SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  FORM 10-K/A

                           AMENDMENT TO CURRENT REPORT

(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934 (FEE REQUIRED)
                    For the Fiscal Year ended June 29, 1996.
                                       OR
( )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 or 15 (d)  OF THE  SECURITIES
     EXCHANGE  ACT OF 1934 (NO FEE  REQUIRED)  For the  transition  period  from
     _____________ to _____________

Commission File Number:  1-9716

                              DONNELLY CORPORATION
             (Exact name of registrant as specified in its charter)

          Michigan                                        38-0493110
(State of other jurisdiction of
incorporation or organization)               (IRS Employer Identification No.)

         414 East Fortieth Street, Holland, Michigan          49423
          (Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code              (616) 786-7000

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class                  Name of each exchange on which registered
Class A Common Stock                           American Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act:              None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes __X__   No_____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of  registrant's  knowledge in definitive  proxy or information  statements
incorporated  by reference in Part III of the Form 10-K or any amendment to this
Form 10-K. __X__


The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
registrant was $102,811,298 as of August 30, 1996.

Number of  shares  outstanding  of each of the  registrant's  classes  of common
stock, as of August 30, 1996.

     4,261,178 shares of Class A Common Stock par value, $.10 per share
     3,575,959 shares of Class B Common Stock par value, $.10 per share
<PAGE>
ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
           FINANCIAL CONDITION

RESULTS OF OPERATIONS

General

Donnelly  Corporation's  (Company)  net  sales and net  income  are  subject  to
significant  quarterly   fluctuations   attributable   primarily  to  production
schedules of the Company's major automotive customers.  These same factors cause
quarterly  results to  fluctuate  from year to year.  The  comparability  of the
Company's  results  on a period to  period  basis  may also be  affected  by the
Company's implementation of new joint ventures, alliances and acquisitions.

Comparison of 1996 to 1995

The Company's net sales  increased  14.7% to $439.6 million in 1996, from $383.3
million in 1995. Net sales for the Company's  domestic  operations  increased by
approximately  11% despite a 3% decrease in North  American  car and light truck
production,  the loss of  Saturn  modular  window  business  (which  represented
approximately  5% of the Company's net sales in 1995) and price  pressures  from
the Company's major automotive customers. Price decreases, however, did not have
a material impact on the Company's  increase in net sales for 1996. The increase
in net sales  remained  strong  due to higher  sales of modular  window  systems
(particularly for the new Chrysler Caravan/Voyager minivans),  lighting and trim
products,  complete exterior mirror products and door handles. Net sales for the
Company's  foreign  operations  increased by approximately 54% from the previous
year due to the  introduction of modular window programs in Langres,  France for
the Chrysler Caravan/Voyager minivan and Jeep Cherokee and stronger sale for the
Company's  electrochromic  mirror product line. The Company's  Irish  operations
experienced  significant  pricing  pressures during the year from competition in
Eastern   Europe  and  Asia  slightly   offsetting  the  higher  sales  volumes.
Consolidated net sales remained  relatively strong throughout the year, but were
exceptionally  strong during the fourth quarter with an increase of 24% over the
fourth quarter of 1995.

Gross profit margin  decreased to 18.6% of net sales in 1996,  from 21.5% of net
sales in 1995.  The gross profit  margins were  adversely  impacted in the first
half  of  the  year  by  the  start-up  of  various  modular  window   programs,
particularly for the Chrysler Caravan/Voyager minivan, and the implementation of
a new paint line in the Company's Newaygo facility. Domestic gross profit margin
performance was also significantly  impacted by supplier technical  difficulties
on a new business program that resulted in significant  additional  engineering,
production  and other  costs  that  negatively  impacted  gross  margins by $2.2
million. Although this problem was largely due to factors not directly under the
Company's  control,  the issue was resolved in a timely and cooperative way that
provided  an  uninterrupted  source  of  supply to the  customer.  Finally,  the
Company's  foreign  operations  experienced  lower gross profit  margins in 1996
compared  to  1995  due to  pricing  pressures  and  operating  expenses  at the
Company's Irish operations.

Selling,  general and  administrative  expenses  were 8.7% of net sales in 1996,
down from 11.8% of net sales in 1995.  These  costs were  significantly  reduced
primarily  as a  result  of the  restructuring  plan  implemented  in  1995  and
continued  commitment  to achieve  higher sales levels  without a  proportionate
increase in these expenses.  In addition, a patent settlement recognized in 1996
resulted in a reduction of these expenses by 1.3% of net sales.

Research and development  expenses for 1996 were 6.3% of net sales,  compared to
5.9% of net sales in 1995.  The increase in research and  development  costs was
due to the technical  difficulties  on a new business  program and costs for the
design and  development  of new window,  mirror,  door handle and interior  trim
programs.
<PAGE>
A  restructuring  charge of $2.4 million was  recorded in the fourth  quarter of
1996  related  to the  write-down  of  certain  assets  and the  closure  of the
Company's  manufacturing  facility in Mt. Pleasant,  Tennessee.  The decision to
close the  Tennessee  facility was based on a number of factors that  included a
major loss of business during 1995 and the inability to attract  significant new
business for the plant.  These costs included accruals for severance and related
employee support programs and write-down of certain assets removed from service.
The  majority  of these  liabilities  were paid or settled  during the first six
months of 1997.

The Company's  operating income decreased from 4.4% of net sales in 1995 to 3.1%
of net sales in 1996. The Company's  domestic  operating  income  decreased from
5.7% of net  sales  in 1995 to 4.1% of net  sales in  1996.  Domestic  operating
income  was  adversely  effected  by the  start-up  of  various  modular  window
programs,   the   implementation  of  a  new  paint  line,   supplier  technical
difficulties on a new business  program,  higher research and development  costs
and  a   restructuring   charge   relating  to  the  closure  of  the  Company's
manufacturing  facility in Mt. Pleasant,  Tennessee.  Partially offsetting these
variances was the recognition of a $2.3 million patent  settlement in the fourth
quarter of 1996.  Foreign  operating  losses  improved from 7.8% of net sales in
1995 to 3.8% of net sales in 1996. The improvement  resulted  primarily from the
Company's subsidiary in Mexico operating at normal production levels in 1996. In
1995, this subsidiary experienced start-up losses. The Company's Irish operation
experienced  lower  operating  margins  due  to  pricing  pressures  and  higher
operating expenses to support new business programs.

Interest  expense  increased to $8.1 million in 1996, from $5.0 million in 1995.
The increase  over 1995  resulted  from higher  borrowing  levels to support the
Company's  investment in and advances to Donnelly Hohe, which was then an equity
affiliate of the Company,  and to support the Company's capital expenditures and
higher  working  capital.  The Company has advanced $28 million to Donnelly Hohe
under a subordinated loan agreement,  $14.3 million in 1995 and $13.7 million in
1996.  Amounts advanced to Donnelly Hohe under the  subordinated  loan agreement
provide for 10%  interest  per annum with no  principal  payments  due until its
maturity on April 1, 1998.  The advances  were  financed  through the  Company's
existing borrowing  agreements.  The increase in interest income realized by the
Company was a result of the interest  charged on the advances to Donnelly  Hohe,
which is presented net of amounts  eliminated from equity earnings in accordance
with generally accepted accounting principles.

Royalty  income was $5.2 million in 1996 compared to $3.8 million in 1995.  This
increase  resulted from royalty income associated with the sale of the Appliance
Business in 1995.  Royalty  payments  associated  with the sale of the Appliance
Business in 1995 concluded in the fourth quarter of 1996.

Equity in earnings of affiliated  companies was $0.1 million in 1996 compared to
$0.4 million in 1995.  Equity earnings from Donnelly Hohe, after the elimination
of  intercompany  interest,  were offset by losses at Applied Films  Corporation
("AFC"), the Company's joint venture in Boulder Colorado,  and Vision Group. The
combined impact on net income from the Company's  non-automotive  joint ventures
was a loss of $1.5 million in 1996,  compared to income of $0.1 million in 1995.
AFC's  results  were  adversely  affected by a downturn in the market for coated
glass  used in the  production  of  liquid  crystal  displays.  The  Company  is
currently exploring opportunities to exit this business.  Vision Group continued
to experience start-up losses during 1996.

The  Company  reported  net  income of $8.5  million in 1996  compared  to $11.0
million  for 1995.  Net  income in 1996  included  $1.1  million  of net  income
associated  with the patent and license  settlement  and a $1.4 million net loss
for  restructuring  costs,  while  1995  included  $2.0  million  of net  income
associated with the gain on the sale and restructuring of certain non-automotive
businesses.  Positively  impacting the Company's domestic operations were higher
sales volumes, higher royalty income, lower selling,  general and administrative
costs as a percentage  of net sales and a patent and license  settlement  with a
competitor.  These  improvements  were offset by higher than  expected  start-up
costs during the first half of the year, technical difficulties during the third
<PAGE>
quarter on a new business  program which resulted in a reduction of net earnings
by $1.2 million, higher research and development costs as a percent of net sales
and  restructuring  charges taken in the fourth quarter.  The Company's  foreign
operations experienced lower net income at the Company's subsidiaries in Ireland
in addition to start-up losses at Langres,  France. The Company's net income was
also  lower  in  1996  due  to  the  recognition  of a  $1.5  million  loss  for
non-automotive affiliated companies.

Comparison of 1995 to 1994

Donnelly's  net sales were $383.3  million in 1995,  an increase of 14% over the
$337.3 million of net sales in 1994. The Company's  domestic net sales increased
by approximately 9% while automotive  production  increased 5% in 1995 over 1994
production  levels.  New business in exterior  mirrors,  door handles,  interior
systems and modular systems, along with the strong automotive production levels,
all contributed to the stronger sales level. The Company continues to experience
pricing pressures from its automotive customers.  Price decreases,  however, did
not have a material impact on the Company's  increase in net sales for 1995. The
Company's  foreign  net sales  were  higher  due to  twelve  months of net sales
included in 1995 for Donnelly  Vision Systems Europe  ("DVSE"),  compared to two
months in 1994. The Company acquired DVSE in April 1994.

Gross  profit  margin was 21.5% in 1995  compared  to 21.8% in 1994.  Continuous
improvement  programs being run throughout the Company,  along with higher sales
volumes,   helped  the  Company  offset  price   pressures  from  customers  and
significant increases in raw material costs.

Selling, general and administrative expenses were 11.8% of net sales in 1995, an
increase  from 11.3% of net sales in 1994.  The  increase was  primarily  due to
patent  litigation costs that were  significantly  higher in 1995 as the Company
pursued actions to protect its intellectual property.

Research and  development  expenses  were 5.9% of net sales in 1995  compared to
6.3% of net sales in 1994.

In the second quarter of 1995, the Company  implemented a restructuring  plan to
focus on its automotive businesses.  The restructuring plan included the sale of
the Company's  appliance  business,  the sale of the heavy truck mirror business
and the liquidation of the Company's investment in OSD Envizion, a joint venture
engaged in the manufacture of welding helmet shields. The Company received total
proceeds of $14.2 million associated with the restructuring of these businesses,
which had a combined net book value of $6.5 million. In addition,  restructuring
costs of $3.0 million were also recognized consisting of a severance program and
other  expenses  associated  with  the  plan.  The  severance  program  included
twenty-five personnel,  primarily middle and senior managers of the Company. The
spending  for these  costs was  essentially  completed  by the end of 1995.  The
restructuring of the non-automotive businesses resulted in a pretax gain of $4.7
million. These non-automotive businesses represented an insignificant portion of
the Company's operations for each period reported.

The Company  also  restructured  certain  automotive  operations  resulting in a
charge of $2.4 million in the second  quarter,  primarily for the  write-down of
operating  assets due to the loss of Saturn's  business at D&A Technology,  Inc.
("D&A"),  the  Company's  joint venture with Asahi Glass  Company.  As a result,
minority  interest  in net  income  of  subsidiaries  was $0.4  million  in 1995
compared to $0.8 million in 1994. D&A  represented 5% and 8%,  respectively,  of
the Company's net sales and net income in 1995.

The Company's  operating income increased from 3.9% of net sales in 1994 to 4.4%
of net sales in 1995. The Company's  domestic  operating  income  increased from
5.1% of net  sales  in 1994 to 5.7% of net  sales in  1995.  Domestic  operating
margins were higher due to higher sales, lower research and development expenses
as a percent of net sales and the recognition of a gain on the  restructuring of
certain  businesses.  Foreign operating
<PAGE>
loss improved from 17.7% of net sales in 1994 to 7.8% of net sales in 1995.  The
improvement  resulted  primarily from the  restructuring  of the Company's Irish
subsidiary  in 1994.  In the fourth  quarter  of 1994,  the  Company  recognized
restructuring  costs of $1.2  million  to cover a  severance  program  and other
expenses at Donnelly  Mirrors  Limited.  Foreign  operating income also improved
despite start-up expenses  incurred at the Company's  subsidiaries in Mexico and
France.  These expenses were  approximately 5.0% to foreign segment net sales in
1995.

Interest  expense  increased to $5.0 million in 1995, from $3.5 million in 1994,
due to higher  interest  rates and to increased  borrowing to support  increased
capital spending.

Royalty  income was $3.8 million in 1995  compared to $1.4 million in 1994.  The
increase resulted  primarily from royalty income associated with the sale of the
Appliance Business in 1995.  Included in other income was a $0.5 million gain on
the sale of a warehouse facility in the fourth quarter of 1995.

Equity in earnings of  affiliated  companies  increased to $0.4 million in 1995,
from a loss of $0.1  million  in  1994.  Improved  earnings  at AFC and a slight
profit from  Donnelly  Hohe for the two month period  ending May 31, 1995,  more
than offset start-up costs at Vision Group.

The Company had net income of $11.0 million in 1995, compared to $7.3 million in
1994.  The  increase  in  net  income  was  the  result  of a  restructuring  of
non-automotive businesses,  higher sales volumes, lower research and development
costs as a percentage of net sales,  higher royalty  income and improved  equity
earnings in  affiliated  companies.  Results  from foreign  operations  improved
slightly,  as  improvements  in Ireland  exceeded  start-up losses in Mexico and
France.

ACQUISITIONS AND INVESTMENT IN AFFILIATES

In the fourth  quarter of 1996,  the Company  formed a 50-50 joint  venture with
Shanghai Fu Hua Glass  Company,  Ltd. to produce  framed glass  products for the
Asian  automotive  industry.  Shanghai  Fu Hua Glass  Company  is itself a joint
venture  between Ford Motor Company and Shanghai Yao Hua Glass Works.  The joint
venture will have its  equipment  and  processes in place by September  1996 and
will begin  manufacturing  encapsulated  and framed glass products by the end of
1997.  Also in the fourth quarter,  the Compan formed Donnelly  Eurotrim Ltd., a
100% owned subsidiary organized under the laws of Ireland, to offer our interior
lighting and overhead trim products for the European market.

During 1996 and 1995,  VVL's  parent,  VISION Group,  PLC (VISION),  sold common
shares  in a  private  placement  and  through  public  offerings  reducing  the
Company's  ownership interest from 40% to 30.4%. The Company's equity in the net
proceeds  of these sales is  reflected  as an  increase  in  additional  paid-in
capital in the accompanying financial statements.  The aggregate market value of
the  Company's  investment  in  VISION,  based on the  quoted  market  price for
VISION's  common  shares,  which are  listed on the Londo  Stock  Exchange,  was
approximately $44 million at June 29, 1996. The Company's  investment in the net
assets of VISION was $4.0 million at June 29, 1996.

In April  1995,  the Company  acquired an interest in Hohe GmbH & Co. KG,  since
renamed  Donnelly  Hohe  GmbH  &  Co.  KG  (Donnelly  Hohe),  a  German  limited
partnership  with  operations  in Germany  and Spain.  Donnelly  Hohe,  based in
Collenberg,  Germany,  serves  many of the main  auto  producers  in  Europe  in
exterior automotive mirrors, interior mirrors, door handles, automotive tooling,
and electronic components related to mirror systems.

The Company acquired 48% of the controlling general partnership  interest and 66
2/3% of the limited
<PAGE>
partnership  interest for $3.6 million.  Additionally,  the Company has advanced
$28 million to Donnelly Hohe under a subordinated loan agreement,  $14.3 million
in 1995 and $13.7 million in 1996.  Amounts  advanced to Donnelly Hohe under the
subordinated loan agreement provide for 10% interest per annum with no principal
payments  due  until its  maturity  on April 1,  1998.  In  connection  with the
Company's acquisition of the Donnelly Hohe interest,  refinancing and additional
loans of  approximately  $70 million were  provided to Donnelly  Hohe by several
banks.

The terms of the transaction allow Donnelly to purchase the remaining  ownership
interest in Donnelly Hohe through various options ranging from $3 million to $10
million. The remaining owners have an option to require the Company to buy their
interests  at any time based upon a formula that results in a price of up to $10
million.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  current ratio was 2.0 and 1.7 at June 29, 1996 and July 1, 1995,
respectively.  Working  capital was $63.5 million at June 29, 1996,  compared to
$40.5 million at July 1, 1995.  This  increase  included an increase in accounts
receivables  to support higher sales and higher  customer  tooling and increased
inventories  to support new business  programs  reaching full  production in the
first  quarter of 1997.  Accounts  receivable  were also  higher due to the year
ending on June 29 and the timing of customer  payments.  The Company's  accounts
receivable balance as a percent to sales increased from 13.3% at July 1, 1995 to
16.8% at June 29, 1996. The Company's  North American  customers pay the Company
on  pre-established  payment  dates  ranging  from  the 25th to the 30th of each
month.  Therefore,  a number of customer  payments were not received by the June
29, 1996 balance sheet date,  accounting for the increase in accounts receivable
compared to July 1, 1995.

Capital  expenditures  for 1996 were $20.6 million compared to $29.2 million for
1995 and $35.3 million for 1994. Capital  expenditures were lower in 1996 due to
the completion of the building additions required the last two years in Langres,
France and Newaygo,  Michigan to support new business programs,  the transfer of
the outside  mirror glass  product line to Mexico and the  consolidation  of two
older  interior  mirror  operations  into a new  facility in Holland,  Michigan.
Capital  expenditures  in 1996  included  costs for  equipment  to  support  new
business  for  complete  exterior  mirrors,  door  handles  and  modular  window
encapsulation,  bonding and  hardware  programs.  The Company  does not have any
material  commitments for capital  expenditures  other than those arising out of
the normal course of business, which were approximately $9.0 million at June 29,
1996.

In the second  quarter of 1996,  the Company  amended its revolving  credit loan
agreement by  increasing  the amount to $80 million and  extending  the maturity
date to November 2002. The revolving credit agreement had borrowings  against it
of $35.4 million at June 29, 1996. In November 1995, the Company issued a senior
note of $20.0 million with an insurance company.  Principal payments commence in
2001 until  maturity in 2006. The Company  anticipates  completing a $50 million
asset  securitization  transaction by the end of the first quarter of 1997. This
will  be  utilized  by the  Company  and  Donnelly  Hohe to  provide  additional
financing availability and reduce interest and other costs.

The Company  utilizes  interest  rate swaps and foreign  exchange  contracts  to
manage exposure to fluctuations in interest and foreign currency exchange rates.
The risk of loss to the  Company  in the  event of  nonperformance  by any party
under these agreements is not material.

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, the Financial  Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets
<PAGE>
to be  Disposed  Of." The Company is  required  to adopt this  statement  by its
fiscal year ending in 1997.  The new  statement  requires  the Company to review
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate  that the carrying  amount of an asset may not be  recoverable  through
future net cash flows  generated by the assets.  The Company does not expect the
adoption of this statement to have a material  impact on its financial  position
or results of operations.

In October  1995,  the FASB  issued SFAS No. 123,  "Accounting  for  Stock-Based
Compensation."  SFAS No. 123 allows  companies  to continue to account for their
stock-based  compensation  plans in  accordance  with APB  Opinion  No.  25, but
encourages  the  adoption  of a new  accounting  method to  record  compensation
expense based on the estimated fair value of employee stock-based  compensation.
Companies electing not to follow the new fair value based method are required to
provide  expanded  footnote  disclosures,  including  pro forma net  income  and
earnings per share, determined as if the company had adopted the new method. The
Statement is required to be adopted by the Company's fiscal year ending in 1997.
Management intends to continue to account for its stock-based compensation plans
in accordance with APB Opinion No. 25 and provide the  supplemental  disclosures
as required by SFAS No. 123, beginning in 1997.

No other recently  issued  accounting  standards are expected to have a material
impact on the Company.
<PAGE>
ITEM 8.                            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

DONNELLY CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
COMBINED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>                                                
                                                            June 29,     July 1,       July 2,
In thousands, except share data           Year ended         1996         1995           1994
----------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>          <C>
Net sales ............................................   $ 439,571    $ 383,340    $ 337,262
Cost of sales ........................................     357,830      300,772      263,630
                                                                                  
                                    Gross profit......      81,741       82,568       73,632
Operating expenses:
Selling ..............................................       8,239        6,538        6,194
Administrative and general ...........................      29,884       38,529       31,771
Research and development .............................      27,728       22,733       21,362
Restructuring charges (gain) .........................       2,399       (2,265)       1,184
                                                                                 
Total operating expenses .............................      68,250       65,535       60,511
                                                                                 
                                 Operating income.....      13,491       17,033       13,121
                                                                                 
Non-operating (income) expenses:
Interest expense .....................................       8,102        5,010        3,528
Royalty income .......................................      (5,239)      (3,774)      (1,370)
Interest income ......................................      (1,017)        (514)        (153)
Other (income) expenses, net .........................        (704)        (512)         108
                                                                                
Non-operating expenses ...............................       1,142          210        2,113
                                                                                
Income before taxes on ...............................      12,349       16,823       11,008
  income

Taxes on income ......................................       4,191        5,795        3,334
                                                                           
Income before minority
  interest and
  equity earnings ....................................       8,158       11,028        7,674
Minority interest in net (income) loss of ............         186         (371)        (825)
  subsidiaries
Equity in earnings (losses) of affiliated ............         110          352         (104)
  companies
                                                                            
Income before cumulative effect of change in
  accounting principle ...............................       8,454       11,009        6,745
Cumulative effect of adopting SFAS No. 109 ...........        --           --            513
                                                                           
Net income ...........................................   $   8,454    $  11,009    $   7,258
                                                                      
Per share of common stock:
Income before cumulative effect of change in
     accounting principle ............................   $    1.08    $    1.42    $    0.87
Cumulative effect of adopting SFAS No. 109 ...........        --           --           0.07
                                                                         
Income per share of common stock .....................   $    1.08    $    1.42    $    0.94
</TABLE>                                                       
The accompanying notes are an integral part of these statements.
<PAGE>
DONNELLY CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
COMBINED CONSOLIDATED BALANCE SHEETS
<TABLE>
                                                                                         June 29,            July 1,
In thousands, except share data                                                            1996               1995
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>          <C>
ASSETS
Current assets:
Cash and cash equivalents ...............................................................   $   1,303    $   5,224
Accounts receivable, less allowance of $571 and $575 ....................................      73,658       50,866
Inventories .............................................................................      24,228       22,042
Customer tooling to be billed ...........................................................      19,955       17,357
Prepaid expenses ........................................................................       5,639        2,120
Deferred income taxes ...................................................................       1,912        2,197
                                                                                            ---------    ---------
                                            Total current assets ........................     126,695       99,806
                                                                                            ---------    ---------
Property, plant and equipment:
Land ....................................................................................       3,327        3,329
Buildings ...............................................................................      33,000       32,556
Machinery and equipment .................................................................     112,761       98,149
Construction in progress ................................................................       8,073       16,544
                                                                                            ---------    ---------
                                                                                              157,161      150,578
Less accumulated depreciation ...........................................................      57,397       56,642
                                                                                            ---------    ---------
                                            Net property, plant and equipment ...........      99,764       93,936
Investments in and advances to affiliates ...............................................      37,932       25,246
Other assets ............................................................................       7,101        4,800
                                                                                            ---------    ---------
                                            Total assets ................................   $ 271,492    $ 223,788
                                                                                            =========    =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................................   $  44,349    $  42,248
Current maturities of long-term debt ....................................................         159          428
Accruals:
Compensation ............................................................................       7,264        6,671
Taxes ...................................................................................       4,705        1,974
Other ...................................................................................       6,736        7,983
                                                                                            ---------    ---------
                                            Total current liabilities ...................      63,213       59,304
                                                                                            ---------    ---------
Long-term debt, less current maturities .................................................     101,757       66,374
Postretirement plans ....................................................................      12,026        7,645
Deferred income taxes and other .........................................................       5,644        5,281
                                                                                            ---------    ---------
                                            Total liabilities ...........................     182,640      138,604
                                                                                            ---------    ---------
Minority interest .......................................................................        --          2,284
Shareholders' equity:
Preferred stock, 7 1/2% cumulative, $10 par: shares
                      authorized 250,000, issued 53,112 .................................         531          531
Common stocks:
                      Class A, $.10 par; shares authorized
                                   30,000,000, issued 4,248,814 and 4,183,287 ...........         425          418
                      Class B, $.10 par; shares authorized
                                   15,000,000, issued 3,582,198 and 3,582,915 ...........         358          358
                      Donnelly Export Corporation, $.01 par; shares
                                   authorized 600,000, issued 409,397 and ...............           4            4
                                                                                 
Additional paid-in capital ..............................................................      25,158       23,522
Cumulative foreign currency translation adjustment ......................................        (771)         154
Retained earnings .......................................................................      63,147       57,913
                                                                                            ---------    ---------
                                            Total shareholders' equity ..................      88,852       82,900
                                                                                            ---------    ---------
                                            Total liabilities and shareholders' equity ..   $ 271,492    $ 223,788
                                                                                            =========    =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DONNELLY CORPORATION AND
SUBSIDIARIES
----------------------------------------------------------------------------
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
                                                                                      June 29,         July 1,          July 2,
In thousands                                                      Year ended            1996            1995              1994
------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S>                                                                                    <C>            <C>               <C>
Net income                                                                             $8,454         $11,009           $7,258
Adjustments to reconcile net income to net
cash from
     (for) operating activities:
Depreciation and amortization                                                          12,984          11,184            9,771
Deferred pension cost and postretirement                                                4,934           2,742            3,941
benefits
Deferred income taxes                                                                  (2,386)         (2,108)          (1,432)
Minority interest income (loss)                                                          (186)            371              825
Equity in (earnings) losses of affiliated                                               1,160            (453)              28
companies
Cumulative effect of change in accounting                                                  --              --             (513)
principle
Restructuring charges (gain)                                                            2,399          (2,265)           1,184
Changes in operating assets and liabilities,
net of
effects of sale of businesses:
Accounts receivable                                                                   (22,792)         (3,736)          (9,228)
Inventories                                                                            (2,186)         (2,841)          (6,074)
Prepaid expenses and other current assets                                              (6,117)         (3,304)          (3,352)
Accounts payable and other current liabilities                                          3,134           6,320           13,629
Other                                                                                     189             131              375
                                                                                 ---------------------------------------------
                                      Net cash from (for)                                (413)         17,050           16,412
                                      operating activities
                                                                                 =============================================
INVESTING ACTIVITIESCapital expenditures                                              (20,585)        (29,154)         (35,329)
Investments in and advances to equity affiliates                                      (13,966)        (18,824)              --
Purchase of minority interest                                                          (2,100)             --               --
Proceeds from sale of businesses                                                           --          14,200               --
Proceeds from sale-lease back                                                              --          10,513               --
Change in unexpended bond proceeds                                                        316          (1,015)           1,093
Other                                                                                    (854)           (601)             847
                                                                                 ---------------------------------------------
                                      Net cash for investing                          (37,189)        (24,881)         (33,389)
                                      activities
                                                                                 =============================================
FINANCING ACTIVITIES
Proceeds from long-term debt                                                           36,195          15,000           21,362
Repayments on long-term debt                                                               --          (1,764)          (2,018)
Resources provided by minority interest                                                    --             491               --
Common stock issuance                                                                     706             478              304
Dividends paid                                                                         (3,220)         (2,524)          (2,511)
                                                                                 ---------------------------------------------
                                      Net cash from financing                          33,681          11,681           17,137
                                      activities
                                                                                 =============================================
                                                               
Increase (decrease) in cash and cash equivalents                                      (3,921)           3,850              160

Cash and cash equivalents, beginning of year                                           5,224            1,374            1,214
                                                                                 ---------------------------------------------
Cash and cash equivalents, end of year                                                $1,303           $5,224           $1,374
                                                                                 =============================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
DONNELLY CORPORATION AND SUBSIDIARIES
--------------------------------------------------------------------------------
COMBINED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
                                                                       Common stock                         Cumulative
                                                            _______________________________                 foreign
                                                                                   Donnelly    Additional   currency
                                                Preferred                           Export      paid-in     translation     Retained
                                                  stock     Class A    Class B    Corporation   capital     adjustment      earnings
<S>                                              <C>        <C>         <C>           <C>       <C>          <C>            <C>
Balance, July 4, 1993 .......................... $  531     $ 413      $ 358         $  4        $20,428    ($   869)       $44,681
Net income ......................................                                                                             7,258
Foreign currency translation
     adjustment .................................                                                                229
Cash dividends declared:
Preferred stock-$.75 per share ..................                                                                               (40)
Common stock:
     Class A-$.32 per share .....................                                                                            (1,323)
     Class B-$.32 per share .....................                                                                            (1,148)
Common stock issued under
     employee benefit plans .....................               2                                    302

Balance, July 2, 1994 ...........................$  531     $ 415      $ 358          $ 4       $ 20,730     ($ 640)        $49,428
Net income ......................................                                                                            11,009
Foreign currency translation
     adjustment .................................                                                               794
Cash dividends declared:
  Preferred stock-$.75 per share ................                                                                               (40)
Common stock:
     Class A-$.32 per share .....................                                                                            (1,337)
     Class B-$.32 per share .....................                                                                            (1,147)
Common stock issued under
     employee benefit plans .....................               3                                    475
Change in investment in Vision
     Group PLC ..................................                                                  2,317
                                                                                                                             ------
Balance, July 1, 1995 ...........................   531       418        358            4         23,522        154          57,913
Net income ......................................                                                                             8,454
Foreign currency translation
     adjustment .................................                                                              (925)
Cash dividends declared:
     Preferred stock-$.75 per share..............                                                                               (40)
Common stock:
     Class A-$.40 per share .....................                                                                            (1,690)
     Class B-$.40 per share .....................                                                                            (1,490)
Common stock issued under
     employee benefit plans .....................               7                                    699
Change in investment in Vision
     Group PLC ..................................                                                    937
                                                                                                                              ------
Balance, June 29, 1996 ..........................   531       425        358            4         25,158        (771)        63,147
                                                                                                                             ======
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO THE COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION AND CONSOLIDATION

The combined consolidated  financial statements include the accounts of Donnelly
Corporation,  Donnelly Export  Corporation  and all majority  owned,  controlled
subsidiaries  (the  Company)  after  all  significant   intercompany   balances,
transactions and shareholdings  have been eliminated.  Investments in 20% to 50%
owned  companies  are  accounted  for using  the  equity  method of  accounting.
Investments in affiliates representing less than 20% ownership are accounted for
under the cost  method.  Cost in excess of net assets of acquired  companies  is
being amortized on a straight-line basis over a 15 year period.

Voting control of Donnelly Corporation and Donnelly Export Corporation is vested
in the same  shareholders  and the  corporations  are under  common  management.
Because  of  these  relationships,  the  accounts  of the two  corporations  are
included in the financial statements as if they were a single entity.


USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.


FOREIGN CURRENCY TRANSLATION

Except for the Company's  subsidiary in Mexico, whose functional currency is the
United  States  dollar,  financial  statements  of  international  companies are
translated  into United States dollar  equivalents at exchange rates as follows:
(1) balance sheet accounts at year-end rates; and (2) income statement  accounts
at  weighted  average  monthly  exchange  rates  prevailing   during  the  year.
Translation   gains  and  losses  are  reported  as  a  separate   component  of
shareholders'  equity. For the Company's  subsidiary in Mexico,  transaction and
translation  gains or losses are reflected in net income for all accounts  other
than  intercompany  balances  of a  long-term  investment  nature  for which the
translation   gains  or  losses  are   reported  as  a  separate   component  of
shareholders' equity.  Foreign currency transaction gains and losses included in
other income are not material.


REVENUE RECOGNITION

The  Company's  primary  source of  revenue  is  generated  from the sale of its
products. The Company recognizes revenue when its products are shipped.


CASH AND CASH EQUIVALENTS

Cash equivalents  include all highly liquid investments with a maturity of three
months or less when purchased.
<PAGE>
INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined by the
last-in,  first-out  (LIFO) method,  except for inventories of the  consolidated
subsidiaries which are valued using the first-in, first-out (FIFO) method.


CUSTOMER TOOLING TO BE BILLED

Customer  tooling  to be  billed  represents  costs  incurred  on  behalf of the
Company's customers.  These costs are recoverable at the time of tool completion
and approval,  or are recovered in the program's  piece price over the program's
life, not to exceed a period of three years.


PROPERTY, PLANT AND EQUIPMENT

Property,  plant and  equipment  are stated at cost.  Depreciation  is  provided
primarily  by the  straight-line  method.  Depreciation  is  computed  over  the
estimated useful lives of the assets as follows:

                                   Years
Buildings........................ 10 to 40
Machinery and equipment.......... 3 to 12

For tax purposes,  useful lives and accelerated methods are used as permitted by
the taxing authorities.


INCOME TAXES

Deferred  taxes  reflect the tax effects of  temporary  differences  between the
financial statement and tax basis of assets and liabilities,  and operating loss
carryforwards. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of  management,  it is more likely than not that some portion or all
of the deferred tax assets will not be realized.  Deferred  income taxes are not
provided on cumulative  undistributed  earnings of the foreign  subsidiaries and
affiliates because they are intended to be permanently reinvested.


INCOME PER SHARE OF COMMON STOCK

Income per share is computed by dividing  net  income,  adjusted  for  preferred
stock  dividends,   by  the  weighted  average  number  of  shares  of  Donnelly
Corporation common stock outstanding,  as adjusted for the stock split effective
January 30, 1997  (7,802,846 in 1996,  7,744,042 in 1995 and 7,716,923 in 1994).
The  potential  dilutive  effect  from  the  exercise  of stock  options  is not
material.


FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company  estimates  the fair value of all  financial  instruments  where the
carrying value differs from the fair value, primarily long-term fixed rate debt,
interest rate swaps and foreign exchange currency contracts, based
<PAGE>
upon  quoted  amounts or the  current  rates  available  for  similar  financial
instruments.  The carrying  value of the  Company's  variable  rate debt and all
other financial instruments approximates their fair value.


FISCAL YEAR

The  Company's  fiscal  year is the 52 or 53 week  period  ending  the  Saturday
nearest June 30.  Fiscal years 1996,  1995 and 1994 ended on June 29, July 1 and
July 2, respectively, each included 52 weeks.


IMPAIRMENT OF ASSETS

In March 1995,  Statement  of  Financial  Accounting  Standards  (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," was issued. SFAS No. 121 requires long-lived assets,  including
the excess of cost over the fair value of assets of businesses  acquired,  to be
reviewed  for  impairment  losses  whenever  events or changes in  circumstances
indicate  the carrying  amount may not be  recoverable  through  future net cash
flows generated by the assets.  The Company  consistent with existing  generally
accepted  accounting  principles,  currently  states the  majority  of its fixed
assets at the lower of cost or net realizable value. The Company will adopt SFAS
No. 121 in 1997 and believes the effect of adoption will not be material.


RECLASSIFICATIONS

Certain  reclassifications  have been made to prior  year data to conform to the
current  year  presentation  and had no effect on net  income  reported  for any
period.


2. NATURE OF OPERATIONS

The Company is an  international  supplier of high quality  automotive parts and
component systems from manufacturing operations in North America and Europe. The
Company  supplies  automotive  customers  around the world with rearview  mirror
systems,  modular  window  systems and interior  lighting and trim systems.  The
Company also provides products to several non-automotive markets.

Export revenues are foreign revenues produced by identifiable  assets located in
the United States.  Foreign revenues are generated by identifiable assets at the
Company's  subsidiaries located in Ireland,  France and Mexico. A summary of the
Company's operations by geographic area follows:
<TABLE>
                                                     Year ended
                                             1996        1995        1994
                                                     (in thousands)
<S>                                   <C>             <C>             <C>
Revenues:
     United States .............      $ 331,469       $ 317,710       $ 296,226
     Foreign ...................         55,998          36,832          18,367
     Export:
     Americas ..................         49,655          25,016          21,557
     Asia ......................            532             981             310
     Europe ....................          1,917           2,786             785
     Other .....................           --                15              17
                                                            
                                      $ 439,571       $ 383,340       $ 337,262
                                       
Operating Income (Loss):
     United States .............      $  15,641       $  19,857       $  16,397
     Foreign ...................         (2,150)         (2,824)         (3,276)
                                      ---------       ---------       ---------
                                      $  13,491       $  17,033       $  13,121
                                                                   
Identifiable Assets:
     United States .............      $ 226,861       $ 186,743       $ 165,172
     Foreign ...................         44,631          37,045          18,629
                                                                   
                                      $ 271,492       $ 223,788       $ 183,801
</TABLE>                                                                  
<PAGE>
Sales to major automobile  manufacturers as a percent of the Company's net sales
follows:
<TABLE>
                                                Year ended
                                        1996     1995      1994
                                        ----     ----      ----
            <S>                         <C>      <C>       <C>
            Chrysler...............       33%       18%       18%
            Ford...................       22        22        24
            Honda..................       16        14        12
            General Motors.........       10        17        21
                                        ----      ----      ----
                                          81%       71%       75%
                                        ====      ====      ====
</TABLE>
3. INVENTORIES

Inventories consist of:
<TABLE>
                                                             1996           1995
                                                            ------         -----
                                                               (in thousands)
<S>                                                       <C>            <C>
LIFO cost:
     Finished products and work in process .........       $ 6,998       $ 6,743
     Raw materials .................................         6,981         6,622
                                                                      
                                                           13,979        13,365
FIFO cost:

     Finished products and work in process .........         3,202         3,397
     Raw materials .................................         7,047         5,280
                                                                     
                                                            10,249         8,677
                                                                      
                                                           $24,228       $22,042
</TABLE>
If only the  first-in,  first-out  method of inventory  valuation had been used,
inventories  would have been $0.4 million and $0.5 million  higher than reported
at June 29,  1996 and July 1, 1995,  respectively,  and would have  approximated
replacement cost.
<PAGE>
4. INVESTMENTS IN AND ADVANCES TO EQUITY AFFILIATES

     The Company's  equity  affiliates  include the following:  Donnelly Hohe, a
German limited  partnership that produces  exterior  mirrors,  interior mirrors,
door handles,  automotive  tooling and electronic  components  related to mirror
systems;  Vision Group plc ("Vision Group"), the sole shareholder of VLSI Vision
Limited  that  produces an  advanced  video  microchip;  newly  formed  Shanghai
Donnelly Fu Hua Window Systems Company Ltd. (Shanghai Donnelly Fu Hua) that will
manufacture  encapsulated  and framed glass  products  for the Asian  automotive
industry;  and  Applied  Films  Corporation,  a 50%  owned  joint  venture  that
manufactures  thin-film  glass coatings used in the production of liquid crystal
displays.

     In the fourth quarter of 1996, the Company formed Shanghai Donnelly Fu Hua,
a 50-50 joint venture with Shanghai Fu Hua Glass Company,  Ltd.  Shanghai Fu Hua
Glass Company is itself a joint venture  between Ford Motor Company and Shanghai
Yao Hua Glass Works.  The joint venture will have its equipment and processes in
place by September 1996, and the venture will begin  manufacturing  encapsulated
and framed glass products by the end of the year.

     During  1996 and  1995,  Vision  Group  sold  common  shares  in a  private
placement and through public offerings reducing the Company's ownership interest
from 40% to 30.4%.  The  Company's  equity in the net proceeds of these sales is
reflected  as an  increase in  additional  paid-in  capital in the  accompanying
financial statements.  The aggregate market value of the Company's investment in
Vision Group, based on the quoted market price for Vision Group's common shares,
which are listed on the London Stock Exchange,  was approximately $44 million at
June 29, 1996.  The  Company's  investment in the net assets of Vision Group was
approximately $4 million at June 29, 1996.

     Effective  April 1, 1995,  the Company  acquired an interest in Hohe GmbH &
Co. KG, since  renamed  Donnelly  Hohe GmbH & Co. KG (Donnelly  Hohe),  a German
limited  partnership with operations in Germany and Spain.  Donnelly Hohe, based
in Collenberg, Germany, supplies many of the main automakers in Europe.

     The Company acquired 48% of the general partnership  interest and 662/3% of
the limited partnership interest for $3.6 million. Additionally, the Company has
advanced $28 million to Donnelly Hohe under a subordinated loan agreement, $14.3
million in 1995 and $13.7  million in 1996.  Amounts  advanced to Donnelly  Hohe
under the subordinated loan agreement provide for 10% interest per annum with no
principal  payments due until its maturity on April 1, 1998. In connection  with
the  Company's  acquisition  of the  Donnelly  Hohe  interest,  refinancing  and
additional loans of approximately  $70 million were provided to Donnelly Hohe by
several  banks.  The terms of the  transaction  allow  Donnelly to purchase  the
remaining  ownership  interest in Donnelly Hohe through  various options ranging
from $3 million to $10 million.  The remaining  owners have an option to require
the  Company  to buy their  interests  at any time  based  upon a formula  which
results in a price range of up to $10 million.

     Summarized balance sheet and income statement information for the Company's
non-consolidated affiliates
<PAGE>
accounted  for  using  the  equity  method  are  as  follows.  Income  statement
information  includes  Donnelly Hohe's twelve months ended May 31, 1996, and two
months ended May 31, 1995.  All  significant  others  presented  include  twelve
months ending in the month of June for each year presented.
<TABLE>
                                                           1996        1995
                                                             (in thousands)
Summarized Balance Sheet Information
<S>                                                    <C>             <C>
     Current assets .............................      $  90,927       $  80,443
     Non-current assets .........................         82,052          80,986
     Current liabilities ........................         69,931          57,857
     Non-current liabilities ....................         87,905          89,860
                                                                    
     Net equity .................................      $  15,143       $  13,712
                                                                  
Summarized Income Statement Information
     Net sales ..................................      $ 250,904       $  77,756
     Costs and expenses .........................        254,403          77,547
                                                          
     Net income (loss) ..........................      $  (3,500)      $     209
                                                       =========       =========
</TABLE>
5. DEBT AND OTHER FINANCING ARRANGEMENTS

     Debt consists of:
<TABLE>
                                                                                 1996         1995
                                                                                    (in thousands)
<S>                                                                             <C>        <C>
    Borrowings under revolving credit agreements at 4.15% and 7.50%             $ 35,418   $ 15,000
Senior Notes, due 2004, principal payable in installments
   beginning in 1999, interest at 6.67% ...........................               15,000     15,000
Senior Notes, due 2005, principal payable in installments
   beginning in 2000, interest at 7.22% ...........................               15,000     15,000
Senior Notes, due 2006, principal payable in installments
   beginning in 2001, interest at 6.70% ...........................               20,000       --
Industrial revenue bonds:
$9,500 at adjustable rates (3.80% at June 29, 1996), due in 2008-
   2010; $5,000 at a fixed rate of 8.13%, due in 2012 .............               14,500     14,500
Other .............................................................                1,998      6,602
                                                                               
Total .............................................................              101,916     66,802
Less current maturities ...........................................                  159        428
                                                                              
                                                                                $101,757    $66,374
</TABLE>
<PAGE>
     The Company has an unsecured $80 million  Revolving  Credit Loan  Agreement
which  expires  November  20,  2002.  Interest  is at prime  unless one of three
alternative elections are made by the Company.

     The $9.5 million  industrial revenue bonds are secured by letters of credit
which must be renewed annually.  All industrial revenue bonds are collateralized
by the purchased land, building and equipment. The senior notes are unsecured.

     The various borrowings subject the Company to certain restrictions relating
to, among other things,  minimum net worth, payment of dividends and maintenance
of certain  financial  ratios.  At June 29, 1996,  the Company was in compliance
with all related  covenants.  Retained earnings  available for dividends at June
29, 1996, are $19.6 million.

     Annual principal maturities consist of:
<TABLE>
                   Year ending                         Amount
                                                  (in thousands)
              <S>                                 <C>
              1997...................           $        159
              1998...................                    117
              1999...................                  3,525
              2000...................                  7,000
              2001...................                 20,357
              2002 and thereafter....                 70,758
                                                   ---------
                                                    $101,916
</TABLE>
     The Company provides  guarantees for $7.3 million in municipal  funding for
the  construction of a manufacturing  facility and up to $5.0 million of Applied
Films Corporation borrowings.

     Interest payments of $7.8 million,  $5.0 million and $3.7 million were made
in 1996, 1995 and 1994, respectively.


6. FINANCIAL INSTRUMENTS

     The Company utilizes interest rate swaps and foreign exchange  contracts to
manage exposure to fluctuations in interest and foreign currency exchange rates.
The risk of loss to the  Company  in the  event of  nonperformance  by any party
under these  agreements is not material.  At June 29, 1996 and July 1, 1995, the
Company  had  interest  rate  swaps  with an  aggregate  notional  amount of $60
million,  $30 million and $40 million of which were  offsetting at June 29, 1996
and July 1, 1995, respectively.  These effectively converted $30 million and $20
million of the Company's  variable interest rate debt to fixed rates at June 29,
1996 and July 1, 1995, respectively.  The Company is currently paying a weighted
average  fixed rate of 7.17%,  calculated  on the notional  amounts.  These swap
agreements  have  varied  expirations  through  2003.  The  notional  amounts of
interest rate swaps do not represent amounts exchanged by the parties,  and thus
are not a  measure  of the  exposure  to the  Company  through  its use of these
instruments.  Net receipts or payments under the agreements are recognized as an
adjustment to interest expense.
<PAGE>
     The Company's Irish  subsidiaries  enter into foreign exchange contracts to
hedge  against  changes in foreign  currency  exchange  rates.  The  Company had
foreign exchange contracts outstanding of $7.8 million and $13.3 million at June
29, 1996 and July 1, 1995, respectively.  The foreign exchange contracts require
the Company to exchange foreign currencies for Irish pounds and generally mature
within 12 months.

     In accordance  with the  requirements of SFAS No. 107,  "Disclosures  About
Fair Value of Financial  Instruments" (see Note 1), the Company has provided the
following fair value  estimates for  instruments in which the fair value differs
from carrying value at June 29, 1996:
<TABLE>
                                                           Carrying Value       Fair Value
                                                                     (in thousands)
            Liabilities
            <S>                                            <C>                   <C>
                 Long-term fixed rate debt.........        $     55,000          $ 53,630
            Derivatives
                 Interest rate swaps...............                  --              (423)
                 Foreign exchange contracts........                  --               274
</TABLE>
7. BENEFIT PLANS

A. Pension Benefits

     The Company sponsors  defined benefit pension plans covering  substantially
all employees.  Pension costs for the plans are funded in amounts which equal or
exceed regulatory  requirements.  Benefits under these plans are based primarily
on years of service and compensation.

     Assumptions and net periodic pension cost are as follows:
<TABLE>
                                                        Year ended
                                            1996           1995          1994
                                                      (in thousands)
<S>                                         <C>             <C>         <C>
Discount rate.........................        8.00%          8.25%        8.25%
Compensation increase.................        5.00%          5.00%        5.00%
Expected return on plan assets........        9.50%          9.50%        9.50%
Service cost..........................      $3,545         $3,544       $3,178
Interest cost.........................       5,060          4,560        3,912
Actual gain on plan assets............      (8,528)        (6,389)        (854)
Net amortization and deferral.........       4,550          2,563       (2,292)
                                           -------        -------       ------
Net periodic pension cost.............      $4,627         $4,278       $3,944
</TABLE>                                        
<PAGE>
     The funded status of the defined benefit pension plans is summarized below:
<TABLE>
                                                                                                 1996           1995
                                                                                                    (in thousands)
<S>                                                                                            <C>          <C>
Accumulated benefit obligation, including vested benefits of $43,101 and $38,997.......        $(43,945)    $(40,328)
Effect of projected compensation increases.............................................         (23,826)     (23,462)
                                                                                               ---------    ---------
Projected benefit obligation for service rendered to date..............................         (67,771)     (63,790)
Plan assets at fair value, primarily corporate equity and debt securities..............          55,784       47,180
                                                                                             ----------     ---------
Projected benefit obligation in excess of plan assets..................................         (11,987)     (16,610)
Unrecognized net transition obligation.................................................             408          492
Unrecognized prior service cost........................................................             530          120
Unrecognized net loss..................................................................           1,926       10,165
                                                                                              ---------    ---------
Net pension liability..................................................................       $  (9,123)   $  (5,833)
                                                                                              =========    =========
</TABLE>
B. Postretirement Health Care Benefits

     The Company  provides  certain health care and life insurance  benefits for
eligible  active and retired  employees.  The plan contains cost saving features
such as deductibles, coinsurance and a lifetime maximum and is unfunded.

     Effective  July 4, 1993,  the Company  adopted  SFAS No.  106,  "Employers'
Accounting  for  Postretirement  Benefits Other Than  Pensions."  This Statement
requires the accrual,  during the employee's  years of service,  of the expected
cost of providing those benefits to an employee and the employee's beneficiaries
and covered dependents.  The net transition obligation represents the difference
between the accrued  postretirement  benefit costs prior to the adoption of SFAS
No. 106 and the Plan's unfunded accumulated postretirement benefit obligation as
of July 4, 1993. The net  transition  obligation of $7.9 million at July 4, 1993
is being amortized over 22 years.

     The  components  of the net  periodic  postretirement  benefit  cost are as
follows:
<TABLE>
                                                                                               Year ended
                                                                                     1996        1995        1994
                                                                                             (in thousands)
            <S>                                                                      <C>         <C>        <C>
            Service cost........................................................     $   450     $   402    $   388
            Interest cost.......................................................         830         779        661
            Amortization of net transition obligation over 22 years.............         360         360        360
            Unrecognized net loss...............................................          20          13         --
                                                                                  
            Net periodic postretirement benefit cost............................      $1,660      $1,554     $1,409
                                                                                   
</TABLE>
<PAGE>
     The postretirement health care liability recognized in the balance sheet is
as follows:
<TABLE>
                                                                              1996         1995
                                                                                 (in thousands)
            <S>                                                               <C>           <C>
            Retirees...................................................       $(5,946)      $(5,973)
            Fully eligible active participants.........................           (66)          (14)
            Other active participants..................................        (5,467)       (4,961)
                                                                             --------      --------
            Accumulated postretirement benefit obligation..............       (11,479)      (10,948)
            Unrecognized transition obligation.........................         6,841         7,201
            Unrecognized net loss......................................         1,486         1,519
                                                                           
            Postretirement health care liability.......................       $(3,152)      $(2,228)
                                                                              =======       =======
</TABLE>
     The assumed health care inflation rate used in measuring the postretirement
health care  liability is 9.0% for 1997,  declining  uniformly to 6% in 2000 and
remaining level thereafter. The health care cost trend rate has an effect on the
amounts reported.  Increasing the assumed health care inflation rate by 1% would
increase the postretirement  health care liability by $0.6 million,  and the net
periodic  postretirement  benefit  cost for the year by  $40,000.  The  weighted
average discount rate used in determining the accumulated postretirement benefit
obligation was 8.0% and 7.75% in 1996 and 1995, respectively.


8. TAXES ON INCOME

Effective July 4, 1993, the Company adopted SFAS No. 109, "Accounting for Income
Taxes."  The  cumulative  effect of this  accounting  change of $0.5  million is
reported  separately  in the 1994  combined  consolidated  statement  of income.
Deferred  income  taxes under SFAS No. 109 reflect the tax effects of  temporary
differences  between  the  amounts  of  assets  and  liabilities  for  financial
reporting purposes and those amounts as measured by income tax laws. The Company
has grouped the  noncurrent  deferred  tax assets with other  assets and the net
noncurrent  deferred tax liability with certain other liabilities on the balance
sheet. The tax effects of temporary differences which give rise to a significant
portion of deferred tax assets (liabilities) are as follows:
<TABLE>
                                                                1996        1995
                                                                  (in thousands)
            <S>                                                 <C>          <C>
            Fixed assets...................................     $(5,581)     $(4,237)
            Retirement plans...............................       3,106        1,641
            Postretirement benefits........................       1,103          780
            Loss carryforwards.............................       2,095          636
            Accrued expenses and other.....................        (280)        (271)
                                                              ---------    ---------
            Net deferred tax asset (liability).............    $    443      $(1,451)
                                                             
                Per Balance Sheet:

                                                               1996       1995
                                                                 (in thousands)
            <S>                                                 <C>        <C>
            Current income tax asset...........                 $1,912     $2,197
            Noncurrent income tax asset........                  2,095       ----
            Noncurrent income tax liability....                 (3,564)    (3,648)
                                                             ---------  ---------
            Net deferred tax asset (liability).               $    443    $(1,451)
                                                            
</TABLE>
<PAGE>
     At June 29,  1996,  the  Company  has $2.1  million of net  operating  loss
carryforwards, the majority of which expire in 2010 or are indefinite.
<TABLE>
                                                                                    Year ended
                                                                           1996         1995       1994
                                                                                  (in thousands)
            <S>                                                         <C>          <C>         <C>
            Income before taxes on income consists of:
                 Domestic.........................................       $15,647     $18,692      $14,453
                 Foreign..........................................        (3,298)     (1,869)      (3,445)
                                                                       ---------     -------    ---------
                                                                         $12,349     $16,823      $11,008
            Tax expense (benefit) consists of:
                 Current:
                      Domestic....................................      $  6,909    $  7,920     $  4,782
                      Foreign.....................................             8         (17)         (16)
                                                                      -----------              ----------
                                                                           6,917       7,903        4,766
                 Deferred:
                      Domestic....................................        (2,156)     (1,761)      (1,101)
                      Foreign.....................................          (570)       (347)        (331)
                                                                       ---------   ---------    ---------
                                                                          (2,726)     (2,108)      (1,432)
                                                                       ---------   ---------    ---------
                                                                        $  4,191    $  5,795     $  3,334
</TABLE>
     The  difference  from the amount that would be  computed  by  applying  the
federal statutory income tax rate to income before taxes on income is reconciled
as follows:
<TABLE>
                                                                              Year ended
                                                                    1996         1995        1994
                                                                            (in thousands)
            <S>                                                    <C>            <C>         <C>
            Income taxes at federal statutory rate                 35%            35%         34%
            Impact of:
                 Available tax credits..................           --             (2)        (11)
                 Foreign subsidiary earnings............            5              2           7
                 DISC earnings..........................           (6)            (2)         (3)
                 Other..................................           --              1           3
                                                                -----          ------      -----
            Effective tax rate..........................           34%            34%         30%
                                                                -----          ------      -----
            Income taxes paid...........................       $3,731        $10,332      $3,149
                                                               ======        =======      ======
</TABLE>
<PAGE>
9. PREFERRED STOCK AND COMMON STOCK

     Each share of 71/2% cumulative  preferred stock is entitled to one vote for
the election of the members of the Board of Directors not elected by the holders
of Class A Common  Stock,  and all other matters at all  shareholders'  meetings
whenever  dividend  payments  are in arrears for four  cumulative  quarters.  No
arrearage  existed at June 29, 1996. The preferred  stock is redeemable in whole
or in part, if called by the Company, at $10.50 per share.  Additionally,  there
are 1,000,000 authorized shares of series preferred stock, no par value. At June
29, 1996 and July 1, 1995, no series preferred stock was outstanding.

     Each share of Class A Common  Stock and Class B Common Stock is entitled to
one vote and ten votes, respectively, at all shareholders' meetings. The holders
of Class A Common Stock are entitled to elect  one-quarter of the members of the
Board of Directors.  The remaining directors are elected by the holders of Class
B Common Stock and any preferred stock entitled to vote.


10. STOCK PURCHASE AND OPTION PLANS

     The  Company's  Employees'  Stock  Purchase Plan permits the purchase in an
aggregate  amount  of up to  437,800  shares of Class A Common  Stock.  Eligible
employees  may  purchase  stock at market  value,  or 90% of market value if the
price is $8.00 per share or higher,  up to a maximum of $5,000 per  employee  in
any calendar year. The Company issued 17,460 shares in 1996 and 22,771 shares in
1995 under this plan.

     The Company's Stock Option Plans permit the granting of either nonqualified
or incentive stock options to certain key employees and directors to purchase an
aggregate  amount of up to 862,500 shares of the Company's Class A Common Stock.
The options,  which become exercisable twelve months after date of grant, expire
ten years after date of grant. Although the plan administrator may establish the
nonqualified  option  price at below  market  value at date of grant,  incentive
stock options may be granted only at prices not less than the market value.

     Options have been granted to purchase  common stock at prices  ranging from
$9.20 to $20.125  per share.  Options  were  exercised  during  1995 and 1996 at
prices ranging from $9.20 to $10.60 per share. A summary of option  transactions
follows:
<TABLE>
                                                                        Year ended
                                                                    1996       1995     1994
                                                                         (in thousands)
            <S>                                                      <C>        <C>       <C>
            Options outstanding, beginning of year..........         412        361       283
            Options granted.................................          80         76        79
            Options exercised...............................         (47)       (13)       (1)
            Options expired.................................         (36)       (12)       --
            Options outstanding, end of year.................        409        412       361
                                                           
            Exercisable, end of year.........................        337        343       282
</TABLE>
<PAGE>
     The Company has reserved 364,975 shares for future grants at June 29, 1996.

In  1995,   the  FASB  issued  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation."  SFAS No. 123 allows  companies  to continue to account for their
stock-based  compensation  plans in  accordance  with APB  Opinion  No.  25, but
encourages  the  adoption  of a new  accounting  method to  record  compensation
expense based on the estimated fair value of employee stock-based  compensation.
Companies electing not to follow the new fair value based method are required to
provide  expanded  footnote  disclosures,  including  pro forma net  income  and
earnings per share, determined as if the company had adopted the new method. The
Statement is required to be adopted by the Company's fiscal year ending in 1997.
Management intends to continue to account for its stock-based compensation plans
in accordance with APB Opinion No. 25 and provide the  supplemental  disclosures
as required by SFAS No. 123, beginning in 1997.


11. COMMITMENTS AND CONTINGENCIES

A. Patent Litigation

     Certain  electrochromic  mirror  technology  of the  Company  has  been the
subject  of  patent  litigation  between  the  Company  and  Gentex  Corporation
("Gentex"). Following the settlement of prior litigation, Gentex filed a lawsuit
against the Company on June 7, 1993,  alleging that the Company's  solid polymer
film  electrochromic  mirror  infringed a patent  owned by Gentex.  On March 21,
1994, the Company's motion for summary judgment of non-infringement  was granted
and the  lawsuit  was  dismissed.  Gentex  filed an  appeal of this  ruling.  On
November  3, 1995,  the Court of Appeals for the Federal  Circuit  affirmed  the
summary judgment  decision and dismissed  Gentex's appeal. On December 18, 1995,
the Court of Appeals  for the  Federal  Circuit  denied  Gentex's  request for a
rehearing.

     The  Company was also a party to three  subsequent  lawsuits  involving  10
patents owned by the Company.  In one of these suits, the Court granted Gentex's
motion for  summary  judgment  that two of the  Company's  patents  relating  to
lighted  mirrors are  invalid.  The  Company  believes  that its lighted  mirror
patents are not  invalid  and has filed on appeal on this  issue.  The appeal is
currently pending.

     On April 1, 1996,  the Company  entered  into a settlement  agreement  with
Gentex which resolved all aspects of these three lawsuits except for the pending
appeal  referred to above.  Under the  agreement,  Gentex paid the Company  $6.0
million  in  settlement  fees and will pay an  additional  $0.2  million  if the
Company  prevails  in  its  appeal.   In  addition,   the  settlement   includes
cross-licensing  of certain patents which each party may practice within its own
core  technology  area,  and an  agreement  that  the  partie  will  not  pursue
litigation  against  each other on certain  other  patents  for a period of four
years.  This settlement was recognized in selling,  general and  administrative,
net of related patent litigation costs previously capitalized. Patent litigation
costs  included  in  selling,  general  and  administrative  expenses  were $3.7
million, $3.1 million and $0.8 million in 1996, 1995, and 1994, respectively.

B. Other Litigation

     The  Company  and its  subsidiaries  are  involved  in certain  other legal
actions and claims,  including  environmental  claims,  arising in the  ordinary
course of business.  Management believes (based on advice of legal counsel) that
such  litigation  and claims will be  resolved  without  material  effect on the
Company's financial position,  results of operation and liquidity,  individually
and in the aggregate.
<PAGE>
C. Other

     As  of  June  29,  1996,  the  Company  had  capital  expenditure  purchase
commitments outstanding of approximately $9 million.


12. LEASES

The Company leases various  facilities and equipment.  Rental expense charged to
operations  amounted to  approximately  $3.8 million for 1996,  $2.5 million for
1995 and $2.5 million for 1994. In 1995 the Company entered an agreement for the
sale and leaseback of newly installed modular window production  equipment.  The
equipment  was  sold  at  cost  and  no  gain  or  loss  was  recognized  on the
transaction.  The lease which has six one year renewal terms,  an effective 6.9%
fixed  interest rate and a 40% balloon for the Company  option to purchase after
the full seven year term is classified as an operating lease.

     Future minimum lease payments, excluding renewal options, consist of:
<TABLE>
                              Year ending                       Amount
                                                            (in thousands)
                              <S>                              <C>
                              1997........................     $      3,688
                              1998........................            1,196
                              1999........................              514
                              2000........................              578
                              2001........................              221
                              2002 and thereafter.........              485
                                                              -------------
                                                               $      6,682
</TABLE>
13. RESTRUCTURING OF OPERATIONS

     In the fourth quarter of 1996, the Company recorded a restructuring  charge
of $2.4 million  related to the  write-down of certain assets and the closure of
the Company's manufacturing facility in Mt. Pleasant, Tennessee. The decision to
close the  Tennessee  facility was based on a number of factors that  included a
major loss of business one year ago and the inability to attract significant new
business for the plant.  These costs include  accruals for severance and related
employee  support programs and write-off of certain assets removed from service.
The majority of these  liabilities  will be paid or settled during the first six
months of 1997.

       In the second  quarter of 1995, the Company  implemented a  restructuring
plan to focus on its automotive businesses.  The restructuring plan included the
sale of the  Company's  appliance  business,  the sale of the heavy truck mirror
business and the  liquidation  of the Company's  investment  in OSD Envizion,  a
joint venture engaged in the manufacture of welding helmet shields.  The Company
received total proceeds of $14.2 million  associated with the  restructuring  of
these  businesses,  which had a  combined  net book  value of $6.5  million.  In
addition, restructuring costs of $3.0 million were also recognized consisting of
a severance  program and other expenses  associated with the plan. The severance
program included twenty-five personnel,  primarily middle and senior managers of
the Company.  The spending for these costs was essentially  completed by the end
of 1995. The restructuring of the non-automotive businesses resulted in a pretax
gain  of  $4.7  million.   These   non-automotive   businesses   represented  an
insignificant portion of the Company's operations for each period reported.
<PAGE>
     The Company also restructured  certain automotive  operations in the second
quarter  of  1995,  resulting  in a charge  of $2.4  million  primarily  for the
write-down  of  operating  assets due to the loss of  Saturn's  business  at D&A
Technology,  Inc.  (D&A),  the  Company's  former joint venture with Asahi Glass
Company.  In the first quarter of 1996, the Company  dissolved the joint venture
and acquired  Asahi's 40% interest in D&A for  approximately  $2.1 million.  D&A
represented 5% and 8%, respectively,  of the Company's combined consolidated net
sales and net income in 1995.

     In the fourth quarter of 1994, the Company recognized  restructuring  costs
of $1.2 million to cover a severance program and other expenses  associated with
the restructuring of Donnelly Mirrors Limited.


QUARTERLY FINANCIAL DATA--UNAUDITED


     The Company's  common stock is traded on the American  Stock Exchange under
the Symbol  "DON." Market  quotations  regarding the range of high and low sales
prices of the Company's common stock were as follows:
<TABLE>
Fiscal                     1996                               1995
Quarter              High           Low                 High           Low
<S>                 <C>           <C>                  <C>            <C>
First               $ 16 3/4      $ 141/2              $ 17 1/2       $ 15 1/8
Second                15 5/8       13 3/4                17 5/8         13 1/4
Third                 14 7/8           13                    18         15 1/8
Fourth                16 1/8       13 3/4                17 5/8         14 7/8
</TABLE>
<TABLE>
                                                                  First        Second         Third        Fourth      Total
                                                                Quarter       Quarter        Quarter       Quarter      Year
                                                                                  (in thousands, except per share data)
<S>                                                               <C>          <C>          <C>            <C>          <C>
1996
     Net sales................................................    $90,523      $106,823     $116,445       $125,780     $439,571
     Gross profit.............................................     13,685        20,030       22,153         25,873       81,741
     Operating income (loss)..................................     (2,087)        3,899        3,920          7,759       13,491
     Net Income (loss):
          Income (loss).......................................     (1,789)        2,629        2,503          5,111        8,454
          Per common share....................................       (.23)          .34          .32            .65         1.08
     Dividends declared per share of common stock.............        .10           .10          .10            .10          .40

1995
     Net sales................................................    $86,741     $  98,460    $  96,708       $101,431     $383,340
     Gross profit.............................................     18,101        22,312       21,019         21,136       82,568
     Operating income.........................................        811         7,274        4,828          4,120       17,033
     Net Income (loss):
          Income (loss).......................................        (85)        4,699        3,076          3,319       11,009
          Per common share....................................       (.01)          .61          .40            .42         1.42
     Dividends declared per share of common stock.............        .08           .08          .08            .08          .32
</TABLE>
<PAGE>
     The impact of certain  transactions on the 1996 and 1995 quarterly  results
of operations is discussed in Notes 11 and 13. See  Management's  Discussion and
Analysis of Results of Operations and Financial  Condition for discussion of the
Company's results of operations, in Item 7 of this report on pages 2-5.
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 (d) of the Securities Exchange Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

DONNELLY CORPORATION


/s/ William R. Jellison
William R. Jellison
Vice President, Corporate
Controller and Treasurer

Date:     September 23, 1997
<PAGE>
                                                          
                            Annual Report - Form 10-K

                                  Exhibit Index

3.        Articles of Incorporation  and Bylaws are incorporated by reference to
          Exhibit 3.1 and 3.2 of  Registrant's  Registration  Statement  on Form
          S-1, as  amended,  dated March 9, 1988,  (Registration  No.  33-17167)
          ("S-1 Registration Statement").

4.        A specimen stock  certificate of the Class A Common Stock was filed as
          part  of a  Registration  Statement  on  Form  S-1  (Registration  No.
          33-17167) as Exhibit 4.1, and the same is hereby  incorporated  herein
          by reference.

10.1      Amended and Restated First Chicago Revolving Credit Loan Agreement

10.2      Nationwide Life Insurance  Company Debt Agreement was filed as part of
          Form 10-K for the fiscal year ending July 1, 1995 as Exhibit  10.1 and
          is hereby incorporated herein by reference.

10.3      An English  language  summary of an Acquisition  Agreement and related
          documents  written in German  between the  Registrant,  Donnelly GmbH,
          Hohe GmbH & Co. KG ("Hohe") and other related  parties,  dated May 25,
          1995,  consolidated  financial statements of Hohe as of March 31, 1995
          and  1994  (audited)  and  pro  forma  financial  information  of  the
          Registrant  were filed as part of Form 8-K on June 9, 1995,  which has
          been  subsequently  amended  and are  hereby  incorporated  herein  by
          reference.

10.4      Nationwide Life Insurance  Company Debt Agreement was filed as part of
          Form 10-K for the fiscal year ending July 2, 1994 as Exhibit  10.1 and
          is hereby incorporated herein by reference.

10.5      The Principal Mutual Debt Agreement was filed as part of Form 10-K for
          the fiscal  year  ending  July 3, 1993 as  Exhibit  10.2 and is hereby
          incorporated herein by reference.

10.6      A Merger  Agreement  for the  Merger of  Donnelly  Coated  Corporation
          ("DCC")  into  Applied  Coated  Corporation,  among  Registrant,  DCC,
          Applied Films Lab, Inc. and Cecil Vanalsburg, John Chapin, and Richard
          Condon,  dated  February 24, 1992, was filed as part of a Registration
          Statement on Form S-2  (Registration  No.  33-47036) and Exhibit 10.7,
          and the same is hereby incorporated herein by reference.

10.7      The form of Indemnity  Agreement  between  Registrant  and each of its
          directors was filed as a part of a Registration  Statement on Form S-1
          (Registration  No.  33-17167) as Exhibit 10.8,  and the same is hereby
          incorporated herein by reference.

10.8      The  Donnelly  Corporation  Stock  Option  Plan was filed as part of a
          Registration  Statement  on Form S-1  (Registration  No.  33-17167) as
          Exhibit 10.9, and the same is hereby incorporated herein by reference.

10.9      The  Donnelly   Corporation   1987  Employees'  Stock  Purchase  Plan,
          including amendments was filed as part of a Registration  Statement on
          Form S-8  (Registration No. 33-34746) as Exhibit 28.1, and the same is
          hereby incorporated herein by reference.

10.10     The Donnelly Corporation Non Employee Director's Stock Option Plan was
          filed as part of a  Registration  Statement on Form S-8  (Registration
          No.  33-55499)  as  Exhibit  99,  and the same is hereby  incorporated
          herein by reference.

10.11     The Donnelly Corporation Executive Compensation Plan

10.12     The Donnelly Corporation Unfunded Deferred Director Fee Plan

10.13     The Donnelly Corporation Pension Plan for Outside Directors

10.14     The Donnelly Corporation Supplemental Retirement Plan

10.15     The Donnelly Corporation Deferred Compensation Plan

10.17     Letter  from  Donnelly  Corporation  to Mr.  Donn Viola dated July 12,
          1996, as modified on July 22, 1996.

10.18     Letter from Donnelly  Corporation to Mr. Russ Scaffede dated September
          15, 1995

10.19     An English language summary of the Security Pool Agreement  written in
          German  between the  Registrant  and Donnelly Hohe GmbH & Co. KG dated
          September 15, 1995

10.20*    Receivables Purchase Agreement among Donnelly Receivables Corporation,
          Falcon Asset Securitization Corporation and the First National Bank of
          Chicago dated as of November 14, 1996

22        Schedule of Affiliates.

24        Consent  of BDO  Seidman,  LLP,  independent  public  accountants  for
          Form-10K/A for the fiscal year ending June 29, 1996.

27        Financial Data Schedules.

__________________________  
*Certain  confidential  information  has been omitted  pursuant to a request for
confidential treatment.
<PAGE>
 

                                                                    10.11

                   Executive Compensation Plan August 29, 1994

                                TABLE OF CONTENTS

                                                                            PAGE

  ARTICLE I      CONCEPT AND OBJECTIVES....................................... 1
  ARTICLE 11     DEFINITIONS.................................................. 3
  ARTICLE III    ELIGIBILITY.................................................. 5
  ARTICLE IV     INDIVIDUAL ANNUAL INCENTIVE AWARD OPPORTUNITIES.............. 6
  ARTICLE V      ANNUAL INCENTIVE AWARD PAYMENTS..............................12
  ARTICLE VI     MEASUREMENT OF PERFORMANCE UNITS.............................13
  ARTICLE VII    PERFORMANCE UNIT GRANTS......................................14
  ARTICLE VIII   PERFORMANCE UNIT AWARD PAYOUTS...............................16
  ARTICLE IX     ADMINISTRATION OF THE PLAN...................................17

<PAGE>
                DONNELLY CORPORATION EXECUTIVE COMPENSATION PLAN

                        ARTICLE I CONCEPT AND OBJECTIVES

     SECTION 1:01 This incentive  compensation  Plan is intended (in combination
with the  organization's  Stock Option Plan) to reward key  executives and other
designated  members of management  for  increasing the value of the Company long
ten-n and for the profitable growth of the Company on an annual basis. There are
two parts of this cash-based Plan:

  (a)     ANNUAL INCENTIVE  AWARDS.  Provide annual cash payments in recognition
          of  the   profitable   growth  of  Donnelly   and  reward   successful
          controllable performance on an annual basis.  Participating executives
          will be rewarded for performance based on financial results,  measured
          by Earnings per Share,  Business  Unit BGI, and Business  Unit BGI-ROA
          and strategy implementation.

Cash awards will be paid following  year-end  based on actual  results  measured
against  performance  standards  established prior to the beginning of each Plan
Year.

Participation  in the annual  incentive  part of the Plan is intended to include
members of senior management and may be expanded in scope over time.

  (b)     LONG-TERM INCENTIVE AWARDS..  Reward executive for sustainable Company
          performance  improvements,  serve to link  executive  and  shareholder
          interests,  focus attention on long-term  profitability  and planning,
          and provide the primary  retention  mechanism  among all  compensation
          elements.

Participating  executives will be granted a specific number of Performance Units
which will be converted to a cash payment at the end of a five-year  Performance
Period.  The  value  of the  Performance  Units  at the  time of  grant IS zero.
Monetary value is accrued over the five year Performance  Period based on 5 year
cumulative  average  appreciation  in  share  value.  The  ultimate  size  of an
executive's  long-term award payment depends on the number of Performance  Units
granted and the appreciation in share value over the Performance Period.

Units will be granted  annually  and without cost to  participating  executives.
Following the first five-year  Performance  Period,  award payments will be made
annually.

Participation in the long-term part of the overall  executive  incentive program
is limited to the most senior management team members.
<PAGE>
     SECTION 1:02 This  Executive  Compensation  Plan is designed and adopted to
achieve the following objectives:

  (a)     ALIGN STRATEGY WITH PAY. To encourage  executives to exercise the type
          of judgment  that  supports  Donnelley's  strategy  while actin in the
          spirit of Donnelley's culture and values.

  (b)     ENCOURAGE  PROFITABLE  GROWTH.  To provide  financial  recognition  to
          Participants  for their  contribution to the profitable  growth of the
          Company.

  (c)     BUILD  COMMITMENT.  To promote  commitment  to Donnelley  long-term by
          providing  equitable and competitive  compensation,  and the potential
          for substantial cash awards.

  (d)     LINK PAY AND PERFORMANCE.  To reinforce and motivate actions that will
          ensure  Donnelley's  best  interests  are  served  by  linking  pay to
          long-term value creation and performance improvement.
<PAGE>
                                   ARTICLE II

                                   DEFINITIONS

     SECTION 2:01 As used in this document, the following words and phrases will
have the meanings specified below:

  (a)     BASE  SALARY  means the annual rate of base pay in effect for the Plan
          Year.

  (b)     CAUSE   means    failure   to    satisfactorily    perform    assigned
          responsibilities,   or  other  conduct,   leading  to  termination  of
          employment.

  (c)     COMMITTEE means the Committee  (Compensation Committee of the Board of
          Directors) formed to oversee the administration of the Plan.

  (d)     COMPANY  means  Donnelley   Corporation  including  all  wholly  owned
          subsidiaries of Donnelley Corporation.

  (e)     DISABILITY  OR DISABLED  means a  Participant  is disabled  within the
          meaning of the Company's long-term disability plan.

  (f)     EARNINGS PER SHARE means the dollars of earnings generated in the Plan
          Year divided by the average number of shares of outstanding  stock for
          the same period.

  (g)     GRANT  YEAR  means the first  year of a 5 year  Performance  Period in
          which the number of performance  units per  Participant are determined
          for that Performance Period.

  (h)     PARTICIPANT means a full-time  employee of the Company  fulfilling the
          eligibility requirements defined in Article M.

  (i)     PERFORMANCE  PERIOD  means a period  of 5  consecutive  fiscal  years,
          beginning  on the first day of the first fiscal year and ending on the
          last day of the fifth fiscal year,  over which  performance  units are
          measured.

  (j)     PERFORMANCE  UNIT OR UNITS  means  the form in  which  long-term  cash
          awards are granted to Participants. Each Performance Unit has monetary
          value as determined by this Plan.  Performance  Units do not represent
          any actual ownership interest in the Company.
<PAGE>
  (k)    PLAN means the Executive  Compensation  Plan described in this document
         and any amendments to the Plan.

  (1)    PLAN YEAR means the Company's fiscal year.

  (m)    PRETAX measures the income of the business group before adjustments for
         income taxes and minority interests.

  (n)    PRETAX-ROA  measures  return on assets for the business  group based on
         the  Pretax  calculation  divided by average  assets  deployed  for the
         business group.

  (o)    RETIREMENT  OR  RETIRE  means a  Participant  is  receiving  retirement
         benefits  under the United  States  Social  Security Act or any similar
         program or act, or Donnelley pension, and is not in active employment.

     SECTION 2:02 Tables  contained in this Plan  documentation  are  conceptual
illustrations  and not  intended to specify  actual or  specific  opportunities.
Specific opportunities will be communicated on an annual basis.
<PAGE>
                             ARTICLE III ELIGIBILITY

     SECTION 3:01 Those eligible to be selected for  participation  will consist
of executives who are full-time employees of the Company who are selected by the
Committee on the basis of Plan objectives described in Article 1.

  (a)    Executives  who are  selected to be  Participants  in this Plan will be
         notified   by  the   Committee   at  the   beginning   of   each   Plan
         Year/Performance Period.

  (b)    The Committee may, from time to time, select  additional  executives to
         become Participants during a Plan Year/Performance
         Period from the eligible group of employees.

  (c)    The  Committee  may  select  executives  to  participate  in the annual
         incentive  portion  of  this  Plan  only  or in  combination  with  the
         long-term incentive portion of this Plan.

     SECTION  3:02  Any  employees  of the  Company  who  becomes  eligible  for
participation  and is selected as a Participant  after the beginning of the Plan
Year/Performance Period will participate on a pro rata basis.

     SECTION 3:03 A Participant  will cease to be eligible for  participation in
the Plan due to voluntary or involuntary  termination  of full-time  employment,
death, Disability or Retirement.

     SECTION  3:04 If a  Participant  dies,  retires,  becomes  disabled,  or is
granted  a leave  of  absence  during  the  Plan  Year/Performance  Period,  the
Committee, at its discretion, may award partial incentive on a pro-rata basis.

     SECTION  3:05 In no case,  will any  award  be paid  under  the Plan to any
Participant  who is  terminated at any time for Cause  including  cases in which
termination occurs after the end of the Plan Year/Performance Period, but before
incentive awards are paid.
<PAGE>
                                   ARTICLE IV
                 INDIVIDUAL ANNUAL INCENTIVE AWARD OPPORTUNITIES

     SECTION 4:01 Annual incentive award opportunities will be determined by the
Committee in consideration of the following:

          (a) The degree to which a Participant may impact Company performance.

  (b)    The magnitude of award opportunity that will affordably allow Donnelley
         to  reward   Participants   competitively  when  expected  results  are
         achieved.

     SECTION 4:02 A range of annual incentive opportunity will be provided to:

          (a) Reward controllable achievements above expected levels.

  (b)    Encourage  and  recognize  efforts  that are above  minimum  acceptable
         levels of performance.


                                     TABLE I
                      RANGE OF ANNUAL INCENTIVE OPPORTUNITY

Table I shows the  correlation  between award size and performance  results.  An
example of  threshold  for  Corporate  performance  achievement  might be in the
neighborhood  of 80% of planned  results and an  appropriate  Maximum  limit for
Corporate performance achievement might be in the 140% range.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 1)
<PAGE>
     SECTION 4:03 Payment of annual  incentive  awards to  Participants  will be
contingent  on  performance   measured  in  two  broad   categories.   Financial
performance  will be measured by Earnings Per Share for the  organization and by
Pretax and Pretax-ROA for business units. Strategic/Operational performance will
be measured on accomplishment against pre-established goals.

                                     TABLE 2
                         FINANCIAL MEASURES CALCULATION

Table 2  illustrates  the method to be used for Earnings per Share  calculation,
Pretax income calculation for each business unit, and Pretax-ROA calculation for
each business unit.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 2)
<PAGE>
                                     TABLE 3
                   ILLUSTRATION OF STRATEGIC/OPERATIONAL GOALS

Table 3 illustrate an example of what a strategic/operational  imperative may be
for a  business  unit  head and how  accomplishment  of that  imperative  may be
measured.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 3)

     STRATEGIC/OPERATIONAL  Performance  will  be  measured  against  milestones
established  in  context  of  long-term   strategy   implementation.   Strategic
milestones will be determined prior to the beginning of each Plan Year.

     SECTION 4:04 The amount of the emphasis placed on achieving results in each
performance  category  can vary by  Participant  and will be  determined  by the
Committee  in  consideration  of the  following  and as shown  for  illustrative
purposes only in Table 4:

        (a)      The Participant's responsibilities.

  (b)  Areas  of  performance  where  results  can  have  the  most  significant
contribution.
<PAGE>
                                     TABLE 4
                ILLUSTRATION OF WEIGHTING OF AWARD OPPORTUNITIES

Table 4 illustrates that I 00% of the CEO's performance  weighting will be based
on Corporate Financial performance.  It also shows that Business Unit Heads will
typically have three  components of performance  categories,  and that Corporate
Staff will typically have two components of performance  categories with a range
possible (e.g.- A-13%) in each.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 4)

     SECTION 4:05 For each financial  performance  measure,  awards will be paid
based on  performance  results  achieved  relative  to  predetermined,  expected
levels.  Minimum  acceptable and maximum  controllable  achievement will also be
specified by the  Committee  prior to the  beginning of the Plan Year. No awards
will  be paid  for  performance  that  falls  below  minimum  acceptable  levels
(Threshold)  and no additional  incentive  payments will be made for performance
that  exceed  maximum  controllable  levels.   Awards  for  performance  between
specified levels will be interpolated.

     SECTION 4:06 Prior to the  beginning of each Plan Year the  Committee  will
decide and communicate expected levels of financial performance for which Awards
will be Paid, as well as minimum acceptable and maximum  controllable  financial
performance.

     Specified threshold,  expected and maximum levels of financial  performance
may vary by business group or for the Company at the discretion of the Committee
in consideration of the following:

  (a)     The sensitivity of financial results to Participant performance.

  (b)     The level of effort required to attain desired results.

  (c)     The Company's pay philosophy and compensations principles.
<PAGE>
                                     TABLE 5
              ILLUSTRATION OF RANGE OF ANNUAL INCENTIVE OPPORTUNITY

Table 5  provides  an  illustration  of  potential  award size  versus  level of
performance  achievement.  The numbers is this table  provide an example of what
might be  expected  for a  business  unit  head.  The  potential  also  exist to
establish awards that are flat dollar amounts instead of awards that represent a
percent of base salary.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 5)

     SECTION 4:07 The award  portion  based on strategy  implementation  will be
discretionary   based  on  an  evaluation  of   achievement   of  one  to  three
predetermined  strategic  milestones.  The emphasis will be placed on whether or
not all of the  milestones  were  attained  during the Plan Year  rather than on
degrees of fulfillment.

     SECTION 4:08 When position and/or  responsibility  changes occur within the
year,  awards  will be paid on a pro rata basis based on the  discretion  of the
Committee.
<PAGE>
     SECTION  4:09  While  the   Committee   has  overall   accountability   for
administering  this Plan, the process for setting  expectations,  evaluating and
communicating results is participatory as designated below:

                                     TABLE 6

          PARTICIPATORY  PROCESS FOR SETTING  EXPECTATIONS  AND  EVALUATING  AND
     COMMUNICATING RESULTS

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 6)
<PAGE>
                                    ARTICLE V
                         ANNUAL INCENTIVE AWARD PAYMENTS

     SECTION 5:01 Annual  incentive  awards will be paid in cash to Participants
as soon as possible  following  finalization of audited  financials for the Plan
Year.

     SECTION  5:02  Payments of awards will be reduced by the amount paid out in
other bonuses paid to the Participant for the Plan year.

     SECTION 5:03 Payment of awards is contingent upon the company's  ability to
pay.
<PAGE>
                                   ARTICLE VI
                        MEASUREMENT OF PERFORMANCE UNITS

     SECTION 6:01 Performance  units will be valued based on a 5 year cumulative
average  appreciation  in share value.  Yearly  appreciation  will be calculated
using the  average of the  average of the first 3 0 days and the  average of the
last 3 0 days of the year stock price.

     SECTION 6:02 The  Committee  will  determine  the value of a  Participant's
Performance  Unit as soon as possible after the close of the 5 year  Performance
Period.

     SECTION  6:03 There is no cap on the  maximum  value of  Performance  Units
under this Plan.
<PAGE>
                                   ARTICLE VII

                             PERFORMANCE UNIT GRANTS

     SECTION 7:01 There are an  aggregate  number of 100,000  Performance  Units
available for allocation each year from which grants can be made.

     SECTION  7:02  Units will be  granted  at the  beginning  of each Plan Year
resulting in overlapping Performance Periods.

                                     TABLE 7
                    OVERLAPPING FIVE YEAR PERFORMANCE PERIODS

This  table  illustrates  the  concept  of  granting  Performance  Units  at the
beginning of each Plan Year with a five-year Performance Period for those grants
resulting in a potential payout at the end of the five-year  Performance Period.
Table 7 also illustrates the concept of overlapping Performance Periods.

(TABLES  CONTAINED  IN THIS  REPORT ARE  CONCEPTUAL  ILLUSTRATIONS  ONLY AND NOT
INTENDED TO SPECIFY ACTUAL OR SPECIFIC OPPORTUNITIES.)

                                    (Table 7)

     SECTION 7:03 All Participants will not necessarily receive a grant of Units
each year, and the number of Units granted to the same Participant may vary from
year to year. Not all available  units will  necessarily be granted in any given
year.

     SECTION 7:04 The number of Units  granted to a  Participant  will remain in
effect for the duration of the Performance Period unless the Units are forfeited
as described in Article II or the  Participant  is  transferred  as described in
Section 7:07.
<PAGE>
     SECTION  7:05 The value of Units at the time of grant is zero.  Units  will
appreciate in value over the Performance  Period based on an amount equal to the
appreciation  in share price.  The Units do not represent and equity interest in
the Company.

     SECTION  7:06 The specific  number of Units to be granted to each  eligible
Participant  will be decided by the Committee.  The number of Units granted will
be determined in consideration of the following:

  (a)    The Participant's  current and anticipated ability to contribute to the
         long-term success of the organization through actions and decisions.

  (b)    The  number  of  Units  required  to  provide  long-term   compensation
         opportunities,   in  conjunction  with  Stock  Options,  which  support
         Donnelley's  pay philosophy and that will help retain  high-performance
         Participants who fulfill strategic plans.

     SECTION 7:07 Units granted to  Participants  who are  transferred  from one
position to another during a Performance Period will be handled as follows:

  (a)    Units  already  granted from the  Performance  Period will  continue to
         appreciate in value to the remainder of the Performance Period.

  (b)    Any adjustments due to position/responsibility  changes will be made at
         the discretion of the Committee in future Grant Years.
<PAGE>
                   ARTICLE VIII PERFORMANCE UNIT AWARD PAYOUTS

     SECTION  8:01  Cash  award  payments  will be made at the end of the 5 year
Performance  Period as soon as possible after the award amount can be calculated
and audited following the close of the Performance Period.

     SECTION 8:02 Payment of awards is contingent upon the Company's  ability to
pay.
<PAGE>
                                   ARTICLE IX
                           ADMINISTRATION OF THE PLAN

     SECTION 9:01 This Plan is effective July 1, 1994.

     SECTION 9:02 The Plan will be administered by the Committee which will have
full  responsibility  and authority to interpret and  administer  the Plan.  The
Committee will have the following duties and responsibilities in relation to the
administration of the Plan.

  (a)    To resolve all questions arising in the administration,  interpretation
         and application of the Plan, including questions of eligibility and the
         status and rights of Participants.

  (b)    To decide any dispute arising in the administration of the Plan.

  (c)    To correct defects, supply omissions, and reconcile  inconsistencies to
         the extent necessary to act on the Plan.

  (d)    To authorize all payments that will be made pursuant to the  provisions
         of this Plan.

  (e)    To have  all such  other  powers as may be  necessary to discharge  its
         duties herein.

     SECTION 9:03 The Committee may at any time amend,  modify, or terminate the
Plan. Written notice of any amendments will be given to each Participant.

     SECTION 9:04 All costs and expenses involved in the  administration of this
Plan will be borne by the Company.

     SECTION 9:05 The Company will deduct from all payments  under this Plan any
federal, state and/or local taxes required by law.

     SECTION 9:06 Any payments  due upon a  Participant's  death will be paid to
the  beneficiary  by  her/him in writing  and filed with the  Committee.  In the
absence of such a designation, payment will be made to the person(s) entitled by
will  or  the  laws  of  descent  and  distribution.  Acceptable  proof  of  the
entitlement to payment must be provided by the beneficiary to the Committee.
<PAGE>
     SECTION 9:07 Nothing contained in the Plan shall be construed as a contract
of  employment  between  the  Company  and a  Participant,  or as a  right  of a
Participant  to continue in the  employment of the Company or as a limitation of
the right of the Company to discharge a Participant, with or without Cause.

     SECTION 9:08 All  determinations by the Committee will be final and binding
upon Participants and are not subject to appeal.

     SECTION 9:09 In the event of a change in control in the beneficial interest
of both  vote and  value  of the  Company,  this  Plan  will  remain  in  effect
unchanged.

     SECTION 9:10 None of the opportunities,  payments, or Units under this Plan
will be  transferable  by the  Participant  other  than  by will or the  laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined in Title I of the Employee  Retirement  Income  Security Act of 1974 and
the rules thereunder.
<PAGE>
                                DONNELLY CORPORATION

                           UNFUNDED DEFERRED DIRECTOR
                           --------------------------
                                    FEE PLAN
                                    --------

     1. On or before  the last day of any  quarter,  any  director  may elect to
defer receipt of all or a specified  amount of his or her director's  fees to be
earned in the  succeeding  quarter.  Any election shall continue from quarter to
quarter until modified by a subsequent election, which subsequent election shall
be effective with respect to the calendar quarters following the election.

     2. The Company shall maintain a separate account for each director to which
the fees of such director  shall be credited as earned.  On the last day of each
of its fiscal  quarters,  the  Company  shall also  credit to each such  account
interest on the average balance in that quarter,  at the rate equal to the prime
rate on the last day of that quarter.

     3. The plan will be unfunded.

     4. Amounts  deferred under the Plan,  together with  accumulated  interest,
will be  distributed  to the  director  in ten  annual  installments,  the first
installment  payable  on the first  day of the year  following  such  director's
retirement  or  termination  from the  Board of  Directors.  The  amount of each
installment shall be the balance of the director's  account at that date divided
by the number of unpaid  installments.  The balance of such  director's  account
shall continue to be credited with interest as provided above.

     5. The Company, by resolution of the Board of Directors,  may elect, at the
Company's sole option, to pay any amount standing to the credit of a director in
a lump sum, after such director  ceases to be a director of the Company,  in the
event  the  director  and  thereafter  becomes  employed  by, a  director  of or
otherwise affiliated with any business that is in competition with the Company.

     6. Upon death of a director or a former director prior to the expiration of
the period  during  which the deferred  amounts are payable,  the balance of the
director's  fees and interest in his or her account  shall be payable in full on
the first day of the calendar year following the year in which he or she dies to
the beneficiary  designated in writing to the Company by such director or former
director, or if no beneficiary has been designated, to his or her estate.

December 1993 WL07-23.DOC
<PAGE>
                                FORM OF ELECTION
                                ----------------


TO:     Donnelly Corporation

     I hereby elect to defer that portion of my director's fees set forth below,
commencing with fees payable to me after the quarter, following the date of this
election,  pursuant to the Donnelly  Corporation  Unfunded Deferred Director Fee
Plan:

                                                  Amount of Fees Types of Fees
  to be Deferred                              to be Deferred
  ----------------------------                --------------

  _____  Annual Retainer Fee                           _____ All

  _____  Annual Retainer and Meeting Fees

                                              _____ The first $_________
                                                     per year

                                              _____ Percent as earned

  In the event of my death, pay the following beneficiary:


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


  -----------------------                 ----------------------------------
  Date                                    Signature of Director

  December 1996
  WL07-23.DOC
<PAGE>
                                                                 EXHIBIT 10.13

                     THE DONNELLY CORPORATION PENSION PLAN FOR OUTSIDE DIRECTORS




  VARNUM, RIDDERING, SCHMIDT & HOWLETT
  Suite 800, 171 Monroe, N.W.
  Grand Rapids, Michigan 49503
  616/459-4186
  9/10/92
<PAGE>
                                TABLE OF CONTENTS


                                                       Page
                                                       ----

  ARTICLE I - PURPOSE...................................  1

  ARTICLE II - DEFINITIONS..............................  1

  ARTICLE III - PARTICIPATION AND SERVICE...............  2

  ARTICLE IV - FUNDING..................................  2

  ARTICLE V - RETIREMENT BENEFITS.......................  2

  ARTICLE VI - SPECIAL RETIREMENT BENEFITS..............  3

  ARTICLE VII - SUSPENSION OF BENEFITS..................  3

  ARTICLE VIII - MISCELLANEOUS..........................  4
<PAGE>
                            THE DONNELLY CORPORATION
                       PENSION PLAN FOR OUTSIDE DIRECTORS


     This  Pension  Plan has been  adopted by Donnelly  Corporation,  a Michigan
corporation (the "Company").

                                    ARTICLE I
                                     PURPOSE

     The  Company  is  adopting  this plan  which  will be called  the  Donnelly
Corporation  Pension Plan for Outside  Directors (the "Plan")  effective July 1,
1992 to provide  retirement  benefits  for the members of its board of directors
who are not officers or employees of the Company.

     This  Plan  will not  cover  any  employees  of the  Company  and will not,
therefore,  be subject to the  requirements  of the Employee  Retirement  Income
Security Act of 1974. This Plan will apply only to persons who served as members
of the Board of  Directors  of the  Company on or after July 1, 1992 and are not
employees or officers of the Company.

                                   ARTICLE II
                                   DEFINITIONS

     The  masculine  gender  is  used  throughout  this  Plan  for  purposes  of
simplicity  only and is intended to refer to persons of both the  masculine  and
feminine  gender.  The following words or phrases,  when used in this Plan, will
have the following meanings:

     2.1 Board: The board of directors of the Company.

     2.2  Beneficiary:  The person or persons  designated by the  participant to
receive any death benefit payable under the Plan.

     2.3 Committee:  The  compensation  committee  established by the board. The
committee may act on behalf of the board on any matter concerning this Plan.

     2.4  Company:  Donnelly  Corporation,   a  Michigan  corporation,   or  its
successor.

     2.5  Outside  director:  A member  of the board  who is not an  officer  or
employee of the Company or any of its subsidiaries.

     2.6 Participant:  An outside director who is eligible to participate in the
Plan.

     2.7 Plan: The Donnelly  Corporation  Retirement Plan for Outside Directors,
as set forth in this document and any later amendments.

     2.8 Service: The period during which a person has served as a member of the
board and computed in accordance with Section 3.2.

                                       -1-
<PAGE>
                                   ARTICLE III
                            PARTICIPATION AND SERVICE

     3.1  Eligibility  to  participate.  Each  outside  director  will  become a
participant  in the Plan on the first day of the  month  following  the month in
which he completes one (1) year of service as a director of the Company.

     3.2 Service.  An outside director's  eligibility to participate in the Plan
and his  benefits  under the Plan will be based  upon his period of service as a
member of the board. An outside director will be credited with a year of service
for each full year between the date on which he became a member of the board and
the date on which he ceased to be a member of the  board.  An  outside  director
will also be  credited  with one  quarter  of a year of  service  for each three
months of service as a member of the Board during the period  following his last
full year of service.  If an outside director becomes an employee of the Company
and continues to serve as a member of the board, he will not be given credit for
service during the period of his employment by the Company as an employee.

                                   ARTICLE IV
                                     FUNDING

     4.1 Funding from General Assets Only. All amounts  payable to  participants
and  beneficiaries  under this Plan will be paid in cash from the general assets
of the Company.  The Company will not establish any special or separate fund for
purposes of this Plan.

     4.2 Status of  Participants.  Participants  and  beneficiaries  will have a
right to payment of their  benefits  under this Plan from the general  assets of
the Company.  They will have the status of unsecured  creditors  with respect to
their claims for  benefits.  The  establishment  of this Plan is not intended to
create a trust or fiduciary relationship between the Company and participants or
beneficiaries.

                                    ARTICLE V
                               RETIREMENT BENEFITS

     5.1  Eligibility.  A retirement  benefit  will be paid to each  participant
whose service as a member of the board  terminates  after he has completed 10 or
more years of service.

     5.2 Amount of Benefit. A participant's retirement benefit will be quarterly
payments  for a period  equal to his years of  service on the board or 20 years,
whichever  number is smaller,  in an amount equal to 25% of the annual  retainer
that was in effect for  participant on the date of termination of his service on
the board.

     5.3  Commencement  and  Duration  of  Benefit  Payments.   Payment  of  the
retirement benefit will begin on the first working day of the next quarter after
the participant's 70th birthday or the date of termination of his service on the
board, whichever is later, and will

                                       -2-
<PAGE>
continue on the first working day of each quarter  thereafter for a period equal
to the participant's years of service on the board or 20 years, whichever period
is shorter.

     If a  participant's  service  on the  board  terminates  prior  to his 70th
birthday, he may elect to have his retirement benefits commence on the first day
of any quarter after his 55th birthday.  If payments  commence prior to his 70th
birthday,  the quarterly payments will be reduced by the amount required to make
the payments the actuarial  equivalent of payments beginning on the first day of
the  quarter  after  his  70th  birthday.  The  actuarial  equivalence  will  be
determined  on the  basis  of the  interest  assumptions  used  for  determining
actuarially  equivalent  installment  payments  under the  Donnelly  Corporation
Retirement Income Plan.

     5.4 Continuation of Benefits After Death. If a participant dies while he is
a member  of the  board  or after he is  retired,  but  before  he has  received
retirement benefits over the period for which he is eligible, the balance of the
quarterly  payments for which the  participant was eligible will be continued to
be made to his beneficiary.  At the election of the beneficiary,  the balance of
the payments may be made in a single lump sum payment  equal to the  actuarially
equivalent present value of the remaining quarterly payments.  The present value
will be determined using the interest assumption specified in Section 5.3.

     5.5   Designation  of  Beneficiary.   Each   participant  may  designate  a
beneficiary or  beneficiaries  to whom his plan benefits will be paid if he dies
before receipt of all benefits. Each beneficiary designation must be on the form
prescribed  by the  committee  and will be  effective  only when  filed with the
committee during the participant's  lifetime. Each beneficiary designation filed
with the  committee  will cancel all  beneficiary  designations  that were filed
previously.  If a  participant  fails  to  designate  a  beneficiary  or if  the
beneficiary dies before the  participant,  the death benefit will be paid to the
participant's spouse, if surviving, and if not, to his estate.

                                   ARTICLE VI
                           SPECIAL RETIREMENT BENEFITS

     6.1  Eligibility.  The board may grant a special  retirement  benefit  to a
participant whose service on the board will be terminating before he is eligible
for a retirement  benefit.  The board may grant special retirement benefits only
if it determines that the payment will be in the best interest of the Company.

     6.2 Amount of  Benefit.  The amount  and timing of the  special  retirement
benefit will be  determined  by the board on the basis of the  circumstances  of
each  special  retirement.  The actions of the board with respect to any special
retirement will not serve as a precedent for any situation in the future.


                                       -3-
<PAGE>
                                   ARTICLE VII
                             SUSPENSION OF BENEFITS

     7.1 Resumption of Board  Membership.  If a retired  participant  returns to
membership on the board,  the benefits  payable under the Plan will cease for as
long as he continues on the board.  Upon  subsequent  retirement from the board,
the participant's  retirement  benefits will be resumed and will be redetermined
on the basis of the annual retainer that is in effect for him on the date of the
second retirement.

     7.2 Employment as Employee. If a retired participant becomes an employee of
the Company or any of its subsidiaries, retirement benefits payable to him under
the Plan will cease for as long as he remains an employee.  Upon  termination of
employment,  payment  of his  retirement  benefits  will be  resumed in the same
amount as before the period of employment.

                                  ARTICLE VIII
                                  MISCELLANEOUS

     8.1 Amendments.  The board reserves the right to amend the Plan at any time
and from time to time,  and the  right to  terminate  the Plan at any time.  The
board  may  not,  however,  by way of  amendment  or  termination  of the  Plan,
adversely  affect the rights of any  participant or beneficiary who is receiving
benefits at the time, or the rights of any  participant who has 10 or more years
of service.

     8.2 Status of Participants.  No participant will have any right or claim to
benefits  under the Plan except in accordance  with the  provisions of the Plan.
The  adoption of the Plan will not be construed  as giving any  participant  the
right to be continued as a member of the board, to modify or affect the terms of
membership on the board,  or to interfere with the right of  shareholders of the
Company to elect members of the board.

     8.3 Nonalienation of Benefits. No interest,  right, or claim to any benefit
payable  under the Plan will be  assignable,  transferable,  or subject to sale,
assignment, garnishment, attachment, execution, or levy of any kind. The Company
will not recognize any attempt to transfer,  assign,  sell,  garnish,  attach or
execute on benefits except to the extent required by law.

     8.4  Facility of Payment.  Whenever in the  committee's  opinion,  a person
entitled to receive any benefit is under a legal  disability or is incapacitated
in any way so as to be unable to manage his financial affairs, the committee may
direct  the   Company  to  make   payments  to  such  person  or  to  his  legal
representative or to a relative or friend of such person for his benefit, or the
committee  may direct the  Company to apply the  payment for the benefit of such
person in such manner as the committee considers advisable. If a person entitled
to receive benefits is a minor and the value of the benefit exceeds $5,000,  the
Company may either delay payment of the benefit until the minor has attained the
age of  majority or pay the benefit to a person who has been named by a court of
competent  jurisdiction  as conservator of the estate of the minor or to another
similar court-appointed  fiduciary.  Any payment of a benefit in accordance with
the  provisions  of this Section will  discharge  all liability for such benefit
under the provisions of the Plan.

                                       -4-
<PAGE>
     8.5   Interpretation.   The   committee   will  be   responsible   for  the
administration  and interpretation of the Plan and will determine the amount, of
benefits   payable  in  the  event  of  any  dispute.   Any   determination   or
interpretation  by the committee  will be final,  binding and  conclusive on all
persons.

     8.6 Governing Law. This Plan will be interpreted, construed and enforced in
accordance with the laws of the State of Michigan.

     8.7  Severability of Provisions.  If any provision of this Plan is declared
void and  unenforceable,  the other provisions will be severable and will not be
affected by the invalidation of the unenforceable provision.

     IN WITNESS  WHEREOF,  the Company has adopted this Plan on the _____ day of
_____, 1992.

                                       DONNELLY CORPORATION


                                       By
                                          Its Chief Executive Officer

(Corporate Seal)


Attest:


By

    Its Secretary

::ODMA\PCDOCS\GRR\72898\1

                                       -5-
<PAGE>
                                                                 EXHIBIT 10.14




                              THE DONNELLY CORPORATION

                            SUPPLEMENTAL RETIREMENT PLAN









  VARNUM, RIDDERING, SCHMIDT & HOWLETT 171 Monroe, N.W., Suite 800
  Grand Rapids, MI  49503
  (616) 459-4186
  8/21/92
<PAGE>
                                TABLE OF CONTENTS

                                                       Page
                                                       ----

  ARTICLE I -- PURPOSE                                   1

  ARTICLE II -- DEFINITIONS                              1

  2.1   Accrued Benefits                                 1
  2.2   Actuarial Equivalent                             1
  2.3   Authorized Leave of Absence                      1
  2.4   Average Monthly Compensation                     2
  2.5   Code                                             2
  2.6   Committee                                        2
  2.7   Company                                          2
  2.8   Compensation                                     2
  2.9   Covered Compensation                             2
  2.10  Controlled Group                                 2
  2.11  Employee                                         2
  2.12  ERISA                                            3
  2.13  Normal Retirement Date                           3
  2.14  Participant                                      3
  2.15  Plan Year                                        3
  2.16  Service                                          3
  2.17  Social Security Retirement Age                   3

  ARTICLE III -- PARTICIPATION AND SERVICE               3

  3.1   Participation                                    3
  3.2   Service                                          4
  3.3   Transfers of Employment Within the Company or
        Controlled Group of Corporations                 4

  ARTICLE IV -- NORMAL RETIREMENT BENEFIT                4

  4.1   Eligibility                                      4
  4.2   Amount of Benefit                                4
  4.3   Suspension of Benefits                           5
  4.4   Commencement of Benefits                         5

  ARTICLE V -- EARLY RETIREMENT BENEFIT                  5

  5.1   Eligibility                                      5
  5.2   Amount of Benefit                                5
  5.3   Commencement of Benefits                         5

                                        -i-
<PAGE>
                                                           Page
                                                           ----

  ARTICLE VI -- DEFERRED VESTED BENEFIT                      6

  6.1    Eligibility                                         6
  6.2    Amount of Benefit                                   6
  6.3    Commencement and Form of Payment                    6


  ARTICLE VII -- SURVIVING SPOUSE BENEFIT                    6

  7.1    Eligibility                                         6
  7.2    Amount of Benefit                                   6
  7.3    Commencement, Duration, and Form of Payment         7


  ARTICLE VIII -- PAYMENT OF RETIREMENT BENEFITS             7

  8.1    Standard Benefit                                    7
  8.2    Post-Retirement Surviving Spouse Benefit            8
  8.3    Optional Forms of Benefit                           8
  8.4    Reduction of Benefits for Previous Payments         8


  ARTICLE IX -- RESPONSIBILITIES AND INDEMNIFICATION         8

  9.1    Funding                                             8
  9.2    Indemnification                                     9


  ARTICLE X -- ADMINISTRATION                                9

  10.1    Plan Administrator                                 9
  10.2    Records and Reports                                9
  10.3    Appointment of Committee                           9
  10.4    Claims Procedure                                   9
  10.5    Other Committee Powers and Duties                 10
  10.6    Committee Procedures                              10
  10.7    Authorization of Benefit Payments                 10
  10.8    Application and Forms for Benefits                10
  10.9    Facility of Payment                               10


  ARTICLE XI -- AMENDMENT OF PLAN                           10

                                       -ii-
<PAGE>
                                                            Page
                                                            ----

  11.1    Amendments                                         10
  11.2    Right of Termination                               10

  ARTICLE XII -- NONALIENATION OF BENEFITS AND DOMESTIC
                 RELATIONS ORDERS                            11

  12.1    Nonalienation of Benefits                          11
  12.2    Procedure for Domestic Relations Orders            11


  ARTICLE XIII -- MISCELLANEOUS                              11

  13.1    Status of Participants                             11
  13.2    No Interest in Company Affairs                     12
  13.3    Notices                                            12
  13.4    Governing Law                                      12
  13.5    Severability of Provisions                         12


                                  -iii-
<PAGE>
                            THE DONNELLY CORPORATION
                          SUPPLEMENTAL RETIREMENT PLAN


     This Supplemental Pension Plan has been adopted by Donnelly Corporation,  a
Michigan corporation (the "Company").

                            ARTICLE I PURPOSE

     The Company maintains a pension plan for all of its employees.  The plan is
known as the Donnelly Corporation  Employees'  Retirement Plan and is maintained
as a "qualified  plan" under the  provisions  of Section  401(a) of the Internal
Revenue Code.

     This Supplemental Pension Plan (the "Plan") is designed to provide benefits
to certain  employees that will be in addition to the benefits that will be paid
under the qualified  plan.  This Plan is intended to be an "excess benefit plan"
that does not satisfy the requirements of Section 401(a) of the Internal Revenue
Code and is exempt from most of the provisions of ERISA. This Plan will apply to
all employees who are covered by the qualified plan and whose benefits under the
qualified  plan are limited by the provisions of Section 415 of the Code and the
limitations on compensation in Section 401(a)(17) of the Code.

     This Plan will be  effective  as of July 1, 1992 and will  apply to persons
who were employed by the Company on or after that date.

                             ARTICLE II DEFINITIONS

     The  masculine  gender  is  used  throughout  this  Plan  for  purposes  of
simplicity,  but is intended to refer to either gender.  The following  words or
phrases will have the following meanings:

     2.1 Accrued benefit.  The portion of a normal retirement  benefit earned as
of the date of the  computation.  It is a monthly  benefit  commencing at normal
retirement date and equal to the benefit  computed in accordance with the normal
retirement  benefit  formula  in  Section  4.2 using the  participant's  average
monthly   compensation,   covered  compensation  and  service  on  the  date  of
computation.

     2.2 Actuarial equivalent. Equivalence in the present value of various forms
of payment.  Present  values will be determined  by the actuaries  chosen by the
Company based on the 1971 Group Annuity  Mortality  Table (male lives) with ages
set back two years for  employees  and four  years  for  joint  annuitants,  and
interest at the rate of 8% per annum.

     2.3  Authorized  leave of absence.  Any absence  authorized  by the Company
under its standard personnel policies. All employees under similar circumstances
will be  treated  alike in the  granting  of leaves and must  return  within the
period  authorized.  An absence due to service in the armed forces of the United
States will be an authorized leave of
<PAGE>
absence provided the employee  qualifies for  reemployment  rights under federal
law (38 USCA  (S)(S)2021 or 2024 or other statute of similar import) and returns
to employment with the Company within the period provided by law.

     2.4 Average monthly compensation. The greater of the following:

     (a)  1/60th  of the  compensation  of the  participant  during  the last 60
consecutive calendar months prior to termination of employment with the Company;
or

     (b) 1/60th of his compensation  during the five consecutive  calendar years
in which his  compensation  was the highest during the last 10 calendar years of
his employment with the Company.

     2.5 Code. The Internal Revenue Code of 1986, as amended from time to time.

     2.6 Committee. The persons appointed to administer the Plan.

     2.7  Company.  Donnelly  Corporation,   a  Michigan  corporation,   or  its
successor.

     2.8  Compensation.  The  total of  salary,  wages,  and  bonuses  paid to a
participant by the Company for personal services  rendered as an employee,  plus
any amounts by which the participant's salary or wages has been reduced pursuant
to any 401(k) or flexible  benefit  plan salary  reduction  agreements  with the
Company. Amounts shown on the participant's form W-2 for any year as a result of
fringe  benefits  derived from the Company or benefits paid under this Plan will
not be counted as compensation for purposes of the Plan.

     2.9  Covered  compensation.  One-twelfth  (1/12th)  of the average for each
participant  of the  Social  Security  taxable  wage  bases in  effect  for each
calendar  year  during the 35-year  period  ending with the last day of the year
preceding  the year in which  the  participant  attains  or will  attain  Social
Security  retirement  age.  The taxable  wage base for the current year and each
subsequent  year  will be  assumed  to be the same as the  taxable  wage base in
effect as of the beginning of the plan year for which the determination is being
made.  If a  participant  continues  working  during  the plan  year in which he
attains Social Security retirement age and thereafter,  his covered compensation
will be the amount  determined for the year in which he attains Social  Security
retirement  age.  For plan years prior to the 35-year  period  described  in the
first  sentence,  a  participant's  covered  compensation  will be  equal to the
taxable wage base for the plan year.  Each  participant's  covered  compensation
will be redetermined for each plan year.

     2.10 Controlled  group.  The group consisting of each corporation that is a
member of a controlled group of corporations, as defined in Code Section 414(b),
of which the  Company  is a  member;  each  trade or  business,  whether  or not
incorporated,  under common control,  as defined in Code Section  414(c),  of or
with the Company;  and each member of an affiliated service group, as defined in
Code Section 414(m), of which the Company is a member.

                                        -2
<PAGE>
     2.11  Employee.  Any  person  who is a regular  full-time  employee  of the
Company and receives  compensation for personal services rendered to the Company
(or is on lay off  status or an  authorized  leave of  absence),  but  excluding
persons who are classified as temporary contract employees.

     2.12  ERISA.  The  Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     2.13 Normal retirement date. The first day of the month following the later
of the following:

     (a) The  participant's  birthday  on which he attains the age that is three
(3) years prior to his Social Security retirement age; or

     (b)  The  fifth  anniversary  of the  date  on  which  he  first  became  a
participant in the Plan.

     The  relevant  birthday  for  subsection  (a)  is  the  62nd  birthday  for
participants  born before 1938, the 63rd birthday for  participants  born in the
years 1938 through 1954, and the 64th birthday for participants born after 1954.

     2.14  Participant.  A  person  who  is  employed  by  the  Company  and  is
participating in the Plan in accordance with the provisions of Article III.

     2.15 Plan year.  The "fiscal  year" of the Plan which will be the  12-month
period ending June 30.

     2.16  Service.  The  period of a  participant's  employment  considered  in
determining  his  eligibility  for benefits and the amount of his benefits under
the Plan, as computed in accordance with Section 3.2.

     2.17 Social Security retirement age. The age at which a participant becomes
eligible for benefits under the federal Social Security Act that are not reduced
on account of age. This will be age 65 for participants born before 1938, age 66
for  participants  born  during  the years  1938  through  1954,  and age 67 for
participants born after 1954.

                      ARTICLE III PARTICIPATION AND SERVICE

     3.1  Participation.  An employee will become a participant  in this Plan on
the first day of the next plan year (July 1) after the plan year in which either
of the following occurs:

     (a) The employee's  compensation exceeds the limit on compensation that can
be considered under the Donnelly  Corporation  Employees'  Retirement Plan under
the provisions of Section 401(a)(17) of the Code. This limit is $228,860 for

                                        -3
<PAGE>
the plan year  beginning  July 1, 1992 and will be  adjusted  for changes in the
cost of living under the provisions of Section 415(d) of the Code; or


                                        -4
<PAGE>
     (b)  The  employee's   accrued  benefit  under  the  Donnelly   Corporation
Employees'  Retirement  Plan exceeds the maximum benefit under Section 4.4(a) of
that plan.

     3.2 Service. A Participant's eligibility for benefits and the amount of his
benefits  under the Plan will be  determined by his period of service which will
be equal to his years of service as calculated  under the  provisions of Section
3.2 of the Donnelly Corporation Employees' Retirement Plan.

     3.3  Transfers  of  Employment  Within the Company or  Controlled  Group of
Corporations.

     (a) Transfers Resulting in Eligibility to Participate. A person who becomes
an  employee  as a result of a transfer  to  employment  with the  Company  from
another  corporation  that is in a  controlled  group  will be given  credit for
purposes  of the  eligibility  requirements  of Section  6.1 for prior  years of
service with the other corporation while it was a member of the controlled group
of corporations. The transferred employee will earn service credits for purposes
of determining his benefit under the Plan only for his period of employment with
the Company.

     Notwithstanding the foregoing, a participant who was previously employed by
Donnelly Mirrors,  Ltd., an Irish corporation and wholly owned subsidiary of the
Company,  will be given credit in accordance  with Section 3.2 for prior service
with Donnelly Mirrors, Ltd. for purposes of benefits and eligibility.

     (b) Transfers resulting in ineligibility to participate.  A participant who
ceases to be an employee as a result of a transfer to  employment  with  another
corporation  that is a member of the controlled  group of corporations  with the
Company will cease to be an active  participant as of the date of transfer.  The
transferee  will  continue to earn service  credits for purposes of  determining
eligibility  for a deferred  vested  benefit under Section 6.1 for his period of
service  with  any  member  of the  controlled  group,  but he will not earn any
additional  service credits for purposes of determining  benefits after the date
of transfer.

                                   ARTICLE IV
                            NORMAL RETIREMENT BENEFIT

     4.1  Eligibility.  A  normal  retirement  benefit  will  be  paid  to  each
participant whose employment terminates on or after his normal retirement date.

     4.2 Amount of Benefit.

     The  normal  retirement  benefit  will be equal  to the sum of the  amounts
determined under the following subparagraphs (a) and (b) minus the amount of the
participant's  normal  retirement  benefits  that are payable under the Donnelly
Corporation Employees'

                                        -5
<PAGE>
Retirement Plan and the pension plan for Donnelly  Mirrors,  Ltd., the Company's
Irish subsidiary.

     (a) The  participant's  number of years of service  multiplied by 1% of his
average monthly compensation; and

     (b) The participant's number of years of service or 35, whichever number is
smaller,  multiplied  by 0.55% of his average  monthly  compensation  that is in
excess of his covered compensation.

     Participants  who  receive  benefits  in the form of a joint  and  survivor
annuity or other optional form of payment will have their  benefits  adjusted by
an  amount  necessary  to make  the  optional  form  of  payment  the  actuarial
equivalent of the benefit provided in this section.

     4.3  Suspension  of Benefits.  Benefits will not be payable with respect to
any month in which an otherwise  eligible  participant  remains in the employ of
the Company or in which a retiree  returns to active service with the Company as
an employee and is credited with 40 or more hours of employment.

     4.4 Commencement of Benefits.  Payment of normal  retirement  benefits will
commence  on  the  first  day of the  month  after  the  participant  meets  all
requirements for eligibility and be payable in accordance with Article VIII.



                                    ARTICLE V
                            EARLY RETIREMENT BENEFIT

     5.1 Eligibility.  A participant who has attained age 55, completed five (5)
or more years of service,  and thereafter  terminates  his  employment  with the
Company will be entitled to receive an early retirement benefit beginning on the
first day of the month following the month of termination.

     5.2 Amount of Benefit.  The early  retirement  benefit will be equal to the
participant's  accrued  benefit.  If payment of benefits is to commence prior to
normal retirement date, the benefit will be reduced by six-tenths of one percent
(0.6%)  for each  month by which  the  commencement  of  benefits  precedes  the
participant's  normal  retirement  date  during the period from age 60 to normal
retirement  date,  and by  three-tenths  of one percent (0.3%) for each month by
which commencement precedes normal retirement date during the period from age 55
to age 60.

     5.3 Commencement of Benefits. Payment of early retirement benefits will com
mence on the first day of the month after the participant meets the requirements
and requests payment, and be payable in accordance with Article VIII.

                                        -6
<PAGE>
                       ARTICLE VI DEFERRED VESTED BENEFIT

     6.1  Eligibility.  A  participant  will be eligible  for a deferred  vested
benefit if he:

     (a) has completed at least five (5) years of service with the Company;

     (b) terminates employment for reasons other than death or retirement; and

     (c) is not  receiving  or entitled to receive any other  benefit  under the
Plan.

     6.2  Amount of  Benefit.  The  amount of a  participant's  deferred  vested
benefit will be equal to his accrued benefit.

     6.3  Commencement  and Form of  Payment.  Payment  of the  deferred  vested
benefit will commence on the former participant's normal retirement date. If the
former  Participant  satisfied the service  requirement for an early  retirement
benefit  on his date of  termination,  then at his option  the  deferred  vested
benefit may be payable  commencing  on the first day of the month  following the
birthday  on which he would have been  eligible  for early  retirement,  but the
payments will be reduced in accordance with the formula in section 5.2.

     Payment  will  be  made  in  accordance   with  Article  VIII.  The  former
participant  must apply in writing  for  payment of  benefits at such date as he
wishes  to  have  benefits  commence  and no  payment  will be  made  until  the
application has been received by the committee.  If the  actuarially  equivalent
present value of a deferred  vested benefit is $10,000 or less, the benefit will
be paid to the  former  participant  in a  single  lump sum  payment  as soon as
administratively  practical  after the end of the plan year in which  employment
terminates.

                      ARTICLE VII SURVIVING SPOUSE BENEFIT

     7.1  Eligibility.  The spouse of a  participant  will  receive a survivor's
benefit if the participant:

     (a) dies while  employed  by the  Company  and after he is  eligible  for a
deferred vested benefit, or an early or normal retirement benefit;

     (b) is survived  by a spouse to whom he has been  married for more than one
year at the time of his death; and

     (c) has not begun receiving  payments in a form other than a joint and 100%
survivor annuity.

                                        -7
<PAGE>
     7.2 Amount of Benefit.  The  survivor's  benefit will be computed as if the
participant  had  retired  in the manner  for which he was  eligible  on the day
before his death and elected payment of his retirement  benefit in the form of a
joint and 100% survivor annuity with his spouse.

     7.3 Commencement, Duration and Form of Payment. The survivor's benefit will
be payable in the form of a monthly pension for the life of the surviving spouse
commencing on the first day of the month  following the  participant's  death or
the date on which the  participant  would have been eligible to begin  receiving
early retirement  benefits,  whichever date is later, and continuing every month
thereafter to and including the month in which the surviving spouse dies. If the
actuarially  equivalent present value of the surviving spouse benefit is $10,000
or less,  the benefit will be paid to the surviving  spouse in a single lump sum
payment  as  soon  as   administratively   practical  after  the  death  of  the
participant.


                                  ARTICLE VIII
                         PAYMENT OF RETIREMENT BENEFITS

     8.1 Standard  Benefit.  Benefits will be paid as follows unless an optional
form of benefit is elected:

     (a) If the  participant is not married at the time benefit  payments begin,
the benefit will be payable in monthly  installments from the com mencement date
to and including the month in which the participant dies; and

     (b) If the participant is married at the time payments begin, benefits will
be paid in the  form of a joint  and 100%  survivor  annuity  with  the  spouse.
Payment in this form may be waived by the participant and his spouse.

     A joint and 100%  survivor  annuity  will provide  monthly  payments to the
participant  from the  commencement  date to and including the month in which he
dies and,  thereafter,  monthly  payments to the spouse,  if surviving,  for the
balance of the spouse's life in an amount equal to 100% of the monthly  payments
to the participant.  The amount of the monthly payments under the joint and 100%
survivor  annuity will be adjusted so that the payments to the  participant  and
spouse  will  be the  actuarial  equivalent  of  payments  for  the  life of the
participant only.

     The Company will furnish each  participant,  within a reasonable  period of
time before his benefit  commencement  date,  with a written  explanation of the
terms  and  conditions  of the  joint and 100%  survivor  annuity  and the other
optional forms of payment  provided  under this Article.  The  explanation  will
advise the  participant  of his right to elect a form of payment  other than the
joint and 100%  survivor  annuity  and the  requirement  that the  participant's
spouse consent to the election. The explanation will advise the participant that
any elections  concerning  benefits can be changed or revoked by the participant
and his spouse at any time prior to the date on which benefit payments commence.

                                        -8
<PAGE>
     An  election  to have  benefits  paid in any form other than joint and 100%
survivor  annuity can be made by the  participant and his spouse only during the
period of ninety (90) days prior to the date on which  benefits are to commence.
If the participant is married on the date the benefit  payments  commence,  then
the  participant's  spouse  must  consent  in  writing  to  the  payment  of the
retirement benefit in any form other than a joint and 100% survivor annuity with
the spouse.  The spouse's consent must  acknowledge that the spouse  understands
the  effect  of  electing  another  form of  benefit,  and must be signed in the
presence of a representative of the Company or witnessed by a notary public.

     8.2  Post-Retirement  Surviving  Spouse Benefit.  The surviving spouse of a
former participant will be entitled to a benefit if:

     (a) the former  participant's  employment with the company terminated after
he had satisfied the requirements for normal  retirement,  early retirement,  or
deferred vested benefits under the Plan;

     (b) the former  participant  died before he had begun to receive payment of
benefits under the Plan; and

     (c) the former  participant  had been married to his spouse for a period of
at least one year on the date of his death.

     The  post-retirement  surviving  spouse  benefit will be computed as if the
former  participant had elected payment of his retirement benefit in the form of
a joint and 100% survivor  annuity with his spouse.  Payment will commence as of
the first  day of the month  following  the  participant's  death or the date on
which  the  participant  would  have  been  eligible  to begin  receiving  early
retirement  benefits,  whichever  date is later,  and will continue  every month
thereafter to and including the month in which the surviving spouse dies. If the
actuarially  equivalent present value of the surviving spouse benefit is $10,000
or less,  the benefit will be paid to the surviving  spouse in a single lump sum
payment  as  soon  as   administratively   practical  after  the  death  of  the
participant.

     8.3  Optional  Forms of  Benefit.  At any time during the  election  period
described in section 8.1, a  participant  may, with the consent of his spouse if
applicable, elect payment in one of the optional forms described below by filing
a written election with the committee.  Upon receipt of a proper  election,  the
committee will direct the trustee to distribute benefits in any of the following
methods in accordance with the election:

     (a)  Monthly  payments  during a period  certain  (not to  exceed 10 years)
during and after the participant's lifetime; or

     (b) Monthly payments during the lifetime of the participant only.

     8.4 Reduction of Benefits for Previous Payments.  If a participant receives
payment of any benefits under the Plan prior to his normal  retirement  date and
thereafter is employed by the

                                        -9
<PAGE>
Company, the benefits payable upon any subsequent  retirement will be reduced by
the actuarial equivalent of the earlier payments.

                 ARTICLE IX RESPONSIBILITIES AND INDEMNIFICATION

     9.1 Funding.  Benefits  payable under this Plan will be paid by the Company
as they  become  due.  Benefits  will be paid  from the  general  assets  of the
Company.

     9.2  Indemnification.  The  Company  will  indemnify  the  members  of  the
committee and any other employees of the Company and hold them harmless  against
any and all liabilities,  including legal fees and expenses,  arising out of any
act or omission made or suffered in good faith pursuant to the provisions of the
Plan.

                            ARTICLE X ADMINISTRATION

     10.1 Plan Administrator. The Company will be the plan administrator.

     10.2 Records and Reports.  The Company will  exercise  such  authority  and
respon  sibility  as it  deems  appropriate  in  order to  maintain  records  of
participant's service, and to provide notices and reports to participants.

     10.3  Appointment  of  Committee.  The  Company  will  appoint a  committee
consisting  of at least three persons who will assist in the  administration  of
the Plan and serve at the  pleasure  of the  Company.  All usual and  reasonable
expenses of the committee will be paid by the Company.

     10.4  Claims  Procedure.   The  committee  will  make  all   determinations
concerning  benefits.  Any denial of benefits by the committee will be stated in
writing and delivered or mailed by certified mail, return receipt requested,  to
the participant or beneficiary  within 60 days after the denial. The notice will
set forth the reasons for the denial in language  that may be  understood by the
participant  and will  specify  the Plan  provisions  upon  which the denial was
based.  If the denial is based on the failure of the  participant or beneficiary
to supply certain materials or information, the notice will so state. The notice
will advise that the denial may be appealed to the committee and will include an
explanation of the appeal procedure.

     The committee  will adopt a procedure  for reviewing  appeals of denials of
claim benefits. The procedure will include the following:

     (a) The  claimant or his duly  authorized  representative  may  initiate an
appeal by written  request for review  delivered to the committee not later than
60 days after receipt by the claimant of the notice of denial;

                                       -10
<PAGE>
     (b) The claimant or his duly authorized representative may review documents
pertinent  to the  appeal  and may  submit  written  statements  of  issues  and
arguments relevant to the appeal to the committee;

     (c) The committee  will return its decision on the appeal not later than 60
days after receipt of the request for review; and

     (d) The  claimant  will be advised in writing of the decision on the appeal
including the reasons for the decision in language that may be understood by the
claimant  with  references  to the Plan  provisions  upon which the  decision is
based.

     10.5 Other Committee Powers and Duties. The committee will have such powers
as may be necessary to discharge  its duties under the Plan.  The  committee may
adopt such rules as it deems necessary and appropriate.  All rules and decisions
of the committee will be  consistently  applied to all  participants  in similar
circumstances. When making a determination or calculation, the committee will be
entitled to rely upon information furnished by a participant or beneficiary, the
Company, or the legal counsel of the Company.

     10.6  Committee  Procedures.  The  committee  may  act at a  meeting  or by
unanimous written consent without a meeting.  The committee may elect one of its
members as chairman and appoint a secretary, who need not be a committee member.
The  secretary  will keep a record of all  meetings  and forward  all  necessary
communications  to the Company and the  trustee.  The  committee  may adopt such
bylaws and regulations as it deems desirable for the conduct of its affairs. All
decisions of the committee will be made by the vote of the majority.

     10.7 Authorization of Benefit Payments. The committee will issue directions
to the Company  concerning  all  benefits  which are to be paid  pursuant to the
provisions of the Plan.

     10.8  Application  and Forms for  Benefits.  The  committee  may  require a
participant  to  complete  and file an  application  for a benefit and all other
forms  approved  by the  committee,  and to furnish  all  pertinent  information
requested by the  committee.  The committee  may rely upon all such  information
including the participant's current mailing address.

     10.9 Facility of Payment.  Whenever,  in the committee's  opinion, a person
entitled to receive any benefit is under a legal  disability or is incapacitated
in any way so as to be unable to manage his financial affairs, the committee may
direct  the   Company  to  make   payments  to  such  person  or  to  his  legal
representative or to a relative or friend of such person for his benefit, or the
committee  may direct the  Company to apply the  payment for the benefit of such
person in such manner as the  committee  considers  advisable.  Any payment of a
benefit in accordance  with the  provisions  of this section will  discharge all
liability for such benefit under the provisions of the Plan.


                                   ARTICLE XI
                        AMENDMENT OR TERMINATION OF PLAN

                                       -11
<PAGE>
     11.1 Amendments. The Company reserves the right at any time to amend any of
the  provisions  of this Plan on a prospective  basis,  but  amendments  may not
reduce the accrued benefit that has been earned by any participant  prior to the
date of the amend ment.

     11.2 Right of Termination. The Plan may be terminated at any time by action
of the board of directors  of the Company.  Upon  termination  of the Plan,  the
rights of each  participant to benefits  accrued to the date of termination will
become nonforfeitable.

                                       -12
<PAGE>
                    ARTICLE XII NONALIENATION OF BENEFITS AND
                            DOMESTIC RELATIONS ORDERS

     12.1 Nonalienation of Benefits.  No interest,  right, or claim in or to any
part of the trust or any benefit will be assignable, transferable, or subject to
sale,  assignment,   hypothecation,   anticipation,   garnishment,   attachment,
execution, or levy of any kind and the Company will not recognize any attempt to
so transfer,  assign,  sell,  hypothecate,  or anticipate the same except to the
extent required by law. This provision will not apply to any domestic  relations
order entered by a Court of competent jurisdiction.

     12.2  Procedure  for  Domestic  Relations  Orders.  Whenever the Company is
served with a domestic  relations order from a court of competent  jurisdiction,
the Company will follow the following procedure in determining whether the order
constitutes  a domestic  relations  order that would be exempt  from the general
spendthrift protection of this Article:

     (a) The Company  will notify the  participant  and any  "alternate  payees"
named in the order that the order was served on the Company and that objec tions
concerning the order must be submitted in writing within 15 days;

     (b) The Company will determine  whether the order is a "qualified  domestic
relations  order" and notify the  participant  and each  alternate  payee of its
determination.  If the Company determines that the order is a qualified domestic
relations  order,  the Company  will make payment in  accordance  with the order
except that  payment  will not be made until the  participant's  employment  has
terminated;

     (c) During the period in which the Company is determining the status of the
order,  payment of any  benefits  in dispute  will be  deferred.  If the Company
determines  that the order is not a  qualified  domestic  relations  order,  the
Company  will resume  payments to the former  participant  or begin  payments in
accordance with the terms if this Plan as the case may be; and

     (d) The Company will notify the participant and all other alternate  payees
named in the order of its decision concerning the qualified status of the order.
Payments  pursuant  to the order will be made as soon as  practicable  after the
status of the order has been determined or as soon as the amounts become payable
pursuant to this Plan.

                           ARTICLE XIII MISCELLANEOUS

     13.1 Status of Participants. No participant will have any right or claim to
any benefits  under the Plan except in  accordance  with the  provisions  of the
Plan. The adoption of the Plan will not be construed as creating any contract of
employment between the Company and any participant

                                       -13
<PAGE>
or to  otherwise  confer  upon any  participant  or other  person  any  right to
continuation  of  employment,  nor as  limiting or  qualifying  the right of the
Company to discharge any participant.

     13.2 No Interest in Company Affairs. Nothing contained in this Plan will be
construed as giving any participant,  employee or beneficiary an equity or other
interest in the  assets,  business  or affairs of the  Company,  or the right to
examine any of the books and records of the Company.

     13.3 Notices. All notices and other designations to be given hereunder will
be in writing and will be deemed to be given when  mailed by United  States mail
with  postage  prepaid  addressed  to the Company at 414 East  Fortieth  Street,
Holland,  Michigan  49423,  and to the  committee at 414 East  Fortieth  Street,
Holland,  Michigan  49423, or at such other address as the parties may designate
in writing.

     13.4 Governing Law. This Plan will be  interpreted,  construed and enforced
in accordance with the laws of the State of Michigan.

     13.5 Severability of Provisions.  If any provisions of the Plan will at any
time be declared void and unenforceable,  the other provisions will be severable
and will not be affected thereby.

     IN WITNESS  WHEREOF,  the Company has caused this Plan to be executed  this
_______ day of ___________________, 1992.

  ATTEST:                                 DONNELLY CORPORATION


  By____________________________          By____________________________

     Its Secretary                           Its Chief Executive Officer

                                       -14-
<PAGE>
                                                                  EXHIBIT 10.15




----------------------------------------------------------------------DONNELLY
                                   CORPORATION

                           DEFERRED COMPENSATION PLAN

                   PLAN DOCUMENT AND SUMMARY PLAN DESCRIPTION

                           (Effective January 1, 1997)
------------------------------------------------------------------------------
<PAGE>
                 DONNELLY CORPORATION DEFERRED COMPENSATION PLAN
------------------------------------------------------------------------------

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

                                                                            PAGE
                                                                            ----

  ARTICLE I - Introduction                                                     1

  ARTICLE II - Definitions                                                     2

  ARTICLE III - Participation by Eligible Employees                            3

  ARTICLE IV - Annual Incentive Award and Annual Base Salary Deferrals         4

  ARTICLE V - Distributions                                                    5

  ARTICLE VI - Accounts                                                        7

  ARTICLE VII - Funding and Participant's Interest                             8

  ARTICLE VIII - Administration and Interpretation                             9

  ARTICLE IX - Amendment and Termination                                      10

  ARTICLE X - Miscellaneous Provision                                         11
<PAGE>
                              DONNELLY CORPORATION
                           DEFERRED COMPENSATION PLAN

                           (Effective January 1, 1997)

                             ARTICLE I INTRODUCTION

1.1  Name:  The  name  of  this  plan  is  the  Donnelly   Corporation  Deferred
Compensation Plan ("Plan").

1.2 Effective Date: The effective date of this Plan is January 1, 1997.

1.3 Employer:  Donnelly  Corporation  ("Donnelly"),  when  employing one or more
Eligible Employees who have become  Participants in accordance with Article III,
shall be the employer under this Plan.

1.4 Purpose:  This Plan is established effective January 1, 1997 by Donnelly for
the purposes of providing deferred  compensation  benefits for a select group of
its management and/or highly compensated employees.

This Plan provides a means whereby Eligible Employees may defer all or a portion
of their annual incentive awards they otherwise would receive under the Donnelly
Corporation Executive  Compensation Plan for services performed for Donnelly. It
will also be the means whereby  Eligible  Employees may defer a portion of their
annual base  salary,  whether or not they defer all or a portion of their annual
incentive award.

All  deferrals  under this Plan shall be in the form of  unfunded  recordkeeping
entries.
<PAGE>
                                   ARTICLE II

                                   DEFINITIONS

Whenever the following  initially  capitalized words and phases are used in this
Plan,  they shall have the meanings  specified  below unless the context clearly
indicates to the contrary:

2.1 "Administrator" shall mean the Compensation and Benefits Manager of Donnelly
Corporation.

2.2 "Beneficiary" shall mean such person or legal entity as may be designated by
a  Participant  under  Section  5.6 to  receive  benefits  hereunder  after such
Participant's death.

2.3  "Board"  shall mean the Board of  Directors  of  Donnelly  Corporation,  as
constituted from time to time.

2.4  "Change in Control"  shall mean a change in the  control of  Donnelly  that
shall be deemed to have  occurred  upon the earliest to occur of the  following:
(i) the date  Donnelly  becomes a party to a merger,  consolidation,  or sale of
substantially  all of its assets or any other corporate  reorganization in which
Donnelly  will not be the  surviving  corporation,  or in which the  holders  of
Donnelly stock will receive securities of another corporation, (ii) the purchase
by an individual,  or group of individuals acting in concert, of at least 25% of
the  voting  securities  of  Donnelly,  or (iii)  during  any  24-month  period,
individuals who at the beginning of such period  constituted the Board cease for
any reason to constitute a majority thereof.

2.5 "Committee" shall mean the Compensation Committee of the Board.

2.6 "Deferred  Compensation" shall mean that portion of the Participant's annual
incentive awards and/or annual base salary which the Participant elects to defer
pursuant  to  Sections  4.1 or 4.2 of this Plan in  accordance  with a  Deferred
Compensation Agreement.

2.7  "Deferred  Compensation  Account"  shall  mean  the  recordkeeping  account
established by the  Administrator for each Participant to which the portion of a
Participant's   annual  incentive  award  and/or  annual  base  salary  that  is
voluntarily  deferred pursuant to Sections 4.1 or 4.2 is credited and from which
distributions
<PAGE>
to the Participant or to his or her Beneficiary are debited. A Participant shall
at all  times  be fully  vested  in the  balance  of his  Deferred  Compensation
Account.

2.8 "Deferred  Compensation  Agreement"  shall mean a document (or documents) as
made  available  from time to time by the  Administrator,  whereby  an  Eligible
Employee  enrolls as a  Participant  and elects to defer a portion of his annual
incentive award and/or annual base salary pursuant to Article IV of this Plan.

2.9 "Disability"  shall mean a disability  qualifying for benefits payable under
Donnelly's long-term disability plan under which the Participant is covered.

2.10 "Eligible  Employee"  shall mean an individual who is employed by Donnelly,
and who is a member of the Corporate  Senior  Management  Team and holds the job
title of Chief  Executive  Officer,  Chief  Operating  Officer,  Chief Financial
Officer, Treasurer, Corporate Secretary, or Senior Vice President.

2.11  "Participant"  shall  mean  an  Eligible  Employee  as  designated  by the
Committee  and  who  has  amounts  standing  to  his  credit  under  a  Deferred
Compensation Account.

2.12 "Plan Year" shall be the 12  consecutive  month  period  between July 1 and
June 30th.


                 ARTICLE III PARTICIPATION BY ELIGIBLE EMPLOYEES

3.1 Participation:  Participation in this Plan is limited to Eligible Employees,
who are designated by the Committee as Participants for the following year.

3.2 Failure to Designate: In the event that the Committee fails to designate the
group of Eligible  Employees who shall be eligible to participate  for any year,
each Eligible  Employee who was  designated in the prior year shall be deemed to
have been designated for the next  succeeding Plan Year,  provided that any such
Eligible  Employee shall  participate  for purposes of the next  succeeding Plan
Year only if he or she is actively employed by Donnelly on the first day of such
succeeding  Plan Year and provided he or she is  otherwise an Eligible  Employee
for such year.
<PAGE>
3.3 Continuity of  Participation:  A Participant who separates from service with
Donnelly will cease active participation hereunder.

3.4 Immediate  Cash-Out of Ineligible  Employee:  This Plan is intended to be an
unfunded  "top-hat"  plan,  maintained  primarily  for the purposes of providing
deferred  compensation  for a select group of management  or highly  compensated
employees.  Accordingly,  if the Committee  determines that any Participant does
not qualify as a member of the select group,  one hundred percent (100%) of such
Participant's  Deferred  Compensation  Account shall be paid to the  Participant
immediately.

                                   ARTICLE IV
                ANNUAL INCENTIVE AWARD AND BASE SALARY DEFERRALS

4.1 Annual Incentive Award Deferral Election: No later than March 15 of the Plan
Year in  which  the  annual  incentive  award  under  the  Donnelly  Corporation
Executive  Compensation  Plan is earned,  each Eligible Employee may irrevocably
elect, by completing and executing a Deferred Compensation  Agreement and filing
it with the Administrator, to defer any portion up to one hundred percent (100%)
of his annual incentive award to be earned for that year.

4.2 Deferral of Annual Base Salary:  An Eligible  Employee may elect to defer up
to twenty-five  percent (25%) of his future annual base salary by completing and
executing a Deferred Compensation Agreement which specifies the amount of annual
base salary to be deferred and filing it with the  Administrator.  Such election
may be modified or revoked once each  quarter by  executing  and filing with the
Administrator a new Deferred Compensation  Agreement at least 15 days before the
end of the quarter. Any election,  modification or revocation shall be effective
as of the  first  payroll  of the  next  quarter  after  being  received  by the
Administrator.  No election,  modification  or  revocation is  permissible  with
respect  to  annual  base  salary  paid  prior to the  execution  of a  Deferred
Compensation Agreement.

4.3 Period for Which Deferral  Election is Effective:  A Participant's  deferral
election  under  Section  4.1 with  respect to annual  incentive  award shall be
effective  only  for  the  Plan  Year  specified  in the  Deferred  Compensation
Agreement. A Participant must file a separate Deferred Compensation Agreement by
March 15 of each  subsequent  Plan Year in order to make annual  incentive award
deferrals for that Plan Year. A Participant's election to defer
<PAGE>
annual base salary shall remain in effect until  modified or revoked as provided
in Section 4.2.

                             ARTICLE V DISTRIBUTIONS

5.1 Election of Distribution  Date: At the time a Participant  makes an election
to defer a portion of his annual incentive award and/or annual base salary under
Article  IV,  such  Participant  shall also  specify in writing in the  Deferred
Compensation  Agreement  the  date or event on  which  the cash  payment  of the
Participant's  Deferred Compensation Account shall be made. Such date may be any
of the following:

  (i)   The  fifth  December  31st  immediately  following  the  year in which a
        portion  of the annual  base  salary  and  annual  incentive  award were
        initially deferred.  However, a Participant's  termination of employment
        for any reason shall  accelerate  the payment of any deferral under this
        Section 5.1(i); or

  (ii)  The earlier of the  Participant's death,  disability,  or termination of
        employment for any reason.

5.2  Distribution  May Be Extended:  If the  Participant has made an election to
defer a portion of his annual  incentive award and/or annual base salary for any
Plan Year for the five-year  period  provided  under Section  5.1(i) above,  the
period of deferral with respect to such  compensation  may be mutually  extended
for another  five-year period or until the  Participant's  death,  disability or
termination  of  employment  for any  reason.  An extended  deferral  under this
section shall be effective only by mutual agreement reached at least 90 (ninety)
days before the original  deferral is to be distributed  between the Participant
and  Donnelly.  This  agreement  shall be in the  written  format  specified  by
Donnelly.

5.3 Method of Payment:
 
  (i)   Distributions resulting from retirement or disability of the Participant
        shall be paid in cash in the form of either a single lump sum or, annual
        installments  for a period  not to exceed  five  years as elected by the
        Participant and approved by Donnelly.
<PAGE>
  (ii)  Distributions  resulting from  termination of  employment for any reason
        other than retirement  or disability of the Participant shall be paid in
        cash in the form  of a single lump sum.

5.4 Special  Election for Early  Distribution:  A  Participant  may apply to the
Administrator  for  early  distribution  of  all  or any  part  of his  Deferred
Compensation Account. Such early distribution shall be made in a single lump sum
and  in  cash,  provided  that  10%  of  the  amount  withdrawn  in  such  early
distribution  shall be  forfeited  from the  payment  of the early  distribution
amount to the Participant.  In the event a Participant's  early  distribution is
submitted within one year after a Change in Control the forfeiture penalty shall
be reduced to 5%.

5.5 Financial Hardship. The Committee shall have the authority to determine,  in
its sole  discretion,  that payments  should be made in any manner the Committee
deems  appropriate,  in whole or in part, on any other date or dates in order to
alleviate a financial hardship of a Participant. "Financial hardship" shall mean
a severe financial  hardship  resulting from a sudden and unexpected  illness or
accident of the Participant,  or of a dependent (as defined in Section 152(a) of
the  Internal  Revenue  Code)  of the  Participant,  loss  of the  Participant's
property due to  casualty,  or other  similar  extraordinary  and  unforeseeable
emergencies arising as a result of events beyond the control of the Participant.
The circumstances  that will constitute a financial  hardship will depend on the
facts of each case, but, in any case, payment may not be made to the extent that
such hardship is or may be relieved (i) through reimbursement or compensation by
insurance or otherwise,  (ii) by liquidation of the Participant's assets, to the
extent such liquidation  would not itself cause severe financial  hardship,  and
(iii)  by  cessation  of  deferrals  under  the  Plan.  Any  financial  hardship
distribution  approved by the Committee shall be limited to the amount necessary
to meet the financial  hardship and shall be made solely from the  Participant's
Deferred Compensation Account.

5.6  Distribution  on Death.  In the event of a  Participant's  death before his
Deferred  Compensation  Account has been distributed,  distribution(s)  shall be
made to the Beneficiary  selected by the Participant,  in a single lump sum cash
payment  within 60 days after the date of death (of, if later,  after the proper
Beneficiary has been identified). A Participant may from time to time change his
designated  Beneficiary  without the consent of such Beneficiary by filing a new
designation in writing with the Administrator.  If no Beneficiary designation is
in  effect  at  the  time  of the  Participant's  death,  or if  the  designated
Beneficiary is missing or has predeceased the Participant, distribution shall be
made  to the  Participant's  surviving  spouse,  or if  none,  to his  surviving
children per stirpes, and if none, to his estate.
<PAGE>
5.7  Valuation  of  Distributions.  All  distributions  under this Plan shall be
annual based upon the amount credited to a Participant's  Deferred  Compensation
Account as of the last quarterly valuation immediately preceding the date of the
distribution.  The amount of installment payable to a Participant  electing such
method of payment  shall be  determined  by dividing the amount  credited to the
Participant's   Deferred   Compensation  Account  by  the  remaining  number  of
installments,  including the current  installment,  to be paid. It is understood
that administrative requirements may lead to a delay between such valuation date
and the date of distribution, not to exceed twenty business days.

                            ARTICLE VI ACCOUNTS

6.1  Deferred  Compensation  Account:  The  Administrator  shall  establish  and
maintain,  or  cause to be  established  and  maintained,  a  separate  Deferred
Compensation  Account for each  Participant  hereunder  who executes an election
pursuant to Section 4.1 or Section 4.2. Each such Participant's annual incentive
awards and/or annual base salary  deferred  pursuant to a Deferred  Compensation
Agreement under Section 4.1 or Section 4.2 shall be separately accounted for and
credited  with  earnings,  for  recordkeeping  purposes  only,  to his  Deferred
Compensation  Account. A Participant's  Deferred  Compensation  Account shall be
solely  for the  purpose  of  measuring  the  amounts to be paid under the Plan.
Donnelly  shall not be  required  to fund or secure  the  Deferred  Compensation
Account,  in any way,  Donnelly's  obligation to  Participants  hereunder  being
purely contractual. All assets of the Plan will at all times remain the property
of Donnelly and will be subject to Donnelly's creditors.

6.2 Crediting of Earnings and Statement of Account:  The Participant's  Deferred
Compensation  Account shall be credited with interest  quarterly.  The amount of
interest  to be  credited  each  quarter  shall be equal  to the  prime  rate of
interest in effect as of the last day of the preceding  each  quarter.  Interest
will be credited for whole quarters  only. As soon as practicable  after the end
of  each  quarter  (and  at  such  additional  times  as the  Administrator  may
determine), the Administrator shall furnish each Participant with a statement of
the balance credited to the Participant's Deferred Compensation Account.

6.3  Investment  to  Facilitate  Payment of Benefits:  Although  Donnelly is not
obligated to invest in any specific asset or fund, or purchase any insurance
<PAGE>
contract in order to provide the means for the payment of any liabilities  under
this Plan, the Committee may elect to do so.

                                   ARTICLE VII
                       FUNDING AND PARTICIPANT'S INTEREST

7.1  Deferred  Compensation  Plan  Unfunded:  This Plan shall be unfunded and no
trust shall be created by the Plan. The crediting to each Participant's Deferred
Compensation  Account,  as the case may be, shall be made through  recordkeeping
entries.  No actual funds shall be set aside;  provided,  however,  that nothing
herein shall prevent Donnelly from  establishing one or more grantor trusts from
which  benefits  due  under  this  Plan may be paid in  certain  instances.  All
distributions  shall  be  paid  by  Donnelly  from  its  general  assets  and  a
Participant  or his or her  Beneficiary  shall  have the  rights  of a  general,
unsecured  creditor against Donnelly for any  distributions  due hereunder.  The
Plan  constitutes  a mere  promise by Donnelly to make  benefit  payments in the
future.

7.2  Participant's  Interest in Plan: A Participant  has an interest only in the
cash  value of the amount  credited  to his  Deferred  Compensation  Account.  A
Participant  has  no  rights  or  interests  in any  specific  funds,  stock  or
securities.

                 ARTICLE VIII ADMINISTRATION AND INTERPRETATION

8.1   Administration:   Except  where  certain   duties  are  delegated  to  the
Administrator,   the  Committee   shall  be  in  charge  of  the  operation  and
demonstration of this Plan. The Committee has, to the extent  appropriate and in
addition to the powers  described  elsewhere  in this Plan,  full  discretionary
authority  to construe and  interpret  the terms and  provision of the Plan;  to
adopt, alter and repeal administrative rules, guidelines and practices governing
the Plan; to perform all acts,  including the  delegation of its  administrative
responsibilities to advisors or other persons who may or may not be employees of
Donnelly;  and to rely upon the  information  or  opinions  of legal  counsel or
experts  selected to render  advice with  respect to the Plan,  as it shall deem
advisable, with respect to the administration of the Plan.
<PAGE>
8.2  Interpretation:  The  Committee  may take any  action,  correct any defect,
supply any  omission  or  reconcile  any  inconsistency  in the Plan,  or in any
election  hereunder,  in the manner and to the extent it shall deem necessary to
carry the Plan into effect or to carry out the Board's  purposes in adopting the
Plan. Any decision,  interpretation  or other action made or taken in good faith
by  or  at  the  direction  of  Donnelly,  the  Board,  the  Committee,  or  the
Administrator arising out of or in connection with the Plan, shall be within the
absolute  discretion  of all and each of them,  as the case may be, and shall be
final,   binding  and  conclusive  on  Donnelly,   and  all   Participants   and
Beneficiaries and their respective heirs, executors, administrators,  successors
and assigns. The Committee's  determinations  hereunder need not be uniform, and
may be made  selectively  among  Eligible  Employees,  whether  or not  they are
similarly  situated.  Any actions to be taken by the Committee  will require the
consent of a majority of the Committee members.  If a member of the Committee is
a Participant  in this Plan,  such member may not decide or determine any matter
or question  concerning  his benefits under this Plan that such member would not
have the right to decide or determine if he were not a member.

8.3 Records and Reports:  The  Administrator  shall keep a record of proceedings
and  actions  and shall  maintain  or cause to be  maintained  all such books of
account,  records,  and  other  data  as  shall  be  necessary  for  the  proper
administration  of the Plan.  Such  records  shall  contain  all  relevant  data
pertaining  to  individual  Participants  and their rights  under the Plan.  The
Administrator  shall have the duty to carry into  effect all rights or  benefits
provided hereunder to the extent assets of Donnelly are properly available.

8.4 Payment of Expenses:  Donnelly shall bear all expenses incurred by it and by
the Committee in administering this Plan.

8.5 Indemnification  for Liability:  Donnelly shall indemnify the Administrator,
the  members  of the  Committee,  and the  employees  of  Donnelly  to whom  the
Administrator  delegates  duties  under this Plan  against  any and all  claims,
losses, damages, expenses and liabilities arising from their responsibilities in
connection  with the  Plan,  unless  the same is  determined  to be due to gross
negligence or willful misconduct.

8.6 Claims Procedure:  If a claim for benefits or for  participation  under this
Plan is  denied  in  whole  or in  part,  a  Participant  will  receive  written
notification.  The  notification  will include  specific reasons for the denial,
specific  reference to pertinent  provisions of this Plan, a description  of any
additional  material or information  necessary to process the claim and why such
material or information is
<PAGE>
necessary,  and an explanation of the claims review procedure.  If the Committee
fails to respond within 90 days, the claim is treated as denied.

8.7 Review Procedure.  Within 60 days after the claim is denied or, if the claim
is deemed denied,  within 150 days after the claim is filed,  a Participant  (or
his  duly  authorized  representative)  may  file a  written  request  with  the
Committee for a review of his denied claim. The Participant may review pertinent
documents that were used in processing his claim,  submit  pertinent  documents,
and address issues and comments in writing to the Committee.  The Committee will
notify the  Participant of its final decision in writing.  In its response,  the
Committee will explain the reason for the decision,  with specific references to
pertinent  Plan  provision  on which  the  decision  was  annual  based.  If the
Committee  fails to respond to the request for review within 60 days,  the claim
is treated as denied.

                      ARTICLE IX AMENDMENT AND TERMINATION

9.1  Amendment and  Termination:  The Company may at any time amend or terminate
any or all of the provisions of the Plan, subject to the following limitations:

          (a) The amendment will not be effective  unless the Plan will continue
              to operate for the exclusive benefit of employees.

          (b) The amendment or termination  will not adversely  affect the right
              of any  Participant or Beneficiary to a payment  under the Plan on
              the basis of compensation  allocated to the Participant's Deferred
              Compensation Account.

     If the Plan is discontinued with respect to future deferrals, Participants'
Deferred  Compensation  Accounts shall be distributed on the distribution  dates
elected in accordance  with Section 5.1,  unless the Committee  designates  that
distributions shall be made on an earlier date. If the Committee designates such
earlier date, each Participant shall receive distribution of his entire Deferred
Compensation  Account, as specified by the Committee.  If the Plan is completely
terminated,  each participant shall receive  distribution of his entire Deferred
Compensation
<PAGE>
Account in a single lump sum cash payment as of the date of the Plan termination
designated by the Board.

                        ARTICLE X MISCELLANEOUS PROVISION

10.1 Right of Donnelly to Take Employment Actions:  The adoption and maintenance
of this Plan shall not be deemed to constitute a contract  between  Donnelly and
any  Eligible  Employee,  or to be a  consideration  for,  or an  inducement  or
condition of, the  employment of any person.  Nothing herein  contained,  or any
action taken hereunder,  shall be deemed to give an Eligible  Employee the right
to be  retained  in the employ of  Donnelly  or to  interfere  with the right of
Donnelly to discharge an Eligible  Employee at any time,  nor shall it be deemed
to give to Donnelly the right to require the Eligible  Employee to remain in its
employ,  nor shall it interfere with the Eligible  Employee's right to terminate
his or her employment at any time.  Nothing in this Plan shall prevent  Donnelly
from amending,  modifying,  or terminating any other benefit plan, including the
Donnelly Corporation Executive Compensation Plan.

10.2 Alienation of Assignment of Benefits:  A Participant's  rights and interest
under the Plan shall not be assigned or transferred except as otherwise provided
herein,  and the  Participant's  rights to benefit payments under the Plan shall
not be subject to alienation, pledge or garnishment by or on behalf of creditors
(including  heirs,  beneficiaries,  or  dependents)  of the  Participant or of a
Beneficiary.

10.3 Right to  Withhold:  To the extent  required by law in effect at the time a
distribution is made from the Plan,  Donnelly or its agents shall have the right
to withhold or deduct from any  distributions  or payments any taxes required to
be withheld by federal, state or local governments.

10.4  Construction:  All  legal  questions  pertaining  to  the  Plan  shall  be
determined in accordance  with the laws of the State of Michigan,  to the extent
such laws are not superseded by the Employee  Retirement  Income Security Act of
1974, as amended, or any other federal law.

10.5  Headings:  The  headings of the Articles and Sections of this Plan are for
reference only. In the event of a conflict between a heading and the contents of
an Article or Section, the contents of the Article or Section shall control.
<PAGE>
10.6 Number and Gender: Whenever any words used herein are in the singular form,
they shall be  construed as though they were also used in the plural form in all
cases where they would so apply,  and  references  to the male  gender  shall be
construed as applicable to the female gender where applicable, and vice versa.


IN WITNESS WHEREOF, the Company has caused this Plan to be executed this


         23rd          day of       August        , 1996.
  --------------------        --------------------


                                    DONNELLY CORPORATION

                                    By: /s/ William R. Jellison
                                    ----------------------------
                                    William R. Jellison Chief Financial Officer

  CORPORATE SEAL

  Attest:

  By: /s/ Maryam Komejan ------------------Maryam Komejan Corporate Secretary
<PAGE>
                                                                  EXHIBIT 10.17


July 22, 1996



Mr. Donn Viola 
7405 Parkwood Drive Fenton, MI 48430

Dear Donn:

This letter will amend your original offer letter dated July 12, 1996,  based on
our conversation of July 19, 1996. Our discussions centered on three major areas
of concern:

  1.  Regarding Performance Shares, you questioned whether or not those would be
      carried forward on a rolling basis after your retirement.  In other words,
      would you receive the value of the performance shares that were awarded to
      you before retirement after retiring from the company.

This is the first year that we have used Performance Shares at Donnelly and that
issue is not addressed in our plan.  However,  I believe it is the intent of the
plan to provide  the value of  performance  shares  that were  granted  prior to
retirement  after  retirement.  I will  clarify this issue with the Board at the
upcoming meeting in July.

  2.  On the issue of retirement income, we both understand that the assumptions
      being used to project the benefits  could vary  considerably  based on the
      performance of the company and how that  performance  affects stock value.
      However,  you expressed a strong need to have your compensation package be
      structured so as to provide a somewhat  stronger  income  opportunity  for
      retirement than is currently assumed to be the case.

In order to provide  additional  support in this area, the company will increase
the amount to be deposited in your deferred  compensation plan to $75,000 rather
than the $50,000  originally  offered.  A new  worksheet  from Towers  Perrin is
attached to  illustrate  the effect of that change.  As stated in your  original
letter,  this amount will be deposited in such an account on your behalf  within
one year of employment. This amendment affects item 4.a. in your offer letter of
July 12, 1996.

  3.  The third area of concern dealt with your  relocation  package.  Since you
      have  concerns  about  selling  your  house in the  near-term,  due to its
      uniqueness, you inquired whether Donnelly could provide you with cash flow
      assistance in the purchase of a home in West Michigan.
<PAGE>
  Donn Viola
  July 22, 1996
  Page 2


Donnelly has already agreed to pay for the real estate fees and closing costs on
the sale of your  existing home in  Pennsylvania.  To assist you in purchasing a
home in West Michigan, we will pay you $30,000 in lieu of those closing costs in
Pennsylvania  upon  having  made an offer and having it  accepted on the home of
your choice in West  Michigan.  This  payment  will be grossed up for taxes.  In
addition,  Donnelly  will cover closing costs on a new home in West Michigan and
those costs will be grossed up for taxes. This modification will replace section
7.a. in your original offer letter of July 12, 1996.

We are very pleased with the  prospect of having you join our  organization  and
look  forward to working with you.  This offer,  as amended  here,  remains open
until the  close of  business  on  Tuesday,  July 23,  1996 and is  subject  the
contingencies #11 and 12 in your original offer letter. I will assume,  based on
our earlier conversations, that you remain highly interested in joining Donnelly
and will attend the Board meeting on July 30, 1996 in Chicago to finalize  these
agreements.  Please notify me today, by telephone your intention to proceed with
our plans for a meeting in Chicago.

As always, feel free to contact me with questions if I can be of service.

Sincerely,

DONNELLY CORPORATION



Maryann Komejan
Senior Vice President



/jvb
<PAGE>
July 12, 1996



Mr. Donn Viola
7405 Parkwood Drive Fenton, MI  48430


Dear Donn:

I am very pleased to extend to you  Donnelly's  offer of  employment to fill the
new position of Chief Operating Officer for Donnelly North American  Operations.
We believe  you bring  outstanding  skills to our company and that you will find
Donnelly an excellent environment in which to invest your career. We are looking
forward to working with you.

You will  report  to the CEO of  Donnelly  and will  work  from our home  office
located in Holland, Michigan. The details of your offer include:

  1.      A base salary of $27,083 per month.  This equates to an annual  salary
          of $325,000.  This base compensation  falls in the neighborhood of the
          75th percentile based on national executive  compensation  survey data
          for an operation  the size of our North  American  Operations,  and as
          such  represents  a  strong  expression  of  interest  for you to join
          Donnelly.  Our policy is to review salaries for all officers  annually
          after the close of our fiscal year. You will be eligible for review in
          August/September,  1997 and the Board takes action  regarding  officer
          salaries in October of each year.

  2.      An annual  bonus  incentive  will be  provided  which is linked to the
          achievement of specific business and individual goals.  Achieving plan
          performance  would  result  in a bonus  of  approximately  50% of base
          salary. Exceptional performance over plan goals can earn a bonus of up
          to 100% of base salary.  Shortly  after you begin work at Donnelly,  I
          will meet with you to establish  specific goals for the upcoming year.
          Bonus awards are typically  paid in September,  after the close of our
          fiscal year.  This program will begin for you in fiscal 1997 (June '96
          June '97).  Two-thirds  of the first year's plan annual  incentive for
          achieving  plan (or $108,000)  will be  guaranteed  since you were not
          part of the planning  process for this year and will not have the full
          year to influence  performance.  This annual incentive will be paid in
          the August - October period of 1997.

  3.      It is customary for Donnelly to consider  stock options for executives
          annually,  based on competitive  market  comparisons and on individual
          contributions made to the business.  Long-term incentive  compensation
          for your  position  would  typically  consist of annual  stock  option
          grants and  performance  unit grants.  The initial stock option grants
          and  performance  unit  grants  will  be  priced  at the  date of your
          acceptance of the employment offer made to you. Subsequent grants will
          be
<PAGE>
  Donn Viola
  July 12, 1996
  Page 2


          priced as of the date granted. Stock options are exercisable after one
          year of receiving them and no later than ten years of receiving  them.
          Performance unit grants are paid out in cash five years after they are
          granted.

  4.      A special  one-time  consideration  is being  offered to recognize the
          adjustments  that will be required in making a transition to Donnelly.
          This one-time consideration will include two components:

  a.      A $50,000 deposit into a deferred compensation program. While Donnelly
          does not have a  deferred  compensation  plan in place for  executives
          now, we will commit to having such a plan in place  within one year of
          your  employment and we will deposit $50,000 into this account on your
          behalf at the time the plan is adopted.

  b.      Donnelly is offering you a stock  option for 10,000  shares and 10,000
          performance  unit shares upon your  employment  with  Donnelly.  These
          grants are subject to approval by the Donnelly Stock Option  Committee
          and  will be  governed  by the  terms  of  Donnelly  plans  for  these
          programs.

  5.      You will  receive a company  car valued at between  $40,000 - $50,000.
          Car expenses will be covered for insurance,  maintenance, and business
          fuel expense.

  6.      Donnelly  offers  a  very   comprehensive   package  of  group  health
          insurance,  group life insurance,  401K, employee stock purchase,  and
          retirement  plans.  Vacation is six weeks.  You will be provided  with
          descriptions  of all plans and I  believe  you will find our  flexible
          benefit options very strong in protecting you and your family.

  7.      Our relocation package will include:

  a.      Closing  costs on a new home in West Michigan and real estate fees and
          closing costs on the sale of your existing  home.  These costs will be
          "grossed up" for taxes.

  b.      Moving  expenses for you, your family,  and personal  belongings  (per
          company  policy).  We will select a mover for you or reimburse a mover
          of your choice upon receiving two estimates.

  c.      Temporary  living  expenses  to cover  an  appropriate  apartment,  or
          equivalent temporary condo/house as available,  for six months in West
          Michigan if required. Of course, we assume that you will be interested
          in locating more  permanent  living  arrangements  as soon as possible
          after
<PAGE>
  Donn Viola
  July 12, 1996
  Page 3


          accepting a position  with  Donnelly.  If you haven't  made  permanent
          arrangements  at the end of six months,  we can discuss an  extension.
          The objective is to achieve a transition as soon as possible.

  d.      If you are  unable  to sell  your  home  within  nine  (9)  months  of
          beginning work at Donnelly,  we will purchase your home at fair market
          value  (based on the  average  value  established  by two  independent
          appraisals).  If the amount  that you paid for your home  exceeds  the
          appraised value, Donnelly will pay the difference, but the total price
          paid by Donnelly will not exceed 100% of the average appraised value.

  8.      In the event that you are separated from Donnelly for any reason other
          than cause,  we will provide a severance  plan that provides 18 months
          of base salary and benefits,  subject to a noncompete agreement in our
          specific area of business and closure on a separation agreement.

  9.      In the event that you choose to leave  Donnelly,  you will receive all
          benefits for which you are vested per plan descriptions.

  10.     In the event that there is a change in control regarding  ownership of
          the company,  all stock options and  performance  units will be vested
          consistent with the applicable plan descriptions.

  11.     This offer is contingent on appropriate references being completed and
          that those references are positive. We have already begun this process
          and do not anticipate problems in this area.

  12.     You have expressed an interest to meet with some of our Directors, and
          as a courtesy to our  Directors,  I feel this is also  important to do
          before  everything is totally  final.  I do not anticipate any issues,
          and  expect  that both you and they will feel  positive  about  moving
          forward.  Therefore,  while I hope that you and I can reach  agreement
          regarding this offer as soon as possible, we will wait until July 30th
          to totally finalize everything. I will schedule an opportunity for you
          to meet with our Human  Resource  Committee  of the Board at a meeting
          previously  scheduled  in Chicago on the 30th to deal with a number of
          other issues.

I plan to be in Europe  and Asia for the next two  weeks,  which  makes this the
earliest time we can do this.

We will also invite all  Directors  to attend,  but due to their  schedules,  we
cannot predict how many will be able to make it.
<PAGE>
  Donn Viola
  July 12, 1996
  Page 4


We are pleased to extend this to offer you. In an effort to be helpful,  we have
enclosed a  comparative  summary of  Donnelly's  offer to your  previous  annual
compensation package, as we understand it. This comparative summary was prepared
after  discussions  between you and Jeff Bacher from Towers Perrin.  In both the
current  year and over the course of your  career  with  Donnelly,  we feel this
package  offers  substantial  advantages  for you and your family.  Based on the
Towers  Perrin  comparison,  your total direct  compensation  is estimated to be
equivalent to that at Mack, and the potential for the long-term (or  non-direct)
compensation is more favorable for you in joining Donnelly.

As the company  continues to grow and develop,  part of our corporate mission is
to double  shareholder value every five years, and our current five-year outlook
is consistent with achieving this level of performance.  Donnelly has grown at a
compounded annual rate in excess of 15% during the past 15 years, and we believe
the company is  positioned  for strong  growth in the  future.  With your proven
skills to shape strong  operations and improve  earnings,  the prospects for the
growth of your estate  through the stock  options  and  performance  share plans
should be strong. Our program for deferred  compensation should also prove to be
an attractive tool for enhancing your long-term financial position.

All  matters  not  specified  here will be handled in  accordance  with  company
policy. We will provide you with all appropriate  policies and plan descriptions
forthrightly.  I believe  that you will find all of them  very  competitive  and
supportive.

Of  course,  we  understand  that you will  need time to  assess  the  financial
implications of this opportunity. This offer will remain open until the close of
business on Friday,  July 18, 1996,  although the offer and your  acceptance are
subject to the contingencies discussed in paragraphs 11 and 12.

On behalf of myself,  the Board of Directors,  and the senior management team at
Donnelly,  we are looking forward to having you and Barbara join our company.  I
am convinced  that you will help us make this an even stronger  company and I am
personally looking forward to working with you.

Sincerely,

DONNELLY CORPORATION



Dwane Baumgardner Chairman of the Board
<PAGE>
                                                                  Exhibit 10.18

September 15, 1995


Mr. Russ Scaffede
102 Clubhouse Drive Nicholasville, KY 40356

Dear Russ:

I am very pleased to extend to you  Donnelly's  offer of at will  employment for
the position of Vice President,  Manufacturing. We believe you bring outstanding
skills to our company and that you will find  Donnelly an excellent  environment
in which to invest your career. We are all looking forward to working with you.

You will report to the C.O.O.  of Donnelly  North America and be located here in
Holland.  Until that  position is filled,  you will report  directly to me. Your
annual base salary will be $180,000 paid in 52 equal  installments  of $3,461.64
paid each week. Our policy is to review salaries at the end of each fiscal year.
We offer a  management  bonus  based  on  attainment  of  mutually  agreed  upon
objectives  targeted at 25% of base salary for reaching  those  objectives,  and
with a potential to reach a total of 35% for exceeding them. This is paid yearly
at the closing of the accounting records. You will be eligible to participate in
the plan, on a prorated basis, for the balance of fiscal year 1996.

Our long term incentive  plan,  also based on attainment of mutually agreed upon
personal objectives and company  performance,  is targeted at 35% of annual base
salary. This is awarded in stock options and/or performance units. This bonus is
also awarded at the time of closing of accounting records for the previous year.
You will be eligible for  participation  in this plan, on a prorated basis,  for
the balance of fiscal 1996.

We will provide you with a company car with an approximate  value of $30,000 and
car expenses to include insurance, maintenance and business use fuel expense.

I have included, for your information,  information on our various health, life,
stock purchase and pension plans.  Vacation is six weeks.  Rick will be happy to
provide any further information you may require on these plans. I think you will
agree that our flexible  benefit  approach  allows you to select a very generous
array of protection for you and your family.

Our relocation policy includes the following:

       All closing costs including real estate fees.

       Moving expenses for you, your family and your property.
<PAGE>
  Mr. Russ Scaffede September 15, 1995 page 2


       Two trips for Barb to visit the area and look at housing.

       One time relocation expense of $7,500.

Away from home expenses for yourself for a period of 90 days and five trips back
to Nicholasville.

In the event that we elect your separation from the company for any reason other
than cause,  we will  provide  severance  in the form of base salary and benefit
coverage  for a period of 12 months or until you find  other  employment  of any
kind whichever occurs first. This  consideration will be subject to a noncompete
agreement in our specific area of business.

Our Board of Directors has been strongly  supportive of bringing someone of your
caliber to our company.  While I anticipate no  reservations on their part about
your  selection  for  this  key  position,   this  offer  is  subject  to  their
confirmation.

Russ,  we are  looking  forward to having  you and Barb join our family  here at
Donnelly.  I am  convinced  you can  help us make  this a great  company  and am
personally looking forward to working with you with great anticipation.

Sincerely,

DONNELLY CORPORATION



Dwane Baumgardner Chairman of the Board
<PAGE>
                                                                  Exhibit 10.19

               English Language Summary of Security Pool Agreement
                             -----------------------


This  document is a  translation  and a summary,  and the terms of the  complete
original document are controlling.


Between the following credit institutions of the one part:

  1.  Berliner Bank Aktiengesellschaft, Berlin
      -Hereinafter also referred to as the "pool principal"
  2.  Deutsche Genossenschaftsbank Bayam, Nuremberg branch 
  3.  National Bank Detroit, Frankfurt branch
  4.  The First National Bank of Chicago, Chicago
  5.  Sparkasse Miltenberg-Obernburg, Miltenberg

  -hereinafter referred to jointly as "the Banks" and referred to individually
   as "the Bank",

  and

  Donnelly Hohe GmbH & Co KG, Collenberg (at present still called Hohe GmbH & Co
  KG) of the other part

  -hereinafter referred to as "the Firm"

  the following agreement has been reached:


                     Clause 1      Loans and credit facilities

  The following  banks have made/shall make the following loans and credit lines
  available to the firm:



  Berliner Bank AG:                      Loan            for          DM
  5,000,000.00
                              Working credit  for          DM     15,000,000.00
                              Bridging loan   for          DM      5,000,000.00

  Deutsche Genossenschaftsbank:      Loan            for       DM
                                     5,000,000.00
                                     Working credit  for       DM
                                     15,000,000.00
                                     Bridging loan   for       DM   5,000,000.00

  National Bank Detroit:             Working credit  for       DM
  15,000,000.00

  The First National Bank of Chicago:    Working credit  for          DM
  10,000,000.00

  Sparkasse Miltenberg:                  Working credit  for          DM
                                                                            5,00
                                                                             0,0
                                                                             00.
                                                                             00

                                                                            ----
                                                                             ---
                                                                             ---
                                                                             ---
                                         Total   DM               80,000,000.00
<PAGE>
Money-market  transactions,  Euro-financing  business, bill purchases or foreign
exchange  transactions,  for example,  can also be performed and bank guarantees
can be accepted in appropriation to the respective business loans.

The two bridging loans of Berliner Bank AG and Deutsche  Genossenschaftsbank are
limited to 31/st/  December,  1995 at the latest,  and will be paid back when an
additional bank is admitted into this securities pooling agreement.

The business loans granted by the NBD Bank,  Frankfurt/Main branch and The First
National Bank of Chicago shall be  administered  as a unit by the NBD Bank until
revocation  by one of the two banks;  credit shall be granted  individually  and
independent of the respective other bank up to the level of participation of the
respective bank. The First National Bank of Chicago hereby revocably  authorizes
the  NBD to  represent  it in all  respects  in  connection  with  this  pooling
agreement,  to safeguard its rights in connection with this  securities  pooling
agreement vis-a-vis the other contractual parties to the said agreement,  and to
issue such statements on behalf of the First National Bank of Chicago as the NBD
Bank deems  necessary or desirable in connection with the loans granted and with
respect to this securities pooling agreement.

                              Clause 2      Securities

1.   The Firm has  provided/shall  provide the following  securities to the pool
     principal:

  a)  Registered land charge for DM 5,000,000.00, jointly registered as follows:
      in the Land Register of Fechenbach, leaf 1508, leaf 1810 and leaf 2152; in
      the Land  Register of  Dorfprozelten,  leaf 3738;  in the Land Register of
      Stadtprozelten,  leaf 1733; and in the Land Register of  Tappenbeck,  leaf
      299.

  b)  Registered  land  charge  for  DM  32,500,000.00,  jointly  registered  as
      follows:  in the Land Register of Fechanbach,  leaf 1808,  leaf 1810, leaf
      1817 and leaf 2152; in the Land Register of  Dorprozelten,  leaf 3738; and
      in the Land Register of Stadtprozelten, leaf 1733.

  c)  Owner's certified land charge for DM 5,000,000.00,  jointly  registered as
      follows:  in the Land Register of Fechenbach,  leaf 1608,  leaf 1810, leaf
      1817 and leaf 2152; in the Land Register of Dorfprozelten,  leaf 3738; and
      in the Land Register of  Stadtprozelten,  leaf 1733,  assigned to the pool
      principal.

  d)  Owner's certified land charge for DM 7,500,000.00,  jointly  registered as
      follows: Land Register of Fechenbach,  leaf 1608, leaf 1810, leaf 1817 and
      leaf 2152; in the Land Register of  Dorfprozelten,  leaf 3738;  and in the
      Land  Register  of  Stadtprozelten,   leaf  1733,  assigned  to  the  pool
      principal.

  e)  Registered land charge for DM 7,000,000.00, jointly registered as follows:
      in the  Land  Register  of  Fechenbach,  leaf  1608 and  leaf  1817.  This
      registered  land charge is currently still entered in the Land Register in
      the name of  Bankhaus  Karl  Schmidt,  and shall be  assigned  to the pool
      principal.

  f)  Registered land charge for DM 4,000,000.00, jointly registered as follows:
      in the  Land  Register  of  Fechenbach,  leaf  1608 and  leaf  1817.  This
      registered  land charge is currently still entered in the Land Register in
      the name of  Deutsche  Genossenschaftsbank,  and shall be  assigned to the
      pool principal.
<PAGE>
  g)  Registered  land  charges (in some cases for joint and several  liability)
      for a total of DM  14,450,000.00,  which is currently still entered in the
      Land   Register   in  the  name  of   Industriekreditbank   AG,   Deutsche
      Industriebank  in Dusseldorf and Berlin (IKB) and is to be assigned to the
      pool principal, if and as soon as the IKB is obliged to release these land
      charges.  These  registered  charges are place on different  items of real
      estate in Fachenbach, Dorprozelten and Tappenbeck.

  h)  Chattels  mortgage on machines  and  fittings  according to a new chattels
      mortgage agreement to be concluded.

  2.  For the safeguarding purpose outlined in S3, the Company hereby grants the
      individual  banks a  right of lien  existing among one  another - equal in
      status  to the individual  rights of lien  existing among one another - to
      the credit balance that is held with one of the banks either now or in the
      future. The  rights of lien only  apply to credit  balances that stem from
      business  relations in  connection with  this pooling agreement. Rights of
      lien that are based on the General Terms and Conditions of Business of the
      banks have priority over the rights of lien named herein.

The situation shall not be affected by any  consideration  of whether or not the
Banks  have  acquired  the de facto or de jure  power of  disposal  for the said
credit balances.

Notification  of the  placement  of these rights under lien is made to the Banks
herewith.

Up until the time of any  revocation  on  recourse on security by any one of the
Banks,  each bank  shall be  entitled  to  authorize  operations  on the  credit
balances at its  establishment  which are under lien to the other Banks,  in the
course of normal proper business operations.  A General Business Conditions lien
held by any of the Banks may be invoked prior to the lien of any other bank only
for its own credit lines  according to this  security pool  agreement;  the same
shall  apply  to the  offsetting  of any  claims  receivable  it has in its  own
capacity against credit balances of the Firm.

Realization of the liens  established under this agreement shall be by agreement
with the banks;  it shall be done in accordance with the provisions of this pool
agreement.

  3.  All other  securities  previously  provided to the Banks  participating in
      this security pool agreement are hereby  cancelled and transferred back to
      the firm herewith.  To the extent that any further procedures are required
      for this purpose, the Banks undertake to perform these.
<PAGE>
                         Clause 3      Purpose of security

  The purpose of the securities listed under clause 2 is

  as first priority


  and with equal  priority for each,  to provide  Berliner  Bank AG and Deutsche
  Genossenschaftsbank with security for their Loans listed under clause 1 for DM
  5,000,000.00 in each case, and

  thereafter in terms of priority


  and with equal  priority  with  respect to each  other,  to provide  the Banks
  listed under clause 1 with  security for their credit  facilities as indicated
  in clause 1.

  In  the  event  of  Euroloans  having  been  granted  by  third-party   credit
  institutions against the credit lines listed under clause 1 through the agency
  of the  Banks,  the  securities  listed in  clause 2 shall  also  function  as
  security for all present and future claims  arising from the granting of these
  credit facilities.

  and last ranking


  and of equal rank with respect to one another for the purpose of  safeguarding
  the claims of the banks  arising  from  overdrawing  of the  loans/credits  in
  accordance with S1.


                           Clause 4      Security trustee

  1.  The pool principal  shall  administer the securities  incorporated  in the
      pool  agreement with proper  business  care,  also acting as a trustee for
      each of the other Banks.  The pool principal shall be entitled to this end
      to exercise all  supervisory,  administration  and drawing  rights arising
      from the  agreement in its own name.  The  complete or partial  release of
      securities shall required the consent of each of the other Banks.

  2.  Each bank may at any time request  information  from the pool principal on
      the administration of the securities. Independently from that entitlement,
      the pool  principal  shall also keep the Banks  informed in this regard in
      accordance with its conscientious judgment.

  3.  The pool  principal  shall be entitled,  after prior  notification  of the
      other Banks, to transfer the  administration  of the securities to another
      trustee deemed by it to be suitable for this purpose.

  4.  In each case, the trustee shall be exempt from the  restrictions  pursuant
      to s. 181 of the German Civil Code.
<PAGE>
         S 5 Utilization, Power of Utilization and Distribution of Profits

  1.  The  utilization of the securities  referred to in S2 shall be carried out
      by the pool manager in its own name, yet for the account of the banks.

  2.  If the Company is in default with  due payments  on secured claims despite
      the  granting of an appropriate  period of grace (safeguarding  case), the
      banks shall  decide  on the  question  as to whether  and when utilization
      measures are to be instituted or put through. Decisions must be taken by a
      majority of 50.1% based on the shares of the loans and credits referred to
      in S1. The banks may only institute other enforcement measures against the
      Company  once a majority resolution has been passed in accordance with the
      previous sentence.

The  utilization  measures shall be announced by the pool manager of the Company
and the  prerequisites for the utilization are to be observed in accordance with
the individual agreements concerning safeguarding.

  3.  The proceeds from the utilization of the pool securities are to be used in
      the following order of priority:

  a)  to settle costs, pay any taxes due or meet any other costs arising from
      the utilization of the securities;

  b)  to  redeem  the  claims  of  the  banks   arising  from  the  granting  of
      loans/credits, in respect of which the safeguarding took place, that is

  .  having higher  priority to, and with respect to one another equal priority,
     the  redemption of the loan referred to in S1 of currently DM  5,000,000.00
     in each case,  which was made  available  by the  Berliner  Bank AG and the
     Deutsche Genossenschaftsbank, however at most, up to the amount of the loan
     availed of in each case

  .  of equal  rank in the rank  below  that in  relation  to the other  credits
     availed of during the period in which the decision  concerning  utilization
     was taken,  whereby the calculation of the  distribution  key is only to be
     based on those  claims that do not exceed the credit  lines  referred to in
     S1.

If a distribution of profits takes place, each of the banks is entitled,  and on
request of the other banks acting irrevocably on behalf of the Company,  obliged
to bring their credit claims, which do not exceed the credit lines in accordance
with S1, to such a level that credit is available to the banks in  proportion to
the said credit  lines;  this credit  claims level is to be achieved by means of
appropriate transfers.

If for legal reasons it is not possible validly to implement and equalization of
balances  vis-a-vis  the  Firm,  the  Banks,   acting  by  arrangement   between
themselves,  shall be  required  to  implement  an  equivalent  equalization  of
balances. The respective Banks shall first offset their credit claims receivable
on the basis of  movements  in the credit line as  specified in clause 1 against
the  balances  of any  accounts  not bound to a  specific  purpose.  If any such
offsetting  procedures  are  implemented  after the  equalization  of  balances,
further balance equalization procedures must take place.

If the Banks have arranged Euroloans as per clause 3 against the credit lines as
per clause 1 of this agreement,  and where the said Euroloans are to be redeemed
by the Bank in question which has arranged the  transaction  to the  third-party
credit  institution,  the  equalization  payment  shall be  imputed  to the cash
balance of the credit institution arranging the transaction,  provided that this
does  not  lead to the  credit  line as per  clause  1 of this  agreement  being
exceeded:
<PAGE>
  c)  to meeting the claims of Banks whose credit lines have been exceeded, with
      equal  priority  and in  proportion  to the amounts by which the credit is
      exceeded in each case;

  d)  to meeting the claims of the Banks from other credit  facilities  granted,
      with equal priority and in proportion to the amounts of additional  credit
      facilities  taken  up,  unless  these  derive  from  the  proceeds  of the
      realization of securities provided separately for them;

  e)  any  further  proceeds not  required for any of the above shall be paid to
      the Firm.

  4.  Guaranteed credits only then count as having been availed of when recourse
      has been made to the bank/banks.

  5.  The  amounts  taken  up  shall  be  imputed  to any  subsequently  arising
      increases in balances  resulting from reversed debt items and/or  returned
      cheques.  This  shall not apply if this would  result on the  loans/credit
      facilities listed in clause 1 being exceeded.

  6.  If the  amount of claims  to be considered has not yet been established at
      the time of the distribution  of proceeds,  these shall  initially  not be
      taken  into account  in the  determination  of  the  shares  in  which the
      realization  proceeds  are  to  be distributed. Only  when  the amounts in
      question  have been  definitively established shall a final calculation of
      the  distribution shares  be made.  Any  resulting changes in the proceeds
      payable  to each of the Banks shall be adjusted between the Banks, even if
      payments have already been made.

  7.  The Banks  shall be entitled  to change the  above-mentioned  distribution
      formula at any time by mutual agreement.

                                   S6      Costs

  1.  All costs incurred by the pool manager in connection  with this securities
      pooling agreement,  and especially in respect of the administration of the
      securities,  shall only be borne by the firm  during the first year of the
      term of this  agreement.  Said  costs  shall  be  borne  in the  form of a
      flat-rate payment of DM 50,000.00

  2.  The  Berliner  Bank  shall  only  take  over  the  management  of the pool
      following  the first  year of the term of the  agreement,  subject  to the
      proviso that the said flat-rate costs of DM 50,000.00 shall continue to be
      paid to it. The bank is in no way obliged to continue to manage the pool.

  3.  The costs of any measures that are taken to utilize the  securities  shall
      be borne by the Company.
<PAGE>
                          S7      Obligation to disclose

Each bank is entitled and, at the request of the other banks, obliged to provide
the other banks with  information  concerning its claims against the Company and
the securities,  insofar as this affects this agreement and its completion. Each
bank shall  inform the other banks of  disturbances  in the credit  relationship
(e.g.  default,  etc.)  without  delay.  Each bank is  entitled  to inspect  the
accounts and receive information relating to same on request.

The  Company  expressly  releases  the banks  from their  obligation  to observe
banking secrecy  vis-a-vis one another.  The Company shall put together a report
on  loans/credits  availed of in accordance  with S1 on a twice monthly basis to
the end of the month and shall pass this on to the banks.


  S8      Change to the loans/credits and securities, allocation of securities
          to third parties


  1.  The banks  shall  maintain  the  loans/credit  lines  and shall  only make
      increases,  reductions or  cancellations  with the mutual agreement of the
      parties.  This  shall not  apply,  however  to loans and  credits  granted
      outside the pool.

  2.  The right of a  bank to  terminate  loans/credits  with just cause and the
      right of the NBD  Bank and The First National Bank of Chicago to terminate
      credits  granted in  the case  of an "event  of default", or for any other
      reason, shall  remain  thereby  unaffected.  This  shall also apply to the
      reclaiming  of credits in  accordance  with the  agreement between the NBD
      Bank, The  First National  Bank of Chicago and the Company. In the case of
      such termination  by one of  the banks, the other banks are to be informed
      thereof  in advance, unless this  is not  possible  due to the  particular
      urgency  of the termination. The pooling agreement shall remain unaffected
      by the termination of a credit line or loan.

  3.  If a bank receives  further  securities in the future for one of the loans
      or  credits  listed  in S1,  the  parties  are  already  agreed  that said
      securities shall be incorporated into the pool agreement.

  4.  The Company  undertakes not to furnish third parties with securities until
      it has received the unanimous consent of the banks.

  5.  The  Company is  entitled  to ascribe or  terminate  the  loan/credits  in
      accordance  with S1, either in full or in part,  and is empowered to admit
      an other bank/other banks into the pool agreement.  The admission can only
      be refused by the banks with just cause.
<PAGE>
                            S9      Term and termination

  1a. Each bank is entitled to  terminate  the  agreement  observing a period of
      notice of three  months to the end of the quarter.  The earliest  date for
      termination,  however is 31/st/ December,  2005. The notice of termination
      is to be served to the pool  manager.  The date on which the pool  manager
      receives the letter providing notice of termination  shall be decisive for
      deciding  whether or not the deadline was adhered to. If this agreement is
      terminated by the pool manager,  notice of  termination  must be served to
      all the other banks.

  b.  A balance equalization in accordance with S5, No. 3.b is to be carried out
      upon withdrawal of the bank terminating the agreement, even if only one of
      the banks is in favor of the same.

  In the case of  termination,  the  terminating  bank  withdraws  from the pool
  agreement  without any claim to a transfer of securities  from the pool.  This
  pool agreement between the remaining banks remains unchanged.

  2.  Notwithstanding  the above,  this pool  agreement  can be annulled for all
      contractual  parties if a majority of at least  50.1% with  respect to the
      shares of the  loans/credits  referred to in S1 are in favor of this.  The
      remaining  contractual parties are to be informed of this decision without
      delay.

  3.  If the  Company  pays back its  loans/credits  referred to in S1 to one or
      several banks, the bank/banks shall be entitled and, at the request of the
      Company,  obliged to terminate this pool agreement without notice. In this
      case,  all of the other  banks  shall be obliged to  transfer  part of the
      securities to the Company. Said part of the securities shall correspond to
      the share of the  loans/credits  in  accordance  with S1  belonging to the
      withdrawing bank.


                    S10      Release and appraisal of securities

  Once all claims secured by this pool agreement have been satisfied  (including
  the discharge of any  obligations  in connection  with bank  guarantees),  the
  banks shall be obliged to return the securities  made available to them to the
  respective  guarantor.  In addition,  they shall be obliged to  surrender  any
  surplus  proceeds  from their  utilization.  This shall not apply if the party
  providing the  securities  is also the  borrower,  and the bank in question is
  obliged to transfer the security to a third party (a guarantor that has repaid
  the bank, for example).

  The Banks shall be obliged,  even before  full  satisfaction  of their  claims
  secured by the pool  securities,  on request,  to release the pool  securities
  provided  to them  and  any  other  securities  provided  to  them,  at  their
  discretion,  to the party providing the said  securities,  in full or in part,
  provided that the realizable  value or all securities does not exceed,  except
  for a short time only, 120% of the claims of the Banks secured by this pool.

  The  realizable  value of the  securities  shall  be as shown in the  relevant
  security agreement.

  The  stipulations  formulated in the respective  security  agreements on cover
  limits and release obligations shall be supplemented/replaced  for the term of
  this pool agreements by the conditions agreed upon hereinabove.
<PAGE>
                              Clause 11      Guarantee

  The pool  principal  and the Bank acting as Trustee do not make any  guarantee
  that the  securities  in  existence at any time are  sufficient  to secure the
  claims of the Banks, and are not liable for any deficiencies  arising from any
  breaches of the  obligations  assumed by the Firm  and/or a security  provider
  pursuant to the security agreements.

  The parties  are agreed  that the pool  manager and the bank acting as trustee
  shall not be liable for the legal validity of the  safeguarding  agreements or
  their potential to be enforced. Neither shall they be liable for the validity,
  preservation,  intrinsic  value  and  soundness  of the  securities,  nor  for
  ensuring that said securities are free from  third-party  rights,  nor for all
  circumstances  that could  detract from the  intrinsic  value,  soundness  and
  utilization  of said  securities.  Within the framework of the  management and
  examination  of the  securities,  the  liability  of the pool manager is to be
  limited to the due care to be expected of it when managing its own affairs.

  The pool manager and the bank acting as trustee shall therefore  submit copies
  of the  safeguarding  agreements  referred  to in S2 to the  other  banks,  if
  requested to do so by them,  for the purpose of  examination  by them at their
  own liability.


                     Clause 12      General Business Conditions

  For this  agreement,  the  dealings  of the Banks with each other and with the
  Firm  shall  be  subject  to the  General  Business  Conditions  of  the  pool
  principal,  which are available for inspection at the offices of that Bank and
  can be sent out on request.


                            Clause 13      Saving clause

  If any provision of this agreement  proves not to be legally valid or is found
  to be  unenforceable,  the  validity  of the  remaining  content  shall not be
  affected.  The contracting  parties shall replace the invalid or unenforceable
  provision by a condition  matching the  commercial  intent and  approaching as
  closely as possible the content of the provision replaced.


                                Clause 14      Venue

  The venue shall be Munich. For this pool agreement German law will be valid.
<PAGE>
                           Clause 15      Legal validity

  This agreement  becomes  effective on being signed by the pool members and the
  Firm.


  Munich, 9, Aug. 1995

  BERLINER BANK Aktiengesellschaft Munich Branch



  Frankfurt, 7, Sept. 1995

  National Bank Detroit Frankfurt Branch



  Miltenberg, 30, Aug. 1995

  Sparkasse Miltenberg-Obernburg



  Nuremberg, 25, Aug. 1995

  Deutsche Genossenschaftsbank Nuremberg Branch



  Chicago, 8, Sept. 1995

  The First National Bank of Chicago, Chicago



  Collenberg, 15, Sept. 1995

  Donnelly Hohe GmbH & Co. KG
  (currently still called Hohe GmbH & Co. KG)
<PAGE>
                                                         EXHIBIT 10.20 FALCON
                                                         AGREEMENT


Note:   Certain   information  has  been  omitted  pursuant  to  a  request  for
confidential  treatment,  and  such  confidential  information  has  been  filed
separately with the United States Securities and Exchange Commission.



         DONNELLY RECEIVABLES CORPORATION RECEIVABLES PURCHASE AGREEMENT



     This Receivables  Purchase Agreement dated as of November 14, 1996 is among
Donnelly Receivables  Corporation,  a Michigan  corporation (the "Seller"),  the
Investors,  Falcon Asset  Securitization  Corporation  ("Falcon")  and The First
National Bank of Chicago,  as  Administrative  Agent.  Unless defined  elsewhere
herein,  capitalized  terms  used in this  Agreement  shall  have  the  meanings
assigned to such terms in Exhibit I hereto.


                             PRELIMINARY STATEMENTS

       The Seller  desires to transfer  and assign  Receivable  Interests to the
  Purchasers from time to time.

     Falcon  may,  in its  absolute  and sole  discretion,  purchase  Receivable
Interests from the Seller from time to time.

     The  Investors  shall,  at the request of the Seller,  purchase  Receivable
Interests from time to time. In addition, the Investors have agreed to provide a
liquidity facility to Falcon.

     The First National Bank of Chicago has been requested and is willing to act
as Administrative Agent on behalf of Falcon and the Investors in accordance with
the terms hereof.


                                    ARTICLE I
                       AMOUNTS AND TERMS OF THE PURCHASES

     Section  1.1.  Purchase  Facility.  (a) Upon the terms and  subject  to the
conditions  hereof,  the Seller may, at its option,  sell and assign  Receivable
Interests to the Administrative Agent for the benefit of the Purchasers.  Falcon
may, at its option,  instruct the Administrative  Agent to purchase on behalf of
Falcon, or if Falcon shall decline to purchase,  the Administrative  Agent shall
purchase  on behalf of the  Investors,  Receivable  Interests  from time to time
during  the  period  from the date  hereof  to but not  including  the  Facility
Termination  Date.  The Seller  hereby  assigns,  transfers  and  conveys to the
Administrative  Agent for the benefit of the relevant  Purchaser or  Purchasers,
and the  Administrative  Agent hereby acquires all of the Seller's right,  title
and interest in and to the Receivable Interests.

          (b)  The  Seller  may,   upon  at  least  five  days'  notice  to  the
     Administrative  Agent,  terminate in whole or reduce in part ratably  among
     the Investors the unused portion of the
<PAGE>
     Purchase Limit;  provided that each partial reduction of the Purchase Limit
     shall be in an amount equal to $5,000,000 or an integral multiple thereof.

     Section  1.2.   Making   Purchases.   (a)  The  Seller  shall  provide  the
Administrative  Agent  with a  purchase  notice,  in  substantially  the form of
Exhibit IX hereto (each a "Purchase Notice"), at least three Business Days prior
to the date (the "Purchase Date") of each Incremental  Purchase. A Purchase Date
may occur,  in the case of a Dollar  Purchase,  on any Business Day prior to the
Facility  Termination  Date and,  in the case of any DM  Purchase,  on the tenth
Business Day of any month prior to the Facility  Termination Date. Each Purchase
Notice shall,  except as set forth below,  be irrevocable  and shall specify the
requested (i) Purchase  Price (which shall not be less than  $2,000,000,  or the
Dollar Equivalent thereof in the case of any DM Purchase), (ii) currency of such
Purchase Price,  whether Dollars or Deutsche Marks, (iii) Purchase Date and (iv)
in the case of a Dollar Purchase, the duration of the initial Tranche Period and
the initial  Discount  Rate  related  thereto.  Following  receipt of a Purchase
Notice,  the  Administrative  Agent will determine whether Falcon agrees to make
the purchase.  If Falcon  declines to make a proposed  purchase,  the Seller may
cancel  the  Purchase  Notice  or the  Incremental  Purchase  of the  Receivable
Interests will be made by the Investors.

          (b) On the date of each Incremental Purchase, upon satisfaction of the
     applicable  conditions  precedent  set forth in Article IV,  Falcon or each
     Investor,  as  applicable,  shall  deposit  to  the  Facility  Account,  in
     immediately  available funds and in the applicable currency,  no later than
     12:00 noon  (Chicago  time),  an amount equal to (i) in the case of Falcon,
     the aggregate  Purchase Price of each Receivable  Interests  Falcon is then
     purchasing  or (ii) in the case of an Investor,  such  Investor's  Pro Rata
     Share of the aggregate  Purchase Price of each of the Receivable  Interests
     the Investors are purchasing.

     Section 1.3.  Selection of Tranche  Periods and  Discount  Rates.  (a) Each
Receivable  Interest  shall at all times have an  associated  currency  (whether
Dollars or  Deutsche  Marks),  amount of Capital (in the  applicable  currency),
Discount Rate and Tranche Period  applicable to it. Not less than $2,000,000 (or
the Dollar Equivalent thereof in the case of a Receivable  Interest arising from
a DM Purchase) of Capital may be allocated to any single Receivable Interest.

          (b) In the case of each Receivable  Interest that shall have arisen by
     reason of a Dollar  Purchase,  the Seller shall request  Discount Rates and
     Tranche  Periods for such  Receivable  Interest in the manner  described in
     this  subsection  (b).  The  Seller  may  select  the  CP  Rate,  with  the
     concurrence  of  the  Administrative  Agent,  or  the  Base  Rate  for  the
     Receivable  Interests  of Falcon and the LIBO Rate or the Base Rate for the
     Receivable  Interests  of the  Investors.  With  respect  to each  expiring
     Tranche Period, the Seller shall give the Administrative  Agent irrevocable
     notice of the new  Tranche  Period  and  Discount  Rate for the  Receivable
     Interest  associated  with  such  expiring  Tranche  Period,  by 9:00  a.m.
     (Chicago time), (i) at least three Business Days prior to the expiration of
     any then  existing  Tranche  Period with  respect to which the LIBO Rate is
     being  requested as a new Discount  Rate,  (ii) at least two Business  Days
     prior to the expiration of any then existing Tranche Period with respect to
     which the CP Rate

                                     Page 2
<PAGE>
     is being  requested as a new Discount  Rate and (iii) at least one Business
     Day prior to the expiration of any Tranche Period with respect to which the
     Base Rate is being  requested as a new Discount  Rate.  The  Administrative
     Agent  shall  advise  the  Seller in any  instance  if the  Tranche  Period
     selected  by the  Seller  at any time is not  acceptable  to  Falcon or the
     Investors, as applicable.  If the Seller fails to request timely a Discount
     Rate and/or a Tranche  Period for any Receivable  Interest  pursuant to the
     terms of this Section 1.3(b),  or the Seller and the  Administrative  Agent
     fail to  agree  on an  acceptable  duration  for any  Tranche  Period,  the
     Discount Rate shall be the CP Rate (if Falcon is the applicable  Purchaser)
     or the Base Rate, in the  Administrative  Agent's sole discretion,  and the
     applicable  Tranche  Period shall be a period of one day  commencing on the
     day  requested in the Purchase  Notice or the last day of the then expiring
     Tranche  Period for such  Receivable  Interest,  as  applicable.  Until the
     Seller gives notice to the  Administrative  Agent of another Discount Rate,
     the initial  Discount Rate for any Receivable  Interest  transferred to the
     Investors pursuant to Section 2.1 shall be the Base Rate.

          (c) In the case of each Receivable  Interest that shall have arisen by
     reason of a DM Purchase,  the applicable Tranche Periods and Discount Rates
     shall be determined in accordance  with this  subsection  (c). Each Tranche
     Period for each such Receivable  Interest shall be coextensive with a Fixed
     Exchange Period unless the Administrative  Agent shall otherwise agree. The
     Discount  Rate in respect of each Tranche  Period shall be a rate per annum
     determined by the Administrative Agent on or prior to the first day of such
     Tranche Period on the basis of (i) the cost of Dollar funds procured by the
     Purchaser(s)  to fund and maintain  such  Receivable  Interest and (ii) the
     currency hedging and exchange arrangements procured by such Purchaser(s) in
     order to maintain such Receivable Interest in Deutsche Marks.

          (d) If any  Investor  notifies  the  Administrative  Agent that it has
     determined that (i) funding its Pro Rata Share of the Receivable  Interests
     of the  Investors at a LIBO Rate or  maintaining  an  appropriate  currency
     hedge or exchange arrangement for the purpose of maintaining any Receivable
     Interest  that shall have arisen by reason of a DM Purchase  would  violate
     any applicable law, rule, regulation,  or directive,  whether or not having
     the force of law, (ii) deposits of a type and maturity appropriate to match
     fund its Receivable  Interests at such LIBO Rate are not available or (iii)
     such  LIBO  Rate  does not  accurately  reflect  the cost of  acquiring  or
     maintaining   a   Receivable   Interest   at  such  LIBO  Rate,   then  the
     Administrative  Agent shall suspend the  availability of such LIBO Rate and
     require  the  Seller  to  select a new  Discount  Rate  for any  Receivable
     Interest accruing Discount at such LIBO Rate.

          (e) If any Purchaser notifies the  Administrative  Agent that it shall
     not be able to make or  participate  in the making of any DM Purchase  then
     being requested hereunder,  or to maintain an appropriate currency hedge or
     exchange arrangement for the purpose of maintaining any Receivable Interest
     that shall have arisen from a DM Purchase or for the purpose of  converting
     any  Collections  denominated in Deutsche  Marks into Dollars,  in any such
     case  whether  because (i) the  introduction  of or any change in or in the
     interpretation  of any law or regulation makes it unlawful,  or any central
     bank or other governmental  authority asserts that it is unlawful, for such
     Purchaser to do so or to convert  Dollar funds into Deutsche Marks in order
     to do so, (ii) any material  disruption  shall have occurred in the credit,
     currency or foreign exchange markets

                                     Page 3
<PAGE>
     in the United  States or  Germany  (whether  by reason of act of God,  war,
     governmental  intervention,  strike, power or communications system failure
     or  natural  disaster)  or (iii) any other  event or  condition  beyond the
     reasonable control of the Purchaser,  then the  Administrative  Agent shall
     suspend  the  availability  of DM  Purchases  and in  any  such  event  the
     Purchasers  shall thereafter not have any obligation to make or fund any DM
     Purchase.  Upon its receipt of any such notice,  the  Administrative  Agent
     shall declare the  Liquidation  Day in respect of all Receivable  Interests
     that shall have arisen by reason of a DM Purchase.

     Section 1.4. Percentage Evidenced by Receivable Interests.  Each Receivable
Interest and its corresponding Currency Allocation Percentage shall be initially
computed on its date of purchase.  Thereafter,  until its Liquidation  Day, each
Receivable  Interest and Currency  Allocation  Percentage shall be automatically
recomputed  (or deemed to be  recomputed)  on each day prior to its  Liquidation
Day. The variable  percentage  represented  by any  Receivable  Interest and its
corresponding  Currency  Allocation  Percentage,  in each case as  computed  (or
deemed recomputed) as of the close of business on the day immediately  preceding
its Liquidation  Day, shall remain constant at all times after such  Liquidation
Day.

     Section 1.5. Dividing or Combining Receivable Interests.  The Seller or the
Administrative  Agent may,  upon notice to and consent by the other  received at
least  three  Business  Days  prior  to the  end of a  Tranche  Period  for  any
Receivable  Interest,  take any of the  following  actions  with respect to such
Receivable  Interest:  (i)  divide  the  Receivable  Interest  into  two or more
Receivable  Interests  having  aggregate  Capital  equal to the  Capital of such
divided Receivable  Interest,  (ii) combine the Receivable Interest with another
Receivable Interest with a Tranche Period ending on the same day, creating a new
Receivable  Interest  having  Capital equal to the Capital of the two Receivable
Interests  combined or (iii) combine the  Receivable  Interest with a Receivable
Interest  to be  purchased  on  such  day  by  such  Purchaser,  creating  a new
Receivable  Interest  having  Capital equal to the Capital of the two Receivable
Interests  combined,  provided that, a Receivable  Interest of Falcon may not be
combined with a Receivable  Interest of the Investors and a Receivable  Interest
that shall have  arisen  from a Dollar  Purchase  shall not be  combined  with a
Receivable Interest that shall have arisen from a DM Purchase.

     Section 1.6.  Reinvestment  Purchases.  At any time that any  Collection or
Collections  are  received  by the  Servicer  after the  initial  purchase  of a
Receivable  Interest  hereunder and on or prior to the  Liquidation  Day of such
Receivable Interest,  the Seller hereby requests and, upon the terms and subject
to the conditions  hereof,  the Purchasers hereby agree to make,  simultaneously
with such receipt, a reinvestment  (each a "Reinvestment")  with that portion of
each  and  every  Collection  received  by the  Servicer  that  is  part of such
Receivable Interest, such reinvestment being in Receivables that shall have been
acquired by the Seller  pursuant to the Donnelly  Transfer  Agreement  since the
date of the last purchase or Reinvestment  hereunder.  Until the  Administrative
Agent  shall  otherwise  direct,  Collections  denominated  in Dollars  shall be
applied to a  Reinvestment  in respect of a  Receivable  Interest the Capital of
which is  denominated in Dollars and  Collections  denominated in Deutsche Marks
shall  be  applied  to  a  Reinvestment  in  respect  of a  Receivable  Interest
denominated  in  Deutsche  Marks.  The making of a  Reinvestment  shall not,  of
itself, cause any increase or decrease in, or otherwise affect, the

                                     Page 4
<PAGE>
Capital associated with any Receivable  Interest.  If, and to the extent, on any
day  the  Seller  shall  have  insufficient   Receivables  for  the  purpose  of
accommodating  the  Reinvestment of all Collections  received on such day in the
applicable  currency,  the  Servicer  shall  set aside and hold in trust for the
holder of each Receivable Interest such Collections until the earlier of (i) the
next date on which the Seller shall  acquire  Receivables  in such  currency and
shall be capable of  accommodating a Reinvestment  of such  Collections and (ii)
the  next  following  date  that is the  last day of any  Tranche  Period  for a
Receivable Interest in such currency.

     Section 1.7. Liquidation Settlement Procedures.  (a) On the Liquidation Day
of a Receivable  Interest  and on each day  thereafter,  the Servicer  shall set
aside  and  hold  in  trust  for the  holder  of such  Receivable  Interest  all
Collections  received on such day that shall be  denominated  in the currency in
which the Capital of such Receivable  Interest is denominated;  provided that if
there  shall be more than one  Receivable  Interest  at such time the Capital of
which is  denominated  in such  currency,  then the Servicer shall set aside and
hold in trust for the holder or holders of the Receivable Interest that are then
liquidating their respective Currency Allocation  Percentage of such Collections
received on such day.  On the last day of each  Tranche  Period of a  Receivable
Interest after the occurrence of its  Liquidation  Day, the Servicer shall remit
to the  Administrative  Agent's  account the  amounts set aside  pursuant to the
preceding  sentence,  together with any remaining  amounts set aside pursuant to
Section 1.8 prior to such day, in each case  (unless  the  Administrative  Agent
shall otherwise agree) in the currency in which such Collections shall have been
received or deemed received;  provided that the aggregate amount remitted on any
day in respect of any  Receivable  Interest  shall not exceed the sum of (i) the
accrued  Discount  for  such  Receivable  Interest,  (ii)  the  Capital  of such
Receivable  Interest,  and (iii) the  aggregate  of all other  amounts then owed
hereunder by Seller to the Purchasers.

          (b) If there shall be  insufficient  funds on deposit for the Servicer
     to distribute funds in payment in full of the aforementioned  amounts,  the
     Servicer  shall   distribute   funds  first,   to   reimbursement   of  the
     Administrative   Agent's  costs  of  collection  and  enforcement  of  this
     Agreement,  second,  in payment of all accrued  Discount for the Receivable
     Interests,  third, in reduction of the Capital of the Receivable Interests,
     and  fourth,  in payment of all other  amounts  payable to the  Purchasers.
     Notwithstanding  any rule  pertaining to the application of Collections set
     forth in this Section 1.7, the Administrative Agent may, at any time and in
     its  discretion,  allocate  Collections  in one  currency  to a  Receivable
     Interest  denominated  in another  currency.  Collections  allocated to the
     Receivable  Interests  of the  Investors  shall be  shared  ratably  by the
     Investors in accordance with their Pro Rata Shares.  Collections applied to
     the payment of fees,  expenses,  Discount and all other amounts  payable by
     the Seller to the Administrative  Agent and the Purchasers  hereunder shall
     be allocated ratably among the  Administrative  Agent and the Purchasers in
     accordance  with such amounts owing to each of them.  Following the date on
     which the Aggregate  Unpaids are reduced to zero, the Servicer shall pay to
     Seller  any  remaining  Collections  set  aside  and  held by the  Servicer
     pursuant to this Section 1.7.

     Section 1.8. Deemed Collections. If on any day the Outstanding Balance of a
Receivable is either (x) reduced as a result of any defective or rejected  goods
or services,  any cash discount or any adjustment by the Seller,  any Designated
Servicer or either Originator, or (y) reduced

                                     Page 5
<PAGE>
or  cancelled  as a result of a setoff  in  respect  of any claim by any  Person
(whether  such  claim  arises  out of the same or a  related  transaction  or an
unrelated transaction),  the Seller shall be deemed to have received on such day
a Collection of such  Receivable in the amount of such reduction or cancellation
and in the currency of such Receivable. If on any day any of the representations
or  warranties  in Article III are no longer true with respect to a  Receivable,
the Seller  shall be deemed to have  received on such day a  Collection  of such
Receivable  in full in the  applicable  currency.  If the  Seller  receives  any
Collections or is deemed to receive Collections  pursuant to this Section 1.8 or
otherwise,   the  Seller  shall  immediately  pay  such  Collections  or  deemed
Collections  to the  Servicer  and,  at all times  prior to such  payment,  such
Collections  shall be held in trust by the Seller for the  exclusive  benefit of
the Purchasers and the Administrative Agent.

     Section 1.9. Discount;  Payments and Computations,  Etc. (a) Discount shall
accrue for each  Receivable  Interest for each day occurring  during the Tranche
Period for such Receivable Interest.  On the last day of each Tranche Period the
Seller shall pay to the Administrative  Agent an amount equal to the accrued and
unpaid Discount for such Tranche Period.

          (b)  Notwithstanding  any  limitation  on recourse  contained  in this
     Agreement,  the  Seller  shall  pay to the  Administrative  Agent,  for the
     account  of the  relevant  Purchasers,  such  fees as set  forth in the Fee
     Letter  (which fees shall be  sufficient  to pay the  Investor  Fees),  all
     amounts payable as Discount,  all amounts payable pursuant to Article VIII,
     if any, all Servicer costs, if any,  payable pursuant to Section 6.2 and on
     demand  therefor,  any Early Collection Fee. If any Person fails to pay any
     amount  when due  hereunder,  such  Person  agrees to pay,  on demand,  the
     Default Fee.

          (c) All amounts to be paid or deposited by any Person  hereunder shall
     be paid or  deposited  in  accordance  with the terms  hereof no later than
     12:00  noon  (Chicago  time) on the day when due in  immediately  available
     funds; if such amounts are payable to a Purchaser they shall be paid to the
     Administrative Agent, for the account of such Purchaser, at (i) in the case
     of  any  Dollardenominated  amount,  One  First  National  Plaza,  Chicago,
     Illinois  60670  and  (ii)  in the  case of any  Deutsche  Mark-denominated
     amount,  Niederlassung,  Frankfurt,  Germany,  BLZ 503 304 00, in each case
     until otherwise  notified by the  Administrative  Agent. Upon notice to the
     Seller,  the  Administrative  Agent may debit the Facility  Account for all
     amounts due and payable hereunder. Except as otherwise provided herein, all
     computations  of Discount  and per annum fees  hereunder  and under the Fee
     Letter  shall be made on the  basis  of a year of 360  days for the  actual
     number of days elapsed  (including  the first but  excluding the last day).
     All per annum  fees  shall be payable  monthly  in  arrears.  If any amount
     hereunder  shall be  payable  on a day which is not a  Business  Day,  such
     amount shall be payable on the next succeeding Business Day.

          (d) Where appropriate,  the Administrative Agent may designate whether
     any of the  foregoing  fees or other amounts shall be payable in Dollars or
     Deutsche Marks. In the event, for any reason, (i) payment on any obligation
     shall  be  remitted  to the  Administrative  Agent  or any  Purchaser  in a
     currency other than the currency designated by the Administrative Agent or

                                     Page 6
<PAGE>
     (ii)  Collections  in one currency are  allocated to a Receivable  Interest
     denominated  in  another  currency  pursuant  to Section  1.7(b),  then the
     Administrative  Agent shall convert such payment or such  Collections  into
     such other  currency using such hedging  arrangements  and markets as shall
     then be  available  to the  Administrative  Agent  and as shall  have  been
     selected by the Administrative Agent in its sole discretion and the payment
     of  such  obligation  or  the  application  of  such  Collections  to  such
     Receivable  Interest shall be deemed to have occurred only to the extent of
     the amount of such other currency received by the  Administrative  Agent or
     the applicable Purchaser after giving effect to such conversion.

     Section  1.10.  Capital  Limit.  The Seller shall ensure that the Aggregate
Capital at no time exceeds the Capital  Limit.  If on the  Liquidation  Day of a
Receivable  Interest or on any day on which the Coverage  Exchange Rate is to be
determined in accordance  with the  definition  thereof,  the Aggregate  Capital
exceeds  the  Capital   Limit,   the  Seller  shall   immediately   pay  to  the
Administrative   Agent  an  amount  in  Dollars  or   Deutsche   Marks  (as  the
Administrative  Agent may  direct) to be  applied  to reduce the  Capital of the
Receivable  Interests,  such  that  after  giving  effect  to such  payment  the
Aggregate  Capital  does not exceed the  Capital  Limit.  Such  amount  shall be
applied to the  reduction  of the  Capital of the  Receivable  Interests  in the
applicable  currency.  Any  amounts  received by the  Investors  pursuant to the
preceding  sentence shall be applied  ratably in accordance  with their Pro Rata
Shares.

     Section 1.11. Seller's Extinguishment.  The Seller shall have the right, on
three (3) Business Days' written notice to the Administrative Agent, at any time
following  the Facility  Termination  Date and the  reduction  of the  Aggregate
Capital to a level that is less than ten percent (10%) of the Purchase  Limit in
effect on the date hereof,  to repurchase from the Purchasers all, and not part,
of the then  outstanding  Receivable  Interests.  The purchase  price in respect
thereof  shall be an amount equal to the Aggregate  Unpaids  (which amount shall
include,  without  limitation,  any Early  Collection  Fee that  shall  arise in
connection with such repurchase) through the date of such repurchase, payable in
immediately  available funds.  Such repurchase shall be without  representation,
warranty or recourse of any kind by, on the part of or against any  Purchaser or
the Administrative Agent.

     Section 1.12. Extensions of the Liquidity Termination Date. The Seller may,
by written notice (an "Extension Request") given to the Administrative Agent not
later than sixty days prior to the  Liquidity  Termination  Date then in effect,
request that such Liquidity  Termination  Date be extended.  Each such Extension
Request shall contemplate an extension of the Liquidity Termination Date then in
effect  to a date  that is a  Business  Day not more  than 364 days  after  such
Liquidity  Termination Date. The Administrative Agent shall promptly advise each
Purchaser of its receipt of any Extension  Request.  Each  Purchaser may, in its
sole  discretion,  consent to a requested  extension  by giving  written  notice
thereof to the  Administrative  Agent by not later than the date that is 30 days
prior to the Liquidity  Termination Date then in effect.  Failure on the part of
any Purchaser to respond to an Extension Request by such date shall be deemed to
be a denial of such request by such  Purchaser.  If all of the Purchasers  shall
consent in writing to a requested  extension,  such request shall be granted and
the requested

                                     Page 7
<PAGE>
extension  shall  become  effective  on  the  Liquidity  Termination  Date  then
otherwise in effect. No extension granted under this Section 1.12 shall exceed a
period of 364 days.

                          ARTICLE II LIQUIDITY FACILITY

     Section 2.1. Transfer to Investors. Each Investor hereby agrees, subject to
Section 2.4, that  immediately  upon written notice from Falcon  delivered on or
prior to the Liquidity  Termination  Date,  it shall acquire by assignment  from
Falcon,  without recourse or warranty,  its Pro Rata Share of one or more of the
Receivable  Interests  of Falcon as  specified by Falcon.  Each  Investor  shall
promptly  pay  to the  Administrative  Agent  at an  account  designated  by the
Administrative  Agent,  for the  benefit of Falcon,  its  Acquisition  Amount in
Dollars.  Unless an Investor has notified the Administrative  Agent that it does
not intend to pay its Acquisition  Amount, the  Administrative  Agent may assume
that such payment has been made and may, but shall not be obligated to, make the
amount of such  payment  available to Falcon in reliance  upon such  assumption.
Falcon  hereby  sells and  assigns to the  Administrative  Agent for the ratable
benefit of the  Investors,  and the  Administrative  Agent hereby  purchases and
assumes from Falcon, effective upon the receipt by Falcon of the Falcon Transfer
Price, the Receivable  Interests of Falcon which are the subject of any transfer
pursuant to this Article II.

     Section 2.2. Transfer Price Reduction  Discount.  If the Adjusted Liquidity
Price is  included  in the  calculation  of the  Falcon  Transfer  Price for any
Receivable  Interest,  each Investor agrees that the Administrative  Agent shall
pay  to  Falcon  the  Reduction  Percentage  of  any  Discount  received  by the
Administrative Agent with respect to such Receivable Interest.

     Section 2.3.  Payments to Falcon. In consideration for the reduction of the
Falcon Transfer Prices by the Falcon Transfer Price  Reductions,  effective only
at such time as the aggregate amount of the Capital of the Receivable  Interests
of the Investors  equals the Falcon  Residual,  each Investor hereby agrees that
the  Administrative  Agent  shall  not  distribute  to the  Investors  and shall
immediately remit to Falcon any Discount, Collections or other payments received
by it to be applied  pursuant  to the terms  hereof or  otherwise  to reduce the
Capital of the Receivable Interests of the Investors.

     Section  2.4.   Limitation   on   Commitment   to  Purchase   from  Falcon.
Notwithstanding  anything to the contrary in this  Agreement,  no Investor shall
have any obligation to purchase any Receivable Interest from Falcon, pursuant to
Section 2.1 or otherwise, if:

          (i) Falcon shall have  voluntarily  commenced any  proceeding or filed
     any petition  under any  bankruptcy,  insolvency or similar law seeking the
     dissolution, liquidation or reorganization of Falcon or taken any corporate
     action for the purpose of effectuating any of the foregoing; or

          (ii)  involuntary  proceedings or an  involuntary  petition shall have
     been commenced or filed against Falcon by any Person under any  bankruptcy,
     insolvency or similar law

                                     Page 8
<PAGE>
     seeking the dissolution,  liquidation or  reorganization of Falcon and such
     proceeding or petition shall have not been dismissed.

     Section 2.5. Defaulting Investors. If one or more Investors defaults in its
obligation  to pay its  Acquisition  Amount  pursuant  to Section 2.1 (each such
Investor  shall be called a "Defaulting  Investor"  and the aggregate  amount of
such  defaulted  obligations  being  herein  called the "Falcon  Transfer  Price
Deficit"),  then upon notice from the Administrative  Agent, each Investor other
than the Defaulting  Investors (a "Non-Defaulting  Investor") shall promptly pay
to the  Administrative  Agent, in immediately  available Dollar funds, an amount
equal to the lesser of (x) such  Non-Defaulting  Investor's  proportionate share
(based upon the relative  Commitments  of the  Non-Defaulting  Investors) of the
Falcon Transfer Price Deficit and (y) the unused portion of such  Non-Defaulting
Investor's Commitment.  A Defaulting Investor shall forthwith upon demand pay to
the  Administrative  Agent for the account of the  Non-Defaulting  Investors all
amounts  paid by each  Non-Defaulting  Investor  on  behalf  of such  Defaulting
Investor,  together with interest thereon,  for each day from the date a payment
was  made by a  Non-Defaulting  Investor  until  the  date  such  Non-Defaulting
Investor  has been paid such  amounts in full,  at a rate per annum equal to the
Federal  Funds  Effective  Rate plus 2%. In addition,  without  prejudice to any
other rights that Falcon may have under applicable law, each Defaulting Investor
shall  pay  to  Falcon  forthwith  upon  demand,  the  difference  between  such
Defaulting Investor's unpaid Acquisition Amount and the amount paid with respect
thereto by the  non-Defaulting  Investors,  together with interest thereon,  for
each day from the date of the Administrative Agent's request for such Defaulting
Investor's  Acquisition  Amount  pursuant  to  Section  2.1  until  the date the
requisite  amount is paid to Falcon  in full,  at a rate per annum  equal to the
Federal Funds Effective Rate plus 2%.

     Section 2.6.  Hedging  Arrangements.  The  Administrative  Agent and Falcon
shall take such actions as are reasonably necessary to cause Falcon's rights and
interest in each hedging or exchange arrangement entered into in connection with
a Receivable  Interest to be  transferred  to the Investors upon the transfer by
Falcon of such Receivable  Interest to the Investors.  Following the purchase by
the Investors of any Receivable Interest hereunder, whether under Section 1.2 or
2.1, the Administrative  Agent shall facilitate the procurement by the Investors
of  hedging  and  exchange  arrangements  in  connection  with the  funding  and
maintenance of Receivable Interests by the Investors.


                   ARTICLE III REPRESENTATIONS AND WARRANTIES

     Section 3.1.  Seller  Representations  and  Warranties.  The Seller  hereby
represents and warrants to the Purchasers that:


          (a) Corporate  Existence and Power.  The Seller is a corporation  duly
     organized,  validly  existing  and in good  standing  under the laws of its
     state of incorporation, and has all corporate

                                     Page 9
<PAGE>
     power and all governmental licenses, authorizations, consents and approvals
     required  to carry  on its  business  in each  jurisdiction  in  which  its
     business is conducted.

          (b) No Conflict. The execution, delivery and performance by the Seller
     of this  Agreement  and each other  Transaction  Document  to which it is a
     party,  and the Seller's use of the proceeds of purchases  made  hereunder,
     are within its corporate powers, have been duly authorized by all necessary
     corporate  action,  do not  contravene  or violate (i) its  certificate  or
     articles of  incorporation  or by-laws,  (ii) any law,  rule or  regulation
     applicable to it, (iii) any restrictions  under any agreement,  contract or
     instrument  to which it is a party or by which it or any of its property is
     bound,  or (iv) any order,  writ,  judgment,  award,  injunction  or decree
     binding  on or  affecting  it or its  property,  and do not  result  in the
     creation or imposition of any Adverse Claim on assets of the Seller (except
     created  hereunder);   and  no  transaction  contemplated  hereby  requires
     compliance  with any bulk sales act or similar law. This Agreement and each
     other Transaction Document has been duly authorized, executed and delivered
     by the Seller.

          (c) Governmental Authorization. Other than the filing of the financing
     statements required hereunder, no authorization or approval or other action
     by,  and no  notice  to or  filing  with,  any  governmental  authority  or
     regulatory body is required for the due execution, delivery and performance
     by the Seller of the Transaction Documents.

          (d) Binding Effect. The Transaction Documents to which the Seller is a
     party  constitute  the legal,  valid and binding  obligations of the Seller
     enforceable  against the Seller in accordance with their respective  terms,
     except  as  such  enforcement  may be  limited  by  applicable  bankruptcy,
     insolvency,  reorganization  or other  similar laws relating to or limiting
     creditors' rights generally.

          (e) Accuracy of Information.  All information  heretofore furnished by
     the  Seller or any of its  Affiliates  to the  Administrative  Agent or the
     Purchasers for purposes of or in connection with this Agreement, any of the
     other  Transaction  Documents,  or any transaction  contemplated  hereby or
     thereby is, and all such information  hereafter  furnished by the Seller to
     the Purchasers will be, true and accurate in every material respect, on the
     date such  information  is stated  or  certified  and does not and will not
     contain any material  misstatement of fact or omit to state a material fact
     or any  fact  necessary  to  make  the  statements  contained  therein  not
     misleading.

          (f) Use of  Proceeds.  No proceeds of any purchase  hereunder  will be
     used (i) for a  purpose  which  violates,  or would be  inconsistent  with,
     Regulation  G, T, U or X  promulgated  by the  Board  of  Governors  of the
     Federal Reserve System from time to time or (ii) to acquire any security in
     any  transaction  which is subject  to  Section 13 or 14 of the  Securities
     Exchange Act of 1934, as amended.

          (g) Title to Receivables  Purchased from Originators.  Each Receivable
     transferred  (i) by Hohe to Donnelly has been  purchased  by Donnelly  from
     Hohe in  accordance  with the  terms of the Hohe  Transfer  Agreement,  and
     Donnelly has thereby irrevocably obtained all legal and

                                     Page 10
<PAGE>
     equitable  title to, and has the legal right to sell,  such  Receivable and
     the Related Security to the Seller,  and (ii) by Donnelly to the Seller has
     been purchased by the Seller from Donnelly in accordance  with the terms of
     the Donnelly  Transfer  Agreement,  and the Seller has thereby  irrevocably
     obtained all legal and equitable title to, and has the legal right to sell,
     such  Receivable,  the Related  Security and the Hohe  Discount.  Each such
     Receivable  has  been  transferred  to  Donnelly  and  to  the  Seller,  as
     applicable,  free and clear of any  Adverse  Claim.  Without  limiting  the
     foregoing,  there has been duly  filed all  financing  statements  or other
     similar  instruments or documents,  and there has been duly taken all other
     actions,  necessary  under the UCC (and any  comparable  law in the  United
     States,  Germany,  Canada,  Belgium,  Spain, Sweden or any other country in
     which  an  Obligor  of an  Eligible  Receivable  may  be  located)  of  all
     applicable  jurisdictions  to  perfect  Donnelly's  and  the  Seller's,  as
     applicable, ownership interest in such Receivable, the Related Security and
     the Hohe Discount.

          (h)  Good  Title;  Perfection.  Immediately  prior  to  each  purchase
     hereunder,  the  Seller  shall be the  legal  and  beneficial  owner of the
     Receivables,  Related  Security with respect thereto and the Hohe Discount,
     free and clear of any Adverse Claim,  except as created by the  Transaction
     Documents.  This  Agreement is effective to, and shall,  upon each purchase
     hereunder,  transfer to the  relevant  Purchaser  or  Purchasers  (and such
     Purchaser  or  Purchasers  shall  acquire  from  the  Seller)  a valid  and
     perfected first priority  undivided  percentage  ownership interest in each
     Receivable  existing or hereafter arising and in the Related Security,  the
     Hohe Discount and Collections with respect  thereto,  free and clear of any
     Adverse Claim, except as created by the Transactions Documents.

          (i) Places of  Business.  The  principal  places of business and chief
     executive  office of the Seller and the offices  where the Seller keeps all
     its  Records are  located at the  address(es)  listed on Exhibit II or such
     other  locations  notified to the  Administrative  Agent in accordance with
     Section 5.2(a) in jurisdictions where all action required by Section 5.2(a)
     has been taken and completed.  The Seller's Federal Employer Identification
     Number is correctly set forth on Exhibit II.

          (j)  Collection  Banks;  etc.  Except  as  otherwise  notified  to the
     Administrative  Agent in accordance with Section 5.2(b), (i) the Seller has
     instructed,  or has caused the Originators to instruct, all Obligors to pay
     all  Collections  directly  to a lock-box  listed on Exhibit III or, in the
     case of wire-transfers  on Deutsche  Mark-denominated  Receivables,  to the
     concentration account therefor specified on Exhibit III, (ii) proceeds from
     any such lock- boxes are  deposited  directly by a  Collection  Bank into a
     concentration  account or a depository account listed on Exhibit III, (iii)
     the names and addresses of all Collection Banks,  together with the account
     numbers of the Collection  Accounts of the Seller at each Collection  Bank,
     are listed on Exhibit III, and (iv) each lock-box and Collection Account to
     which Collections are remitted is subject to a Collection Account Agreement
     that is in full force and effect.  In the case of lock-boxes and Collection
     Accounts  identified on Exhibit III which were established by an Originator
     or by any Person  other than the  Seller,  exclusive  dominion  and control
     thereof has been transferred to the Seller.  The Seller has not granted any
     Person,  other  than  the  Administrative  Agent  as  contemplated  by this
     Agreement,  dominion and control of any lock-box or Collection  Account, or
     the right to

                                     Page 11
<PAGE>
     take dominion and control of any lock-box or Collection Account at a future
     time or upon the occurrence of a future event.

          (k)  Material  Adverse  Effect.  Since  June 29,  1996,  no event  has
     occurred which would have a Material Adverse Effect.

          (l)  Names.  In the  past  five  years,  the  Seller  has not used any
     corporate  names,  trade names or assumed  names other than those listed on
     Exhibit II.

          (m)  Actions,  Suits.  There  are no  actions,  suits  or  proceedings
     pending, or to the knowledge of the Seller threatened, against or affecting
     the Seller or either Originator, or any of the respective properties of the
     Seller or either  Originator,  in or before any court,  arbitrator or other
     body,   which  are   reasonably   likely  to  (i)   adversely   affect  the
     collectibility  of a material portion of the  Receivables,  (ii) materially
     adversely  affect the financial  condition of the Seller or such Originator
     or (iii)  materially  adversely  affect  the  ability of the Seller or such
     Originator  to perform its  obligations  under the  Transaction  Documents.
     Neither the Seller nor either  Originator is in default with respect to any
     order of any court, arbitrator or governmental body.

          (n) Coverage. The Aggregate Capital does not exceed the Capital Limit.

          (o) Credit and Collection  Policies.  With respect to each Receivable,
     each of the applicable  Originator,  the Seller and the Designated Servicer
     has  complied  in all  material  respects  with the Credit  and  Collection
     Policy. Except as otherwise permitted under this Agreement,  the Credit and
     Collection  Policy has not been amended or modified in any material respect
     since the date of this Agreement.

          (p)  Payments  to  Originator.  With  respect  to (i) each  Receivable
     transferred  to Donnelly under the Hohe Transfer  Agreement,  and (ii) each
     Receivable transferred to the Seller under the Donnelly Transfer Agreement,
     Donnelly or the Seller,  as  applicable,  has given  reasonably  equivalent
     value to the applicable  Originator in  consideration  for such transfer of
     such Receivable and the Related  Security with respect thereto and the Hohe
     Discount under the applicable  Transfer Agreement and such transfer was not
     made for or on  account  of an  antecedent  debt.  No  transfer  by  either
     Originator of any Receivable is or may be voidable under any Section of the
     Bankruptcy Reform Act of 1978 (11 U.S.C. (S)(S) 101 et seq.), as amended or
     under any law, rule or regulation in effect in Germany or any other country
     in which any Obligor on any  Receivable  may be located,  or any  political
     subdivision   thereof  or  jurisdiction   therein,   whether   relating  to
     bankruptcy, insolvency, reorganization, creditors' rights or otherwise.

          (q) Ownership of the Seller.  Donnelly  owns,  directly or indirectly,
     one hundred percent (100%) of the issued and  outstanding  capital stock of
     the  Seller.  Such  capital  stock  is  validly  issued,   fully  paid  and
     nonassessable and there are no options, warrants or other rights to acquire
     securities of the Seller.

                                     Page 12
<PAGE>
          (r) Subsidiaries. The Seller has no Subsidiaries.

          (s)  Not an  Investment  Company.  The  Seller  is not an  "investment
     company"  within the  meaning of the  Investment  Company  Act of 1940,  as
     amended from time to time, or any successor statute.

     Section 3.2. Investor Representations and Warranties.  Each Investor hereby
represents and warrants to the Administrative Agent and Falcon that:

          (a) Existence and Power.  Such Investor is a corporation  or a banking
     association duly organized, validly existing and in good standing under the
     laws of its  jurisdiction of  incorporation  or  organization,  and has all
     corporate power to perform its obligations hereunder.

          (b) No  Conflict.  The  execution,  delivery and  performance  by such
     Investor of this Agreement are within its corporate powers,  have been duly
     authorized by all necessary  corporate action, do not contravene or violate
     (i) its certificate or articles of incorporation or association or by-laws,
     (ii) any law, rule or regulation  applicable to it, (iii) any  restrictions
     under any  agreement,  contract or instrument to which it is a party or any
     of its  property  is  bound,  or (iv) any  order,  writ,  judgment,  award,
     injunction or decree binding on or affecting it or its property, and do not
     result in the creation or  imposition  of any Adverse  Claim on its assets.
     This  Agreement  has been duly  authorized,  executed and delivered by such
     Investor.

          (c) Governmental Authorization.  No authorization or approval or other
     action by, and no notice to or filing with, any  governmental  authority or
     regulatory body is required for the due execution, delivery and performance
     by such Investor of this Agreement.

          (d) Binding Effect.  This Agreement  constitutes the legal,  valid and
     binding  obligation of such Investor  enforceable  against such Investor in
     accordance  with its terms,  except as such  enforcement  may be limited by
     applicable  bankruptcy,  insolvency,  reorganization  or other similar laws
     relating to or limiting creditors' rights generally.



                       ARTICLE IV CONDITIONS OF PURCHASES

     Section 4.1. Conditions Precedent to Initial Purchase. The initial purchase
of a  Receivable  Interest  under this  Agreement  is subject to the  conditions
precedent  that the  Administrative  Agent shall have  received on or before the
date of such purchase those documents listed on Schedule A hereto.

                                     Page 13
<PAGE>
     Section 4.2. Conditions Precedent to All Purchases and Reinvestments.  Each
purchase of a Receivable  Interest (other than pursuant to Section 2.1) and each
Reinvestment  shall be subject to the further  conditions  precedent that (a) in
the case of each  such  purchase,  the  Servicer  shall  have  delivered  to the
Administrative  Agent  on or prior  to the  date of such  purchase,  in form and
substance  satisfactory to the  Administrative  Agent, all Settlement Reports as
and  when due  under  Section  6.5;  (b) on the date of each  such  purchase  or
Reinvestment,  the  following  statements  shall be true both  before  and after
giving  effect to such  Reinvestment  (and  acceptance  of the  proceeds of such
purchase or Reinvestment  shall be deemed a  representation  and warranty by the
Seller that such statements are then true):

  (i)     the  representations  and  warranties  set  forth in  Article  III are
          correct  on and as of the date of such  purchase  or  Reinvestment  as
          though made on and as of such date;

  (ii)    no  event  has  occurred,  or  would  result  from  such  purchase  or
          Reinvestment,  that will constitute a Servicer  Default,  and no event
          has occurred and is continuing,  or would result from such purchase or
          Reinvestment, that would constitute a Potential Servicer Default;

  (iii)   the Liquidity Termination Date shall not have occurred,  the Aggregate
          Capital shall not exceed the Purchase Limit, and the Aggregate Capital
          shall not exceed the Capital Limit; and

  (iv)    in the case of any DM Purchase or any  Reinvestment  for a  Receivable
          Interest  that shall have arisen from a DM  Purchase,  the  applicable
          Purchaser(s) shall have obtained hedging and currency  arrangements in
          connection therewith reasonably satisfactory to such Purchaser(s).

and (c) the  Administrative  Agent  shall have  received  such other  approvals,
opinions or documents as it may reasonably request.

                               ARTICLE V COVENANTS

     Section 5.1.  Affirmative  Covenants of Seller. Until the date on which the
Aggregate  Unpaids  have  been  indefeasibly  paid in full,  the  Seller  hereby
covenants, individually and in its capacity as Servicer, that:

          (a)  Financial  Reporting.  The  Seller  will  maintain  a  system  of
     accounting  established  and  administered  in  accordance  with  generally
     accepted accounting principles, and furnish to the Administrative Agent:

          (i)  Annual  Reporting.  Within 90 days after the close of each of its
     fiscal  years,  financial  statements  for such fiscal year  certified in a
     manner  acceptable  to the  Administrative  Agent  by the  chief  financial
     officer of the Seller.

                                     Page 14
<PAGE>
          (ii) Quarterly Reporting. If so requested by the Administrative Agent,
     within 45 days after the close of the first three quarterly periods of each
     of its fiscal years, balance sheets as at the close of each such period and
     statements  of income and  retained  earnings and a statement of cash flows
     for the period  from the  beginning  of such fiscal year to the end of such
     quarter, all certified by its chief financial officer.

          (iii) Compliance  Certificate.  Together with the financial statements
     required hereunder,  a compliance  certificate in substantially the form of
     Exhibit IV signed by the Seller's corporate  comptroller or chief financial
     officer  and  dated the date of such  annual  financial  statement  or such
     quarterly financial statement, as the case may be.

          (iv) Shareholders Statements and Reports. Promptly upon the furnishing
     thereof  to  the  shareholders  of the  Seller,  copies  of  all  financial
     statements, reports and proxy statements so furnished.

          (v) Change in Credit and Collection  Policy. At least 30 days prior to
     the  effectiveness of any material change in or amendment to the Credit and
     Collection  Policy,  a copy of the Credit  and  Collection  Policy  then in
     effect and a notice indicating such change or amendment.

          (vi) Notices under Transaction  Documents.  Forthwith upon its receipt
     of any notice,  request for consent,  financial statements,  certification,
     report or other  communication  under or in connection with any Transaction
     Document  from  any  Person  other  than  the  Administrative  Agent or any
     Purchaser, copies of the same.

          (vii)   Other   Information.   Such   other   information   (including
     nonfinancial  information) as the Administrative Agent or any Purchaser may
     from time to time reasonably request.


          (b)  Notices.  The  Seller  will  notify the  Administrative  Agent in
     writing of any of the following immediately upon learning of the occurrence
     thereof, describing the same and, if applicable, the steps being taken with
     respect thereto:

          (i) Servicer Defaults or Potential Servicer  Defaults.  The occurrence
     of each Servicer Default or each Potential Servicer Default, by a statement
     of the corporate comptroller or senior financial officer of the Seller.

          (ii) Judgment. The entry of any judgment or decree against the Seller.

          (iii)  Litigation.  The  institution  of any  litigation,  arbitration
     proceeding or  governmental  proceeding  against the Seller or to which the
     Seller becomes party.

          (iv) Donnelly Credit Rating.  The  introduction  of, or any change in,
     any publicly  announced or privately  issued  indicative  credit  rating by
     Standard & Poor's Ratings

                                     Page 15
<PAGE>
     Services, a division of the McGraw-Hill Companies,  Inc., Moody's Investors
     Service,  Inc., the National Association of Insurance  Commissioners or any
     other  nationally  recognized  rating agency or similar  organization  with
     respect to any  indebtedness  or  obligations  of Donnelly at any time that
     Donnelly is  performing  any servicing  responsibilities  in respect of the
     Receivables.

          (c)  Compliance  with Laws.  The Seller  will  comply in all  material
     respects  with all  applicable  laws,  rules,  regulations,  orders  writs,
     judgments, injunctions, decrees or awards to which it may be subject.

          (d) Audits. The Seller will furnish to the  Administrative  Agent from
     time to time such information with respect to it and the Receivables as the
     Administrative Agent may reasonably request. The Seller shall, from time to
     time during regular business hours as requested by the Administrative Agent
     upon reasonable notice,  permit the Administrative  Agent, or its agents or
     representatives   (and   shall   cause  each   Originator   to  permit  the
     Administrative Agent or its agents or representatives),  (i) to examine and
     make copies of and  abstracts  from all Records in the  possession or under
     the control of the Seller or such  Originator  relating to Receivables  and
     the Related Security, including, without limitation, the related Contracts,
     and  (ii) to  visit  the  offices  and  properties  of the  Seller  or such
     Originator for the purpose of examining such materials  described in clause
     (i)  above,  and to  discuss  matters  relating  to the  Seller's  or  such
     Originator's  financial  condition  or  the  Receivables  and  the  Related
     Security  or the  Seller's  performance  hereunder,  or  such  Originator's
     performance under any of the other Transaction  Documents,  or the Seller's
     or such  Originator's  performance  under  the  Contracts  with  any of the
     officers or employees of the Seller or such Originator  having knowledge of
     such matters.

          (e) Keeping and  Marking of Records and Books;  Notation in  Financial
     Statements.

          (i) The Seller will, and will cause each  Originator to,  maintain and
     implement  administrative  and  operating  procedures  (including,  without
     limitation,  an ability to recreate records  evidencing  Receivables in the
     event of the destruction of the originals  thereof),  and keep and maintain
     all documents, books, records and other information reasonably necessary or
     advisable  for  the  collection  of  all  Receivables  (including,  without
     limitation, records adequate to permit the immediate identification of each
     new  Receivable  and all  Collections  of and  adjustments to each existing
     Receivable).  The Seller will, and will cause each  Originator to, give the
     Administrative  Agent notice of any material  change in the  administrative
     and operating procedures referred to in the previous sentence.

          (ii) The Seller  will,  and will cause each  Originator  to, (a) on or
     prior to the date hereof, mark its master data processing records and other
     books and  records  relating  to the  Receivable  Interests  with a legend,
     acceptable to the Administrative Agent, describing the Receivable Interests
     or, in the case of Hohe, the ownership  interest of Donnelly and the Seller
     in the "Purchased Receivables" under and as defined in the Hohe Transfer


                                     Page 16
<PAGE>
     Agreement and (b) upon the request of the Administrative  Agent at any time
     following the replacement of the Seller as the Servicer hereunder,  deliver
     to the Administrative Agent all Contracts  (including,  without limitation,
     all multiple originals of any such Contract) relating to the Receivables.

          (iii) The Seller will note in its financial statements that Receivable
     Interests  have been sold to the Purchasers  hereunder,  and will cause (a)
     Donnelly to note in its financial statements that its Receivables have been
     sold to the Seller and (b) Hohe to note in its  financial  statements  that
     the  "Purchased  Receivables"  under and as  defined  in the Hohe  Transfer
     Agreement have been sold to Donnelly.

          (f) Compliance  with Contracts and Credit and Collection  Policy.  The
     Seller  will,  and will  cause  each  Originator  to,  timely and fully (i)
     perform and comply in all material respects with all provisions,  covenants
     and other  promises  required  to be  observed  by it under  the  Contracts
     related to the Receivables,  and (ii) comply in all material  respects with
     the  Credit  and  Collection  Policy in regard to each  Receivable  and the
     related  Contract.  The Seller will, and will cause each Originator to, pay
     when due any taxes payable in connection with the Receivables.

          (g) Purchase of  Receivables  from  Originators.  With respect to each
     Receivable purchased under a Transfer Agreement,  the Seller shall take (or
     shall cause the  applicable  Originator  to take) all actions  necessary to
     vest legal and equitable title to such Receivable, the Related Security and
     the Hohe Discount irrevocably in the Seller, including, without limitation,
     the filing of all  financing  statements or other  similar  instruments  or
     documents  necessary  under the UCC (and any  comparable  law in the United
     States,  Germany,  Canada,  Belgium,  Spain, Sweden or any other country in
     which  an  Obligor  of an  Eligible  Receivable  may  be  located)  of  all
     applicable   jurisdictions  to  perfect  the  Seller's   interest  in  such
     Receivable and such other action to perfect, protect or more fully evidence
     the  interest  of the  Seller as the  Administrative  Agent may  reasonably
     request.

          (h) Ownership Interest.  The Seller shall take all necessary action to
     establish  and  maintain a valid and  perfected  first  priority  undivided
     percentage ownership interest in the Receivables, the Related Security, the
     Hohe Discount and Collections with respect to any of the foregoing,  to the
     full extent contemplated  herein, in favor of the Administrative  Agent and
     the  Purchasers,  including,  without  limitation,  taking  such  action to
     perfect,  protect or more fully evidence the interest of the Administrative
     Agent  and  the  Purchasers  hereunder  as  the  Administrative  Agent  may
     reasonably request.

          (i)  Payment  to the  Originators.  With  respect  to  any  Receivable
     purchased by the Seller from Donnelly,  such sale shall be effected  under,
     and  in  strict  compliance  with  the  terms  of,  the  Donnelly  Transfer
     Agreement,  including, without limitation, the terms relating to the amount
     and timing of payments  to be made to  Donnelly in respect of the  purchase
     price for such  Receivable.  With  respect to any  Receivable  purchased by
     Donnelly  from Hohe,  the Seller  shall cause  Donnelly to effect such sale
     under, and in strict compliance with the terms of, the Hohe

                                     Page 17
<PAGE>
     Transfer Agreement,  including,  without limitation,  the terms relating to
     the  amount  and  timing of  payments  to be made to Hohe in respect of the
     purchase price for such Receivable.

          (j)  Performance and  Enforcement of Transfer  Agreements.  The Seller
     shall  timely  perform  the  obligations  required to be  performed  by the
     Seller,  and shall vigorously  enforce the rights and remedies  accorded to
     the  Seller,  under each  Transfer  Agreement.  The  Seller  shall take all
     actions to perfect and enforce its rights and interests (and the rights and
     interests of the Purchasers and the  Administrative  Agent, as assignees of
     the Seller) under each Transfer Agreement as the  Administrative  Agent may
     from time to time reasonably request, including, without limitation, making
     claims to which it may be entitled  under any indemnity,  reimbursement  or
     similar provision contained in either Transfer Agreement.

          (k) Purchasers' Reliance.  The Seller acknowledges that the Purchasers
     are  entering  into the  transactions  contemplated  by this  Agreement  in
     reliance upon the Seller's identity as a legal entity that is separate from
     Donnelly,  Hohe and other  Affiliates  of the Seller.  Therefore,  from and
     after the date of  execution  and  delivery of this  Agreement,  the Seller
     shall take all reasonable steps including,  without  limitation,  all steps
     that the  Administrative  Agent  or any  Purchaser  may  from  time to time
     reasonably  request to maintain the Seller's  identity as a separate  legal
     entity  and to make it  manifest  to third  parties  that the  Seller is an
     entity with assets and  liabilities  distinct from those of its  Affiliates
     and not  just a  division  of any  such  Affiliate.  Without  limiting  the
     generality  of the  foregoing  and in addition to the other  covenants  set
     forth herein, the Seller shall:

          (i)  conduct its own  business  in its own name and  require  that all
     full-time  employees of the Seller  identify  themselves as such and not as
     employees of any of its Affiliates (including, without limitation, by means
     of providing  appropriate  employees with business or identification  cards
     identifying such employees as the Seller's employees);

          (ii) compensate all employees,  consultants and agents directly,  from
     the Seller's  bank  accounts,  for services  provided to the Seller by such
     employees,  consultants  and  agents  and,  to  the  extent  any  employee,
     consultant or agent of the Seller is also an employee,  consultant or agent
     of an Affiliate of the Seller,  allocate the compensation of such employee,
     consultant or agent between the Seller and such  Affiliate on a basis which
     reflects the services rendered to the Seller and such Affiliate;  provided,
     however,  that the  Seller  may  enter  into  written  agreements  with any
     Affiliate  which allow such  Affiliate to pay any  employee,  consultant or
     agent on behalf of the Seller  provided the Seller agrees to reimburse such
     Affiliate for its allocable share of such payment;

          (iii) (A) maintain office space separate and apart from that of any of
     its  Affiliates  (even if such office space is  subleased  from or is on or
     near premises occupied by any of its Affiliates),  (B) clearly identify its
     offices (by signage or otherwise) as its offices, (C) own or lease pursuant
     to written leases all office furniture and equipment necessary

                                     Page 18
<PAGE>
     to operate its business  and (D) have a separate  telephone  number,  which
     will be answered  only in its name and  separate  stationery,  invoices and
     checks in its own name;

          (iv) conduct all transactions with each of its Affiliates  (including,
     without  limitation,   any  delegation  of  its  obligations  hereunder  as
     Servicer)  strictly on an  arm's-length  basis,  and  allocate all overhead
     expenses  (including,  without  limitation,  telephone  and  other  utility
     charges)  for items  shared  between the Seller and such  Affiliate  on the
     basis of actual  use to the extent  practicable  and,  to the  extent  such
     allocation is not practicable, on a basis reasonably related to actual use;

          (v) at all times  have at least one  member of its Board of  Directors
     and one officer who (A) meets the  qualifications set forth in the Michigan
     Compiled Laws Annotated (S)  450.1107(3),  as in effect on the date hereof,
     (B) is not a customer or  supplier  of the Seller or any of its  Affiliates
     and (C) is not a  shareholder  (whether  direct,  indirect  or  beneficial)
     holding more than 1% of the oustanding stock of any Affiliate;

          (vi) observe all corporate  formalities as a distinct  entity,  ensure
     that all corporate  actions are duly  authorized  by unanimous  vote of its
     Board of Directors,  and maintain the Seller's  books and records  separate
     from those of each of its Affiliates and otherwise readily  identifiable as
     its own assets rather than assets of any of its Affiliates;

          (vii) prepare its financial  statements  separately  from those of its
     Affiliates and ensure that any consolidated  financial statements of either
     Originator or any  Affiliate  thereof that include the Seller have detailed
     notes clearly  stating that the Seller is a separate  corporate  entity and
     that its assets will be available  first and foremost to satisfy the claims
     of the creditors of the Seller;

          (viii) except as herein specifically otherwise provided, not commingle
     funds or other assets of the Seller with those of any of its Affiliates and
     not maintain bank accounts or other depository accounts to which any of its
     Affiliates  is an account  party,  into which any of its  Affiliates  makes
     deposits  or  from  which  any of its  Affiliates  has  the  power  to make
     withdrawals;

          (ix) not  permit  any of its  Affiliates  to pay any of its  operating
     expenses (except pursuant to allocation  arrangements  that comply with the
     requirements of this Section 5.1(k));

          (x) refrain from paying  dividends or making  distributions,  loans or
     other  advances to any of its  Affiliates  (except that,  commencing  after
     October  15,  1997,  dividends  which are duly  authorized  by its Board of
     Directors and are in compliance  with applicable law may be payable no more
     than once each  calendar year so long as (i) such dividend is payable after
     October 15 of such year and (ii) no event has occurred  and is  continuing,
     or would result from such dividend, which constitutes a Servicer Default or
     Potential Servicer Default);

                                     Page 19
<PAGE>
          (xi) refrain from filing or otherwise  initiating  or  supporting  the
     filing  of a  motion  in any  bankruptcy  or other  insolvency  proceedings
     involving the Seller,  Donnelly, Hohe, or any other Affiliate of Seller, to
     substantively consolidate the Seller with any such Affiliate;

          (xii)  refrain  from (A)  guaranteeing  any  obligation  of any of its
     Affiliates (B) having its obligations  guaranteed by any of its Affiliates,
     (C) holding itself out as responsible for debts of any of its Affiliates or
     for the  decisions  or actions  with  respect to the  affairs of any of its
     Affiliates,  and (D)  being  directly  or  indirectly  named as a direct or
     contingent  beneficiary or loss payee on any insurance  policy covering the
     property of any Affiliate; and

          (xiii)  maintain in place all  policies and  procedures,  and take and
     continue to take all action,  described  in the facts and  assumptions  set
     forth in the opinion letter issued by Varnum Riddering  Schmidt and Howlett
     LLP  of  even  date  herewith   relating  to  true  sale  and   substantive
     consolidation  issues,  and in any certificates  accompanying  such opinion
     letter.

          (l)  Collections.  The Seller shall  instruct (or cause the applicable
     Originators to instruct) all Obligors to pay all Collections  directly to a
     lockbox listed on Exhibit III or, in the case of wire-transfers on Deutsche
     Markdenominated   Receivables,   to  the  concentration   account  therefor
     specified  on Exhibit  III.  In the case of  payments  remitted to any such
     lock-box,  the Seller  shall cause all  proceeds  from such  lock-box to be
     deposited  directly by a Collection Bank into a concentration  account or a
     depositary  account  listed on  Exhibit  III.  The  Seller  shall  maintain
     exclusive  dominion and control (subject to the terms of this Agreement) to
     each such lock-box,  concentration  account and depositary  account. In the
     case of any Collections received by the Seller or an Originator, the Seller
     shall remit (or shall cause such Originator to remit) such Collections to a
     Collection  Account not later than the Business Day  immediately  following
     the date of receipt of such  Collections,  and,  at all times prior to such
     remittance,  the Seller shall itself hold (or, if  applicable,  shall cause
     such  Originator  to hold) such  Collections  in trust,  for the  exclusive
     benefit of the Purchasers and the Administrative Agent.

          (m) Minimum Net Worth.  The Seller  shall at all times  maintain a net
     worth of not less than $2,850,000.

          (n) German  Credit and  Collection  Policy.  By no later than the date
     which is 90 days from the date  hereof,  the  Seller  shall  deliver to the
     Administrative  Agent a written credit and collection  policy,  in form and
     substance satisfactory to the Administrative Agent,  summarizing its credit
     and collection policies and practices relating to Deutsche Mark-denominated
     Receivables and Contracts related thereto.

     Section  5.2.  Negative  Covenants  of Seller.  Until the date on which the
Aggregate  Unpaids  have  been  indefeasibly  paid in full,  the  Seller  hereby
covenants, individually and in its capacity as Servicer, that:

                                     Page 20
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          (a) Name Change,  Offices,  Records and Books of Accounts.  The Seller
     will not change its name,  identity  or  corporate  structure  (within  the
     meaning of Section  9-402(7)  of any  applicable  enactment  of the UCC) or
     relocate its chief  executive  office or any office where  Records are kept
     unless it shall have: (i) given the  Administrative  Agent at least 45 days
     prior notice  thereof and (ii)  delivered to the  Administrative  Agent all
     financing statements,  instruments and other documents reasonably requested
     by the Administrative Agent in connection with such change or relocation.

          (b) Change in Payment  Instructions  to Obligors.  The Seller will not
     add or terminate any bank as a Collection Bank from those listed in Exhibit
     III, or make any change in its instructions to Obligors  regarding payments
     to be made to the Seller or payments to be made to any lock-box, Collection
     Account or  Collection  Bank,  unless the  Administrative  Agent shall have
     received, at least 10 days before the proposed effective date therefor, (i)
     written  notice  of such  addition,  termination  or  change  and (ii) with
     respect to the  addition  of a lockbox,  Collection  Account or  Collection
     Bank,  an executed  account  agreement and an executed  Collection  Account
     Agreement from such Collection Bank relating  thereto;  provided,  however,
     that the Seller may make  changes in  instructions  to  Obligors  regarding
     payments if such new instructions  require such Obligor to make payments to
     another  existing  lock-box  or  Collection  Account  that is  subject to a
     Collection Account Agreement then in effect.

          (c) Modifications to Contracts and Credit and Collection  Policy.  The
     Seller will not make any change to the Credit and  Collection  Policy which
     would be reasonably  likely to adversely affect the  collectibility  of any
     material  portion of the  Receivables or decrease the credit quality of any
     newly  created  Receivables.  Except as  provided  in Section  6.2(c),  the
     Seller,  acting  as  Servicer  or  otherwise,  will  not  extend,  amend or
     otherwise  modify  the  terms of any  Receivable  or any  Contract  related
     thereto other than in accordance with the Credit and Collection Policy.

          (d) Sales, Liens, Etc. The Seller shall not sell, assign (by operation
     of law or  otherwise)  or  otherwise  dispose  of, or grant any option with
     respect to, or create or suffer to exist any Adverse Claim upon (including,
     without limitation,  the filing of any financing statement) or with respect
     to, any  Receivable,  Related  Security,  Hohe Discount or  Collections  in
     respect  thereof,  or upon or with respect to any Contract  under which any
     Receivable  arises,  or any  lock-box or  Collection  Account or assign any
     right to receive  income in respect  thereof (other than, in each case, the
     creation of the interests therein in favor of the Administrative  Agent and
     the Purchasers provided for herein), and the Seller shall defend the right,
     title and interest of the  Administrative  Agent and the  Purchasers in, to
     and  under  any of the  foregoing  property,  against  all  claims of third
     parties claiming through or under the Seller or either Originator.

          (e) Nature of Business;  Other  Agreements;  Other  Indebtedness.  The
     Seller  shall not engage in any  business  or activity of any kind or enter
     into  any  transaction  or  indenture,  mortgage,  instrument,   agreement,
     contract,   lease  or  other   undertaking   other  than  the  transactions
     contemplated and authorized by this Agreement and the Transfer  Agreements.
     Without  limiting the  generality  of the  foregoing,  the Seller shall not
     create, incur, guarantee, assume or suffer

                                     Page 21
<PAGE>
     to  exist  any  indebtedness  or  other  liabilities,   whether  direct  or
     contingent,  other than (i) as a result of the  endorsement  of  negotiable
     instruments  for  deposit  or  collection  or similar  transactions  in the
     ordinary course of business,  (ii) the incurrence of obligations under this
     Agreement or as expressly  contemplated in the Donnelly Transfer  Agreement
     to make payment to Donnelly for the purchase of Receivables  thereunder and
     (iii) the  incurrence  of  operating  expenses  in the  ordinary  course of
     business  of the type  otherwise  contemplated  in  Section  5.1(k) of this
     Agreement.

          (f) Amendments to Transfer  Agreements.  The Seller shall not, without
     the prior  written  consent  of the  Administrative  Agent,  (i)  cancel or
     terminate  either  Transfer  Agreement,  (ii)  give  any  consent,  waiver,
     directive or approval  under  either  Transfer  Agreement,  (iii) waive any
     default,  action,  omission or breach under either Transfer  Agreement,  or
     otherwise  grant any indulgence  thereunder,  or (iv) amend,  supplement or
     otherwise modify any of the terms of either Transfer Agreement.

          (g) Amendments to Corporate Documents.  The Seller shall not amend its
     Certificate  of  Incorporation  or By-Laws in any respect that would impair
     its  ability  to  comply  with  the  terms  or  provisions  of  any  of the
     Transaction  Documents,  including,  without limitation,  Section 5.1(k) of
     this Agreement.

          (h) Merger. The Seller shall not merge or consolidate with or into, or
     convey, transfer, lease or otherwise dispose of (whether in one transaction
     or in a series  of  transactions,  and  except  as  otherwise  contemplated
     herein)  all or  substantially  all of its  assets  (whether  now  owned or
     hereafter  acquired) to, or acquire all or substantially  all of the assets
     of, any Person.

          (i) Subsidiaries.  The Seller shall not establish,  create, acquire or
     permit to exist any Subsidiary.

          (j) Deposits.  The Seller shall not deposit or otherwise  credit,  and
     shall not permit an  Originator or any other Person to deposit or otherwise
     credit,  to any  lock-box or  Collection  Account any cash or payment  item
     other than Collections.  Notwithstanding the foregoing, Hohe may, from time
     to time until the Administrative  Agent shall otherwise direct in a written
     notice  to  the  Seller,   instruct  its  Obligors  to  remit  payments  on
     receivables,  including  receivables  that do not constitute  "Receivables"
     under this  Agreement,  to one or more of the  lock-boxes or  concentration
     accounts  identified  on Exhibit III;  provided that (i) each such lock-box
     and concentration  account shall be in the name of, and under the exclusive
     dominion  and control of, the Seller,  and (ii) at all such times a written
     agreement  among the Seller and the  Originators,  satisfactory in form and
     substance to the Administrative Agent, shall be in effect setting forth the
     procedures implemented for the identification and allocation of collections
     on such receivables as among the Seller and the Originators.

                                     Page 22
<PAGE>
                    ARTICLE VI ADMINISTRATION AND COLLECTION

     Section 6.1. Designation of Servicer. (a) The servicing, administration and
collection of the Receivables shall be conducted by such Person (the "Servicer")
so designated  from time to time in accordance with this Section 6.1. The Seller
is hereby designated as, and hereby agrees to perform the duties and obligations
of, the Servicer  pursuant to the terms of this  Agreement.  The  Administrative
Agent may, and at the  direction of the Required  Investors  shall,  at any time
following the occurrence of a Servicer Default, designate as Servicer any Person
to succeed the Seller or any successor Servicer.

          (b) The Seller is permitted to delegate, and the Seller hereby advises
     the Purchasers and the Administrative Agent that it has delegated,  to each
     Originator,  as a subservicer  of the  Servicer,  certain of its duties and
     responsibilities  as  Servicer  hereunder  in  respect  of the  Receivables
     transferred  by such  Originator to Donnelly or the Seller,  as applicable.
     Notwithstanding the foregoing, (i) the Seller shall be and remain primarily
     liable  to the  Administrative  Agent and the  Purchasers  for the full and
     prompt  performance  of all duties  and  responsibilities  of the  Servicer
     hereunder and (ii) the  Administrative  Agent and the  Purchasers  shall be
     entitled  to deal  exclusively  with the Seller in matters  relating to the
     discharge by the Servicer of its duties and responsibilities hereunder, and
     the  Administrative  Agent and the Purchasers shall not be required to give
     notice,  demand or other  communication to any Person other than the Seller
     in order for communication to the Servicer and its respective delegates and
     subservicers  in respect  thereof to be  accomplished.  The Seller,  at all
     times that it is the  Servicer,  shall be  responsible  for  providing  its
     delegates and subservicers with any notice given under this Agreement.

          (c) Without the prior written consent of the Required  Investors,  (i)
     the  Seller  shall  not be  permitted  to  delegate  any of its  duties  or
     responsibilities  as Servicer to any Person other than an  Originator,  and
     then  such  delegation  shall be  limited  to the  activities  of  Servicer
     hereunder  as the same may  relate to the  Receivables  originated  by such
     Originator,  and (ii) no Originator  shall be permitted to further delegate
     to any other Person any of the duties or  responsibilities  of the Servicer
     delegated  to it by the  Seller.  If at any time the  Administrative  Agent
     shall  designate as Servicer  any Person other than the Seller,  all duties
     and  responsibilities   theretofore  delegated  by  the  Seller  to  either
     Originator  may,  at  the  discretion  of  the  Administrative   Agent,  be
     terminated  forthwith  on notice given by the  Administrative  Agent to the
     Seller.

     Section 6.2. Duties of Servicer. (a) The Servicer shall take or cause to be
taken  all such  actions  as may be  necessary  or  advisable  to  collect  each
Receivable from time to time, all in accordance with applicable  laws, rules and
regulations,  with  reasonable  care and diligence,  and in accordance  with the
Credit and Collection Policy.

          (b) The Servicer shall  administer the  Collections in accordance with
     the  procedures  described  herein and in Article I. The Servicer shall set
     aside and hold in trust for the  account of the  Seller and the  Purchasers
     their respective shares of the Collections of Receivables in

                                     Page 23
<PAGE>
     accordance  with Section  1.7.  The Servicer  shall upon the request of the
     Administrative  Agent after the occurrence of a Liquidation Day, segregate,
     in a manner  acceptable to the  Administrative  Agent, all cash, checks and
     other instruments received by it from time to time constituting Collections
     from  the  general  funds  of the  Servicer  or  the  Seller  prior  to the
     remittance thereof in accordance with Section 1.7. If the Servicer shall be
     required to segregate  Collections pursuant to the preceding sentence,  the
     Servicer  shall  segregate  and  deposit  with  a  bank  designated  by the
     Administrative Agent such allocable share of Collections of Receivables set
     aside for the Purchasers on the first Business Day following receipt by the
     Servicer  of  such  Collections,   duly  endorsed  or  with  duly  executed
     instruments of transfer.

          (c) The Servicer,  may, in accordance  with the Credit and  Collection
     Policy,  extend the maturity of any  Receivable  or adjust the  Outstanding
     Balance of any  Receivable as the Servicer may determine to be  appropriate
     to maximize Collections thereof; provided,  however, that such extension or
     adjustment  shall not alter the status of such  Receivable  as a Delinquent
     Receivable   or   Defaulted   Receivable   or  limit  the   rights  of  the
     Administrative    Agent   or   the   Purchasers   under   this   Agreement.
     Notwithstanding   anything   to  the   contrary   contained   herein,   the
     Administrative  Agent shall have the absolute and unlimited right to direct
     the  Servicer to commence  or settle any legal  action with  respect to any
     Receivable or to foreclose upon or repossess any Related Security.

          (d)  The  Servicer  shall  hold  in  trust  for  the  Seller  and  the
     Purchasers,  in accordance with their respective Receivable Interests,  all
     Records that evidence or relate to the Receivables,  the related  Contracts
     and Related  Security  or that are  otherwise  necessary  or  desirable  to
     collect the Receivables  and shall,  as soon as practicable  upon demand of
     the Administrative  Agent,  deliver or make available to the Administrative
     Agent all such Records,  at a place selected by the  Administrative  Agent.
     The Servicer shall, as soon as practicable  following receipt thereof, turn
     over  to  the  Seller  (i)  that  portion  of  Collections  of  Receivables
     representing the Seller's undivided  fractional ownership interest therein,
     less,  in  the  event  the  Seller  is not  the  Servicer,  all  reasonable
     outof-pocket costs and expenses of the Servicer of servicing, administering
     and collecting the Receivables, and (ii) any cash collections or other cash
     proceeds   received   with  respect  to   Indebtedness   not   constituting
     Receivables.  The Servicer  shall,  from time to time at the request of any
     Purchaser,  furnish to the Purchasers  (promptly  after any such request) a
     calculation of the amounts set aside for the Purchasers pursuant to Section
     1.7.

          (e) Any payment by an Obligor in respect of any  indebtedness  owed by
     it to the Seller  shall,  except as otherwise  specified by such Obligor or
     otherwise  required by contract or law and unless  otherwise  instructed by
     the  Administrative  Agent, be applied as a Collection of any Receivable of
     such Obligor  (starting  with the oldest such  Receivable) to the extent of
     any amounts then due and payable  thereunder  before  being  applied to any
     other receivable or other obligation of such Obligor.

     Section 6.3. Collection Notices.  The Administrative Agent is authorized at
any  time  to  date  and to  deliver  (and,  at the  direction  of the  Required
Investors,  the  Administrative  Agent shall date and deliver) to the Collection
Banks, a Collection Notice under any Collection

                                     Page 24
<PAGE>
Account Agreement.  The Seller hereby transfers to the Administrative  Agent for
the benefit of the Purchasers,  effective when the Administrative Agent delivers
such notice, the exclusive ownership and control of the Collection Accounts.  In
case any  authorized  signatory  of the  Seller  whose  signature  appears  on a
Collection  Account  Agreement  shall  cease to have such  authority  before the
delivery of such Collection Notice, such Collection Notice shall nevertheless be
valid as if such authority had remained in force.  The Seller hereby  authorizes
the  Administrative  Agent,  and agrees that the  Administrative  Agent shall be
entitled to (i) endorse the Seller's (or, under authority  granted to the Seller
under  either  Transfer  Agreement,  an  Originator's)  name on checks and other
instruments representing Collections,  (ii) enforce the Receivables, the related
Contracts  and the  Related  Security  and (iii)  take  such  action as shall be
necessary  or  desirable  to  cause  all  cash,  checks  and  other  instruments
constituting  Collections  of  Receivables  to come into the  possession  of the
Administrative Agent rather than the Seller or an Originator.

     Section  6.4.  Responsibilities  of  the  Seller.  Anything  herein  to the
contrary  notwithstanding,  the  exercise  by the  Administrative  Agent and the
Purchasers  of their  rights  hereunder  shall not release  the  Servicer or the
Seller from any of their duties or obligations  with respect to any  Receivables
or under the related  Contracts.  The  Purchasers  shall have no  obligation  or
liability with respect to any Receivables or related Contracts, nor shall any of
them be obligated to perform the obligations of the Seller.

     Section 6.5.  Reports.  On or before the seventh Business Day of each month
and at such other times as the  Administrative  Agent shall reasonably  request,
the  Servicer  shall  prepare  and  forward  to the  Administrative  Agent (i) a
Settlement  Report as of the end of the  immediately  preceding  fiscal month of
Donnelly and (ii) if requested by the Administrative Agent, a listing by Obligor
of all Receivables together with an aging of such Receivables.



                          ARTICLE VII SERVICER DEFAULTS

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

          (a) Any  Designated  Servicer or the Seller shall fail (i) to make any
     payment or  deposit  required  hereunder  when due and such  failure  shall
     remain  unremedied  for one Business Day, (ii) to perform or observe in any
     material respect any term,  covenant or agreement hereunder relating to the
     Receivables,  the Related Security, the Hohe Discount or the Collections or
     (iii) to perform or observe in any material  respect any term,  covenant or
     agreement  hereunder  (other  than as  referred to in clause (i) or (ii) of
     this  paragraph  (a)) and such  failure  shall remain  unremedied  for five
     Business Days.

          (b) Any representation,  warranty,  certification or statement made by
     the Seller, any Designated Servicer or either Originator in this Agreement,
     any other Transaction Document or

                                     Page 25
<PAGE>
     in any other document  delivered  pursuant  hereto shall prove to have been
     incorrect in any material respect when made or deemed made.

          (c)(i) The Seller, any Designated  Servicer or either Originator shall
     generally  not pay its debts as such  debts  become  due or shall  admit in
     writing its  inability  to pay its debts  generally or shall make a general
     assignment for the benefit of creditors;  or (ii) any  proceeding  shall be
     instituted by or against the Seller,  any Designated  Servicer  (other than
     Donnelly)  or Hohe  seeking to  adjudicate  it  bankrupt or  insolvent,  or
     seeking liquidation, winding up, reorganization,  arrangement,  adjustment,
     protection, relief or composition of it or its debts under any law relating
     to  bankruptcy,  insolvency  or  reorganization  or relief of  debtors,  or
     seeking the entry of an order for relief or the  appointment of a receiver,
     trustee or other  similar  official for it or any  substantial  part of its
     property;  or (iii)  any  proceeding  shall  be  instituted  by or  against
     Donnelly  seeking  to  adjudicate  it  bankrupt  or  insolvent,  or seeking
     liquidation,   winding   up,   reorganization,   arrangement,   adjustment,
     protection, relief or composition of it or its debts under any law relating
     to  bankruptcy,  insolvency  or  reorganization  or relief of  debtors,  or
     seeking the entry of an order for relief or the  appointment of a receiver,
     trustee or other  similar  official for it or any  substantial  part of its
     property unless (A) such proceeding is instituted  against  Donnelly and is
     being  contested by Donnelly in good faith and by appropriate  proceedings,
     (B) within two Michigan business days of the institution of such proceeding
     Donnelly  shall have  obtained a court order  (which may include an interim
     order) satisfactory to the Administrative  Agent and the Required Investors
     authorizing the continued  transfer of "Receivables",  "Related Assets" and
     "Collections"   under  the  Donnelly  Transfer   Agreement  and  Receivable
     Interests hereunder in the manner (and with the effect) contemplated herein
     following  commencement of such  proceeding and granting  protection to the
     Seller and the Purchasers against subsequent  avoidance or subordination of
     such  transfers by the trustee or any other Person in connection  with such
     proceeding and (C) such proceeding shall be dismissed within 30 days of the
     institution  thereof; or (iv) the Seller, any Designated Servicer or either
     Originator  shall take any corporate action to authorize any of the actions
     set forth in clause (i) or (iii) above in this subsection (c);

          (d) As at the end of any calendar month,  the Delinquency  Ratio shall
     have exceeded 10% for two consecutive months.

          (e) As at the end of any calendar month, the Loss-to-Liquidation Ratio
     shall exceed 1%.

          (f)  Either  Originator  (i) shall  fail to  perform or observe in any
     material  respect any term,  covenant or  agreement  contained in any other
     Transaction Document,  after giving effect to any grace period therefor, or
     (ii) shall for any  reason  cease to  transfer,  or cease to have the legal
     capacity or  otherwise be incapable  of  transferring,  Receivables  to the
     applicable  transferee  under any Transfer  Agreement to which it is party,
     any "Termination Event" or "Potential  Termination Event" shall occur under
     the  Donnelly  Transfer  Agreement,  or any  "German  Servicer  Default" or
     "Potential  German  Servicer  Default"  shall occur under the Hohe Transfer
     Agreement.

          (g) A Change of Control shall occur.

                                     Page 26
<PAGE>
                          ARTICLE VIII INDEMNIFICATION

     Section 8.1.  Indemnities by the Seller.  Without limiting any other rights
which the  Administrative  Agent or any  Purchaser  may have  hereunder or under
applicable law, the Seller hereby agrees to indemnify the  Administrative  Agent
and  each  Purchaser  and  their  respective  officers,  directors,  agents  and
employees  (each an  "Indemnified  Party") from and against any and all damages,
losses,  claims, taxes,  liabilities,  costs, expenses and for all other amounts
payable,  including reasonable attorneys' fees (which attorneys may be employees
of the Administrative Agent or such Purchaser) and reasonable disbursements (all
of the  foregoing  being  collectively  referred  to as  "Indemnified  Amounts")
awarded against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition,  either directly or indirectly,  by a Purchaser of
an interest in the Receivables, excluding, however:

          (i)  Indemnified  Amounts to the extent  final  judgment of a court of
     competent  jurisdiction holds such Indemnified  Amounts resulted from gross
     negligence  or  willful  misconduct  on the part of the  Indemnified  Party
     seeking indemnification;

          (ii)  Indemnified  Amounts to the extent the same  includes  losses in
     respect of Eligible  Receivables  which are uncollectible on account of the
     insolvency,  bankruptcy or lack of creditworthiness of the related Obligor;
     or

          (iii)  taxes  imposed by the  jurisdiction  in which such  Indemnified
     Party's  principal  executive  office is  located,  on or  measured  by the
     overall  net  income  of such  Indemnified  Party  to the  extent  that the
     computation of such taxes is consistent with the Intended Characterization;

     provided,  however, that nothing contained in this sentence shall limit the
     liability  of the  Seller  or the  Servicer  or limit the  recourse  of the
     Purchasers  to the Seller or Servicer  for amounts  otherwise  specifically
     provided to be paid by the Seller or the  Servicer  under the terms of this
     Agreement.    Without    limiting   the   generality   of   the   foregoing
     indemnification,  the Seller shall indemnify the  Administrative  Agent and
     the Purchasers for  Indemnified  Amounts  (including,  without  limitation,
     losses in  respect  of  uncollectible  receivables,  regardless  of whether
     reimbursement  therefor  would  constitute  recourse  to the  Seller or the
     Servicer) relating to or resulting from:

  (i)     any  representation or warranty made by the Seller,  either Originator
          or the Servicer (or any officers of the Seller,  either  Originator or
          the Servicer) under or in connection  with this  Agreement,  any other
          Transaction  Document,  any Settlement Report or any other information
          or report delivered by the Seller,  either  Originator or the Servicer
          pursuant  hereto or thereto,  which shall have been false or incorrect
          when made or deemed made;

                                     Page 27
<PAGE>
  (ii)    the failure by the Seller, either Originator or the Servicer to comply
          with any  applicable  law,  rule or  regulation  with  respect  to any
          Receivable or Contract  related thereto,  or the  nonconformity of any
          Receivable or Contract  included therein with any such applicable law,
          rule or regulation or the failure of the Seller,  either Originator or
          the Servicer to timely and fully comply with any  provision,  covenant
          or other promise required to be observed by it under any Contract;

  (iii)   any  failure of the  Seller,  either  Originator  or the  Servicer  to
          perform its duties or obligations in accordance with the provisions of
          this Agreement or any other Transaction Document;

  (iv)    any  products  liability  or  similar  claim  arising  out  of  or  in
          connection  with  merchandise,  insurance  or  services  which are the
          subject of any Contract;

  (v)     any  dispute,  claim,  offset or  defense  (other  than  discharge  in
          bankruptcy  of the  Obligor)  of any  Obligor  to the  payment  of any
          Receivable  (including,  without  limitation,  a defense based on such
          Receivable  or the  related  Contract  not  being a legal,  valid  and
          binding  obligation  of  such  Obligor   enforceable   against  it  in
          accordance with its terms), or any other claim resulting from the sale
          of the  merchandise  or  service  related  to such  Receivable  or the
          furnishing or failure to furnish such merchandise or services;

  (vi)    the  commingling  of Collections of Receivables at any time with other
          funds;

  (vii)   any investigation, litigation or proceeding related to or arising from
          this Agreement or any other  Transaction  Document,  the  transactions
          contemplated hereby or thereby, the use of the proceeds of a purchase,
          the ownership of the Receivable  Interests or any other investigation,
          litigation or proceeding  relating to the Seller or either  Originator
          in which any Indemnified  Party becomes involved as a result of any of
          the transactions contemplated hereby or thereby;

  (viii)  any  inability to litigate any claim against any Obligor in respect of
          any Receivable as a result of such Obligor being immune from civil and
          commercial  law and suit on the grounds of  sovereignty  or  otherwise
          from any legal action, suit or proceeding;

  (ix)    any Servicer Default described in paragraph (c) of Article VII;

  (x)     the failure to vest and maintain  vested in the  Administrative  Agent
          and the Purchasers, or to transfer to the Administrative Agent and the
          Purchasers,

                                     Page 28
<PAGE>
          legal and  equitable  title to,  and  ownership  of, a first  priority
          perfected  undivided  percentage  ownership  (to  the  extent  of  the
          Receivable Interests contemplated  hereunder) in the Receivables,  the
          Related  Security,  the Hohe  Discount and the  Collections,  free and
          clear of any  Adverse  Claim;  or the  failure  of the  Seller  or any
          Originator to cause  Collections  to be  transferable  to any location
          outside of Germany  without any set-off,  deduction or other charge or
          encumbrance; or the failure of the Seller or any Originator to deliver
          Collections to the Servicer at any time;and

  (xi)    any failure of the Seller or Donnelly  to give  reasonably  equivalent
          value to an Originator under a Transfer  Agreement in consideration of
          the transfer by such Originator of any  Receivable,  or any attempt by
          any Person to void any such  transfer  under  statutory  provisions or
          common law or equitable action,  including,  without  limitation,  any
          provision of the Bankruptcy Code.

     If any  claim  which  may give rise to a claim  for  indemnity  under  this
Section 8.1 is asserted against any Indemnified  Party,  such Indemnified  Party
shall give the Seller written notice of that claim. In the event any third party
brings an action or proceeding against any Indemnified Party in respect of which
indemnity may be sought under this Section 8.1, such Indemnified  Party promptly
shall give notice of that action or proceeding to the Seller and upon receipt of
any such  notice the Seller  shall have the right and, if so  requested  by such
Indemnified  Party,  the  obligation  to assume  the  defense  of the  action or
proceeding;  provided, that (i) failure of a party to give such notice shall not
relieve the Seller  from any of its  obligations  under this  Section 8.1 unless
that failure  prejudices  the defense of the action or  proceeding by the Seller
and (ii) the Seller  shall not have the right to assume the  defense of any such
action  or  proceeding  unless  (a) no  Servicer  Default  has  occurred  and is
continuing  and (b) the Seller has  acknowledged  to such  Indemnified  Party in
writing  its  obligation  to  pay  any  indemnity  claim  hereunder  arising  in
connection with such action or proceeding and has paid any  Indemnified  Amounts
already incurred by the applicable  Indemnified  Parties in connection with such
action or  proceeding.  At its own  expense,  an  Indemnified  Party may  employ
separate  counsel and  participate  in any defense  assumed by the Seller.  Each
Indemnified  Party  shall  obtain  the  Seller's  prior  written  consent to any
settlement  or  compromise  of any  action or  proceeding  in  respect  of which
indemnity may be sought hereunder.

     Section 8.2.  Increased Cost and Reduced Return.  If after the date hereof,
any  Funding  Source  shall be charged  any fee,  expense or  increased  cost on
account of the adoption of any applicable law, rule or regulation (including any
applicable  law, rule or regulation  regarding  capital  adequacy) or any change
therein,  or any change in the  interpretation or administration  thereof by any
governmental  authority,  central  bank or  comparable  agency  charged with the
interpretation  or  administration  thereof,  or compliance  with any request or
directive  (whether  or not  having  the  force of law) of any  such  authority,
central bank or comparable  agency (a "Regulatory  Change"):  (i) which subjects
any  Funding  Source to any  charge or  withholding  on or with  respect  to any
Funding Agreement or a Funding Source's obligations under a Funding

                                     Page 29
<PAGE>
Agreement,  or on or with  respect to the  Receivables,  or changes the basis of
taxation  of payments to any  Funding  Source of any amounts  payable  under any
Funding  Agreement  (except  for  changes in the rate of tax on the  overall net
income of a Funding Source) or (ii) which imposes,  modifies or deems applicable
any  reserve,   assessment,   insurance  charge,   special  deposit  or  similar
requirement  against  assets of,  deposits  with or for the account of a Funding
Source,  or credit extended by a Funding Source pursuant to a Funding  Agreement
or (iii) which  imposes any other  condition  the result of which is to increase
the cost to a  Funding  Source of  performing  its  obligations  under a Funding
Agreement,  or to reduce the rate of return on a Funding  Source's  capital as a
consequence  of its  obligations  under a Funding  Agreement,  or to reduce  the
amount of any sum  received or  receivable  by a Funding  Source under a Funding
Agreement  or to require any payment  calculated  by  reference to the amount of
interests  or loans held or interest  received by it and such cost  described in
clause (i),  (ii) or (iii)  arises in  connection  with any of the  transactions
contemplated in this Agreement,  then, upon demand by the Administrative  Agent,
the  Seller  shall  pay to the  Administrative  Agent,  for the  benefit  of the
relevant  Funding  Source,  a  reasonable  allocation  of the  aggregate of such
amounts  charged to such Funding Source or compensate  such Funding Source for a
reasonable allocation of the aggregate of such reduction. A statement as to such
amount,  prepared in good faith and in reasonable  detail by the  Administrative
Agent  and  submitted  by the  Administrative  Agent  to the  Seller,  shall  be
conclusive and binding for all purposes absent manifest error in computation.

     Section  8.3.  Other  Costs  and  Expenses.  The  Seller  shall  pay to the
Administrative  Agent and Falcon on demand all  reasonable  costs and reasonable
out-of-pocket expenses in connection with the preparation,  execution,  delivery
and administration of this Agreement,  the transactions  contemplated hereby and
the other documents to be delivered hereunder, including without limitation, the
reasonable cost of Falcon's auditors auditing the books,  records and procedures
of the Seller,  reasonable fees and reasonable  out-of-pocket  expenses of legal
counsel  for Falcon and the  Administrative  Agent  (which  such  counsel may be
employees of Falcon or the  Administrative  Agent) with respect thereto and with
respect to advising Falcon and the  Administrative  Agent as to their respective
rights  and  remedies  under  this  Agreement.  The  Seller  shall  pay  to  the
Administrative  Agent on demand any and all reasonable costs and expenses of the
Administrative  Agent and the Purchasers,  if any, including  reasonable counsel
fees and expenses in connection  with the  enforcement of this Agreement and the
other documents  delivered hereunder and in connection with any restructuring or
workout of this  Agreement  or such  documents,  or the  administration  of this
Agreement  following a Servicer  Default.  The Seller shall reimburse  Falcon on
demand for all other  reasonable  costs and  expenses  incurred by Falcon or any
shareholder  of Falcon  ("Other  Costs"),  including,  without  limitation,  the
reasonable cost of auditing Falcon's books by certified public accountants,  the
cost of rating the Commercial  Paper by independent  financial  rating agencies,
and the reasonable fees and out-of-pocket  expenses of counsel for Falcon or any
counsel for any  shareholder  of Falcon with respect to advising  Falcon or such
shareholder as to matters relating to Falcon's operations.

     Section 8.4.  Allocations.  Falcon shall  allocate the  liability for Other
Costs  among the Seller and other  Persons  with whom  Falcon has  entered  into
agreements to purchase  interests in receivables  ("Other Sellers") on the basis
of the relation that the Aggregate Capital hereunder

                                     Page 30
<PAGE>
bears  to  the  aggregate   "Capital"  or  similar  investment  under  all  such
agreements, or on such other reasonable basis as Falcon may use for such purpose
in accordance with its customary  practice.  If any Other Costs are attributable
to the Seller and not  attributable  to any Other  Seller,  the Seller  shall be
solely liable for such Other Costs.  However, if Other Costs are attributable to
Other Sellers and not  attributable  to the Seller,  such Other Sellers shall be
solely liable for such Other Costs.  All  allocations to be made pursuant to the
foregoing  provisions  of this  Article VIII shall be made by Falcon in its sole
discretion and shall be binding on the Seller and the Servicer.


                                   ARTICLE IX
                            THE ADMINISTRATIVE AGENT

     Section 9.1. Authorization and Action. Each Purchaser hereby designates and
appoints  First  Chicago  to act as its agent  hereunder  and under  each  other
Transaction  Document,  and  authorizes  the  Administrative  Agent to take such
actions as agent on its behalf and to exercise  such powers as are  delegated to
the  Administrative  Agent  by  the  terms  of  this  Agreement  and  the  other
Transaction  Documents  together with such powers as are  reasonably  incidental
thereto. The Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein or in any other Transaction Document, or
any  fiduciary  relationship  with  any  Purchaser,  and no  implied  covenants,
functions,  responsibilities,  duties, obligations or liabilities on the part of
the  Administrative  Agent  shall  be read  into  this  Agreement  or any  other
Transaction  Document  or  otherwise  exist  for the  Administrative  Agent.  In
performing  its functions and duties  hereunder and under the other  Transaction
Documents, the Administrative Agent shall act solely as agent for the Purchasers
and does not  assume  nor shall be  deemed to have  assumed  any  obligation  or
relationship  of trust or agency with or for the Seller or any of its successors
or assigns.  The  Administrative  Agent shall not be required to take any action
which  exposes  the  Administrative  Agent  to  personal  liability  or which is
contrary to this Agreement,  any other  Transaction  Document or applicable law.
The  appointment  and  authority of the  Administrative  Agent  hereunder  shall
terminate upon the indefeasible  payment in full of all Aggregate Unpaids.  Each
Purchaser  hereby  authorizes the  Administrative  Agent to execute on behalf of
such Purchaser (the terms of which shall be binding on such  Purchaser)  each of
the Uniform  Commercial  Code  financing  statements,  together  with such other
instruments or documents  determined by the Administrative Agent to be necessary
or desirable in order to perfect, evidence or more fully protect the interest of
the Purchasers contemplated hereunder.

     Section 9.2. Delegation of Duties. The Administrative Agent may execute any
of its duties under this  Agreement  and each other  Transaction  Document by or
through agents or  attorneys-in-fact  and shall be entitled to advice of counsel
concerning all matters  pertaining to such duties. As between the Administrative
Agent and each Purchaser,  the Administrative Agent shall not be responsible for
the negligence or misconduct of any agents or  attorneys-in-fact  selected by it
with reasonable care.

                                     Page 31
<PAGE>
     Section 9.3. Exculpatory  Provisions.  Neither the Administrative Agent nor
any of its directors,  officers, agents or employees shall be (i) liable for any
action  lawfully  taken  or  omitted  to be  taken  by it or  them  under  or in
connection  with this Agreement or any other  Transaction  Document  (except for
its, their or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Purchasers for any recitals, statements,
representations  or warranties  made by the Seller  contained in this Agreement,
any other Transaction  Document or any certificate,  report,  statement or other
document  referred to or provided  for in, or  received  under or in  connection
with,  this  Agreement,  or any other  Transaction  Document  or for the  value,
validity,  effectiveness,  genuineness,  enforceability  or  sufficiency of this
Agreement,  or any other Transaction Document or any other document furnished in
connection  herewith or  therewith,  or for any failure of the Seller to perform
its  obligations  hereunder  or  thereunder,  or  for  the  satisfaction  of any
condition specified in Article IV, or for the perfection,  priority,  condition,
value or  sufficiency  or any  collateral  pledged in connection  herewith.  The
Administrative  Agent  shall not be under any  obligation  to any  Purchaser  to
ascertain  or to  inquire  as to the  observance  or  performance  of any of the
agreements or covenants  contained in, or conditions  of, this  Agreement or any
other Transaction  Document,  or to inspect the properties,  books or records of
the Seller.  The  Administrative  Agent shall not be deemed to have knowledge of
any Servicer  Default or Potential  Servicer  Default unless the  Administrative
Agent has received notice from the Seller or a Purchaser.

     Section 9.4. Reliance by  Administrative  Agent. The  Administrative  Agent
shall in all cases be entitled to rely, and shall be fully protected in relying,
upon any document or  conversation  believed by it to be genuine and correct and
to have been  signed,  sent or made by the  proper  Person or  Persons  and upon
advice and statements of legal counsel (including,  without limitation,  counsel
to the  Seller),  independent  accountants  and other  experts  selected  by the
Administrative  Agent.  The  Administrative  Agent  shall in all  cases be fully
justified in failing or refusing to take any action under this  Agreement or any
other  Transaction  Document  unless  it shall  first  receive  such  advice  or
concurrence  of Falcon or the Required  Investors or all of the  Purchasers,  as
applicable,  as it deems  appropriate  and it shall first be  indemnified to its
satisfaction   by  the   Purchasers,   provided   that   unless  and  until  the
Administrative  Agent shall have received such advice, the Administrative  Agent
may take or refrain from taking any action,  as the  Administrative  Agent shall
deem advisable and in the best interests of the Purchasers.  The  Administrative
Agent shall in all cases be fully  protected in acting,  or in  refraining  from
acting, in accordance with a request of Falcon or the Required  Investors or all
of the  Purchasers,  as  applicable,  and such  request and any action  taken or
failure to act pursuant thereto shall be binding upon all the Purchasers.

     Section 9.5.  Non-Reliance on  Administrative  Agent and Other  Purchasers.
Each Purchaser expressly acknowledges that neither the Administrative Agent, nor
any  of  its  officers,  directors,  employees,  agents,   attorneys-in-fact  or
affiliates has made any  representations  or warranties to it and that no act by
the Administrative  Agent hereafter taken,  including,  without limitation,  any
review  of the  affairs  of the  Seller,  shall  be  deemed  to  constitute  any
representation  or  warranty  by  the   Administrative   Agent.  Each  Purchaser
represents  and  warrants  to the  Administrative  Agent  that it has and  will,
independently and without reliance upon the

                                     Page 32
<PAGE>
Administrative  Agent or any other  Purchaser  and based on such  documents  and
information  as it  has  deemed  appropriate,  made  its  own  appraisal  of and
investigation into the business, operations,  property, prospects, financial and
other conditions and creditworthiness of the Seller and made its own decision to
enter  into  this  Agreement,  the  other  Transaction  Documents  and all other
documents related hereto or thereto.

     Section 9.6.  Reimbursement  and  Indemnification.  The Investors  agree to
reimburse and indemnify the  Administrative  Agent and its officers,  directors,
employees,  representatives  and  agents  ratably  according  to their  Pro Rata
Shares,  to the extent not paid or  reimbursed by the Seller (i) for any amounts
for which the  Administrative  Agent,  acting in its capacity as  Administrative
Agent,  is entitled to  reimbursement  by the Seller  hereunder and (ii) for any
other  expenses  incurred  by  the  Administrative  Agent,  in its  capacity  as
Administrative Agent and acting on behalf of the Purchasers,  in connection with
the  administration  and enforcement of this Agreement and the other Transaction
Documents, but excluding any such expenses to the extent the final judgment of a
court of competent  jurisdiction  holds that such  expenses  resulted from gross
negligence or willful misconduct on the part of the Administrative Agent.

     Section  9.7.   Administrative  Agent  in  its  Individual  Capacity.   The
Administrative  Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Seller or any Affiliate of
the Seller as though the Administrative  Agent were not the Administrative Agent
hereunder.  With respect to the acquisition of Receivable  Interests pursuant to
this Agreement,  the Administrative  Agent shall have the same rights and powers
under this  Agreement  as any  Purchaser  and may exercise the same as though it
were  not the  Administrative  Agent,  and the  terms  "Investor,"  "Purchaser,"
"Investors"  and  "Purchasers"  shall  include the  Administrative  Agent in its
individual capacity.

     Section 9.8. Successor  Administrative Agent. The Administrative Agent may,
upon five days' notice to the Seller and the Purchasers,  and the Administrative
Agent will, upon the direction of all of the Purchasers resign as Administrative
Agent. If the  Administrative  Agent shall resign,  then the Required  Investors
during such five-day period shall either (i) appoint from among the Purchasers a
successor  agent or (ii) with the consent of the Seller,  appoint a Person other
than a  Purchaser  as the  successor  agent.  If for  any  reason  no  successor
Administrative Agent is appointed by the Required Investors during such five-day
period,  then  effective  upon the  termination  of such  five day  period,  the
Purchasers shall perform all of the duties of the Administrative Agent hereunder
and under the other Transaction Documents and the Seller shall make all payments
in respect of the Aggregate  Unpaids  directly to the applicable  Purchasers and
for  all  purposes   shall  deal  directly  with  the   Purchasers.   After  the
effectiveness of any retiring  Administrative  Agent's resignation  hereunder as
Administrative Agent, the retiring Administrative Agent shall be discharged from
its duties and obligations  hereunder and under the other Transaction  Documents
and the  provisions of this Article IX and Article VIII shall continue in effect
for its benefit with  respect to any actions  taken or omitted to be taken by it
while it was  Administrative  Agent  under  this  Agreement  and under the other
Transaction Documents.

                                     Page 33
<PAGE>
                      ARTICLE X ASSIGNMENTS; PARTICIPATIONS

     Section 10.1.  Assignments.  (a) The Seller and each Investor  hereby agree
and consent to the complete or partial assignment by Falcon of all of its rights
under,  interest in, title to and  obligations  under this  Agreement to (i) the
Investors  pursuant to Section  2.1,  (ii) any Person that is a special  purpose
corporation in respect of which First Chicago is then serving as  administrative
or  managing  agent or in any similar  capacity or (iii) with the prior  written
consent of the Seller (which consent shall not be  unreasonably  withheld),  any
other Person. In each case, upon such assignment,  Falcon shall be released from
its obligations so assigned.  Further, the Seller and each Investor hereby agree
that any assignee of Falcon of this  Agreement  or all or any of the  Receivable
Interests  of Falcon  shall  have all of the  rights  and  benefits  under  this
Agreement as if the term "Falcon" explicitly referred to such party, and no such
assignment shall in any way impair the rights and benefits of Falcon  hereunder.
The Seller  shall not have the right to assign its rights or  obligations  under
this Agreement.

          (b) Any  Investor  may at any time and from time to time assign to one
     or more Persons ("Purchasing  Investors") all or any part of its rights and
     obligations under this Agreement pursuant to an assignment agreement,  in a
     form  and  substance   satisfactory  to  the   Administrative   Agent  (the
     "Assignment  Agreement"),  executed by such  Purchasing  Investor  and such
     selling Investor.  The consent of Falcon, the Administrative  Agent and the
     Seller (the  Seller's  consent not to be  unreasonably  withheld)  shall be
     required prior to the  effectiveness of any such assignment.  Each assignee
     of an  Investor  must  have a  short-term  debt  rating of A-1 or better by
     Standard & Poor's Ratings Group and P-1 by Moody's Investors Service,  Inc.
     and must agree to deliver to the Administrative  Agent,  promptly following
     any  request   therefor  by  the   Administrative   Agent  or  Falcon,   an
     enforceability   opinion  in  form  and  substance   satisfactory   to  the
     Administrative  Agent and Falcon.  Upon delivery of the executed Assignment
     Agreement  to the  Administrative  Agent,  such selling  Investor  shall be
     released from its obligations  hereunder to the extent of such  assignment.
     Thereafter  the  Purchasing  Investor shall for all purposes be an Investor
     party to this Agreement and shall have all the rights and obligations of an
     Investor  under this Agreement to the same extent as if it were an original
     party hereto and no further consent or action by the Seller, the Purchasers
     or the Administrative Agent shall be required.

          (c) Each of the Investors agrees that in the event that it shall cease
     to have a  short-term  debt  rating of A-1 or better by  Standard  & Poor's
     Corporation  and P-1 by  Moody's  Investors  Service,  Inc.  (an  "Affected
     Investor"),  such  Affected  Investor  shall be obliged,  at the request of
     Falcon  or the  Administrative  Agent,  to  assign  all of its  rights  and
     obligations  hereunder  to (x) another  Investor  or (y) another  financial
     institution  nominated by the Administrative Agent and acceptable to Falcon
     and the Seller (the Seller's consent not to be unreasonably withheld),  and
     willing to participate in this Agreement through the Liquidity  Termination
     Date in the place of such  Affected  Investor;  provided  that the Affected
     Investor receives payment in full, pursuant to an Assignment Agreement,  of
     an amount equal to such Investor's Pro Rata Share of the

                                     Page 34
<PAGE>
     Capital and  Discount  owing to the  Investors  and all accruing but unpaid
     fees and other costs and expenses  payable in respect of its Pro Rata Share
     of the Receivable Interests.

     Section 10.2.  Participations.  Any Investor may, in the ordinary course of
its  business  at any time sell to one or more  Persons  (each a  "Participant")
participating interests in its Pro Rata Share of the Receivable Interests of the
Investors,  its  obligation to pay Falcon its  Acquisition  Amounts or any other
interest  of  such  Investor  hereunder.  Notwithstanding  any  such  sale by an
Investor of a participating  interest to a Participant,  such Investor's  rights
and obligations under this Agreement shall remain unchanged, such Investor shall
remain solely responsible for the performance of its obligations hereunder,  and
the Seller,  Falcon and the  Administrative  Agent shall continue to deal solely
and directly with such Investor in connection  with such  Investor's  rights and
obligations  under this  Agreement.  Each  Investor  agrees  that any  agreement
between such Investor and any such Participant in respect of such  participating
interest  shall not restrict such  Investor's  right to agree to any  amendment,
supplement,  waiver or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in clause (i) of Section 11.1(b).

                            ARTICLE XI MISCELLANEOUS

     Section 11.1.  Waivers and Amendments.  (a) No failure or delay on the part
of the  Administrative  Agent or any Purchaser in exercising any power, right or
remedy under this  Agreement  shall operate as a waiver  thereof,  nor shall any
single or partial exercise of any such power, right or remedy preclude any other
further  exercise  thereof or the exercise of any other power,  right or remedy.
The rights and remedies herein provided shall be cumulative and  nonexclusive of
any rights or remedies  provided by law. Any waiver of this  Agreement  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

          (b) No  provision  of this  Agreement  may be  amended,  supplemented,
     modified or waived except in writing in accordance  with the  provisions of
     this Section 11.1(b).  Falcon, the Seller and the Administrative  Agent, at
     the   direction  of  the  Required   Investors,   may  enter  into  written
     modifications  or waivers of any  provisions of this  Agreement,  provided,
     however, that no such modification or waiver shall:

          (i)  without the consent of each  affected  Purchaser,  (A) extend the
     Liquidity  Termination  Date  or the  date of any  payment  or  deposit  of
     Collections  by the Seller or the  Servicer,  (B) reduce the rate or extend
     the time of payment of Discount (or any component thereof),  (C) reduce any
     fee payable to the Administrative  Agent for the benefit of the Purchasers,
     (D) except  pursuant to Article X hereof,  change the amount of the Capital
     of any Purchaser, an Investor's Pro Rata Share or an Investor's Commitment,
     (E) amend,  modify or waive any  provision  of the  definition  of Required
     Investors or this Section 11.1(b),  (F) consent to or permit the assignment
     or transfer by the Seller of any of its rights and  obligations  under this
     Agreement, (G) change the definition of "Eligible Receivable" or "Aggregate
     Reserve" (H) amend any hedging or

                                     Page 35
<PAGE>
     currency  exchange  arrangement  that  shall  have  been  entered  into  in
     connection  with any DM  Purchase  hereunder,  or (I) amend or  modify  any
     defined  term (or any  defined  term used  directly or  indirectly  in such
     defined term) used in clauses (A) through (H) above in a manner which would
     circumvent the intention of the restrictions set forth in such clauses; or

          (ii)  without the written  consent of the then  Administrative  Agent,
     amend,  modify or waive  any  provision  of this  Agreement  if the  effect
     thereof is to affect the rights or duties of such Administrative Agent.

Notwithstanding  the foregoing,  (i) without the consent of the  Investors,  the
Administrative  Agent may, with the consent of the Seller,  amend this Agreement
solely to add  additional  Persons as Investors  hereunder  and (ii) without the
consent of the Seller,  the  Administrative  Agent, each Investor and Falcon may
enter into  amendments  to modify any of the terms or  provisions of Article II,
Article IX, Article X, Section 11.13 or any other  provision of this  Agreement,
provided  that such  amendment  has no  negative  impact  upon the  Seller.  Any
modification  or waiver made in accordance with this Section 11.1 shall apply to
each of the  Purchasers  equally  and  shall be  binding  upon the  Seller,  the
Purchasers and the Administrative Agent.

     Section 11.2 Notices.  (a) Except as provided in subsection (b) below,  all
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other  parties  hereto at their  respective  addresses  or
telecopy   numbers  set  forth  on  the  signature   pages   hereof.   All  such
communications and notices shall, when mailed, telecopied,  telegraphed, telexed
or  cabled,  be  effective  when  received  through  the mails,  transmitted  by
telecopy,  delivered to the telegraph company,  confirmed by telex answerback or
delivered to the cable company,  respectively,  except that  communications  and
notices to the Administrative Agent or any Purchaser pursuant to Article I or II
shall not be effective until received by the intended recipient.

          (b) The Seller hereby  authorizes the  Administrative  Agent to effect
     purchases  and  Tranche  Period  and  Discount  Rate  selections  based  on
     telephonic notices made by any Person whom the Administrative Agent in good
     faith  believes to be acting on behalf of the Seller.  The Seller agrees to
     deliver promptly to the Administrative Agent a written confirmation of each
     telephonic notice signed by an authorized  officer of the Seller.  However,
     the  absence of such  confirmation  shall not affect the  validity  of such
     notice.  If the written  confirmation  differs from the action taken by the
     Administrative  Agent, the records of the Administrative Agent shall govern
     absent manifest error.

     Section 11.3.  Ratable  Payments.  If any  Purchaser,  whether by setoff or
otherwise,  has payment made to it with respect to any portion of the  Aggregate
Unpaids  owing to such  Purchaser  (other  than  payments  received  pursuant to
Section  8.2 or 8.3) in a greater  proportion  than that  received  by any other
Purchaser  entitled to receive a ratable share of such Aggregate  Unpaids,  such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse

                                     Page 36
<PAGE>
or warranty a portion of the Aggregate  Unpaids held by the other  Purchasers so
that after such purchase each Purchaser will hold its ratable  proportion of the
Aggregate Unpaids;  provided that if all or any portion of such excess amount is
thereafter  recovered from such Purchaser,  such purchase shall be rescinded and
the  purchase  price  restored  to the  extent  of such  recovery,  but  without
interest.

     Section 11.4. Protection of Ownership Interests of the Purchasers.  (a) The
Seller agrees that from time to time, at its expense,  it will promptly  execute
and deliver all  instruments  and documents,  and take all actions,  that may be
necessary  or  desirable,  or that the  Administrative  Agent  may  request,  to
perfect,  protect or more fully evidence the Receivable Interests,  or to enable
the Administrative  Agent or the Purchasers to exercise and enforce their rights
and remedies  hereunder.  At any time  following  the  occurrence  of a Servicer
Default,  the Administrative  Agent may, or the Administrative  Agent may direct
the  Seller  to (and  the  Seller  thereupon  shall),  notify  the  Obligors  of
Receivables, at any time and at the Seller's expense, of the ownership interests
of the Purchasers  under this Agreement and may also direct that payments of all
amounts due or that become due under any or all  Receivables be made directly to
the  Administrative  Agent  or its  designee;  provided  that in the case of any
Receivables  denominated in Deutsche Marks, the Administrative  Agent may direct
the Seller to (and the Seller  thereupon  shall)  notify  the  Obligors  of such
Receivables,  at any time and at the Seller's  expense,  of the Seller's and the
Purchasers'  interest  therein to the extent  determined  by the  Administrative
Agent to be necessary or desirable in accordance with Section 5.1(h). The Seller
shall,  at any Purchaser's  request,  withhold the identity of such Purchaser in
any such notification.

          (b)  If the  Seller  or  the  Servicer  fails  to  perform  any of its
     obligations  hereunder,  the Administrative Agent or any Purchaser may (but
     shall  not  be  required  to)  perform,   or  cause  performance  of,  such
     obligation;  and the Administrative  Agent's or such Purchaser's reasonable
     costs and expenses incurred in connection therewith shall be payable by the
     Seller  (if the  Servicer  that  fails to so  perform  is the  Seller or an
     Affiliate  thereof) as provided in Section 8.3, as  applicable.  The Seller
     and the Servicer each irrevocably  authorizes the  Administrative  Agent at
     any time and from time to time in the sole discretion of the Administrative
     Agent, and appoints the Administrative  Agent as its  attorney-in-fact,  to
     act on behalf of the  Seller and the  Servicer  (i) to execute on behalf of
     the  Seller  as  debtor  and to  file  financing  statements  necessary  or
     desirable in the  Administrative  Agent's sole discretion to perfect and to
     maintain the  perfection  and priority of the interest of the Purchasers in
     the  Receivables  and  (ii)  to  file  a  carbon,   photographic  or  other
     reproduction  of this Agreement or any financing  statement with respect to
     the   Receivables  as  a  financing   statement  in  such  offices  as  the
     Administrative Agent in its sole discretion deems necessary or desirable to
     perfect and to maintain the perfection and priority of the interests of the
     Purchasers in the Receivables. This appointment is coupled with an interest
     and is irrevocable.

     Section  11.5.  Confidentiality.  (a) The  Seller and each  Investor  shall
maintain  and shall cause each of their  respective  employees  and  officers to
maintain  the  confidentiality  of this  Agreement  and the  other  confidential
proprietary information with respect to the Administrative

                                     Page 37
<PAGE>
Agent and  Falcon and their  respective  businesses  obtained  by any of them in
connection with the  structuring,  negotiating and execution of the transactions
contemplated herein,  except that the Seller, each Investor and their respective
officers  and  employees  may  disclose  such  information  to their  respective
external  accountants  and  attorneys and as required by any  applicable  law or
order of any judicial or administrative proceeding.

          (b) Anything herein to the contrary notwithstanding, the Seller hereby
     consents to the disclosure of any nonpublic  information with respect to it
     (i) to the  Administrative  Agent,  the  Investors or Falcon by each other,
     (ii) by the  Administrative  Agent or the Purchasers to any  prospective or
     actual   assignee  or   participant   of  any  of  them  or  (iii)  by  the
     Administrative  Agent to any  rating  agency,  Commercial  Paper  dealer or
     provider of a surety, guaranty or credit or liquidity enhancement to Falcon
     or any entity  organized  for the purpose of  purchasing,  or making  loans
     secured  by,   financial  assets  for  which  First  Chicago  acts  as  the
     administrative  agent and to any officers,  directors,  employees,  outside
     accountants  and  attorneys  of any of the  foregoing,  provided  each such
     Person is  informed  of the  confidential  nature of such  information.  In
     addition, the Purchasers and the Administrative Agent may disclose any such
     nonpublic  information  pursuant to any law, rule,  regulation,  direction,
     request or order of any judicial, administrative or regulatory authority or
     proceedings (whether or not having the force or effect of law).

     Section 11.6. Bankruptcy Petition. The Seller, the Administrative Agent and
each Investor hereby  covenants and agrees that,  prior to the date which is one
year  and  one  day  after  the  payment  in  full  of  all  outstanding  senior
Indebtedness of Falcon, it will not institute against,  or join any other Person
in instituting  against,  Falcon any  bankruptcy,  reorganization,  arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.

     Section 11.7.  Limitation  of  Liability.  Except with respect to any claim
arising  out of the  willful  misconduct  or gross  negligence  of  Falcon,  the
Administrative  Agent or any Investor,  no claim may be made by the Seller,  the
Servicer or any other Person against  Falcon,  the  Administrative  Agent or any
Investor  or  their  respective  Affiliates,   directors,  officers,  employees,
attorneys or agents for any special, indirect, consequential or punitive damages
in respect of any claim for breach of contract or any other  theory of liability
arising out of or related to the transactions contemplated by this Agreement, or
any act,  omission or event  occurring in connection  therewith;  and the Seller
hereby  waives,  releases,  and  agrees  not to sue upon any  claim for any such
damages,  whether or not accrued and whether or not known or  suspected to exist
in its favor.

     SECTION  11.8.  CHOICE  OF  LAW.  THIS  AGREEMENT  SHALL  BE  CONSTRUED  IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS.

     SECTION  11.9.  CONSENT  TO  JURISDICTION.  THE SELLER  HEREBY  IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY

                                     Page 38
<PAGE>
UNITED STATES  FEDERAL OR ILLINOIS  STATE COURT SITTING IN CHICAGO IN ANY ACTION
OR  PROCEEDING  ARISING  OUT OF OR RELATING TO THIS  AGREEMENT  OR ANY  DOCUMENT
EXECUTED  BY THE  SELLER  PURSUANT  TO  THIS  AGREEMENT  AND THE  SELLER  HEREBY
IRREVOCABLY  AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND  IRREVOCABLY  WAIVES ANY OBJECTION
IT MAY NOW OR  HEREAFTER  HAVE AS TO THE  VENUE  OF ANY  SUCH  SUIT,  ACTION  OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT  FORUM.
NOTHING  HEREIN  SHALL  LIMIT  THE  RIGHT  OF THE  ADMINISTRATIVE  AGENT  OR ANY
PURCHASER  TO BRING  PROCEEDINGS  AGAINST  THE SELLER IN THE COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL  PROCEEDING BY THE SELLER AGAINST THE ADMINISTRATIVE
AGENT  OR ANY  PURCHASER  OR ANY  AFFILIATE  OF THE  ADMINISTRATIVE  AGENT  OR A
PURCHASER INVOLVING,  DIRECTLY OR INDIRECTLY,  ANY MATTER IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE
SELLER  PURSUANT TO THIS AGREEMENT  SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.

     SECTION 11.10.  WAIVER OF JURY TRIAL. THE ADMINISTRATIVE  AGENT, THE SELLER
AND  EACH  PURCHASER  HEREBY  WAIVES  TRIAL BY JURY IN ANY  JUDICIAL  PROCEEDING
INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER  (WHETHER  SOUNDING  IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,  RELATED TO, OR CONNECTED WITH
THIS AGREEMENT,  ANY DOCUMENT  EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT
OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

     Section 11.11. Integration; Survival of Terms.

  (a)  This  Agreement,  the  Collection  Account  Agreements and the Fee Letter
       contain the final and complete  integration  of all prior  expressions by
       the parties  hereto with respect to the subject  matter  hereof and shall
       constitute the entire  agreement among the parties hereto with respect to
       the  subject  matter  hereof   superseding  all  prior  oral  or  written
       understandings.

  (b)  The  provisions  of  Article  VIII and  Section  11.6 shall  survive  any
       termination of this Agreement.

     Section 11.12. Counterparts;  Severability.  This Agreement may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of  which  when  taken  together  shall  constitute  one  and  the  same
Agreement.   Any   provisions  of  this   Agreement   which  are  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability  without  invalidating the
remaining provisions hereof, and

                                     Page 39
<PAGE>
any  such  prohibition  or   unenforceability  in  any  jurisdiction  shall  not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 11.13. First Chicago Roles. Each of the Investors acknowledges that
First Chicago acts,  or may in the future act, (i) as  administrative  agent for
Falcon,  (ii) as issuing and paying  agent for the  Commercial  Paper,  (iii) to
provide  credit  or  liquidity  enhancement  for  the  timely  payment  for  the
Commercial Paper and (iv) to provide other services from time to time for Falcon
(collectively,  the "First Chicago  Roles").  Without limiting the generality of
this Section 11.13,  each Investor hereby  acknowledges  and consents to any and
all First  Chicago  Roles and agrees that in  connection  with any First Chicago
Role,  First Chicago may take,  or refrain from taking,  any action which it, in
its discretion, deems appropriate, including, without limitation, in its role as
administrative  agent for  Falcon,  the  giving of notice to the  Administrative
Agent of a mandatory purchase pursuant to Section 2.1.

     Section  11.14.  Characterization.  (a) It is the  intention of the parties
hereto that each purchase hereunder shall constitute an absolute and irrevocable
sale,  which  purchase  shall  provide the  applicable  Purchaser  with the full
benefits  of  ownership  of  the  applicable  Receivable  Interest.   Except  as
specifically  provided in this  Agreement,  each sale of a  Receivable  Interest
hereunder is made without recourse to the Seller;  provided,  however,  that (i)
the Seller shall be liable to each  Purchaser and the  Administrative  Agent for
all representations, warranties and covenants made by the Seller pursuant to the
terms of this  Agreement,  and (ii)  such sale  does not  constitute  and is not
intended to result in an assumption by any Purchaser or the Administrative Agent
or any assignee thereof of any obligation of the Seller or either  Originator or
any other  person  arising  in  connection  with the  Receivables,  the  Related
Security,  or the related  Contracts,  or any other obligations of the Seller or
either Originator.

          (b) If the  conveyance by the Seller to the Purchasers of interests in
     Receivables  hereunder shall be  characterized  as a secured loan and not a
     sale, it is the intention of the parties hereto that this  Agreement  shall
     constitute a security  agreement under  applicable law, and that the Seller
     shall be deemed to have granted to the Administrative Agent for the ratable
     benefit of the Purchasers a duly perfected  security interest in all of the
     Seller's right,  title and interest in, to and under the  Receivables,  the
     Collections, each Collection Account, all Related Security, all payments on
     or with respect to such  Receivables,  all Hohe Discount,  all other rights
     relating  to and  payments  made in  respect  of the  Receivables,  and all
     proceeds of any thereof prior to all other liens on and security  interests
     therein.  After  a  Servicer  Default,  the  Administrative  Agent  and the
     Purchasers  shall have,  in addition to the rights and remedies  which they
     may have under this Agreement,  all other rights and remedies provided to a
     secured  creditor  after  default under the UCC and other  applicable  law,
     which rights and remedies shall be cumulative.

                                      Page 40
<PAGE>
     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.


                   DONNELLY RECEIVABLES CORPORATION


                   By:/s/ William R. Jellison
                      William R. Jellison President
                      414 E. 40th Street Holland, Michigan 49423



                   FALCON ASSET SECURITIZATION CORPORATION


                   By:/s/ Signature
                      -------------------------------------Authorized Signatory
                      c/o The First National Bank
                      of Chicago, as Administrative Agent Suite 0596, 1-21
                      One First National Plaza
                      Chicago, Illinois 60670
                      Fax: (312) 732-4487



                   THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent


                   By:/s/ Signature
                   
                   Title: Authorized Agent
                          The First National Bank of Chicago
                          Suite 0596, 1-21
                          One First National Plaza
                          Chicago, Illinois 60670
                          Fax: (312) 732-4487

                                     Page 41
<PAGE>
  COMMITMENTS               INVESTORS
  -----------               ---------

  $25,000,000               THE FIRST NATIONAL BANK OF CHICAGO


                        By: /s/ Signature
                            ------------------------------

                        Title: Authorized Agent
                      ---------------------------

                            The First National Bank of Chicago Suite 0596, 1-21
                            One First National Plaza
                            Chicago, Illinois  60670
                            Fax:  (312) 732-4487


  $25,000,000               DRESDNER BANK AG NEW YORK AND GRAND CAYMAN BRANCHES


                        By: /s/ Signature
                            -----------------------

                        Title: Vice President
                        ---------------------------

                        By: /s/ Signature
                            -----------------------

                        Title: Executive Vice President
                        ---------------------------

                              190 S. LaSalle Street Suite 2700
                              Chicago, Illinois 60603 Fax: (312) 444-1305




  =============
  $50,000,000                      PURCHASE LIMIT

                                      Page 42
<PAGE>
                             EXHIBITS AND SCHEDULES

  EXHIBIT I        DEFINITIONS

  EXHIBIT II       PRINCIPAL PLACE OF BUSINESS OF THE SELLER; LOCATION(S)
                   OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; NAMES

  EXHIBIT III      LOCK-BOXES; CONCENTRATION ACCOUNTS; DEPOSITARY ACCOUNTS

  EXHIBIT IV       FORM OF COMPLIANCE CERTIFICATE

  EXHIBIT V        FORM OF COLLECTION ACCOUNT AGREEMENT

  EXHIBIT VI       CREDIT AND COLLECTION POLICY

  EXHIBIT VII      FORM OF CONTRACT(S)

  EXHIBIT VIII     FORM OF SETTLEMENT REPORT

  EXHIBIT IX       FORM OF PURCHASE NOTICE

  EXHIBIT X        FORM OF LEGEND

  EXHIBIT XI       ELIGIBLE DM OBLIGORS

  EXHIBIT XII      FORM OF OBLIGOR NOTIFICATION


  SCHEDULE A       LIST OF DOCUMENTS TO BE DELIVERED TO THE ADMINISTRATIVE AGENT
                   PRIOR TO THE INITIAL PURCHASE

                                      Page 43
<PAGE>
                                    EXHIBIT I

                                   DEFINITIONS

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

     "Acquisition  Amount"  means,  on the date of any  purchase  from Falcon of
Receivable  Interests pursuant to Section 2.1, (i) with respect to each Investor
other than First  Chicago,  the lesser of (a) such  Investor's Pro Rata Share of
the Falcon  Transfer Price and (b) such  Investor's  unused  Commitment and (ii)
with respect to First Chicago,  the difference  between (a) the Falcon  Transfer
Price and (b) the aggregate  amount payable by all other  Investors on such date
pursuant to clause (i) above.

     "Adjusted  Liquidity Price" means, in determining the Falcon Transfer Price
for any Receivable Interest, an amount equal to

                            [      NDR      ]
           (i) DC + (ii) RI [-------------- ]
                            [1 + (.50 X .25)]

where:

RI = the undivided percentage interest evidenced by such Receivable Interest.

DC = the Deemed Collections.

NDR = the Outstanding Balance of all non-Defaulted Receivables.

Each of the foregoing shall be determined from the most recent Settlement Report
received from the Servicer.  For this purpose,  "Deemed Collections" shall be an
amount equal to the sum of the aggregate amount of all Dollar-denominated Deemed
Collections and the aggregate Dollar Equivalent of all Deutsche Mark-denominated
Deemed Collections.

     "Administrative   Agent"   means   First   Chicago  in  its   capacity   as
administrative  agent for the Purchasers  pursuant to Article IX, and not in its
individual  capacity as an  Investor,  and any  successor  Administrative  Agent
appointed pursuant to Article IX.

     "Adverse Claim" means a lien, security interest, charge or encumbrance,  or
other right or claim in, of or on any Person's  assets or properties in favor of
any other Person.

                                     Page 44
<PAGE>
     "Affiliate" means any Person directly or indirectly controlling, controlled
by, or under  direct or indirect  common  control  with,  another  Person or any
Subsidiary  of such other  Person.  A Person shall be deemed to control  another
Person  if the  controlling  Person  owns  10% or more of any  class  of  voting
securities of the controlled  Person or possesses,  directly or indirectly,  the
power to direct or cause the  direction  of the  management  or  policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.

     "Aggregate  Capital"  means,  at any time,  the sum at such time of (i) the
Dollar amount of all Capital  associated  with  Receivable  Interests that shall
have arisen by reason of Dollar Purchases and (ii) the Dollar  Equivalent amount
of all Capital  associated with  Receivable  Interests that shall have arisen by
reason of DM Purchases.

     "Aggregate Reserve" means, [____________].

     "Aggregate  Unpaids"  means, at any time, an amount equal to the sum of all
accrued and unpaid Discount,  Capital and all other amounts owed (whether due or
accrued) hereunder or under the Fee Letter to the  Administrative  Agent and the
Purchasers at such time.

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

     "Average  Collection Period" means at any time that period of days equal to
the average  maturity of the Receivables  calculated by the Servicer in the then
most recent Settlement Report;  provided that if the Administrative  Agent shall
disagree with any such calculation, the Administrative Agent may recalculate the
Average Collection Period.

     "Bankruptcy  Code" means Title 11 of the United  States Code,  as it may be
amended from time to time.

     "Base Rate" means,  (i) prior to the  occurrence of a Servicer  Default,  a
Dollar rate per annum equal to the corporate base rate,  prime rate or base rate
of interest,  as applicable,  announced by the Reference Bank from time to time,
changing  when  and as such  rate  changes,  and  (ii) at all  times  after  the
occurrence of a Servicer Default, such rate plus [__]% per annum.

     "Business  Day" means any day on which banks are not authorized or required
to close in New York,  New York or Chicago,  Illinois and The  Depository  Trust
Company of New York is open for business, and (i) if the applicable Business Day
relates to any  computation or payment to be made with respect to the LIBO Rate,
any day on which  dealings  in Dollar  deposits  are  carried  on in the  London
interbank market and (ii) if the applicable  Business Day relates to any payment
or  deposit  to be made in  Deutsche  Marks,  any DM  Purchase  or a  Receivable
Interest arising therefrom,  the delivery of any Settlement Report under Section
6.5, or any  conversion  of Dollars into Deutsche  Marks or Deutsche  Marks into
Dollars,  any day on which dealings in Dollars and Deutsche Marks are carried on
in the London interbank market

                                     Page 45
<PAGE>
and on which banks are not  authorized or required to close in London,  England,
Frankfurt, Germany or Munich, Germany.

     "Capital" of any Receivable Interest means, at any time, (a)(i) in the case
of any Receivable Interest arising from a Dollar Purchase, the Purchase Price in
Dollars  of such  Receivable  Interest,  and (ii) in the case of any  Receivable
Interest  arising from a DM Purchase,  the Purchase  Price in Deutsche  Marks of
such  Receivable  Interest,  minus  (b)  the  sum of  the  aggregate  amount  of
Collections  and other payments  received by the  Administrative  Agent which in
each case are applied to reduce such  Capital;  provided that such Capital shall
be restored in the amount of any Collections or payments so received and applied
if at any time the distribution of such Collections or payments are rescinded or
must otherwise be returned for any reason.

     "Capital Limit" means, at any time, the amount of Aggregate Capital at such
time that would cause the following calculation to equal 1.00:

                                C -------NRB - AR

where:

C = the  Aggregate  Capital of in respect of all  Receivable  Interests  at such
time.

NRB = the Net Receivables Balance.

AR = the Aggregate Reserve.

     "Change of Control" means (i) the acquisition by any Person, or two or more
Persons acting in concert,  of beneficial  ownership (within the meaning of Rule
13d-3 of the Securities and Exchange  Commission  under the Securities  Exchange
Act of  1934)  of 20% or more of the  outstanding  shares  of  voting  stock  of
Donnelly;  (ii)  Donnelly  shall  cease to own,  free and  clear of all  Adverse
Claims,  at  least  66  2/3% of the  outstanding  shares  of  voting  stock  (or
comparable  equity interest) of Hohe on a fully diluted basis; or (iii) Donnelly
shall cease to own, free and clear of all Adverse Claims, all of the outstanding
shares of voting stock of the Seller on a fully diluted basis.

     "Charged-Off  Receivable"  means a Receivable:  (i) as to which the Obligor
thereof  has taken  any  action,  or  suffered  any event to occur,  of the type
described  in  paragraph  (c) of  Article  VII (as if  references  to the Seller
therein  refer to such  Obligor);  (ii) as to which the  Obligor  thereof,  if a
natural  person,  is  deceased,  (iii)  which,  consistent  with the  Credit and
Collection  Policy,  would be written off the Seller's  books as  uncollectible,
(iv) which has been

                                     Page 46
<PAGE>
identified  by the Seller as  uncollectible  or (v) as to which any payment,  or
part thereof, remains unpaid for 365 days or more from the original due date for
such payment.

     "Collection Account" means each concentration account,  depositary account,
lock-box  account or similar  account in which any  Collections are collected or
deposited.

     "Collection Account Agreement" means, in relation to any actual or proposed
Collection Account, an agreement in substantially the form of Exhibit V hereto.

     "Collection  Bank" means,  at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.

     "Collection Notice" means a notice, in substantially the form of Collection
Notice  contained  in  Exhibit  V  hereto,  from the  Administrative  Agent to a
Collection Bank.

     "Collections"  means,  with respect to any Receivable or any Hohe Discount,
all cash  collections  and other cash proceeds in respect of such  Receivable or
such Hohe Discount,  including, without limitation, all cash proceeds of Related
Security with respect thereto,  and all amounts payable to the Purchasers by the
Seller pursuant to Section 1.8.

     "Commercial Paper" means promissory notes of Falcon issued by Falcon in the
commercial paper market.

     "Commitment"  means, for each Investor,  the commitment of such Investor to
purchase its Pro Rata Share of Receivable Interests from (i) the Seller and (ii)
Falcon,  such Pro Rata Share not to exceed, in the aggregate,  the Dollar amount
set  forth  opposite  such  Investor's  name  on the  signature  pages  of  this
Agreement, as such amount may be modified in accordance with the terms hereof.

     "Concentration  Limit" means, at any time, for any Obligor, an amount equal
to [___]% of the Outstanding  Balance of all Eligible  Receivables at such time,
or such  other  amount  (a  "Special  Concentration  Limit")  for  such  Obligor
designated  by the  Administrative  Agent  with  the  consent  of  the  Required
Investors;  provided  that,  in the case of an Obligor and any Affiliate of such
Obligor, the Concentration Limit shall be calculated as if such Obligor and such
Affiliate are one Obligor;  and provided,  further,  that Falcon or the Required
Investors  may,  upon not less than three  Business  Days' notice to the Seller,
cancel any Special  Concentration  Limit. As of the date of this Agreement,  and
subject to the foregoing,  each of the following Obligors (together in each case
with its respective  Affiliates) shall have a Special Concentration Limit at all
times  equal to the  lesser of (i) an amount  equal to [__]% of the  Outstanding
Balance of all Eligible  Receivables at such time and (ii) the respective amount
set forth below:

                                     [TABLE]


                                     Page 47
<PAGE>
     "Contingent  Obligation"  of a Person means any  agreement,  undertaking or
arrangement by which such Person  assumes,  guarantees,  endorses,  contingently
agrees to purchase or provide funds for the payment of, or otherwise  becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other  Person,  or  otherwise  assures any  creditor of such other Person
against loss,  including,  without  limitation,  any comfort  letter,  operating
agreement, take-or-pay contract or application for a letter of credit.

     "Contract" means, with respect to any Receivable,  any and all instruments,
agreements,  leases, invoices, shipping releases, general terms or conditions or
other writings  pursuant to which such Receivable arises or which evidences such
Receivable.

     "Coverage Exchange Rate" means, with respect to an amount of Deutsche Marks
during any Fixed  Exchange  Period,  the forward rate of exchange  quoted by the
Administrative  Agent for the amount in question in the London interbank foreign
exchange  market at or about 11:00 a.m.  London time two Business  Days prior to
the first day of such Fixed  Exchange  Period for the purchase of Deutsche Marks
with Dollars on the last day of such Fixed Exchange Period.

     "CP Rate" means, the rate, requested by the Seller and agreed to by Falcon,
equivalent  to the rate (or if more than one rate,  the weighted  average of the
rates) at which  Commercial  Paper having a term equal to the  relevant  Tranche
Period may be sold by any placement agent or commercial paper dealer  reasonably
selected by Falcon,  as agreed between each such dealer or agent and Falcon plus
any and all  applicable  issuing  and  paying  agent  fees  and  commissions  of
placement  agents and  commercial  paper  dealers in respect of such  Commercial
Paper; provided, however, that if the rate (or rates) as agreed between any such
agent or dealer and Falcon is a discount rate (or rates), the "CP Rate" for such
Tranche Period shall be the rate (or if more than one rate, the weighted average
of the rates)  resulting from Falcon's  converting such discount rate (or rates)
to an interest-bearing equivalent rate per annum.

     "Credit and  Collection  Policy" means the Seller's  credit and  collection
policies and  practices  relating to Contracts and  Receivables  existing on the
date hereof, which policies and practices (i) in the case of  Dollar-denominated
Receivables,  are  summarized  in  Exhibit  VI  hereto  and  (ii) in the case of
Deutsche Mark-denominated Receivables, shall be summarized in the written credit
and collection  policy  delivered to the  Administrative  Agent by the Seller in
accordance with Section 5.1(n),  in each case as such policies and practices may
be modified from time to time in accordance with this Agreement.

     "Currency  Allocation  Percentage"  means, at any time, with respect to any
Receivable  Interest,  a ratio  (expressed  as a  percentage)  equal  to (i) the
Capital of such Receivable  Interest,  divided by (ii) the aggregate  Capital of
all Receivable Interests (including such Receivable Interest) denominated in the
same currency as such Receivable Interest.

     "Deemed  Collections"  means the  aggregate of all amounts  owing to Falcon
pursuant to Sections 1.8 and 8.1.

                                     Page 48
<PAGE>
     "Default  Fee"  means with  respect  to any  amount due and  payable by the
Seller  hereunder  or under the Fee Letter,  an amount  equal to interest on any
such amount at a rate per annum equal to 2% above the Base Rate,  together  with
any loss, cost or expense incurred by the Administrative  Agent or any Purchaser
in connection with the extension or delay of settlement on any foreign  exchange
contract related to such due and payable amount,  provided,  however,  that such
interest  rate  will  not at any time  exceed  the  maximum  rate  permitted  by
applicable law.

     "Defaulted  Receivable" means a Receivable as to which any payment, or part
thereof,  remains unpaid for 90 days or more from the original due date for such
payment.

     "Delinquency  Ratio"  means,  at any time,  a  percentage  equal to (i) the
aggregate   Outstanding   Balance  of  all  Receivables   that  were  Delinquent
Receivables  at such time divided by (ii) the aggregate  Outstanding  Balance of
all Receivables  (other than  Receivables owed by an Affiliate of the applicable
Originator) at such time.

     "Delinquent Receivable" means a Receivable (other than a Receivable owed by
an  Affiliate of the  applicable  Originator)  as to which any payment,  or part
thereof,  remains unpaid for 60 days or more from the original due date for such
payment.

     "Designated Obligor" means an Obligor indicated by the Administrative Agent
to the Seller in writing.

     "Designated  Servicer"  means, at any time, each of the following:  (i) the
Servicer,  if other than the  Administrative  Agent or a Purchaser at such time,
and (ii) each Originator,  if any responsibility of the Servicer hereunder shall
have been delegated to such Originator.

     "Deutsche Marks" means the lawful currency of Germany.

     "Dilution  Ratio"  means,  as of the  last  day of any  calendar  month,  a
percentage equal to (i) the aggregate amount (in Dollars or Dollar  Equivalents)
of Dilutions  which shall have occurred  during such month,  divided by (ii) the
aggregate amount of new Receivables (in Dollars or Dollar  Equivalents)  arising
during such month.

     "Dilution  Factor" means, at any time, a percentage equal to the product of
(a) two,  multiplied by (b) the highest  average of the Dilution  Ratios for any
three month period during the immediately preceding twelve months.

     "Dilutions"  means, at any time, the aggregate  amount of reductions in the
Outstanding  Balances of the  Receivables  as a result of any setoff,  discount,
return, pricing or warranty adjustment or otherwise, other than cash Collections
on account of such Receivables.

     "Discount" means, for each Receivable Interest for any Tranche Period:

                                     Page 49
<PAGE>
                                 AD DR x C x --
                                 yr


   where:

DR = the Discount Rate for such Receivable Interest for such Tranche Period;

C = the Capital of such Receivable Interest during such Tranche Period;

AD = the actual number of days elapsed during such Tranche Period;

yr = (i) in the case of any Receivable  Interest arising from a Dollar Purchase,
     360,  and (ii) in the case of any  Receivable  Interest  arising  from a DM
     Purchase,  such  number of days as shall apply to the  applicable  Discount
     Rate as  derived  from  the  hedging  or  exchange  arrangements  that  the
     applicable  Purchaser  shall have entered  into to fund and  maintain  such
     Receivable Interest during such Tranche Period;

provided,  that no  provision  of this  Agreement  shall  require the payment or
permit  the  collection  of  Discount  in excess  of the  maximum  permitted  by
applicable  law; and provided,  further,  that  Discount for any Tranche  Period
shall not be considered paid by any  distribution to the extent that at any time
all or a portion of such distribution is rescinded or must otherwise be returned
for any reason.

     "Discount  Rate"  means  for any  Tranche  Period,  (i) in the  case of any
Receivable  Interest  that shall have  arisen from a Dollar  Purchase,  the LIBO
Rate, the CP Rate or the Base Rate, as  applicable,  and (ii) in the case of any
Receivable  Interest  that shall have arisen by reason of any DM Purchase,  such
rate per annum as shall have been  notified to the Seller by the  Administrative
Agent on or prior to the first day of such  Tranche  Period in  accordance  with
Section  1.3(c);  provided in each case that from and after the  occurrence of a
Servicer Default,  the Discount Rate in respect of each Receivable  Interest and
Tranche Period shall be the Base Rate.

     "Discount Factor" means [__]%.

     "DM  Purchase"  means a Purchase in respect of which the Purchase  Price is
payable in Deutsche Marks.

     "Dollars" and the sign "$" each means lawful money of the United States.

                                     Page 50
<PAGE>
     "Dollar Equivalent" means, at any time in relation to an amount denominated
in  Deutsche  Marks,  the amount of Dollars  required  to  purchase  such amount
denominated  in Deutsche  Marks at the  Applicable  Exchange  Rate.  "Applicable
Exchange Rate" means, at any time, (i) for purposes of calculating the "Dilution
Ratio",  the  "Loss-to-Liquidation  Ratio",  the  "Aggregate  Capital",  or  the
"Outstanding  Balance" of any  Receivable,  the Spot  Exchange Rate in effect at
such time and (ii) for all other purposes,  the Coverage Exchange Rate in effect
at such time.

     "Dollar  Purchase"  means a Purchase in respect of which the Purchase Price
is payable in Dollars.

     "Donnelly" means Donnelly Corporation, a Michigan corporation.

     "Donnelly  Transfer  Agreement"  means that  certain  Receivables  Purchase
Agreement of even date herewith between the Seller, as purchaser,  and Donnelly,
as seller,  as the same may be  amended,  restated,  supplemented  or  otherwise
modified from time to time.

     "Early  Collection  Fee" means,  for any Receivable  Interest which has its
Capital reduced,  or its Tranche Period terminated prior to the date on which it
was originally  scheduled to end, the sum of (a) the excess,  if any, of (i) the
Discount  that would have accrued  during the  remainder  of the Tranche  Period
subsequent to the date of such  reduction or  termination on the Capital of such
Receivable Interest if such reduction or termination had not occurred, over (ii)
the sum of (A) to the extent all or a portion of such  Capital is  allocated  to
another Receivable Interest, the Discount actually accrued during such period on
such Capital for the new Receivable Interest, and (B) to the extent such Capital
is not allocated to another  Receivable  Interest,  the income, if any, actually
received  during  such  period by the holder of such  Receivable  Interest  from
investing  the portion of such Capital not so allocated  and (b) if  applicable,
the cost  associated  with the early  reduction  or  termination  of any foreign
currency  of  exchange  transaction  that  shall have been  entered  into by the
Administrative  Agent  or any  Purchaser  in  connection  with  the  funding  or
maintenance of such Receivable Interest.

     "Eligible  DM  Obligor"  means  each of the  Persons  listed on  Exhibit XI
hereto,  and any other Person as the Seller may from time to time request and as
the Administrative Agent, in its sole discretion, may agree in writing.

     "Eligible Receivable" means, at any time, a Receivable:

          (i) the  Obligor  of which  (a) is a  corporation  or  other  business
     organization,  organized  under the laws of the United States or Germany or
     any political subdivision thereof and has its chief executive office in the
     United   States  or  Germany;   provided  that  (A)  in  the  case  of  any
     Dollardenominated Receivables, such Obligor may be organized under the laws
     of, and have its chief executive office in, Canada,  and (B) in the case of
     any Deutsche  Mark-denominated  Receivables,  such Obligor may be organized
     under the laws of, and have its chief executive office in, Belgium,  Spain,
     Sweden  or  any  other  country  as  may  be  approved  in  writing  by the
     Administrative Agent with the consent of

                                     Page 51
<PAGE>
     the  Required  Investors,  such  approval  and  consent  to be given by the
     Administrative  Agent and the Required  Investors,  respectively,  in their
     sole discretion;  (b) is not an Affiliate of any of the parties hereto; (c)
     is not a Designated Obligor;  and (d) is not a government or a governmental
     subdivision or agency,

          (ii)  the  Obligor  of  which is not the  Obligor  of any  Charged-Off
     Receivable   and,  if  such  Obligor  is  the  Obligor  of  any   Defaulted
     Receivables,   the  aggregate   Outstanding   Balance  of  such   Defaulted
     Receivables  does not  exceed  an  amount  equal to 30% of the  Outstanding
     Balance of all Receivables of such Obligor at such time,

          (iii) which is not a Defaulted Receivable, a Charged-Off Receivable or
     Delinquent Receivable,

          (iv)  which by its  terms  is due and  payable  within  60 days of the
     original billing date therefor and has not had its payment terms extended,

          (v) which is an  account  receivable  representing  all or part of the
     sales price of  merchandise,  insurance and services  within the meaning of
     Section 3(c)(5) of the Investment Company Act of 1940, as amended,

          (vi) a purchase of which with the proceeds of notes would constitute a
     "current  transaction"  within  the  meaning  of  Section  3(a)(3)  of  the
     Securities Act of 1933, as amended,

          (vii) which is an "account" within the meaning of Section 9-106 of the
     UCC of all applicable jurisdictions,

          (viii) which is denominated  and payable only in Dollars in the United
     States or Deutsche Marks in Germany,

          (ix) which arises under a Contract in substantially the form of one of
     the  form  contracts  or,  in  the  case  of  a  Deutsche  Mark-denominated
     Receivable,  Standard  Terms set forth on Exhibit  VII hereto or  otherwise
     approved by the Administrative Agent in writing,  which, together with such
     Receivable,  is in full force and effect and constitutes  the legal,  valid
     and binding obligation of the related Obligor enforceable by the Seller and
     its assignees against such Obligor in accordance with its terms and, in the
     case of a  Deutsche  Mark-denominated  Receivable,  has not  been  amended,
     supplemented  or  superseded  in any  material  respect,  or in any respect
     whatsoever  which  could  affect  the  collectibility,  transferability  or
     ownership of such  Receivable  by any other  agreements  or  communications
     between  such  Obligor  and the  Seller  other  than the  relevant  Obligor
     Notification,

          (x) which  arises  under a  Contract  which (A) does not  require  the
     Obligor under such Contract to consent to the transfer,  sale or assignment
     of the rights and duties of

                                     Page 52
<PAGE>
     the applicable  Originator or any of its assignees  under such Contract or,
     if any such consent is required,  the Obligor  shall have duly executed and
     delivered either (x) a consent to such transfer,  sale or assignment or (y)
     a  valid  waiver  of  such   requirement,   and  (B)  does  not  contain  a
     confidentiality  provision  that would have the effect of  restricting  the
     ability of the Administrative Agent or any Purchaser to exercise its rights
     under this Agreement,  including,  without limitation,  its right to review
     the Contract,

          (xi) which arises under a Contract  that contains an obligation to pay
     a  specified  sum of money,  contingent  only upon the sale of goods or the
     provision of services by an Originator,

          (xii)  which  is not  subject  to any  right of  rescission,  set-off,
     counterclaim,   any  other  defense  (including  defenses  arising  out  of
     violations  of usury  laws) of the  applicable  Obligor  or the  applicable
     Originator or any other  Adverse  Claim,  and the Obligor  thereon holds no
     right as against such Originator to cause such Originator to repurchase the
     goods or  merchandise  the  sale of which  shall  have  given  rise to such
     Receivable,

          (xiii) as to which the  applicable  Originator of such  Receivable has
     satisfied and fully  performed all  obligations on its part with respect to
     such  Receivable  required to be fulfilled by it, and no further  action is
     required to be  performed  by any Person with  respect  thereto  other than
     payment thereon by the applicable Obligor,

          (xiv) all right,  title and  interest to and in which has been validly
     transferred  by the  applicable  Originator  directly or  indirectly to the
     Seller under and in accordance with the applicable Transfer Agreement,  and
     the  Seller has good and  marketable  title  thereto  free and clear of any
     Adverse  Claim,  including  but not limited to, any Adverse  Claim  arising
     pursuant   to   a   retention    of   title    arrangement    (verlangerter
     Eigentumsvorbehalt)   or  global  security   assignment   (kreditsicherende
     Globalzession),

          (xv) which, together with the Contract related thereto, was created in
     compliance  with each, and does not contravene any, law, rule or regulation
     applicable  thereto  (including,  without  limitation,  any  law,  rule and
     regulation relating to truth in lending,  fair credit billing,  fair credit
     reporting,  equal credit  opportunity,  fair debt collection  practices and
     privacy) and with respect to which no part of the Contract  related thereto
     is in violation of any such law, rule or regulation,

          (xvi) which  satisfies all applicable  requirements  of the Credit and
     Collection Policy,

          (xvii) which was  generated in the ordinary  course of the  applicable
     Originator's  business in connection with the purchase of goods or services
     by the applicable Obligor from such Originator,

                                     Page 53
<PAGE>
          (xviii) which arises solely from the sale or the provision of services
     to the related Obligor by the Originator that shall have  transferred  such
     Receivable  directly  or  indirectly  to the  Seller,  and not by any other
     Person (in whole or in part),

          (xix) in the case of any  Receivable  other than a  Dollar-denominated
     Receivable,

          (a)  such  Receivable  shall  have  arisen  pursuant  to a  commercial
          transaction  (Handelsgeschaft)  between Hohe and the relevant  Obligor
          and   is   not   included   in   any   current   account   arrangement
          (Kontokorrentabrede) between Donnelly and the related Obligor,

          (b) such Obligor is an Eligible DM Obligor,

          (c) the shipping  release in respect of which,  if the related Obligor
          is organized  under, or has its chief executive office in, any country
          other than  Germany  contains the legend set forth in Exhibit X hereto
          in the  relevant  language of the  jurisdiction  where such Obligor is
          resident (or, if different,  into the language (or languages) in which
          such Obligor conducts its business with Hohe), an d

          (d) in  respect  of which  either  (1) Hohe has  delivered  an Obligor
          Notification to the related Obligor and such Obligor  Notification has
          been duly signed by Hohe, the Seller and a duly  authorized  signatory
          on behalf of such  Obligor,  and has been  returned  to Hohe not later
          than  December 20, 1996,  or (2) the related  Obligor has confirmed in
          writing  that it will pay all  amounts in  respect of such  Receivable
          directly into the German Collection Account,  and (in either case) the
          relevant  Obligor  in  respect  of  which  is in  compliance  with any
          obligation to make payments  into the German  Collection  Account with
          respect to other Eligible Receivables of such Obligor, and

          (xx) as to which the Administrative  Agent has not notified the Seller
     that the Administrative  Agent has determined that such Receivable or class
     of  Receivables  is not  acceptable as an Eligible  Receivable,  including,
     without limitation, because such Receivable arises under a Contract that is
     not acceptable to the Administrative Agent.

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

     "Facility Account" means the Seller's Account No. 549-0286 at First Chicago
or, in the case of any DM  Purchase,  such other  account as the  Administrative
Agent may from time to time advise the Seller.

                                     Page 54
<PAGE>
     "Facility  Termination  Date"  means  the  earliest  of (i)  the  Liquidity
Termination  Date,  (ii)  the  date  the  Seller  shall  exercise  its  right to
repurchase the outstanding  Receivable Interests pursuant to Section 1.11, (iii)
any date selected by the Seller on not less than 30 days' prior  written  notice
to the  Administrative  Agent,  (iv) the date of the  occurrence of any Servicer
Default  involving  the Seller and of the type  described  in  paragraph  (c) of
Article  VII,  and (v)  any  date  following  the  occurrence,  and  during  the
continuance,  of any Servicer Default which the Required Investors declare to be
the Facility Termination Date.

     "Falcon Residual" means the sum of the Falcon Transfer Price Reductions.

     "Falcon Transfer Price" means,  with respect to the assignment by Falcon of
one or more Receivable  Interests to the Administrative Agent for the benefit of
the  Investors  pursuant  to Section  2.1,  the sum of (i) the lesser of (a) the
aggregate Dollar and Dollar  Equivalent amount of the Capital of each Receivable
Interest and (b) the Adjusted  Liquidity Price of each  Receivable  Interest and
(ii) the aggregate Dollar and Dollar Equivalent amount of all accrued and unpaid
Discount for such Receivable Interests.

     "Falcon  Transfer Price  Reduction" means in connection with the assignment
of a Receivable  Interest by Falcon to the Administrative  Agent for the benefit
of the  Investors,  the  positive  difference  between  (i) the  Capital of such
Receivable  Interest and (ii) the Adjusted  Liquidity  Price for such Receivable
Interest.

     "Federal  Funds  Effective  Rate"  means,  for any  period,  a  fluctuating
interest  rate per annum equal for each day during such period  equal to (a) the
weighted  average of the rates on  overnight  federal  funds  transactions  with
members of the Federal  Reserve  System  arranged by federal funds  brokers,  as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal  Reserve Bank of New York in the Composite  Closing
Quotations  for  U.S.  Governments  Securities;  or (b) if  such  rate is not so
published for any day which is a Business Day, the average of the  quotations at
approximately  10:30  a.m.  (Chicago  time)  for such  day on such  transactions
received by the  Reference  Bank from three  federal funds brokers of recognized
standing selected by it.

     "Fee  Letter"  means that  certain  letter  agreement  dated as of the date
hereof between the Seller and the Administrative  Agent, as it may be amended or
modified and in effect from time to time.

     "Finance Charges" means, with respect to a Contract, any finance, interest,
late payment  charges or similar  charges  owing by an Obligor  pursuant to such
Contract.

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

     "Fixed  Exchange  Period"  means a  period  commencing  on the  date in any
calendar  month on which a DM Purchase may be made and ending on the date in the
next following calendar

                                     Page 55
<PAGE>
month  on  which a DM  Purchase  may be  made,  in each  case  such  date  being
determined  in  accordance  with the terms of Section 1.2 (and  whether or not a
purchase is in fact being made on such date or the Facility Termination Date has
occurred  on or prior to such  date);  provided  that (i) if at any time a Fixed
Exchange  Period would otherwise be of a duration that is less than 30 days, the
Administrative  Agent may direct that such Fixed  Exchange  Period have a longer
duration not to exceed 60 days, as the Administrative  Agent may elect, and (ii)
the Administrative Agent may at any time, on written notice given to the Seller,
direct that the Fixed Exchange  Periods in effect be of a duration  shorter than
one calendar month (and may be as short as a period of one day).  Fixed Exchange
Periods shall occur sequentially,  with each Fixed Exchange Period commencing on
the expiration of the immediately  preceding Fixed Exchange Period and ending on
the commencement of the immediately next following Fixed Exchange Period.

     "Funding  Agreement"  means this  Agreement and any agreement or instrument
executed by any Funding Source with or for the benefit of Falcon.

     "Funding Source" means (i) any Investor or (ii) any insurance company, bank
or other financial institution providing liquidity, credit enhancement or backup
purchase support or facilities to, or currency  hedging or exchange  arrangement
for the benefit of, Falcon.

     "German  Collection  Account" has the meaning  assigned to that term in the
Hohe Transfer Agreement.

     "Germany" means the Federal Republic of Germany.

     "Hedge Factor" means, at any time, [__________].

     "Hohe" means  Donnelly  Hohe GmbH & Co. KG, a company  organized  under the
laws of Germany.

     "Hohe Discount"  means all "Discount" now or at any time hereafter  payable
by Hohe under the Hohe  Transfer  Agreement,  together  with any  "Default  Fee"
payable by Hohe in respect thereof.

     "Hohe Transfer Agreement" means that certain Receivables Purchase Agreement
of even date herewith between  Donnelly,  as purchaser,  and Hohe, as Seller, as
the same may be amended, restated,  supplemented or otherwise modified from time
to time.

     "Incremental Purchase" means a purchase of one or more Receivable Interests
which increases the total outstanding Capital hereunder.

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations  representing the deferred purchase price of property or
services  (other than accounts  payable  arising in the ordinary  course of such
Person's business payable on terms customary in

                                     Page 56
<PAGE>
the  trade),  (iii)  obligations,  whether or not  assumed,  secured by liens or
payable out of the proceeds or production  from property now or hereafter  owned
or acquired by such  Person,  (iv)  obligations  which are  evidenced  by notes,
acceptances, or other instruments,  (v) capitalized lease obligations,  (vi) net
liabilities  under  interest  rate  swap,  exchange  or  cap  agreements,  (vii)
Contingent  Obligations  and (viii)  liabilities  in respect of unfunded  vested
benefits under plans covered by Title IV of ERISA.

     "Intended   Characterization"   means,   for  income  tax   purposes,   the
characterization of the acquisition by the Purchasers of Receivable Interests as
a loan or loans by the Purchasers to the Seller secured by the Receivables,  the
Related Security, the Hohe Discount and the Collections.

     "Investor Fee" means, for each Investor,  a fee agreed to in writing by the
Administrative Agent or Falcon and such Investor.

     "Investors" means the financial  institutions listed on the signature pages
of this Agreement under the heading "Investors" and their respective  successors
and assigns.

     "LIBO  Rate"  means the rate per annum equal to the sum of (i) (a) the rate
at  which  deposits  in  U.S.  Dollars  are  offered  by the  Reference  Bank to
firstclass  banks in the London  interbank  market at  approximately  11:00 a.m.
(London time) two Business  Days prior to the first day of the relevant  Tranche
Period,  such  deposits  being in the  approximate  amount of the Capital of the
Receivable  Interest  to be funded or  maintained,  divided by (b) one minus the
Reserve  Requirement  (expressed as a decimal) applicable to such Tranche Period
plus (ii) [_____]% per annum. The LIBO Rate shall be rounded,  if necessary,  to
the next higher 1/16 of 1%.

     "Liquidation Day" means, for any Receivable Interest, the earliest to occur
of (i)  any  Business  Day so  designated  by the  Administrative  Agent  or the
Required  Investors on or at any time  following any day on which the conditions
precedent set forth in Section 4.2 are not  satisfied,  (ii) any Business Day so
designated by the Seller or Falcon after the occurrence of the Termination Date,
(iii) the Business Day immediately prior to the occurrence of a Servicer Default
set forth in paragraph (c) of Article VII and (iv) in the case of any Receivable
Interest that shall have arisen by reason of a DM Purchase,  declaration  of the
Liquidation Day therefor by the Administrative  Agent in accordance with Section
1.3(e).

     "Liquidity Termination Date" means November 13, 1997, or such later date as
shall then be in effect in accordance with Section 1.12.

     "Loss-to-Liquidation  Ratio"  means,  as at the  last  day of any  calendar
month, a percentage equal to (i) the amount (in Dollars and Dollar  Equivalents)
of Charged-Off Receivables which became Charged-Off Receivables during the three
calendar months then most recently ended,  divided by (ii) the aggregate  amount
(in Dollars and Dollar  Equivalents)  of  Collections  in respect of Receivables
during such three month period.

                                     Page 57
<PAGE>
     "Material  Adverse  Effect"  means a  material  adverse  effect  on (i) the
financial condition,  business or operations of the Seller or either Originator,
(ii) the ability of the Seller or either  Originator to perform its  obligations
under any Transaction Document,  (iii) the legality,  validity or enforceability
of this Agreement,  any Transaction Document or any Collection Account Agreement
or  Collection  Notice  relating to a  Collection  Account into which a material
portion of  Collections  are  deposited,  (iv) the  Seller's or any  Purchaser's
interest  in the  Receivables  generally  or in any  significant  portion of the
Receivables,  the Related  Security,  the Hohe Discount or the Collections  with
respect thereto,  or (v) the  collectibility of the Receivables  generally or of
any material portion of the Receivables.

     "Net  Receivables  Balance" means, at any time, the Outstanding  Balance of
Eligible  Receivables at such time reduced by the aggregate  amount by which the
Outstanding  Balance  of all  Eligible  Receivables  of  each  Obligor  and  its
Affiliates exceeds the Concentration Limit for such Obligor.

     "Obligor" means a Person obligated to make payments pursuant to a Contract.

     "Obligor  Notification"  means a  notification  in the form of Exhibit  XII
attached hereto.

     "Originator" means either of Donnelly or Hohe.

     "Outstanding  Balance" of any  Receivable at any time means (i) in the case
of any Receivable denominated in Dollars, the then outstanding principal balance
thereof and (b) in the case of any Receivable denominated in Deutsche Marks, the
Dollar Equivalent of the then outstanding principal balance thereof.

     "Person"  means  an  individual,  partnership,   corporation  (including  a
business trust), joint stock company, trust, unincorporated  association,  joint
venture or other entity, or a government or any political  subdivision or agency
thereof.

     "Potential Servicer Default" means an event which, with the passage of time
or the giving of notice, or both, would constitute a Servicer Default.

     "Pro Rata Share" means, for each Investor,  the Commitment of such Investor
divided by the  Purchase  Limit,  adjusted  as  necessary  to give affect to the
application of the terms of Section 2.5.

     "Purchase Date" has the meaning specified in Section 1.2.

     "Purchase  Limit" means the aggregate of the  Commitments  of the Investors
hereunder.

     "Purchase  Price"  means,  with  respect to any  Incremental  Purchase of a
Receivable Interest, the amount paid to the Seller for such Receivable Interest.

                                     Page 58
<PAGE>
     "Purchaser" means Falcon or an Investor, as applicable.

     "Receivable" means the indebtedness and other obligations owed (at the time
it arises) to an Originator  and owned,  transferred to or otherwise held by the
Seller,  whether constituting an account,  chattel paper,  instrument or general
intangible,  arising in  connection  with the sale of goods or the  rendering of
services by such Originator, and includes, without limitation, the obligation to
pay any Finance Charges with respect thereto.  Indebtedness and other rights and
obligations  arising from any one transaction,  including,  without  limitation,
indebtedness  and other  rights and  obligations  represented  by an  individual
invoice,  shall constitute a Receivable separate from a Receivable consisting of
the  indebtedness  and  other  rights  and  obligations  arising  from any other
transaction.

     "Receivable Interest" means, at any time, an undivided percentage ownership
interest  associated  with a  designated  amount of Capital,  Discount  Rate and
Tranche Period selected  pursuant to Section 1.3 in (i) all Receivables  arising
prior  to the time of the  most  recent  computation  or  recomputation  of such
undivided  interest  pursuant to Section  1.4,  (ii) all Related  Security  with
respect to such Receivables,  (iii) all Hohe Discount,  and (iv) all Collections
with respect to, and other proceeds of, any of the foregoing. From and after the
date of the initial  purchase  hereunder,  the  aggregate  Receivable  Interests
hereunder shall at all times equal 100%. As among Purchasers,  any allocation of
Collections  in  respect  of  any  Receivable   Interests  (other  than  in  the
circumstances when the applicable Currency Allocation  Percentage is required to
be applied)  shall be made  ratably such that the  percentage  allocated to each
such Receivable  Interest is equal to (i) the Dollar or Dollar Equivalent amount
of Capital assigned to such Receivable  Interest,  divided by (ii) the aggregate
Capital (in Dollars and Dollar Equivalents) assigned to all Receivable Interests
at such time.

     "Records"  means,  with respect to any Receivable,  all Contracts and other
documents, books, records and other information (including,  without limitation,
computer  programs,  tapes,  disks,  punch cards,  data processing  software and
related property and rights)  relating to such Receivable,  any Related Security
therefor and the related Obligor.

     "Reduction  Percentage" means, for any Receivable  Interest acquired by the
Investors  from Falcon for less than the Dollar or Dollar  Equivalent  amount of
Capital of such  Receivable  Interest,  a  percentage  equal to a  fraction  the
numerator of which is the Falcon  Transfer Price  Reduction for such  Receivable
Interest and the denominator of which is the Dollar or Dollar  Equivalent amount
of Capital of such Receivable Interest.

     "Reference   Bank"  means   First   Chicago  or  such  other  bank  as  the
Administrative Agent shall designate with the consent of the Seller.

     "Required  Investors"  means,  (i) at any time that a Servicer  Default has
occurred and is continuing,  Investors with  Commitments in excess of 66-2/3% of
the  Purchase  Limit and (ii) at any other  time,  the  Investor  then acting as
Administrative Agent.

                                     Page 59
<PAGE>
     "Related Security" means, with respect to any Receivable:

          (i) all of the Seller's  present or future  interest in the  inventory
     and goods (including  returned or repossessed  inventory or goods), if any,
     the  financing  or lease of which  gave  rise to such  Receivable,  and all
     insurance  contracts with respect thereto,  including,  but not limited to,
     all of the Seller's present or future claims for re-delivery  and/or return
     of such inventory and or goods,

          (ii) all  other  security  interests  or liens  and  property  subject
     thereto from time to time,  if any,  purporting  to secure  payment of such
     Receivable,  whether pursuant to the Contract related to such Receivable or
     otherwise,  together with all financing  statements and security agreements
     describing any collateral securing such Receivable,

          (iii) all guaranties,  insurance and other  agreements or arrangements
     of whatever  character from time to time supporting or securing  payment of
     such Receivable whether pursuant to the Contract related to such Receivable
     or otherwise,

          (iv)  all  service   contracts  and  other  contracts  and  agreements
     associated with such Receivables,

          (v) all Records related to such Receivables,

          (vi) all of the  Seller's  right,  title and interest in, to and under
     each  Transfer  Agreement,  the Servicing  Agreement  and each  instrument,
     document or agreement  executed in connection  the foregoing in favor of or
     otherwise for the benefit of the Seller (or, if different,  the  applicable
     transferee thereunder);

          (vii) all of the Seller's  retention of title rights  relating to such
     Receivable; and

          (viii) all proceeds of any of the foregoing.

     "Reserve  Requirement"  means the  maximum  aggregate  reserve  requirement
(including  all  basic,  supplemental,  marginal  and other  reserves)  which is
imposed  against the Reference Bank in respect of Eurocurrency  liabilities,  as
defined in Regulation D of the Board of Governors of the Federal  Reserve System
as in effect from time to time.

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

     "Servicer"  means at any time the Person  (which may be the  Administrative
Agent) then authorized pursuant to Article VI to service, administer and collect
Receivables.

     "Servicer Default" has the meaning specified in Article VII.

                                     Page 60
<PAGE>
     "Servicing  Agreement" means that certain Servicing  Agreement of even date
herewith between the Seller and Donnelly, as the same may be amended,  restated,
supplemented or otherwise modified from time to time.

     "Settlement  Report" means a report,  in substantially  the form of Exhibit
VIII  hereto  (appropriately  completed),  furnished  by  the  Servicer  to  the
Administrative Agent pursuant to Section 6.5.

     "Spot Exchange Rate" means,  with respect to an amount of Deutsche Marks on
any date,  the spot rate of exchange at which  Deutsche  Marks may be  converted
into Dollars on such date, as  determined  by reference to the selling  exchange
rate  published in the Wall Street Journal on such date (or, if such date is not
a Business Day, on the next preceding Business Day); provided, that in the event
such rate is not so published,  the "Spot  Exchange Rate" for such date shall be
the rate of exchange quoted by the Administrative  Agent in the London interbank
foreign  exchange market at or about 11:00 a.m. London time on such date (or, if
such date is not a Business  Day, on the next  preceding  Business  Day) for the
spot purchase of such amount of Deutsche Marks with Dollars.

     "Standard  Terms" means any standard terms and conditions  which govern the
sale of any  products  or  provision  of any  services by Hohe to an Eligible DM
Obligor.

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

     "Termination  Date"  means,  for  any  Receivable  Interest,  the  Facility
Termination  Date, and, solely with respect to a Receivable  Interest of Falcon,
that Business Day so designated by the Seller or Falcon by notice to the other.

     "Tranche  Period"  means (a) with respect to any  Receivable  Interest that
shall have arisen from a Dollar Purchase:

          (i) if  Discount  for such  Receivable  Interest  is  calculated  with
     respect to the CP Rate, a period of days not to exceed 270 days  commencing
     on a Business Day requested by the Seller and agreed to by Falcon;

          (ii) if Discount for such  Receivable  Interest is  calculated  on the
     basis of the LIBO Rate, a period of one, two or three months, or such other
     period as may be mutually  agreeable  to the  Administrative  Agent and the
     Seller,  commencing  on a  Business  Day  selected  by  the  Seller  or the
     Administrative Agent pursuant to this Agreement.  Such Tranche Period shall
     end on the day in the applicable succeeding calendar month which

                                     Page 61
<PAGE>
     corresponds  numerically  to the  beginning  day of  such  Tranche  Period,
     provided,  however, that if there is no such numerically  corresponding day
     in such  succeeding  month,  such  Tranche  Period  shall  end on the  last
     Business Day of such succeeding month; and

          (iii) if Discount for such  Receivable  Interest is  calculated on the
     basis of the Base Rate,  a period of 30 days  commencing  on a Business Day
     selected by the Seller;

          (b) with  respect to any  Receivable  Interest  that shall have arisen
     from a DM Purchase:

            (i) a Fixed Exchange Period, or

(ii) such other period of time as the Seller may,  with the prior consent of the
Administrative Agent, select.

If any  Tranche  Period  would end on a day which is not a  Business  Day,  such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding  Business Day falls in a new month,  such Tranche Period shall end on
the  immediately  preceding  Business Day. In the case of any Tranche Period for
any Receivable Interest of which commences before the Termination Date and would
otherwise  end on a date  occurring  after the  Termination  Date,  such Tranche
Period shall end on the  Termination  Date.  The duration of each Tranche Period
which commences after the Termination Date shall be of such duration as selected
by the Administrative Agent.

     "Transaction Documents" means,  collectively,  this Agreement, the Transfer
Agreements, the Servicing Agreement, each Collections Account Agreement, and all
other instruments, documents and agreements executed and delivered by the Seller
or either Originator in connection herewith.

     "Transfer  Agreement" means either the Donnelly  Transfer  Agreement or the
Hohe Transfer Agreement.

     "UCC" means the Uniform  Commercial  Code as from time to time in effect in
the specified jurisdiction.

     All accounting terms not specifically  defined herein shall be construed in
accordance  with generally  accepted  accounting  principles.  All terms used in
Article  9 of the UCC in the State of  Illinois,  and not  specifically  defined
herein, are used herein as defined in such Article 9.

                                     Page 62
<PAGE>
                                   EXHIBIT II

PLACES OF  BUSINESS  OF THE  SELLER;  LOCATIONS  OF  RECORDS;  FEDERAL  EMPLOYER
IDENTIFICATION NUMBER(S); NAME(S)


  Principal Place of Business; Chief Executive Office

  None, except:                414 East Fortieth Street Holland, Michigan 49423


  Location of Records:

  None, except:                414 East Fortieth Street Holland, Michigan 49423

                               Haupstrabe 36, D-97903 Collenberg, Germany


  Federal Employer Identification Number:

                                          38-3314469


  Corporate Names, Trade Names, Assumed Names:

       None, except:                      Donnelly Receivables Corporation

                                     Page 63
<PAGE>
                                   EXHIBIT III

                                   LOCK-BOXES;
                 CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS


  None, except:

a.  NBD Bank
    611 Woodward Avenue Detroit, MI 48226 Lock-Box No. 78066 Account No. 964-733

b.  Bank One, Columbus, NA
    100 E. Broad
    Columbus, OH 43271-0391
    Lock-Box No. 432710938
    Checking Account No. 931296050

c.  The First National Bank of Chicago, Frankfurt branch Niederlassung Frankfurt
    BLZ 503 304 00
    Account No. 100-7173

                                     Page 64
<PAGE>
                                   EXHIBIT IV

                            [On Letterhead of Seller]

                         FORM OF COMPLIANCE CERTIFICATE

To: The First National Bank of Chicago, as Administrative Agent

     This  Compliance   Certificate  is  furnished   pursuant  to  that  certain
Receivables  Purchase  Agreement  dated as of November 14, 1996,  among Donnelly
Receivables  Corporation  (the "Seller"),  the Purchasers  party thereto and The
First National Bank of Chicago, as Administrative Agent for such Purchasers (the
"Agreement").

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1. I am the duly elected _____________________ of the Seller;

     2. I have  reviewed  the terms of the  Agreement  and I have made,  or have
caused to be made under my supervision,  a detailed  review of the  transactions
and  conditions  of the  Seller  during  the  accounting  period  covered by the
attached financial statements;

     3. The examinations  described in paragraph 2 did not disclose,  and I have
no knowledge  of, the  existence of any  condition or event which  constitutes a
Servicer  Default or Potential  Servicer  Default,  as each such term is defined
under the Agreement,  during or at the end of the  accounting  period covered by
the attached financial statements or as of the date of this Certificate,  except
as set forth below; and

     4. Schedule I attached  hereto sets forth  financial data and  computations
evidencing the compliance with certain covenants of the Purchase Agreement,  all
of which data and computations are true, complete and correct.

     Described below are the exceptions,  if any, to paragraph 3 by listing,  in
detail,  the nature of the  condition or event,  the period  during which it has
existed  and the action  which the Seller has taken,  is taking,  or proposes to
take with respect to each such condition or event:

     The foregoing  certifications,  together with the computations set forth in
Schedule I hereto and the financial  statements  delivered with this Certificate
in  support  hereof,  are made and  delivered  this ____ day of  ______________,
19___.



                         SCHEDULE I TO COMPLIANCE REPORT

                                     Page 65
<PAGE>
  A.   Schedule of Compliance as of __________,  19____ with Section [5.1(m)] of
       the Agreement.  Unless otherwise  defined herein,  the terms used in this
       Compliance Certificate have the meanings ascribed thereto in the Purchase
       Agreement.

  This schedule relates to the month ended:  _______________


       Minimum Net Worth:

       1.   Total assets: _________.

       2. Total liabilities: ________.

       3. Net Worth (item 1- item 2): _______________.

       4. Net Worth [equals or exceeds] [is less than] $2,850,000.


                                     Page 66
<PAGE>
                                   EXHIBIT V-A

          FORM OF COLLECTION ACCOUNT AGREEMENT FOR COLLECTION ACCOUNTS
                          LOCATED IN THE UNITED STATES

                            [On letterhead of Seller]

                                __________ 19__


[Lock-Box Bank/Concentration Bank/Depositary Bank]

Re:  Donnelly Receivables Corporation [and name of applicable Originator]

Ladies and Gentlemen:

     You have exclusive control of P.O. Box #_____________ in [city,  state, zip
code] (the "Lock-Box") for the purpose of receiving mail and processing payments
therefrom pursuant to that certain [name of lock-box  agreement] between you and
_______ [Name of  Originator]  dated  _________  (the  "Agreement").  You hereby
confirm  your  agreement to perform the services  described  therein.  Among the
services you have agreed to perform therein,  is to endorse all checks and other
evidences  of payment,  and credit such  payments  to our  checking  account no.
__________  maintained  with  you in the  name of  [Originator]  (the  "Lock-Box
Account").

     [Originator]  hereby  transfers  and  assigns  all of its right,  title and
interest in and to, and exclusive  ownership and control over,  the Lock-Box and
the Lock-Box  Account to Donnelly  Receivables  Corporation  (the "Seller").  We
hereby  request  that the name of the  Lock-Box  Account be changed to  Donnelly
Receivables  Corporation,  as  "Collection  Agent" for the  benefit of The First
National Bank of Chicago ("FNBC"),  as  Administrative  Agent under that certain
Receivables  Purchase Agreement (the "Receivables  Purchase Agreement") dated as
of November 14, 1996 among the Seller, Falcon Asset Securitization  Corporation,
certain financial institutions parties thereto and FNBC.

     The Seller hereby  irrevocably  instructs  you, and you hereby agree,  that
upon receiving  notice from FNBC in the form attached hereto as Annex A: (i) the
name of the Lock-Box Account will be changed to FNBC for itself and as agent (or
any  designee of FNBC) and FNBC will have  exclusive  ownership of and access to
such Lock-Box  Account,  and neither we nor any of our affiliates  will have any
control of such  Lock-Box  Account or any access  thereto,  (ii) you will either
continue to send the funds from the  Lock-Box to the Lock-Box  Account,  or will
redirect the funds as FNBC may otherwise request, (iii) you will transfer monies
on deposit in the Lock-Box  Account,  at any time, as directed by FNBC, (iv) all
services to be performed by you under the Agreement  will be performed on behalf
of FNBC, and (v) copies of all

                                     Page 67
<PAGE>
correspondence  or other mail which you have agreed to send us will also be sent
to FNBC at the following address:

  The First National Bank of Chicago
  Suite 0596, 21st Floor
  One First National Plaza
  Chicago, Illinois 60670
  Attention:  Credit Manager, Asset Backed
               Securities Division

     Moreover,  upon such  notice,  FNBC for  itself  and as agent will have all
rights and  remedies  given to us under the  Agreement.  We agree,  however,  to
continue to pay all fees and other assessments due thereunder at any time.

     You hereby acknowledge that monies deposited in the Lock-Box Account or any
other account  established  with you by FNBC for the purpose of receiving  funds
from the Lock-Box are subject to the liens of FNBC for itself and as agent under
the  Receivables  Purchase  Agreement,  and will not be  subject  to  deduction,
setoff, banker's lien or any other right you or any other party may have against
us,  except  that you may debit the  Lock-Box  Account  for any items  deposited
therein that are returned or otherwise not collected and for all charges,  fees,
commissions and expenses incurred by you in providing services hereunder, all in
accordance  with your customary  practices for the charge back of returned items
and expenses.

     This  letter  agreement  and the  rights  and  obligations  of the  parties
hereunder will be governed by and construed and  interpreted in accordance  with
the laws of the State of Illinois.  This letter agreement may be executed in any
number of  counterparts  and all of such  counterparts  taken  together  will be
deemed to constitute one and the same instrument.  All references herein to "we"
or "us" refer to [Originator] and Donnelly Receivables Corporation.

     This letter agreement  contains the entire  agreement  between the parties,
and may not be altered, modified,  terminated or amended in any respect, nor may
any right,  power or privilege  of any party  hereunder be waived or released or
discharged,  except upon execution by all parties hereto of a written instrument
so  providing.  In the event that any  provision in this letter  agreement is in
conflict with, or inconsistent with, any provision of the Agreement, this letter
agreement  will  exclusively  govern and control.  Each party agrees to take all
actions  reasonably  requested  by any other party to carry out the  purposes of
this  letter  agreement  or to  preserve  and  protect  the rights of each party
hereunder.

                                     Page 68
<PAGE>
     Please  indicate  your  agreement to the terms of this letter  agreement by
signing  in the  space  provided  below.  This  letter  agreement'  will  become
effective  immediately  upon execution of a counterpart of this letter agreement
by all parties hereto.

                      Very truly yours,

                      [ORIGINATOR]


             By
                ---------------------------------------
             Title
                  -------------------------------------

             DONNELLY RECEIVABLES CORPORATION


             By
                ----------------------------------------
             Title
                   -------------------------------------



  Acknowledged and agreed to
  this ____ day of _______, 1996

  [COLLECTION BANK]

  By:

  Title:



  Acknowledged and agreed to
  this ____ day of _______, 1996

  THE FIRST NATIONAL BANK OF
  CHICAGO (as Administrative Agent)

  By
     --------------------------------

  Title
        -----------------------------



                                     Page 69
<PAGE>
                                     ANNEX A
                            FORM OF COLLECTION NOTICE

                             [On letterhead of FNBC]


                           _____________________, 19__



  [Collection Bank/Depositary Bank/Concentration Bank]


       Re:  Donnelly Receivables Corporation


  Ladies and Gentlemen:

     We hereby  notify you that we are  exercising  our rights  pursuant to that
certain letter agreement among [Originator],  Donnelly Receivables  Corporation,
you and us, to have the name of, and to have exclusive ownership and control of,
account  number  ____________  (the  "Lock-Box  Account")  maintained  with you,
transferred to us. [Lock-Box Account will henceforth be a zero-balance  account,
and funds  deposited in the Lock-Box  Account  should be sent at the end of each
day to  _______________.]  You have further agreed to perform all other services
you are performing under that certain agreement dated  ____________  between you
and [Originator] on our behalf.

     We appreciate your cooperation in this matter.


                      Very truly yours,

             THE FIRST NATIONAL BANK OF CHICAGO (as Administrative Agent)


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

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

                                     Page 70
<PAGE>
                                   EXHIBIT V-B

                      FORM OF COLLECTION ACCOUNT AGREEMENT
                   FOR COLLECTION ACCOUNTS LOCATED IN GERMANY


                [LETTERHEAD OF DONNELLY RECEIVABLES CORPORATION]


[Date]


[Name and Address of Bank]



Dear Sirs,

                           Account No. [____________]

We refer to Account No.  1007173  (the  "Account")  opened with your bank in the
name of Donnelly  Receivables  Corporation  ("DRC"), on trust for the benefit of
The First National Bank of Chicago (in its capacity as  administrative  agent of
Falcon Asset Securitization  Corporation ("Falcon"), the "Administrative Agent")
acting on behalf of Falcon and certain other persons. We hereby notify you that,
in connection with certain  transactions  involving certain of the trade account
receivables (the  "Receivables")  of Donnelly Hohe GmbH & Co. KG ("Hohe"),  Hohe
has  sold  and  assigned  to  its  parent  company,  Donnelly  Corporation,  the
Receivables,  together  with all payments of all amounts due with respect to the
Receivables.  Donnelly  Corporation has resold and reassigned or will resell and
reassign  the  Receivables,  together  with all payments of all amounts due with
respect  thereto,  to its  wholly-owned  subsidiary,  DRC. DRC will in turn sell
interests in the Receivables to Falcon and certain other persons.

The  obligors  of  the  Receivables  have  been  notified  of  the  sale  of the
Receivables to Donnelly Corporation and to DRC.  Nevertheless,  the obligors may
make payments in respect of the  Receivables in the name of Hohe,  although such
payments will be made to the Account.

In connection with the foregoing, we hereby instruct you, as of the date of this
Agreement:  (i) to collect the monies,  checks,  instruments  and other items of
payment mailed to or otherwise paid to the Account including,  for the avoidance
of doubt, any monies,  checks,  instruments and other items of payment with Hohe
as the named payee;  and (ii) endorse all checks and other evidences of payment,
deposit  into or  otherwise  credit  to the  Account  all such  monies,  checks,
instruments  and other items of payment  including,  for the avoidance of doubt,
any monies,  checks,  instruments  and other  items of payment  with Hohe as the
named payee.  In respect of any monies,  checks,  instruments and other items of
payment with Hohe as the named payee, Hohe, by its signature below,

                                     Page 71
<PAGE>
acknowledges  and  consents  to your  acting in  accordance  with the  foregoing
instructions in the name of Hohe and on its behalf, and undertakes to ratify and
confirm  any  actions  taken by you in the name of Hohe in  accordance  with the
foregoing instructions.

In addition,  we hereby request that the following  terms and  conditions  shall
apply with respect to the Account:

  1. The  Administrative  Agent shall be granted a  revocable  power of attorney
     (widerrufliche Kontovollmacht),  pursuant to which the Administrative Agent
     shall be entitled to operate the Account and withdraw any and all monies on
     deposit in the Account from time to time pursuant to your normal withdrawal
     procedures  and the mandate  signed by us in relation to the  Account.  The
     Administrative  Agent may  operate  the  Account  as our agent  only on the
     signatures of certain duly authorized officers of the Administrative Agent.
     As at the date of this letter, those duly authorized officers are: [ ]. The
     signature of any one of the aforesaid  persons is required to authorize any
     transaction  related to the Account.  The specimen signature of each of the
     aforesaid authorized  signatories is set out in Annex A to this letter. Any
     change in the list of authorized  signatories of the  Administrative  Agent
     will not be binding on you until  notified to you in writing,  signed by an
     existing authorized signatory of the Administrative Agent.

  2. Hohe,  shall,  until you have received the  Notification (as defined below)
     from the  Administrative  Agent,  be granted a revocable  power of attorney
     (widerrufliche Kontovollmacht) (the "Hohe Power of Attorney"),  pursuant to
     which Hohe shall be entitled to operate  the Account and  withdraw  any and
     all monies on deposit in the  Account  from time to time  pursuant  to your
     normal  withdrawal  procedures  and the mandate signed by us in relation to
     the  Account.  Hohe  may  operate  the  Account  as our  agent  only on the
     signatures of certain duly  authorized  officers of Hohe. As at the date of
     this letter,  those duly  authorized  officers are: [ ]. [The signatures of
     any  [two]  of  the  aforesaid   persons  are  required  to  authorize  any
     transaction  related to the Account.]/1/ The specimen  signature of each of
     the aforesaid authorized  signatories is set out in Annex A to this letter.
     Any  change  in the  list of  authorized  signatories  of Hohe  will not be
     binding on you until  notified to you in  writing,  signed by an officer of
     each of DRC, the Administrative Agent and Hohe.

  3. If at any time the Administrative Agent delivers to you a written notice in
     the form of Annex B to this letter (which may be in the form of a facsimile
     and which shall be signed by an officer or  director of the  Administrative
     Agent)  (the  "Notification"),  then  the  Hohe  Power  of  Attorney  shall
     terminate  and  (i) you  shall  no  longer  permit  Hohe or any  authorized
     signatory  on the  Account  who is an officer  of Hohe to make any  further
     withdrawals  of monies from the Account or otherwise  deal with the Account
     or authorize any transactions relating to the Account, (ii) the name of the
     Account will be changed to the name of the

  ------------
  /1/  Complete information in square brackets as appropriate

                                     Page 72
<PAGE>
Administrative  Agent and the Administrative Agent will have exclusive ownership
and access to the Account,  including the rights to make withdrawals  therefrom,
(iii) you will  transfer  monies on  deposit  in the  Account,  at any time,  as
directed by the  Administrative  Agent and (iv) copies of all  correspondence or
other  mail  which  you  have  agreed  to  send  us  will  also  be  sent to the
Administrative Agent at the following address:

             The First National Bank of Chicago Suite 0956, 1-21
             One First National Plaza
             Chicago, Illinois 60670
             USA

             Fax: 1 312-732-4487

  4. We  hereby  agree  that  you  shall  in no  event  be held  liable  for any
     transactions  relating to the Account that were authorized by an authorized
     signatory of Hohe prior to your receipt of the Notification.

  5. Hohe has no authority to withdraw  more monies from the Account than are on
     deposit  therein  at  such  time,  and  you  are  expressly   requested  to
     countermand any withdrawals that would so overdraw the Account.

  6. You  hereby  represent  and  warrant  to us  that,  as of the  date of your
     signature  below,  you are not  aware  of any  liens,  security  interests,
     charges,  encumbrances or other rights or claims of any persons or entities
     to the  Account  other than  ourselves,  the  Administrative  Agent and the
     rights of Hohe created  pursuant to this letter.  You hereby agree that you
     will  notify us  immediately  upon your  becoming  aware of any such liens,
     security interests,  charges, encumbrances or other rights or claims of any
     third persons or entities arising on or with respect to the Account.

  7. You hereby  agree that you will not  exercise,  and you hereby  waive,  any
     right  of  combination,  consolidation,  merger,  set-off,  lien,  security
     interest, charge or encumbrance whatsoever which you may have in respect of
     any monies  standing or accruing to the credit of the Account.  You further
     acknowledge  and agree that the terms and  conditions  of this letter shall
     prevail in the event of any conflict  between such terms and conditions and
     your standard terms and conditions applicable to the opening, operating and
     holding of the Account (including any standard account mandate).

Please  acknowledge  your  consent  and  agreement  to the terms and  conditions
setforth in this letter by signing  where  indicated  below and returning one of
the  signed  originals  of this  letter to DRC at [ ] and to the  Administrative
Agent at [ ].


Yours faithfully,

                                     Page 73
<PAGE>
  DONNELLY RECEIVABLES CORPORATION

  By: ______________________

  Title: ___________________


                                          ACKNOWLEDGED AND AGREED:
     
                                          [Relevant Bank]

                                          By:_____________________________


                                          Title:____________________________


                                          Date:____________________________


                       THE FIRST NATIONAL BANK
                       OF CHICAGO, as Administrative Agent

                       By:_____________________________


                                          Title:____________________________


                                          Date:____________________________

                                          DONNELLY HOHE GmbH & CO. KG

                                          By:_____________________________


                                          Title:____________________________


                                          Date:____________________________

                                     Page 74
<PAGE>
                                         DONNELLY CORPORATION

                                         By:_____________________________


                                         Title:____________________________


                                         Date:____________________________



                                         FALCON ASSET SECURITIZATION CORPORATION

                                         By:_____________________________


                                         Title:____________________________


                                         Date:____________________________

                                     Page 75
<PAGE>
                         ANNEX A AUTHORIZED SIGNATORIES



  HOHE

  Name                                     Specimen Signature


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------



  ADMINISTRATIVE AGENT

  Name                                     Specimen Signature


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------


  [                   ]                    ------------------------------


                                     Page 76
<PAGE>
                                     ANNEX B
                              FORM OF NOTIFICATION


                             [On letterhead of FNBC]


                           _____________________, 19__


[Collection Bank]


     Re: Donnelly Receivables Corporation

Ladies and Gentlemen:

     We hereby  notify you that we are  exercising  our rights  pursuant to that
certain letter agreement among Donnelly Receivables Corporation,  you and us, to
instruct  you that (i) you shall no longer  permit  Donnelly  Hohe GmbH & Co. KG
("Hohe")  or any  authorized  signatory  on  account  number  ____________  (the
"Account")  who is an officer of Hohe to make any further  withdrawals of monies
from  the  Account  or  otherwise   deal  with  the  Account  or  authorize  any
transactions  relating to the Account and (ii) we are  exercising  our rights to
have the name of, and to have  exclusive  ownership  and control of, the Account
transferred to us. The Account will  henceforth be a zero-balance  account,  and
funds  deposited  in the  Account  should  be sent  at the  end of  each  day to
_______________.

     We appreciate your cooperation in this matter.


                                Very truly yours,


                       THE FIRST NATIONAL BANK OF CHICAGO
                       (as Administrative Agent)

                       By:___________________________________

                       Title:__________________


                                     Page 77
<PAGE>
                                   EXHIBIT VI

                          CREDIT AND COLLECTION POLICY

                                   (Attached)







                                     Page 78
<PAGE>
                                   EXHIBIT VII

                               FORM OF CONTRACT(S)

                                   (Attached)







                                     Page 79
<PAGE>
                                  EXHIBIT VIII

                            FORM OF SETTLEMENT REPORT

                                   (Attached)






                                     Page 80
<PAGE>
                                   EXHIBIT IX

                             FORM OF PURCHASE NOTICE

                            [On Letterhead of Seller]


                                      [Date]


The First National Bank of Chicago,
    as Administrative Agent for the Purchasers parties
    to the Receivables Purchase Agreement
    referred to below
Suite 0596, 1-21
One First National Plaza Chicago, Illinois 60670

Attention: Asset-Backed Markets


Gentlemen:

     The  undersigned,   DONNELLY   RECEIVABLES   CORPORATION,   refers  to  the
Receivables Purchase Agreement,  dated as of November 14, 1996 (the "Receivables
Purchase  Agreement",  the terms  defined  therein  being used herein as therein
defined),  among  the  undersigned,   Falcon  Asset  Securitization  Corporation
("Falcon"),  certain  Investors  parties  thereto and The First National Bank of
Chicago, as Administrative Agent for Falcon and such Investors, and hereby gives
you notice,  irrevocably,  pursuant to Section 1.2 of the  Receivables  Purchase
Agreement that the undersigned  hereby requests a Purchase under the Receivables
Purchase  Agreement,  and in that  connection  sets forth below the  information
relating to such Purchase (the  "Proposed  Purchase") as required by Section 1.2
of the Receivables Purchase Agreement:

          (i) The Business Day of the Proposed Purchase is ___________, 19__.

(ii)      The requested  Purchase  Price in respect of the Proposed  Purchase is
          [$_____________] [DM___________].

(iii)     The  requested  Purchaser[s]  in respect of the Proposed  Purchase [is
          Falcon] [are the Investors].

(iii)     The duration of the initial  Tranche Period for the Proposed  Purchase
          is ____________ [days] [months].

                                     Page 81
<PAGE>
(iv)      The Discount Rate related to such initial  Tranche Period is requested
          to be the [CP] [LIBO] [Base] Rate.

     The undersigned hereby certifies that the following  statements are true on
the date hereof,  and will be true on the date of the Proposed  Purchase (before
and after giving effect to the Proposed Purchase):


  (A)    the  representations  and  warranties  set forth in Article  III of the
         Receivables  Purchase  Agreement are correct on and as of such date, as
         though made on and as of such date;

  (B)    no event has occurred,  or would result from the Proposed Purchase that
         will  constitute a Servicer  Default,  and no event has occurred and is
         continuing,  or would result from such  Proposed  Purchase,  that would
         constitute a Potential Servicer Default; and

  (iii)  the Liquidity  Termination Date shall not have occurred,  the Aggregate
         Capital shall not exceed the Purchase  Limit and the Aggregate  Capital
         shall not exceed the Capital Limit.

  [A Settlement Report is attached hereto and made a part hereof.]/2/




                                Very truly yours,

                                DONNELLY RECEIVABLES CORPORATION



                               By__________________________________ Title:

  ------------
  /2/  If requested by the Administrative Agent.

                                     Page 82
<PAGE>
                                    EXHIBIT X

                                 FORM OF LEGEND



The Receivable  evidenced by this  Invoice/shipping  documentation has been sold
and  assigned  to Donnelly  Corporation  and resold and  reassigned  by Donnelly
Corporation  to  Donnelly  Receivables  Corporation  and the  amount  payable in
respect  hereof should be paid in accordance  with our letter to you dated [date
of relevant Obligor Notification].

                                     Page 83
<PAGE>
                                   EXHIBIT XI

                          LIST OF ELIGIBLE DM OBLIGORS


Name of
Eligible Obligor                   Address


  Audi AG                          85045 Ingolstadt, Germany

  Bayerische Motorenwerke AG       Postfach 40 02 01
                                   80788 Munchen, Germany

  Ford Werke AG                    Henry-Ford-Strasse 1
                                   50735 Koln, Germany

  Karmann Wilhelm GmbH             Postfach 2609
                                   49016 Osnabruck, Germany

  Evobus GmbH                      Postfach 2660
                                   89016 Ulm, Germany

  Opel Adam AG                     Postfach 17 10
                                   65423 Russelsheim, Germany

  Porsche Dr. Ing. H.C.F. AG       Postfach 40 06 40
                                   70406 Stuttgart, Germany

  Rowenta Werke GmbH               Postfach 10 16 64
                                   63016 Offenbach, Germany

                                   B10-3 Erad
  Saab Automobile AB               46180 Trollhaettan, Sweden

  Saechsische Automobilbau GmbH    Postfach 200
                                   08125 Mosel, Germany
  

                                     Page 84
<PAGE>
  Volkswagenwerk AG                Postfach
                                   38436 Wolfsburg, Germany

  Volkswagenwerk Bruxelles S.A.    201, Boulevard de la Deuxieme Armee 
                                   1190 Bruxelles, Belgium

  Volvo Car Corporation            40508 Goteborg, Sweden

  Volvo Cars Europe Industry       Postfach 2 73
                                   9000 Gent, Belgium

  Alfi Zitzmann GmbH               Postfach 16 16
                                   97866 Wertheim, Germany

                                     Page 85
<PAGE>
                                   EXHIBIT XII

                          FORM OF OBLIGOR NOTIFICATION

                                   (Attached)








                                     Page 86
<PAGE>
                                   SCHEDULE A

DOCUMENTS TO BE DELIVERED TO THE ADMINISTRATIVE AGENT ON OR PRIOR TO THE INITIAL
PURCHASE

                                   (Attached)






                                     Page 87
<PAGE>
                         RECEIVABLES PURCHASE AGREEMENT

                          Dated as of November 14, 1996

                                      Among

                   DONNELLY RECEIVABLES CORPORATION as Seller

                                       and

                     FALCON ASSET SECURITIZATION CORPORATION

                                       and

              THE FINANCIAL INSTITUTIONS PARTY HERETO, as Investors

                                       and

           THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent
<PAGE>
                                TABLE OF CONTENTS
                                -----------------

CAPTION
                                                                     PAGE
                                                                     ----


 ARTICLE I
      AMOUNTS AND TERMS OF THE PURCHASES.................  Page 1 Section 1.1.
      Purchase Facility..................................  Page 2 Section 1.2.
      Making Purchases...................................  Page 2 Section 1.3.
      Selection of Tranche Periods and Discount Rates....  Page 2 Section 1.4.
      Percentage Evidenced by Receivable Interests.......  Page 4 Section 1.5.
      Dividing or Combining Receivable Interests.........  Page 4 Section 1.6.
      Reinvestment Purchases.............................  Page 4 Section 1.7.
      Liquidation Settlement Procedures..................  Page 5 Section 1.8.
      Deemed Collections.................................  Page 6 Section 1.9.
      Discount; Payments and Computations, Etc...........  Page 6 Section 1.10.
      Capital Limit......................................  Page 7 Section 1.11.
      Seller's Extinguishment............................  Page 7 Section 1.12.
      Extensions of the Liquidity Termination Date.......  Page 7

 ARTICLE II
      LIQUIDITY FACILITY.................................  Page 8 Section 2.1.
      Transfer to Investors..............................  Page 8 Section 2.2.
      Transfer Price Reduction Discount..................  Page 8 Section 2.3.
      Payments to Falcon.................................  Page 8 Section 2.4.
      Limitation on Commitment to Purchase from Falcon...  Page 8 Section 2.5.
      Defaulting Investors...............................  Page 9 Section 2.6.
      Hedging Arrangements...............................  Page 9

  ARTICLE III
      REPRESENTATIONS AND WARRANTIES.....................  Page 9 Section 3.1.
      Seller Representations and Warranties..............  Page 9 Section 3.2.
      Investor Representations and Warranties............  Page 13

  ARTICLE IV
      CONDITIONS OF PURCHASES............................. Page 14 Section 4.1.
      Conditions Precedent to Initial Purchase............ Page 14 Section 4.2.
      Conditions Precedent to All Purchases 
               and Reinvestments.......................... Page 14

  ARTICLE V
      COVENANTS........................................... Page 15 Section 5.1.
      Affirmative Covenants of Seller..................... Page 15 Section 5.2.
      Negative Covenants of Seller........................ Page 21

  ARTICLE VI
      ADMINISTRATION AND COLLECTION....................... Page 23 Section 6.1.



                                       -i-
<PAGE>
      Designation of Servicer............................ Page 23 Section 6.2.
      Duties of Servicer................................. Page 24 Section 6.3.
      Collection Notices................................. Page 25 Section 6.4.
      Responsibilities of the Seller..................... Page 25 Section 6.5.
      Reports............................................ Page 25

  ARTICLE VII
      SERVICER DEFAULTS.................................. Page 26

  ARTICLE VIII
      INDEMNIFICATION.................................... Page 27 Section 8.1.
      Indemnities by the Seller.......................... Page 27 Section 8.2.
      Increased Cost and Reduced Return.................. Page 30 Section 8.3.
      Other Costs and Expenses........................... Page 30 Section 8.4.
      Allocations........................................ Page 31

  ARTICLE IX
      THE ADMINISTRATIVE AGENT........................... Page 31 Section 9.1.
      Authorization and Action........................... Page 31 Section 9.2.
      Delegation of Duties............................... Page 32 Section 9.3.
      Exculpatory Provisions............................. Page 32 Section 9.4.
      Reliance by Administrative Agent................... Page 32 Section 9.5.
      Non-Reliance on Administrative Agent and
                Other Purchasers......................... Page 33 Section 9.6.
  Reimbursement and Indemnification...................... Page 33 Section 9.7.
  Administrative Agent in its Individual Capacity........ Page 33 Section 9.8.
  Successor Administrative Agent......................... Page 34

  ARTICLE X
      ASSIGNMENTS; PARTICIPATIONS........................ Page 34 Section 10.1.
      Assignments........................................ Page 34 Section 10.2.
      Participations..................................... Page 35

  ARTICLE XI
      MISCELLANEOUS...................................... Page 35 Section 11.1.
      Waivers and Amendments............................. Page 35 Section 11.2
      Notices............................................ Page 36 Section 11.3.
      Ratable Payments................................... Page 37 Section 11.4.
      Protection of Ownership Interests of the
                 Purchasers.............................. Page 37 Section 11.5.
 Confidentiality......................................... Page 38 Section 11.6.
 Bankruptcy Petition..................................... Page 38 Section 11.7.
 Limitation of Liability................................. Page 39 SECTION 11.8.
 CHOICE OF LAW........................................... Page 39 SECTION 11.9.
 CONSENT TO JURISDICTION................................. Page 39 SECTION 11.10.
 WAIVER OF JURY TRIAL.................................... Page 39 Section 11.11.



                                       -ii
<PAGE>
Integration; Survival of Terms........................... Page 40 Section 11.12.
Counterparts; Severability............................... Page 40 Section 11.13.
First Chicago Roles...................................... Page 40 Section 11.14.
Characterization......................................... Page 40






                                      -iii
<PAGE>
                             EXHIBITS AND SCHEDULES

  EXHIBIT I      DEFINITIONS

  EXHIBIT II     PRINCIPAL PLACE OF BUSINESS OF THE SELLER; LOCATION(S) OF
                 RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS; NAMES

  EXHIBIT III    LOCK-BOXES; CONCENTRATION ACCOUNTS; DEPOSITARY ACCOUNTS

  EXHIBIT IV     FORM OF COMPLIANCE CERTIFICATE

  EXHIBIT V      FORM OF COLLECTION ACCOUNT AGREEMENT

  EXHIBIT VI     CREDIT AND COLLECTION POLICY

  EXHIBIT VII    FORM OF CONTRACT(S)

  EXHIBIT VIII   FORM OF SETTLEMENT REPORT

  EXHIBIT IX     FORM OF PURCHASE NOTICE

  EXHIBIT X      FORM OF LEGEND

  EXHIBIT XI     ELIGIBLE DM OBLIGORS

  EXHIBIT XII    FORM OF OBLIGOR NOTIFICATION


  SCHEDULE A     LIST OF DOCUMENTS TO BE DELIVERED TO THE ADMINISTRATIVE AGENT
                 PRIOR TO THE INITIAL PURCHASE



                                      -iv-

<PAGE>
                                                                      EXHIBIT 24



Consent of Independent Certified Public Accountants


Donnelly Corporation
Holland, Michigan

We hereby consent to the  incorporation by reference of our reports dated August
2, 1996, relating to the combined consolidated financial statements and schedule
of Donnelly corporation  appearing in the corporation's amended annual report on
Form 10-K for the year ended June 29,  1996,  in that  corporation's  previously
filed Form S-8 Registration  Statements for that corporation's 1987 Stock Option
Plan   (Registration  No.   33-26555),   1987  Employees'  Stock  Purchase  Plan
(Registration  No.  33-34746)  and  Non-Employee  Directors'  Stock  Option Plan
(Registration No. 33-55499).


/s/ BDO Seidman, LLP
Grand Rapids, Michigan
September 19, 1997