described in Subparagragh
6.01(f) or 6.01(g), immediately and without notice, (1) the Commitments and the
obligations of the Lenders to make Loans shall automatically terminate and (2)
all outstanding obligations payable by Borrower hereunder shall automatically
become immediately due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding. In addition to
the foregoing remedies, upon the occurrence or existence of any Event of
Default, Agent may exercise any other right, power or remedy available to it
under any of the Credit Documents or otherwise by law, either by suit in equity
or by action at law, or both.


SECTION VII. THE AGENT AND RELATIONS AMONG LENDERS.

         7.01. Appointment, Powers and Immunities. Each Lender hereby appoints
and authorizes Agent to act as its agent hereunder and under the other Credit
Documents with such powers as are expressly delegated to Agent by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Agent shall



                                       58
<PAGE>   62
not have any duties or responsibilities except those expressly set forth in this
Agreement or in any other Credit Document, be a trustee for any Lender or have
any fiduciary duty to any Lender. Notwithstanding anything to the contrary
contained herein Agent shall not be required to take any action which is
contrary to this Agreement or any other Credit Document or any applicable
Governmental Rule. Neither Agent nor any Lender shall be responsible to any
other Lender for any recitals, statements, representations or warranties made by
Borrower or any of its Subsidiaries contained in this Agreement or in any other
Credit Document, for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Credit Document or
for any failure by Borrower or any of its Subsidiaries to perform their
respective obligations hereunder or thereunder. Agent may employ agents and
attorneys-in-fact and shall not be responsible to any Lender for the negligence
or misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither Agent nor any of its directors, officers, employees,
agents or advisors shall be responsible to any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Credit Document
or in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. Except as otherwise provided under this
Agreement, Agent shall take such action with respect to the Credit Documents as
shall be directed by the Required Lenders.

        7.02. Reliance by Agent. Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, facsimile
or telex) believed by it in good faith to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advise and statements of legal counsel, independent accountants and other
experts selected by Agent with reasonable care. As to any other matters not
expressly provided for by this Agreement, Agent shall not be required to take
any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Lenders and shall in all
cases be fully protected by the Lenders in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the instructions
of the Required Lenders, and such instructions of the Required Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.

         7.03. Defaults. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default unless Agent has received a written notice from
a Lender or Borrower, referring to this Agreement, describing such Default and
stating that such notice is a "Notice of Default". If Agent receives such a
notice of the occurrence of a Default, Agent shall give prompt notice thereof to
the Lenders. Agent shall take such action with respect to such Default as shall
be reasonably directed by the Required Lenders; provided, however, that until



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<PAGE>   63
Agent shall have received such directions, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the Lenders.

         7.04. Indemnification. Without limiting the Obligations of Borrower
hereunder, each Lender agrees to indemnify Agent, ratably in accordance with
their Proportionate Shares, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of this
Agreement or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof; provided, however, that no Lender shall be liable for
any of the foregoing to the extent they arise from Agent's gross negligence or
willful misconduct. Agent shall be fully justified in refusing to take or in
continuing to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The obligations of each Lender under this Paragraph 7.04 shall survive
the payment and performance of the Obligations, the termination of this
Agreement and any Lender ceasing to be a party to this Agreement (with respect
to events which occurred prior to the time such Lender ceased to be a Lender
hereunder).

        7.05. Non-Reliance. Each Lender represents that it has, independently
and without reliance on Agent, or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of the
business, prospects, management, financial condition and affairs of Borrower and
the Subsidiaries and its own decision to enter into this Agreement and agrees
that it will, independently and without reliance upon Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. Neither Agent nor any of its affiliates nor any of
their respective directors, officers, employees, agents or advisors shall (a) be
required to keep any Lender informed as to the performance or observance by
Borrower or any of its Subsidiaries of the obligations under this Agreement or
any other document referred to or provided for herein or to make inquiry of, or
to inspect the properties or books of Borrower or any of its Subsidiaries; (b)
have any duty or responsibility to provide any Lender with any credit or other
information concerning Borrower or any of its Subsidiaries which may come into
the possession of Agent, except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by Agent
hereunder; or (c) be responsible to any Lender for (i) any recital, statement,
representation or warranty made by Borrower or any officer, employee or agent of
Borrower in this Agreement or in any of the



                                       60
<PAGE>   64
other Credit Documents, (ii) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any Credit Document, (iii)
the value or sufficiency of any collateral or the validity or perfection of any
of the liens or security interests intended to be created by the Credit
Documents, or (iv) any failure by Borrower to perform its obligations under
this Agreement or any other Credit Document.

         7.06. Resignation or Removal of Agent. Agent may resign at any time by
giving thirty (30) days prior written notice thereof to Borrower and the
Lenders, and Agent may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Agent, which Agent, if not a Lender,
shall be reasonably acceptable to Borrower; provided, however, that Borrower
shall have no right to approve a successor Agent if a Default has occurred and
is continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from the duties and obligations
thereafter arising hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Section VII shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.

         7.07. Authorization. Agent is hereby authorized by the Lenders to
execute, deliver and perform, each of the Credit Documents to which Agent is or
is intended to be a party and each Lender agrees to be bound by all of the
agreements of Agent contained in the Credit Documents.

         7.08. Agent in its Individual Capacity. Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of banking
or other business with Borrower and its Subsidiaries and affiliates as though
Agent were not Agent hereunder. With respect to Loans, if any, made by Agent in
its capacity as a Lender, Agent in its capacity as a Lender shall have the same
rights and powers under this Agreement and the other Credit Documents as any
other Lender and may exercise the same as though it were not Agent, and the
terms "Lender" or "Lenders" shall include Agent in its capacity as a Lender.

SECTION VIII.  MISCELLANEOUS.

         8.01. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Borrower, any Lender or Agent under this Agreement or the other Credit Documents
shall be in writing and faxed, mailed or delivered, if to Borrower or Agent, at
its respective facsimile number or address set forth below or, if to any Lender,
at the address or facsimile number specified beneath



                                       61
<PAGE>   65
the heading "Address for Notices" under the name of such Lender in Schedule I 
(or to such other facsimile number or address for any party as indicated in any
notice given by that party to the other parties). All such notices and
communications shall be effective (a) when sent by Federal Express or other
overnight service of recognized standing, on the Business Day following the
deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt; provided, however, that any notice delivered to Agent under Section
II shall not be effective until received by Agent.

     Agent:            ABN AMRO Bank N.V
                       ABN AMRO Bank North America, Inc.
                       Capital, Markets-Syndications Group
                       1325 Avenue of the Americas, 9th Floor
                       New York, NY 10019
                       Attn:  Linda Boardman
                       Telephone:  (212) 314-1724
                       Fax: (212) 314-1709 

                       With a copy to:

                       ABN AMRO Bank N. V.
                       ABN AMRO Bank North America, Inc.
                       101 California Street, Suite 4550
                       San Francisco, CA 94111-5812
                       Attn: Robin Yim
                       Telephone: (415) 984-3712
                       Fax: (415) 362-3524

     Borrower:         Novellus Systems, Inc. 
                       3970 North First Street
                       San Jose, CA 95134
                       Attn: Chief Financial Officer
                       Telephone: (408) 943-3460
                       Fax No: (408) 943-3422

Each Notice of Borrowing and Notice of Interest Period Selection shall be given
by Borrower to Agent's office located at the address referred to above during
Agent's normal business hours; provided, however, that any such notice received
by Agent after 10:00 a.m. on any Business Day shall be deemed received by Agent
on the next Business Day. In any case where this Agreement authorizes notices,
requests, demands or other communications by Borrower to Agent or any Lender to
be made by telephone or facsimile, Agent or any Lender may conclusively presume
that anyone purporting to be a person designated in any incumbency certificate
or other similar document received by Agent or a Lender is such a person.

         8.02. Expenses. Borrower shall pay on demand, whether or not any Loan
is made hereunder, (a) all reasonable fees and



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<PAGE>   66
expenses, including reasonable attorneys' fees and expenses incurred by Agent in
connection with the preparation, negotiation, execution and delivery of, and the
exercise of its duties under, this Agreement and the other Credit Documents, and
the preparation, negotiation, execution and delivery of amendments and waivers
thereunder and thereunder and (b) all reasonable fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Agent and the Lenders in
the enforcement or attempted enforcement of any of the Obligations or in
preserving any of Agent's or the Lenders' rights and remedies (including,
without limitation all such fees and expenses incurred in connection with any
"workout" or restructuring affecting the Credit Documents or the Obligations or
any bankruptcy or similar proceeding involving Borrower or any of its
Subsidiaries). As used herein, the term "reasonable attorneys, fees and
expenses" shall include, without limitation, allocable costs and expenses of
Agent's and Lenders' in-house legal counsel and staff. The obligations of
Borrower under this Paragraph 8.02 shall survive the payment and performance of
the Obligations and the termination of this Agreement.

         8.03. Indemnification. To the fullest extent permitted by law, Borrower
agrees to protect, indemnity, defend and hold harmless Agent, the Lenders and
their Affiliates and their respective directors, officers, employees, agents and
advisors ("Indemnities") from and against any and all liabilities, losses,
damages or expenses of any kind or nature and from any suits, claims or demands
(including in respect of or for reasonable attorney's fees and other expenses)
arising on account of or in connection with any matter or thing or action or
failure to act by Indemnitees, or any of them, arising out of or relating to the
Credit Documents or any transaction contemplated thereby, including without
limitation any use by Borrower of any proceeds of the Loans, except to the
extent such liability arises from the willful misconduct or gross negligence of
such Indemnitee. Upon receiving knowledge of any suit, claim or demand asserted
by a third party that Agent or any Lender believes is covered by this indemnity,
Agent or such Lender shall give Borrower notice of the matter and an opportunity
to defend it, at Borrower's sole cost and expense, with legal counsel
satisfactory to Agent or such Lender, as the case may be. Agent or such Lender
may also require Borrower to defend the matter. Any failure or delay of Agent or
any Lender to notify Borrower of any such suit, claim or demand shall not
relieve Borrower of its obligations under this Paragraph 8.03 but shall reduce
such obligations to the extent of any increase in those obligations caused
solely by any such failure or delay which is unreasonable. The obligations of
Borrower under this Paragraph 8.03 shall survive the payment and performance of
the Obligations and the termination of this Agreement.

         8.04. Waivers; Amendments. Any term, covenant, agreement or condition
of this Agreement or any other Credit Document may be amended or waived, and any
consent under this



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<PAGE>   67
Agreement or any other Credit Document may be given, it such amendment, waiver
or consent is in writing and is signed by Borrower and the Required Lenders (or
Agent on behalf of the Required Lenders with the written approval of the
Required Lenders); provided, however that:

             (a) Any amendment, waiver or consent which would (i) increase the
         Total Commitment, (ii) extend the Maturity Date, (iii) reduce the
         principal of or interest on any Loan or any fees or other amounts
         payable for the account of the Lenders hereunder, (iv) extend any
         scheduled principal, interest or fee payment date, (v) amend this
         Paragraph 8.04, or (vi) amend the definition of Required Lenders, must
         be in writing and signed or approved in writing by all Lenders;

             (b) Any amendment, waiver or consent which increases or decreases
         the Proportionate Share of any Lender must be in writing and signed by
         such Lender; and

             (c) Any amendment, waiver or consent which affects the rights or
         obligations of Agent must be in writing and signed by Agent.

No failure or delay by Agent or any Lender in exercising any right under this
Agreement or any other Credit Document shall operate as a waiver thereof or of
any other right hereunder or thereunder nor shall any single or partial exercise
of any such right preclude any other further exercise thereof or of any other
right hereunder or thereunder. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.

         8.05.  Successors and Assigns.

             (a) Binding Effect. This Agreement and the other Credit Documents
         shall be binding upon and inure to the benefit of Borrower, the
         Lenders, Agent, all future holders of the Notes and their respective
         successors and permitted assigns, except that Borrower may not assign
         or transfer any of its rights or obligations under any Credit
         Document without the prior written consent of Agent and each Lender.
         All references in this Agreement to any Person shall be deemed to
         include all successors and assigns of such Person.

             (b) Participations. Any Lender may at any time sell to one or more
         banks or other financial institutions ("Participants") participating
         interests in any Loan owing to such Lender, any Note held by such
         Lender, any Commitment of such Lender or any other interest of such
         Lender under this Agreement and the other Credit Documents. In the
         event of any such sale by a Lender of participating interests, such
         Lender's obligations under this Agreement shall remain unchanged, such
         Lender shall remain solely responsible for



                                       64
<PAGE>   68
         the performance thereof, such Lender shall remain the holder of its
         Notes for all purposes under this Agreement and Borrower and Agent
         shall continue to deal solely and directly with such Lender in
         connection with such Lender's rights and obligations under this
         Agreement. Any agreement pursuant to which any such sale is effected
         may require the selling Lender to obtain the consent of the Participant
         in order for such Lender to agree in writing to any amendment, waiver
         or consent of a type specified in clause (i), (ii), (iii) or (iv) of
         Subparagraph 8.04(a) but may not otherwise require the Selling Lender
         to obtain the consent of such Participant to any other amendment,
         waiver or consent hereunder. Borrower agrees that if amounts
         outstanding under this Agreement and the other Credit Documents are not
         paid when due (whether upon acceleration or otherwise), each
         Participant shall, to the fullest extent permitted by law be deemed to
         have the right of setoff in respect of its participating interest in
         amounts owing under this Agreement and any other Credit Documents to
         the same extent as if the amount of its participating interest were
         owing directly to it as a Lender under this Agreement or any other
         Credit Documents; provided, however, that no Participant shall
         exercise any rights under this sentence without the consent of Agent,
         (ii) no Participant shall have any rights under this sentence which are
         greater than those of the selling Lender and (iii) such rights of
         setoff shall be subject to the obligation of such Participant to share
         the payment so obtained with all of the Lenders as provided in
         Subparagraph 2.13(b). Borrower also agrees that any Lender which has
         transferred any participating interest in its Commitment or Loans
         shall, notwithstanding any such transfer, be entitled to the full
         benefits accorded such Lender under Paragraph 2.14, Paragraph 2.15, and
         Paragraph 2.16, as if such Lender had not made such transfer.

             (c) Assignments. Any Lender may, at any time, sell and assign to
         any other Lender or to any eligible Assignee (individually, an
         "Assignee Lender") all or a portion of its rights and obligations under
         this Agreement and the other Credit Documents (such a sale and
         assignment to be referred to herein as an "Assignment") pursuant to an
         assignment agreement in the form of Exhibit D (an "Assignment
         Agreement"), executed by each Assignee Lender and such assignor Lender
         (an "Assignor Lender") and delivered to Agent for its acceptance and
         recording in the Register; Provided, however, that:

                 (i) Without the written consent of Agent and, if no Default has
             occurred and is continuing, Borrower (which consent of Agent and
             Borrower shall not be unreasonably withheld), no Lender way make
             any Assignment to any Assignee Lender which is not, immediately
             prior to such Assignment, a Lender hereunder or an Affiliate
             thereof; or



                                       65
<PAGE>   69
                 (ii) Without the written consent of Agent and, if no Default
             has occurred and is continuing, Borrower (which consent of Agent
             and Borrower shall not be unreasonably withheld), no Lender may
             make any Assignment to any Assignee Lender if, after giving effect
             to such Assignment, the Commitment of such Lender or such Assignee
             Lender would be less than Ten Million Dollars ($10,000,000) (except
             that a Lender may make an Assignment which reduces its Commitment
             to zero without the written consent of Borrower and Agent); or

                 (iii) Without the written consent of Agent and, if no Default
             has occurred and is continuing, Borrower (which consent of Agent
             and Borrower shall not be unreasonably withheld), no Lender may
             make any Assignment which does not assign and delegate an equal pro
             rata interest in such Lenders Loans, Commitments and all other
             rights, duties and obligations of such Lender under this Agreement
             and the other Credit Documents and under the Related Lease
             Documents.

         Upon such execution, delivery, acceptance and recording of each
         Assignment Agreement, from and after the Assignment Effective Date
         determined pursuant to such Assignment Agreement, (A) each Assignee
         Lender thereunder shall be a Lender hereunder with a Proportionate
         Share as set forth on Attachment I to such Assignment Agreement (under
         the caption "Proportionate Share After Assignment") and shall have the
         rights, duties and obligations of such a Lender under this Agreement
         and the other Credit Documents, and (B) the Assignor Lender thereunder
         shall be a Lender with a Proportionate Share as set forth on Attachment
         I to such Assignment Agreement (under the caption "Proportionate Share
         After Assignment"), or, if the Proportionate Share of the Assignor
         Lender has been reduced to 0%, the Assignor Lender shall cease to be a
         Lender and to have any obligation to make any Loan; provided, however,
         that any such Assignor Lender which ceases to be a Lender shall
         continue to be entitled to the benefits of any provision of this
         Agreement which by its terms survives the termination of this
         Agreement. Each Assignment Agreement shall be deemed to amend Schedule
         I to the extent, and only to the extent, necessary to reflect the
         addition of each Assignee Lender, the deletion of each Assignor Lender
         which reduces its Proportionate Share to 0% and the resulting
         adjustment of Proportionate Shares arising from the purchase by each
         Assignee Lender of all or a portion of the rights and obligations of an
         Assignor Lender under this Agreement and the other Credit Documents. On
         or prior to the Assignment Effective Date determined pursuant to each
         Assignment Agreement, Borrower, at its own expense, shall execute and
         deliver to Agent, in exchange for the surrendered Note of the Assignor
         Lender thereunder, a new Note to the order of each Assignee Lender
         thereunder (with each new Note to be in



                                       66
<PAGE>   70
         an amount equal to the commitment assumed by such Assignee Lender) and,
         if the Assignor Lender is continuing as a Lender hereunder, a new Note
         to the order of the Assignor Lender (with the new Note to be in an
         amount equal to the Commitment retained by it). Each such new Note
         shall be dated the Closing Date, and each such new Note shall otherwise
         be in the form of the Note replaced thereby. The Notes surrendered by
         the Assignor Lender shall be returned by Agent to Borrower marked
         "replaced". Each Assignee Lender which was not previously a Lender
         hereunder and which is not incorporated under the laws of the United
         States of America or a state thereof shall, within three (3) Business
         Days of becoming a Lender, deliver to Borrower and Agent two duly
         completed copies of United States Internal Revenue Service Form 1001 or
         4224 (or successor applicable form), as the case may be, certifying in
         each case that such Lender is entitled to receive payments under this
         Agreement without deduction or withholding of any United States federal
         income taxes. (Without limiting the generality of any of the preceding
         provisions of this Subparagraph 8.05(c), no Lender may, if Borrower
         shall object in writing, make any Assignment to any Assignee Lender
         that, at the time of such Assignment, (1) has a basis for demanding any
         payment under Subparagraph 2.14 (c) or Subparagraph 2.14 (d) in excess
         of the pro rata amount that then could be demanded thereunder by the
         Lender proposing to make such Assignment or (2) would require Borrower
         to make any payment under Subparagraph 2.15(a) on account of payments
         to such Assignee Lender in excess of the pro rata amount that Borrower
         was then required to make thereunder on account of payments to the
         Lender proposing to make such Assignment.)

             (d) Register. Agent shall maintain at its address referred to in
         Paragraph 8.01 a copy of each Assignment Agreement delivered to it and
         a register (the "Register") for the recordation of the names and
         addresses of the Lenders and the Proportionate shares of each Lender
         from time to time. The entries in the Register shall be conclusive in
         the absence of manifest error, and Borrower, Agent and the Lenders may
         treat each Person whose name is recorded in the Register as the owner
         of the Loans recorded therein for all purposes of this Agreement. The
         Register shall be available for inspection by Borrower or any Lender at
         any reasonable time and from time to time upon reasonable prior notice.

             (e) Registration. Upon its receipt of an Assignment Agreement
         executed by an Assignor Lender and an Assignee Lender (and, to the
         extent required by Subparagraph 8.05(c), by Borrower and Agent)
         together with payment to Agent by Assignor Lender of a registration and
         processing fee of $2,500, Agent shall (i) promptly accept such
         Assignment Agreement and (ii) on the Effective Date determined pursuant
         thereto record the information contained therein in the



                                       67
<PAGE>   71
         Register and give notice of such acceptance and recordation to the
         Lenders and Borrower. Agent may, from time to time at its election,
         prepare and deliver to the Lenders and Borrower a revised Schedule I
         reflecting the names, addresses and respective Proportionate Shares of
         all Lenders then parties hereto.

             (f) Confidentiality. Subject to Subparagraph 8.11(g), Agent and the
         Lenders may disclose the Credit Documents and any financial or other
         information relating to Borrower or any Subsidiary to each other or to
         any potential Participant or Assignee Lender.

         8.06. Setoff. In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, with the prior consent of
Agent but without prior notice to or consent of Borrower, any such notice and
consent being expressly waived by Borrower to the extent permitted by applicable
law, upon the occurrence and during the continuance of an Event of Default, to
set-off and apply against the Obligations any amount owing from such Lender to
Borrower. The aforesaid right of set-off may be exercised by such Lender against
Borrower or against any trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver or execution, judgment or attachment
creditor of Borrower or against anyone else claiming through or against Borrower
or such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off may not have been exercised
by such Lender at any prior time. Each Lender agrees promptly to notify Borrower
after any such set-off and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such set-off and
application.

         8.07. No Third Party-Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

         8.08. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability
of the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

         8.09. Jury Trial. EACH OF BORROWER, THE LENDERS AND AGENT, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT.



                                       68
<PAGE>   72
         8.10. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

         8.11. Confidentiality. Neither Agent nor any Lender shall disclose to
any Person any information with respect to Borrower or any of its Subsidiaries
which is furnished pursuant to this Agreement, except that Agent or any Lender
may disclose any such information (a) to its own directors, officers, employees,
auditors, counsel and other advisors and to its Affiliates; (b) to any other
Lender or Agent; (c) which is otherwise available to the public; (d) if required
or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over such Lender
or Agent; (e) if required or appropriate in response to any summons or subpoena
or in connection with any litigation; (f) to comply with any Requirement of Law
applicable to such Lender or Agent; (g) to any Participant or Assignee Lender or
any prospective Participant or Assignee Lender, provided that such Participant
or Assignee Lender or prospective Participant or Assignee Lender agrees to be
bound by this Paragraph 8.11; or (h) otherwise with the prior consent of
Borrower; provided, however, that any disclosure made in violation of this
Agreement shall not affect the obligations of Borrower and its Subsidiaries
under this Agreement and the other Credit Documents.


                       [The first signature page follows.]








                                       69
<PAGE>   73
        IN WITNESS WHEREOF, Borrower, the Lenders and Agent have caused this
Agreement to be executed as of the day and year first above written.

BORROWER:                         NOVELLUS SYSTEMS, INC.

                                        By: /s/ JOHN CHENAULT
                                           ----------------------------------
                                           Name: John Chenault
                                                -----------------------------
                                           Title: Executive V.P., Operations
                                                 ----------------------------


AGENT:                                     ABN AMRO BANK N.V.

                                        By: /s/ ROBIN S. YIM
                                           ----------------------------------
                                           Name: Robin S. Yim
                                                -----------------------------
                                           Title: Group Vice President
                                                 ----------------------------

                                        By: /s/ ROBERT N. HARTINGER
                                           ----------------------------------
                                           Name:  Robert N. Hartinger
                                                -----------------------------
                                           Title: Senior Vice President
                                                 ----------------------------


LENDERS:                                   ABN AMRO BANK N.V.

                                        By: /s/ ROBIN S. YIM
                                           ----------------------------------
                                           Name: Robin S. Yim
                                                -----------------------------
                                           Title: Group Vice President
                                                 ----------------------------

                                        By: /s/ ROBERT N. HARTINGER
                                           ----------------------------------
                                           Name:  Robert N. Hartinger
                                                -----------------------------
                                           Title: Senior Vice President
                                                 ----------------------------





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<PAGE>   74
The following exhibits / schedules to the Credit Agreement have been omitted.
Such exhibits / schedules will be submitted to the Securities and Exchange
Commission upon request:

Schedules

        I         Lenders
        1.01      Pricing Grid
        3.01      Initial Conditions Precedent
        4.01(g)   Litigation
        4.01(q)   Subsidiaries
        5.02(a)   Existing Indebtedness
        5.02(b)   Existing Liens
        5.02(e)   Existing Investments

Exhibits
        
        A         Notice of Borrowing (2.02)
        B         Notice of Interest Period Selection (2.04(b))
        C         Note (2.11(a))
        D         Assignment Agreement (8.05(c))


                                       71