Document:

<PAGE>

                                                                     EXHIBIT 4.2

================================================================================

                                DEERE & COMPANY

                        JOHN DEERE CAPITAL CORPORATION

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

                                $2,075,000,000

                                    364-DAY
                               CREDIT AGREEMENT

                         Dated as of February 20, 2001

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

                           THE CHASE MANHATTAN BANK,
                as Administrative Agent and as a Managing Agent

                            BANK OF AMERICA, N.A.,
               as a Documentation Agent and as a Managing Agent

                                 BANK ONE, NA,
               as a Documentation Agent and as a Managing Agent

                       DEUTSCHE BANK AG NEW YORK BRANCH,
                 as Syndication Agent and as a Managing Agent

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

                                  JP MORGAN,
                     a division of CHASE SECURITIES INC.,
                        as Lead Arranger and Bookrunner

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
<S>                                                                                              <C>
SECTION 1   DEFINITIONS.........................................................................   1

     1.1.   Defined Terms.......................................................................   1
     1.2.   Other Definitional Provisions.......................................................  12

SECTION 2   THE COMMITTED RATE LOANS; THE BID LOANS; THE NEGOTIATED RATE LOANS;
     AMOUNT AND TERMS...........................................................................  12

     2.1.   Committed Rate Loans................................................................  12
     2.2.   The Bid Loans; the Negotiated Rate Loans............................................  13
     2.3.   Loan Accounts.......................................................................  17
     2.4.   Fees................................................................................  17
     2.5.   Termination or Reduction of Commitments; Cancellation of Capital
            Corporation as Borrower.............................................................  18
     2.6.   Optional Prepayments................................................................  19
     2.7.   Minimum Amount of Certain Loans.....................................................  19
     2.8.   Committed Rate Loan Interest Rate and Payment Dates.................................  19
     2.9.   Conversion and Continuation Options.................................................  20
     2.10.  Computation of Interest and Fees....................................................  20
     2.11.  Inability to Determine Interest Rate................................................  21
     2.12.  Pro Rata Treatment and Payments.....................................................  22
     2.13.  Requirements of Law.................................................................  24
     2.14.  Indemnity...........................................................................  27
     2.15.  Non-Receipt of Funds by the Administrative Agent....................................  27
     2.16.  Extension of Termination Date.......................................................  28
     2.17.  Foreign Taxes.......................................................................  28
     2.18.  Confirmations.......................................................................  30
     2.19.  Replacement of Cancelled Banks......................................................  30
     2.20.  Commitment Increases................................................................  31

SECTION 3   REPRESENTATIONS AND WARRANTIES......................................................  33

     3.1.   Financial Condition.................................................................  33
     3.2.   Corporate Existence.................................................................  33
     3.3.   Corporate Power; Authorization; Enforceable Obligations.............................  33
     3.4.   No Legal Bar........................................................................  33
     3.5.   No Material Litigation..............................................................  34
     3.6.   Taxes...............................................................................  34
     3.7.   Margin Regulations..................................................................  34
     3.8.   Pari Passu Ranking..................................................................  34
     3.9.   No Defaults.........................................................................  34
     3.10.  Use of Proceeds.....................................................................  34
</TABLE>

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<TABLE>
<S>                                                                                              <C>
SECTION 4   CONDITIONS PRECEDENT................................................................  35

     4.1.   Conditions to Initial Loan..........................................................  35
     4.2.   Conditions to All Loans.............................................................  36

SECTION 5   AFFIRMATIVE COVENANTS...............................................................  36

     5.1.   Financial Statements................................................................  36
     5.2.   Certificates; Other Information.....................................................  37
     5.3.   Company Indenture Documents.........................................................  37
     5.4.   Capital Corporation Indenture Documents.............................................  37
     5.5.   Notice of Default...................................................................  38
     5.6.   Ownership of Capital Corporation Stock..............................................  38
     5.7.   Employee Benefit Plans..............................................................  38

SECTION 6   NEGATIVE COVENANTS OF THE COMPANY...................................................  38

     6.1.   Company May Consolidate, etc., Only on Certain Terms................................  38
     6.2.   Limitation on Liens.................................................................  39
     6.3.   Limitations on Sale and Lease-back Transactions.....................................  42
     6.4.   Consolidated Tangible Net Worth.....................................................  42

SECTION 7   NEGATIVE COVENANTS OF THE CAPITAL CORPORATION.......................................  43

     7.1.   Fixed Charges Ratio.................................................................  43
     7.2.   Consolidated Senior Debt to Consolidated Capital Base...............................  43
     7.3.   Limitation on Liens.................................................................  43
     7.4.   Consolidation; Merger...............................................................  44

SECTION 8   EVENTS OF DEFAULT...................................................................  45

SECTION 9   THE AGENTS..........................................................................  47

     9.1.   Appointment
     47
     9.2.   Delegation of Duties................................................................  47
     9.3.   Exculpatory Provisions..............................................................  47
     9.4.   Reliance by Agents..................................................................  48
     9.5.   Notice of Default...................................................................  48
     9.6.   Non-Reliance on Agents and Other Banks..............................................  48
     9.7.   Indemnification.....................................................................  49
     9.8.   Agents in their Individual Capacities...............................................  49
     9.9.   Successor Agents....................................................................  49

SECTION 10  MISCELLANEOUS.......................................................................  49

     10.1.  Amendments and Waivers..............................................................  49
     10.2.  Notices.............................................................................  50
     10.3.  No Waiver; Cumulative Remedies......................................................  51
</TABLE>

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<TABLE>
<S>                                                                                              <C>
     10.4.  Payment of Expenses and Taxes.......................................................  51
     10.5.  Successors and Assigns; Participations; Purchasing Banks............................  53
     10.6.  Adjustments.........................................................................  57
     10.7.  Confidentiality.....................................................................  58
     10.8.  Counterparts........................................................................  58
     10.9.  GOVERNING LAW.......................................................................  58
     10.10. Consent to Jurisdiction and Service of Process......................................  59
</TABLE>

                                      iii
<PAGE>

         SCHEDULES:

         Schedule I        Terms of Subordination
         Schedule II       Commitments
         Schedule III      Addresses for Notices

         EXHIBITS:

         Exhibit A         Form of Borrowing Notice
         Exhibit B         Form of Bid Loan Request
         Exhibit C         Form of Bid Loan Offer
         Exhibit D         Form of Bid Loan Confirmation
         Exhibit E         Form of Loan Assignment
         Exhibit F         Form of Commitment Transfer Supplement
         Exhibit G         Form of Opinion of General Counsel to the Company
         Exhibit H         Form of Opinion of Special New York Counsel to the
                           Borrowers
         Exhibit I         Form of Extension Request
         Exhibit J         Form of Form 1001 Tax Letter
         Exhibit K         Form of Form 4224 Tax Letter
         Exhibit L         Form of Agreement
         Exhibit M         Form of Promissory Note
         Exhibit N         Form of New Bank Supplement
         Exhibit O         Form of Commitment Increase Supplement

                                       iv
<PAGE>

                  CREDIT AGREEMENT, dated as of February 20, 2001, among (a)
DEERE & COMPANY, a Delaware corporation (the "Company"), (b) JOHN DEERE CAPITAL
                                              -------
CORPORATION, a Delaware corporation (the "Capital Corporation"), (c) the several
                                          -------------------
financial institutions parties hereto (collectively, the "Banks", and
                                                          -----
individually, a "Bank"), (d) THE CHASE MANHATTAN BANK, as administrative agent
                 ----
hereunder (in such capacity, the "Administrative Agent"), (e) BANK OF AMERICA,
                                  --------------------
N.A. and BANK ONE, NA, as documentation agents hereunder (in such capacity, the
"Documentation Agents"), (f) DEUTSCHE BANK AG NEW YORK BRANCH, as syndication
 --------------------
agent hereunder (in such capacity, the "Syndication Agent"), (g) the managing
                                        -----------------
agents identified on the signature pages hereof (collectively, the "Managing
                                                                    --------
Agents") and (h) the co-agents identified on the signature pages hereof
------
(collectively, the "Co-Agents").
                    ---------

                  The parties hereto hereby agree as follows:

                  SECTION 1         DEFINITIONS
                                    -----------

                  1.1. Defined Terms. As used in this Agreement, the following
                       -------------
         terms have the following meanings:|

                  "ABR": at any particular date, the higher of (a) the rate of
                   ---
         interest per annum publicly announced by Chase for such date as its
         prime rate in effect at its principal office in New York City and (b)
         0.5% per annum above the rate set forth for such date or, if such date
         is not a Business Day, the next preceding Business Day, opposite the
         caption "Federal Funds (Effective)" in the weekly statistical release
         designated as "H.15(519)" (or any successor publication) published by
         the Board of Governors of the Federal Reserve System or, if such rate
         is not so published for such date, the average of the quotations for
         such day on such transactions received by the Administrative Agent from
         three Federal Funds dealers of recognized standing selected by it. The
         prime rate is not intended to be the lowest rate of interest charged by
         Chase in connection with extensions of credit to debtors.

                  "ABR Loans": Committed Rate Loans at such time as they are
                   ---------
         made and/or being maintained at a rate of interest based upon the ABR.

                  "Absolute Rate Bid Loan":  any Bid Loan made pursuant to an
                   ----------------------
         Absolute Rate Bid Loan Request.

                  "Absolute Rate Bid Loan Request": any Bid Loan Request
                   ------------------------------
         requesting the Banks to offer to make Bid Loans at an absolute rate (as
         opposed to a rate composed of the Applicable Index Rate plus (or minus)
                                                                 ----     -----
         a margin).

                  "Administrative Agent":  as defined in the preamble hereto.
                   --------------------

                  "Agent":  the Administrative Agent, the Syndication Agent or
                   -----
         any Documentation Agent, as the context shall require; together, the
         "Agents".
          ------
<PAGE>

                  "Agreement":  this Credit Agreement, as amended, supplemented
                   ---------
         or modified from time to time.

                  "Applicable Index Rate":  in respect of any Bid Loan requested
                   ---------------------
         pursuant to an Index Rate Bid Loan Request, the Eurodollar Rate
         applicable to the Interest Period for such Bid Loan.

                  "Applicable Margin":  for each Type of Committed Rate Loan the
                   -----------------
         rate per annum set forth below:

                                   ABR                     Eurodollar
                                  Loans                      Loans
                            ---------------------      ------------------

                                    0%                       0.195%

                  "Attributable Debt":  as defined in subsection 6.2(b)(ii).
                   -----------------

                  "Bank" and "Banks":  as defined in the preamble hereto.
                   ----       -----

                  "benefitted Bank":  as defined in subsection 10.6.
                   ---------------

                  "Bid Loan": each loan (other than Negotiated Rate Loans) made
                   --------
         pursuant to subsection 2.2; the aggregate amount advanced by a Bid Loan
         Bank pursuant to subsection 2.2 on each Borrowing Date shall constitute
         one Bid Loan, or more than one Bid Loan if so specified by the relevant
         Loan Assignee in its request for promissory notes pursuant to
         subsection 10.5(c).

                  "Bid Loan Banks": the collective reference to each Bank
                   --------------
         designated from time to time as a Bid Loan Bank by a Borrower (for
         purposes of Bid Loans to such Borrower) by written notice to the
         Administrative Agent and which has not been removed as a Bid Loan Bank
         by such Borrower by written notice to the Administrative Agent (each of
         which notices the Administrative Agent shall transmit to each such
         affected Bank).

                  "Bid Loan Confirmation": each confirmation by the Company or
                   ---------------------
         the Capital Corporation of its acceptance of Bid Loan Offers, which Bid
         Loan Confirmation shall be substantially in the form of Exhibit D and
         shall be delivered to the Administrative Agent by facsimile
         transmission or by telephone, immediately confirmed by facsimile
         transmission.

                  "Bid Loan Offer": each offer by a Bid Loan Bank to make Bid
                   --------------
         Loans pursuant to a Bid Loan Request, which Bid Loan Offer shall
         contain the information specified in Exhibit C and shall be delivered
         to the Administrative Agent by facsimile transmission or by telephone,
         immediately confirmed by facsimile transmission.

                  "Bid Loan Request": each request by a Borrower for Bid Loan
                   ----------------
         Banks to submit bids to make Bid Loans, which shall contain the
         information in respect of such requested Bid Loans specified in Exhibit
         B and shall be delivered to the Administrative Agent by facsimile
         transmission or by telephone, immediately confirmed by facsimile
         transmission.

                                       2
<PAGE>

                  "Borrower":  the Company or the Capital Corporation;
                   --------
          collectively, the "Borrowers".
                             ---------

                  "Borrowing Date":  in respect of any Loan, the date such Loan
                   --------------
         is made.

                  "Business Day":  a day other than a Saturday, Sunday or other
                   ------------
         day on which commercial banks in New York City are authorized or
         required by law to close.

                  "Cancelled Bank":  any Bank that has the whole or any part of
                   --------------
         its Commitment cancelled under subsection 2.13(a), (b) or (c),
         subsection 2.16(c) or subsection 2.17(b) or the Commitment of which has
         expired under subsection 2.16(a).

                  "Capital Corporation":  as defined in the preamble hereto.
                   -------------------

                  "Chase":  The Chase Manhattan Bank, a New York banking
                   -----
         corporation.

                  "Closing Date":  the date on which each of the conditions
                   ------------
         precedent specified in subsection 4.1 shall have been satisfied (or
         compliance therewith shall have been waived by the Majority Banks
         hereunder).

                  "Co-Agents":  as defined in the preamble hereto.
                   ---------

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

                  "Commitment":  as to any Bank, the amount set opposite such
                   ----------
         Bank's name on Schedule II, as such amount may be modified as provided
         herein; collectively, as to all the Banks, the "Commitments".
                                                         -----------

                  "Commitment Expiration Date":  as defined in subsection
                   --------------------------
         2.16(a).

                  "Commitment Increase Notice":  as defined in subsection
                   --------------------------
         2.20(a).

                  "Commitment Increase Supplement":  as defined in subsection
                   ------------------------------
         2.20(c).

                  "Commitment Percentage":  as to any Bank at any time, the
                   ---------------------
         percentage which such Bank's Commitment at such time constitutes of all
         the Commitments at such time; collectively, as to all the Banks, the
         "Commitment Percentages".
          ----------------------

                  "Commitment Period":  the period from and including the
                   -----------------
         Closing Date to but not including the Termination Date or such earlier
         date on which the Commitments shall terminate as provided herein.

                  "Commitment Transfer Supplement":  a Commitment Transfer
                   ------------------------------
         Supplement, substantially in the form of Exhibit F.

                  "Committed Rate Loans":  each loan made pursuant to subsection
                   --------------------
         2.1.

                                       3
<PAGE>

                  "Commonly Controlled Entity":  in relation to a Borrower, an
                   --------------------------
         entity, whether or not incorporated, which is under common control with
         such Borrower within the meaning of Section 414(b) or (c) of the Code.

                  "Company":  as defined in the preamble hereto.
                   -------

                  "Consolidated Capital Base": at a particular time for the
                   -------------------------
         Capital Corporation and its consolidated Subsidiaries, the sum of (a)
         the amount shown opposite the item "Total stockholder's equity" on the
         consolidated balance sheet of the Capital Corporation and its
         consolidated Subsidiaries plus (b) the principal amounts outstanding
                                   ----
         under the 8-5/8% Subordinated Debentures due 2019 of the Capital
         Corporation (so long as the subordination terms thereof continue to be
         as favorable to the Administrative Agent and the Banks as in existence
         on the Closing Date) and all indebtedness of the Capital Corporation
         and its consolidated Subsidiaries for borrowed money subordinated (on
         terms no less favorable to the Administrative Agent and the Banks than
         the terms of subordination set forth on Schedule I) to the indebtedness
         which may be incurred hereunder by the Capital Corporation, provided
                                                                     --------
         that the sum of clauses (a) and (b) hereof as at the end of a fiscal
         quarter of the Capital Corporation and its consolidated Subsidiaries
         (including the last quarter of a fiscal year of the Capital Corporation
         and its consolidated Subsidiaries) shall be determined by reference to
         the publicly available consolidated balance sheet of the Capital
         Corporation and its consolidated Subsidiaries as at the end of such
         fiscal quarter and after such adjustments, if any, as may be required
         so that the sum of the amounts referred to in clauses (a) and (b) is
         determined in accordance with GAAP.

                  "Consolidated Net Worth":  as defined in subsection
                   ----------------------
         6.2(b)(ii).

                  "Consolidated Senior Debt": at a particular time for the
                   ------------------------
         Capital Corporation and its consolidated Subsidiaries, indebtedness for
         borrowed money other than the 8-5/8% Subordinated Debentures due 2019
         of the Capital Corporation (so long as the subordination terms thereof
         continue to be as favorable to the Administrative Agent and the Banks
         as such terms in existence on the Closing Date) and any such
         indebtedness that is subordinated, on terms no less favorable to the
         Administrative Agent and the Banks than the terms of subordination set
         forth on Schedule I, to the indebtedness which may be incurred
         hereunder by the Capital Corporation, provided that the amount of such
                                               --------
         indebtedness for borrowed money (other than such subordinated
         indebtedness) as at the end of a fiscal quarter of the Capital
         Corporation and its consolidated Subsidiaries (including the last
         quarter of a fiscal year of the Capital Corporation and its
         consolidated Subsidiaries) shall be determined by reference to the
         publicly available consolidated balance sheet of the Capital
         Corporation and its consolidated Subsidiaries as at the end of such
         fiscal quarter and after such adjustments, if any, as may be required
         so that such amount is determined in accordance with GAAP.

                  "Consolidated Tangible Net Worth": at a particular time for a
                   -------------------------------
         Borrower and its consolidated Subsidiaries, the excess of the amount
         shown opposite the item "Total stockholder's equity" on the
         consolidated balance sheet of such Borrower and its consolidated
         Subsidiaries over the aggregate amount shown on such balance sheet for
         any

                                       4
<PAGE>

         intangible assets, including, without limitation, goodwill, franchises,
         licenses, patents, trademarks, trade-names, copyrights, service marks
         and brand names, provided that such excess amount shall be determined
         (a) with respect to the Company and its consolidated Subsidiaries as at
         the end of any of their fiscal quarters (including the last quarter of
         any of their fiscal years), by reference to the publicly available
         consolidated balance sheet of the Company and its consolidated
         Subsidiaries as at the end of such fiscal quarter and (b) with respect
         to the Capital Corporation and its consolidated Subsidiaries as at the
         end of any of their fiscal quarters (including the last quarter of any
         of their fiscal years), by reference to the publicly available
         consolidated balance sheet of the Capital Corporation and its
         consolidated Subsidiaries as at the end of such fiscal quarter, in each
         such case after such adjustments, if any, as may be required so that
         such excess is determined in accordance with GAAP.

                  "Contractual Obligation":  as to any Person, any provision of
                   ----------------------
         any security issued by such Person or of any agreement, instrument or
         undertaking to which such Person is a party or by which it or any of
         its property is bound.

                  "Debt":  as defined in subsection 6.2.
                   ----

                  "Default":  any of the events specified in Section 8, whether
                   -------
         or not any requirement for the giving of notice, the lapse of time, or
         both, or any other condition, event or act has been satisfied.

                  "Documentation Agents":  as defined in the preamble hereto.
                   --------------------

                  "Dollars" and "$": dollars in lawful currency of the United
                   -------       -
         States of America.

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

                  "Eurodollar Loans": Committed Rate Loans at such time as they
                   ----------------
         are made and/or being maintained at a rate of interest based upon a
         Eurodollar Rate.

                  "Eurodollar Rate": with respect to each day during each
                   ---------------
         Interest Period for a Eurodollar Loan and for each Index Rate Bid Loan,
         (a) the rate determined by the Administrative Agent to be the
         arithmetic mean of the offered rates for deposits in Dollars for a
         period of such Interest Period which appear on the Reuters Screen LIBO
         Page as of 11:00 a.m., London time, on the date that is two Working
         Days prior to the beginning of such Interest Period or (b) if fewer
         than two offered rates appear, the rate in respect of such Interest
         Period will be the rate per annum equal to the average (rounded
         upwards, if necessary, to the nearest whole multiple of one sixteenth
         of one percent) of the respective rates notified to the Administrative
         Agent by the Reference Banks as the rate at which such Reference Bank
         is offered Dollar deposits two Working Days prior to the beginning of
         such Interest Period in the interbank eurodollar market where the
         eurodollar and foreign currency and exchange operations in respect of
         its Eurodollar Loans are customarily conducted at or about 10:00 a.m.,
         New York City time, for delivery on the first day of such Interest
         Period for the number of days comprised therein

                                       5
<PAGE>

         and in an amount (i) in the case of Eurodollar Loans, comparable to the
         amount of the Eurodollar Loan of such Reference Bank to be outstanding
         during such Interest Period and (ii) in the case of an Index Rate Bid
         Loan by any Bank, equal to the principal amount of all Index Rate Bid
         Loans to which such Interest Period applies.

                  "Event of Default":  any of the events specified in Section 8,
                   ----------------
         provided that any requirement for the giving of notice, the lapse of
         --------
         time, or both, or any other condition, event or act has been satisfied.

                  "Exposure":  (a) with respect to an Objecting Bank at any
                   --------
         time, the aggregate outstanding principal amount of its Loans and (b)
         with respect to any other Bank at any time, the Commitment of such
         Bank.

                  "Extension Request": each request by the Borrowers made
                   -----------------
         pursuant to subsection 2.16 for the Banks to extend this Agreement,
         which shall contain the information in respect of such extension
         specified in Exhibit I and shall be delivered to the Administrative
         Agent in writing.

                  "Facility Fee Rate": 0.055%.
                   -----------------

                  "Fixed Charges": for any particular period for the Capital
                   -------------
         Corporation and its consolidated Subsidiaries, all of the Capital
         Corporation's and its consolidated Subsidiaries" consolidated interest
         on indebtedness for borrowed money, amortization of discounts of
         indebtedness for borrowed money, the portion of rentals under financing
         leases deemed to represent interest and rentals under operating leases,
         provided that such amounts for a fiscal quarter of the Capital
         --------
         Corporation and its consolidated Subsidiaries (including the last
         quarter of a fiscal year of the Capital Corporation and its
         consolidated Subsidiaries) shall be determined by reference to the
         publicly available consolidated statement of income of the Capital
         Corporation and its consolidated Subsidiaries for or covering such
         fiscal quarter and after such adjustments, if any, as may be required
         so that such amounts are determined in accordance with GAAP.

                  "Foreign Taxes":  as defined in subsection 2.17(a).
                   -------------

                  "GAAP":  generally accepted accounting principles in the
                   ----
         United States of America as applied in the preparation of financial
         statements of the Company or the Capital Corporation, respectively, as
         of the fiscal year ended October 31, 1998.

                  "Governmental Authority":  any nation or government, any state
                   ----------------------
         or other political subdivision thereof, and any entity exercising
         executive, legislative, judicial, regulatory or administrative
         functions of or pertaining to government.

                  "Important Property": (a) any manufacturing plant, including
                   ------------------
         land, all buildings and other improvements thereon, and all
         manufacturing machinery and equipment located therein, owned and used
         by the Company or a Restricted Subsidiary primarily for the manufacture
         of products to be sold by the Company or such Restricted Subsidiary,
         (b) the executive office and administrative building of the Company in
         Moline, Illinois, and (c) research and development facilities,
         including land and buildings and other

                                       6
<PAGE>

         improvements thereon and research and development machinery and
         equipment located therein, in each case, owned and used by the Company
         or a Restricted Subsidiary; except in any case property of which the
         aggregate fair value as determined by the Board of Directors of the
         Company does not at the time exceed 1% of Consolidated Net Worth, as
         shown on the audited consolidated balance sheet contained in the latest
         annual report to stockholders of the Company.

                  "Increasing Bank":  as defined in subsection 2.20(c).
                   ---------------

                  "Index Rate Bid Loan":  any Bid Loan made at an interest rate
                   -------------------
         based upon the Applicable Index Rate.

                  "Index Rate Bid Loan Request": any Bid Loan Request requesting
                   ---------------------------
         the Banks to offer to make Index Rate Bid Loans at an interest rate
         equal to the Applicable Index Rate plus (or minus) a margin.
                                            ----     -----

                  "Interest Payment Date": (a) as to any ABR Loan, the last
                   ---------------------
         Business Day of each March, June, September and December, commencing on
         the first of such days to occur after such ABR Loan is made or a
         Eurodollar Loan is converted to an ABR Loan and (b) as to any
         Eurodollar Loan, the last day of each Interest Period applicable
         thereto, provided that as to any Eurodollar Loan in respect of which a
                  --------
         Borrower has selected an Interest Period of six months, interest shall
         also be paid on the day which is three months after the beginning of
         such Interest Period.

                  "Interest Period": (a) with respect to any Eurodollar Loan,
                   ---------------
         the period commencing on the Borrowing Date, the date any ABR Loan is
         converted to a Eurodollar Loan or the date any Eurodollar Loan is
         continued as a Eurodollar Loan, as the case may be, with respect to
         such Eurodollar Loan and ending one, two, three or six months
         thereafter, as selected by a Borrower in its notice of borrowing,
         conversion or continuance as provided in subsection 2.1(c) or 2.9;

                  (b) with respect to any Bid Loan, the period commencing on the
         Borrowing Date with respect to such Bid Loan and ending on the date not
         less than seven days nor more than six months thereafter, as specified
         by a Borrower in its Bid Loan Request as provided in subsection 2.2(b);
         and

                  (c) with respect to any Negotiated Rate Loan, the period or
         periods commencing on the Borrowing Date with respect to such
         Negotiated Rate Loan or the last day of any Interest Period with
         respect thereto and ending on the dates as shall be mutually agreed
         upon between the relevant Borrower and the relevant Bank; provided,
                                                                   --------
         that all of the foregoing provisions relating to Interest Periods are
         subject to the following:

                  (i) if any Interest Period pertaining to a Eurodollar Loan or
              an Index Rate Bid Loan would otherwise end on a day which is not a
              Working Day, that Interest Period shall be extended to the next
              succeeding Working Day unless the result of such extension would
              be to carry such Interest Period into another calendar month in

                                       7
<PAGE>

              which event such Interest Period shall end on the immediately
              preceding Working Day;

                   (ii)  if any Interest Period pertaining to a Negotiated Rate
              Loan or an Absolute Rate Bid Loan would otherwise end on a day
              which is not a Business Day, that Interest Period shall be
              extended to the next succeeding Business Day;

                   (iii) any Interest Period pertaining to a Eurodollar Loan
              having an Interest Period of one, two, three or six months or an
              Index Rate Bid Loan having an Interest Period of one, two, three,
              four, five or six months, that begins on the last Working Day of a
              calendar month (or on a day for which there is no numerically
              corresponding day in the calendar month at the end of such
              Interest Period) shall end on the last Working Day of a calendar
              month;

                   (iv)  Interest Periods shall be deemed available only if the
              Required Banks shall not have advised the Administrative Agent
              that the Eurodollar Rate determined by the Administrative Agent on
              the basis of the applicable quotes will not adequately and fairly
              reflect the cost to such Banks of maintaining or funding their
              Committed Rate Loans bearing interest based on the Eurodollar Rate
              determined for such Interest Period. The Administrative Agent
              shall notify the Borrowers and each Bank promptly after having
              been advised by the Required Banks that a Eurodollar Rate will not
              so adequately and fairly reflect such Banks" costs as aforesaid.
              If a requested Interest Period shall be unavailable in accordance
              with the foregoing sentence, the proposed Borrower may (A) in
              accordance with the provisions (including any requirements for
              notification) of subsection 2.1 request, at its option, that the
              requested Committed Rate Loans be made or maintained as ABR Loans
              or (B) withdraw the request for such Committed Rate Loans for
              which the Interest Period was unavailable by giving notice of such
              election to the Administrative Agent in accordance with subsection
              2.11; provided, that if the Administrative Agent does not receive
                    --------
              any notice hereunder, such Borrower shall be deemed to have
              requested ABR Loans;

                   (v)   with respect to Loans made by an Objecting Bank, no
              Interest Periods with respect to such Loans shall end after the
              second anniversary of such Objecting Bank's Commitment Expiration
              Date; and

                   (vi)  no Interest Period shall end after the second
              anniversary of the Termination Date.

                "Loan Account":  as defined in subsection 2.3; collectively, the
                 ------------
         "Loan Accounts".
          -------------
                "Loan Assignees":  as defined in subsection 10.5(c).
                 --------------

                "Loan Assignment":  a Loan Assignment, substantially in the form
                 ---------------
         of Exhibit E.

                "Loans":  the collective reference to the Committed Rate Loans,
                 -----
         the Bid Loans and the Negotiated Rate Loans.

                                       8
<PAGE>

                  "Majority Banks": at any particular time, Banks having
                   --------------
         Commitment Percentages aggregating more than fifty percent; provided
                                                                     --------
         that (a) at any time after the termination of all the Commitments,
         "Majority Banks" shall mean Banks holding Loans aggregating more than
         fifty percent in principal amount of all outstanding Loans and (b) at
         any time after the Commitment Expiration Date with respect to any
         Objecting Bank (but prior to the termination of all the Commitments),
         "Majority Banks" shall mean Banks whose Exposure aggregates more than
         fifty percent of the aggregate Exposure of all the Banks.

                  "Managing Agents":  as defined in the preamble hereto.
                   ---------------

                  "Margin Stock":  as defined in Regulation U of the Board of
                   ------------
         Governors of the Federal Reserve System.

                  "Mortgage":  as defined in subsection 6.2.
                   --------

                  "Negotiated Rate Loan": each Loan made to a Borrower by a Bank
                   --------------------
         pursuant to a Negotiated Rate Loan Request in such principal amount,
         for such number of Interest Periods (subject to the proviso to the
         definition of "Interest Period" in this subsection 1.1) and having such
         interest rate(s) and repayment terms as shall, in each case, be
         mutually agreed upon between such Borrower and such Bank.

                  "Negotiated Rate Loan Request": each request by a Borrower for
                   ----------------------------
         a Bank to make Negotiated Rate Loans, which shall be delivered to such
         Bank in writing, by facsimile transmission, or by telephone,
         immediately confirmed in writing, and which shall specify the amount to
         be borrowed and the proposed Borrowing Date.

                  "Net Earnings Available for Fixed Charges": for any particular
                   ----------------------------------------
         period for the Capital Corporation and its consolidated Subsidiaries,
         consolidated net earnings of the Capital Corporation and such
         Subsidiaries for such period without deduction of Fixed Charges and
         without deduction of federal, state or other income taxes, provided
                                                                    --------
         that such net earnings for a fiscal quarter of the Capital Corporation
         and its consolidated Subsidiaries (including the last quarter of a
         fiscal year of the Capital Corporation and its consolidated
         Subsidiaries) shall be determined by reference to the publicly
         available statement of income of the Capital Corporation and its
         consolidated Subsidiaries for or covering such fiscal quarter and after
         such adjustments, if any, as may be required so that such net earnings
         are determined in accordance with GAAP, except that earned investment
         tax credits may be included as revenue in the consolidated income
         statement of the Capital Corporation and its consolidated Subsidiaries,
         rather than as an offset against the provision for income taxes.

                  "New Bank":  as defined in subsection 2.20(b).
                   --------

                  "New Bank Supplement":  as defined in subsection 2.20(b).
                   -------------------

                  "Notes":  the collective reference to any promissory note
                   -----
         evidencing Loans.

                  "Objecting Banks":  as defined in subsection 2.16(a).
                   ---------------

                                       9
<PAGE>

                  "Offered Increase Amount":  as defined in subsection 2.20(a).
                   -----------------------

                  "Participants":  as defined in subsection 10.5(b).
                   ------------

                  "Person": an individual, partnership, corporation, business
                   ------
         trust, joint stock company, trust, unincorporated association, joint
         venture, Governmental Authority or other entity of whatever nature,
         provided that for purposes of Section 8(h), Person shall also include
         --------
         two or more entities acting as a syndicate or any other group for the
         purpose of acquiring, holding or disposing of securities of the
         Company.

                  "Plan":  any pension plan which is covered by Title IV of
                   ----
         ERISA and in respect of which either Borrower or a Commonly Controlled
         Entity is an "employer" as defined in Section 3(5) of ERISA.

                  "Purchasing Banks":  as defined in subsection 10.5(d).
                   ----------------

                  "Re-Allocation Date":  as defined in subsection 2.20(e).
                   ------------------

                  "Reference Banks":  Chase, Bank of America, N.A., Bank One, NA
                   ---------------
         and Deutsche Bank AG New York Branch.

                  "Register":  as defined in subsection 10.5(e).
                   --------

                  "Report Period":  as defined in subsection 2.18.
                   -------------

                  "Reportable Event":  any of the events set forth in Section
                   ----------------
         4043(b) of ERISA or the regulations thereunder.

                  "Required Banks": at a particular time, Banks having
                   --------------
         Commitment Percentages aggregating at least 66-2/3%; provided that (a)
                                                              --------
         at any time after the termination of all the Commitments, "Required
         Banks" means Banks holding Loans aggregating at least 66-2/3% in
         principal amount of all outstanding Loans, (b) as used in subsection
         2.16, "Required Banks" means with respect to any Extension Request, at
         a particular time after the Termination Date has been extended pursuant
         to such subsection, Banks (i) which are not Objecting Banks with
         respect to any previous Extension Request and (ii) which have
         Commitment Percentages aggregating at least 66-2/3% of the aggregate
         Commitment Percentages of such non-Objecting Banks and (c) as used in
         any provision other than subsection 2.16 at any time after the
         Commitment Expiration Date with respect to any Objecting Bank (but
         prior to the termination of all the Commitments), "Required Banks"
                                                            --------------
         means Banks whose Exposure aggregates at least 66-2/3% of the aggregate
         Exposure of all the Banks.

                  "Requirement of Law": as to any Person, the Certificate of
                   ------------------
         Incorporation and By-Laws or other organizational or governing
         documents of such Person, and any law, treaty, rule or regulation, or
         determination of an arbitrator or a court or other Governmental
         Authority, in each case applicable to or binding upon such Person or
         any of its property or to which such Person or any of its property is
         subject.

                                       10
<PAGE>

                  "Reserves":  as defined in subsection 2.13(c).
                   --------

                  "Responsible Officer":  of a Borrower, the Chairman, the
                   -------------------
         President, any Executive, Senior or other Vice President, the Treasurer
         and any Assistant Treasurer of such Borrower.

                  "Restricted Margin Stock": any Margin Stock, the sale, pledge
                   -----------------------
         or other disposition of which by the Company or any of its Subsidiaries
         is in any way restricted by an arrangement with any Bank or any
         affiliate thereof to the extent that the value thereof (determined in
         accordance with Regulation U of the Board of Governors of the Federal
         Reserve System) does not exceed 25% of the value (determined in
         accordance with such Regulation U) of all the assets subject to such
         restriction.

                  "Restricted Subsidiary": any Subsidiary of the Company
                   ---------------------
         incorporated in the United States of America or Canada (a) which is
         engaged in, or whose principal assets consist of property used by the
         Company or any Restricted Subsidiary in, the manufacture of products
         within the United States of America or Canada or in the sale of
         products principally to customers located in the United States of
         America or Canada except any corporation which is a retail dealer in
         which the Company has, directly or indirectly, an investment, or (b)
         which the Company shall designate as a Restricted Subsidiary in an
         officers" certificate signed by two Responsible Officers of the Company
         and delivered to the Administrative Agent.

                  "Sale and Lease-back Transaction":  as defined in subsection
                   -------------------------------
         6.3.

                  "Significant Subsidiary": of a Borrower, any Subsidiary of
                   ----------------------
         such Borrower the assets, revenues or net worth of which is, at the
         time of determination, equal to or greater than ten percent of the
         assets, revenues or net worth, respectively, of such Borrower at such
         time.

                  "Subsidiary": of a Person, a corporation or other entity of
                   ----------
         which securities or other ownership interests having ordinary voting
         power (other than securities or other ownership interests having such
         power only by reason of the happening of a contingency) to elect a
         majority of the board of directors or other Persons performing similar
         functions are at the time directly or indirectly owned by such Person
         or one or more Subsidiaries of such Person, or by such Person and one
         or more Subsidiaries of such Person.

                  "Syndication Agent":  as defined in the preamble hereto.
                   -----------------

                  "Termination Date":  the date which is 364 days after the date
                   ----------------
         of this Agreement or such later date as shall be determined pursuant to
         the provisions of subsection 2.16 with respect to non-Objecting Banks.

                  "Transferees":  as defined in subsection 10.5(g).
                   -----------

                  "Transfer Effective Date":  as defined in each Commitment
                   -----------------------
         Transfer Supplement and each Loan Assignment.

                                       11
<PAGE>

                  "Type":  as to any Committed Rate Loan, its nature as an ABR
                   ----
         Loan or Eurodollar Loan.

                  "Working Day":  any Business Day on which dealings in foreign
                   -----------
         currencies and exchange between banks may be carried on in London,
         England and New York, New York.

                  1.2.  Other Definitional Provisions. (a) All terms defined in
                        -----------------------------
         this Agreement shall have the defined meanings when used in any
         certificate or other document made or delivered pursuant hereto.

                  (b)   As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting terms relating to either Borrower
and its Subsidiaries not defined in subsection 1.1, and accounting terms partly
defined in subsection 1.1 to the extent not defined, shall have the respective
meanings given to them under GAAP.

                  (c)   The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.

                  (d)   Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the relevant Borrower.

                  SECTION 2   THE COMMITTED RATE LOANS; THE BID
                              ---------------------------------
                              LOANS; THE NEGOTIATED RATE LOANS;
                              ---------------------------------
                              AMOUNT AND TERMS
                              ----------------

                  2.1.  The Committed Rate Loans.  (a) During the Commitment
                        ------------------------
Period, subject to the terms and conditions hereof, each Bank severally agrees
to make loans (individually, a "Committed Rate Loan") to either Borrower from
                                -------------------
time to time in an aggregate principal amount for both Borrowers at any one time
outstanding not to exceed such Bank's Commitment. During the Commitment Period,
either Borrower may use the Commitments by borrowing, repaying and reborrowing,
all in accordance with the terms and conditions hereof.

                  (b)   The Committed Rate Loans may be either (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof as determined by the
relevant Borrower.

                  (c)   Either Borrower may borrow Committed Rate Loans on any
Working Day, if the borrowing is of Eurodollar Loans, or on any Business Day, if
the borrowing is of ABR Loans; provided, however, that a Responsible Officer of
                               --------  -------
such Borrower shall give the Administrative Agent irrevocable notice thereof
(which notice must be received by the Administrative Agent (i) prior to 12:00
Noon, New York City time, three Working Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, (ii) except as provided in clause (iii)
hereof below, prior to 12:00 Noon, New York City time, one Business Day prior to
the requested Borrowing Date, in the case of ABR Loans and (iii) prior to 11:00
A.M., New York City time, on the requested Borrowing Date in the case of ABR
Loans up to an aggregate

                                       12
<PAGE>

principal amount for both Borrowers not to exceed 25% of the Commitments on such
Borrowing Date). Each such notice shall be given in writing or by facsimile
transmission substantially in the form of Exhibit A (with appropriate
insertions) or shall be given by telephone (specifying the information set forth
in Exhibit A) promptly confirmed by notice given in writing or by facsimile
transmission substantially in the form of Exhibit A (with appropriate
insertions). On the day of receipt of any such notice from either Borrower, the
Administrative Agent shall promptly notify each Bank thereof. Each Bank will
make the amount of its share of each borrowing available to the Administrative
Agent for the account of such Borrower at the office of the Administrative Agent
set forth in subsection 10.2 at 11:00 A.M. (or 2:00 P.M., in the case of ABR
Loans requested pursuant to clause (iii) above), New York City time, on the
Borrowing Date requested by such Borrower in funds immediately available to the
Administrative Agent as the Administrative Agent may direct. The proceeds of all
such Committed Rate Loans will be made available promptly to such Borrower by
the Administrative Agent at the office of the Administrative Agent specified in
subsection 10.2 by crediting the account of such Borrower on the books of such
office of the Administrative Agent with the aggregate of the amount made
available to the Administrative Agent by the Banks and in like funds as received
by the Administrative Agent.

                  (d)  All Committed Rate Loans made to each Borrower shall be
repaid in full by such Borrower on or before the second anniversary of the
Termination Date; provided, that Committed Rate Loans made by Objecting Banks
                  --------
shall be repaid as provided in subsection 2.16(b).

                  2.2. The Bid Loans; the Negotiated Rate Loans.  (a) Either
                       ----------------------------------------
Borrower may borrow Bid Loans or Negotiated Rate Loans from time to time on any
Business Day (in the case of Bid Loans made pursuant to an Absolute Rate Bid
Loan Request), any Working Day (in the case of Bid Loans made pursuant to an
Index Rate Bid Loan Request) or, in the case of Negotiated Rate Loans, on such
days as shall be mutually agreed upon between the relevant Borrower and the
applicable Bank, in each case during the Commitment Period and in the manner set
forth in this subsection 2.2 and in amounts such that the aggregate principal
amount of Loans at any time outstanding shall not exceed the aggregate amount of
the Commitments at such time. Notwithstanding any other provision of this
Agreement, the aggregate principal amount of the outstanding Bid Loans and/or
Negotiated Rate Loans made by any Bank may at any time (but shall not be
required to) exceed the Commitment of such Bank so long as the aggregate
outstanding principal amount of all Loans does not at any time exceed the
aggregate amount of the Commitments.

                  (b)  (i) Either Borrower shall request Bid Loans or Negotiated
Rate Loans by delivering (A) in the case of an Index Rate Bid Loan, a Bid Loan
Request to the Administrative Agent, c/o The Chase Manhattan Bank, One Chase
Manhattan Plaza, 8th Floor, New York, New York 10081, Attention: Chris Consomer,
Telephone: (212) 552-7259, Facsimile: (212) 552-5627, not later than 12:00 Noon
(New York City time) four Working Days prior to the proposed Borrowing Date, (B)
in the case of an Absolute Rate Bid Loan, a Bid Loan Request to the
Administrative Agent at the address set forth in clause (A) of this subsection
2.2(b)(i) not later than 10:00 A.M. (New York City time) one Business Day prior
to the proposed Borrowing Date or (C) in the case of a Negotiated Rate Loan, a
Negotiated Rate Loan Request to any Bank at such time as the applicable Borrower
and the applicable Bank shall agree. Each Bid Loan

                                       13
<PAGE>

Request may solicit bids for Bid Loans in an aggregate principal amount of
$25,000,000 or an integral multiple of $5,000,000 in excess thereof and for not
more than three alternative Interest Periods for such Bid Loans. The
Administrative Agent shall promptly notify each Bid Loan Bank by facsimile
transmission or by telephone, immediately confirmed by facsimile transmission,
of the contents of each Bid Loan Request received by it.

                  (ii)  In the case of an Index Rate Bid Loan Request, upon
receipt of notice from the Administrative Agent of the contents of such Bid Loan
Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall
irrevocably offer to make one or more Bid Loans at the Applicable Index Rate
plus or minus a margin for each such Bid Loan determined by such Bid Loan Bank,
in its sole discretion. Any such irrevocable offer shall be made by delivering a
Bid Loan Offer to the Administrative Agent at the address set forth in clause
(i)(A) above before 10:30 A.M. (New York City time) three Working Days before
the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for
each Interest Period, and the aggregate maximum amount for all Interest Periods,
which such Bank would be willing to make and the margin above or below the
Applicable Index Rate at which such Bid Loan Bank is willing to make each such
Bid Loan. The Administrative Agent shall advise the relevant Borrower before
11:00 A.M. (New York City time) three Working Days before the proposed Borrowing
Date of the contents of each such Bid Loan Offer received by it. If the
Administrative Agent in its capacity as a Bid Loan Bank shall, in its sole
discretion, elect to make any such offer, it shall advise such Borrower of the
contents of its Bid Loan Offer before 10:15 A.M. (New York City time) three
Working Days before the proposed Borrowing Date.

                  (iii) In the case of an Absolute Rate Bid Loan Request, upon
receipt of notice from the Administrative Agent of the contents of such Bid Loan
Request, any Bid Loan Bank that elects, in its sole discretion, to do so, shall
irrevocably offer to make one or more Bid Loans at a rate or rates of interest
for each such Bid Loan determined by such Bid Loan Bank in its sole discretion.
Any such irrevocable offer shall be made by delivering a Bid Loan Offer to the
Administrative Agent at the address set forth in clause (i)(A) of this
subsection 2.2(b) before 9:30 A.M. (New York City time) on the proposed
Borrowing Date, setting forth the maximum amount of Bid Loans for each Interest
Period, and the aggregate maximum amount for all Interest Periods, which such
Bid Loan Bank would be willing to make and the rate or rates of interest at
which such Bid Loan Bank is willing to make each such Bid Loan. The
Administrative Agent shall advise the relevant Borrower before 10:00 A.M. (New
York City time) on the proposed Borrowing Date of the contents of each such Bid
Loan Offer received by it. If the Administrative Agent in its capacity as a Bid
Loan Bank shall, in its sole discretion, elect to make any such offer, it shall
advise such Borrower of the contents of its Bid Loan Offer before 9:15 A.M. (New
York City time) on the proposed Borrowing Date.

                  (iv)  The relevant Borrower shall before 11:30 A.M. (New York
City time) three Working Days before the proposed Borrowing Date (in the case of
Bid Loans requested by an Index Rate Bid Loan Request) and before 10:30 A.M.
(New York City time) on the proposed Borrowing Date (in the case of Bid Loans
requested by an Absolute Rate Bid Loan Request) either, in its absolute
discretion:

          (A)     cancel such Bid Loan Request by giving the Administrative
     Agent telephone notice to that effect, or

                                       14
<PAGE>

          (B)     accept one or more of the offers made by any Bid Loan Bank or
     Bid Loan Banks pursuant to clause (ii) or clause (iii) of this subsection
     2.2(b), as the case may be, by giving telephone notice to the
     Administrative Agent (immediately confirmed by delivery to the
     Administrative Agent at the address set forth in clause (i)(A) of this
     subsection 2.2(b) of a Bid Loan Confirmation) of the amount of Bid Loans
     for each relevant Interest Period to be made by each Bid Loan Bank (which
     amount shall be equal to or less than the maximum amount for such Interest
     Period specified in the Bid Loan Offer of such Bid Loan Bank, and for all
     Interest Periods included in such Bid Loan Offer shall be equal to or less
     than the aggregate maximum amount specified in such Bid Loan Offer for all
     such Interest Periods) and reject any remaining offers made by Bid Loan
     Banks pursuant to clause (ii) or clause (iii) above, as the case may be;
     provided, however, that (x) such Borrower may not accept offers for Bid
     --------  -------
     Loans for any Interest Period in an aggregate principal amount in excess of
     the maximum principal amount requested for such Interest Period in the
     related Bid Loan Request, (y) if such Borrower accepts any such offers, it
     must accept offers strictly based upon pricing for such relevant Interest
     Period and upon no other criteria whatsoever and (z) if two or more Bid
     Loan Banks submit offers for any Interest Period at identical pricing and
     such Borrower accepts any of such offers but does not wish to borrow the
     total amount offered by such Bid Loan Banks with such identical pricing,
     such Borrower shall accept offers from all of such Bid Loan Banks in
     amounts allocated among them pro rata according to the amounts offered by
                                  --- ----
     such Bid Loan Banks (or as nearly pro rata as shall be practicable, after
                                       --- ----
     giving effect to the requirement that Bid Loans made by a Bid Loan Bank on
     a Borrowing Date for each relevant Interest Period shall be in a principal
     amount of $5,000,000 or an integral multiple of $1,000,000 in excess
     thereof, it being agreed that to the extent that it is not possible to make
     allocations in accordance with the provisions of this clause (z) such
     allocations shall be made in accordance with the instructions of such
     Borrower, it being understood that in no event shall any Bank be obligated
     to make any Bid Loan in a principal amount less than $5,000,000).

                       (v)      If such Borrower notifies the Administrative
Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) of this
subsection 2.2(b), the Administrative Agent shall give prompt telephone notice
thereof to the Bid Loan Banks, and the Bid Loans requested thereby shall not be
made.

                       (vi)     (A)  If such Borrower accepts pursuant to clause
(iv)(B) of this subsection 2.2(b) one or more of the offers made by any Bid Loan
Bank or Bid Loan Banks pursuant to a Bid Loan Request, the Administrative Agent
shall promptly notify by telephone each Bid Loan Bank which has made such an
offer of the aggregate amount of such Bid Loans to be made on such Borrowing
Date for each Interest Period and of the acceptance or rejection of any offers
to make such Bid Loans made by such Bid Loan Bank. Each Bid Loan Bank which is
to make a Bid Loan pursuant to a Bid Loan Request shall, before 12:00 Noon (New
York City time) on the Borrowing Date specified in the Bid Loan Request
applicable thereto, make available to the Administrative Agent at its office set
forth in subsection 10.2 the amount of Bid Loans to be made by such Bid Loan
Bank, in immediately available funds. The Administrative Agent will make such
funds available to such Borrower as soon as practicable on such date at the
Administrative Agent's aforesaid address.

                                       15
<PAGE>

                  (B) If such Borrower and any Bank agree to the terms of a
         Negotiated Rate Loan to be made on a Borrowing Date pursuant to a
         Negotiated Rate Loan Request, such Borrower and such Bank shall
         promptly notify by telephone the Administrative Agent of the aggregate
         amount of Negotiated Rate Loans to be made on such Borrowing Date and
         the respective Interest Periods therefor. Each Bank which is to make a
         Negotiated Rate Loan shall, at such time, on such Borrowing Date and at
         such location as shall be mutually agreed upon between such Borrower
         and such Bank, make available to such Borrower the amount of Negotiated
         Rate Loans to be made by such Bank, in immediately available funds.

                  (C) As soon as practicable after each Borrowing Date for Bid
         Loans and Negotiated Rate Loans, the Administrative Agent shall notify
         each Bank of the aggregate amount of Bid Loans or Negotiated Rate Loans
         advanced pursuant to a Bid Loan Request or Negotiated Rate Loan Request
         on such Borrowing Date and the respective Interest Periods therefor.

                  (c) Within the limits and on the conditions set forth in this
subsection 2.2, each Borrower may from time to time borrow under this subsection
2.2, repay pursuant to paragraph (d) below, and reborrow under this subsection
2.2.

                  (d) Each Borrower shall repay to the Administrative Agent for
the account of each Bid Loan Bank (or the Loan Assignee in respect thereof, as
the case may be) which has made a Bid Loan to such Borrower on the last day of
the Interest Period for each Bid Loan (such Interest Period being that specified
by such Borrower for repayment of such Bid Loan in the related Bid Loan Request)
the then unpaid principal amount of such Bid Loan. Each Borrower shall repay to
each Bank which has made a Negotiated Rate Loan to such Borrower (or the Loan
Assignee in respect thereof, as the case may be) the principal thereof as agreed
by such Borrower and such Bank.

                  (e) Each Borrower shall pay interest on the unpaid principal
amount of each Bid Loan and each Negotiated Rate Loan borrowed by such Borrower
from the applicable Borrowing Date to the stated maturity date thereof, in the
case of a Bid Loan, at the rate of interest determined pursuant to paragraph (b)
of this subsection 2.2, and, in the case of a Negotiated Rate Loan, as agreed by
such Borrower and the relevant Bank (calculated on the basis of a 360 day year
for actual days elapsed), payable on the interest payment date or dates (i)
specified by such Borrower for such Bid Loan in the related Bid Loan Request and
(ii) mutually agreed upon between such Borrower and such Bank in the case of
Negotiated Rate Loans, provided that as to any Bid Loan in respect of which the
                       --------
stated maturity date is more than three months after such Borrowing Date,
interest shall also be paid on the day which occurs three months after such
Borrowing Date. If all or a portion of the principal amount of any Bid Loan
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue principal amount shall, without limiting any rights of
any Bank under this Agreement, bear interest from the date on which such payment
was due at a rate per annum which is 1% above the rate which would otherwise be
applicable to such Bid Loan until the scheduled maturity date with respect
thereto and for each day thereafter at a rate per annum which is 1% above the
ABR until paid in full (as well after as before judgment). If all or any portion
of the principal amount of any Negotiated Rate Loan shall not be paid when due
(whether at the stated

                                       16
<PAGE>

maturity, by acceleration or otherwise), such overdue principal amount shall,
without limiting any rights of any Bank under this Agreement, bear interest from
the date on which such payment was due at a rate per annum as shall be mutually
agreed upon between the relevant Borrower and the relevant Bank.

                  (f)  After the first Bid Loan Request has been given
hereunder, no Bid Loan Request or Negotiated Rate Loan Request shall be given
until at least one Business Day, in the case of an Absolute Rate Bid Loan
Request, or one Working Day, in the case of an Index Rate Bid Loan Request,
after the earliest to occur of (i) the Borrowing Dates with respect to all prior
Bid Loan Requests made pursuant to subsection 2.2(b)(i), (ii) the date on which
all Bid Loan Banks have failed to submit Bid Loan Offers with respect to any Bid
Loan Requests within the time specified in subsection 2.2(b)(ii) or (iii), as
the case may be, and (iii) the date on which the relevant Borrower has cancelled
all prior Bid Loan Requests pursuant to subsection 2.2(b)(iv).

                  2.3. Loan Accounts. Each Bank, with respect to its Committed
                       -------------
Rate Loans, Bid Loans and Negotiated Rate Loans, and the Administrative Agent,
with respect to all Committed Rate Loans and Bid Loans, shall open and maintain
in the name of each Borrower loan accounts (as to each Bank, its "Loan Account"
                                                                  ------------
applicable to such Borrower) on its books and records setting forth the amounts
of principal, interest and other sums paid and payable by such Borrower from
time to time hereunder in respect of such Loans, and the obligation of such
Borrower to pay or repay, as the case may be, such amounts to such Bank shall be
evidenced by such Bank's Loan Account. In case of any dispute, action or
proceeding relating to any Committed Rate Loan, Bid Loan or Negotiated Rate
Loan, the entries in such records shall constitute prima facie evidence of the
                                                   ----- -----
accuracy of the information set forth therein. In case of discrepancy between
the entries in the Administrative Agent's books and records and any Bank's, the
entries in the Administrative Agent's books and records shall constitute prima
                                                                         -----
facie evidence of the accuracy of the information set forth therein.
-----

                  2.4. Fees. (a) The Company and the Capital Corporation jointly
                       ----
and severally agree to pay to the Administrative Agent for the account of each
Bank a facility fee (i) from and including the Closing Date to but excluding the
date on which the Commitment of such Bank terminates hereunder, computed at a
per annum rate equal to the Facility Fee Rate on the average daily amount of the
Commitment of such Bank in effect during the period for which payment is made
and (ii) thereafter until all Committed Rate Loans of such Bank are paid in
full, computed at a per annum rate equal to the Facility Fee Rate on the average
daily amount of such Committed Rate Loans outstanding, in each case, payable
quarterly in arrears on the first Business Day of each January, April, July and
October of each year, on the Termination Date or such earlier date on which the
Commitments shall terminate as provided herein, and on the second anniversary of
the Termination Date or such earlier date on which the Loans are repaid in full,
commencing in April, 2001.

                  (b)  The Company and the Capital Corporation jointly and
severally agree to pay to the Administrative Agent for its own account all fees
set forth in the letter agreement dated January 23, 2001 from JP Morgan, a
division of Chase Securities Inc., and Chase to the Borrowers.

                                       17
<PAGE>

                  (c)  The Company and the Capital Corporation jointly and
severally agree to pay to the Administrative Agent for its own account all other
fees payable to the Administrative Agent as the Borrowers and the Administrative
Agent shall mutually agree from time to time.

                  2.5. Termination or Reduction of Commitments; Cancellation of
                       --------------------------------------------------------
Capital Corporation as Borrower. (a) The Borrowers, acting jointly, shall have
-------------------------------
the right, upon not less than five Business Days" notice to the Administrative
Agent, to terminate the Commitments or, from time to time, reduce the amount of
the Commitments, provided that (i) any such reduction shall be accompanied by
                 --------
prepayment of Committed Rate Loans hereunder, together with accrued interest on
the amount so prepaid to the date of such prepayment, to the extent, if any,
that the aggregate outstanding principal amount of all Loans exceeds the amount
of the Commitments as then reduced and (ii) any such termination of the
Commitments shall be accompanied by prepayment in full of the Loans then
outstanding hereunder in accordance with subsection 2.6, and any termination of
a Bank's Commitment pursuant to subsection 2.13, 2.16 or 2.17 shall, with
respect to each affected Loan, on the last day of the applicable Interest Period
therefor or, if earlier, on such earlier date as shall be notified by the
Borrowers, be accompanied by prepayment in full of such Loan, together with, in
each case, accrued interest thereon to the date of such prepayment, the payment
of any unpaid facility fee then accrued hereunder, and the payment of any
amounts then payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17. Upon
receipt of such notice from the Borrowers the Administrative Agent shall
promptly notify each Bank thereof. Any reduction of the Commitments pursuant to
this subsection 2.5 shall be in an amount not less than $25,000,000, and shall
be an amount which is a whole multiple of $5,000,000, and shall reduce
permanently the amount of the Commitments then in effect.

                  (b)  The Company may cancel the ability of the Capital
Corporation to borrow hereunder upon not less than five Business Days" notice to
the Administrative Agent. Upon receipt of such notice from the Company the
Administrative Agent shall promptly notify each Bank thereof. On the first day
following receipt of such notice, on which all Loans to the Capital Corporation
and all interest thereon shall have been paid in full, and notwithstanding any
other provision of this Agreement, (i) the Capital Corporation shall cease to be
a party hereto or to have any right or obligation hereunder, (ii) rights and
obligations expressed herein to be, in effect, of either the Company or the
Capital Corporation or of both of them, but not any such rights and obligations
expressed herein to be of the Capital Corporation only, shall be deemed to be
rights and obligations of the Company only and (iii) the Banks shall cease to
have any right or obligation hereunder which depends or is contingent upon any
action, condition or performance, or the absence thereof, whether past or
present, of the Capital Corporation other than any action, condition or
performance, or the absence thereof, of the Capital Corporation in its capacity
as a Subsidiary, Significant Subsidiary or Restricted Subsidiary hereunder;
provided, however, that the obligation of the Capital Corporation to make any
--------  -------
payment pursuant to subsection 2.13, 2.14, 2.15 or 2.17 which arises prior to
the cancellation of the ability of the Capital Corporation to borrow hereunder
shall survive the cancellation of the ability of the Capital Corporation to
borrow hereunder.

                  2.6. Optional Prepayments.  Either Borrower may at any time
                       --------------------
and from time to time prepay its Committed Rate Loans in whole or in part,
without premium or penalty, but subject to the provisions of subsection 2.14,
upon at least three Working Days" irrevocable notice, in the case of Eurodollar
Loans, or one Business Day's irrevocable notice in the case of

                                       18
<PAGE>

ABR Loans, in each case to the Administrative Agent, specifying the date and
amount of prepayment and whether the prepayment is of its Eurodollar Loans, ABR
Loans, or a combination thereof, and if of a combination thereof, the amount of
prepayment allocable to each. Upon receipt of such notice the Administrative
Agent shall promptly notify each Bank thereof. If such notice is given, the
Borrower delivering such notice shall make such prepayment, and the payment of
the amount specified in such notice shall be due and payable, on the date
specified therein, together with accrued interest to such date on the amount
prepaid and any amounts payable pursuant to subsections 2.14 and 2.15. Except as
provided in the immediately following sentence, partial prepayments shall be in
an aggregate principal amount of $5,000,000, or a whole multiple thereof;
provided, however, that after giving effect thereto, the aggregate principal
--------  -------
amount of all Committed Rate Loans made on the same Borrowing Date shall not be
less than $25,000,000. Anything contained in this subsection 2.6 to the contrary
notwithstanding, partial prepayments of a Cancelled Bank's Loans in connection
with the termination under subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) of
such Cancelled Bank's Commitment (in whole or in part) shall be in an amount
equal to the principal amount of the Loans of such Bank being prepaid,
notwithstanding the amount thereof, and shall be permitted notwithstanding the
provisions of the foregoing proviso. Either Borrower may prepay Negotiated Rate
Loans or Bid Loans on such terms as shall be mutually agreed upon between the
relevant Borrower and the relevant Bank.

                  2.7. Minimum Amount of Certain Loans. All borrowings,
                       -------------------------------
conversions, continuations, payments and, except as set forth in the penultimate
sentence of subsection 2.6(a), prepayments in respect of Committed Rate Loans
shall be in such amounts and be made pursuant to such elections that, after
giving effect thereto, (a) the aggregate principal amount of Committed Rate
Loans made on any Borrowing Date shall not be less than $25,000,000 or a whole
multiple of $5,000,000 in excess thereof and (b) the aggregate principal amount
of Committed Rate Loans of any Type with the same Interest Period shall not be
less than $10,000,000 or a whole multiple of $1,000,000 in excess thereof.

                  2.8. Committed Rate Loan Interest Rate and Payment Dates. (a)
                       ---------------------------------------------------
The Eurodollar Loans shall bear interest for the period from the date thereof
until the stated maturity thereof on the unpaid principal amount thereof at a
rate per annum equal to the Eurodollar Rate determined for the Interest Period
therefor plus the Applicable Margin.

                  (b)  The ABR Loans shall bear interest for each day during the
period from the date thereof until the payment in full thereof on the unpaid
principal amount thereof at a fluctuating rate per annum equal to the ABR for
such day plus the Applicable Margin.

                  (c)  If all or a portion of the principal amount of any of the
Committed Rate Loans shall not be paid when due (whether at the stated maturity,
by acceleration or otherwise) such overdue principal amount of such Committed
Rate Loan (i) shall bear interest at a rate per annum which is 1% above the rate
which would otherwise be applicable pursuant to subsection 2.8(a) or (b) as the
case may be, from the date when such principal amount is due until the date on
which such amount is paid in full and (ii) shall, if such Committed Rate Loan is
a Eurodollar Loan, be converted to an ABR Loan at the end of the Interest Period
applicable thereto.

                  (d)  Interest shall be payable in arrears on each Interest
Payment Date.

                                       19
<PAGE>

                  2.9.  Conversion and Continuation Options.   (a) The relevant
                        -----------------------------------
Borrower may elect from time to time to convert Committed Rate Loans of one Type
into Committed Rate Loans of another Type by giving to the Administrative Agent
irrevocable notice of such conversion by the earliest time that they would have
been required to give notice under subsection 2.1(c) if they had been borrowing
Committed Rate Loans of each such Type on the conversion date specified in such
notice, provided that any such conversion of Eurodollar Loans may only be made
        --------
on the last day of an Interest Period with respect thereto. Any such notice of
conversion to Eurodollar Loans shall specify the length of the initial Interest
Period or Interest Periods therefor. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Bank thereof. All or any part of
outstanding Eurodollar Loans and ABR Loans may be converted as provided herein,
provided that no Loan may be converted into a Eurodollar Loan after the date
--------
that is one month prior to (i) in the case of a Loan made by an Objecting Bank,
the second anniversary of such Objecting Bank's Commitment Expiration Date, and
(ii) in the case of all Loans, the second anniversary of the Termination Date.

                  (b)   Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
relevant Borrower giving notice to the Administrative Agent, such notice to be
given by the time it would have been required to give notice under subsection
2.1(c) if it had been borrowing Eurodollar Loans on the last day of the then
expiring Interest Period therefor, of the length of the next Interest Period to
be applicable to such Loans, provided that no Eurodollar Loan may be continued
                             --------
as such after the date that is one month prior to (i) in the case of a Loan made
by an Objecting Bank, the second anniversary of such Objecting Bank's Commitment
Expiration Date, and (ii) in the case of all Loans, the second anniversary of
the Termination Date. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each Bank thereof.

                  2.10. Computation of Interest and Fees. (a) Facility fees and
                        --------------------------------
interest in respect of ABR Loans based upon clause (a) of the definition of ABR
shall be calculated on the basis of a 365- (or 366- as the case may be) day year
for the actual days elapsed (including the first day and excluding the last
day). Interest in respect of Eurodollar Loans, Bid Loans and ABR Loans based
upon clause (b) of the definition of ABR shall be calculated on the basis of a
360-day year for the actual days elapsed (including the first day and excluding
the last day). The Administrative Agent shall promptly notify the Borrowers and
the Banks of each determination of a Eurodollar Rate. Any change in the interest
rate on a Committed Rate Loan resulting from a change in the ABR shall become
effective as of the opening of business on the day on which such change in the
ABR shall become effective. The Administrative Agent shall promptly notify the
Borrowers and the Banks of the effective date and the amount of each such
change.

                  (b)   Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrowers and the Banks in the absence of manifest
error. The Administrative Agent shall, at the request of a Borrower, deliver to
such Borrower a statement showing the quotations given by the Reference Banks
and the computations used by the Administrative Agent in determining any
interest rate.

                  (c)   If any Reference Bank's Commitment shall terminate
(otherwise than on termination of all the Commitments) or, as the case may be,
its Loans are assigned, prepaid or repaid for any reason whatsoever, such
Reference Bank shall thereupon cease to be a Reference

                                       20
<PAGE>

Bank, and the Administrative Agent (after consultation with the Banks and with
the consent of the Borrowers) shall, by notice to the Borrowers and the Banks,
designate a sufficient number of other Banks as Reference Banks so that there
shall at all times be at least three Reference Banks.

          (d)   Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Banks shall be unable or otherwise fails to supply such rates
to the Administrative Agent upon its request, the rate of interest shall be
determined on the basis of the quotations of the remaining Reference Banks or
Reference Bank.

          2.11. Inability to Determine Interest Rate. (a) In the event that the
                ------------------------------------
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that by reason of circumstances
affecting the interbank eurodollar market generally, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for any requested
Interest Period with respect to Committed Rate Loans that a Borrower has
requested be made as, continued as or converted into Eurodollar Loans, the
Administrative Agent shall promptly give notice of such determination to such
Borrower and the Banks prior to the first day of the requested Interest Period
for such Eurodollar Loans. If such notice is given, such Borrower may (i) in
accordance with the provisions of subsection 2.1 or 2.9, as the case may be
(including any requirements for notification), request that the affected Loans
be made as, continued as or converted into, as the case may be, ABR Loans, or
(ii) in the case of Loans requested to be made on the first day of such Interest
Period, withdraw the notice given under subsections 2.1 or 2.9, as the case may
be, by giving telephonic notice to the Administrative Agent, no later than 10:00
A.M. (New York City time) on the applicable Borrowing Date, confirmed in writing
no later than one Business Day after such telephonic notice is given; provided
                                                                      --------
that if the Administrative Agent does not receive any notice permitted from the
relevant Borrower hereunder, such Borrower shall be deemed to have requested
that the affected Loans be made as, continued as or converted into, as the case
may be, ABR Loans. Until the notice given pursuant to the first sentence of this
paragraph has been withdrawn by the Administrative Agent, no further Loans shall
be made as, continued as or converted into, as the case may be, Eurodollar
Loans.

          (b)   In the event that the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the Borrowers) that by
reason of circumstances affecting the interbank eurodollar market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for any
Interest Period with respect to a proposed Bid Loan to be made pursuant to an
Index Rate Bid Loan Request, the Administrative Agent shall forthwith give
notice of such determination to the relevant Borrower and the Bid Loan Banks at
least two Business Days prior to the proposed Borrowing Date, and such Bid Loans
shall not be made on such Borrowing Date. Until any such notice has been
withdrawn by the Administrative Agent, no further Index Rate Bid Loan Requests
shall be submitted by either Borrower.

          2.12. Pro Rata Treatment and Payments. (a) All payments (including
                -------------------------------
prepayments), to be made by the Borrowers on account of principal, interest and
fees shall be made without defense, set-off or counterclaim and shall be made,
in the case of fees and principal of, and interest on, Loans (other than
Negotiated Rate Loans) at the Administrative Agent's office specified in
subsection 10.2, in each case in lawful money of the United States of

                                       21
<PAGE>

America and in immediately available funds not later than 11:00 A.M. (New York
City time) on the date due. The Administrative Agent shall distribute such
payments to the Banks entitled thereto on the day of receipt in like funds as
received, provided that the Administrative Agent shall have received such
          --------
payments not later than 11:00 A.M. (New York City time). If the Administrative
Agent shall distribute such payments to the Banks entitled thereto on a date
after the date on which such payments were received prior to 11:00 A.M. (New
York City time), the Administrative Agent shall pay to each such Bank on demand
an amount equal to the product of (i) the daily average Federal funds rate
during such period as quoted by the Administrative Agent, times (ii) the amount
                                                          -----
of such Bank's share of such payment, times (iii) a fraction, the numerator of
                                      -----
which is the number of days that elapse from and including such date of receipt
of payment by the Administrative Agent to but excluding the date on which such
Bank's share of such payment shall have become immediately available to such
Bank and the denominator of which is 360. All payments (including prepayments)
to be made by the Borrowers on account of principal, interest and fees relating
to Negotiated Rate Loans shall be made to the Bank with respect thereto on such
terms, at such address and at such time as shall be mutually agreed upon between
the relevant Borrower and the relevant Bank in lawful money of the United States
of America on the date due.

          (b)   (i) Each borrowing by the Borrowers of Committed Rate Loans and
each payment of principal in respect of Committed Rate Loans (subject to the
provisions of subsection 2.20(e)) shall be made in accordance with the following
requirements:

          (A)   All borrowings of Committed Rate Loans and all principal
     payments in respect of such Loans, shall be made pro rata according to the
                                                      --- ----
     respective Commitments of the Banks.

          (B)   As provided in clause (b)(ii) below, if any principal payment is
     made in respect of any Loans (other than Negotiated Rate Loans) on any day
     on which principal amounts are due and owing in respect of any Loans (other
     than Negotiated Rate Loans), such principal payment shall be applied to the
     Banks pro rata according to the respective amounts of principal due and
           --- ----
     owing to the Banks in respect of Loans (other than Negotiated Rate Loans)
     under this Agreement.

                (ii)   Except as provided in subsections 2.13, 2.16 and 2.17,
each reduction of the Commitments shall be made pro rata among the Banks
                                                --- ----
according to their respective Commitment Percentages. Each payment by the
Borrowers under this Agreement or of any Loan (other than Negotiated Rate Loans)
shall be applied, first, to any fees then due and owing pursuant to subsection
                  -----
2.4, second, to interest then due and owing in respect of the Loans (other than
     ------
Negotiated Rate Loans) and third, to principal then due and owing hereunder
                           -----
(other than principal due and owing under Negotiated Rate Loans) and under the
Loans (other than Negotiated Rate Loans). Each payment made by the Borrowers
under this Agreement relating to a Negotiated Rate Loan to the Bank with respect
thereto shall be applied, first, to interest then due and owing in respect of
                          -----
such Negotiated Rate Loan and second, to principal then due and owing hereunder
                              ------
with respect to such Negotiated Rate Loan and under such Negotiated Rate Loan.
Each payment (other than voluntary prepayments made when no principal payments
are due and owing hereunder) by either Borrower on account of principal of and
interest on the Loans (other than Negotiated Rate Loans) shall be made for the
account of each Bank pro rata
                     --- ----

                                       22
<PAGE>

according to the respective amounts of principal and interest due and owing to
such Bank under this Agreement. Subject to the requirements of clause (i) of
this paragraph (b), each payment by a Borrower on account of principal of the
Loans (other than Negotiated Rate Loans) shall be applied, first, to such of its
                                                           -----
Committed Rate Loan borrowings as such Borrower may designate, provided,
                                                               --------
however, that if any such payment is made after the Commitment Expiration Date
-------
for any Objecting Banks to which Committed Rate Loans remain outstanding, such
Objecting Banks shall receive, pro rata, the portion of such payment that bears
                               --- ----
the same ratio to the aggregate outstanding principal amount of Committed Rate
Loans owing to all Objecting Banks as the portion of such prepayment applied to
the Committed Rate Loans of the other Banks bears to the aggregate outstanding
principal amount of Committed Rate Loans owing to such other Banks, and, second,
                                                                         ------
after all Committed Rate Loans shall have been paid in full, to all of its
Absolute Rate Bid Loans or Index Rate Bid Loans made on the same Borrowing Date
with the same Interest Period as such Borrower may designate, pro rata according
                                                              --- ----
to the respective amounts outstanding; provided, however, that prepayments made
                                       --------  -------
pursuant to subsection 2.13(a), (b) or (c), 2.16(c) or 2.17(b) shall be applied
in accordance with such subsection.

          (c)   If any payment hereunder (other than payments on the Eurodollar
Loans and Index Rate Bid Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day. If any payment on a Eurodollar Loan or Index Rate Bid Loan becomes due and
payable on a day other than a Working Day, the maturity thereof shall be
extended to the next succeeding Working Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Working Day. With respect to
any extension of the payment of principal pursuant to this subsection 2.12(c),
interest thereon shall be payable at the then applicable rate during such
extension.

          (d)   Unless the Administrative Agent shall have been notified in
writing by any Bank prior to the date of the Committed Rate Loan, Committed Rate
Loans, Bid Loan or Bid Loans to be made by such Bank (which notice shall be
effective upon receipt) that such Bank will not make its pro rata share of the
                                                         --- ----
amount of the requested borrowing on such date available to the Administrative
Agent, the Administrative Agent may assume that such Bank has made such amount
available to it on such date and the Administrative Agent may, in reliance upon
such assumption, make available to the relevant Borrower a corresponding amount.
If a Bank shall make such amount available to the Administrative Agent on a date
after such Borrowing Date, such Bank shall pay to the Administrative Agent on
demand an amount equal to the product of (i) the daily average Federal funds
rate during such period as quoted by the Administrative Agent, times (ii) the
                                                               -----
amount of such Bank's pro rata share of such borrowing, times (iii) a fraction,
                      --- ----                          -----
the numerator of which is the number of days that elapse from and including such
Borrowing Date to but excluding the date on which such Bank's pro rata share of
                                                              --- ----
such borrowing shall have become immediately available to the Administrative
Agent and the denominator of which is 360. A certificate of the Administrative
Agent submitted to any Bank with respect to any amounts owing under this
subsection 2.12(d) shall be conclusive, absent manifest error. If such Bank's
pro rata share is not in fact made available to the Administrative Agent by such
--- ----
Bank within three Business Days of such Borrowing Date, the Administrative Agent
shall be entitled to recover such amount, on demand, from the relevant Borrower
with interest thereon at the rate equal to the product of (i) during the period
from and including such Borrowing Date to the Business Day next following the
date of such demand, the daily average

                                       23
<PAGE>

Federal funds rate as quoted by the Administrative Agent, times a fraction, the
                                                          -----
numerator of which is the number of days that elapse from and including such
Borrowing Date to but excluding the Business Day next following the date of such
demand and the denominator of which is 360 and (ii) thereafter, the interest
rate or rates applicable to the Loan or Loans funded by the Administrative Agent
on behalf of such Bank on such Borrowing Date, times a fraction, the numerator
                                               -----
of which is the number of days which elapse from and including the Business Day
next following the date of such demand to but excluding the date such amount is
recovered by the Administrative Agent from such Borrower and the denominator of
which is 360. In the event any Bank's pro rata share of a borrowing is not made
                                      --- ----
available to the Administrative Agent in accordance with this paragraph within
three Business Days of the applicable Borrowing Date (i) such Bank shall, during
the period from such Borrowing Date to the date such Bank makes its pro rata
                                                                    --- ----
share of the applicable borrowing available, not accrue and shall not be
entitled to receive any facility fee under subsection 2.4 and (ii) either
Borrower may exercise or pursue any other rights, remedies, powers and
privileges against such Bank as are provided by law or by contract.

          2.13. Requirements of Law. (a) If any Bank shall determine that by
                -------------------
reason of (i) the introduction after the date hereof of any applicable law,
regulation or guideline or any change after the date hereof in any applicable
law, regulation or guideline (including the phasing-in of a provision of any
applicable law, regulation or guideline) or in the interpretation thereof by any
governmental or other regulatory authority charged with the administration
thereof or any court of competent jurisdiction and/or (ii) compliance by such
Bank with any requirement adopted after the date hereof or directive adopted
after the date hereof from any central bank or other fiscal, monetary or other
regulatory authority (whether or not having the force of law), there shall be
any increase in the cost of such Bank of maintaining or giving effect to its
obligations with respect to Committed Rate Loans under this Agreement or
maintaining its Commitment with respect to Committed Rate Loans or making or
maintaining any Eurodollar Loans or any reduction in any amount receivable by
such Bank in respect of Eurodollar Loans under this Agreement, notwithstanding
the reasonable efforts (such reasonable efforts not to result in the incurrence
of additional costs or expenses) of such Bank to mitigate such increase or
reduction, then the relevant Borrower shall from time to time on receipt
(whenever occurring) of a certificate from such Bank (which shall be executed by
an officer thereof and a copy of which shall be delivered to the Administrative
Agent) pay to such Bank such amounts as are stated therein to be required to
indemnify such Bank against such increased costs or reduction; provided,
                                                               --------
however, that if such Borrower becomes obligated to pay any Bank any additional
-------
amount pursuant to this subsection 2.13(a), such Borrower shall have the right,
so long as no Event of Default has occurred and is then continuing, upon giving
notice to the Administrative Agent and such Bank in accordance with subsection
2.6, to prepay in full the Loans of such Bank, together with accrued interest
thereon, any amounts payable to such Bank pursuant to subsections 2.13, 2.14,
2.15 and 2.17 and any accrued and unpaid facility fee or other amount payable to
such Bank hereunder and/or, upon giving not less than three Business Days'
notice to any such Bank and the Administrative Agent, to cancel the whole or
part of the Commitment of any such Bank; provided, further, that such Borrower
                                         --------  -------
shall not be obligated to pay any Bank any additional amount pursuant to this
subsection 2.13(a) (A) which constitutes a present or future income, stamp or
other tax, levy, impost, duty, charge, fee, deduction or withholding referred to
in subsection 2.17(a) or (B) as a result of any law, rule, guideline,
regulation, request or directive regarding capital adequacy referred to in
subsection 2.13(b). A certificate of such Bank as to the

                                       24
<PAGE>

amount of such increased costs or reduction shall set forth in reasonable detail
the computation of such increased costs or reduction, and shall be binding and
conclusive in the absence of manifest error. A Bank which demands
indemnification hereunder as a result of an increased cost or reduction referred
to herein shall deliver the certificate referred to above to the relevant
Borrower demanding indemnification no later than the later of (y) the thirtieth
day immediately following each payment or realization by such Bank of such
increased cost or reduction (and such certificate shall certify that the amounts
set forth therein were paid or realized within such thirty-day period) and (z)
the thirtieth day immediately following such Bank's knowledge of the incurrence
or realization by such Bank of such increased cost or reduction (and such
certificate shall so certify).

          (b)   In the event that any Bank shall have determined that the
adoption after the date hereof of any law, rule, guideline or regulation
regarding capital adequacy, or any change after the date hereof in any existing
or future law, rule, guideline or regulation regarding capital adequacy
(excluding, however, the phasing-in of any existing law, rule, regulation or
guideline regarding capital adequacy) or in the interpretation or application
thereof or compliance by such Bank or any corporation controlling such Bank with
any request or directive made or adopted after the date hereof regarding capital
adequacy (whether or not having the force of law) from any central bank or
Governmental Authority, does or shall have the effect of reducing the rate of
return on such Bank's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Bank or such corporation
could have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or such corporation's policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within 30 days after receipt (whenever occurring) of a certificate from
such Bank (which shall be executed by an officer thereof and a copy of which
shall be delivered to the Administrative Agent), the Borrowers jointly and
severally agree to pay to such Bank such additional amounts as are stated
therein to be required to compensate it for such reduction; provided, however,
                                                            --------  -------
that if such Borrower becomes obligated to pay any Bank any additional amount
pursuant to this subsection 2.13(b), such Borrower shall have the right, so long
as no Event of Default has occurred and is then continuing, upon giving notice
to the Administrative Agent and such Bank in accordance with subsection 2.6, to
prepay in full the Loans of such Bank, together with accrued interest thereon,
any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17 and any
accrued and unpaid facility fee or other amounts payable to it hereunder and/or,
upon giving not less than three Business Days' notice to any such Bank and the
Administrative Agent, to cancel the whole or part of the Commitment of any such
Bank. A certificate of such Bank as to the amount of such reduction shall set
forth in reasonable detail the computation of such reduction, and shall be
binding and conclusive in the absence of manifest error. A Bank which demands
indemnification hereunder as a result of a reduction referred to herein shall
deliver the certificate referred to above to the relevant Borrower demanding
indemnification no later than the later of (i) the thirtieth day immediately
following each realization by such Bank of such reduction (and such certificate
shall certify that the amounts set forth therein were realized within such
thirty-day period) and (ii) the thirtieth day immediately following such Bank's
knowledge of the realization by such Bank of such reduction (and such
certificate shall so certify).

                  (c) Each Borrower shall pay to each Bank that delivers a
certificate to such Borrower in accordance with the second and third following
sentences such amounts as shall be

                                       25
<PAGE>

necessary to reimburse such Bank for the costs (determined in accordance with
the immediately following sentence), if any, incurred by such Bank, as a result
of the application to such Bank during any period on which there are outstanding
Eurodollar Loans advanced by such Bank to such Borrower of basic, supplemental,
marginal and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto dealing with reserve requirements prescribed
for eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System (any such
reserves dealing with reserve requirements prescribed for eurocurrency funding
being referred to as "Reserves"), such amount to be set forth in a certificate
                      --------
of such Bank delivered to the relevant Borrower; provided, however, that if a
                                                 --------  -------
Bank gives to a Borrower the written notice contemplated by the proviso set
forth in the second following sentence, such Borrower shall have the right, so
long as no Event of Default has occurred and is then continuing, upon giving
notice to the Administrative Agent and such Bank in accordance with subsection
2.6, to prepay in full the Loans of such Bank, together with accrued interest
thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17
and any accrued and unpaid facility fee or other amounts payable to it hereunder
and/or upon giving not less than three Working Days' notice to such Bank and the
Administrative Agent, to cancel the whole or part of the Commitment of any such
Bank. Amounts certified by a Bank hereunder for any period shall represent such
Bank's calculation or, if an accurate calculation is impracticable, reasonable
estimate (using such reasonable means of allocation as such Bank shall
determine) of the actual costs, if any, theretofore incurred by such Bank as a
result of the application of Reserves to Eurocurrency liabilities (as referred
to in Regulation D referred to above) of such Bank in an amount equal to such
Bank's Eurodollar Loans during such period and in any event shall not exceed the
amount obtainable utilizing the maximum Reserves prescribed by the Board of
Governors of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto for such period. Such payment shall be made
within fifteen days after receipt by the relevant Borrower of a certificate,
signed by an officer of the Bank delivering such certificate, which certificate
shall be binding and conclusive in the absence of demonstrable error, specifying
the period (prior to the date of such certificate) during which the cost set
forth therein was incurred by such Bank and stating (i) that such amount
represents the actual cost, or, if an accurate calculation of such cost is
impracticable stating that such amount represents such Bank's reasonable
estimate of the actual cost, incurred by such Bank during such period as a
result of the application of Reserves to Eurocurrency liabilities of such Bank
in an amount equal to such Bank's Eurodollar Loans during such period and
specified in such certificate and (ii) that the amount set forth therein does
not in any event exceed the amount obtainable utilizing the maximum Reserves
prescribed for such period by the Board of Governors of the Federal Reserve
System or such other Governmental Authority having jurisdiction with respect
thereto; provided that the obligation of the Borrowers to pay any amounts
         --------
pursuant to this subsection 2.13(c) shall apply only in the case of those Banks
that give to the relevant Borrower and the Administrative Agent, no later than
3:00 P.M. (New York City time) on the day that is two Working Days prior to the
applicable Borrowing Date therefor, a written notice stating that such Bank
intends to demand reimbursement pursuant hereto. A Bank which demands
reimbursement of Reserve costs hereunder on account of a Eurodollar Loan made by
such Bank shall deliver the certificate referred to in the preceding sentence to
the relevant Borrower setting forth the items specified in

                                       26
<PAGE>

clauses (i) and (ii) of the preceding sentence no later than the thirtieth day
immediately following the last day of the Interest Period applicable to such
Eurodollar Loan.

          (d)   The obligations of the parties under this subsection 2.13 shall
survive termination of this Agreement and payment of the Loans.

          2.14. Indemnity.  Each Borrower agrees to indemnify each Bank and to
                ---------
hold each Bank harmless from any loss or expense which such Bank may sustain or
incur as a consequence of (a) default by such Borrower in payment of the
principal amount of or interest on any Loan by such Bank, including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its Loans
hereunder, (b) default by such Borrower in making a borrowing, conversion or
continuance after such Borrower has given a notice in accordance with subsection
2.1, 2.2 or 2.9, (c) default by such Borrower in making any prepayment after
such Borrower has given a notice in accordance with subsection 2.5 or 2.6 or (d)
the making by such Borrower of a prepayment of a Committed Rate Loan (other than
an ABR Loan), a Bid Loan or, to the extent agreed to by the relevant Borrower
and the relevant Bank with respect to a Negotiated Rate Loan, a Negotiated Rate
Loan on a day which is not the last day of an Interest Period with respect
thereto (with respect to Committed Rate Loans) or the maturity date therefor
(with respect to Bid Loans) or any agreed date (with respect to Negotiated Rate
Loans), including, but not limited to, any such loss or expense arising from
interest or fees payable by such Bank to lenders of funds obtained by it in
order to maintain its Loans hereunder. This covenant shall survive termination
of this Agreement and payment of the outstanding Loans. A certificate as to any
amount payable pursuant to the foregoing shall be submitted by such Bank (and
executed by an officer thereof) to the relevant Borrower, setting forth the
computation of such amounts in reasonable detail, and shall be conclusive in the
absence of manifest error.

          2.15. Non-Receipt of Funds by the Administrative Agent. With respect
                ------------------------------------------------
to all Loans except Negotiated Rate Loans, unless the Administrative Agent shall
have been notified by the relevant Borrower prior to the date on which any
payment is due from it hereunder (which notice shall be effective upon receipt)
that such Borrower does not intend to make such payment, the Administrative
Agent may assume that such Borrower has made such payment when due, and the
Administrative Agent may in reliance upon such assumption (but shall not be
required to) make available to each Bank on such payment date an amount equal to
the portion of such assumed payment to which such Bank is entitled hereunder,
and if such Borrower has not in fact made such payment to the Administrative
Agent, such Bank shall, on demand, repay to the Administrative Agent the amount
made available to such Bank together with interest thereon in respect of each
day during the period commencing on the date such amount was made available to
such Bank and ending on (but excluding) the date such Bank repays such amount to
the Administrative Agent, at a rate per annum equal to the Administrative
Agent's cost of obtaining overnight funds in the federal funds market in New
York on each such day. A certificate of the Administrative Agent submitted to
the relevant Bank with respect to any amount owing under this subsection 2.15
shall be conclusive absent manifest error.

          2.16. Extension of Termination Date. (a) Not less than 60 days and not
                -----------------------------
more than 90 days prior to the Termination Date then in effect, provided that no
Event of Default shall have occurred and be continuing, the Borrowers may
request an extension of such Termination

                                       27
<PAGE>

Date by submitting to the Administrative Agent an Extension Request containing
the information in respect of such extension specified in Exhibit I, which the
Administrative Agent shall promptly furnish to each Bank. Each Bank shall, not
less than 30 days and not more than 60 days prior to the Termination Date then
in effect, notify the Borrowers and the Administrative Agent of its election to
extend or not extend the Termination Date as requested in such Extension
Request. Notwithstanding any provision of this Agreement to the contrary, any
notice by any Bank of its willingness to extend the Termination Date shall be
revocable by such Bank in its sole and absolute discretion at any time prior to
the date which is 30 days prior to the Termination Date then in effect. If the
Required Banks shall approve in writing the extension of the Termination Date
requested in such Extension Request, the Termination Date shall automatically
and without any further action by any Person be extended for the period
specified in such Extension Request; provided that (i) each extension pursuant
                                     --------
to this subsection 2.16 shall be for a maximum of 364 days and (ii) the
Commitment of any Bank which does not consent in writing to such extension not
less than 30 days and not more than 60 days prior to the Termination Date then
in effect (an "Objecting Bank") shall, unless earlier terminated in accordance
               --------------
with this Agreement, expire on the Termination Date in effect on the date of
such Extension Request (such Termination Date, if any, referred to as the
"Commitment Expiration Date" with respect to such Objecting Bank). If, not less
 --------------------------
than 30 days and not more than 60 days prior to the Termination Date then in
effect, the Required Banks shall not approve in writing the extension of the
Termination Date requested in an Extension Request, the Termination Date shall
not be extended pursuant to such Extension Request. The Administrative Agent
shall promptly notify (y) the Banks and the Borrowers of any extension of the
Termination Date pursuant to this subsection 2.16 and (z) the Borrowers and any
other Bank of any Bank which becomes an Objecting Bank.

          (b)   Committed Rate Loans owing to any Objecting Bank on the
Commitment Expiration Date with respect to such Bank shall be repaid in full on
or before the date which is two years after such Commitment Expiration Date.

          (c)   The Borrowers shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Objecting Banks in accordance with subsection 2.6,
to prepay in full the Committed Rate Loans of the Objecting Banks, together with
accrued interest thereon, any amounts payable pursuant to subsections 2.13,
2.14, 2.15 and 2.17 and any accrued and unpaid facility fee or other amounts
payable to it hereunder and/or, upon giving not less than three Working Days'
notice to the Objecting Banks and the Administrative Agent, to cancel the whole
or part of the Commitments of the Objecting Banks.

          2.17. Foreign Taxes. (a) All payments made under this Agreement shall
                -------------
be made without set-off or counterclaim and free and clear of, and without
reduction for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, withholdings or
restrictions or conditions of any nature whatsoever, now or hereafter imposed,
levied, collected, withheld or assessed by any country (or by any political
subdivision or taxing authority thereof or therein) from or through which any
amount is paid under this Agreement excluding, in the case of each Bank, (i)
income and franchise taxes (including, without limitation, branch taxes imposed
by the United States or similar taxes imposed by a political subdivision or
taxing authority thereof or therein but excluding, in the

                                       28
<PAGE>

case of any Bank not organized under the laws of the United States, any taxes
imposed by the United States by means of withholding at the source), (ii) in the
case of any Bank not organized under the laws of the United States, any taxes
imposed by the United States by means of withholding at the source unless such
Bank has provided the Company, the Capital Corporation and the Administrative
Agent with the documents it is required to provide to them under subsection
2.17(c) and (iii) taxes that would not have been imposed on such Bank but for
the existence of a connection between such Bank and the jurisdiction imposing
such taxes (other than a connection arising principally by virtue of this
Agreement) (such non-excluded taxes being called "Foreign Taxes"). If any
                                                  -------------
Foreign Taxes are required to be withheld from any amounts so payable to any
Bank hereunder, the amounts so payable to such Bank shall be increased to the
extent necessary to yield to such Bank (after payment of all Foreign Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Foreign Taxes are payable by
the Company or the Capital Corporation, as the case may be, as promptly as
possible thereafter the Company or the Capital Corporation, as the case may be,
shall send to the Administrative Agent, for the account of the affected Bank, a
certified copy of the original official receipt, if any, received by the Company
or the Capital Corporation, as the case may be, showing payment thereof. If the
Company or the Capital Corporation, as the case may be, fails to pay any Foreign
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent, for the account of the affected Banks, the required
receipts or other required documentary evidence, the Company or the Capital
Corporation, as the case may be, shall indemnify such Banks for any incremental
taxes, interest or penalties that may become payable by such Banks as a result
of any such failure.

          (b)   If a Borrower is required by this subsection 2.17 to make a
payment to or in respect of any Bank, such Borrower shall have the right, so
long as no Event of Default has occurred and is then continuing, upon giving
notice to the Administrative Agent and such Bank in accordance with subsection
2.6, to prepay in full the Loans of such Bank, together with accrued interest
thereon, any amounts payable pursuant to subsections 2.13, 2.14, 2.15 and 2.17
and any accrued and unpaid facility fee or other amounts payable to it hereunder
and/or on giving not less than three Business Days' notice to any such Bank and
the Administrative Agent, to cancel the whole or part of the Commitment of such
Bank.

          (c)   At least two Business Days prior to the first Borrowing Date or,
if such date does not occur within thirty days after the Closing Date, by the
end of such thirty-day period, each Bank agrees that it will deliver to each
Borrower and the Administrative Agent (i) either (A) a statement that it is
incorporated under the laws of the United States or a state thereof or (B) if it
is not so incorporated, a letter in duplicate in the form of Exhibit J or
Exhibit K, as appropriate, and two duly completed copies of United States
Internal Revenue Service Form 4224 or 1001 or successor applicable form, as the
case may be, certifying in each case that such Bank is entitled to receive
payment under this Agreement without deduction or withholding of any United
States Federal income taxes, and (ii) Internal Revenue Service Form W-8 or W-9,
or successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax. Each Bank agrees (for the benefit of the
Administrative Agent and the Borrowers) to provide the Administrative Agent and
the Borrowers a new letter and Form 4224 or 1001 and Form W-8 or W-9, or
successor applicable form or other manner of certification, on or before the
date that any such letter or form expires or becomes obsolete or after the
occurrence

                                       29
<PAGE>

of any event requiring a change in the most recent letter or form previously
delivered by it, certifying in the case of a Form 1001 or 4224 that such Bank is
entitled to receive payments under this Agreement without deduction or
withholding of any United States Federal income tax, and in the case of a Form
W-8 or W-9 establishing exemption from United States backup withholding tax. The
Administrative Agent shall not be responsible for obtaining such documentation
from any Bank other than Chase.

          (d)   The Company and the Capital Corporation shall not be required to
make payments on account of United States withholding taxes to any Bank under
the second sentence of subsection 2.17(a) to the extent that such taxes could
have been avoided had such Bank complied with a reasonable request by the
Company, the Capital Corporation or the Administrative Agent for the forms or
documents referred to in subsection 2.17(c).

          (e)   To the extent that, as determined by any Bank in its sole
discretion and without any obligation to disclose its tax records, Foreign Taxes
have been irrevocably utilized by such Bank (either as credits or deductions) to
reduce its tax liabilities and such utilization is consistent with its overall
tax policies, such Bank shall pay to the Company or the Capital Corporation, as
the case may be, an amount equal to such reduction obtained to the extent of
such increased amounts paid by the Company or the Capital Corporation to such
Bank as aforesaid.

          (f)   The obligations of the parties under this subsection 2.17 shall
survive termination of this Agreement and payment of the Loans.

          2.18. Confirmations. The Administrative Agent shall, within 15 days
                -------------
following the last day of each calendar quarter (each such period being a
"Report Period"), furnish to the Borrowers a written account with respect to all
 -------------
amounts outstanding under the Loan Accounts as at the last day of such Report
Period, including an accounting setting forth, for such Report Period the
amounts of principal, interest and other sums paid and payable hereunder. The
Borrowers shall, within 15 days following receipt of such written account,
notify the Administrative Agent of any discrepancies between such written
account and the Borrowers' records or, if no such discrepancies exist, furnish
written confirmation to the Administrative Agent of the accuracy of such written
account. Upon any Bank's request, the Administrative Agent shall furnish to each
Bank a copy of such written account together with the Borrowers' response
thereto.

          2.19. Replacement of Cancelled Banks. The Borrowers may designate one
                ------------------------------
or more financial institutions to act as a Bank hereunder in place of any
Cancelled Bank, and upon the Borrowers, each such financial institution and the
Administrative Agent executing a writing substantially in the form of Exhibit L,
such financial institution shall become and be a Bank hereunder with all the
rights and obligations it would have had if it had been named on the signature
pages hereof, and having for all such financial institutions an aggregate
Commitment no greater than the whole, or such cancelled part, of the Commitment
of the Cancelled Bank in place of which such financial institutions were
designated; provided, however, that all rights and obligations of such Cancelled
            --------  -------
Bank relating to the Loans made by such Cancelled Bank that are outstanding on
the date of such cancellation shall be the rights and obligations of such
Cancelled Bank and not of any such financial institution. The Administrative
Agent shall execute any such

                                       30
<PAGE>

writing presented to it and shall notify the Banks of the execution thereof, the
name of the financial institution executing such writing and the amount of its
Commitment.

          2.20  Commitment Increases. (a) At any time after the Closing Date,
                --------------------
provided that no Event of Default shall have occurred and be continuing, the
--------
Borrowers may request an increase of the aggregate Commitments by notice to the
Administrative Agent in writing of the amount (the "Offered Increase Amount") of
                                                    -----------------------
such proposed increase (such notice, a "Commitment Increase Notice"). Any such
                                        --------------------------
Commitment Increase Notice must offer each Bank the opportunity to subscribe for
its pro rata share of the increased Commitments; provided, however, the
                                                 --------  -------
Borrowers may, with the consent of the Administrative Agent (which consent shall
not be unreasonably withheld or delayed), without offering to each Bank the
opportunity to subscribe for its pro rata share of the increased Commitments,
offer to any bank or other financial institution that is not an existing Bank
the opportunity to provide a new Commitment pursuant to paragraph (b) below if
the aggregate amount of all Commitments made hereunder pursuant to this proviso
which will be in effect when such new Commitment becomes effective does not
exceed $750,000,000 subject to subsection 2.20(f). If any portion of the
increased Commitments offered to the Banks as contemplated in the immediately
preceding sentence is not subscribed for by the Banks, the Borrowers may, with
the consent of the Administrative Agent as to any bank or financial institution
that is not at such time a Bank (which consent shall not be unreasonably
withheld or delayed), offer to any existing Bank or to one or more additional
banks or financial institutions the opportunity to provide all or a portion of
such unsubscribed portion of the increased Commitments pursuant to paragraph (b)
below.

          (b)   Any additional bank or financial institution that the Borrowers
select to offer the opportunity to provide any portion of the increased
Commitments, and that elects to become a party to this Agreement and provide a
Commitment, shall execute a New Bank Supplement with the Borrowers and the
Administrative Agent, substantially in the form of Exhibit N (a "New Bank
                                                                 --------
Supplement"), whereupon such bank or financial institution (a "New Bank") shall
----------                                                     --------
become a Bank for all purposes and to the same extent as if originally a party
hereto and shall be bound by and entitled to the benefits of this Agreement, and
Schedule II shall be deemed to be amended to add the name and Commitment of such
New Bank, provided that the Commitment of any such New Bank shall be in an
          --------
amount not less than $10,000,000.

          (c)   Any Bank that accepts an offer to it by the Borrowers to
increase its Commitment pursuant to this subsection 2.20 shall, in each case,
execute a Commitment Increase Supplement with the Borrowers and the
Administrative Agent, substantially in the form of Exhibit O (a "Commitment
                                                                 ----------
Increase Supplement"), whereupon such Bank (an "Increasing Bank") shall be bound
-------------------                             ---------------
by and entitled to the benefits of this Agreement with respect to the full
amount of its Commitment as so increased, and Schedule II shall be deemed to be
amended to so increase the Commitment of such Bank.

          (d)   The effectiveness of any New Bank Supplement or Commitment
Increase Supplement shall be contingent upon receipt by the Administrative Agent
of such corporate resolutions of the Borrowers and legal opinions of counsel to
the Borrowers as the Administrative Agent shall reasonably request with respect
thereto.

                                       31
<PAGE>

          (e)   (i) Except as otherwise provided in subparagraphs (ii) and (iii)
of this paragraph (e), if any bank or financial institution becomes a New Bank
pursuant to subsection 2.20(b) or any Bank's Commitment is increased pursuant to
subsection 2.20(c), additional Committed Rate Loans made on or after the date of
the effectiveness thereof (the "Re-Allocation Date") shall be made in accordance
                                ------------------
with the pro rata provisions of subsection 2.12(b) based on the Commitment
Percentages in effect on and after such Re-Allocation Date (except to the extent
that any such pro rata borrowings would result in any Bank making an aggregate
principal amount of Committed Rate Loans in excess of its Commitment, in which
case such excess amount will be allocated to, and made by, the relevant New
Banks and Increasing Banks to the extent of, and in accordance with the pro rata
provisions of subsection 2.12(b) based on, their respective Commitments). On
each Re-Allocation Date, the Administrative Agent shall deliver a notice to each
Bank of the adjusted Commitment Percentages after giving effect to any increase
in the aggregate Commitments made pursuant to this subsection 2.20 on such Re-
Allocation Date.

                (ii)   In the event that on any such Re-Allocation Date there is
an unpaid principal amount of ABR Loans, the applicable Borrower shall make
prepayments thereof and one or both Borrowers shall make borrowings of ABR Loans
and/or Eurodollar Loans, as the applicable Borrower shall determine, so that,
after giving effect thereto, the ABR Loans and Eurodollar Loans outstanding are
held as nearly as may be in accordance with the pro rata provisions of
subsection 2.12(b) based on such new Commitment Percentages.

                (iii)  In the event that on any such Re-Allocation Date there is
an unpaid principal amount of Eurodollar Loans, such Eurodollar Loans shall
remain outstanding with the respective holders thereof until the expiration of
their respective Interest Periods (unless the applicable Borrower elects to
prepay any thereof in accordance with the applicable provisions of this
Agreement), and on the last day of the respective Interest Periods the
applicable Borrower shall make prepayments thereof and one or both Borrowers
shall make borrowings of ABR Loans and/or Eurodollar Loans so that, after giving
effect thereto, the ABR Loans and Eurodollar Loans outstanding are held as
nearly as may be in accordance with the pro rata provisions of subsection
2.12(b) based on such new Commitment Percentages.

          (f)   Notwithstanding anything to the contrary in this subsection
2.20, (i) in no event shall any transaction effected pursuant to this subsection
2.20 cause the aggregate Commitments to exceed $3,000,000,000, (ii) the
Commitment of an individual Bank shall not, as a result of providing a new
Commitment or of increasing its existing Commitment pursuant to this subsection
2.20, exceed 15% of the aggregate Commitments on any Re-Allocation Date and
(iii) no Bank shall have any obligation to increase its Commitment unless it
agrees to do so in its sole discretion.

          (g)   The Borrowers, at their own expense, shall execute and deliver
to the Administrative Agent in exchange for the surrendered Notes of any Bank,
if any, new Notes to the order of such Bank, if requested, in an amount equal to
the Commitment of such Bank after giving effect to any increase in such Bank's
Commitment.

                                       32
<PAGE>

          SECTION 3    REPRESENTATIONS AND WARRANTIES
                       ------------------------------

          Each Borrower hereby represents and warrants to the Administrative
Agent and to each Bank that:

          3.1.  Financial Condition. The consolidated balance sheet of such
                -------------------
Borrower and its consolidated Subsidiaries as at October 31, 2000 and the
related consolidated statements of income and of cash flow for the fiscal year
then ended (including the related schedules and notes) reported on by Deloitte &
Touche LLP, copies of which have heretofore been furnished to each Bank, fairly
present the consolidated financial condition of such Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and changes in financial position for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with generally accepted accounting principles
in the United States of America applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein).

          3.2.  Corporate Existence. Such Borrower is duly organized, validly
                -------------------
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to conduct the business in which it is currently engaged.

          3.3.  Corporate Power; Authorization; Enforceable Obligations. Such
                -------------------------------------------------------
Borrower has the corporate power and authority and the legal right to execute,
deliver and perform this Agreement and to borrow hereunder and has taken all
necessary corporate action to authorize its borrowings on the terms and
conditions of this Agreement and to authorize its execution, delivery and
performance of this Agreement. No consent or authorization of, filing with, or
other act by or in respect of, any Governmental Authority, is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement other than any such
consents, authorizations, filings or acts as have been obtained, taken or made
and are in full force and effect. This Agreement has been duly executed and
delivered on behalf of such Borrower, and this Agreement constitutes a legal,
valid and binding obligation of such Borrower enforceable against such Borrower
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general equity
principles (whether enforcement is sought by proceedings in equity or at law).

          3.4.  No Legal Bar. The execution, delivery and performance of this
                ------------
Agreement, the borrowings hereunder and the use of the proceeds thereof, will
not violate any Requirement of Law or any Contractual Obligation of such
Borrower, and will not result in, or require, the creation or imposition of any
lien on any of its properties or revenues pursuant to any Requirement of Law or
Contractual Obligation.

          3.5.  No Material Litigation.  No litigation, investigation or
                ----------------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of such Borrower, threatened by or against such Borrower or any
of its Subsidiaries or against any of its

                                       33
<PAGE>

or their respective properties or revenues except actions, suits or proceedings
which will not materially adversely affect the ability of such Borrower to
perform its obligations hereunder. All of the defaults, if any, of such Borrower
or any of its Subsidiaries with respect to any order of any Governmental
Authority do not, and will not collectively, have a material adverse effect on
the business, operations, property or financial or other condition of such
Borrower and its Subsidiaries taken as a whole.

          3.6.  Taxes. Each of such Borrower and its Subsidiaries has filed or
                -----
caused to be filed all tax returns which, to the knowledge of such Borrower, are
required to be filed (except where the failure to file such tax returns would
not have a material adverse effect on the business, operations, property or
financial or other condition of such Borrower and its Subsidiaries taken as a
whole), and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than assessments, taxes, fees and other charges the amount or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of such Borrower or its Subsidiaries, as the case may be).

          3.7.  Margin Regulations. No part of the proceeds of any Loan
                ------------------
hereunder will be used for any purpose which violates the provisions of
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect.

          3.8.  Pari Passu Ranking. The indebtedness of such Borrower under its
                ------------------
Loans and all other amounts due hereunder ranks at least pari passu with all
present and future unsecured senior indebtedness of such Borrower (other than
indebtedness preferred by law).

          3.9.  No Defaults. No "Event of Default" or similar event, or event
                -----------
which, with the lapse of time or the giving of notice, or both, would constitute
such an Event of Default or similar event, has occurred and is continuing
hereunder or under any material bond, debenture, note or other evidence of
indebtedness, or in any material mortgage, deed of trust, indenture or loan
agreement, of such Borrower.

          3.10. Use of Proceeds. The proceeds of the Loans will be used by such
                ---------------
Borrower for its general corporate purposes, which shall include, but shall not
be limited to, any purchase or other acquisition of all or a portion of the debt
or stock or other evidences of ownership of such Borrower or the assets or stock
or other evidences of ownership of any other Person or Persons.

          SECTION 4    CONDITIONS PRECEDENT
                       --------------------

          4.1.  Conditions to Initial Loan. The obligation of each Bank to make
                --------------------------
its initial Loan hereunder is subject to the satisfaction of the following
conditions precedent:

          (a)   Counterparts. The Administrative Agent shall have received
                ------------
     counterparts hereof, executed by all of the parties hereto.

                                       34
<PAGE>

          (b)   Resolutions. The Administrative Agent shall have received, with
                -----------
     a counterpart for each Bank, resolutions, certified by the Secretary or an
     Assistant Secretary of each Borrower, in form and substance satisfactory to
     the Administrative Agent, adopted by the Board of Directors of such
     Borrower authorizing the execution of this Agreement and the performance of
     its obligations hereunder and any borrowings hereunder from time to time.

          (c)   Legal Opinions. The Administrative Agent shall have received,
                --------------
     with a counterpart for each Bank, an opinion of James R. Jenkins, Esq., or
     his successor as General Counsel of the Company, or an associate general
     counsel of the Company, dated the Closing Date and addressed to the Agents
     and the Banks, substantially in the form of Exhibit G, and an opinion of
     Shearman & Sterling, special counsel to the Borrowers, dated the Closing
     Date and addressed to the Agents and the Banks, substantially in the form
     of Exhibit H. Such opinions shall also cover such other matters incident to
     the transactions contemplated by this Agreement as the Administrative Agent
     shall reasonably require.

          (d)   Incumbency Certificate. The Administrative Agent shall have
                ----------------------
     received, with a counterpart for each Bank, a certificate of the Secretary
     or an Assistant Secretary of each Borrower certifying the names and true
     signatures of the officers of such Borrower authorized to sign this
     Agreement, together with evidence of the incumbency of such Secretary or
     Assistant Secretary.

          (e)   Termination of Existing Credit Agreements. The Administrative
                -----------------------------------------
     Agent shall have received evidence satisfactory to it that the commitment
     of each financial institution to make loans pursuant to (i) the
     $2,250,000,000 364-Day Credit Agreement, dated as of February 22, 2000, as
     supplemented, among the Borrowers, the lenders parties thereto, The Chase
     Manhattan Bank, as Administrative Agent, Bank of America, N.A. and Bank
     One, NA, as Documentation Agents, Deutsche Bank AG New York Branch, as
     Syndication Agent, and the Managing Agents and the Co-Agents named therein,
     and (ii) the $2,250,000,000 Five-Year Credit Agreement, dated as of
     February 22, 2000, as supplemented, among the Borrowers, the lenders
     parties thereto, The Chase Manhattan Bank, as Administrative Agent, Bank of
     America, N.A. and Bank One, NA, as Documentation Agents, Deutsche Bank AG
     New York Branch, as Syndication Agent, and the Managing Agents and the Co-
     Agents named therein, shall have been terminated in full and the
     outstanding principal amount of the indebtedness thereunder and all other
     amounts owing to any bank thereunder shall have been repaid or paid by the
     Borrowers.

          (f)   Fees. The Administrative Agent shall have received, for the
                ----
     accounts of the Banks and the Administrative Agent, and each Agent shall
     have received, for the account of such Agent, all accrued fees and expenses
     owing hereunder or in connection herewith to the Banks and the Agents to be
     received on the Closing Date.

          (g)   Additional Matters. All other documents which the Administrative
                ------------------
     Agent may reasonably request in connection with the transactions
     contemplated by this

                                       35
<PAGE>

     Agreement shall be reasonably satisfactory in form and substance to the
     Administrative Agent and its counsel.

          4.2.  Conditions to All Loans. The obligation of each Bank to make
                -----------------------
any Loan (which shall include the initial Loan to be made by it hereunder but
shall not include any Loan made pursuant to subsection 2.20(e)(ii) or (iii) if,
after the making of such Loan and the application of the proceeds thereof, the
aggregate outstanding principal amount of the Committed Rate Loans would not be
increased) to be made by it hereunder is subject to the satisfaction of the
following conditions precedent:

          (a)   Representations and Warranties. The representations and
                ------------------------------
     warranties made by the Borrowers herein or which are contained in any
     certificate, document or financial or other statement furnished by either
     Borrower at any time hereunder or in connection herewith (other than any
     representations and warranties which by the terms of such certificate,
     document or financial or other statement do not survive the execution of
     this Agreement) shall be correct on and as of the date of such Loan as if
     made on and as of such date except as such representations and warranties
     expressly relate to an earlier date.

          (b)   No Default or Event of Default. No Default or Event of Default
                ------------------------------
     shall have occurred and be continuing on such date or after giving effect
     to the Loans to be made on such date and the application of the proceeds
     thereof.

          (c)   Additional Conditions to Bid Loans. If such Loan is made
                ----------------------------------
     pursuant to subsection 2.2, all conditions set forth in subsection 2.2(f)
     shall have been satisfied.

          Each acceptance by either Borrower of a Loan shall constitute a
representation and warranty by the relevant Borrower as of the date of such Loan
that the applicable conditions in clauses (a), (b) and (c) of this subsection
4.2 have been satisfied.

          SECTION 5    AFFIRMATIVE COVENANTS
                       ---------------------

          Each of the Borrowers (except as otherwise specified) hereby agrees
that, so long as there is any obligation by any Bank to make Loans to it
hereunder, any Loan of such Borrower remains outstanding and unpaid or any other
amount is owing by such Borrower to any Bank or any Agent hereunder (unless the
Majority Banks shall otherwise consent in writing):

          5.1.  Financial Statements.  Such Borrower shall furnish to each Bank:
                --------------------

          (a)   as soon as available, but in any event within 120 days after the
     end of each fiscal year of such Borrower, a copy of the consolidated
     balance sheet of such Borrower and its consolidated Subsidiaries as at the
     end of such year and the related consolidated statements of income and of
     cash flow for such year, reported on by Deloitte & Touche LLP or other
     independent certified public accountants of nationally recognized standing;
     and

          (b)   as soon as available, but in any event not later than 60 days
     after the end of each of the first three quarterly periods of each fiscal
     year of such Borrower, the condensed unaudited consolidated balance sheet
     of such Borrower and its consolidated

                                       36
<PAGE>

     Subsidiaries as at the end of each such quarter and the related unaudited
     consolidated statement of income of such Borrower and its consolidated
     Subsidiaries for such quarterly period and the portion of the fiscal year
     through such date, certified by a Responsible Officer of such Borrower
     (subject to normal year-end audit adjustments);

all such financial statements to present fairly the consolidated financial
condition and results of operations of such Borrower and its consolidated
Subsidiaries and to be prepared in accordance with generally accepted accounting
principles in the United States of America applied consistently throughout the
periods reflected therein (except as approved by such accountants or officer, as
the case may be, and disclosed therein).

          5.2.  Certificates; Other Information. Such Borrower shall furnish to
                -------------------------------
each Bank:

          (a)   concurrently with the delivery of the financial statements
     referred to in subsections 5.1(a) and (b) above, a certificate of a
     Responsible Officer of such Borrower stating that (i) he has no knowledge
     of the occurrence and continuance of any Default or Event of Default except
     as specified in such certificate, in which case such certificate shall
     contain a description thereof and a statement of the steps, if any, which
     such Borrower is taking, or proposes to take, to cure the same and (ii) the
     financial statements delivered pursuant to subsection 5.1 would not be
     different if prepared in accordance with GAAP except as specified in such
     certificate; and

          (b)   promptly, such additional financial and other information as any
     Bank may from time to time reasonably request.

          5.3.  Company Indenture Documents. The Company shall,
                ---------------------------
contemporaneously with the delivery thereof to the Trustee, furnish to each Bank
a copy of any information, document or report required to be filed with the
Trustee pursuant to Section 7.03 of the indenture dated October 1, 1998 between
the Company and The Chase Manhattan Bank (National Association), as trustee.

          5.4.  Capital Corporation Indenture Documents. The Capital Corporation
                ---------------------------------------
shall, contemporaneously with the delivery thereof to the trustee, furnish to
each Bank a copy of any information, document or report required to be filed
with the Trustee pursuant to Section 7.03 of the indenture dated March 15, 1997,
between the Capital Corporation and The Bank of New York, as trustee.

          5.5   Notice of Default. Such Borrower shall promptly give notice to
                -----------------
the Administrative Agent of the occurrence of any Default or Event of Default,
which notice shall be given in writing as soon as possible, and in any event
within 10 days after a Responsible Officer of such Borrower obtains knowledge of
such occurrence, with a description of the steps being taken to remedy the same
(provided that such Borrower shall not be obligated to give notice of any
Default or Event of Default which is remedied prior to or within 10 days after a
Responsible Officer of such Borrower first acquires such knowledge). Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Bank thereof.

                                       37
<PAGE>

          5.6.  Ownership of Capital Corporation Stock. The Company shall
                --------------------------------------
continue to own, directly or through one or more wholly-owned Subsidiaries, free
and clear of any lien or other encumbrance, 51% of the voting stock of the
Capital Corporation; provided, however, that the Capital Corporation may merge
or consolidate with, or sell or convey substantially all of its assets to, the
Company as provided in subsection 7.4.

          5.7.  Employee Benefit Plans. The Company shall maintain, and cause
                ---------------------
each of its Subsidiaries to maintain, each Plan as to which it may have
liability, in compliance with all applicable requirements of law and
regulations.

          SECTION 6    NEGATIVE COVENANTS OF THE COMPANY
                       ---------------------------------

          The Company hereby agrees that, so long as there is any
obligation by any Bank to make Loans hereunder, any Loan remains outstanding and
unpaid or any other amount is owing to any Agent or any Bank hereunder, it shall
not, nor in the case of subsections 6.2 and 6.3 shall it permit any Restricted
Subsidiary to (unless the Majority Banks shall otherwise consent in writing):

          6.1.  Company May Consolidate,etc., Only on Certain Terms. Consolidate
                ---------------------------------------------------
with or merge with or into any other corporation or convey or transfer its
properties and assets substantially as an entirety to any Person, unless:

          (a)   either the Company shall be the continuing corporation, or the
     corporation (if other than the Company) formed by such consolidation or
     into which the Company is merged or the Person which acquires by conveyance
     or transfer the properties and assets of the Company substantially as an
     entirety shall expressly assume, by an assumption agreement, executed and
     delivered to the Administrative Agent, in form satisfactory to the Majority
     Banks, the due and punctual payment of the principal of and interest on the
     Loans to the Company and the performance of every covenant of this
     Agreement on the part of the Company to be performed or observed;

          (b)   immediately after giving effect to such transaction, no Default
     or Event of Default, shall have happened and be continuing;

          (c)   if as a result thereof any property or assets of the Company or
     a Restricted Subsidiary would become subject to any Mortgage not permitted
     by (i) through (xii) of subsection 6.2(a) or subsection 6.2(b), compliance
     shall be effected with the first clause of subsection 6.2(a); and

          (d)   the Company and the successor Person have delivered to the
     Administrative Agent an officers' certificate signed by two Responsible
     Officers of the Company stating that such consolidation, merger, conveyance
     or transfer and such assumption agreement comply with this subsection 6.1
     and that all conditions precedent herein provided for relating to such
     transaction have been complied with.

          6.2.  Limitation on Liens. (a) Issue, incur, assume or guarantee any
                -------------------
debt (hereinafter in this subsection referred to as "Debt") secured by any
                                                     ----
mortgage, security interest, pledge, lien or other encumbrance (hereinafter
called "Mortgage" or "Mortgages") upon any
        --------      ---------

                                       38
<PAGE>

Important Property, or upon any shares of stock or indebtedness issued or
incurred by any Restricted Subsidiary (whether such Important Property, shares
of stock or indebtedness is now owned or hereafter acquired) without in any such
case effectively providing, concurrently with the issuance, incurrence,
assumption or guaranty of any such Debt, that the Loans and all other amounts
hereunder (together with, if the Company shall so determine, any other
indebtedness of or guaranty by the Company or such Restricted Subsidiary ranking
equally with the Loans then existing or thereafter created) shall be secured
equally and ratably with or prior to such Debt; provided, however, that the
                                                --------  -------
foregoing restrictions shall not apply to:

          (i)     Mortgages on any property acquired, constructed or improved by
     the Company or any Restricted Subsidiary after the date of this Agreement
     which are created or assumed contemporaneously with, or within 120 days
     after, such acquisition, construction or improvement to secure or provide
     for the payment of all or any part of the purchase price of such property
     or the cost of such construction or improvement incurred after the date of
     this Agreement, or (in addition to Mortgages contemplated by clauses (ii),
     (iii) and (iv) below) Mortgages on any property existing at the time of
     acquisition thereof; provided that such Mortgages shall not apply to any
                          --------
     Important Property theretofore owned by the Company or any Restricted
     Subsidiary other than, in the case of any such construction or improvement,
     any theretofore unimproved real property on which the property so
     constructed, or the improvement, is located;

          (ii)    Mortgages on any property, shares of stock, or indebtedness
     existing at the time of acquisition thereof from a corporation which is
     consolidated with or merged into, or substantially all of the assets of
     which are acquired by, the Company or a Restricted Subsidiary;

          (iii)   Mortgages on property of a corporation existing at the time
     such corporation becomes a Restricted Subsidiary;

          (iv)    Mortgages to secure Debt of a Restricted Subsidiary to the
     Company or to another Restricted Subsidiary;

          (v)     Mortgages in favor of the United States of America or any
     State thereof, or any department, agency or instrumentality or political
     subdivision of the United States of America or any State thereof, to secure
     partial, progress, advance or other payments pursuant to any contract or
     statute or to secure any indebtedness incurred for the purpose of financing
     all or any part of the purchase price or the cost of constructing or
     improving the property subject to such Mortgages and Mortgages given to
     secure indebtedness incurred in connection with the financing of
     construction of pollution control facilities, the interest on which
     indebtedness is exempt from income taxes under the Code;

          (vi)  any deposit or pledge of assets (1) with any surety company or
     clerk of any court, or in escrow, as collateral in connection with, or in
     lieu of, any bond on appeal from any judgment or decree against the Company
     or a Restricted Subsidiary, or in connection with other proceedings or
     actions at law or in equity by or against the Company or a Restricted
     Subsidiary, or (2) as security for the performance of any contract or
     undertaking not directly related to the borrowing of money or the securing
     of

                                       39
<PAGE>

     indebtedness, if made in the ordinary course of business, or (3) with any
     governmental agency, which deposit or pledge is required or permitted to
     qualify the Company or a Restricted Subsidiary to conduct business, to
     maintain self-insurance, or to obtain the benefits of any law pertaining to
     worker's compensation, unemployment insurance, old age pensions, social
     security, or similar matters, or (4) made in the ordinary course of
     business to obtain the release of mechanics', workmen's, repairmen's,
     warehousemen's or similar liens, or the release of property in the
     possession of a common carrier;

          (vii)   Mortgages existing on property acquired by the Company or a
     Restricted Subsidiary through the exercise of rights arising out of
     defaults on receivables acquired in the ordinary course of business;

          (viii)  judgment liens, so long as the finality of such judgment is
     being contested in good faith and execution thereon is stayed;

          (ix)    Mortgages for the sole purpose of extending, renewing or
     replacing in whole or in part Debt secured by any Mortgage referred to in
     the foregoing clauses (i) to (viii), inclusive, or in this clause (ix),
     provided, however, that the principal amount of Debt secured thereby shall
     not exceed the principal amount of Debt so secured at the time of such
     extension, renewal or replacement, and that such extension, renewal or
     replacement shall be limited to all or a part of the property which secured
     the Mortgage so extended, renewed or replaced (plus improvements on such
     property);

          (x)     liens for taxes or assessments or governmental charges or
     levies not yet due or delinquent, or which can thereafter be paid without
     penalty, or which are being contested in good faith by appropriate
     proceedings; landlord's liens on property held under lease; and any other
     liens of a nature similar to those hereinabove described in this clause (x)
     which do not, in the opinion of the Company, materially impair the use of
     such property in the operation of the business of the Company or a
     Restricted Subsidiary or the value of such property for the purposes of
     such business;

          (xi)    Mortgages on Margin Stock owned by the Company and its
     Restricted Subsidiaries to the extent such Margin Stock so Mortgaged
     exceeds 25% of the fair market value of the sum of the Important Property
     of the Company and the Restricted Subsidiaries plus the shares of stock
     (including Margin Stock) and indebtedness issued or incurred by the
     Restricted Subsidiaries; and

          (xii)   Mortgages on any Important Property of, or any shares of stock
     or indebtedness issued or incurred by, any Restricted Subsidiary organized
     under the laws of Canada.

          (b)     (i) The provisions of subsection 6.2(a) shall not apply to the
issuance, incurrence, assumption or guarantee by the Company or any Restricted
Subsidiary of Debt secured by a Mortgage which would otherwise be subject to the
foregoing restrictions up to an aggregate amount which, together with the sum of
(A) all other Debt issued or incurred by the Company and its Restricted
Subsidiaries secured by Mortgages (other than Mortgages permitted by subsection
6.2(a)) which would otherwise be subject to the foregoing restrictions and (B)
the

                                       40
<PAGE>

Attributable Debt in respect of Sale and Lease-back Transactions in existence at
such time (other than Sale and Lease-back Transactions which, if the
Attributable Debt in respect of such Sale and Lease-back had been a Mortgage,
would have been permitted by clause (i) of subsection 6.2(a) and other than Sale
and Lease-back Transactions the proceeds of which have been applied in
accordance with subsection 6.3(b)) does not at the time exceed 5% of
Consolidated Net Worth, as shown on the audited consolidated balance sheet
contained in the latest annual report to stockholders of the Company.

                (ii)   For purposes of subsection 6.2(b)(i), the term
"Consolidated Net Worth" shall mean the aggregate of capital and surplus of the
 ----------------------
Company and its consolidated Subsidiaries, less minority interests in
Subsidiaries, determined in accordance with GAAP; and the term "Attributable
                                                                ------------
Debt" shall mean, as of any particular time, the present value, discounted at a
----
rate per annum equal to the interest rate set forth in the Company's 8-1/2%
Debentures Due 2022, compounded semi-annually, of the obligation of a lessee for
rental payments during the remaining term of any lease (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended); the net amount of rent required to be paid for any such period shall
be the total amount of the rent payable by the lessee with respect to such
period, but may exclude amounts required to be paid on account of maintenance
and repairs, insurance, taxes, assessments, water rates and similar charges;
and, in the case of any lease which is terminable by the lessee upon the payment
of a penalty, such net amount shall also include the amount of such penalty, but
no rent shall be considered as required to be paid under such lease subsequent
to the first date upon which it may be so terminated.

          (c)   If, upon any consolidation or merger of any Restricted
Subsidiary with or into any other corporation, or upon any consolidation or
merger of any other corporation with or into the Company or any Restricted
Subsidiary or upon any sale or conveyance of the property of any Restricted
Subsidiary as an entirety or substantially as an entirety to any other Person,
or upon any acquisition by the Company or any Restricted Subsidiary by purchase
or otherwise of all or any part of the property of any other Person, any
Important Property theretofore owned by the Company or such Restricted
Subsidiary would thereupon become subject to any Mortgage not permitted by the
terms of subsection (a) or (b) of this subsection 6.2, the Company, prior to
such consolidation, merger, sale or conveyance, or acquisition, will, or will
cause such Restricted Subsidiary to, secure payment of the principal of and
interest on the Loans (equally and ratably with or prior to any other
indebtedness of the Company or such Subsidiary then entitled thereto) by a
direct lien on all such property prior to all liens other than any liens
theretofore existing thereon by an assumption agreement or otherwise.

          (d)   If at any time the Company or any Restricted Subsidiary shall
issue, incur, assume or guarantee any Debt secured by any Mortgage not permitted
by this subsection 6.2, to which the covenant in subsection 6.2(a) is
applicable, the Company will promptly deliver to the Administrative Agent (with
counterparts for each Bank):

          (i)   an officers' certificate signed by two Responsible Officers of
     the Company stating that the covenant of the Company contained in paragraph
     (a) or (c) of this subsection 6.2 has been complied with; and

                                       41
<PAGE>

          (ii)  an opinion of counsel satisfactory to the Administrative Agent
     to the effect that such covenant has been complied with, and that any
     instruments executed by the Company in the performance of such covenant
     comply with the requirements of such covenant.

          6.3.  Limitations on Sale and Lease-back Transactions. Enter into any
arrangement with any Person providing for the leasing to the Company or any
Restricted Subsidiary of any Important Property owned or hereafter acquired by
the Company or such Restricted Subsidiary (except for temporary leases for a
term, including any renewal thereof, of not more than three years and except for
leases between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries), which Important Property has been or is to be sold or transferred
by the Company or such Restricted Subsidiary to such Person (herein referred to
as a "Sale and Lease-back Transaction") unless the net proceeds of such sale are
      -------------------------------
at least equal to the fair value (as determined by the Board of Directors of the
Company or such Restricted Subsidiary, as applicable) of such property and
either (a) the Company or such Restricted Subsidiary would be entitled, pursuant
to the provisions of (1) subsection 6.2(a)(i) or (2) subsection 6.2(b), to incur
Debt secured by a Mortgage on the Important Property to be leased without
equally and ratably securing the Loans, or (b) the Company shall, and in any
such case the Company covenants that it will, within 120 days of the effective
date of any such arrangement, apply an amount equal to the fair value (as so
determined) of such property to the reduction of the Commitments (to be
accompanied by prepayment of the Loans in accordance with subsection 2.6 to the
extent that the principal amount thereof outstanding prior to such prepayment
would exceed the Commitments as so reduced) or to the payment or other
retirement of funded debt for money borrowed, incurred or assumed by the Company
which ranks senior to or pari passu with the Loans or of funded debt for money
                         ---- -----
borrowed, incurred or assumed by any Restricted Subsidiary (other than, in
either case, funded debt owned by the Company or any Restricted Subsidiary). For
this purpose, funded debt means any Debt which by its terms matures at or is
extendable or renewable at the sole option of the obligor without requiring the
consent of the obligee to a date more than twelve months after the date of the
creation of such Debt.

          6.4.  Consolidated Tangible Net Worth. Permit Consolidated Tangible
                -------------------------------
Net Worth as at the end of any fiscal quarter of the Company and its
consolidated Subsidiaries (including the last quarter of any fiscal year of the
Company and its consolidated Subsidiaries) to be less than $500,000,000.

          SECTION 7    NEGATIVE COVENANTS OF THE CAPITAL CORPORATION
                       ---------------------------------------------

          The Capital Corporation hereby agrees that, so long as there is any
obligation by any Bank to make Loans to the Capital Corporation hereunder, any
Loan of the Capital Corporation remains outstanding and unpaid or any other
amount is owing by the Capital Corporation to any Bank or any Agent hereunder,
the Capital Corporation shall not, nor in the case of the agreements set forth
in subsection 7.3 shall it permit any of its Subsidiaries to, directly or
indirectly (unless the Majority Banks shall otherwise consent in writing):

                                       42
<PAGE>

          7.1.  Fixed Charges Ratio. Permit the ratio of Net Earnings Available
                -------------------
for Fixed Charges to Fixed Charges for any fiscal quarter of the Capital
Corporation and its consolidated Subsidiaries (including the last quarter of any
fiscal year of the Capital Corporation and its consolidated Subsidiaries) to be
less than 1.05 to 1.

          7.2.  Consolidated Senior Debt to Consolidated Capital Base. Permit
                -----------------------------------------------------
the ratio of Consolidated Senior Debt to Consolidated Capital Base as at the end
of any fiscal quarter of the Capital Corporation and its consolidated
Subsidiaries (including the end of any fiscal year of the Capital Corporation
and its consolidated Subsidiaries) to be more than 8 to 1.

          7.3.  Limitation on Liens. Issue, incur, assume or guarantee any Debt
                -------------------
secured by any Mortgage upon any of its property or assets, or any of the
property or assets of any of its Subsidiaries (whether any such property or
assets is now owned or hereafter acquired) without in any such case effectively
providing, concurrently with the issuance, incurrence, assumption or guaranty of
any such Debt, that the Loans and all other amounts hereunder (together with, if
the Capital Corporation shall so determine, any other indebtedness of or
guaranty by such Borrower or such Subsidiary ranking equally with the Loans then
existing or thereafter created) shall be secured equally and ratably with or
prior to such Debt; provided, however, that the foregoing restrictions shall not
                    --------  -------
apply to:

          (a)   Mortgages on fixed assets or other physical properties hereafter
acquired to secure all or part of the purchase price thereof or the acquiring
hereafter of such assets or properties subject to any existing lien or charge
securing indebtedness (whether or not assumed);

          (b)   easements, liens, franchises or other minor encumbrances on or
over any real property which do not materially detract from the value of such
property or its use in the business of the Capital Corporation or a Subsidiary
of the Capital Corporation;

          (c)   any deposit or pledge of assets (i) with any surety company or
clerk of any court, or in escrow, as collateral in connection with or in lieu
of, any bond on appeal from any judgment or decree against the Capital
Corporation or a Subsidiary of the Capital Corporation, or in connection with
other proceedings or actions at law or in equity by or against the Capital
Corporation or a Subsidiary of the Capital Corporation or (ii) as security for
the performance of any contract or undertaking not directly or indirectly
related to the borrowing of money or the securing of indebtedness, if made in
the ordinary course of business, or (iii) with any governmental agency, which
deposit or pledge is required or permitted to qualify the Capital Corporation or
a Subsidiary of the Capital Corporation to conduct business, to maintain self-
insurance, or to obtain the benefits of any law pertaining to workmen's
compensation, unemployment insurance, old age pensions, social security, or
similar matters, or (iv) made in the ordinary course of business to obtain the
release of mechanics', workmen's, repairmen's, warehousemen's or similar liens,
or the release of property in the possession of a common carrier;

          (d)   Mortgages by a Subsidiary as security for indebtedness owed to
the Capital Corporation;

                                       43
<PAGE>

          (e)   liens for taxes and governmental charges not yet due or
contested by appropriate proceedings in good faith;

          (f)   Mortgages existing on property acquired by the Capital
Corporation or a Subsidiary of the Capital Corporation through the exercise of
rights arising out of defaults on receivables acquired in the ordinary course of
business;

          (g)   judgment liens, so long as the finality of such judgment is
being contested in good faith and execution thereon is stayed;

          (h)   any Mortgage (other than directly or indirectly to secure
borrowed money) if, after giving effect thereto, the aggregate principal sums
secured by pledges or liens otherwise within the restrictions in clauses (a)
through (h) of this subsection 7.3 do not exceed $500,000;

          (i)   any transaction characterized as a sale of receivables (retail
or wholesale) but reflected as secured indebtedness on a balance sheet in
conformity with generally accepted accounting principles in the United States of
America; and

          (j)   Mortgages on Margin Stock owned by the Capital Corporation and
its Subsidiaries to the extent such Margin Stock exceeds 25% of the fair market
value of property and assets of the Capital Corporation and its Subsidiaries
(including Margin Stock).

          7.4.  Consolidation; Merger.  Merge or consolidate with, or sell or
                ---------------------
convey (other than a conveyance by way of lease) all or substantially all of its
assets to, any other corporation, unless (a) the Capital Corporation shall be
the surviving corporation in the case of a merger or the surviving, resulting or
transferee corporation (the "successor corporation") shall be a corporation
                             ---------------------
organized under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume the due and punctual performance
of all of the agreements, covenants and obligations of the Capital Corporation
under this Agreement by supplemental agreement satisfactory to the
Administrative Agent and executed and delivered to the Administrative Agent by
the successor corporation and (b) the Capital Corporation or such successor
corporation, as the case may be, shall not, immediately after such merger,
consolidation, sale or conveyance, be in default in the performance of any such
agreements, covenants or obligations; provided, however, that the Capital
                                      --------  -------
Corporation may merge or consolidate with, or sell or convey substantially all
of its assets to, the Company, if (i) the Company is the successor corporation
(as defined above) and (ii) subclause (b) above is complied with. Upon any such
merger, consolidation, sale or conveyance, the successor corporation shall
succeed to and be substituted for, and may exercise every right and power of and
shall be subject to all the obligations of, the Capital Corporation under this
Agreement, with the same effect as if the successor corporation had been named
as the Capital Corporation herein and therein.

          SECTION 8    EVENTS OF DEFAULT
                       ----------------

          Upon the occurrence and during the continuance of any of the following
     events:

          (a) Either Borrower shall fail to pay any principal of any Loan when
     due in accordance with the terms hereof or to pay any interest on any Loan,
     in each case within

                                       44
<PAGE>

     two Business Days after any such amount becomes due in accordance with the
     terms hereof or shall fail to pay any other amount payable hereunder within
     five Business Days after any such other amount becomes due in accordance
     with the terms thereof or hereof; or

          (b)   Any representation or warranty made or pursuant to subsection
     4.2 deemed made by either Borrower herein or which is contained in any
     material certificate, material document or material financial statement or
     other material statement furnished at any time under or in connection with
     this Agreement shall prove to have been incorrect in any material respect
     on or as of the date made or deemed made; or

          (c)   The Company shall default in the observance or performance of
     any agreement contained in subsection 5.6, 6.1 or 6.4, or the Capital
     Corporation shall default in the observance or performance of any agreement
     contained in subsections 7.1, 7.2 or 7.4; or

          (d)   Either Borrower shall default in the observance or performance
     of any agreement contained in this Agreement (other than those agreements
     referred to above in this Section 8), and such default shall continue
     unremedied for a period of 30 days after written notice thereof shall have
     been given to such Borrower by the Administrative Agent or any of the Banks
     through the Administrative Agent; or

          (e)   (i) Either Borrower or any of its Significant Subsidiaries shall
     default in any payment of principal of or interest on any indebtedness for
     borrowed money (other than the Loans) in a principal amount in excess of
     $30,000,000 in the aggregate, or any interest or premium thereon, when due
     (whether at scheduled maturity or by required prepayment, acceleration,
     demand or otherwise) and such failure shall continue beyond the period of
     grace, if any, provided in the instrument or agreement under which such
     indebtedness was created; or (ii) any other default (other than any default
     arising solely out of either Borrower's, or any of its Significant
     Subsidiaries', violation of any arrangement with any Bank, or any affiliate
     of any Bank, in any way restricting such Borrower's, or such Significant
     Subsidiary's, right or ability to sell, pledge or otherwise dispose of
     Margin Stock other than Restricted Margin Stock), or any other event that
     with notice or the lapse of time, or both, would constitute such a default,
     under any agreement or instrument relating to any such indebtedness for
     borrowed money (other than the Loans), shall occur and shall continue after
     the applicable grace period, if any, specified in such agreement or
     instrument, if the effect of such default or event is to accelerate the
     maturity of such indebtedness; or (iii) any such indebtedness shall, by
     reason of default, be declared to be due and payable, or required to be
     prepaid, prior to the stated maturity thereof (unless such indebtedness is
     declared due and payable, or required to be prepaid, solely by reason of
     either Borrower's, or any of its Significant Subsidiaries', violation of
     any arrangement with any Bank, or any affiliate of any Bank, in any way
     restricting such Borrower's, or such Significant Subsidiary's, right or
     ability to sell, pledge or otherwise dispose of Margin Stock other than
     Restricted Margin Stock); or

          (f)   (i) Either Borrower or any of its Significant Subsidiaries shall
     commence any case, proceeding or other action (A) under any existing or
     future law of any

                                       45
<PAGE>

     jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
     reorganization or relief of debtors, seeking to have an order for relief
     entered with respect to it, or seeking to adjudicate it a bankrupt or
     insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
     liquidation, dissolution, composition or other relief with respect to it or
     its debts, or (B) seeking appointment of a receiver, trustee, custodian or
     other similar official for it or for all or any substantial part of its
     assets, or such Borrower or any of its Significant Subsidiaries shall make
     a general assignment for the benefit of its creditors; or (ii) there shall
     be commenced against either Borrower or any of its Significant Subsidiaries
     any case, proceeding or other action of a nature referred to in clause (i)
     above which (A) results in the entry of an order for relief or any such
     adjudication or appointment or (B) remains undismissed, undischarged or
     unbonded for a period of 90 days; or

          (g)   Any action is undertaken to terminate any Plan as to which
     either Borrower, or any Subsidiary of either Borrower, may have liability,
     or any such Plan is terminated or such Borrower or Subsidiary withdraws
     from such Plan, or any Reportable Event as to any such Plan shall occur,
     and there shall exist a deficiency in the assets available to satisfy the
     benefits guaranteeable under ERISA with respect to such Plan, in the
     aggregate for all such Plans with respect to which any of the foregoing
     shall have occurred in the immediately preceding 12 consecutive months, of
     more than 25% of the Consolidated Tangible Net Worth of such Borrower; or

          (h)   Any Person shall own beneficially, directly or indirectly, 30%
     or more of the common stock of the Company; or any Person shall have the
     power, direct or indirect, to vote securities having 30% or more of the
     ordinary voting power for the election of directors of the Company or shall
     own beneficially, directly or indirectly, securities having such power,
     provided that there shall not be included among the securities as to which
     --------
     any such Person has such power to vote or which such Person so owns
     securities owned by such Person as nominee for the direct or indirect
     beneficial owner thereof or securities as to which such power to vote
     arises by virtue of proxies solicited by the management of the Company;

then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) above, automatically the Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the Loans shall immediately become due
and payable, and (B) (1) if such event is any Event of Default specified in
paragraph (a) or (e), then with the consent of the Majority Banks, the
Administrative Agent may, or upon the request of the Majority Banks, the
Administrative Agent shall, or (2) if such Event is an Event of Default
specified in paragraph (b), (c), (d), (g) or (h), then with the consent of the
Required Banks, the Administrative Agent may, or upon the request of the
Required Banks, the Administrative Agent shall, take either or both of the
following actions: (i) by notice to the Borrowers, declare the Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate; and
(ii) by notice of default to the Borrowers, declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived
with respect to this Agreement.

                                       46
<PAGE>

          SECTION 9    THE AGENTS
                       ----------

          9.1.  Appointment. (a) Each Bank hereby irrevocably designates and
                -----------
appoints Chase as the Administrative Agent of such Bank under this Agreement,
and each Bank hereby irrevocably authorizes Chase as the Administrative Agent
for such Bank, to take such action on its behalf under the provisions of this
Agreement and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement, together
with such other powers as are reasonably incidental thereto.

          (b)   Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto hereby agree that neither the Syndication Agent,
the Documentation Agents, any Managing Agent nor any Co-Agent shall have any
rights, duties or responsibilities in such respective capacity nor shall any
such Person have the authority to take any action hereunder in its capacity as
such.

          (c)   Notwithstanding any provision to the contrary elsewhere in this
Agreement, no Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against any
Agent.

          9.2.  Delegation of Duties. Each Agent may execute any of its duties
                --------------------
under this Agreement by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Each Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care.

          9.3.  Exculpatory Provisions. Neither any Agent nor any of their
                ----------------------
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable to any Bank for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement (except for its or such Person's own gross negligence or wilful
misconduct), or (ii) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the Borrowers or any
officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
for any failure of the Borrowers to perform their obligations hereunder. No
Agent shall be under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement, or to inspect the properties, books or records of
the Borrowers.

          9.4.  Reliance by Agents. Each Agent shall be entitled to rely, and
                ------------------
shall be fully protected in relying, upon any Loan, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other 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 Borrowers), independent
accountants and other experts selected by such Agent. Each Agent may deem and
treat the payee of any Loan as the

                                       47
<PAGE>

owner thereof for all purposes except as provided in subsections 10.5(c) and
10.5(d). Each Agent shall be fully justified in failing or refusing to take any
discretionary action under this Agreement unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate or it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with a request of the Majority Banks, or all of the Banks (if the
consent of all of the Banks is required), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Banks.

          9.5.  Notice of Default. The Administrative Agent shall not be deemed
                -----------------
to have knowledge or notice of the occurrence of any Default or Event of Default
unless the Administrative Agent has received notice from a Bank or either
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Banks. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Majority Banks, the Required Banks, or all Banks, as applicable;
provided that, unless and until the Administrative Agent shall have received
--------
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Banks.

          9.6.  Non-Reliance on Agents and Other Banks. Each Bank expressly
                --------------------------------------
acknowledges that neither any Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by such Agent hereafter
taken, including any review of the affairs of the Borrowers, shall be deemed to
constitute any representation or warranty by such Agent to any Bank. Each Bank
represents to each Agent that it has, independently and without reliance upon
such Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of each Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Bank also represents that it will,
independently and without reliance upon each Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrowers. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by any Agent hereunder, such Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of either Borrower which may come into the possession of such
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

          9.7.  Indemnification. The Banks agree to indemnify each Agent in its
                ---------------
capacity as such (to the extent not reimbursed by the Borrowers and without
limiting the obligation of the Borrowers to do so), ratably (as reasonably
determined by the Administrative Agent), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,

                                       48
<PAGE>

costs, expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the Loans) be
imposed on, incurred by or asserted against such Agent in any way relating to or
arising out of this Agreement, or any documents contemplated by or referred to
herein or the transactions contemplated hereby or any action taken or omitted by
such Agent under or in connection with any of the foregoing; provided that no
                                                             --------
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or wilful
misconduct. The agreements in this subsection 9.7 shall survive the payment of
the Loans and all other amounts payable hereunder.

          9.8.  Agents in their Individual Capacities. Each Agent and its
                -------------------------------------
respective affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrowers as though such Agent were not
an Agent hereunder. With respect to its Loans made by it, each Agent shall have
the same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not an Agent, and the terms "Bank" and "Banks" shall
include the Administrative Agent in its individual capacity.

          9.9.  Successor Agents. Each Agent may resign as Agent upon 30 days'
                ----------------
notice thereof to the Borrowers and the Banks. If any Agent shall resign as
Agent under this Agreement, then the Majority Banks shall appoint from among the
Banks a successor agent for the Banks which successor agent shall be approved by
the Borrowers, whereupon such successor agent shall succeed to the rights,
powers and duties of the Administrative Agent and the term "Administrative
Agent" shall mean such successor agent effective upon its appointment, and the
former Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any of the
parties to this Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

          SECTION 10   MISCELLANEOUS
                       -------------

          10.1. Amendments and Waivers. With the written consent of the Majority
                ----------------------
Banks, the Administrative Agent and the Borrowers may, from time to time, enter
into written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this Agreement or changing in any manner the rights of
the Banks or of the Borrowers hereunder, and with the consent of the Majority
Banks the Administrative Agent on behalf of the Banks may execute and deliver to
the Borrowers a written instrument waiving, on such terms and conditions as the
Administrative Agent may specify in such instrument, any of the requirements of
this Agreement or any Default or Event of Default and its consequences;
provided, however, that no such waiver, amendment, supplement or modification
--------  -------
shall (a) extend the maturity of any Loan, or reduce the rate or extend the time
of payment of interest thereon, or reduce the principal amount thereof, or
reduce the rate of any fee payable hereunder or extend the time of payment
thereof, in each case, without the written consent of (i) with respect to any
such change to any Committed Rate Loan, each Bank and (ii) with respect to any
such change to any Bid Loan, the Bank which made such Bid Loan, or (b) change
the amount of any Bank's Commitment or the terms of its obligation to make Loans
hereunder (other than in accordance with subsection 2.20)

                                       49
<PAGE>

or amend, modify or waive any provision of this subsection 10.1 or reduce the
percentage specified in the definition of Majority Banks or Required Banks, or
consent to the assignment or transfer by either Borrower of any of its rights
and obligations under this Agreement, in each case without the written consent
of each Bank, or (c) amend, modify or waive any provision of Section 9 without
the written consent of the then Administrative Agent and, if applicable, any
other Agent affected by such amendment, modification or waiver, or (d) extend
the Termination Date with respect to any Bank without the written consent of
such Bank; and provided, further, however, that no such waiver, amendment,
               --------  -------  -------
supplement or modification shall waive, amend, supplement or otherwise modify
subsection 2.16 or Section 8(B) (2) without the written consent of the Required
Banks. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Banks and shall be binding upon the Borrowers, the
Banks and the Agents. In the case of any waiver, the Borrowers, the Banks and
the Agents shall be restored to their former position and rights hereunder, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Anything contained
in the foregoing to the contrary notwithstanding, the relevant Borrower and the
relevant Bank with respect to a Negotiated Rate Loan may, from time to time,
enter into amendments, supplements or modifications for the purpose of adding
any provisions to such Negotiated Rate Loans or changing in any manner the
rights of such Bank and such Borrower thereunder and such Bank may waive any of
the requirements of such Negotiated Rate Loan; provided, however, that such
                                               --------  -------
Borrower and such Bank shall notify the Administrative Agent in writing of any
extension of the maturity of such Negotiated Rate Loan or reduction of the
principal amount thereof; provided, further, that such Borrower and such Bank
                          --------  -------
shall not extend the maturity of such Negotiated Rate Loan beyond the last day
of the Commitment Period.

          10.2. Notices. All notices, requests and demands to or upon the
                -------
respective parties hereto to be effective shall be in writing, by facsimile
transmission, by telephone confirmed in writing or by telegraph and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or when deposited in the mail, postage prepaid, or,
in the case of facsimile transmission, when received, or, in the case of
telegraphic notice, when delivered to the telegraph company or department,
addressed as follows in the case of the Borrowers, the Administrative Agent and
as set forth on Schedule III in the case of the other parties hereto, or to such
address or other address as may be hereafter notified by the respective parties
hereto:

      The Borrowers:
      The Company:                      Deere & Company
                                        Attention:  Treasurer
                                        One John Deere Place
                                        Moline, Illinois  61265
                                        Telephone:  309-765-4162
                                        Facsimile:  309-765-5021

      The Capital                       John Deere Capital Corporation
        Corporation:                    Attention:  Manager
                                        First National Bank Building

                                       50
<PAGE>

                                                    1 East First Street
                                                    Reno, Nevada  89501
                                                    Telephone:  702-786-5527
                                                    Facsimile:  702-786-4145

      with a copy to:                               Deere & Company
                                                    Attention:  Treasurer
                                                    One John Deere Place
                                                    Moline, Illinois  61265
                                                    Facsimile:  309-765-5021

      The Administrative Agent:                     The Chase Manhattan Bank
                                                    Attention:  Randolph Cates
                                                    270 Park Avenue
                                                    New York, New York 10017
                                                    Telephone:  212-270-8997
                                                    Facsimile:  212-270-6041

      with a copy to:                               The Chase Manhattan Bank
                                                    Attention:  Victor Quinones
                                                    One Chase Manhattan Plaza
                                                    New York, New York  10081
                                                    Telephone:  212-552-4025
                                                    Facsimile:  212-552-7500

provided that any notice, request or demand to or upon the Administrative Agent
--------
or the Banks pursuant to subsections 2.1, 2.2, 2.5, 2.6, 2.9, 2.11, 2.20 and 9.9
shall not be effective until received (including receipt by telephone if
permitted hereby).

          10.3.   No Waiver; Cumulative Remedies. No failure to exercise and no
                  ------------------------------
delay in exercising, on the part of either Borrower, the Administrative Agent or
any Bank, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.

          10.4.   Payment of Expenses and Taxes. (a) The Company agrees (i) to
                  -----------------------------
pay or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the preparation and execution of, and any
amendment, supplement or modification to, this Agreement and any other documents
prepared in connection herewith, and the consummation of the transactions
contemplated hereby and thereby in such manner and in such amounts as shall be
agreed to in writing by the Company and the Administrative Agent, (ii) to pay or
reimburse the Administrative Agent for the reasonable fees and disbursements of
counsel to the Administrative Agent incurred in connection with the preparation
and execution of, and any amendment, supplement, modification to, this Agreement
and other documents prepared in connection herewith, and the consummation of the
transaction contemplated hereby and thereby, and (iii) to pay or reimburse each
Bank and each Agent for all its out-of-pocket

                                       51
<PAGE>

costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement and any such other documents, including,
without limitation, fees and disbursements of counsel to each Agent and one
counsel representing the Banks.

          (b)     The Borrowers agree jointly and severally to indemnify and
hold harmless each Agent and each Bank against any and all losses, claims,
damages and liabilities (other than in connection with actions, suits and
proceedings by any of the Banks against any of the other Banks), joint or
several, to which they or any of them may become subject insofar as such losses,
claims, damages and liabilities arise out of, relate to or are based on this
Agreement (including the responsibilities, duties and obligations of the Banks
hereunder and their agreement to make Loans hereunder) in connection with any
acquisition or proposed acquisition of any securities or assets by a Borrower or
any of its Subsidiaries, and shall reimburse each such indemnified party for any
legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage or liability, subject to
the following paragraph. This indemnity agreement shall be in addition to any
liability which either Borrower may otherwise have.

          (c)     Promptly after receipt by an indemnified party under
subsection 10.4(b) of written notice of any loss, claim, damage or liability in
respect of which indemnity may be sought by it hereunder, such indemnified party
will, if a claim is to be made against the Borrowers, notify the Borrowers
thereof in writing; but the omission so to notify the Borrowers will not relieve
the Borrowers from any liability (otherwise than under this subsection 10.4)
which they may have to any indemnified party except as may be required or
provided otherwise than under this subsection 10.4. Thereafter, the indemnified
party and the Borrowers shall consult, to the extent appropriate, with a view to
minimizing the cost to the Borrowers of their obligations hereunder. In case any
indemnified party receives written notice of any loss, claim, damage or
liability in respect of which indemnity may be sought hereunder by it and it
notifies the Borrowers thereof, the Borrowers will be entitled to participate
therein and, to the extent that they may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel reasonably
satisfactory at all times to such indemnified party; provided, however, that (i)
                                                     --------  -------
if the parties against whom any loss, claim, damage or liability arises include
both the indemnified party and a Borrower or any Subsidiary of a Borrower and
the indemnified party shall have reasonably concluded that there may be legal
defenses available to it or other indemnified parties which are different from
or additional to those available to a Borrower or any Subsidiary of a Borrower
and may conflict therewith, the indemnified party or parties shall have the
right to select one separate counsel for such indemnified party or parties to
assume such legal defenses and to otherwise participate in the defense of such
loss, claim, damage or liability on behalf of such indemnified party or parties
and (ii) if any loss, claim, damage or liability arises out of actions brought
by or for the benefit of a Borrower or any Subsidiary of a Borrower, the
indemnified party or parties shall have the right to select their counsel and to
assume and direct the defense thereof and neither Borrower shall be entitled to
participate therein or assume the defense thereof. Upon receipt of notice from
the Borrowers to such indemnified party of their election so to assume the
defense of such loss, claim, damage or liability and approval by the indemnified
party of counsel, the Borrowers shall not be liable to such indemnified party
under this subsection 10.4 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed

                                       52
<PAGE>

such counsel in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence, (ii) the Borrowers shall not
have employed and continued to employ counsel satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after notice
of commencement of the action or (iii) the Borrowers shall have authorized the
employment of counsel for the indemnified party at the expense of the Borrowers.

          (d)     Notwithstanding any other provision contained in this
subsection 10.4, (i) the Borrowers shall not be liable for any settlement,
compromise or consent to the entry of any order adjudicating or otherwise
disposing of any loss, claim, damage or liability effected without their consent
and (ii) after the Borrowers have assumed the defense of any loss, claim, damage
or liability under the preceding paragraph with respect to any Bank, they will
not settle, compromise or consent to entry of any order adjudicating or
otherwise disposing thereof (1) if such settlement, compromise or order involves
the payment of money damages, except if the Borrowers agree with such Bank to
pay such money damages, and, if not simultaneously paid, to furnish such Bank
with satisfactory evidence of their ability to pay such money damages, and (2)
if such settlement, compromise or order involves any relief against such Bank,
other than the payment of money damages, except with the prior written consent
of such Bank.

          (e)     The agreements in this subsection 10.4 shall survive repayment
of the Loans and all other amounts payable hereunder.

          10.5.   Successors and Assigns; Participations; Purchasing Banks. (a)
                  --------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Banks, the Agents and their respective successors and assigns, except that
                                                                   ------ ----
the Borrowers may not assign or transfer any of their rights or obligations
under this Agreement without the prior written consent of each Bank.

          (b)     Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions ("Participants") participating interests
                                        ------------
in the Loans, Commitments and other interests of such Bank hereunder. In the
event of any such sale by a Bank of participating interests to a Participant,
such Bank"s obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Bank shall remain solely responsible for
the performance thereof, such Bank shall remain the holder of any such Loan for
all purposes under this Agreement, and the Borrowers and the Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank"s rights and obligations under this Agreement.

          (c)     Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time assign to one or
more banks or other financial institutions ("Loan Assignees") any Bid Loan or
                                             --------------
Negotiated Rate Loan or portion thereof owing to such Bank, pursuant to a Loan
Assignment executed by the assignor Bank and the Loan Assignee. Upon such
execution, from and after the Transfer Effective Date specified in such Loan
Assignment, the Loan Assignee shall, to the extent of the assignment provided
for in such Loan Assignment and to the extent permitted by applicable law, be
deemed to have the same rights and benefits with respect to such Bid Loans and
Negotiated Rate Loans and the same obligation to share pursuant to subsection
10.6 as it would have had if it were a Bank hereunder; provided, that unless
                                                       --------
such Loan Assignment shall otherwise specify and a copy of such Loan

                                       53
<PAGE>

Assignment shall have been delivered to the Administrative Agent for its
acceptance and recording in the Register in accordance with subsection 10.5(f),
the assignor Bank shall act as collection agent for the Loan Assignee, and in
the case of Bid Loans, the Administrative Agent shall pay all amounts received
from the relevant Borrower which are allocable to the assigned Bid Loan directly
to the assignor Bank without any further liability to the relevant Loan
Assignee, and, in the case of Negotiated Rate Loans, the relevant Borrower shall
pay all amounts due under the assigned Negotiated Rate Loan directly to the
assignor Bank without any further liability to the Loan Assignee. At the request
of any Loan Assignee, on or promptly after the Transfer Effective Date specified
in such Loan Assignment, the relevant Borrower, at its own expense, shall
execute and deliver to the Loan Assignee a promissory note with respect to the
Bid Loans or Negotiated Rate Loans to the order of such Loan Assignee in an
amount equal to the Bid Loan or Negotiated Rate Loan assigned. Such note shall
be dated the Borrowing Date in respect of such Bid Loan or Negotiated Rate Loan
and shall otherwise be in the form of Exhibit M; provided, however, that such
                                                 --------- -------
Borrower shall not be required to execute and deliver more than an aggregate of
two notes with respect to the Bid Loans of any Bank with the same Interest
Period at any time outstanding. A Loan Assignee shall not, by virtue of such
Loan Assignment, become a party to this Agreement or have any rights to consent
to or refrain from consenting to any amendment, waiver or other modification of
any provision of this Agreement or any related document; provided, that (i) the
                                                         --------
assignor Bank and the Loan Assignee may, in their discretion, agree between
themselves upon the manner in which the assignor Bank will exercise its rights
under this Agreement and any related document, and (ii) if a copy of such Loan
Assignment shall have been delivered to the Administrative Agent for its
acceptance and recording in the Register in accordance with subsection 10.5(f),
neither the principal amount of, the interest rate on, nor the maturity date of,
any Bid Loan or Negotiated Rate Loan assigned to a Loan Assignee will be
modified without written consent of such Loan Assignee.

          (d)     Any Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, with the consent of the
Borrowers, sell to any Bank or any affiliate thereof and to one or more
additional banks or other financial institutions ("Purchasing Banks"), all or
                                                   ----------------
portions (subject to the last sentence of this subsection 10.5(d)) of its rights
(which rights may include such Bank"s rights in respect of Loans it has
disbursed) and obligations under this Agreement, pursuant to a Commitment
Transfer Supplement, executed by such Purchasing Bank and such transferor Bank
(and, in the case of a Purchasing Bank that is not then a Bank or an affiliate
thereof, by the Borrowers and the Administrative Agent), and delivered to the
Administrative Agent for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the Transfer
Effective Date specified in such Commitment Transfer Supplement, (i) the
Purchasing Bank thereunder shall be a party hereto and, to the extent provided
in such Commitment Transfer Supplement, have the rights and obligations of a
Bank hereunder with a Commitment as set forth therein, and (ii) the transferor
Bank thereunder shall cease to have those rights and obligations under this
Agreement to which the Purchasing Bank has succeeded (and, in the case of a
Commitment Transfer Supplement covering all or the remaining portion of a
transferor Bank"s rights and obligations under this Agreement, such transferor
Bank shall cease to be a party hereto). Such Commitment Transfer Supplement
shall be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank and the resulting
adjustment of Commitments and Commitment Percentages arising from the purchase
by such Purchasing Bank of a portion of the rights and obligations of such
transferor Bank under this Agreement. On or

                                       54
<PAGE>

promptly after the Transfer Effective Date specified in such Commitment Transfer
Supplement, the Purchasing Bank and the Administrative Agent, on behalf of such
Purchasing Bank, shall open and maintain in the name of each Borrower a Loan
Account with respect to such Purchasing Bank"s Committed Rate Loans and Bid
Loans to such Borrower. Anything contained in this Agreement to the contrary
notwithstanding, no Bank may sell any portion (less than 100%) of its rights and
obligations under this subsection 10.5(d) to any bank or financial institution
if after giving effect to such sale the Commitment of either of the selling and
purchasing institutions would be less than $5,000,000.

          (e)     The Administrative Agent shall maintain at its address
referred to in subsection 10.2 a copy of each Loan Assignment and each
Commitment Transfer Supplement delivered to it and a register (the "Register")
                                                                    --------
for the recordation of (i) the names and addresses of the Banks and the
Commitment of, and principal amount of the Loans (other than Negotiated Rate
Loans) owing to, each Bank from time to time, and (ii) with respect to each Loan
Assignment delivered to the Administrative Agent, the name and address of the
Loan Assignee and the principal amount of each Bid Loan owing to such Loan
Assignee. The entries in the Register shall constitute prima facie evidence of
                                                       ----- -----
the accuracy of the information so recorded, and the Borrowers, the
Administrative Agent and the Banks may treat each Person whose name is recorded
in the Register as the owner of the Loan recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by the Company or
any Bank or Loan Assignee at any reasonable time and from time to time upon
reasonable prior notice.

          (f)     Upon its receipt of a Loan Assignment executed by an assignor
Bank and a Loan Assignee, together with payment to the Administrative Agent (by
the assignor Bank or the Loan Assignee, as agreed between them) of a
registration and processing fee of $3,500, the Administrative Agent shall (i)
accept such Loan Assignment, (ii) record the information contained therein in
the Register and (iii) give prompt notice of such acceptance and recordation to
the assignor Bank, the Loan Assignee and the Borrowers. Upon its receipt of a
Commitment Transfer Supplement executed by a transferor Bank and a Purchasing
Bank (and, in the case of a Purchasing Bank that is not then a Bank or an
affiliate thereof, by the Borrowers and the Administrative Agent) together with
payment to the Administrative Agent (by the transferor Bank or the Purchasing
Bank, as agreed between them) of a registration and processing fee of $3,500 for
each Purchasing Bank listed in such Commitment Transfer Supplement, the
Administrative Agent shall (A) accept such Commitment Transfer Supplement, (B)
record the information contained therein in the Register and (C) give prompt
notice of such acceptance and recordation to the Banks and the Borrowers.

          (g)     The Company authorizes each Bank to disclose to any
Participant, Loan Assignee or Purchasing Bank (each, a "Transferee") and any
                                                        ----------
prospective Transferee any and all financial information in such Bank"s
possession concerning the Borrowers and their Subsidiaries which has been
delivered to such Bank by or on behalf of the Borrowers pursuant to this
Agreement or in connection with such Bank"s credit evaluation of the Borrowers
and their Subsidiaries prior to becoming a party to this Agreement, provided
                                                                    --------
that with respect to confidential data or information described in subsection
10.7, such confidential data may be disclosed only to (i) a Purchasing Bank
and/or (ii) any other Transferee or prospective Transferee with the Borrowers"
prior written consent, which consent shall not be unreasonably withheld with
respect to prospective Participants, Participants, prospective Loan Assignees
and Loan

                                       55
<PAGE>

Assignees; provided, however, that such Bank shall not disclose any such
           --------  -------
confidential data or information pursuant to this subsection 10.5(g) unless (i)
it has notified the Purchasing Bank or other Transferee or potential Transferee
that such data or information are confidential, such notification to be in
writing if such data or information are disclosed in writing and orally if such
data or information are disclosed orally, and (ii) such Purchasing Bank,
Transferee or potential Transferee has agreed in writing to be bound by the
provisions of subsection 10.7.

          (h)     If, pursuant to this subsection, any loan participation or
series of loan participations is sold or any interest in this Agreement is
transferred to any Transferee, the transferor Bank shall cause such Transferee,
concurrently with the effectiveness of such transfer or the first transfer to
occur in a series of transfers between such transferor Bank and such Transferee,
(i) to represent to the transferor Bank (for the benefit of the transferor Bank,
the Administrative Agent and the Borrowers) either (A) that it is incorporated
under the laws of the United States or a state thereof or (B) that under
applicable law and treaties no taxes will be required to be withheld by the
Administrative Agent, the Borrowers or the transferor Bank with respect to any
payments to be made to such Transferee in respect of the Loans, (ii) to furnish
to the transferor Bank, the Administrative Agent and the Borrowers (A) either
(I) a statement that it is incorporated under the laws of the United States or a
state thereof or (II) if it is not so incorporated, a letter in duplicate in the
form of Exhibit J or Exhibit K, as appropriate, and two duly completed copies of
United States Internal Revenue Service Form 4224 or 1001 or successor applicable
form, as the case may be, certifying in each case that such Transferee is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case may
be, to establish an exemption from United States backup withholding tax, and
(iii) to agree (for the benefit of the transferor Bank, the Administrative Agent
and the Borrowers) to provide the transferor Bank, the Administrative Agent and
the Borrowers a new Form 4224 or 1001 and Form W-8 or W-9, or successor
applicable form or other manner of certification, on or before the date that any
such letter or form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent letter and form previously delivered
by it, certifying in the case of a Form 1001 or 4224 that such Transferee is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income tax, and in the case of a Form
W-8 or W-9 establishing exemption from United States backup withholding tax. The
Administrative Agent shall not be responsible for obtaining such documentation
except from its own Transferees.

          (i)     Nothing in this subsection 10.5 shall prohibit any Bank from
pledging or assigning its Loans to any Federal Reserve Bank in accordance with
applicable law.

          (j)     The Borrowers, upon receipt of written notice from the
relevant Bank, agree to issue Notes to any Bank requiring Notes to facilitate
transactions of the type described in paragraph (i) above.

          (k)     Notwithstanding anything to the contrary contained herein, any
Bank (a "Granting Bank") may grant to a special purpose funding vehicle (an
         -------------
"SPC"), identified as such in writing from time to time by the Granting Bank to
 ---
the Administrative Agent and the Company, the option to provide to the Borrowers
all or any part of any Loan that such Granting Bank would otherwise be obligated
to make to the Borrowers pursuant to this Agreement;

                                       56
<PAGE>

provided that (i) nothing herein shall constitute a commitment by any SPC to
--------
make any Loan, (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Bank shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Bank to the
same extent, and as if, such Loan were made by such Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Bank). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this subsection
10.5(k) any SPC may (i) with notice to, but without the prior written consent
of, the Company and the Administrative Agent and without paying any processing
fee therefor, assign all or a portion of its interests in any Loans to the
Granting Bank or to any financial institutions (consented to by the Company and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This subsection
10.5(k) may not be amended without the written consent of the SPC.

          10.6.   Adjustments.  Except as provided in subsection 2.12, if any
                  -----------
Bank (a "benefitted Bank") shall at any time receive any payment of all or part
         ---------------
of its Committed Rate Loans, or interest thereon or facility fee hereunder, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
clause (e) of Section 8, or otherwise) in a greater proportion than any such
payment to and collateral received by any other Bank, if any, in respect of such
other Bank"s Committed Rate Loans, or interest thereon, or facility fee
hereunder, such benefitted Bank shall purchase for cash from the other Banks
such portion of each such other Bank"s Committed Rate Loans, or shall provide
such other Banks with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Bank to share the excess
payment or benefits of such collateral or proceeds ratably with each of such
other Banks; provided, however, that if all or any portion of such excess
             --------  -------
payment or benefits is thereafter recovered from such benefitted Bank, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. The Borrowers agree that each
Bank so purchasing a portion of another Bank"s Committed Rate Loans may exercise
all rights of payment (including, without limitation, rights of set-off) with
respect to such portion as fully as if such Bank were the direct holder of such
portion.

          10.7.   Confidentiality.  (a) Each of the Agents and the Banks shall,
                  ---------------
subject as hereinafter provided, keep confidential from any third party any data
or information received by them from the Borrowers pursuant to this Agreement
which, if provided in writing, is designated in writing as such, and if provided
orally, is designated orally as such by the Borrowers except:

                                       57
<PAGE>

          (i)     any such data or information as is or becomes publicly
     available or generally known otherwise than as a result of any breach of
     the provisions of this subsection 10.7;

          (ii)    as required by law, rule, regulation or official direction;

          (iii)   as may be necessary to protect as against the Borrowers or
     either of them the interests of the Banks or any of them under this
     Agreement;

          (iv)    to the extent permitted under subsection 10.5; and

          (v)     to the attorneys, accountants and regulators of such Banks,
     and to each other Bank.

          (b)     Each of the Agents and the Banks shall use their reasonable
efforts to ensure that any confidential data or information received by them
from the Borrowers pursuant to this Agreement which is disclosed to employees of
such Agent or Bank (as the case may be) is so disclosed only to the extent
necessary for purpose of the administration of this Agreement and, in all cases,
on the condition that such information and data shall be kept confidential
except for such purpose.

          (c)     The provisions of this subsection 10.7 shall survive the
payment in full of all amounts payable hereunder and the termination of this
Agreement.

          10.8.   Counterparts.  This Agreement may be executed by one or more
                  ------------
of the parties to this Agreement on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrowers and the Administrative Agent.

          10.9.   GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
                  -------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

          10.10   Consent to Jurisdiction and Service of Process. All judicial
                  ----------------------------------------------
proceedings brought against the Borrowers with respect to this Agreement may be
brought in any state or federal court of competent jurisdiction in the State of
New York, and, by execution and delivery of this Agreement, the Borrowers
accept, for themselves and in connection with their properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
irrevocably agree to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available. The Borrowers irrevocably agree that all process in any such
proceedings in any such court may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to them at their addresses set forth in subsection 10.2 or at
such other address of which the Administrative Agent shall have been notified
pursuant thereto, such service being hereby acknowledged by the Borrowers to be
effective and binding service in every respect. Each of the Borrowers, the
Agents and the Banks irrevocably waives any objection, including without

                                       58
<PAGE>

limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens which it may now or hereafter have to the bringing of any
such action or proceeding in any such jurisdiction. Nothing herein shall affect
the right to serve process in any other manner permitted by law or shall limit
the right of any Agent or any Bank to bring proceedings against the Borrowers in
the courts of any other jurisdiction.

                                       59
<PAGE>

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

                                             DEERE & COMPANY
Attested by:

/s/ Sonja J. Sterling                        By: /s/ James R. Jabanoski
------------------------------------            --------------------------------
Title: Assistant Secretary                   Title: Vice President and Treasurer

                                             JOHN DEERE CAPITAL CORPORATION

Attested by:

/s/ Susan E. Karlix                          By: /s/ James R. Jabanoski
--------------------------------                --------------------------------
Title: Assistant Secretary                   Title: Treasurer
<PAGE>

                                       THE CHASE MANHATTAN BANK,
                                        as Administrative Agent and as a Bank

                                       By:   /s/ Rudolph E. Gates
                                                 RUDOLPH E. GATES
                                          Title: VICE PRESIDENT

                                       BANK OF AMERICA, N.A., as a
                                        Documentation Agent and as a Bank

                                       By:
                                         Title:

                                       BANK ONE, NA, as a Documentation Agent
                                        and as a Bank

                                       By:    /s/ Richard R. Howard
                                                  Richard R. Howard
                                          Title:  Vice President
                                                  Senior Relationship Manager

                                       DEUTSCHE BANK AG NEW YORK BRANCH AND/OR
                                       CAYMAN ISLANDS BRANCH, as Syndication
                                        Agent and as a Bank

                                       By:    /s/ Chris Howe
                                                  Chris Howe
                                          Title:  Director

                                       By:    /s/ Andreas Rohde
                                                  Andreas Rohde
                                          Title:  Director

                                       THE BANK OF NEW YORK,
                                        as a Managing Agent and as a Bank

                                       By:    /s/ Robert S. Joyce
                                                  Robert S. Joyce
                                          Title:  VP
<PAGE>

                                       CITIBANK, N.A.,
                                         as a Managing Agent and as a Bank

                                       By:    /s/ David L. Harris
                                                  DAVID L. HARRIS
                                          Title:  VICE PRESIDENT

                                       CREDIT AGRICOLE INDOSUEZ,
                                         as a Managing Agent and as a Bank

                                       By:
                                         Title:

                                       By:
                                         Title:

                                       CREDIT SUISSE FIRST BOSTON,
                                         as a Managing Agent and as a Bank

                                       By: /s/ Jay Chall
                                         Title: Jay Chall Director

                                       By: /s/ James Morgan
                                         Title: James Morgan, Director

                                       ROYAL BANK OF CANADA,
                                         as a Managing Agent and as a Bank

                                       By: /s/ Gordon C. MacArthur
                                         Title: Gordon C.. MacArthur
                                                  SENIOR MANAGER
<PAGE>

                                       TORONTO DOMINION (TEXAS), INC.,
                                         as a Managing Agent and as a Bank

                                       By:   /s/ Debbie A. Greene
                                                 DEBBIE A. GREENE
                                          Title: VICE PRESIDENT

                                       MELLON BANK, N.A.,
                                         as a Managing Agent and as a Bank

                                       By:
                                         Title:

                                       BNP PARIBAS,
                                         as a Co-Agent and as a Bank

                                       By: /s/ Frederick H. Moryl, Jr.
                                               Frederick H. Moryl, Jr.
                                       Title:  Director

                                       By: /s/ Richard L. Sted
                                               Richard L. Sted
                                       Title:  Managing Director - Central
                                               Region Mgr.

                                       THE FUJI BANK, LIMITED,
                                         as a Co-Agent and as a Bank

                                       By:/s/ Peter L. Chinnicl
                                             Peter L. Chinnicl
                                       Title:Senior Vice President & Group Head

                                       BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO
                                       BRANCH, as a Bank

                                       By:/s/ Hisashi Miyashiro
                                               HISASHI MIYASHIRO
                                       Title:  DEPUTY GENERAL MANAGER
<PAGE>

                                       BANCA DI ROMA-CHICAGO BRANCH,
                                        as a Bank

                                       By: /s/ James W. Semonchik
                                               James W. Semonchik
                                       Title:  Vice President

                                       By: /s/ Enrico Verdoscia
                                               Enrico Verdoscia
                                       Title:  Sr. Vice Pres. & Branch Mgr.

                                       BANCO BILBAO VIZCAYA ARGENTARIA, S.A.,
                                         as a Bank

                                       By:
                                         Title:

                                       By:
                                         Title:

                                       BANCA COMMERCIALE ITALIANA, CHICAGO
                                         BRANCH, as a Bank

                                       By: /s/ Charles Dougherty
                                         Title: C. Dougherty, VP

                                       By: /s/ Frank Maffei
                                               Frank Maffei
                                       Title:  VICE PRESIDENT

                                       MERRILL LYNCH BANK USA,
                                         as a Bank

                                       By: /s/ Raymond J. Dardano
                                               Raymond J. Dardano
                                       Title:  Senior Credit Officer
<PAGE>

                                       WACHOVIA BANK, N.A.,
                                         as a Bank

                                       By:   /s/ John T. Seedy
                                                 John T. Seedy
                                          Title: Senior Vice President

                                       MERITA BANK PLC,
                                         as a Bank

                                       By:
                                             Title:

                                       By:
                                             Title:
<PAGE>

                                                                      SCHEDULE I
                                                                      ----------

                            TERMS OF SUBORDINATION

               "Senior Indebtedness" means the principal of (and premium, if
                -------------------
any) and unpaid interest on (a) indebtedness of John Deere Capital Corporation
(the "Capital Corporation") (including indebtedness of others guaranteed by the
Capital Corporation), other than the indebtedness evidenced by the Securities
[such term to be defined as the debt to be issued under the indenture or
agreement to which this Schedule relates] and the 8-5/8% Subordinated Debentures
due 2019 of the Capital Corporation, whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed, for money borrowed, unless
in the instrument creating or evidencing the same or pursuant to which the same
is outstanding it is provided that such indebtedness is not senior or prior in
right of payment to the Securities, and (b) renewals, extensions, modifications
and refundings of any such indebtedness.

                                 SUBORDINATION

               Section 1.  Agreement to Subordinate.
                           ------------------------

               The Capital Corporation, for itself, its successors and assigns,
covenants and agrees, and each holder of Securities, by such holder"s acceptance
thereof, likewise covenants and agrees, that the payment of the principal of
(and premium, if any) and interest on each and all of the Securities is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all Senior Indebtedness.

               Section 2.  Distribution on Dissolution, Liquidation and
                           --------------------------------------------
Reorganization; Subrogation of Securities.
-----------------------------------------

               Upon any distribution of assets of the Capital Corporation upon
any dissolution, winding up, liquidation or reorganization of the Capital
Corporation, whether in bankruptcy, insolvency, reorganization or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Capital Corporation or
otherwise (subject to the power of a court of competent jurisdiction to make
other equitable provisions reflecting the rights conferred in this Agreement
upon the Senior Indebtedness and the holders thereof with respect to the
Securities by a lawful plan of reorganization under applicable bankruptcy law),

               (a)  the holders of Senior Indebtedness shall be entitled to
         receive payment in full of the principal thereof (and premium if any)
         and the interest due on the Senior Indebtedness before the holders of
         the Securities are entitled to receive any payment upon the principal
         of (or premium, if any) or interest on indebtedness evidenced by the
         Securities; and

               (b)  any payment or distribution of assets of the Capital
         Corporation of any kind or character, whether in cash, property or
         securities, to which the holders of the Securities or any trustee
         therefor would be entitled except for the provisions of this
<PAGE>

          Article shall be paid by the liquidating trustee or agent or other
          person making such payment or distribution, whether a trustee in
          bankruptcy, a receiver or liquidating trustee or otherwise, directly
          to the holders of Senior Indebtedness or their representative or
          representatives or to the trustee or trustees under any indenture
          under which any instruments evidencing any of such Senior Indebtedness
          may have been issued, ratably according to the aggregate amounts
          remaining unpaid on account of the principal of (and premium, if any)
          and interest on the Senior Indebtedness held or represented by each
          holder of Senior Indebtedness, to the extent necessary to make payment
          in full of all Senior Indebtedness remaining unpaid, after giving
          effect to any concurrent payment or distribution to the holders of
          such Senior Indebtedness; and

                  (c) in the event that, notwithstanding the foregoing, any
          payment or distribution of assets of the Capital Corporation of any
          kind or character, whether in cash, property or securities, shall be
          received by any trustee for the holders of the Securities or the
          holders of the Securities before all Senior Indebtedness is paid in
          full, such payment or distribution shall be paid over, upon written
          notice to any trustee for the holders of the Securities, to the
          holders of Senior Indebtedness or their representative or
          representatives or to the trustee or trustees under any indenture
          under which any instruments evidencing any of such Senior Indebtedness
          may have been issued, ratably as aforesaid, for application to the
          payment of all Senior Indebtedness remaining unpaid until all such
          Senior Indebtedness shall have been paid in full, after giving effect
          to any concurrent payment or distribution to the holders of such
          Senior Indebtedness.

Subject to the payment in full of all Senior Indebtedness, the holders of the
Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Capital Corporation applicable to Senior Indebtedness until
the principal of (and premium, if any) and interest on the Securities shall be
paid in full and no such payments or distributions to the holders of the
Securities of cash, property or securities otherwise distributable to the
holders of Senior Indebtedness shall, as between the Capital Corporation, its
creditors other than the holders of Senior Indebtedness, and the holders of the
Securities, be deemed to be a payment by the Capital Corporation to or on
account of the Securities. It is understood that the provisions of this Article
are, and are intended, solely for the purpose of defining the relative rights of
the holders of the Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand. Nothing contained in this Article or elsewhere
in this Agreement or in the Securities is intended to or shall impair, as
between the Capital Corporation, its creditors other than the holders of Senior
Indebtedness, and the holders of the Securities, the obligation of the Capital
Corporation, which is unconditional and absolute, to pay to the holders of the
Securities the principal of (and premium, if any) and interest on the Securities
as and when the same shall become due and payable in accordance with their
terms, or to affect the relative rights of the holders of the Securities and
creditors of the Capital Corporation other than the holders of Senior
Indebtedness, nor shall anything herein or in the instruments or other evidence
of the Securities prevent any trustee for the holders of the Securities or the
holder of any Securities from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement or such instrument or other
evidence, subject to the rights, if any, under this Article of the holders of
Senior Indebtedness in respect of cash, property or securities of the Capital
Corporation received upon the exercise of any such remedy.
<PAGE>

                  Section 3.  No Payment on Securities in Event of Non-Payment
                              ------------------------------------------------
When Due of Senior Indebtedness.
-------------------------------

                  No payment by the Capital Corporation on account of principal
(or premium, if any), sinking funds, or interest on the Securities shall be made
unless full payment of amounts then due for principal, premium, if any, sinking
funds and interest on Senior Indebtedness has been made or duly provided for in
money or money"s worth.
<PAGE>

                                                                     SCHEDULE II
                                                                     -----------

                                  COMMITMENTS

<TABLE>
<CAPTION>
                                          Bank                                           Commitment
                                          ----                                           ----------
<S>                                                                                  <C>
The Chase Manhattan Bank                                                               $275,000,000
Bank of America, N.A.                                                                   180,000,000
Deutsche Bank AG New York Branch and/or Cayman Islands Branch                           180,000,000
Bank One, NA                                                                            180,000,000
Credit Suisse First Boston                                                              130,000,000
Royal Bank of Canada                                                                    130,000,000
Citibank, N.A.                                                                          130,000,000
Toronto Dominion (Texas), Inc.                                                          130,000,000
The Bank of New York                                                                    112,500,000
Credit Agricole Indosuez                                                                112,500,000
Mellon Bank, N.A.                                                                       100,000,000
BNP Paribas                                                                              70,000,000
The Fuji Bank, Limited                                                                   70,000,000
Merrill Lynch Bank USA                                                                   50,000,000
Wachovia Bank, N.A.                                                                      37,500,000
Banca Commerciale Italiana, Chicago Branch                                               37,500,000
Banca di Roma Chicago Branch                                                             37,500,000
Banca Bilbao Vizcaya Argentaria, S.A.                                                    37,500,000
Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch                                           37,500,000
Merita Bank PLC                                                                          37,500,000

                                                                           ------------------------
Total                                                                                $2,075,000,000
</TABLE>
<PAGE>

                                                                    SCHEDULE III
                                                                    ------------

                             ADDRESSES FOR NOTICES

The Chase Manhattan Bank
Attention:  Randolph Cates
270 Park Avenue - 47/th/ Floor
New York, New York  10017
Telephone:  (212) 270-8997
Facsimile:  (212) 270-6041

Bank of America, N.A.
Attention: Leonar Manhard
Bank of America, N.A.
901 Main Street
Dallas, Texas  75202
Telephone: (214) 209-9262
Facsimile: (214) 290-9430

Bank One, NA
Attention:  Rick Howard
1 Bank One Plaza
Ill-0888
Chicago, Illinois  60670
Telephone:  (312) 732-3179
Facsimile:  (312) 732-1117

Deutsche Bank AG New York Branch and/or Cayman Islands Branch
Attention:  Christopher Howe
31 West 52/nd/ Street
New York, New York  10019
Telephone: (212) 469-8111
Facsimile: (212) 469-8115

Citibank, N.A.
Attention:  John Coons
500 West Madison Street
7/th/ Floor, Zone 1
Chicago, Illinois  60661
Telephone:  (312) 627-3970
Facsimile:  (312) 627-3990
<PAGE>

Credit Agricole Indosuez
Attention:  Ted Tice
Suite 4700
55 East Monroe Street
Chicago, Illinois  60603-5702
Telephone: (312) 917-7463
Facsimile: (312) 372-3455

Credit Suisse First Boston
Attention: Ron Davis
5 World Trade Center
8/th/ Floor
New York, New York  10048-0928
Telephone: (212) 322-1865
Facsimile:  (212) 335-0593

Royal Bank of Canada
New York Branch
Attention: Manager, Loans Admin.
One Liberty Plaza, 3/rd/ Floor
New York, New York  10006-1404
Telephone: (212) 428-6323
Facsimile: (212) 428-2372

with a copy to:

Royal Bank of Canada
Attention: G. MacArthur
One Liberty Plaza, 4/th/ Floor
New York, New York  10006-1404
Telephone: (212) 428-2324
Facsimile: (212) 428-2319

The Bank of New York
Attention: Janeth Lopez, Loan Administration
One Wall Street, 22/nd/ Floor
New York, New York  10286
Telephone: (212) 635-6761
Facsimile: (212) 635-6397

The Toronto-Dominion Bank
Attention: Alva J. Jones
909 Fannin Street, 17/th/ Floor
Houston, Texas  77010
Telephone: (713) 653-8261
Facsimile: (713) 951-9221

                                       2
<PAGE>

BNP Paribas
Attention:  Frederick H. Moryl, Jr.
209 South LaSalle Street, Suite 500
Chicago, Illinois  60604
Telephone: (312) 977-2211
Facsimile: (312) 977-1380

Mellon Bank, N.A.
Attention:  Richard Bouchard - Loan Administrator
Three Mellon Bank Center
Room 1203
Pittsburgh, Pennsylvania  15259-0003
Telephone: (412) 234-5767
Facsimile: (412) 209-6117

Wachovia Bank, N.A.
Attention:  Susan Holmes
191 Peachtree Street, Northeast
Atlanta, Georgia  30303
Telephone: (404) 332-4277
Facsimile:  (404) 332-5016

Bank of Tokyo-Mitsubishi, Ltd., Chicago Branch
Attention: Diane Tkach
227 W. Monroe Street Suite 2300
Chicago, Illinois  60606
Telephone: (312) 696-4663
Facsimile: (312) 696-4535

Banca di Roma-Chicago Branch
Attention:  James Semonchik
225 West Washington
Suite 1200
Chicago, Illinois  60606
Telephone: (312) 704-2629
Facsimile: (312) 726-3058

Banco Bilbao Vizcaya Argentaria, S.A.
Attention: Alejandro Lorca
1345 Avenue of the Americas, 45/th/ Floor
New York, New York  10105
Telephone: (212) 728-1634
Facsimile: (212) 333-2904

                                       3
<PAGE>

Banca Commerciale Italiana, Chicago Branch
Attention:  Charles Dougherty, Vice President
One William Street
New York, New York  10004
Telephone: (212) 607-3656
Facsimile: (212) 809-2124

The Fuji Bank, Limited
Attention:  James S. Bell
225 W. Wacker Drive Suite 2000
Chicago, Illinois  60606
Telephone: (312) 621-0526
Facsimile: (312) 621-3386

Merita Bank PLC
Attention:  Thomas Hickey
437 Madison Ave., 21/st/ Floor
New York, New York  10022
Telephone: (212) 318-9306
Facsimile: (212) 318-9318

Merrill Lynch Bank USA
Attention:  Butch Alder
15 W. South Temple, Suite 300
Salt Lake City, Utah  84101
Telephone: (801) 526-8324
Facsimile: (801) 521-6466

                                       4
<PAGE>

                                                                       EXHIBIT A
                                                                       ---------

                          [FORM OF BORROWING NOTICE]

                                                 __________, 200_

The Chase Manhattan Bank,
  as Administrative Agent under the
Credit Agreement referred to below
One Chase Manhattan Plaza
New York, New York  10081
Attention:  Victor Quinones

Ladies and Gentlemen:

                  Pursuant to subsection 2.1(c) of the $2,075,000,000 364-Day
Credit Agreement, dated as of February 20, 2001, among DEERE & COMPANY, JOHN
DEERE CAPITAL CORPORATION, the Banks parties thereto, THE CHASE MANHATTAN BANK,
as Administrative Agent, BANK OF AMERICA, N.A. and BANK ONE, NA, as
Documentation Agents, DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent,
the Managing Agents named therein and the Co-Agents named therein (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), the undersigned hereby requests that the following
 ----------------
Committed Rate Loans be made on __________, 200_ as follows:

<TABLE>
<S>                                                                                    <C>
         (1)   Total Amount of Committed Rate                                           $_________
                 Loans .............................................................
         (2)   Amount of (1) to be allocated to
                 Eurodollar Loans. .................................................    $__________

         (3)   Amount of (1) to be allocated to
                 ABR Loans..........................................................    $__________

         (4)   Interest Periods and amounts to be
                 allocated thereto in respect of
                 Eurodollar Loans (amounts must total (2)):.........................    $__________

                             (i)   one month........................................    $__________

                             (ii)  two months.......................................    $__________

                             (iii) three months.....................................    $__________

                             (iv)  six months.......................................    $__________
</TABLE>
<PAGE>

                                                                             A-2

<TABLE>
<S>                                                                                  <C>
                             Total Eurodollar Loans.................................  $__________
</TABLE>
NOTE: THE AMOUNT APPEARING IN LINE (1) ABOVE MUST BE AT LEAST EQUAL TO
      $25,000,000 AND IN A WHOLE MULTIPLE OF $5,000,000 AND THE AMOUNTS
      APPEARING IN EACH OTHER LINE ABOVE MUST BE AT LEAST EQUAL TO $10,000,000
      AND IN A WHOLE MULTIPLE OF $1,000,000.

                  Terms defined in the Credit Agreement shall have the same
meanings when used herein.

                                              Very truly yours,

                                              [DEERE & COMPANY]
                                              [JOHN DEERE CAPITAL CORPORATION]

                                              By:______________________________
                                                   Title:
<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

                          [FORM OF BID LOAN REQUEST]

                                                __________, 200_

The Chase Manhattan Bank,
         as Administrative Agent under the Credit
         Agreement referred to below
One Chase Manhattan Plaza, 8th Floor
New York, New York  10081
Attention:  Chris Consomer

Ladies and Gentlemen:

                  Reference is made to the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001, among DEERE & COMPANY, JOHN DEERE
CAPITAL CORPORATION, the Banks parties thereto, THE CHASE MANHATTAN BANK, as
Administrative Agent, BANK OF AMERICA, N.A. and BANK ONE, NA, as Documentation
Agents, DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
                                                                    ------
Agreement"). Terms defined in the Credit Agreement are used herein as therein
---------
defined.

                  This is an [Index Rate] [Absolute Rate] Bid Loan Request
pursuant to subsection 2.2 of the Credit Agreement requesting quotes for the
following Bid Loans:

<TABLE>
<S>                              <C>                     <C>                    <C>
Aggregate Principal Amount       $_______________        $______________        $______________
Borrowing Date                    _______________         ______________         ______________
Interest Period                   _______________         ______________         ______________
Maturity Period                   _______________         ______________         ______________
Interest Payment Dates            _______________         ______________         ______________
Interest Rate Basis               360 day year
</TABLE>

                                  NOTE:   THE AGGREGATE PRINCIPAL AMOUNTS
                                          APPEARING ABOVE MUST BE IN THE
                                          AGGREGATE AT LEAST EQUAL TO
                                          $25,000,000 AND IN A WHOLE MULTIPLE OF
                                          $5,000,000.
<PAGE>

                                                                             B-2
                                          Very truly yours,

                                          [DEERE & COMPANY]
                                          [JOHN DEERE CAPITAL CORPORATION]

                                          By:__________________________________
                                               Title:

-----------

Note:  Pursuant to the Credit Agreement, a Bid Loan Request may be transmitted
       by facsimile transmission, or by telephone, immediately confirmed by
       facsimile transmission. In any case, a Bid Loan Request shall contain the
       information specified in the second paragraph of this form.
<PAGE>

                                                                       EXHIBIT C
                                                                       ---------

                           [FORM OF BID LOAN OFFER]

                                                __________, 200_

The Chase Manhattan Bank, as Administrative
         Agent under the Credit Agreement
         referred to below
One Chase Manhattan Plaza, 8/th/ Floor
New York, New York  10081
Attention: Chris Consomer

Ladies and Gentlemen:

                  Reference is made to the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001, among DEERE & COMPANY, JOHN DEERE
CAPITAL CORPORATION, the Banks parties thereto, THE CHASE MANHATTAN BANK, as
Administrative Agent, BANK OF AMERICA, N.A. and BANK ONE, NA, as Documentation
Agents, DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
                                                                    ------
Agreement"). Terms defined in the Credit Agreement are used herein as therein
---------
defined.

                  In accordance with subsection 2.2 of the Credit Agreement, the
undersigned Bid Loan Bank offers to make Bid Loans thereunder in the following
amounts with the following maturity dates:

Borrowing Date:  _________________, 200_

Aggregate Maximum Amount:  $________
<PAGE>

                                                                             C-2

<TABLE>
<S>                                     <C>                                    <C>
Maturity Date 1:                         Maturity Date 2:                       Maturity Date 3:
---------------                          ---------------                        ---------------
Maximum Amount    $______                Maximum Amount    $______              Maximum Amount    $_______
Rate* ____Amount  $______                Rate* ____Amount  $______              Rate* ___Amount   $_______
Rate* ____Amount  $______                Rate* ____Amount  $______              Rate* ___Amount   $_______
</TABLE>

                                                   Very truly yours,

                                                   [NAME OF BID LOAN BANK]

                                                   By:_________________________
                                                        Name:
                                                        Title:
                                                        Telephone:
                                                        Facsimile:

* If Index Rate Bid Loan, insert percentage above or below Eurodollar Rate.
<PAGE>

                                                                       EXHIBIT D
                                                                       ---------

                        [FORM OF BID LOAN CONFIRMATION]

                                                    __________, 200_

The Chase Manhattan Bank, as Administrative Agent
         under the Credit Agreement referred
         to below
One Chase Manhattan Plaza, 8/th/ Floor
New York, New York  10081
Attention:  Chris Consomer

Ladies and Gentlemen:

                  Reference is made to the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001, among DEERE & COMPANY, JOHN DEERE
CAPITAL CORPORATION, the Banks parties thereto, THE CHASE MANHATTAN BANK, as
Administrative Agent, BANK OF AMERICA, N.A. and BANK ONE, NA, as Documentation
Agents, DEUTSCHE BANK AG NEW YORK BRANCH, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
                                                                    ------
Agreement"). Terms defined in the Credit Agreement are used herein as therein
---------
defined.

                  In accordance with subsection 2.2 of the Credit Agreement, the
undersigned accepts and confirms the offers by Bid Loan Bank(s) to make Bid
Loans to the undersigned on ______________, 200_ [Borrowing Date] under said
subsection 2.2 in the (respective) amount(s) set forth on the attached list of
Bid Loans offered.

                                             Very truly yours,

                                             [DEERE & COMPANY]
                                             [JOHN DEERE CAPITAL CORPORATION]

                                             By:________________________________
                                                  Title:

[Borrower to attach Bid Loan Offer list prepared by Administrative Agent with
accepted amount entered by the Borrower to right of each Bid Loan Offer].
<PAGE>

                                                                       EXHIBIT E
                                                                       ---------

                           [FORM OF LOAN ASSIGNMENT]

                                LOAN ASSIGNMENT
                                ---------------

                  LOAN ASSIGNMENT, dated as of the date set forth in Item 1 of
Schedule I hereto, among the Assignor Bank set forth in Item 2 of Schedule I
hereto (the "Assignor Bank"), the Loan Assignee set forth in Item 3 of Schedule
             -------------
I hereto (the "Loan Assignee"), and THE CHASE MANHATTAN BANK, as administrative
               -------------
agent for the Banks under the Credit Agreement described below (in such
capacity, the "Administrative Agent").
               --------------------

                              W I T N E S S E T H :
                              - - - - - - - - - - -

                  WHEREAS, this Loan Assignment is being executed and delivered
in accordance with subsection 10.5(c) of the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001 among DEERE & COMPANY (the "Company"),
                                                                     -------
JOHN DEERE CAPITAL CORPORATION (the "Capital Corporation"), the Banks parties
                                     -------------------
thereto, THE CHASE MANHATTAN BANK, as Administrative Agent, BANK OF AMERICA,
N.A. and BANK ONE, NA, as Documentation Agents, DEUTSCHE BANK AG NEW YORK
BRANCH, as Syndication Agent, the Managing Agents named therein and the
Co-Agents named therein (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "Credit Agreement"; terms
                                                    ----------------
defined therein being used herein as therein defined); and

                  WHEREAS, the Assignor Bank has advanced to [the Company] [the
Capital Corporation] the Bid Loan or Negotiated Rate Loan or portion thereof
described in Item 5 of Schedule I hereto (the "Loan"), and the Assignor Bank is
                                               ----
assigning the Loan to the Loan Assignee pursuant to this Loan Assignment;

                  NOW, THEREFORE, the parties hereto hereby agree as follows:

                  1.     The Assignor Bank acknowledges receipt from the Loan
Assignee of an amount equal to the purchase price, as agreed between the
Assignor Bank and the Loan Assignee, of the outstanding principal amount of, and
accrued interest on, the Loan. The Assignor Bank hereby irrevocably sells,
assigns and transfers to the Loan Assignee without recourse, representation or
warranty, and the Loan Assignee hereby irrevocably purchases, takes and acquires
from the Assignor Bank, the Loan, together with all instruments, documents and
collateral security pertaining thereto.

                  2.     (a) From and after the date set forth in Item 4 of
Schedule I hereto (the "Transfer Effective Date"), principal and interest that
                        -----------------------
would otherwise be payable to or for the account of the Assignor Bank pursuant
to the Loan shall, instead, be payable to or for the account of the Loan
Assignee.

                  (b)    If Item 6 of Schedule I hereto contains payment
instructions for the Loan Assignee and if the Loan Assignee delivers a copy of
this Loan Assignment to the
<PAGE>

                                                                             E-2

Administrative Agent in accordance with subsection 10.5(f) of the Credit
Agreement at least 5 Business Days prior to the due date of any payment to the
Loan Assignee, the Loan Assignee hereby instructs the Administrative Agent to
pay all such amounts payable to it pursuant to the provision of subparagraph (a)
of this paragraph 2 in accordance with such payment instructions. If Item 6 of
Schedule I hereto does not contain payment instructions for the Loan Assignee
(or a copy hereof is not delivered to the Administrative Agent as aforesaid),
the Assignor Bank and the Loan Assignee agree that, notwithstanding the
provisions of subparagraph (a) of this paragraph 2, the Assignor Bank is hereby
appointed by the Loan Assignee as its collection agent to receive from the
Administrative Agent, for and on behalf of and for the account of the Loan
Assignee, all amounts payable to or for the account of the Loan Assignee under
the Loan; the Assignor Bank will immediately pay over to the Loan Assignee any
such amounts received by it, in like funds as received.

                  3.     Each of the parties to this Loan Assignment agrees that
at any time and from time to time upon the written request of any other party,
it will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Loan Assignment.

                  4.     By executing and delivering this Loan Assignment, the
Assignor Bank and the Loan Assignee confirm to and agree with each other and the
Administrative Agent and the Banks as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned hereby free and clear of any adverse claim, the Assignor Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other instrument or document furnished pursuant thereto
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (ii) the Assignor Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or the Capital Corporation or the performance or observance by the Company or
the Capital Corporation of any of its obligations under the Credit Agreement or
any other instrument or document furnished pursuant thereto; (iii) the Loan
Assignee confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements referred to in subsection 3.1 of the
Credit Agreement (unless financial statements referred to in subsection 5.1(a)
of the Credit Agreement have become available), the financial statements
delivered pursuant to subsection 5.1 of the Credit Agreement, if any, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Loan Assignment; (iv) the Loan
Assignee will, independently and without reliance upon the Administrative Agent,
the Assignor Bank or any other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in respect of the Credit Agreement; and (v) the Loan Assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Administrative Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, all in accordance with Section 9 of the
Credit Agreement.

                  5.     If the Loan Assignee is organized under the laws of any
jurisdiction other than the United States or any State thereof, the Loan
Assignee (i) represents to the Assignor
<PAGE>

                                                                             E-3

Bank (for the benefit of the Assignor Bank, the Administrative Agent and [the
Company] [the Capital Corporation]) that under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent, [the Company]
[the Capital Corporation] or the Assignor Bank with respect to any payments to
be made to the Loan Assignee in respect of the Loan, (ii) will furnish to the
Assignor Bank, the Administrative Agent and [the Company] [the Capital
Corporation], on or prior to the Transfer Effective Date, a letter in duplicate
in the form of Exhibit J or Exhibit K, as appropriate, to the Credit Agreement
and two duly completed copies of either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Service Form 1001 (wherein the Loan Assignee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments under the Loan), (iii) will furnish to the Assignor Bank, the
Administrative Agent and [the Company] [the Capital Corporation], on or prior to
the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or
U.S. Internal Revenue Service Form W-9 (wherein the Loan Assignee claims
entitlement to complete exemption from U.S. federal backup withholding tax on
all interest payments under the Loan) and (iv) agrees (for the benefit of the
Assignor Bank, the Administrative Agent and [the Company] [the Capital
Corporation]) to provide the Assignor Bank, the Administrative Agent and [the
Company] [the Capital Corporation] a new Form 4224 or Form 1001 and Form W-8 or
W-9 or successor applicable form or other manner of certification on or before
the expiration or obsolescence of, or after the occurrence of any event
requiring a change in, any previously delivered letter or form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by the Loan Assignee, and comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption and such backup withholding tax exemption.

                  6.     The Loan Assignee agrees to be bound by subsection 10.7
of the Credit Agreement relating to confidentiality.

                  7.     This Loan Assignment shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

                  IN WITNESS WHEREOF, the parties hereto have caused this Loan
Assignment to be executed by their respective duly authorized officers on
Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
<PAGE>

                                                                      SCHEDULE I
                                                                      TO LOAN
                                                                      ASSIGNMENT
                                                                      ----------

Item 1      (Date of Loan                       [Insert date of Loan Assignment]
            Assignment):

Item 2      (Assignor Bank):                    [Insert name of Assignor Bank]

Item 3      (Loan Assignee):                    [Insert name, address, telephone
                                                and telex numbers and name of
                                                contact party of Loan Assignee]

Item 4      (Transfer Effective Date):          [Insert Transfer Effective Date]
                                                [To be a date not less than five
                                                Business Days after date of Loan
                                                Assignment]

Item 5      (Description of Loan):
            a.     Borrowing Date and Maturity  Date of Bid Loan or Negotiated
            Loan:                               Rate
            b.     Principal Amount of Loan:

Item 6      (Payment Instructions):             [Complete only if payments are
                                                to be made by Administrative
                                                Agent to Loan Assignee rather
                                                than to Assignor Bank as
                                                collection agent for Loan
                                                Assignee; leave blank if
                                                Assignor Bank is to act as such
                                                collection agent]

Item 7      (Signatures):
                                                ______________________________,
                                                as Assignor Bank

                                                By:____________________________
                                                   Title:

                                                ______________________________,
                                                as Loan Assignee

                                                By:____________________________
                                                   Title:

ACCEPTED FOR RECORDATION
  IN REGISTER:

THE CHASE MANHATTAN BANK, as
Administrative Agent

By:__________________________
   Title:
<PAGE>

                                                                       EXHIBIT F
                                                                       ---------

                   [FORM OF COMMITMENT TRANSFER SUPPLEMENT]

                        COMMITMENT TRANSFER SUPPLEMENT
                        ------------------------------

                  COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth
in Item 1 of Schedule I hereto, among the Transferor Bank set forth in Item 2 of
Schedule I hereto (the "Transferor Bank"), each Purchasing Bank set forth in
                        ---------------
Item 3 of Schedule I hereto (each, a "Purchasing Bank"), DEERE & COMPANY, a
                                      ---------------
Delaware corporation (the "Company"), JOHN DEERE CAPITAL CORPORATION, a Delaware
                           -------
corporation (the "Capital Corporation"), and THE CHASE MANHATTAN BANK, as
                  -------------------
administrative agent for the Banks under the Credit Agreement described below
(in such capacity, the "Administrative Agent").
                        --------------------

                             W I T N E S S E T H :
                             - - - - - - - - - - -

                  WHEREAS, this Commitment Transfer Supplement is being executed
and delivered in accordance with subsection 10.5(d) of the $2,075,000,000
364-Day Credit Agreement, dated as of February 20, 2001, among the Company, the
Capital Corporation, the Transferor Bank and the other Banks party thereto, The
Chase Manhattan Bank, as Administrative Agent, Bank of America, N.A. and Bank
One, NA, as Documentation Agents, Deutsche Bank AG New York Branch, as
Syndication Agent, the Managing Agents named therein and the Co-Agents named
therein (as from time to time amended, supplemented or otherwise modified in
accordance with the terms thereof, the "Credit Agreement"; terms defined therein
                                        ----------------
being used herein as therein defined);

                  WHEREAS, each Purchasing Bank (if it is not already a Bank
party to the Credit Agreement) wishes to become a Bank party to the Credit
Agreement; and

                  WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit Agreement;

                  NOW, THEREFORE, the parties hereto hereby agree as follows:

                  1.     From and after the Transfer Effective Date set forth in
Item 4 of Schedule I hereto (the "Transfer Effective Date"), each Purchasing
Bank shall be a Bank party to the Credit Agreement for all purposes thereof.

                  2.     The Transferor Bank acknowledges receipt from each
Purchasing Bank of an amount equal to the purchase price, as agreed between the
Transferor Bank and such Purchasing Bank (the "Purchase Price"), of the portion
                                               --------------
being purchased by such Purchasing Bank (such Purchasing Bank's "Purchased
                                                                 ---------
Percentage") of the outstanding Commitment of such Transferor Bank and/or
----------
Committed Rate Loans and other amounts owing to the Transferor Bank under the
Credit Agreement (other than any Bid Loans and Negotiated Rate Loans owing to
the Transferor Bank). The Transferor Bank hereby irrevocably sells, assigns and
transfers to each Purchasing Bank, without recourse, representation or warranty,
and each Purchasing Bank
<PAGE>

                                                                             F-2

hereby irrevocably purchases, takes and assumes from the Transferor Bank, such
Purchasing Bank"s Purchased Percentage of the Commitments and the presently
outstanding Committed Rate Loans and other amounts owing to the Transferor Bank
under the Credit Agreement (other than any Bid Loans and Negotiated Rate Loans
owing to the Transferor Bank) together with all instruments, documents and
collateral security pertaining thereto.

                  3.     The Transferor Bank has made arrangements with each
Purchasing Bank with respect to (i) the portion, if any, to be paid, and the
date or dates for payment, by the Transferor Bank to such Purchasing Bank of any
fees heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date and (ii) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.

                  4.     (a) From and after the Transfer Effective Date,
principal, interest, fees and other amounts that would otherwise be payable to
or for the account of the Transferor Bank pursuant to the Credit Agreement and
the Committed Rate Loans (other than any Bid Loans and Negotiated Rate Loans
owing to the Transferor Bank) shall, instead, be payable to or for the account
of the Transferor Bank and the Purchasing Banks, as the case may be, in
accordance with their respective interests as reflected in this Commitment
Transfer Supplement, whether such amounts have accrued prior to the Transfer
Effective Date or accrue subsequent to the Transfer Effective Date.

                  (b)    The Transferor Bank and each Purchasing Bank hereby
agree and instruct the Administrative Agent that, notwithstanding the provisions
of subparagraph (a) of this paragraph 4, on each date hereafter on which
interest or fees are payable under the Credit Agreement and the Committed Rate
Loans in respect of any period (an "Accrual Period") ending on or prior to the
                                    --------------
Transfer Effective Date, any such interest or fees payable to the Purchasing
Bank on account of such Accrual Period in respect of its interests as reflected
in this Commitment Transfer Supplement shall be paid over to the Transferor Bank
(and, if such interest or fees are not paid in full when due, the payment over
to the Transferor Bank shall be ratable), and the Transferor Bank and such
Purchasing Bank will make appropriate arrangements for the payment to such
Purchasing Bank of the portion thereof owing to it to reflect the amount, if
any, included in the Purchase Price for interest and fees in respect of any
Accrual Period.

                  5.     On or promptly after the Transfer Effective Date
specified in this Commitment Transfer Supplement, the Purchasing Bank and the
Administrative Agent, on behalf of such Purchasing Bank, shall open and maintain
in the name of each Borrower a Loan Account with respect to such Purchasing
Bank"s Committed Rate Loans and Bid Loans to such Borrower.

                  6.     Concurrently with the execution and delivery hereof,
the Administrative Agent will, at the expense of the Transferor Bank, provide to
each Purchasing Bank (if it is not already a Bank party to the Credit Agreement)
conformed copies of all documents delivered to the Administrative Agent on the
Closing Date in satisfaction of the conditions precedent set forth in the Credit
Agreement.
<PAGE>

                                                                             F-3

                  7.     Each of the parties to this Commitment Transfer
Supplement agrees that at any time and from time to time upon the written
request of any other party, it will execute and deliver such further documents
and do such further acts and things as such other party may reasonably request
in order to effect the purposes of this Commitment Transfer Supplement.

                  8.     By executing and delivering this Commitment Transfer
Supplement, the Transferor Bank and each Purchasing Bank confirm to and agree
with each other and the Administrative Agent and the Banks as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other instrument or
document furnished pursuant thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
Committed Rate Loans or any other instrument or document furnished pursuant
thereto; (ii) the Transferor Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Company
or the Capital Corporation or the performance or observance by the Company or
the Capital Corporation of any of its obligations under the Credit Agreement or
any other instrument or document furnished pursuant thereto; (iii) each
Purchasing Bank confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in subsection 3.1
of the Credit Agreement, the financial statements delivered pursuant to
subsection 5.1 of the Credit Agreement, if any, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Commitment Transfer Supplement; (iv) each Purchasing
Bank will, independently and without reliance upon the Administrative Agent, the
Transferor Bank or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement; (v) each Purchasing
Bank appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement as
are delegated to the Administrative Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, all in accordance with Section
9 of the Credit Agreement; and (vi) each Purchasing Bank agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank.

                  9.     If the Purchasing Bank is organized under the laws of
any jurisdiction other than the United States or any State thereof, the
Purchasing Bank (i) represents to the Transferor Bank (for the benefit of the
Transferor Bank, the Administrative Agent and the Borrowers) that under
applicable law and treaties no taxes will be required to be withheld by the
Administrative Agent, the Borrowers or the Transferor Bank with respect to any
payments to be made to the Purchasing Bank in respect of the Loans, (ii) will
furnish to the Transferor Bank, the Administrative Agent and the Borrowers, on
or prior to the Transfer Effective Date, a letter in duplicate in the form of
Exhibit J or Exhibit K, as appropriate, to the Credit Agreement and two duly
completed copies of either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein the Purchasing Bank claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments in respect of the Loans), (iii) will furnish to the Transferor
Bank, the Administrative Agent and the Borrowers, on or prior
<PAGE>

                                                                             F-4

to the Transfer Effective Date either U.S. Internal Revenue Service Form W-8 or
U.S. Internal Revenue Service Form W-9 (wherein the Purchasing Bank claims
entitlement to complete exemption from U.S. federal backup withholding tax on
all interest payments under the Loan) and (iv) agrees (for the benefit of the
Transferor Bank, the Administrative Agent and the Borrowers), to provide the
Transferor Bank, the Administrative Agent and the Borrowers a new Form 4224 or
Form 1001 and Form W-8 or W-9 or successor applicable form or other manner of
certification on or before the expiration or obsolescence of, or after the
occurrence of any event requiring a change in, any previously delivered letter
or form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by the Purchasing Bank,
and comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption and such backup withholding tax
exemption.

                  10.    The Purchasing Bank agrees to be bound by subsection
10.7 of the Credit Agreement relating to confidentiality.

                  11.    Schedule II hereto sets forth the revised Commitments
and Commitment Percentages of the Transferor Bank and each Purchasing Bank as
well as administrative information with respect to each Purchasing Bank.

                  12.    This Commitment Transfer Supplement shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Commitment Transfer Supplement to be executed by their respective duly
authorized officers on Schedule I hereto as of the date set forth in Item 1 of
Schedule I hereto.
<PAGE>

                                                                      SCHEDULE I
                                                                      TO
                                                                      COMMITMENT
                                                                      TRANSFER
                                                                      SUPPLEMENT
                                                                      ----------

                         COMPLETION OF INFORMATION AND
                           SIGNATURES FOR COMMITMENT
                              TRANSFER SUPPLEMENT
                              -------------------

Item 1      (Date of Commitment                [Insert date of Commitment
            Transfer Supplement):              Transfer Supplement]

Item 2      (Transferor Bank):                 [Insert name of Transferor Bank]

Item 3      (Purchasing Bank[s])               [Insert name[s] of Purchasing
                                               Bank[s]]

Item 4      (Transfer Effective Date):         [Insert Transfer Effective Date:]
                                               [To be a date not less than five
                                               Business Days after date of
                                               Commitment Transfer Supplement]

Item 5      (Signatures of Parties             _______________________________,
            to Commitment Transfer             as Transferor Bank
            Supplement):

                                               By:_____________________________
                                                  Title:

                                               _______________________________,
                                               as a Purchasing Bank

                                               By:_____________________________
                                                  Title:

                                               _______________________________,
                                               as a Purchasing Bank

                                               By:_____________________________
                                                  Title:
<PAGE>

                                                                             I-2

CONSENTED TO AND ACKNOWLEDGED:

DEERE & COMPANY

By:_________________________________
     Title:

JOHN DEERE CAPITAL CORPORATION

By:_________________________________
     Title:

ACCEPTED FOR RECORDATION
  IN REGISTER:

THE CHASE MANHATTAN BANK, as Administrative
  Agent

By:_________________________________
     Title:
<PAGE>

                                                                   SCHEDULE II
                                                                   TO COMMITMENT
                                                                   TRANSFER
                                                                   SUPPLEMENT
                                                                   ----------

                      LIST OF LENDING OFFICES, ADDRESSES
                      FOR NOTICES AND COMMITMENT AMOUNTS
                      ----------------------------------

<TABLE>
<CAPTION>
<S>                                     <C>                                             <C>
[Name of Transferor Bank]                Revised Commitment Amount:                      $_____________
                                         -------------------------
                                         Revised Commitment Percentage:                   _____________
                                         -----------------------------
[Name of Purchasing Bank]                New Commitment Amount:                          $_____________
                                         ---------------------
Address for Notices:
-------------------
                                         New Commitment Percentage:                       _____________
                                         -------------------------
--------------------
--------------------
--------------------
Attn:  _____________
Telephone:  _____________
Facsimile:  _____________
[Name of Purchasing Bank]                New Commitment Amount:                          $_____________
                                         ---------------------
Address for Notices:
-------------------
                                         New Commitment Percentage:                        _____________
--------------------                     -------------------------
--------------------
--------------------
Attn:  _____________
Telephone:  _____________
Facsimile:  _____________
</TABLE>
<PAGE>

                                                                       EXHIBIT G
                                                                       ---------

                      [FORM OF OPINION OF GENERAL COUNSEL
                                TO THE COMPANY]

                                               [Closing Date]
To each of the Banks parties to
the Credit Agreement referred to
below and to The Chase Manhattan
Bank, as Administrative Agent

                              Deere & Company and
                              -------------------
                        John Deere Capital Corporation
                        ------------------------------

Ladies and Gentlemen:

                  This opinion is furnished to you pursuant to subsection 4.1(c)
of the $2,075,000,000 364-Day Credit Agreement dated as of February 20, 2001
(the "Credit Agreement") among Deere & Company (the "Company"), John Deere
Capital Corporation (the "Capital Corporation", the Company and the Capital
Corporation being referred to herein individually as a "Borrower" and
collectively as the "Borrowers"), the Banks parties thereto, The Chase Manhattan
Bank, as Administrative Agent, Bank of America, N.A. and Bank One, NA, as
Documentation Agents, Deutsche Bank AG New York Branch, as Syndication Agent,
the Managing Agents named therein and the Co-Agents named therein for said
Banks. Terms defined in the Credit Agreement are used herein as therein defined.

                  I am General Counsel of the Company and have acted as counsel
for the Capital Corporation in this matter. I am familiar with the corporate
history and organization of each Borrower and of its Subsidiaries and the
proceedings relating to the authorization, execution and delivery by each
Borrower of the Credit Agreement. In that connection I have examined or caused
to have examined:

                  1.       The Credit Agreement;

                  2.       The documents furnished by each of the Borrowers
                           pursuant to Section 4 of the Credit Agreement;

                  3.       The Certificates of Incorporation of the Borrowers
                           and all amendments thereto (the "Charters");

                  4.       The bylaws of the Borrowers and all amendments
                           thereto (the "Bylaws"); and

                  5.       Certificates of the Secretary of State of Delaware,
                           each dated a recent date, attesting to the continued
                           corporate existence and good standing of the
                           Borrowers in that State.
<PAGE>

                                                                             G-2

                  In addition, I have reviewed or caused to have reviewed such
of the corporate proceedings of the Borrowers, and have examined or caused to
have examined such documents, corporate records, and other instruments relating
to the organization of the Borrowers and their respective Subsidiaries and such
other agreements and instruments to which the Borrowers and their respective
Subsidiaries are parties, as I consider necessary as a basis for the opinions
hereinafter expressed. I have assumed the due execution and delivery, pursuant
to due authorization, of the Credit Agreement by the Banks, the Administrative
Agent, the Syndication Agent, the Documentation Agents, the Managing Agents and
the Co-Agents, and the authenticity of all documents submitted to me as
originals and the conformity to the original documents of all documents
submitted to me as certified, conformed or photostatic copies.

                  I am qualified to practice law in the State of Illinois and
the State of Michigan and do not purport to be an expert on, and do not express
any opinion herein concerning, any laws other than the laws of the State of
Illinois and the State of Michigan, the General Corporation Law of the State of
Delaware and the Federal laws of the United States.

                  Based upon the foregoing and upon such investigation as I have
deemed necessary, I am of the following opinion:

                  1.       Each Borrower is a corporation duly organized,
                           validly existing and in good standing under the laws
                           of the State of Delaware and has the corporate power
                           and authority to carry on its business as now being
                           conducted and to own its properties.

                  2.       The execution, delivery and performance by each
                           Borrower of the Credit Agreement are within such
                           Borrower's corporate powers, have been duly
                           authorized by all necessary corporate action, and (i)
                           do not contravene, or constitute a default under the
                           Charter or the Bylaws of such Borrower, any judgment,
                           law, rule or regulation applicable to such Borrower,
                           or any Contractual Obligation by which such Borrower
                           is bound or (ii) result in the creation of any lien,
                           charge or encumbrance upon any of its property or
                           assets. The Credit Agreement has been duly executed
                           and delivered on behalf of each Borrower.

                  3.       No authorization, 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 each Borrower
                           of the Credit Agreement.

                  4.       There is no pending or, to the best of my knowledge,
                           threatened action or proceeding against either
                           Borrower or any of its Subsidiaries before any court,
                           governmental agency or arbitrator which is likely to
                           have a materially adverse effect upon the financial
                           condition or operations of such Borrower and its
                           Subsidiaries taken as a whole.
<PAGE>

                                                                             G-3

                  I am aware that Shearman & Sterling will rely upon the
opinions set forth in paragraphs 1, 2, and 3 of this opinion in rendering their
opinion furnished pursuant to subsection 4.1(c) of the Credit Agreement and
consent thereto.

                                             Very truly yours,

                                             James R. Jenkins
<PAGE>

                                                                       EXHIBIT H
                                                                       ---------

                 [FORM OF OPINION OF SPECIAL NEW YORK COUNSEL
                               TO THE BORROWERS]

                                                [Closing Date]

To each of the Banks parties to the
Credit Agreement referred to below and
to The Chase Manhattan Bank, as
Administrative Agent

                                Deere & Company
                                ---------------
                        John Deere Capital Corporation
                        ------------------------------

Ladies and Gentlemen:

                  This opinion is furnished to you pursuant to subsection 4.1(c)
of the $2,075,000,000 364-Day Credit Agreement, dated as of February 20, 2001
(the "Credit Agreement"), among Deere & Company (the "Company"), John Deere
Capital Corporation (the "Capital Corporation", the Company and the Capital
Corporation being referred to herein individually as a "Borrower" and
collectively as the "Borrowers"), the Banks parties thereto, The Chase Manhattan
Bank, as Administrative Agent, Bank of America, N.A. and Bank One, NA, as
Documentation Agents, Deutsche Bank AG New York Branch, as Syndication Agent,
the Managing Agents named therein and the Co-Agents named therein. Terms defined
in the Credit Agreement are used herein as therein defined.

                  We have acted as special New York counsel for the Borrowers in
connection with the preparation, execution and delivery of the Credit Agreement.

                  In that connection we have examined:

                  (1)      the Credit Agreement; and

                  (2)      the documents furnished by each of the Borrowers
         pursuant to Section 4.1 of the Credit Agreement.

                  We have assumed the due execution and delivery, pursuant to
due authorization, of the Credit Agreement by the Banks and the Agents, the
authenticity of all documents submitted to us as originals and the conformity to
the original documents of all documents submitted to us as certified, conformed
or photostatic copies. We have also assumed that the Banks and the Agents will
perform the Credit Agreement reasonably and in good faith and will act
reasonably and in good faith in taking action, exercising discretion and making
determinations thereunder. We have also assumed that no Bid Loan or Negotiated
Rate Loan made in an amount of less than $2,500,000 will bear interest at a rate
greater than 25% per annum.
<PAGE>

                                                                             H-2

                  We are qualified to practice law in the State of New York. We
do not express any opinion herein concerning any laws other than the laws of the
State of New York and the Federal laws of the United States. To the extent our
opinions expressed below involve conclusions as to matters set forth in
paragraph 1, 2 or 3 of the opinion of James R. Jenkins, General Counsel of the
Company, a copy of which is being delivered to you today pursuant to Section
4.1(c) of the Credit Agreement, we have, with your permission, relied on such
opinion.

                  Based upon the foregoing and upon such investigation as we
have deemed necessary, we are of the opinion that the Credit Agreement
constitutes the legal, valid and binding obligation of each Borrower enforceable
against such Borrower in accordance with its terms, subject to (a) the effect of
any applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers, reorganization and moratorium) or similar law
affecting creditors" rights generally and (b) the effect of general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law).

                                           Very truly yours,

                                           SHEARMAN & STERLING
<PAGE>

                                                                       EXHIBIT I
                                                                       ---------

                          [FORM OF EXTENSION REQUEST]

                          ____________________, 200_

The Chase Manhattan Bank,
as Administrative Agent
One Chase Manhattan Plaza
New York, New York  10081
Attention:  ______________________

Ladies and Gentlemen:

                  Reference is made to the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001 among Deere & Company, John Deere
Capital Corporation, the Banks parties thereto, The Chase Manhattan Bank, as
Administrative Agent, Bank of America, N.A. and Bank One, NA, as Documentation
Agents, Deutsche Bank AG New York Branch, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein (as the same may be
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein as therein
defined.

                  This is an Extension Request pursuant to subsection 2.16 of
the Credit Agreement requesting an extension of the Termination Date to [INSERT
REQUESTED TERMINATION DATE]. Please transmit a copy of this Extension Request to
each of the Banks.
                                         Very truly yours,

                                         DEERE & COMPANY

                                         By:___________________________________
                                              Title:

                                         JOHN DEERE CAPITAL CORPORATION

                                         By:___________________________________
                                              Title:
<PAGE>

                                                                       EXHIBIT J
                                                                       ---------

                             [FORM OF TAX LETTER]

                   [To be sent in DUPLICATE and accompanied
                    by TWO executed copies of Form 1001 of
                         the Internal Revenue Service]

                              [Bank's Letterhead]

                                                   __________, 200_

Deere & Company
One John Deere Place
Moline, Illinois  61265
Attention:  Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada  89501
Attention:  Manager

                 Re:      $2,075,000,000 364-Day Credit Agreement
                          dated as of February 20, 2001 with Deere &
                          Company and John Deere Capital Corporation
                          ------------------------------------------

Ladies and Gentlemen:

                  In connection with the $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001, among Deere & Company, John Deere
Capital Corporation, the Banks parties thereto, The Chase Manhattan Bank, as
Administrative Agent, Bank of America, N.A. and Bank One, NA, as Documentation
Agents, Deutsche Bank AG New York Branch, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein, we hereby represent and
warrant that [name of Bank, address] is a [name of Country] corporation and is
currently exempt from any U.S. federal withholding tax on payments to it from
U.S. sources by virtue of compliance with the provisions of the Income Tax
Convention between the United States and [name of Country] signed [date], [as
amended]. Our fiscal year is the twelve months ending [_____________].

                  The undersigned (a) is a corporation organized under the laws
of [_______] whose registered business is managed or controlled in [_______],
(b) [does not have a permanent establishment or fixed base in the United States]
[does have a permanent establishment or fixed base in the United States but the
above Agreement is not effectively connected with such permanent establishment
or fixed base], (c) is not exempt from tax on the income in [_______] and (d) is
the beneficial owner of the income.
<PAGE>

                                                                             J-2

                  We enclose herewith two copies of Form 1001 of the U.S.
Internal Revenue Service.

                                             Yours faithfully,

                                             [NAME OF BANK]

                                             By:___________________________
                                                Title:

cc: The Chase Manhattan Bank, as Administrative Agent
<PAGE>

                                                                       EXHIBIT K
                                                                       ---------

                             [FORM OF TAX LETTER]

                   [To be sent in DUPLICATE and accompanied
                    by TWO executed copies of Form 4224 of
                         the Internal Revenue Service]

                              [Bank's Letterhead]

                                                 _________________________, 200_
Deere & Company
One John Deere Place
Moline, Illinois 61265
Attention: Treasurer

John Deere Capital Corporation
First National Bank Building
1 East First Street
Reno, Nevada 89501
Attention: Manager

                     Re:      $2,075,000,000 364-Day Credit Agreement
                              dated as of February 20, 2001 with Deere &
                              Company and John Deere Capital Corporation
                              ------------------------------------------

Ladies and Gentlemen:

                  In connection with the above $2,075,000,000 364-Day Credit
Agreement, dated as of February 20, 2001 among Deere & Company, John Deere
Capital Corporation, the Banks parties thereto, The Chase Manhattan Bank, as
Administrative Agent, Bank of America, N.A. and Bank One, NA, as Documentation
Agents, Deutsche Bank AG New York Branch, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein, we hereby represent and
warrant that [name of Bank, address] is a corporation and is entitled to
exemption from U.S. federal withholding tax on payments to it under the
Agreement by virtue of Section 1441(c)(1) of the Internal Revenue Code of the
United States of America and Treasury Regulation Section 1.1441-4(a) thereunder.
<PAGE>

                                                                             K-2
          We enclose herewith two copies of Form 4224 of the U.S. Internal
Revenue Service.

                                         Yours faithfully,

                                         [NAME OF BANK]

                                         By:__________________________
                                            Title:

cc:  The Chase Manhattan Bank, as Administrative Agent
<PAGE>

                                                                       EXHIBIT L
                                                                       ---------
                              [FORM OF AGREEMENT]

          THIS AGREEMENT, dated as of _____, 200_ ("Agreement"), among Deere &
                                                    ---------
Company (the "Company"), John Deere Capital Corporation (the "Capital
              -------                                         -------
Corporation"), ____________ ("New Bank") and The Chase Manhattan Bank, as
-----------                   --------
Administrative Agent for the Existing Banks referred to below.

                             W I T N E S S E T H :
                             - - - - - - - - - -

          WHEREAS, the Company, the Capital Corporation, the several financial
institutions parties thereto (the "Existing Banks"), The Chase Manhattan Bank,
                                   --------------
as Administrative Agent, Bank of America, N.A. and Bank One, NA, as
Documentation Agents, Deutsche Bank AG New York Branch, as Syndication Agent,
the Managing Agents named therein and the Co-Agents named therein are parties to
the $2,075,000,000 364-Day Credit Agreement, dated as of February 20, 2001 (as
the same may have been or may hereafter be amended, supplemented or otherwise
modified, the "Credit Agreement"; terms defined therein being used herein as
               ----------------
therein defined);

          WHEREAS, subsection 2.19 of the Credit Agreement provides that one or
more financial institutions (which may be Existing Banks) may be added as a
"Bank" or "Banks" for purposes of the Credit Agreement upon the cancellation of
all or a portion of the Commitments pursuant to subsection 2.13(a), (b) or (c),
2.16(c) or 2.17(b) of the Credit Agreement or the expiration of all or a portion
of the Commitments pursuant to subsection 2.16(b) of the Credit Agreement and
the execution of an agreement in substantially the form of this Agreement;

          WHEREAS, the Borrowers have cancelled or there have expired an
aggregate principal amount of Commitments equal to $______which have not
heretofore been replaced (the "Cancelled Commitments"; the Banks that are
                               ---------------------
maintaining or have maintained the Cancelled Commitments being collectively
referred to as "Cancelled Banks"); such Cancelled Commitments being on the date
                ---------------
hereof, or on the date of notice of cancellation hereof having been, utilized as
follows:

                                                         Last day of
Principal Amount                                         Interest Period
                                                         ---------------
I     Unused Portion                                          N/A
      --------------

II    Committed Rate Loans
      --------------------
Eurodollar Loans

      1
      2
      3
<PAGE>

                                                                             L-2

ABR Loans                                                          N/A

III    Bid Loans
       ---------

       1
       2
       3

IV     Negotiated Rate Loans
       ---------------------

       1
       2
       3

          WHEREAS, the cancellation of the Cancelled Commitments is effective in
accordance with the Credit Agreement; and

          WHEREAS, [the Borrowers desire the New Bank to become, and the New
Bank is agreeable, to becoming, a "Bank" for purposes of the Credit Agreement]
[the New Bank is an Existing Bank and the Borrowers desire the New Bank to
increase, and the New Bank is agreeable to increasing, its Commitment]* on the
terms contained herein.

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

          1.   Benefits of Agreement.  The Borrowers, the Administrative Agent
               ----------------------
and the New Bank hereby [agree that on and as of the date hereof the New Bank
shall be] [confirm that the New Bank is] a "Bank" for all purposes and shall
[continue to] be bound by and entitled to the benefits of the Credit Agreement
[as if the New Bank had been named on the signature pages thereof], provided
                                                                    --------
that the New Bank shall not assume and shall, except as herein provided, have no
obligations in respect of any Loans outstanding on the date hereof and made by
any [Existing Bank.] [Cancelled Bank.]*

          2.   Commitment of New Bank. The Borrowers, the Administrative Agent
               ----------------------
and the New Bank hereby agree that on and as of the dates set forth below the
New Bank shall replace, as specified herein, _% (such percentage being referred
to as the New Bank"s "Percentage") of each utilization of the Cancelled
Commitments [set forth in the third recital hereof] [set forth under the caption
"Committed Rate Loans"] and that the aggregate Commitment of the New Bank shall
on and as of the date hereof be $_____**. In connection therewith, the
Borrowers, the Administrative Agent and the New Bank hereby agree as follows***:

          (i)  for purposes of determining such New Bank"s pro rata share of
     each Committed Rate Loan borrowing advanced on or after the date hereof
     such Bank"s Commitment shall be equal to $[same as above];
                                                -------------
___________________
* As appropriate for New or Existing Banks.
<PAGE>

                                                                             L-3

        (ii)      the unused and available portion of such New Bank"s Commitment
     shall be deemed utilized by its Percentage of the Committed Rate Loans made
     by the Cancelled Banks and listed in the third recital hereof. In
     furtherance thereof, the unused and available portion of such New Bank"s
     Commitment shall, on the earlier of (x) the last day of each Interest
     Period specified for each outstanding Committed Rate Loan in the third
     recital hereof (and the payment in full to the Cancelled Banks of the
     principal thereof and accrued interest thereon) and (y) the prepayment of
     the principal of such Loans together with accrued interest thereon,
     automatically and without any further action by any party increase by an
     amount equal to the New Bank"s Percentage of such Loan; and

        (iii)     [(A)] [concurrently with the execution hereof the New Bank
     shall disburse to each Borrower in immediately available funds such amount
     as shall be necessary so that the ratio which each Bank"s outstanding ABR
     Loans bears to all of the outstanding ABR Loans equals the ratio which each
     Bank"s Commitment (determined, for the New Bank, in accordance with clause
     (i) above) bears to all of the Commitments (determined, for the New Bank,
     in accordance with the immediately foregoing parenthetical);]

                  [(B)] [on the last day of each Interest Period for each
outstanding Eurodollar Loan, automatically and without any further action by
either Borrower, the New Bank shall disburse to each Borrower in immediately
available funds such amounts as shall be necessary so that the ratio which each
Bank"s outstanding Eurodollar Loans, bears to all of the outstanding Eurodollar
Loans, equals the ratio which each Bank"s Commitment (determined, for the New
Bank, in accordance with clause (i) hereof) bears to all of the Commitments
(determined, for the New Bank, in accordance with the immediately foregoing
parenthetical);]

               [(C)] [Funding of outstanding Bid Loans of Cancelled Banks]*

               [(D)] [Funding of outstanding Negotiated Rate Loans of Cancelled
Banks].*

               3. Representation and Warranty of Borrowers. The Borrowers
                  ----------------------------------------
hereby represent and warrant that after giving effect to the provisions of
paragraph 2 hereof the aggregate principal amount of the Commitments of all
Banks (including, without limitation, the Commitment of the New Bank but
excluding the cancelled or expired portion of the Commitments of the Cancelled
Banks) under the Credit Agreement do not exceed the aggregate principal amount
of the Commitments in effect immediately prior to the cancellation referred to
in the third recital hereof.

               4. Confidentiality.  The New Bank agrees to [continue to] be
                  ---------------
bound by the provisions of subsection 10.7 of the Credit Agreement.

________________________
* To be completed upon agreement of Borrowers and New Bank.
<PAGE>

                                                                             L-4

               5.       [Taxes. The New Bank (i) represents to the
                         -----
Administrative Agent and the Borrowers that [it is incorporated under the laws
of the United States or a state thereof][under applicable law and treaties no
taxes will be required to be withheld by the Administrative Agent or the
Borrowers with respect to any payments to be made to such New Bank in respect of
the Loans], (ii) represents that it has furnished to the Administrative Agent
and the Borrowers (A) [a statement that it is incorporated under the laws of the
United States or a state thereof][a letter in duplicate in the form of Exhibit
[J][K] to the Credit Agreement and two duly completed copies of United States
Internal Revenue Service Form [4224][1001][successor applicable form],
certifying that such New Bank is entitled to receive payments under the Credit
Agreement without deduction or withholding of any United States federal income
taxes], and (B) [an Internal Revenue Service Form [W-8][W-9]] [successor
applicable form] to establish an exemption from United States backup withholding
tax, and (iii) agrees to provide the Administrative Agent and the Borrowers a
new Form [4224][1001] and Form [W-8][W-9], or successor applicable form or other
manner of certification, on or before the date that any such letter or form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent letter and form previously delivered by it, certifying
in the case of a Form [1001][4224] that it is entitled to receive payments under
the Credit Agreement without deduction or withholding of any United States
federal income tax, and in the case of a Form [W-8][W-9] establishing exemption
from United States backup withholding tax.]*

               [5][6].  Miscellaneous.  (a)  This Agreement may be executed by
                        -------------
the parties hereto in separate counterparts and all of the counterparts taken
together shall constitute one and the same instrument and shall be effective
only upon receipt by the Administrative Agent of all of the counterparts.

               (b)      This Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.

_________________

* Use for non-Existing Banks.
<PAGE>

                                                                             L-5

          IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.

                                            DEERE & COMPANY

                                            By:_______________________________
                                                 Title:

                                            JOHN DEERE CAPITAL CORPORATION

                                            By:______________________________
                                                 Title:

                                            [NAME OF NEW BANK]

                                            By:______________________________
                                                 Title:

                                            [Address]
                                            Telephone:
                                            Facsimile:

                                            THE CHASE MANHATTAN BANK, as
                                                Administrative Agent

                                            By:______________________________
                                                Title:
<PAGE>

                                                                       EXHIBIT M

                [FORM OF BID LOAN OR NEGOTIATED RATE LOAN NOTE]

                                PROMISSORY NOTE
                                ---------------

$__________                                                 New York, New York
                                                          ___________ __, 200_

          FOR VALUE RECEIVED, the undersigned, [DEERE & COMPANY] [JOHN DEERE
CAPITAL CORPORATION], a Delaware corporation (the "Borrower"), hereby promises
                                                   --------
to pay on [insert maturity date or dates] to the order of ________________ (the
"Bank") at the office of [The Chase Manhattan Bank located at 270 Park Avenue,
New York, New York 10017 -- for Bid Loan Note] [Name and address of Bank -- for
Negotiated Rate Loan Note], in lawful money of the United States of America and
in immediately available funds, the principal sum of ______________DOLLARS
($____________). The undersigned further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time from the
date hereof [at the rate of ___% per annum -- for Bid Loan Note] [specify rate
for Negotiated Rate Loan Note] (calculated on the basis of a year of 360 days
and actual days elapsed) until the due date hereof (whether at the stated
maturity, by acceleration, or otherwise) and thereafter at the rates determined
or agreed in accordance with subsection 2.2(e) of the $2,075,000,000 364-Day
Credit Agreement, dated as of February 20, 2001 (the "Credit Agreement"), among
                                                      ------ ---------
the Borrower, [Deere & Company] [John Deere Capital Corporation], the Bank, the
other financial institutions parties thereto, The Chase Manhattan Bank, as
Administrative Agent, Bank of America, N.A. and Bank One, NA, as Documentation
Agents, Deutsche Bank AG New York Branch, as Syndication Agent, the Managing
Agents named therein and the Co-Agents named therein. Interest shall be payable
on _______________. This Note may be prepaid pursuant to the provisions of
subsection 2.6 of the Credit Agreement.

          This Note is one of the [Bid] [Negotiated Rate Loan] Notes referred to
in, is subject to and is entitled to the benefits of, the Credit Agreement,
which Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement.

          Terms defined in the Credit Agreement are used herein with their
defined meanings unless otherwise defined herein. This Note shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York.

                                             [DEERE & COMPANY]
                                             [JOHN DEERE CAPITAL CORPORATION]

                                             By:_____________________________
                                                Title:
<PAGE>

                                                                       EXHIBIT N

                                    FORM OF
                              NEW BANK SUPPLEMENT

          SUPPLEMENT, dated _______ __, to the $2,075,000,000 364-Day Credit
Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of
February 20, 2001, among Deere & Company (the "Company"), John Deere Capital
Corporation, the banks and other financial institutions from time to time party
thereto (each a "Bank," and together, the "Banks"), The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent") for the
Banks, Bank of America, N.A. and Bank One, NA, as Documentation Agents, Deutsche
Bank AG New York Branch, as Syndication Agent, the Managing Agents named therein
and the Co-Agents named therein. Unless the context otherwise requires, all
capitalized terms used herein without definition shall have the meanings
ascribed to them in the Credit Agreement.

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, the Credit Agreement provides in subsection 2.20 thereof that
any bank or financial institution, although not originally a party thereto, may
become a party to the Credit Agreement in accordance with the terms thereof by
executing and delivering to the Borrowers and the Administrative Agent a
supplement to the Credit Agreement in substantially the form of this Supplement;
and

          WHEREAS, the undersigned was not an original party to the Credit
Agreement but now desires to become a party thereto;

          NOW, THEREFORE, the undersigned hereby agrees as follows:

          1. The undersigned agrees to be bound by the provisions of the Credit
Agreement and agrees that it shall, on the date this Supplement is accepted by
the Borrowers and the Administrative Agent, become a Bank for all purposes of
the Credit Agreement to the same extent as if originally a party thereto, with a
Commitment of $__________________.

          2. The undersigned (a) represents and warrants that it is legally
authorized to enter into this Supplement; (b) confirms that it has received a
copy of the Credit Agreement, together with copies of the financial statements
delivered pursuant to Section 5.1 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Supplement; (c) agrees that it has made and will,
independently and without reliance upon any Agent, Managing Agent or Co-Agent or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement or any instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as administrative agent on its behalf
and to exercise such powers and discretion under the Credit Agreement or any
instrument or document furnished pursuant hereto or thereto as are delegated to
the Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will
<PAGE>

                                                                             N-2

be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank including, without
limitation, its obligation pursuant to subsection 2.17(c) of the Credit
Agreement.

          3. The undersigned"s address for notices for the purposes of the
Credit Agreement is as follows:

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

                                         Attention:_____________

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

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

                                         Fax:___________________

          IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

                                               [NAME OF NEW BANK]

                                               By:_________________________
                                                  Title:

Accepted this _____ day of

______________, 200_

DEERE & COMPANY

By:_________________________
    Title:

JOHN DEERE CAPITAL CORPORATION

By:_________________________
    Title:
<PAGE>

                                                                             N-3

Accepted this _____ day of

______________, 200_

THE CHASE MANHATTAN BANK,
  as Administrative Agent

By:_________________________
    Title:
<PAGE>

                                                                       EXHIBIT O
                                                                       ---------

                                    FORM OF
                        COMMITMENT INCREASE SUPPLEMENT

          SUPPLEMENT, dated _______ 200_, to the $2,075,000,000 364-Day Credit
Agreement (as in effect on the date hereof, the "Credit Agreement") dated as of
February 20, 2001, among Deere & Company (the "Company"), John Deere Capital
Corporation, the banks and other financial institutions from time to time party
thereto (each a "Bank," and together, the "Banks"), The Chase Manhattan Bank, as
Administrative Agent (in such capacity, the "Administrative Agent"), Bank of
America, N.A. and Bank One, NA, as Documentation Agents, Deutsche Bank AG New
York Branch, as Syndication Agent, the Managing Agents named therein and the Co-
Agents named therein. Unless the context otherwise requires, all capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Credit Agreement.

                             W I T N E S S E T H:
                             - - - - - - - - - -

          WHEREAS, pursuant to the provisions of subsection 2.20 of the Credit
Agreement, the undersigned may increase the amount of its Commitment in
accordance with the terms thereof by executing and delivering to the Borrowers
and the Administrative Agent a supplement to the Credit Agreement in
substantially the form of this Supplement; and

          WHEREAS, the undersigned now desires to increase the amount of its
Commitment under the Credit Agreement;

          NOW THEREFORE, the undersigned hereby agrees as follows:

          1. The undersigned agrees, subject to the terms and conditions of the
Credit Agreement, that on the date this Supplement is accepted by the Borrowers
and the Administrative Agent it shall have its Commitment increased by
$______________, thereby making the amount of its Commitment $______________.

          IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

                                        [NAME OF BANK]

                                        By:_________________________
                                            Title:

Accepted this _____ day of

______________, 200_

DEERE & COMPANY
<PAGE>

By:_________________________
    Title:

JOHN DEERE CAPITAL CORPORATION

By:_________________________
    Title:

Accepted this _____ day of

______________, 200_

THE CHASE MANHATTAN BANK,
  as Administrative Agent

By:_________________________
    Title:<PAGE>   1
                                                                     EXHIBIT 4.2

                         SECURITIES PURCHASE AGREEMENT

               SECURITIES PURCHASE AGREEMENT ("Agreement"), dated as of November
14, 2000, by and among NTN Communications, Inc., a Delaware corporation, with
headquarters located at 5966 La Place Court, Carlsbad, California 92008 (the
"Company") and the investors listed on the Schedule of Buyers attached hereto
(individually, a "Buyer" and collectively, the "Buyers").

               WHEREAS:

               A. The Company and the Buyers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D ("Regulation D") as promulgated by the United States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");

               B. The Buyers wish to purchase, upon the terms and conditions
stated in this Agreement, an aggregate of $2 million of the Company's Common
Stock, $.005 par value per share (the "Common Stock") in the respective amounts
set forth under each Buyer's name on the Schedule of Buyers;

               C. In consideration for such purchase, the Company shall
authorize as of the Closing Date (as defined in Section 1(b)) the issuance of
Common Stock Purchase Warrants to the Buyers (the "Warrants") in the form
attached hereto as Exhibit A, and the issuance of additional Common Stock
Purchase Warrants to the Buyers (the "Additional Warrants") in the form attached
hereto as Exhibit B, to acquire shares of Common Stock (such shares of Common
Stock issued upon exercise of the Warrants and the Additional Warrants are
hereinafter referred to as the "Warrant Shares", and together with the Common
Shares (as defined in Section 1(a)), the Warrants, the Additional Warrants and
the Additional Shares (as defined in Section 4(o)), the "Securities"); and

               D. Contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement in the form attached hereto as Exhibit C (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.

               NOW, THEREFORE, the Company and the Buyers hereby agree as
follows:

               1. PURCHASE AND SALE OF COMMON STOCK AND WARRANTS.

               (a) Purchase of Common Stock. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to the Buyers and the Buyers shall purchase from the Company at a
closing (the "Closing") an aggregate of 1,218,584 shares of Common Stock (the
"Common Shares"), in the respective amounts set forth under each Buyer's name on
the Schedule of Buyers. The per share purchase price (the "Purchase Price") of
the Common Shares shall be $1.64125 for an aggregate purchase price of
$2,000,000.00. On the Closing Date (as defined below) the Company shall direct
and cause its

<PAGE>   2

transfer agent to issue and deliver to each Buyer a stock certificate(s)
representing such number of Common Shares which such Buyer is then purchasing
(as indicated under such Buyer's name on the Schedule of Buyers), duly executed
on behalf of the Company and registered in the name of such Buyer or its
designee (the "Stock Certificates").

               (b) Closing Date. The date and time of the Closing (the "Closing
Date") shall be 10:00 a.m. Eastern Time on November 13, 2000, subject to
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below (or such later date as is mutually agreed to by
the Company and the Buyers). The Closing shall occur on the Closing Date at the
offices of Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022.

               (c) Form of Payment. On the Closing Date, each Buyer shall pay
the Company the Purchase Price for the Common Shares to be issued and sold to
such Buyer at the Closing, by wire transfer of immediately available funds in
accordance with the Company's written wire instructions provided in writing to
the Buyers at least two days prior to the Closing Date.

               (d) Warrants. In consideration of the purchase of the Common
Shares, the Company shall on the Closing Date issue and deliver to each Buyer,
Warrants to purchase in the aggregate of 609,291 additional shares of Common
Stock in the respective amounts set forth under each Buyer's name on the
Schedule of Buyers.

               (e) Additional Warrants. In further consideration of the purchase
of the Common Shares, the Company shall on the Closing Date issue and deliver to
each Buyer, Additional Warrants to purchase in the aggregate 609,291 additional
shares of Common Stock which shall become exercisable in accordance with the
terms thereof, in the respective amounts set forth under each Buyer's name on
the Schedule of Buyers.

               2. BUYER'S REPRESENTATIONS AND WARRANTIES.

               Each Buyer represents and warrants with respect to only itself
that:

               (a) Investment Purpose. Such Buyer (i) is purchasing the Common
Shares and the Additional Shares, if applicable, and acquiring the Warrants and
the Additional Warrants and (ii) upon exercise of the Warrants and Additional
Warrants, will acquire the Warrant Shares then issuable for its own account, for
investment only and not with a present view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1933 Act; provided, however, that by making the
representations herein, such Buyer does not agree to hold any Securities for any
minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration
statement or an exemption under the 1933 Act.

               (b) Accredited Investor Status. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.

               (c) Reliance on Exemptions. Such Buyer understands that the
Common Shares, the Additional Shares (if applicable), Warrants and Additional
Warrants are being

                                       2
<PAGE>   3

offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire the
Common Shares, the Additional Shares (if applicable), the Warrants and the
Additional Warrants.

               (d) Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Common
Shares, the Additional Shares (if applicable), Warrants and Additional Warrants
which have been specifically requested by such Buyer. Such Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below.

               (e) No Governmental Review. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Common Shares,
the Additional Shares (if applicable), Warrants and Additional Warrants or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the Common
Shares, the Additional Shares (if applicable), Warrants and Additional Warrants.

               (f) Transfer or Resale. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) Securities have not been and
are not being registered under the 1933 Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company an opinion of counsel, in a form reasonably acceptable to the Company,
to the effect that such Securities to be sold, assigned or transferred may be
sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such securities can be sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144"); (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.

               (g) Legends. Such Buyer understands that the certificates or
other instruments representing the Common Shares, the Additional Shares (if
applicable), Warrants and Additional Warrants shall bear a restrictive legend in
substantially the following form:

               THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR

                                       3
<PAGE>   4

ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

                      The legend set forth above shall be removed and the
Company shall issue a certificate without such legend to the holder of any
Securities upon which it is stamped, if (i) any such Securities are sold or
transferred pursuant to an effective registration statement under the 1933 Act,
(ii) in connection with a sale transaction, such holder provides the Company
with an opinion of counsel, in a form reasonably acceptable to the Company, to
the effect that a public sale, assignment or transfer of such Securities may be
made without registration under the 1933 Act, or (iii) any of the Securities can
be sold pursuant to Rule 144(k) under the 1933 Act (or any successor rule
thereto).

               (h) Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

               (i) No Previous Sales. No Buyer or any of its affiliates (as
defined under the 1933 Act), has sold, offered to sell, solicited an offer to
buy, contracted to sell, granted any option to purchase, or otherwise
transferred or disposed of, any shares of the Common Stock (including any short
sales or any securities convertible into, or exercisable or exchangeable for,
the Company's Common Stock (including options, warrants, convertible notes or
preferred stock, futures and forward contracts) during the twenty days prior to
Closing.

               3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

               The Company represents and warrants to each of the Buyers that:

               (a) Organization and Qualification. The Company and its
subsidiaries (a complete list of which is set forth in Schedule 3(a)) are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect and all of which
jurisdictions in which either the Company or its subsidiaries is or believes it
should be duly qualified is set forth on Schedule 3(a) hereto. "Material Adverse
Effect" means any material adverse effect on (i) the business, properties,
operations, condition (financial or otherwise), prospects or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) on the
ability of the Company to perform its obligations hereunder, under the

                                       4
<PAGE>   5

Registration Rights Agreement, the Warrants and Additional Warrants or under the
agreements or instruments to be entered into or filed in connection herewith or
therewith, or (iii) the Securities.

               (b) Authorization; Enforcement; Compliance with Other
Instruments. (i) The Company has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement and the Registration
Rights Agreement, to issue, sell and perform its obligations with respect to the
Common Shares, the Additional Shares, if applicable, and the Warrants and
Additional Warrants in accordance with the terms hereof and thereof, and to
issue the Warrant Shares upon the exercise of the Warrants and Additional
Warrants, in accordance with the Warrants and Additional Warrants, (ii) the
execution and delivery of this Agreement, the Common Shares, the Additional
Shares, if applicable, the Warrants, the Additional Warrants and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Common Shares, the Additional Shares, if applicable, and the
Warrants and Additional Warrants and the reservation for issuance and the
issuance of each of the Additional Shares, if applicable, and the Warrant Shares
upon exercise of the Warrants and Additional Warrants have been duly authorized
by the Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders, (iii) this
Agreement, the Registration Rights Agreement, the certificates for the Common
Shares, the Additional Shares, if applicable, the Warrants and the Additional
Warrants have been duly executed and delivered by the Company and the Additional
Shares, if applicable, will be duly executed and delivered by the Company, and
(iv) this Agreement, the Registration Rights Agreement, the certificates for the
Common Shares, the Warrants and the Additional Warrants constitute, or in the
case of the Additional Shares, if applicable, will constitute, the valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.

               (c) Capitalization and Indebtedness. As of the date hereof and
immediately prior to the issuance of the Common Shares and Warrants and
Additional Warrants hereunder, the authorized capital stock of the Company
consists of 70,000,000 shares of Common Stock, of which as of the date hereof,
34,820,135 shares are issued and outstanding, and 10,000,000 shares of Preferred
Stock, of which as of the date hereof 161,112 shares are issued or outstanding.
All of the outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as set forth on Schedule 3(c), as
of the date hereof, (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries, and (ii) there are no outstanding debt
securities, notes, credit agreements, or other agreements, documents or
instruments evidencing indebtedness of the Company, other than trade payables
incurred in the ordinary course of business or equipment lease obligation
representing amounts of less than $50,000 individually or $400,000 in the

                                       5
<PAGE>   6

aggregate, or any of its subsidiaries or by which the Company or any of its
subsidiaries is or may become bound, there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of their securities under the 1933 Act (except the Registration
Rights Agreement). Except as disclosed on Schedule 3(c), there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of any of the Securities as described in this
Agreement. The Company has furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended and as in effect on the date
hereof (the "Certificate of Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "By-laws").

               (d) Issuance of Securities. The Securities are duly authorized
and, upon issuance in accordance with the terms hereof, the Common Shares, the
Additional Shares, if applicable, and the Warrants and Additional Warrants shall
be (i) validly issued, fully paid and non-assessable, (ii) free from all taxes,
liens and charges with respect to the issue thereof, and shall not be subject to
preemptive rights or other similar rights of stockholders of the Company and
(iii) entitled to the rights set forth in the Certificate of Incorporation and
the Warrants, respectively. Not less than 150% of the number of shares of Common
Stock necessary to provide for the issuance in the aggregate of the Warrant
Shares upon exercise of the Warrants and in the aggregate, an amount of not less
than 1,500,000 shares of Common Stock necessary to provide for the issuance of
Additional Shares, if applicable, and the Warrant Shares upon exercise of the
Warrants have been duly authorized and reserved for issuance. Upon exercise of
the Warrants and Additional Warrants, the Warrant Shares will be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock.

               (e) No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Warrants and Additional
Warrants by the Company, and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Securities) will not (i) result in a violation of the Certificate of
Incorporation and the Certificate of Designations, Preferences and Rights of any
outstanding series of Preferred Stock of the Company or By-laws, or (ii) except
as disclosed in Schedule 3(e), violate or conflict with, or result in a breach
of any provision of, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any law, rule, regulation,
order, judgment or decree (including U.S. federal and state securities laws and
regulations and the rules and regulations of the principal market or exchange on
which the Common Stock is traded or listed) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. Neither the Company nor its subsidiaries is
in violation of any term of or in default under its Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of Preferred Stock of the Company or By-laws or their
organizational charter or by-laws, respectively, or in violation of any term of
or in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any law,
ordinance or regulation of any governmental

                                       6
<PAGE>   7

entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental or regulatory or self-regulatory agency in order for it to execute,
deliver or perform any of its obligations under or contemplated by this
Agreement, the Registration Rights Agreement, the Warrants or the Additional
Warrants in accordance with the terms hereof or thereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof. Except as set forth in Schedule 3(e), the Company
is not in violation of the listing requirements of the American Stock Exchange
("AMEX") and does not reasonably anticipate that the Common Stock will be
delisted by the AMEX in the foreseeable future. The Company and its subsidiaries
are unaware of any facts or circumstances which might give rise to any of the
foregoing.

               (f) SEC Documents; Financial Statements. Since December 31, 1998
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC
Documents"). The Company (i) has delivered or made available, including via
EDGAR, to each Buyer or its representative true and complete copies of the SEC
Documents as each Buyer or its representative has requested from the Company and
(ii) agrees to deliver or make available to each Buyer or its representative
true and complete copies of any additional SEC Documents, upon request. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to any Buyer which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they are
or were made, not misleading.

               (g) Absence of Certain Changes. Except as expressly set forth in
Schedule 3(g) since December 31, 1999, there has been no material adverse change
and no material adverse development in the business, properties, operations,
condition (financial or otherwise),

                                       7
<PAGE>   8

prospects or results of operations of the Company and its subsidiaries taken as
a whole. The Company has not taken any steps, and does not currently expect to
take any steps, to seek protection pursuant to any bankruptcy law nor does the
Company or its subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.

               (h) Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened against or affecting the Company
or its subsidiaries or their respective directors or officers, or the Common
Stock, wherein an unfavorable decision, ruling or finding could individually or
in the aggregate have a Material Adverse Effect. Schedule 3(h) contains a
complete list and summary description of any pending, or to the knowledge of the
Company, threatened litigation against or affecting the Company or any of its
subsidiaries, without regard to whether it could have a Material Adverse Effect.

               (i) Acknowledgment Regarding Buyers' Purchase of the Securities.
The Company acknowledges and agrees that each of the Buyers is acting solely in
the capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that each
Buyer is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any of the Buyers or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Buyer's purchase
of the Securities. The Company further represents to each Buyer that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives. Other than copies
of the financial statements for the quarterly period ended September 30, 2000,
as attached to Schedule 3(g), the Company has not provided to any Buyer any
nonpublic information that, in the opinion of the Company, is material to a
decision to purchase or sell Common Stock.

               (j) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of any of
the Securities offered hereby.

               (k) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of any of
the Securities under the 1933 Act or cause the offering of any of the Securities
to be integrated with prior offerings by the Company that would require
registration of any of the Securities under the 1933 Act or that would require
any approvals, including, without limitation, under the rules and regulations of
the AMEX.

               (l) Employment Matters; ERISA Matters. The Company and its
subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations respecting employment and employment practices, terms and
conditions of employment and wages and

                                       8
<PAGE>   9

hours except where failure to be in compliance would not have a Material Adverse
Effect. There are no pending investigations involving the Company or any of its
subsidiaries by the U.S. Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state, local or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company or any of its subsidiaries pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any of its
subsidiaries. No representation question exists respecting the employees of the
Company or any of its subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of its
subsidiaries. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any of
its subsidiaries. No material labor dispute with the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is imminent.
Except as set forth on Schedule 3(l), the Company has no employee benefit plans
subject to the Employee Retirement Income Security Act of 1974, as amended.

               (m) Intellectual Property Rights. The Company and its
subsidiaries own or possess the requisite rights or licenses to use all
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights (collectively
"Intellectual Property Rights") necessary to conduct their respective businesses
as now conducted and as presently contemplated to be operated in the future.
None of the Intellectual Property Rights or other intellectual property rights
have expired or terminated, or are expected to expire or terminate in the near
future. The Company and its subsidiaries do not have any knowledge of any event,
fact or circumstance relating to (i) any infringement by the Company or its
subsidiaries of any trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets or other similar
rights of others, or of any such development of similar or identical trade
secrets or technical information by others or (ii) any person or entity now
infringing any Intellectual Property Rights or other similar rights or any such
development of similar or identical trade secrets or technical information owned
or used by the Company or any of its subsidiaries and, there is no claim, action
or proceeding being made or brought against, or to the Company's knowledge,
being threatened against, the Company or its subsidiaries regarding any
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets or other similar rights of others, or
of any such development of similar or identical trade secrets or technical
information by others or (iii) any person or entity now infringing any
Intellectual Property Rights or other similar rights or any such development of
similar or identical trade secrets or other infringement. The Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights.

               (n) Environmental Laws. (i) The Company and its subsidiaries (A)
are in compliance with any and all Environmental Laws, (B) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (C) are in
compliance with all terms and conditions of any such

                                       9
<PAGE>   10

permit, license or approval. With respect to the Company and/or its subsidiaries
(A) there are no past or present releases of any material into the environment,
actions, activities, circumstances, conditions, events, incidents, or
contractual obligations which may give rise to any common law environmental
liability or any liability under any Environmental Law and (B) neither the
Company nor any of its subsidiaries has received any notice with respect to the
foregoing, nor is any action pending or to the Company's knowledge, threatened
in connection with the foregoing. The term "ENVIRONMENTAL LAWS" means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, "HAZARDOUS MATERIALS") into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

                      (i) Other than those that are or were stored, used or
disposed of in compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or used by the
Company or any of its Subsidiaries, and no Hazardous Materials were released on
or about any real property previously owned, leased or used by the Company or
any of its subsidiaries during the period the property was owned, leased or used
by the Company or any of its subsidiaries.

                      (ii) There are no underground storage tanks on or under
any real property owned, leased or used by the Company or any of its
subsidiaries that are not in compliance with applicable law.

               (o) Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in Schedule 3(o) or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries. Any real property and facilities held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and its subsidiaries.

               (p) Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as is prudent and customary in the businesses in
which the Company and its subsidiaries are engaged. Neither the Company nor any
such subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not individually or in the aggregate have a
Material Adverse Effect.

                                       10
<PAGE>   11

               (q) Regulatory Permits; Compliance. The Company and its
subsidiaries possess all franchises, grants, authorizations, licenses permits,
easements, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to conduct their respective businesses as
currently being conducted (collectively, the "COMPANY PERMITS"). There is no
action pending, or to the knowledge of the Company, threatened regarding the
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits. Neither the Company nor any of its subsidiaries has
received any notification with respect to possible conflicts, defaults, or
violations of applicable laws.

               (r) Internal Accounting Controls. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

               (s) No Materially Adverse Contracts, Etc. Neither the Company nor
any of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which has or is
expected in the future individually or in the aggregate to have a Material
Adverse Effect. Neither the Company nor any of its subsidiaries is a party to
any contract or agreement which has or is expected to have a Material Adverse
Effect.

               (t) Tax Status. The Company and each of its subsidiaries has made
or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction.
The Company has not executed a waiver with respect to the statute of limitations
relating to the assessment or collection of any foreign, federal, state or local
tax. The Company has not been notified that any of its tax returns is currently
being audited by any taxing authority.

               (u) Certain Transactions. Except for arm's length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties
and other than the grant of stock options or warrants disclosed on Schedule
3(c), none of the officers, directors or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or,

                                       11
<PAGE>   12

to the knowledge of the Company, any corporation, partnership, trust or other
entity in which any officer, director or any such employee has a substantial
interest or is an officer, director, trustee or partner.

               (v) S-3 Registration. The Company is currently eligible to
register securities, including the resale of the Common Shares, the Additional
Shares, if applicable, and the Warrant Shares on a registration statement on
Form S-3 under the 1933 Act.

               (w) Disclosure. All information relating to or concerning the
Company or any of its subsidiaries set forth in this Agreement and provided to
the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
information exists with respect to the Company or any of its subsidiaries or its
or their business, properties, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act
are being incorporated into an effective registration statement filed by the
Company under the 1933 Act).

               (x) Investment Company Status. The Company is not and upon
consummation of the sale of the Securities will not be an "investment company,"
a company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.

               (y) Foreign Corrupt Practices. Neither the Company nor any of its
subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any subsidiary has, in the course of his actions
for, or on behalf of, the Company used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or employee.

               (z) Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of the Company's and its
subsidiaries' (i) computer systems and (ii) equipment containing imbedded
microchips (including systems and equipment supplied by others to the Company or
with which are sold as an integral part of Company's or any of its subsidiaries'
systems) and the testing of such systems and equipment, as so reprogrammed has
been completed. The cost to the Company and its subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Company and its subsidiaries with respect to the matters referred to
in the previous sentence (including without limitation, reprogramming errors and
the failure of systems or equipment supplied by others to the Company or which
are sold as an integral part of the Company's or any

                                       12
<PAGE>   13

of its subsidiaries' systems) will not have a Material Adverse Effect. The
computer and management information systems of the Company and each of its
subsidiaries are and, with ordinary course upgrading and maintenance, will
continue to be, sufficient to permit the Company and each subsidiary to conduct
its business without a Material Adverse Effect.

               (aa) No Previous Purchase By Insiders. Neither the Company, any
affiliate (as defined under the 1933 Act) of the Company, nor any officer or
director of the Company nor any shareholder holding more than 10% of the Company
has purchased, offered to purchase, solicited an offer to sell, contracted to
purchase, granted any option to sell or otherwise received or purchased any
shares of the Common Stock (including any instruments convertible into or
exercisable or exchangeable for the Company's Common Stock (including options,
warrants, convertible notes, preferred stock, futures and forward contracts)
during the twenty days prior to Closing.

               4. COVENANTS AND AGREEMENTS.

               (a) Best Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

               (b) Form D. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Buyer promptly after such filing. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is
necessary to qualify the Securities for, or obtain exemption for the Securities
for, sale to the Buyers at the Closing pursuant to this Agreement under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of any such action so taken to the Buyers on or prior to
the Closing Date.

               (c) Reporting Status. Until the earlier of (i) six months after
the date as of which the Investors (as that term is defined in the Registration
Rights Agreement) may sell all of the Common Shares, the Additional Shares, if
applicable, and the Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investors shall have sold all the Common Shares and the Warrant Shares
and (B) none of the Common Shares, the Warrants or the Additional Warrants are
outstanding (the "Registration Period"), the Company (x) shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would otherwise permit such termination and (y) will use its best efforts and
take all necessary action to maintain its ability and eligibility to register
securities on Form S-3.

               (d) Use of Proceeds. The Company will use the proceeds from the
sale of the Common Shares, Warrants and Additional Warrants for working capital
and general corporate purposes and shall not otherwise, directly or indirectly,
use such proceeds for any loan to or investment on any other corporation,
partnership, enterprise or other person (except in connection with its direct or
indirect subsidiaries) or for the repurchase, redemption, or retirement of any
capital stock of the Company.

                                       13
<PAGE>   14

               (e) Financial Information. The Company agrees to file all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act. The
financial statements of the Company will be prepared in accordance with
generally accepted accounting principles, consistently applied, and will fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries and results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).

               (f) Reservation of Shares. The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 150% of the number of shares of Common Stock necessary to
provide for the issuance of the Warrant Shares and, in the aggregate, an amount
of not less than 1,500,000 shares of Common Stock necessary to provide for the
issuance of Additional Shares, if applicable, and the Warrant Shares upon
exercise of the Warrants in accordance with the terms of this Agreement and the
Warrants. For purposes of clarity, the initial reservation of 1,500,000 shares
is for convenience only and in no way limits the Company's obligation to reserve
150% of the number of shares of Common Stock necessary to provide for the
issuance of the Warrant Shares.

               (g) Listing. The Company shall promptly secure the listing of the
Common Shares and Warrant Shares upon AMEX (subject to official notice of
issuance) and shall maintain, so long as any Buyer owns any of the Securities,
the listing of all Common Shares and Warrant Shares from time to time issuable
under the terms of this Agreement, the Warrants and the Additional Warrants on
each national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed. The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4(g).
The Company shall promptly provide to each Buyer copies of any notices it
receives from AMEX regarding the continued eligibility of the Common Stock for
listing on AMEX or other principal exchange or quotation system on which the
Common Stock is listed or traded except to the extent that such notices would
constitute material non public information which, according to applicable law,
rule or regulation should have been disclosed publicly by the Company but which
has not been so disclosed as of such date.

               (h) Expenses. Each of the Company and the Buyers shall each pay
its respective costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution, delivery and performance of
this Agreement, the Warrants and the Registration Rights Agreement; provided,
that at the Closing as the Buyers may request, the Company shall reimburse the
Buyers for the Buyers' and its attorneys' fees and expenses incurred in
connection with the preparation of this Agreement, the Warrants, the Additional
Warrants and the Registration Rights Agreement (including their review of the
initial Registration Statement under the Registration Rights Agreement) up to an
aggregate of $25,000. In addition to the foregoing, the Company agrees to pay on
demand all reasonable costs and expenses (including, without limitation,
reasonable fees and expenses of counsel to the Buyers) incurred by the Buyers in
connection with the successful enforcement of the Buyers' rights and/or the
collection of all amounts due under this Agreement, the Warrants, the Additional
Warrants or the Registration Statement where Buyers have been determined to be
the prevailing party by an arbitrator or a court of competent jurisdiction.

                                       14
<PAGE>   15

               (i)    Additional Issuances of Securities.

                      (i) Right of First Refusal. If at any time on or before
the one year anniversary of the Closing Date, the Company shall desire to issue
any Common Stock or other equity security or any other security convertible,
exchangeable or exercisable for Common Stock (including any debt financing with
an equity component) or any other right to acquire any Common Stock (the
"Convertible Securities") pursuant to Section 4(2) of the 1933 Act or an
offering under Regulation D or Regulation S of the 1933 Act or in any other
private placement, other than pursuant to or in connection with (i) the exercise
or conversion of the Company's preferred stock, options or warrants outstanding
as of the Closing Date or shares issued to employees, directors, consultants and
other service providers pursuant to the exercise of options under a Company
authorized stock incentive plan, (ii) any equity financing whereby Common Stock
or Convertible Securities are issued to any person or entity which has or is
proposed to have a material business, technology or commercial relationship with
the Company in addition to any equity financing provided by such person or
entity and it is determined by the Board of Directors of the Company that such
equity financing will result in a material business, technology or commercial
relationship with the Company ("Strategic Financing"), or (iii) a firm
commitment underwritten secondary public offering of Common Stock of the Company
by a nationally recognized investment banking firm which (x) is registered under
the Securities Act and (y) yields gross proceeds to the Company of at least
$25,000,000 or (each of (i), (ii) and (iii) hereafter referred to as an
"Offering"), then the Company shall first comply with the terms of this Section
4(i).

                      (ii) Notice Requirements. The Company shall notify, or
cause to be notified, the Buyers, by certified mail return receipt requested,
not less than five (5) business days prior to the time the Company intends to
consummate such issuance (the "Issuance Notice"). The Issuance Notice shall set
forth all of the terms of such proposed issuance.

                      (iii) Exercise of Right of First Refusal. The right of
first refusal provided for in this Section 4(i) may be exercised by the Buyers
by delivery of a written notice to the Company (the "Exercise Notice"), within
five (5) business days following receipt of the Issuance Notice (the "Refusal
Period"). The Exercise Notice shall state that the Buyers agree to purchase all
or any specified part of the proposed issuance of such Common Stock or
Convertible Securities on terms substantially equal to the terms set forth in
the Issuance Notice.

                      (iv) Right to Issue Securities. After expiration of the
Refusal Period, if the provisions of this Section 4(i) have been complied with
in all respects by the Company and no Exercise Notice has been given, or if
given, the Buyers have not agreed to purchase all of the securities set forth in
the Issuance Notice, the Company shall have the right for forty-five (45)
calendar days following the termination of the Refusal Period to issue such
securities, or any portion thereof not being purchased by the Buyers, as the
case may be, specified in the Issuance Notice on the terms described in the
Issuance Notice without further notice to the Buyers, but after such forty-five
(45) calendar days, no such issuance may be made without again giving notice to
the Buyers and complying with all of the requirements of this Section 4(i).

               (j) Disclosure. From and after the date hereof, the Company shall
not disclose nonpublic information to any Buyer, advisors to or representatives
of such Buyer unless

                                       15
<PAGE>   16

prior to disclosure of such information the Company identifies such information
as being nonpublic information and provides the Buyer, such advisors and
representatives with the opportunity to accept or refuse to accept such
nonpublic information for review.

               (k) Corporate Existence. So long as any Buyer beneficially owns
any Securities, the Company shall maintain its corporate existence in good
standing under the laws of the jurisdiction in which it is incorporated and
shall not sell all or substantially all of the Company's assets, except in the
event of a merger or consolidation or sale of all or substantially all of the
Company's assets for cash, or, if for securities, where the surviving or
successor entity in such transaction (A) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith and (B) is a publicly traded corporation whose common stock is listed
for trading on AMEX, National Association of Securities Dealers Automated
Quotation System or the New York Stock Exchange.

               (l) Solvency; Compliance with Law. The Company individually and
together with its subsidiaries on a consolidated basis (both before and after
giving effect to the transactions contemplated by this Agreement) is solvent
(i.e., its assets have a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become absolute and
matured) and, except as set forth on Schedule 4(l), currently the Company has no
information that would lead it to reasonably conclude that the Company would not
have, nor does it intend to take any action that would impair, its ability to
pay its debts from time to time incurred in connection therewith as such debts
mature. The Company will conduct its business in compliance with all applicable
laws, rules, ordinances and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations the failure to comply with which
would have a Material Adverse Effect.

               (m) Insurance. The Company shall maintain liability, casualty and
other insurance (subject to customary deductions and retentions) with
responsible insurance companies against such risk of the types and in the
amounts customarily maintained by companies of comparable size to the Company.

               (n) No Integration. The Company will not conduct any future
offering that will be integrated with the issuance of the Securities for
purposes of the rules promulgated by the SEC or AMEX to the extent such future
offering would require registration of any of the Securities under the 1933 Act
or would require any approval with respect to issuance of any of the Securities,
including, without limitation, by or under the rules and regulations of the
AMEX.

               (o) Price Protection.

                      (i) New Issuances. In addition to the rights afforded the
Buyers under Section 4(i), if at any time or from time to time on or before the
date six months following the Closing Date (the "PROTECTION PERIOD"), the
Company issues or enters into an agreement to issue (each, a "NEW ISSUANCE") to
any party other than a Strategic Financing Party (as defined below) any Common
Stock or Convertible Securities without consideration or for a consideration per
share less than the Adjusted Purchase Price (as defined below) in effect
immediately prior to such issuance, other than issuances (i) upon the exercise
or conversion of the Company's

                                       16
<PAGE>   17

preferred stock, options or warrants outstanding as of the Closing Date that are
specifically listed on Schedule 3(c), (ii) of warrants to purchase Common Stock
in an amount not exceeding 200,000 shares of Common Stock to any one individual
and 500,000 series of Common Stock in the aggregate and (iii) pursuant to
Company authorized stock incentive plans, the Company, concurrently with each
such New Issuance (whether or not such Buyer has exercised its right of first
refusal pursuant to Section 4(i)), shall issue to each Buyer a number of
additional shares of Common Stock (the "ADDITIONAL SHARES"), without payment of
any additional consideration by the Buyer or its assignee therefor or any other
action required of the Buyer or its assignee, equal to the difference between
(i) a fraction, the numerator of which is the aggregate purchase price paid by
such Buyer for the Common Shares originally purchased by such Buyer hereunder
and the denominator of which is the purchase price of the New Issuance (which
shall be deemed to be no less than $0.01) and (ii) the number of Common Shares
originally purchased by such Buyer hereunder plus any Additional Common Shares
previously issued to such Buyer pursuant to this Section 4(o).

                      (ii) New Issuances to Strategic Financing Parties. In
addition to the rights afforded the Buyers under Section 4(i), if at any time or
from time to time during the Protection Period, the Company conducts a New
Issuance pursuant to a Strategic Financing with any of the parties identified on
Schedule 4(o) or with any other party mutually agreed to between the Company and
the Buyers (each a "STRATEGIC FINANCING PARTY") of any Common Stock or
Convertible Securities without consideration or for a consideration per share
less than the Adjusted Purchase Price (as defined below) in effect immediately
prior to such issuance, then to the extent that the Average Closing Bid Price
(as defined in the Warrants and Additional Warrants) of the Common Stock for the
20 days immediately following the public announcement of such Strategic
Financing is less than the Adjusted Purchase Price, then the Company, on the
21st day immediately following the public announcement of such Strategic
Financing (whether or not such Buyer has exercised its right of first refusal
pursuant to Section 4(i)), shall issue to each Buyer a number of Additional
Shares of Common Stock, without payment of any additional consideration by the
Buyer or its assignee therefor or any other action required of the Buyer or its
assignee, equal to the difference between (i) a fraction, the numerator of which
is the aggregate purchase price paid by such Buyer for the Common Shares
originally purchased by such Buyer hereunder and the denominator of which is the
purchase price of the New Issuance (which shall be deemed to be no less than
$0.01) and (ii) the number of Common Shares originally purchased by such Buyer
hereunder plus any Additional Common Shares previously issued to such Buyer
pursuant to this Section 4(o).

                      (iii) New Issuances in Subsidiary Financing. In addition
to the rights afforded the Buyers under Section 4(i), if at any time or from
time to time during the Protection Period, any of the Company's subsidiaries
issues any equity interest or any right to acquire any equity interest in such
subsidiary to any party (a "SUBSIDIARY FINANCING"), other than issuances
pursuant to authorized stock incentive plans of such subsidiary, then to the
extent that the Average Closing Bid Price (as defined in the Warrants and
Additional Warrants) of the Common Stock for the 20 days immediately following
the public announcement of such Subsidiary Financing is less than the Adjusted
Purchase Price, then the Company, on the 21st day immediately following the
public announcement of such Subsidiary Financing (whether or not such Buyer has
exercised its right of first refusal pursuant to Section 4(i)), shall issue to
each Buyer a number of Additional Shares of Common Stock, without payment of any
additional

                                       17
<PAGE>   18

consideration by the Buyer or its assignee therefor or any other action required
of the Buyer or its assignee, equal to the difference between (i) a fraction,
the numerator of which is the aggregate purchase price paid by such Buyer for
the Common Shares originally purchased by such Buyer hereunder and the
denominator of which is the Average Closing Bid Price (as defined in the
Warrants and Additional Warrants) of the Common Stock for the 20 days
immediately following the public announcement of such Subsidiary Financing and
(ii) the number of Common Shares originally purchased by such Buyer hereunder
plus any Additional Common Shares previously issued to such Buyer pursuant to
this Section 4(o).

                      (iv) The initial Adjusted Purchase Price shall be $1.64125
per share and shall be reduced from time to time to (i) the price per share at
which Common Stock or Convertible Securities are issued by the Company in each
New Issuance if such New Issuance is pursuant to Sections 4(o)(A) or 4(o)(B)
hereof or (ii) the Average Closing Bid Price (as defined in the Warrants and
Additional Warrants) of the Common Stock for the 20 days immediately following
the public announcement of each Subsidiary Financing for each New Issuance if
such New Issuance is pursuant to Section 4(o)(C) hereof.

                      (v) Example. Assuming the number of Common Shares
originally purchased is 1,200,000 at an initial Purchase Price of $1.67 per
share and the first New Issuance yielded an Adjusted Purchase Price of $1.50 per
share, the Buyers shall be entitled in the aggregate to 133,333 Additional
Shares as follows: ($2,000,000/$1.50) -- 1,200,000 = 133,333.

                      (vi) Covenants Regarding Additional Shares. The Company
covenants and agrees that each Additional Share issuable pursuant to this
Section 4(o) shall be duly authorized and, when issued, shall be validly issued,
fully paid and nonassessable with no liability on the part of the holders
thereof, and shall be free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges.

               5. TRANSFER AGENT INSTRUCTIONS.

               Within 7 days following the Closing Date, the Company shall issue
irrevocable instructions to its transfer agent (in the form attached hereto as
Exhibit D) to issue certificates, or at a Buyer's request, to electronically
issue such shares (e.g., through DWAC or DTC), registered in the name of each
Buyer or its nominee(s), for the Common Shares, Additional Shares, if any, and
the Warrant Shares as the case may be, in such amounts as specified from time to
time by each Buyer to the Company in accordance with the terms of and upon
exercise of the Warrants or the Additional Warrants (the "Irrevocable Transfer
Agent Instructions"). In the event that the Company fails to deliver to the
Buyers a countersigned copy of the Transfer Agent Instructions by American Stock
Transfer Company, within such 7 day period, the Company shall be obligated to
redeem the Securities issued to the Buyers hereunder at the Purchase Price paid
therefor. Prior to registration of the Common Shares, Additional Shares and the
Warrant Shares under the 1933 Act, such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that no
instruction with respect to the Securities other than (i) the Irrevocable
Transfer Agent Instructions referred to in first sentence of this paragraph and
(ii) stop transfer instructions to give effect to Section 2(f) hereof (in the
case of the Common Shares and the Warrant Shares, prior to registration of the
Common Shares and the Warrant Shares under the 1933 Act), will be given by the
Company to its transfer agent and that the

                                       18
<PAGE>   19

Securities shall otherwise be freely transferable on the books and records of
the Company as and to the extent provided in this Agreement, the Registration
Rights Agreement, the Warrants and the Additional Warrants. Nothing in this
Section 5 shall affect in any way each Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of any of the Securities.
If a Buyer provides the Company with an opinion of counsel, reasonably
satisfactory in form to the Company, that registration of a resale by such Buyer
of any of the Securities is not required under the 1933 Act, the Company shall
permit the transfer, and, in the case of the Common Shares, Additional Shares,
if any, or Warrant Shares, promptly instruct its transfer agent to issue one or
more certificates in such name and in such denominations as specified by such
Buyer. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyers by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly (in addition to the redemption
describe above), the Company acknowledges that the remedy at law for a breach of
its obligations under this Section 5 will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Section 5, that the Buyers shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.

               6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

               The obligation of the Company hereunder to issue and sell the
Common Shares, Warrants and Additional Warrants to each Buyer at the Closing is
subject to the satisfaction, with respect to each Buyer, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the Company
at any time in its sole discretion:

               (a) Such Buyer shall have executed this Agreement and the
Registration Rights Agreement and delivered the same to the Company.

               (b) Such Buyer shall have delivered to the Company the purchase
price for the Common Shares being purchased by such Buyer at the Closing by wire
transfer of immediately available funds pursuant to the wire instructions
provided by the Company.

               (c) The representations and warranties of such Buyer shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.

               7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.

               The obligation of each Buyer hereunder to purchase the Common
Shares, Warrants and Additional Warrants at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer's sole benefit and
may be waived by such Buyer at any time in its sole discretion:

                                       19
<PAGE>   20

               (a) The Company shall have executed this Agreement and the
Registration Rights Agreement, and delivered the same to such Buyer.

               (b) The Common Stock shall be listed and authorized for trading
on AMEX, and trading in the Common Stock issuable upon exercise of the Warrants
to be traded on AMEX shall not have been suspended by the SEC or AMEX.

               (c) The representations and warranties of the Company shall be
true and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, executed by the Chief Executive Officer or
Chief Financial Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer including, without limitation, an update as of the Closing Date
regarding the representation contained in Section 3(c) above.

               (d) Each Buyer shall have received and be an addressee on the
opinion of O'Melveny & Myers dated as of the Closing Date, in form, scope and
substance reasonably satisfactory to such Buyer and in substantially the form of
Exhibit E attached hereto.

               (e) The Company shall have delivered to such Buyer the Stock
Certificates (in such denominations as such Buyer shall request) for the Common
Shares purchased by such Buyer at the Closing.

               (f) The Company shall have executed and delivered to such Buyer
the Warrants and Additional Warrants being purchased by such Buyer at the
Closing.

               (g) The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of Exhibit F attached hereto.

               (h) As of the Closing Date, the Company shall have reserved out
of its authorized and unissued Common Stock solely for the purpose of effecting
the exercise of the Warrants and Additional Warrants, shares of Common Stock to
provide for the issuance of the Warrant Shares in accordance with the terms of
this Agreement, the Warrants and Additional Warrants.

               (i) The transactions contemplated hereby shall not violate any
law, regulation or order then in effect and applicable to Buyers or the Company.

               8. INDEMNIFICATION.

                      In consideration of each Buyer's execution and delivery of
this Agreement and acquiring the Securities hereunder and in addition to all of
the Company's other obligations

                                       20
<PAGE>   21

under this Agreement, the Company shall defend, protect, indemnify and hold
harmless each Buyer and each other holder of Securities and all of their
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the "BUYER INDEMNITEES") from and against any and all actions,
causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Buyer Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the "BUYER
INDEMNIFIED LIABILITIES"), incurred by any Buyer Indemnitee (and shall advance
the same) as a result of, or arising out of, or relating to (a) subject to
Section 9(i), any misrepresentation or breach of any representation or warranty
made by the Company in this Agreement the Warrants, the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement the Warrants or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, or (c) the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Buyer Indemnitees, any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the
issuance of the Common Shares, Warrants and Additional Warrants or the status of
such Buyer or holder of any of the Securities as an investor in the Company. To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Buyer Indemnified Liabilities which is
permissible under applicable law.

               9. GOVERNING LAW; MISCELLANEOUS.

               (a) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws.

               (b) Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party, provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

               (c) Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Agreement.

               (d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

               (e) Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements between the Buyers and the Company, their
affiliates and

                                       21
<PAGE>   22

persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the documents referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company, any Buyer makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.

               (f) Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement shall be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile;
(iii) three days after being sent by U.S. certified mail, return receipt
requested, or (iv) one day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. For purposes of consent under Section 4 (i)(ii), notice shall be delivered
only by U.S. certified mail, return receipt requested. The addresses and
facsimile numbers for such communications shall be:

               If to the Company:

                      NTN Communications, Inc.
                      5966 La Place Court
                      Carlsbad, CA 92008
                      Telephone:  (760) 438-7400
                      Facsimile:  (760) 930-1187
                      Attention:  Stanley B. Kinsey

               With a copy to:

                      O'Melveny & Myers
                      400 South Hope Street
                      Los Angeles, CA 90071
                      Telephone:  (213) 430-6000
                      Facsimile:  (213) 430-6407
                      Attention:  C. James Levin, Esq.

               If to the Transfer Agent:

                      American Stock Transfer & Trust Company
                      6201 15th Avenue, 3rd Floor
                      Brooklyn, New York 11219
                      Telephone:  (718) 921-8275
                      Facsimile:  (718) 921-8188
                      Attention:  Paula Carropoli

               If to a Buyer, to its address and facsimile number on the
Schedule of Buyers, with copies to such Buyer's counsel as set forth on the
Schedule of Buyers.

               Each party shall provide five days' prior written notice to the
other party of any change in address or facsimile number.

                                       22
<PAGE>   23

               (g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Securities. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Buyers. A Buyer may assign some or all of its rights
hereunder without the consent of the Company, provided, however, that (i) any
such assignment shall not release such Buyer from its obligations hereunder
unless such obligations are assumed by such assignee and the Company has
consented to such assignment and assumption and (ii) no Buyer may assign its
rights hereunder in a manner that would cause the offering of Securities
hereunder to be required to be registered under the 1933 Act.

               (h) No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

               (i) Survival. The representations and warranties of the Company
and the Buyers contained in Sections 3 and 2, respectively, shall survive the
Closing. The agreements and covenants set forth in Sections 4, 5 and 8, shall
survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.

               (j) Publicity. The Company and each Buyer shall have the right to
approve before issuance any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions as is
required by applicable law and regulations (although each Buyer shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof), but only to the extent required by such law or regulation.

               (k) Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

               (l) No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

               (m) Equitable Relief. The Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations
under this Agreement, any remedy at law may prove to be inadequate relief to the
Buyers. The Company therefore agrees that the Buyers shall be entitled to seek
temporary and permanent injunctive relief in any such case without the necessity
of proving actual damages.

               (n) Consent to Jurisdiction. The parties hereto expressly submit
themselves to the exclusive jurisdiction of the state and federal courts of
Delaware in any action or proceeding relating to this Agreement or any of the
other documents contemplated hereby or any of the

                                       23
<PAGE>   24

transactions contemplated hereby or thereby. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any such action, suit or proceeding
brought in such a court and any claim that any such action, suit or proceeding
brought in such a court has been brought in an inconvenient forum. The parties
hereto irrevocably and unconditionally consent to the service of process of any
of the aforementioned courts in any such action, suit or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, at
their respective addresses set forth or provided for herein, such service to
become effective 10 days after such mailing. Nothing herein shall affect the
right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the other parties in any
other jurisdiction.

               (o) Placement Agent. The Company acknowledges that it has not
engaged a placement agent in connection with the sale of the Common Stock. The
Company shall be responsible for the payment of any placement agent's fees,
financial advisory fees, or brokers' commissions relating to or arising out of
the transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney's fees and out-of-pocket expenses) arising in connection with any such
claim.

                                       24
<PAGE>   25

               IN WITNESS WHEREOF, the Buyers and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.

                                    COMPANY:

                                    NTN COMMUNICATIONS, INC.

                                    By:
                                        ----------------------------------------
                                        Print Name:
                                        Title:

                                    BUYERS:

                                    BAYSTAR CAPITAL, L.P.,
                                    a Delaware limited partnership

                                    BY:    BayStar Capital Management LLC,
                                           Its General Partner

                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                           1500 West Market Street, Suite 200
                                           Mequon, WI 53092
                                           Fax:

                                    BAYSTAR INTERNATIONAL LTD.,
                                    a British Virgin Islands corporation

                                    BY:    BayStar International Management LLC,
                                           Its Investment Manager

                                           By:
                                              ----------------------------------
                                           Name:
                                           Title:

                                           1500 West Market Street, Suite 200
                                           Mequon, WI 53092
                                           Fax:

<PAGE>   26

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                         INVESTOR ADDRESS AND        INVESTOR'S LEGAL COUNSEL AND
         INVESTOR NAME                     FACSIMILE NUMBER                COUNSEL'S ADDRESS
--------------------------------      --------------------------     ----------------------------
<S>                                   <C>                            <C>
BayStar Capital, L.P                  c/o BayStar Capital            Eleazer Klein, Esq.
974,867 Common Shares                 Management LLC                 Schulte Roth & Zabel LLP
487,433 Warrant Shares                1500 West Market Street        900 Third Avenue
487,433 Additional Warrants           Suite 200                      New York, New York  10022
                                      Mequon, WI 53092               Fax:  (212) 593-5955
                                      Attention: Brian Davidson

BayStar International, Ltd.           c/o BayStar International      Eleazer Klein, Esq.
243,717 Common Shares                 Management LLC                 Schulte Roth & Zabel LLP
121,858 Warrant Shares                1500 West Market Street        900 Third Avenue
121,858 Additional Warrants           Suite 200                      New York, New York  10022
                                      Mequon, WI 53092               Fax:  (212) 593-5955
                                      Attention: Brian Davidson
</TABLE>

<PAGE>   27

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
1.    PURCHASE AND SALE OF COMMON STOCK AND WARRANTS...........................1

2.    BUYER'S REPRESENTATIONS AND WARRANTIES...................................2

3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................4

4.    COVENANTS AND AGREEMENTS................................................13

5.    TRANSFER AGENT INSTRUCTIONS.............................................18

6.    CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL..........................19

7.    CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.......................19

8.    INDEMNIFICATION.........................................................20

9.    GOVERNING LAW; MISCELLANEOUS............................................21
</TABLE>

List of Exhibits

Exhibit A      Form of Warrant
Exhibit B      Form of Additional Warrant
Exhibit C      Form of Registration Rights Agreement
Exhibit D      Form of Transfer Agent Instructions
Exhibit E      Form of Opinion of O'Melveny & Myers LLP
Exhibit F      Form of Resolutions of Board

List of Schedules

3(a)    List of Subsidiaries & Jurisdictions of Due Qualification
3(c)    Capitalization and Indebtedness
3(e)    No Conflicts
3(g)    Certain Changes
3(h)    Litigation
3(l)    Employment; Erisa
3(o)    Title
3(u)    Certain Transactions
4(l)    Solvency; Compliance with Law
4(o)    Price Protection

                                     - i -
<PAGE>   28
      SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(a)

                         ORGANIZATION AND QUALIFICATION

NTN Communications, Inc., a Delaware corporation; also qualified in California,
New York and Kentucky

BUZZTIME, Inc., a Delaware corporation; also qualified in California

IWN, Inc., a Delaware corporation

IWN, L.P., a Delaware limited partnership

TAPCO, Inc. (successor to New World Computing, Inc.), a California corporation

National Telecommunicator Network, Inc., a California corporation

NTN Communications, Ltd., a United Kingdom corporation

NTN Internacional S.A. de CV, a Mexico corporation (required paperwork must be
filed in Mexico to return corporation to active status).

NTN owns a 17.5% equity interest in LearnStar Corporation after selling 82.5% of
the subsidiary's equity to NewStar Learning Systems, L.L.C. on June 16, 1998.
<PAGE>   29
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(c)

                         CAPITALIZATION AND INDEBTEDNESS

         On the close of business on November 13, 2000:

         (i)      0 shares of the Company's Series B preferred stock;

         (ii)     110,882 shares of the Company's common stock were held by the
                  Company in its treasury;

         (iii)    7,426,790 shares of the Company's common stock were reserved
                  for issuance pursuant to the Company's Stock Option Plans as
                  more fully described on the attached table;

         (iv)     1,514,189 shares of the Company's common stock were reserved
                  for issuance pursuant to outstanding warrants as more fully
                  described on the attached table;

         (v)      3,137,255 shares of the Company's common stock were reserved
                  for issuance upon conversion of the 7% Convertible Senior
                  Subordinated Notes Due 2001;

         (vi)     there also are reserved for issuance such additional shares of
                  common stock as may become issuable under applicable
                  provisions of outstanding options, warrants and preferred
                  stock

         See attached schedule of options and warrants.

         Each share of Series A Preferred Stock is convertible into
         approximately 0.3767 shares of Common Stock at any time at the option
         of the holders of the Series A Preferred Stock. At October 31, 2000,
         there were 161,112 shares of Series A Preferred Stock issued and
         outstanding and convertible into 60,691 shares of Common Stock.

         In connection with the April 2000 public offering, the Company granted
         certain registration rights to one of the underwriters, GunnAllen
         Financial, Inc., in connection with 42,000 warrants issued with a
         strike price of $3.75 per share as a component of the underwriter's
         compensation.

         In addition, the Company granted "piggyback" registration rights to
         Sikander, Inc. in connection with warrants to purchase 30,000 shares of
         the Company's common stock; said warrants were issued under the terms
         of the December 1999 Wind Up Agreement and Agreement of Settlement and
         Release by and between the Company and Sikander, Inc. On January 11,
         2000, Sikander, Inc. exercised the warrants in full thereby acquiring
         30,000 shares of common stock at $$0.625 per share.
<PAGE>   30
         The Company entered into an engagement agreement with an independent
         consultant, Spencon Integrated Solutions, LLC, for the provision of
         services in connection with the development, creation and
         implementation of an advertising and e-commerce strategy for the
         Company's Internet division pursuant to which the consultant was issued
         warrants to purchase up to 225,000 common stock at $2.375 per share,
         subject to vesting requirements. The independent consultant was granted
         "piggyback" registration rights with respect to the shares of common
         stock represented by said warrants.

         The conversion price of the convertible senior subordinated notes is
         subject to adjustment if certain events, including stock dividends or
         subdivisions or reclassifications of the common stock or any sale or
         issuance of common stock (or of rights or options to subscribe for or
         purchase common stock) for no consideration or for a consideration per
         share less than the "Average Market Price" (as defined) of the common
         stock.

         The Company entered into an agreement with Coast Business Credit for a
         revolving line of credit not to exceed $4,000,000. Interest is charged
         on the outstanding balance at a rate equal to the prime rate plus 1.5%
         per annum, but cannot be less than 9% per annum. The line of credit is
         secured by substantially all of the Company's assets. The loan matures
         on August 31, 2002. The outstanding balance on the line of credit as of
         October 31, 2000 was $2,771,518.

         The senior convertible notes were issued January 11, 1999 and bear
         interest at the annual rate of 7% per annum. Interest is due and
         payable in quarterly installments, in arrears, and the entire principal
         amount will be due and payable on February 1, 2001. The outstanding
         balance of the notes as of October 31, 2000 was $3,960,476.

         The Company purchased equipment and a license agreement related to
         Internet stations for $400,000 in April 1999. A promissory note was
         issued for $360,000 and cash of $40,000 was paid in relation to this
         agreement. The note bears interest at 10% per annum and principal is
         payable in twelve equal quarterly installments of $30,000 plus
         interest. In December 1999, the agreement was revised and a payment of
         approximately $123,000 plus interest was paid in December with nine
         quarterly installments of $19,676 payable beginning on March 31, 2000.
         The balance of the note payable as of October 31, 2000 was $157,408.

         On March 5, 1997, the Company announced a reorganization of its
         executive management personnel in which Patrick J. Downs resigned as
<PAGE>   31
         Chief Executive Officer and Chairman of the Board and Daniel C. Downs
         resigned as President. In addition, three other officers resigned or
         were terminated in connection with the reorganization
         ("Reorganization"). The Company entered into separate agreements
         ("Agreements") with each of the former officers setting out the terms
         on which their existing employment contracts with the Company would be
         settled. In compliance with the Agreements, the Company was to continue
         to pay the former officers their current annual salaries and other
         benefits for the remaining terms of their employment agreements with
         the Company, which were to expire on or before December 31, 1999. In
         March 1998, the Company and three of the former officers agreed to an
         amendment of the Agreements. The Agreements were modified to extend the
         payment term an additional year to December 31, 2000. The total amount
         due under these Agreements as of October 31, 2000 was $169,797.

         In October, 2000, the Company reached a settlement agreement, subject
         to final documentation, with its former independent representative in
         the State of Georgia in connection with pending litigation as more
         fully described in Schedule 3(h). The parties agreed to settle the
         matter for payment by the Company of the sum of $19,000 and return by
         the former sales representative of Company property in his possession.

         Capital lease obligations in excess of $50,000 individually and more
         than $400,000 in aggregate:

<TABLE>
<CAPTION>
         Lessor                     Term                          Balance
         ------                     ----                          -------
<S>                                 <C>                         <C>
         Fujitsu Telephone          08/97-08/01                 $ 81,644.10
         Dell Computers             07/99-06/01                   70,336.51
         Dell Computers             08/99-06/01                   68,929.66
         Dell Computers             10/00-09/01                   53,040.95
         Dell Computers             10/99-09/01                   71,033.91
         Pacific Atlantic Lease     03/00-02/02                  162,362.21
         Pacific Atlantic Lease     08/00-07/02                  101,396.47
         Pacific Atlantic Lease     09/00-08/02                  112,722.35
</TABLE>
<PAGE>   32
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(e)

                                    CONFLICTS

         AMEX has published a set of continued listing guidelines that it
follows to determine whether an AMEX-listed company should be allowed to
continue the trading or listing of its securities on the exchange. Under these
guidelines, the AMEX will consider suspending or "delisting" a company's
securities from the exchange if it has sustained operating or net losses in its
five most recent fiscal years. As reported in the Company's 1999 Annual Report
on Form 10-K, the Company incurred a net loss of $2,498,000 for the year ended
December 31, 1999, representing its fifth consecutive year of losses. As such,
the Company is technically not in compliance with the continued listing
guidelines of the AMEX.

         The Company has received correspondence from the AMEX indicating that,
despite the fact that the Company does not currently meet the guidelines, the
AMEX will continue the listing of its Common Stock pending periodic reviews by
the AMEX of its quarterly and annual SEC filings and certain other financial
information.
<PAGE>   33
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(g)

                                 CERTAIN CHANGES

See attached financial tables for the quarterly period ended September 30, 2000.

See also the following SEC Documents (but excluding any documents incorporated
by reference therein):

1.       Annual report on Form 10-K for the year ended December 31, 1999, as
         amended by Form 10-K/A filed on April 5, 2000.

2.       Quarterly report on Form 10-Q for the fiscal quarter ended March 31,
         2000

3.       Quarterly report on Form 10-Q for the fiscal quarter ended June 30,
         2000

4.       Current reports on Form 8-K filed on April 17, 2000 and April 24, 2000

5.       Proxy Statement dated June 26, 2000
<PAGE>   34
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(h)

                                   LITIGATION

On June 11, 1997, the Company was included as a defendant in a class-action
lawsuit, entitled Eliot Miller and Jay Iyer, shareholders on behalf of
themselves and all others similarly situated vs. NTN Communications, Inc.,
Patrick J. Downs, Daniel C. Downs, Donald C. Klosterman, Ronald E. Hogan, Gerald
P. McLaughlin and KPMG Peat Marwick LLP, filed in the United States District
Court for the Southern District of California. The complaint alleges violations
of state and federal securities laws based upon purported omissions from the
Company's filings with the Securities and Exchange Commission. More
particularly, the complaint alleges that the directors and former officers
devised an "exit strategy" to provide themselves with undue compensation upon
their resignation from the Company. The plaintiffs further allege that
defendants made false statements about, and failed to disclose, contingent
liabilities (guaranteed compensation to management and the right of an investor
in IWN to require the Company to repurchase its investment during 1997) and
phantom assets (loans to management) in the Company's financial statements and
KPMG LLP's audit reports, all of which served allegedly to inflate the trading
price of the Company's Common StockOn November 7, 1997, the court granted KPMG
LLP's motion to dismiss the plaintiffs' claims against it pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim
upon which relief may be granted.

On July 3, 1997, the Company filed a motion to dismiss the lawsuit. On November
6, 1997, the Court dismissed all of the plaintiff's state law causes of action
against the Company but retained the plaintiff's federal law causes of action.
In February 1998, the attorneys representing the plaintiffs in this litigation
filed an action entitled Dorman vs. NTN Communications, Inc. in the Superior
Court of San Diego County for the State of California in which they essentially
replead the state law causes of action dismissed in the federal lawsuit. In
March 1999, the Court granted the Company's motion for summary judgment in the
Dorman matter. On May 13, 1999, plaintiffs filed a motion for new trial which
was denied by the Court. On August 20, 1999, plaintiffs filed an appeal of the
summary judgment in the Fourth Appellate District of the Court of Appeals for
the State of California. The Company filed its reply to the appeal on May 4,
2000 to which Plaintiffs replied, in turn, on May 24, 2000. The Court of Appeal
heard oral arguments on the appeal on October 15, 2000 after which the case was
submitted to the Court for decision. The Court is required to rule within 90
days of submission of the case for decision. The Company has submitted this
claim to its directors and officers liability insurance underwriters, who have
<PAGE>   35
accepted the claim subject to reservation of rights. The Company's deductible
under the insurance policy in connection with this claim has been paid in full.

In November 1999, the Company reached a tentative settlement agreement with the
class of plaintiffs in the Miller litigation whereby the Company would pay
$3,250,000 upon approval by the court. The settlement payment is fully covered
by the Company's liability insurance. On April 3, 2000, the U.S. District Court
for the Southern District entered a final judgment and order of dismissal in the
Miller litigation. The judgment became final on May 3, 2000.In September 1998,
the Company received correspondence from counsel to Microsoft Corporation and
related inquiries from the Business Software Alliance and Software Publishers
Association, two industry associations, requesting information regarding the
Company's use of the MS-DOS operating system in connection with its Playmaker(R)
systems which at the time were installed in over 2,800 hospitality locations
throughout the United States. In response, the Company conducted an internal
audit and produced the results to counsel to the three entities. Based on the
audit results, it was determined that the Company had insufficient licensing for
the MS-DOS in use in the hospitality locations. Microsoft Corporation advised
the Company that the two industry associations would represent Microsoft and act
on its behalf in resolution of the matter. In November 1999, the Company entered
into a Settlement Agreement with the Business Software Alliance ("BSA") pursuant
to which the Company paid the BSA a total of $339,864 in ten equal monthly
installments. The final monthly installment payment was made in July 2000. As
further required, in May 2000, the Company also delivered to BSA a Certification
of Compliance certifying the accuracy of the software audit results and that all
copies of the relevant software products used by NTN in the course of business
are licensed to NTN and are used solely in accordance with such licenses. In
addition, in December 1999, the Company entered into a Settlement Agreement with
the Software Publishers Association ("SPA") pursuant to which the Company was
liable for a total of $25,000 to the SPA in two equal installments and purchased
sufficient copies of the software to replace infringing copies as needed. The
Company's payment obligations under the terms of the settlement were satisfied
in full in January 2000. In December 2000, the Company will be required to
provide SPA with a statement certifying that NTN is still in compliance with any
and all applicable software licensing agreements and copyright law along with a
statement itemizing software purchases made during the course of the previous
year.

The Company has been involved as a plaintiff or defendant in various previously
reported lawsuits in both the United States and Canada involving Interactive
Network, Inc. ("IN"). With the court's assistance, the Company and IN reached a
resolution of all pending disputes in the United States and agreed to private
arbitration regarding any future licensing, copyright or infringement issues
which may arise between the parties. There remain two lawsuits involving the
Company, its unaffiliated Canadian licensee and IN, which were filed in
<PAGE>   36
Canada in 1992. No action was taken in the Canadian litigation until May 1998,
when IN gave notice of its intention to proceed. In November 1998, the Company
and its Canadian licensee filed a counterclaim against IN. These actions affect
only the Canadian operations of the Company and its Canadian licensee and do not
extend to the Company's operations in the United States or elsewhere.

In October 2000, the parties agreed to file a motion for leave of court to file
amended pleadings and to seek an amended order setting forth a revised schedule
for the proceedings and for completion of discovery. Drafts of the moving papers
including amended pleadings have been exchanged by the parties with final
documents to be filed with the court prior to November 30, 2000.

In March 1998, the Company's former independent representative in the State of
Georgia file suit against the Company in Atlanta, Georgia alleging wrongful
termination of its distributor agreement and other breaches of such agreement.
In September 1999, the Company filed a complaint seeking damages for fraud and
conversion against the former sales representative. The parties agreed to settle
the matter for payment by the Company of the sum of $19,000 and return of
Company property by the former sales representative. Final settlement documents
are currently being circulated.

On June 28, 2000, the Company filed suit in Superior Court for the County of San
Diego against the former general manager of its Internet game station division,
Edward Bevliacqua, as well as Sikander, Inc. and the Fun-e-Business Network,
Inc. The complaint alleges causes of action arising, primarily, from the
Company's April 1999 acquisition of the assets and rights to certain technology,
hardware and video games used in the Internet game business from Sikander, Inc.
Allegations include breach of contract, breach of the implied covenant of good
faith and fair dealing, breach of fiduciary duty, intentional interference with
contractual relations, intentional interference with prospective economic
advantage, negligent interference with contractual relations, declaratory
relief, business and professions code violations and fraud. In October 2000,
Sikander, Inc. filed a cross-complaint against the Company for breach of
promissory note alleging the Company failed to make its June 30, 2000 and
subsequent quarterly payments when due under the note. The promissory note was
executed by the Company in favor of Sikander, Inc. in connection with the asset
purchase transaction and is at issue by way of Company's complaint. The parties
are currently conducting discovery. A case management conference has been
scheduled by the court for November 17, 2000.
<PAGE>   37
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(l)

                                EMPLOYMENT; ERISA

                                     None.
<PAGE>   38
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(o)

                                      TITLE

The Company's revolving line of credit with Coast Business Credit is secured by
substantially all of the Company's assets.
<PAGE>   39
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 3(u)

                              CERTAIN TRANSACTIONS

None.
<PAGE>   40
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 4(l)

                                    SOLVENCY

         The entire principal amount, to the extent not converted, of the
Convertible Senior Subordinated Notes issued in January 1999 will be due and
payable on February 1, 2001. In the event the Company has insufficient cash on
hand at maturity to meet its payment obligations under the note, the Company may
be required to seek refinancing of the debt.
<PAGE>   41
     SCHEDULES TO SECURITIES PURCHASE AGREEMENT OF DATED NOVEMBER 14, 2000

                                  SCHEDULE 4(o)

                                PRICE PROTECTION

Scientific Atlanta
Kavanaugh
Motorola/Gen.Instr.
Telefonica
Sandbox/go2Net/Vulcan
Sun Microsystems
Uproar
PSI Net
BSkyB
Liberty
Intel or Excalibur
Chell Merchant
Tribune Group
AOL
Global Crossing
Electronic Arts
Hearst
FoxSports
Gateway
Liberate
Open TV
AT&T
PCCW
<PAGE>   42
                                                                       EXHIBIT A

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

                            NTN COMMUNICATIONS, INC.

                          COMMON STOCK PURCHASE WARRANT

No. W-                                                         November 14, 2000

                                                   Warrant to Purchase _________
                                                          Shares of Common Stock

               NTN COMMUNICATIONS, INC., a Delaware corporation (the "Company"),
for value received, hereby certifies that _________, or registered assigns (the
"Holder"), is entitled to purchase from the Company _________ (the "Warrant
Shares") duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock, par value $.005 per share, of the Company (the "Common Stock"), at
a purchase price per share equal to the Purchase Price (as defined below), at
any time or from time to time on and after the date hereof and prior to 5:00
P.M., New York City time, on November 13, 2003 (the "Expiration Date"), all
subject to the terms, conditions and adjustments set forth below in this
Warrant.

               This Warrant is one of the Common Stock Purchase Warrants
(collectively, the "Warrants", such term to include any such warrants issued in
substitution therefor) originally issued pursuant to the terms of the Securities
Purchase Agreement, dated as of November 13, 2000, by and among the Company and
the Buyers signatory thereto (the "Purchase Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned such
terms in the Purchase Agreement.

               1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms shall have the meanings indicated:

               "Additional Shares of Common Stock" shall mean, all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
Section 3.3 or 3.4, deemed to be issued) by the Company after the date hereof,
whether or not subsequently

<PAGE>   43

reacquired or retired by the Company other than (i) shares of Common Stock
issued upon exercise of the Warrants, (ii) such number of additional shares of
Common Stock as may become issuable by exercise of the Warrants by reason of
adjustments required pursuant to the anti-dilution provisions applicable to the
Warrants, (iii) shares of Common Stock issued pursuant to Approved Stock Plans
and (iv) shares of Common Stock issued pursuant to warrants issued and
outstanding on November 13, 2000 and listed on Schedule 3(c) to the Purchase
Agreement.

               "Anniversary Date" shall mean November 13 of each calendar year.

               "Approved Stock Plan" shall mean any contract, plan or agreement
which has been or shall be approved by the Board of Directors of the Company or
a committee of the Board of Directors, pursuant to which the Company's
securities may be issued to any employee, officer, director, consultant or other
service provider of the Company in an aggregate amount that does not exceed 110%
of the number of securities issuable as of November 13, 2000 pursuant to any
currently existing Approved Stock Plan.

               "Average Closing Bid Price" shall mean the average of the Closing
Bid Prices of the Common Stock for the twenty (20) days immediately preceding
the applicable date.

               "Average Market Price" shall mean the average of the Closing Bid
Prices of the Common Stock for the five (5) trading days immediately preceding
the applicable date.

               "Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New York
are authorized by law to be closed. Any reference to "days" (unless Business
Days are specified) shall mean calendar days.

               "Buy in Actual Damages" shall have the meaning assigned to it in
Section 2.6 of this Agreement.

               "Closing Bid Price" shall mean for any security as of any date,
the closing bid price of such security on the principal securities exchange or
trade market where such security is listed or traded as reported by Bloomberg,
L.P. ("Bloomberg"), or if the foregoing does not apply, the closing bid price of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such
security on such date, as set forth above, the Closing Bid Price of such
security shall be the fair market value as determined in good faith by an
investment banking firm selected jointly by the Company and the Holder, with the
fees and expenses of such determination borne solely by the Company.

               "Commission" shall mean the Securities and Exchange Commission or
any successor agency having jurisdiction to enforce the Securities Act.

                                      -2-
<PAGE>   44

               "Common Stock" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any stock into which such
Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.

               "Company" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation or other
entity which shall succeed to or assume the obligations of the Company hereunder
in compliance with Section 4.

               "Convertible Securities" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares of
Common Stock.

               "Current Market Price" shall mean, on any date specified herein,
the average of the daily Closing Bid Prices for the Common Stock during the 10
consecutive trading days commencing 15 trading days before such date, except
that, if on any such date the shares of Common Stock are not listed or admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Fair Value on
such date.

               "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.

               "Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.

               "Fair Value" shall mean, on any date specified herein (i) in the
case of cash, the dollar amount thereof, (ii) in the case of a security admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price, and (iii) in all other cases
as determined in good faith jointly by the Board of Directors of the Company and
the Holder; provided, however, that if such parties are unable to reach
agreement within a reasonable period of time, the Fair Value shall be determined
in good faith by an independent investment banking firm selected jointly by the
Company and the Holder or, if that selection cannot be made within ten days, by
an independent investment banking firm selected by the American Arbitration
Association in accordance with its rules, and provided further, that the Company
shall pay all of the fees and expenses of any third parties incurred in
connection with determining the Fair Value.

               "Options" shall mean any rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.

                                      -3-
<PAGE>   45

               "Other Securities" shall mean any stock (other than Common Stock)
and other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

               "Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.

               "Purchase Agreement" shall have the meaning assigned to it in the
introduction to this Warrant.

               "Purchase Price" shall mean

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------

              Applicable Period                            Purchase Price
----------------------------------------------------------------------------------------
<S>                                             <C>
(i)  from November 13, 2000 through May         $1.64125
12, 2001:
----------------------------------------------------------------------------------------

(ii)  from May 13, 2001 through November        the lesser of (a) $1.64125 and (b) the
12, 2001:                                       Average Closing Bid Price as of May
                                                13, 2001
----------------------------------------------------------------------------------------

(iii) from November 13, 2001 through May        the lesser of (a) the Purchase Price
12, 2002:                                       resulting from (ii) above and (b) the
                                                Average Closing Bid Price as of
                                                November 13, 2001
----------------------------------------------------------------------------------------

(iv)  from May 13, 2002 through November        the lesser of (a) the Purchase Price
12, 2002:                                       resulting from (iii) above and (b) the
                                                Average Closing Bid Price as of May
                                                13, 2002
----------------------------------------------------------------------------------------

(v)  from November 13, 2002 through May         the lesser of (a) the Purchase Price
12, 2003:                                       resulting from (iv) above and (b) the
                                                Average Closing Bid Price ending on
                                                November 13, 2002
----------------------------------------------------------------------------------------

(vi)  from May 13, 2003 through November        the lesser of (a) the Purchase Price
12, 2003:                                       resulting from (v) above and (b) the
                                                Average Closing Bid Price ending on
                                                May 13, 2003
----------------------------------------------------------------------------------------
</TABLE>

                                      -4-
<PAGE>   46

               provided, however, that such amount shall be subject to
adjustment and readjustment from time to time as provided in Section 3, and, as
so adjusted or readjusted, shall remain in effect until a further adjustment or
readjustment thereof is required by Section 3.

               "Registration Rights Agreement" shall mean the Registration
Agreement dated as of November 13, 2000, substantially in the form of Exhibit C
to the Purchase Agreement.

               "Rights" shall have the meaning assigned to it in Section 3.10.

               "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.

               "Warrants" shall have the meaning assigned to it in the
introduction to this Warrant.

               2.     EXERCISE OF WARRANT.

               2.1. Manner of Exercise; Payment of the Purchase Price. (a) This
Warrant may be exercised by the Holder, in whole or in part, at any time or from
time to time on and after the date hereof and prior to the Expiration Date, by
surrendering to the Company at its principal office (or such other office or
agency of the Company as the Company may designate in a written notice to the
Holder) this Warrant, together with the form of Election to Purchase Shares
attached hereto as Exhibit A (or a reasonable facsimile thereof) duly executed
by the Holder and accompanied by payment of the Purchase Price as described
below for the number of shares of Common Stock specified in such form.

               (b) Payment of the Purchase Price may be made as follows (or by
any combination of the following): (i) in United States currency by cash or
delivery of a certified check or bank draft payable to the order of the Company
or by wire transfer to the account of the Company, (ii) by cancellation of such
number of the shares of Common Stock otherwise issuable to the Holder upon such
exercise as shall be specified in such Election to Purchase Shares, such that
the excess of the Current Market Price of such specified number of shares on the
date of exercise over the portion of the Purchase Price attributable to such
shares shall equal the Purchase Price attributable to the shares of Common Stock
to be issued upon such exercise, in which case upon delivery of such notice such
amount shall be deemed to have been paid to the Company and the number of shares
issuable upon such exercise shall be reduced by such specified number, or (iii)
by surrender to the Company for cancellation, certificates representing shares
of Common Stock of the Company owned by the Holder (properly endorsed for
transfer in blank) having a Current Market Price on the date of Warrant exercise
equal to the Purchase Price.

               2.2. When Exercise Effective. Each exercise of this Warrant shall
be deemed to have been effected immediately prior to the close of business on
the Business Day on which this Warrant shall have been surrendered to, and the
Purchase Price shall

                                      -5-
<PAGE>   47

have been received by, the Company as provided in Section 2.1, and at such time
the Person or Persons in whose name or names any certificate or certificates for
shares of Common Stock (or Other Securities) shall be issuable upon such
exercise as provided in Section 2.3 shall be deemed to have become the holder or
holders of record thereof for all purposes.

               2.3. Delivery of Stock Certificates, etc.; Charges, Taxes and
Expenses. Subject to Section 2.5 (a) as soon as practicable after each exercise
of this Warrant, in whole or in part, and in any event within three (3) Business
Days thereafter, the Company shall cause to be issued in such denominations as
may be requested by Holder in the Election to Purchase Shares, in the name of
and delivered to the Holder or, subject the Purchase Agreement, as the Holder
may direct,

               (i) a certificate or certificates, or, if then permissible under
        the Securities Act, at a Holder's request to electronically issue such
        shares (e.g., through DWAC or DTC), an electronic issuance for the
        number of shares of Common Stock (or Other Securities) to which the
        Holder shall be entitled upon such exercise plus, in lieu of issuance of
        any fractional share to which the Holder would otherwise be entitled, if
        any, a certified check for the amount of cash equal to the same fraction
        multiplied by the Current Market Price per share on the date of Warrant
        exercise, provided, however, that in the event sufficient funds are not
        legally available for the payment of such amount, the number of shares
        of Common Stock for which such certificate(s) represents shall be
        rounded up to the nearest whole number, and

               (ii) in case such exercise is for less than all of the shares of
        Common Stock purchasable under this Warrant, a new Warrant or Warrants
        of like tenor, for the balance of the shares of Common Stock purchasable
        hereunder.

               (b) Issuance of certificates for shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the Holder hereof for
any issue or transfer tax or other incidental expense, in respect of the
issuance of such certificates, all of which such taxes and expenses shall be
paid by the Company.

               2.4. Company to Reaffirm Obligations. The Company shall, at the
time of each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if the Holder of this
Warrant shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such rights to the Holder.

               2.5. Exercise Disputes. In the case of any dispute with respect
to the number of shares to be issued upon exercise of this Warrant, the Company
shall promptly issue such number of shares of Common Stock that is not disputed
and shall submit the disputed determinations or arithmetic calculations to the
Holder via facsimile within two (2) Business Days of receipt of the Holder's
Election to Purchase Shares. If the Holder

                                      -6-
<PAGE>   48

and the Company are unable to agree as to the determination of the Purchase
Price within two (2) Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall in accordance
with this Section, submit via facsimile the disputed determination to an
independent reputable accounting firm of national standing, selected jointly by
the Company and the Holder. The Company shall cause such accounting firm to
perform the determinations or calculations and notify the Company and the Holder
of the results within forty-eight (48) hours from the time it receives the
disputed determinations of calculations. Such accounting firm's determination
shall be binding upon all parties absent manifest error. The Company shall then
on the next Business Day issue certificate(s) representing the appropriate
number of shares of Common Stock in accordance with such accounting firm's
determination and this Section. All fees and expenses of such determination and
calculation shall be borne by the Company.

               2.6. Failure to Deliver Common Stock If, at any time, the Holder
of this Warrant submits this Warrant, an Election to Purchase Shares and payment
to the Company of the Purchase Price for each of the shares of Common Stock
specified in the Election to Purchase Shares in accordance with Section 2.1
above, and the Company, for any reason, fails to deliver, on or prior to the
last possible date which the Company could have issued such Common Stock to the
Holder without violating this Section 2, the number of shares of Common Stock
for which the Holder is entitled upon such exercise, the Company shall pay
damages to the Holder equal to the greater of (a) actual damages incurred by the
Holder as a result of the Holder's needing to "buy in" shares of Common Stock to
the extent necessary to satisfy its securities delivery requirements ("Buy In
Actual Damages") and (b) if the Company fails to deliver such certificates
within five days after the last possible date on which the Company could have
issued such Common Stock to the Holder without violating this Section 2, on each
date such exercise is not timely effected in an amount equal to 1% of the
product of (i) the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is entitled and (ii) the Closing Bid
Price of the Common Stock on the last possible date which the Company could have
issued such Common Stock to the Holder without violating this Section 2.

                                      -7-
<PAGE>   49

               3.     ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.

               3.1.   Adjustment of Number of Shares.

                      Upon each adjustment of the Purchase Price as a result of
the calculations made in this Section 3, this Warrant shall thereafter evidence
the right to receive, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing (i)
the product of the aggregate number of shares covered by this Warrant
immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase Price.

               3.2.   Adjustment of Purchase Price.

               3.2.1. Issuance of Additional Shares of Common Stock. In case the
Company at any time or from time to time after the date hereof shall issue or
sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3.3 or 3.4 but excluding
Additional Shares of Common Stock purchasable upon exercise of Rights referred
to in Section 3.10), without consideration or for a consideration per share less
than the Average Market Price as in effect immediately prior to such issue or
sale, then, and in each such case, subject to Section 3.8, the Purchase Price
shall be reduced, concurrently with such issue or sale, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such Purchase Price by
a fraction

               (a) the numerator of which shall be the sum of (i) the number of
        shares of Common Stock outstanding immediately prior to such issue or
        sale and (ii) the number of shares of Common Stock which the gross
        consideration received by the Company for the total number of such
        Additional Shares of Common Stock so issued or sold would purchase at
        such Current Market Price, and

               (b) the denominator of which shall be the number of shares of
        Common Stock outstanding immediately after such issue or sale, provided
        that, for the purposes of this Section 3.2.1, (x) immediately after any
        Additional Shares of Common Stock are deemed to have been issued
        pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed
        to be outstanding, and (y) treasury shares shall not be deemed to be
        outstanding.

               3.2.2. Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock, then,
in each such case, subject to Section 3.8, the Purchase Price in effect
immediately prior to the close of business on the record date fixed for the
determination

                                      -8-
<PAGE>   50

of holders of any class of securities entitled to receive such dividend or
distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Purchase Price by a
fraction

               (x) the numerator of which shall be the Current Market Price in
        effect on such record date or, if the Common Stock trades on an
        ex-dividend basis, on the date prior to the commencement of ex-dividend
        trading, less the Fair Value of such dividend or distribution applicable
        to one share of Common Stock, and

               (y) the denominator of which shall be such Current Market Price.

               3.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable) then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
(i) the consideration per share (determined pursuant to Section 3.5) of such
shares would be less than the Average Market Price as in effect on the date of
and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be and (ii) such Additional Shares of
Common Stock are not purchasable pursuant to Rights referred to in Section 3.10,
and provided, further, that

               (a) whether or not the Additional Shares of Common Stock
        underlying such Options or Convertible Securities are deemed to be
        issued, no further adjustment of the Purchase Price shall be made upon
        the subsequent issue or sale of Convertible Securities or shares of
        Common Stock upon the exercise of such Options or the conversion or
        exchange of such Convertible Securities;

               (b) if such Options or Convertible Securities by their terms
        provide, with the passage of time or otherwise, for any increase in the
        consideration payable to the Company, or decrease in the number of
        Additional Shares of Common Stock issuable, upon the exercise,
        conversion or exchange thereof (by change of rate or otherwise), the
        Purchase Price computed upon the original issue, sale, grant or
        assumption thereof (or upon the occurrence of the record date, or date
        prior to the commencement of ex-dividend trading, as the case may be,
        with respect thereto), and any subsequent adjustments based thereon,
        shall, upon any

                                      -9-
<PAGE>   51

        such increase or decrease becoming effective, be recomputed to reflect
        such increase or decrease insofar as it affects such Options, or the
        rights of conversion or exchange under such Convertible Securities,
        which are outstanding at such time;

               (c) upon the expiration or termination (or purchase by the
        Company and cancellation or retirement) of any such Options which shall
        not have been exercised or the expiration of any rights of conversion or
        exchange under any such Convertible Securities which (or purchase by the
        Company and cancellation or retirement of any such Convertible
        Securities the rights of conversion or exchange under which) shall not
        have been exercised, the Purchase Price computed upon the original
        issue, sale, grant or assumption thereof (or upon the occurrence of the
        record date, or date prior to the commencement of ex-dividend trading,
        as the case may be, with respect thereto), and any subsequent
        adjustments based thereon, shall, upon such expiration (or such
        cancellation or retirement, as the case may be), be recomputed as if:

                      (i) in the case of Options for Common Stock or Convertible
               Securities, the only Additional Shares of Common Stock issued or
               sold were the Additional Shares of Common Stock, if any, actually
               issued or sold upon the exercise of such Options or the
               conversion or exchange of such Convertible Securities and the
               consideration received therefor was the consideration actually
               received by the Company for the issue, sale, grant or assumption
               of all such Options, whether or not exercised, plus the
               consideration actually received by the Company upon such
               exercise, or for the issue or sale of all such Convertible
               Securities which were actually converted or exchanged, plus the
               additional consideration, if any, actually received by the
               Company upon such conversion or exchange, and

                      (ii) in the case of Options for Convertible Securities,
               only the Convertible Securities, if any, actually issued or sold
               upon the exercise of such Options were issued at the time of the
               issue or sale, grant or assumption of such Options, and the
               consideration received by the Company for the Additional Shares
               of Common Stock deemed to have then been issued was the
               consideration actually received by the Company for the issue,
               sale, grant or assumption of all such Options, whether or not
               exercised, plus the consideration deemed to have been received by
               the Company (pursuant to Section 3.5) upon the issue or sale of
               such Convertible Securities with respect to which such Options
               were actually exercised;

               (d) no readjustment pursuant to subdivision (b) or (c) above
        shall have the effect of increasing the Purchase Price by an amount in
        excess of the amount of the adjustment thereof originally made in
        respect of the issue, sale, grant or assumption of such Options or
        Convertible Securities; and

                                      -10-
<PAGE>   52

               (e) in the case of any such Options which expire by their terms
        not more than 30 days after the date of issue, sale, grant or assumption
        thereof, no adjustment of the Purchase Price shall be made until the
        expiration or exercise of all such Options, whereupon such adjustment
        shall be made in the manner provided in subdivision (c) above.

               3.4. Treatment of Stock Dividends, Stock Splits, etc. In case the
Company at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.

               3.5. Computation of Consideration. For the purposes of this
Section 3,

               (a) the consideration for the issue or sale of any Additional
        Shares of Common Stock shall, irrespective of the accounting treatment
        of such consideration,

                      (i) insofar as it consists of cash, be computed at the
               amount of cash received by the Company, without deducting any
               expenses paid or incurred by the Company or any commissions or
               compensations paid or concessions or discounts allowed to
               underwriters, dealers or others performing similar services in
               connection with such issue or sale,

                      (ii) insofar as it consists of property (including
               securities) other than cash, be computed at the Fair Value
               thereof at the time of such issue or sale, and

                      (iii) in case Additional Shares of Common Stock are issued
               or sold together with other stock or securities or other assets
               of the Company for a consideration which covers both, be the
               portion of such consideration so received, computed as provided
               in clauses (i) and (ii) above, allocable to such Additional
               Shares of Common Stock, such allocation to be determined in the
               same manner that the Fair Value of property not consisting of
               cash or securities is to be determined as provided in the
               definition of 'Fair Value' herein;

               (b) Additional Shares of Common Stock deemed to have been issued
        pursuant to Section 3.3, relating to Options and Convertible Securities,
        shall be deemed to have been issued for a consideration per share
        determined by dividing

                                      -11-
<PAGE>   53

                      (i) the total amount, if any, received and receivable by
               the Company as consideration for the issue, sale, grant or
               assumption of the Options or Convertible Securities in question,
               plus the minimum aggregate amount of additional consideration (as
               set forth in the instruments relating thereto, without regard to
               any provision contained therein for a subsequent adjustment of
               such consideration to protect against dilution) payable to the
               Company upon the exercise in full of such Options or the
               conversion or exchange of such Convertible Securities or, in the
               case of Options for Convertible Securities, the exercise of such
               Options for Convertible Securities and the conversion or exchange
               of such Convertible Securities, in each case computing such
               consideration as provided in the foregoing subdivision (a),

               by

                      (ii) the maximum number of shares of Common Stock (as set
               forth in the instruments relating thereto, without regard to any
               provision contained therein for a subsequent adjustment of such
               number to protect against dilution) issuable upon the exercise of
               such Options or the conversion or exchange of such Convertible
               Securities; and

               (c) Additional Shares of Common Stock deemed to have been issued
        pursuant to Section 3.4, relating to stock dividends, stock splits,
        etc., shall be deemed to have been issued for no consideration.

               3.6. Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Purchase Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.

               3.7. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Section 4) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 3, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 3 with respect to the Purchase Price and the number
of shares purchasable upon Warrant exercise shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the Warrants, so as
to protect the holders of the Warrants against the effect of such dilution.

               3.8. De Minimis Adjustments. If the amount of any adjustment of
the Purchase Price per share required pursuant to this Section 3 would be less
than $.01, such

                                      -12-
<PAGE>   54

amount shall be carried forward and adjustment with respect thereto made at the
time of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate a
change in the Purchase Price of at least $.01 per share. All calculations under
this Warrant shall be made to the nearest .001 of a cent or to the nearest
one-hundredth of a share, as the case may be.

               3.9. Abandoned Dividend or Distribution. If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or other distribution (which results in an adjustment
to the Purchase Price under the terms of this Warrant) and shall, thereafter,
and before such dividend or distribution is paid or delivered to stockholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Purchase Price and number of
shares of Common Stock purchasable upon Warrant exercise by reason of the taking
of such record shall be reversed, and any subsequent adjustments, based thereon,
shall be recomputed.

               3.10. Shareholder Rights Plan. Notwithstanding the foregoing, in
the event that the Company shall distribute "poison pill" rights pursuant to a
"poison pill" shareholder rights plan (the "Rights"), the Company shall, in lieu
of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof, make
proper provision so that each Holder who exercises a Warrant after the record
date for such distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, a number of Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon such exercise at the time of such exercise would be
entitled in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such exercise occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.

               4.     CONSOLIDATION, MERGER, ETC.

               4.1. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital

                                      -13-
<PAGE>   55

reorganization or reclassification resulting in the issue of Additional Shares
of Common Stock for which adjustment in the Purchase Price is provided in
Section 3.2.1 or 3.2.2), then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant, upon the exercise hereof
at any time after the consummation of such transaction shall be entitled to
receive (at the aggregate Purchase Price in effect at the time of such
consummation for all Common Stock or Other Securities issuable upon such
exercise immediately prior to such consummation), in lieu of the Common Stock or
Other Securities issuable upon such exercise prior to such consummation, the
amount of securities, cash or other property to which such Holder would actually
have been entitled as a stockholder upon such consummation if such Holder had
exercised this Warrant immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Sections 3 through 5.

               4.2. Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Purchase Agreement to the contrary, the
Company shall not effect any of the transactions described in clauses (a)
through (d) of Section 4.1 unless, prior to the consummation thereof, each
Person (other than the Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant), (b)
the obligations of the Company under the Purchase Agreement and the Registration
Rights Agreement and (c) the obligation to deliver to the Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section 4, the Holder may be entitled to receive. Nothing in
this Section 4 shall be deemed to authorize the Company to enter into any
transaction not otherwise permitted by the Purchase Agreement.

               5. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the provisions of Section 3 or Section 4 hereof are not strictly
applicable or if strictly applicable would not fairly protect the purchase
rights of the Holder in accordance with the essential intent and principles of
such Sections, then, in each such case, the Board of Directors of the Company
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to preserve, without dilution,
the purchase rights represented by this Warrant.

               6. NO DILUTION OR IMPAIRMENT. The Company shall not, by amendment
of its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be reasonably necessary or appropriate in order to protect the rights of the
Holder of this Warrant against dilution or other impairment. Without limiting
the generality of the foregoing, the Company

                                      -14-
<PAGE>   56

(a) shall not permit the par value of any shares of stock receivable upon the
exercise of this Warrant to exceed the amount payable therefor upon such
exercise, (b) shall take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock, free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges on the exercise of the Warrants from
time to time outstanding, (c) shall not take any action which results in any
adjustment of the Purchase Price if the total number of shares of Common Stock
(or Other Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such exercise, and (d) shall not issue
any capital stock of any class which is preferred as to dividends or as to the
distribution of assets upon voluntary or involuntary dissolution, liquidation or
winding-up, unless the rights of the holders thereof shall be limited to a fixed
sum or percentage of par value or a sum determined by reference to a formula
based on a published index of interest rates, an interest rate publicly
announced by a financial institution or a similar indicator of interest rates in
respect of participation in dividends and to a fixed sum or percentage of par
value in any such distribution of assets.

               7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment
or readjustment in the shares of Common Stock (or Other Securities) issuable
upon the exercise of this Warrant, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate, signed by the Chairman of the Board,
President or one of the Vice Presidents of the Company, and by the Chief
Financial Officer, the Treasurer or one of the Assistant Treasurers of the
Company, setting forth such adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Purchase Price in effect immediately prior to such issue or sale and as
adjusted and readjusted (if required by Section 3) on account thereof. The
Company shall forthwith mail a copy of each such certificate to each holder of a
Warrant and shall, upon the written request at any time of any holder of a
Warrant, furnish to such holder a like certificate. The Company shall also keep
copies of all such certificates at its principal office and shall cause the same
to be available for inspection at such office during normal business hours by
any holder of a Warrant or any prospective purchaser of a Warrant designated by
the holder thereof. The Company shall, upon the request in writing of the Holder
(at the Company's expense), retain independent public accountants of recognized
national standing selected by the Board of Directors of the Company to make any
computation required in connection with adjustments under this Warrant, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of such adjustment, which shall be binding on the Holder and the Company.

               8. NOTICES OF CORPORATE ACTION. In the event of:

                                      -15-
<PAGE>   57

               (a) any taking by the Company of a record of the holders of any
        class of securities for the purpose of determining the holders thereof
        who are entitled to receive any dividend or other distribution, or any
        right to subscribe for, purchase or otherwise acquire any shares of
        stock of any class or any other securities or property, or to receive
        any other right, or

               (b) any capital reorganization of the Company, any
        reclassification or recapitalization of the capital stock of the
        Company, any consolidation or merger involving the Company and any other
        Person, any transaction or series of transactions in which more than 50%
        of the voting securities of the Company are transferred to another
        Person, or any transfer, sale or other disposition of all or
        substantially all the assets of the Company to any other Person, or

               (c) any voluntary or involuntary dissolution, liquidation or
        winding-up of the Company,

the Company shall mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified but in no event earlier than the public announcement of such
proposed transaction or event.

               9. REGISTRATION OF COMMON STOCK. If any shares of Common Stock
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company shall, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be. At any such time as Common Stock is listed on any national
securities exchange or trade market, the Company shall, at its expense, obtain
promptly and maintain the approval for listing on each such exchange or trade
market, upon official notice of issuance, the shares of Common Stock issuable
upon exercise of the then outstanding Warrants and maintain the listing of such
shares after their issuance; and the Company shall also list on such national
securities exchange or trade market, shall register under the Exchange Act and
shall maintain such listing of, any Other Securities that at any time are
issuable upon exercise of the Warrants, if and at the time that any securities
of the same class shall be listed on such national securities exchange or trade
market by the Company.

               10. RESERVATION OF STOCK, ETC. The Company shall at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the

                                      -16-
<PAGE>   58

Warrants, 125% of the number of shares of Common Stock (or Other Securities)
from time to time issuable upon exercise of all Warrants at the time outstanding
and otherwise in accordance with the terms of the Purchase Agreement. All shares
of Common Stock (or Other Securities) issuable upon exercise of any Warrants
shall be duly authorized and, when issued upon such exercise, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges. The transfer agent for the Common
Stock, which may be the Company (the "Transfer Agent"), and every subsequent
Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of any of the purchase rights represented by this Warrant, are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be requisite for
such purpose. The Company shall keep copies of this Warrant on file with the
Transfer Agent for the Common Stock and with every subsequent Transfer Agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by this Warrant. The Company shall supply such
Transfer Agent with duly executed stock certificates for such purpose. All
Warrant Certificates surrendered upon the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of stock which have been issued upon
the exercise of such Warrants. Subsequent to the Expiration Date, no shares of
stock need be reserved in respect of any unexercised Warrant.

               11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.

               11.1. Warrant Register; Ownership of Warrants. Each Warrant
issued by the Company shall be numbered and shall be registered in a warrant
register (the "Warrant Register") as it is issued and transferred, which Warrant
Register shall be maintained by the Company at its principal office or, at the
Company's election and expense, by a Warrant Agent or the Company's transfer
agent. The Company shall be entitled to treat the registered Holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other Person, and shall not be affected by
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. A Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.

               11.2. Transfer of Warrants. This Warrant and all rights hereunder
are transferable in whole or in part, without charge to the Holder hereof, upon
surrender of this Warrant with a properly executed Form of Assignment attached
hereto as Exhibit B at the principal office of the Company together with an
opinion of counsel, in generally acceptable form, to the effect that such
Warrant may be transferred pursuant to an exemption from registration under the
Securities Act of 1933 (or such other office or agency of the Company as it may
in writing designate to the Holder). Upon any partial transfer, the Company
shall at its expense issue and deliver to the Holder a new Warrant of like
tenor, in the name of the Holder, which shall be exercisable for such number of

                                      -17-
<PAGE>   59

shares of Common Stock with respect to which rights under this Warrant were not
so transferred and to the transferee a new Warrant of like tenor, in the name of
the transferee, which shall be exercisable for such number of shares of Common
Stock with respect to which rights under this Warrant were so transferred.

               11.3. Replacement of Warrants. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.

               11.4. Adjustments To Purchase Price and Number of Shares.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.

               11.5. Fractional Shares. Notwithstanding any adjustment pursuant
to Section 3 in the number of shares of Common Stock covered by this Warrant or
any other provision of this Warrant, the Company shall not be required to issue
fractions of shares upon exercise of this Warrant or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, the Company
shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the
Current Market Price of a share of Common Stock on the date of Warrant exercise.

               12. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates that
there would be no adequate remedy at law to the Holder of this Warrant in the
event of any default or threatened default by the Company in the performance of
or compliance with any of the terms of this Warrant and accordingly, the Company
agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by the
Holder hereof in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.

               13. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a stockholder of the Company or as imposing any obligation on the Holder to

                                      -18-
<PAGE>   60

purchase any securities or as imposing any liabilities on the Holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.

               14. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given hereunder must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile, (iii) three days after
being sent by U.S. certified mail, return receipt requested, or (iv) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

               If to the Company:

                      NTN Communications, Inc.
                      The Campus
                      5966 LaPlace Court
                      Carlsbad, California  92008
                      Telephone:  (760) 438-7400
                      Facsimile:  (760) 930-1187
                      Attn:  Stanley B. Kinsey

               If to a Holder, to its address and facsimile number on the
register maintained by the Company. Each party shall provide five days' prior
written notice to the other party of any change in address or facsimile number.
Notwithstanding the foregoing, the exercise of any Warrant shall be effective in
the manner provided in Section 2.

               15. AMENDMENTS. This Warrant and any term hereof may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the party against which enforcement of such
amendment, modification, supplement, termination or consent to departure is
sought.

               16. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof", "herein" and "hereunder"
and words of similar import when used in this Warrant shall refer to this
Warrant as a whole and not to any particular provision of this Warrant, and
Section and paragraph references are to the Sections and paragraphs of this
Warrant unless otherwise specified; (4) the word "including" and words of
similar import when used in this Warrant shall mean "including, without
limitation," unless otherwise specified; (5) "or" is not exclusive; and (6)
provisions apply to successive events and transactions.

                                      -19-
<PAGE>   61

               17. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of laws principles thereof).

               18. JUDICIAL PROCEEDINGS. Any legal action, suit or proceeding
brought against the Company with respect to this Warrant may be brought in any
federal court in the District of Delaware or any state court located in New
Castle County, State of Delaware, and by execution and delivery of this Warrant,
the Company hereby irrevocably and unconditionally waives any claim (by way of
motion, as a defense or otherwise) of improper venue, that it is not subject
personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court. The Company hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, at its address set forth or provided for in
Section 14, such service to become effective 10 days after such mailing. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section. The Company irrevocably submits to the exclusive jurisdiction of the
aforementioned courts in such action, suit or proceeding.

               19. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock
(and Other Securities) issuable upon exercise of this Warrant (or upon
conversion of any shares of Common Stock issued upon such exercise) shall
constitute Registrable Securities (as such term is defined in the Registration
Rights Agreement). Each holder of this Warrant shall be entitled to all of the
benefits afforded to a holder of any such Registrable Securities under the
Registration Rights Agreement and such holder, by its acceptance of this
Warrant, agrees to be bound by and to comply with the terms and conditions of
the Registration Rights Agreement applicable to such holder as a holder of such
Registrable Securities.

               20. LIMITATION ON EXERCISE. Notwithstanding any provision to the
contrary contained herein, in no event shall the Holder be entitled to exercise
this Warrant, nor will the Company recognize such exercise, such that upon
giving effect to such exercise, the aggregate number of shares of Common Stock
then beneficially owned by the Holder and its "affiliates" as defined in Rule
144 of the Act would exceed 4.99% of the total issued and outstanding shares of
the Common Stock following such exercise; provided, however, that Holder may
elect to waive this restriction upon not less than sixty-one (61) days prior
written notice to the Company. For purposes of this Section, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. For purposes of this Section 20, the Company shall not be held liable under
the penalty provisions of Section 2.6 as long as the Company acts in good faith
in its non-recognition of such exercise.

                                      -20-
<PAGE>   62

                                             NTN COMMUNICATIONS, INC.

                                             By:________________________________
                                                Name:
                                                Title:

                                      -21-
<PAGE>   63

                                    [FORM OF]
                           ELECTION TO PURCHASE SHARES
                         AND TRANSFER AGENT INSTRUCTIONS

               The undersigned hereby irrevocably elects to exercise the Warrant
to purchase ____ shares of Common Stock, par value $.005 per share ("Common
Stock"), of NTN COMMUNICATIONS, INC. (the "Company") and hereby [makes payment
of $________ in consideration therefor] [or] [makes payment in consideration
therefor by reduction pursuant to Section 2.1(b)(ii) of the Warrant of the
number of shares of Common Stock otherwise issuable to the Holder upon Warrant
exercise by ______ shares] [or] [makes payment in consideration therefor by
delivery of the following Common Stock Certificates of the Company pursuant to
Section 2.1(b)(iii) of the Warrant, certificates of which are attached hereto
for cancellation _______ [list certificates by number and amount]]. The
undersigned hereby requests that certificates for such shares be issued and
delivered as follows:

ISSUE TO: ______________________________________________________________________
                                     (NAME)
________________________________________________________________________________
                          (ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
                  (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:_____________________________________________________________________
                                     (NAME)
________________________________________________________________________________
                          (ADDRESS, INCLUDING ZIP CODE)

               If the number of shares of Common Stock purchased hereby is less
than the number of shares of Common Stock covered by the Warrant, the
undersigned requests that a new Warrant representing the number of shares of
Common Stock not so purchased be issued and delivered as follows:

ISSUE TO: ______________________________________________________________________
                                     (NAME)
________________________________________________________________________________
                          (ADDRESS, INCLUDING ZIP CODE)
________________________________________________________________________________
                  (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:_____________________________________________________________________
                                     (NAME)
________________________________________________________________________________
                          (ADDRESS, INCLUDING ZIP CODE)

Dated: _____________________                        [NAME OF HOLDER]

                                             By ________________________________
                                                Name:
                                                Title:

<PAGE>   64

        __________________, as transfer agent and registrar of the Common Stock,
is hereby authorized and directed to issue the above number of shares of Common
Stock in the name of the above referenced entity or person and to deliver the
certificates representing such shares using an overnight delivery service.

                                                   NTN COMMUNICATIONS, INC.

                                                   By: _______________________
                                                      Name:
                                                      Title:

<PAGE>   65

                                                                    EXHIBIT B to
                                                   Common Stock Purchase Warrant

                              [FORM OF] ASSIGNMENT

               FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.005 per share ("Common Stock") of NTN
COMMUNICATIONS, INC. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:

<TABLE>
<CAPTION>
Name of Assignee                     Address                       No. of Shares
----------------                     -------                       -------------
<S>                                  <C>                           <C>

</TABLE>

and does hereby irrevocably constitute and appoint ________ as Attorney to make
such transfer on the books of NTN COMMUNICATIONS, INC. maintained for that
purpose, with full power of substitution in the premises.

Dated: ____________________                         [NAME OF HOLDER]

                                             By ________________________________
                                                Name:
                                                Title:

<PAGE>   66

                                                                     EXHIBIT B

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

                            NTN COMMUNICATIONS, INC.

                          COMMON STOCK PURCHASE WARRANT

No. W-                                                         November 14, 2000

                                                   Warrant to Purchase _________
                                                          Shares of Common Stock

                NTN COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), for value received, hereby certifies that _________, or registered
assigns (the "Holder"), is entitled to purchase from the Company _________ (the
"Warrant Shares") duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock, par value $.005 per share, of the Company (the "Common
Stock"), at a purchase price per share equal to the Purchase Price (as defined
below), at any time or from time to time on and after May 13, 2001 and prior to
5:00 P.M., New York City time, on May 13, 2004 (the "Expiration Date"), all
subject to the terms, conditions and adjustments set forth below in this
Warrant; provided, however, that the terms, conditions and adjustments under
this Warrant shall vest only upon the occurrence of a Vesting Event (as defined
below).

                This Warrant is one of the Common Stock Purchase Warrants
(collectively, the "Warrants", such term to include any such warrants issued in
substitution therefor) originally issued pursuant to the terms of the Securities
Purchase Agreement, dated as of November 13, 2000, by and among the Company and
the Buyers signatory thereto (the "Purchase Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned such
terms in the Purchase Agreement.

                1. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms shall have the meanings indicated:

<PAGE>   67

                "Additional Shares of Common Stock" shall mean, all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
Section 3.3 or 3.4, deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company other than (i)
shares of Common Stock issued upon exercise of the Warrants, (ii) such number of
additional shares of Common Stock as may become issuable by exercise of the
Warrants by reason of adjustments required pursuant to the anti-dilution
provisions applicable to the Warrants, (iii) shares of Common Stock issued
pursuant to Approved Stock Plans and (iv) shares of Common Stock issued pursuant
to warrants issued and outstanding on November 13, 2000 and listed on Schedule
3(c) to the Purchase Agreement.

                "Anniversary Date" shall mean May 13 of each calendar year.

                "Approved Stock Plan" shall mean any contract, plan or agreement
which has been or shall be approved by the Board of Directors of the Company or
a committee of the Board of Directors, pursuant to which the Company's
securities may be issued to any employee, officer, director, consultant or other
service provider of the Company in an aggregate amount that does not exceed 110%
of the number of securities issuable as of November 13, 2000 pursuant to any
currently existing Approved Stock Plan.

                "Average Closing Bid Price" shall mean the average of the
Closing Bid Prices of the Common Stock for the twenty (20) days immediately
preceding the applicable date.

                "Average Market Price" shall mean the average of the Closing Bid
Prices of the Common Stock for the five (5) trading days immediately preceding
the applicable date.

                "Business Day" shall mean any day other than a Saturday or a
Sunday or a day on which commercial banking institutions in the City of New York
are authorized by law to be closed. Any reference to "days" (unless Business
Days are specified) shall mean calendar days.

                "Buy in Actual Damages" shall have the meaning assigned to it in
Section 2.6 of this Agreement.

                "Closing Bid Price" shall mean for any security as of any date,
the closing bid price of such security on the principal securities exchange or
trade market where such security is listed or traded as reported by Bloomberg,
L.P. ("Bloomberg"), or if the foregoing does not apply, the closing bid price of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no closing bid price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such
security on such date, as set forth above, the Closing Bid Price of such
security shall be the fair market value as determined in good faith by an
investment banking firm selected

                                      -2-
<PAGE>   68

jointly by the Company and the Holder, with the fees and expenses of such
determination borne solely by the Company.

                "Commission" shall mean the Securities and Exchange Commission
or any successor agency having jurisdiction to enforce the Securities Act.

                "Common Stock" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any stock into which such
Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.

                "Company" shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation or other
entity which shall succeed to or assume the obligations of the Company hereunder
in compliance with Section 4.

                "Convertible Securities" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares of
Common Stock.

                "Current Market Price" shall mean, on any date specified herein,
the average of the daily Closing Bid Prices for the Common Stock during the 10
consecutive trading days commencing 15 trading days before such date, except
that, if on any such date the shares of Common Stock are not listed or admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price shall be the Fair Value on
such date.

                "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations thereunder, or any
successor statute.

                "Expiration Date" shall have the meaning assigned to it in the
introduction to this Warrant.

                "Fair Value" shall mean, on any date specified herein (i) in the
case of cash, the dollar amount thereof, (ii) in the case of a security admitted
for trading on any national securities exchange or quoted in the
over-the-counter market, the Current Market Price, and (iii) in all other cases
as determined in good faith jointly by the Board of Directors of the Company and
the Holder; provided, however, that if such parties are unable to reach
agreement within a reasonable period of time, the Fair Value shall be determined
in good faith by an independent investment banking firm selected jointly by the
Company and the Holder or, if that selection cannot be made within ten days, by
an independent investment banking firm selected by the American Arbitration
Association in accordance with its rules, and provided further, that the Company
shall pay all of the fees and expenses of any third parties incurred in
connection with determining the Fair Value.

                                      -3-
<PAGE>   69

                "Options" shall mean any rights, options or warrants to
subscribe for, purchase or otherwise acquire either Additional Shares of Common
Stock or Convertible Securities.

                "Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

                "Person" shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.

                "Purchase Agreement" shall have the meaning assigned to it in
the introduction to this Warrant.

                "Purchase Price" shall mean

<TABLE>
<CAPTION>
              Applicable Period                              Purchase Price
              -----------------                              --------------
<S>                                               <C>
(i)  for the period ending on November            the lesser of (a) $1.64125 and (b) the
12, 2001:                                         Average Closing Bid Price as of May
                                                  13, 2001

(ii)  from November 13, 2001 through May          the lesser of (a) the Purchase Price
12, 2002:                                         resulting from (i) above and (b) the
                                                  Average Closing Bid Price as of
                                                  November 13, 2001

(iii) from May 13, 2002 through November          the lesser of (a) the Purchase Price
12, 2002:                                         resulting from (ii) above and (b) the
                                                  Average Closing Bid Price as of May
                                                  13, 2002

(iv)  from November 13, 2002 through May          the lesser of (a) the Purchase Price
12, 2003:                                         resulting from (iii) above and (b) the
                                                  Average Closing Bid Price ending on
                                                  November 13, 2002

(v)  from May 13, 2003 through November           the lesser of (a) the Purchase Price
12, 2003:                                         resulting from (iv) above and (b) the
                                                  Average Closing Bid Price ending on
</TABLE>

                                      -4-
<PAGE>   70

<TABLE>
<S>                                               <C>
                                                  May 13, 2003

(vi)  from November 13, 2003 through May          the lesser of (a) the Purchase Price
12, 2004:                                         resulting from (v) above and (b) the
                                                  Average Closing Bid Price ending on
                                                  November 13, 2003
</TABLE>

                provided, however, that such amount shall be subject to
adjustment and readjustment from time to time as provided in Section 3, and, as
so adjusted or readjusted, shall remain in effect until a further adjustment or
readjustment thereof is required by Section 3.

                "Registration Rights Agreement" shall mean the Registration
Agreement dated as of November 13, 2000, substantially in the form of Exhibit C
to the Purchase Agreement.

                "Rights" shall have the meaning assigned to it in Section 3.10.

                "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the rules and regulations thereunder, or any
successor statute.

                "Vesting Event" shall mean the failure of the Company to receive
from Persons other than the Holder or any of its affiliates, in the aggregate,
U.S.$5.0 million from the sale of Common Stock of the Company prior to 5:00
P.M., New York City time, on May 12, 2001 (the "Five Million Threshold");
provided, however, that any capital or funds received from Persons other than
the Holder or any of its affiliates on the Closing Date shall be counted towards
the satisfaction of the Five Million Threshold; and provided, further, that any
purchase of the equity interest of BUZZTIME, Inc., a subsidiary of the Company,
shall also be counted towards the satisfaction of the Five Million Threshold.

                "Warrants" shall have the meaning assigned to it in the
introduction to this Warrant.

                2. EXERCISE OF WARRANT.

                2.1. Manner of Exercise; Payment of the Purchase Price. (a) This
Warrant may be exercised by the Holder, in whole or in part, at any time or from
time to time on and after May 13, 2001 (and only if the Vesting Event has
occurred) and prior to the Expiration Date, by surrendering to the Company at
its principal office (or such other office or agency of the Company as the
Company may designate in a written notice to the Holder) this Warrant, together
with the form of Election to Purchase Shares attached hereto as Exhibit A (or a
reasonable facsimile thereof) duly executed by the Holder and accompanied by
payment of the Purchase Price as described below for the number of shares of
Common Stock specified in such form.

                (b) Payment of the Purchase Price may be made as follows (or by
any combination of the following): (i) in United States currency by cash or
delivery of a

                                      -5-
<PAGE>   71

certified check or bank draft payable to the order of the Company or by wire
transfer to the account of the Company, (ii) by cancellation of such number of
the shares of Common Stock otherwise issuable to the Holder upon such exercise
as shall be specified in such Election to Purchase Shares, such that the excess
of the Current Market Price of such specified number of shares on the date of
exercise over the portion of the Purchase Price attributable to such shares
shall equal the Purchase Price attributable to the shares of Common Stock to be
issued upon such exercise, in which case upon delivery of such notice such
amount shall be deemed to have been paid to the Company and the number of shares
issuable upon such exercise shall be reduced by such specified number, or (iii)
by surrender to the Company for cancellation, certificates representing shares
of Common Stock of the Company owned by the Holder (properly endorsed for
transfer in blank) having a Current Market Price on the date of Warrant exercise
equal to the Purchase Price.

                2.2. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to, and
the Purchase Price shall have been received by, the Company as provided in
Section 2.1, and at such time the Person or Persons in whose name or names any
certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 2.3 shall be deemed
to have become the holder or holders of record thereof for all purposes.

                2.3. Delivery of Stock Certificates, etc.; Charges, Taxes and
Expenses. Subject to Section 2.5 (a) as soon as practicable after each exercise
of this Warrant, in whole or in part, and in any event within three (3) Business
Days thereafter, the Company shall cause to be issued in such denominations as
may be requested by Holder in the Election to Purchase Shares, in the name of
and delivered to the Holder or, subject the Purchase Agreement, as the Holder
may direct,

                (i) a certificate or certificates, or, if then permissible under
        the Securities Act, at a Holder's request to electronically issue such
        shares (e.g., through DWAC or DTC), an electronic issuance for the
        number of shares of Common Stock (or Other Securities) to which the
        Holder shall be entitled upon such exercise plus, in lieu of issuance of
        any fractional share to which the Holder would otherwise be entitled, if
        any, a certified check for the amount of cash equal to the same fraction
        multiplied by the Current Market Price per share on the date of Warrant
        exercise, provided, however, that in the event sufficient funds are not
        legally available for the payment of such amount, the number of shares
        of Common Stock for which such certificate(s) represents shall be
        rounded up to the nearest whole number, and

                (ii) in case such exercise is for less than all of the shares of
        Common Stock purchasable under this Warrant, a new Warrant or Warrants
        of like tenor, for the balance of the shares of Common Stock purchasable
        hereunder.

                                      -6-
<PAGE>   72

                (b) Issuance of certificates for shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the Holder hereof for
any issue or transfer tax or other incidental expense, in respect of the
issuance of such certificates, all of which such taxes and expenses shall be
paid by the Company.

                2.4. Company to Reaffirm Obligations. The Company shall, at the
time of each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if the Holder of this
Warrant shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such rights to the Holder.

                2.5. Exercise Disputes. In the case of any dispute with respect
to the number of shares to be issued upon exercise of this Warrant, the Company
shall promptly issue such number of shares of Common Stock that is not disputed
and shall submit the disputed determinations or arithmetic calculations to the
Holder via facsimile within two (2) Business Days of receipt of the Holder's
Election to Purchase Shares. If the Holder and the Company are unable to agree
as to the determination of the Purchase Price within two (2) Business Days of
such disputed determination or arithmetic calculation being submitted to the
Holder, then the Company shall in accordance with this Section, submit via
facsimile the disputed determination to an independent reputable accounting firm
of national standing, selected jointly by the Company and the Holder. The
Company shall cause such accounting firm to perform the determinations or
calculations and notify the Company and the Holder of the results within
forty-eight (48) hours from the time it receives the disputed determinations of
calculations. Such accounting firm's determination shall be binding upon all
parties absent manifest error. The Company shall then on the next Business Day
issue certificate(s) representing the appropriate number of shares of Common
Stock in accordance with such accounting firm's determination and this Section.
All fees and expenses of such determination and calculation shall be borne by
the Company.

                2.6. Failure to Deliver Common Stock If, at any time, the Holder
of this Warrant submits this Warrant, an Election to Purchase Shares and payment
to the Company of the Purchase Price for each of the shares of Common Stock
specified in the Election to Purchase Shares in accordance with Section 2.1
above, and the Company, for any reason, fails to deliver, on or prior to the
last possible date which the Company could have issued such Common Stock to the
Holder without violating this Section 2, the number of shares of Common Stock
for which the Holder is entitled upon such exercise, the Company shall pay
damages to the Holder equal to the greater of (a) actual damages incurred by the
Holder as a result of the Holder's needing to "buy in" shares of Common Stock to
the extent necessary to satisfy its securities delivery requirements ("Buy In
Actual Damages") and (b) if the Company fails to deliver such certificates
within five days after the last possible date on which the Company could have
issued such Common Stock to the Holder without violating this Section 2, on each
date such exercise is not timely effected in an amount equal to 1% of the
product of (i) the number of shares of Common Stock not issued to the Holder on
a timely basis and to which the Holder is

                                      -7-
<PAGE>   73

entitled and (ii) the Closing Bid Price of the Common Stock on the last possible
date which the Company could have issued such Common Stock to the Holder without
violating this Section 2.

                3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE.

                3.1. Adjustment of Number of Shares.

                        Upon each adjustment of the Purchase Price as a result
of the calculations made in this Section 3, this Warrant shall thereafter
evidence the right to receive, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-hundredth) obtained by
dividing (i) the product of the aggregate number of shares covered by this
Warrant immediately prior to such adjustment and the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price by (ii) the Purchase
Price in effect immediately after such adjustment of the Purchase Price.

                3.2. Adjustment of Purchase Price.

                3.2.1. Issuance of Additional Shares of Common Stock. In case
the Company at any time or from time to time after the date hereof shall issue
or sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3.3 or 3.4 but excluding
Additional Shares of Common Stock purchasable upon exercise of Rights referred
to in Section 3.10), without consideration or for a consideration per share less
than the Average Market Price as in effect immediately prior to such issue or
sale, then, and in each such case, subject to Section 3.8, the Purchase Price
shall be reduced, concurrently with such issue or sale, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such Purchase Price by
a fraction

                (a) the numerator of which shall be the sum of (i) the number of
        shares of Common Stock outstanding immediately prior to such issue or
        sale and (ii) the number of shares of Common Stock which the gross
        consideration received by the Company for the total number of such
        Additional Shares of Common Stock so issued or sold would purchase at
        such Current Market Price, and

                (b) the denominator of which shall be the number of shares of
        Common Stock outstanding immediately after such issue or sale, provided
        that, for the purposes of this Section 3.2.1, (x) immediately after any
        Additional Shares of Common Stock are deemed to have been issued
        pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed
        to be outstanding, and (y) treasury shares shall not be deemed to be
        outstanding.

                3.2.2. Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off,

                                      -8-
<PAGE>   74

reclassification, recapitalization or similar corporate rearrangement) on the
Common Stock, then, in each such case, subject to Section 3.8, the Purchase
Price in effect immediately prior to the close of business on the record date
fixed for the determination of holders of any class of securities entitled to
receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying such
Purchase Price by a fraction

                (x) the numerator of which shall be the Current Market Price in
        effect on such record date or, if the Common Stock trades on an
        ex-dividend basis, on the date prior to the commencement of ex-dividend
        trading, less the Fair Value of such dividend or distribution applicable
        to one share of Common Stock, and

                (y) the denominator of which shall be such Current Market Price.

                3.3. Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities of the Company entitled to receive, any
Options or Convertible Securities (whether or not the rights thereunder are
immediately exercisable) then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
(i) the consideration per share (determined pursuant to Section 3.5) of such
shares would be less than the Average Market Price as in effect on the date of
and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be and (ii) such Additional Shares of
Common Stock are not purchasable pursuant to Rights referred to in Section 3.10,
and provided, further, that

                (a) whether or not the Additional Shares of Common Stock
        underlying such Options or Convertible Securities are deemed to be
        issued, no further adjustment of the Purchase Price shall be made upon
        the subsequent issue or sale of Convertible Securities or shares of
        Common Stock upon the exercise of such Options or the conversion or
        exchange of such Convertible Securities;

                (b) if such Options or Convertible Securities by their terms
        provide, with the passage of time or otherwise, for any increase in the
        consideration payable to the Company, or decrease in the number of
        Additional Shares of Common Stock issuable, upon the exercise,
        conversion or exchange thereof (by change of rate or otherwise), the
        Purchase Price computed upon the original issue,

                                      -9-
<PAGE>   75

        sale, grant or assumption thereof (or upon the occurrence of the record
        date, or date prior to the commencement of ex-dividend trading, as the
        case may be, with respect thereto), and any subsequent adjustments based
        thereon, shall, upon any such increase or decrease becoming effective,
        be recomputed to reflect such increase or decrease insofar as it affects
        such Options, or the rights of conversion or exchange under such
        Convertible Securities, which are outstanding at such time;

                (c) upon the expiration or termination (or purchase by the
        Company and cancellation or retirement) of any such Options which shall
        not have been exercised or the expiration of any rights of conversion or
        exchange under any such Convertible Securities which (or purchase by the
        Company and cancellation or retirement of any such Convertible
        Securities the rights of conversion or exchange under which) shall not
        have been exercised, the Purchase Price computed upon the original
        issue, sale, grant or assumption thereof (or upon the occurrence of the
        record date, or date prior to the commencement of ex-dividend trading,
        as the case may be, with respect thereto), and any subsequent
        adjustments based thereon, shall, upon such expiration (or such
        cancellation or retirement, as the case may be), be recomputed as if:

                        (i) in the case of Options for Common Stock or
                Convertible Securities, the only Additional Shares of Common
                Stock issued or sold were the Additional Shares of Common Stock,
                if any, actually issued or sold upon the exercise of such
                Options or the conversion or exchange of such Convertible
                Securities and the consideration received therefor was the
                consideration actually received by the Company for the issue,
                sale, grant or assumption of all such Options, whether or not
                exercised, plus the consideration actually received by the
                Company upon such exercise, or for the issue or sale of all such
                Convertible Securities which were actually converted or
                exchanged, plus the additional consideration, if any, actually
                received by the Company upon such conversion or exchange, and

                        (ii) in the case of Options for Convertible Securities,
                only the Convertible Securities, if any, actually issued or sold
                upon the exercise of such Options were issued at the time of the
                issue or sale, grant or assumption of such Options, and the
                consideration received by the Company for the Additional Shares
                of Common Stock deemed to have then been issued was the
                consideration actually received by the Company for the issue,
                sale, grant or assumption of all such Options, whether or not
                exercised, plus the consideration deemed to have been received
                by the Company (pursuant to Section 3.5) upon the issue or sale
                of such Convertible Securities with respect to which such
                Options were actually exercised;

                (d) no readjustment pursuant to subdivision (b) or (c) above
        shall have the effect of increasing the Purchase Price by an amount in
        excess of the amount

                                      -10-
<PAGE>   76

        of the adjustment thereof originally made in respect of the issue, sale,
        grant or assumption of such Options or Convertible Securities; and

                (e) in the case of any such Options which expire by their terms
        not more than 30 days after the date of issue, sale, grant or assumption
        thereof, no adjustment of the Purchase Price shall be made until the
        expiration or exercise of all such Options, whereupon such adjustment
        shall be made in the manner provided in subdivision (c) above.

                3.4. Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof shall declare
or pay any dividend on the Common Stock payable in Common Stock, or shall effect
a subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.

                3.5. Computation of Consideration. For the purposes of this
Section 3,

                (a) the consideration for the issue or sale of any Additional
        Shares of Common Stock shall, irrespective of the accounting treatment
        of such consideration,

                        (i) insofar as it consists of cash, be computed at the
                amount of cash received by the Company, without deducting any
                expenses paid or incurred by the Company or any commissions or
                compensations paid or concessions or discounts allowed to
                underwriters, dealers or others performing similar services in
                connection with such issue or sale,

                        (ii) insofar as it consists of property (including
                securities) other than cash, be computed at the Fair Value
                thereof at the time of such issue or sale, and

                        (iii) in case Additional Shares of Common Stock are
                issued or sold together with other stock or securities or other
                assets of the Company for a consideration which covers both, be
                the portion of such consideration so received, computed as
                provided in clauses (i) and (ii) above, allocable to such
                Additional Shares of Common Stock, such allocation to be
                determined in the same manner that the Fair Value of property
                not consisting of cash or securities is to be determined as
                provided in the definition of 'Fair Value' herein;

                                      -11-
<PAGE>   77

                (b) Additional Shares of Common Stock deemed to have been issued
        pursuant to Section 3.3, relating to Options and Convertible Securities,
        shall be deemed to have been issued for a consideration per share
        determined by dividing

                        (i) the total amount, if any, received and receivable by
                the Company as consideration for the issue, sale, grant or
                assumption of the Options or Convertible Securities in question,
                plus the minimum aggregate amount of additional consideration
                (as set forth in the instruments relating thereto, without
                regard to any provision contained therein for a subsequent
                adjustment of such consideration to protect against dilution)
                payable to the Company upon the exercise in full of such Options
                or the conversion or exchange of such Convertible Securities or,
                in the case of Options for Convertible Securities, the exercise
                of such Options for Convertible Securities and the conversion or
                exchange of such Convertible Securities, in each case computing
                such consideration as provided in the foregoing subdivision (a),

                by

                        (ii) the maximum number of shares of Common Stock (as
                set forth in the instruments relating thereto, without regard to
                any provision contained therein for a subsequent adjustment of
                such number to protect against dilution) issuable upon the
                exercise of such Options or the conversion or exchange of such
                Convertible Securities; and

                (c) Additional Shares of Common Stock deemed to have been issued
        pursuant to Section 3.4, relating to stock dividends, stock splits,
        etc., shall be deemed to have been issued for no consideration.

                3.6. Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Purchase Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.

                3.7. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Section 4) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Section 3, the purchase rights granted by this Warrant,
then, and in each such case, the computations, adjustments and readjustments
provided for in this Section 3 with respect to the Purchase Price and the number
of shares purchasable upon Warrant exercise shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from

                                      -12-
<PAGE>   78

time to time receivable upon the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.

                3.8. De Minimis Adjustments. If the amount of any adjustment of
the Purchase Price per share required pursuant to this Section 3 would be less
than $.01, such amount shall be carried forward and adjustment with respect
thereto made at the time of and together with any subsequent adjustment which,
together with such amount and any other amount or amounts so carried forward,
shall aggregate a change in the Purchase Price of at least $.01 per share. All
calculations under this Warrant shall be made to the nearest .001 of a cent or
to the nearest one-hundredth of a share, as the case may be.

                3.9. Abandoned Dividend or Distribution. If the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or other distribution (which results in an adjustment
to the Purchase Price under the terms of this Warrant) and shall, thereafter,
and before such dividend or distribution is paid or delivered to stockholders
entitled thereto, legally abandon its plan to pay or deliver such dividend or
distribution, then any adjustment made to the Purchase Price and number of
shares of Common Stock purchasable upon Warrant exercise by reason of the taking
of such record shall be reversed, and any subsequent adjustments, based thereon,
shall be recomputed.

                3.10. Shareholder Rights Plan. Notwithstanding the foregoing, in
the event that the Company shall distribute "poison pill" rights pursuant to a
"poison pill" shareholder rights plan (the "Rights"), the Company shall, in lieu
of making any adjustment pursuant to Section 3.2.1 or Section 3.2.2 hereof, make
proper provision so that each Holder who exercises a Warrant after the record
date for such distribution and prior to the expiration or redemption of the
Rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, a number of Rights to be
determined as follows: (i) if such exercise occurs on or prior to the date for
the distribution to the holders of Rights of separate certificates evidencing
such Rights (the "Distribution Date"), the same number of Rights to which a
holder of a number of shares of Common Stock equal to the number of shares of
Common Stock issuable upon such exercise at the time of such exercise would be
entitled in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such exercise occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares into which the
Warrant so exercised was exercisable immediately prior to the Distribution Date
would have been entitled on the Distribution Date in accordance with the terms
and provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.

                4. CONSOLIDATION, MERGER, ETC.

                4.1. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person

                                      -13-
<PAGE>   79

but, in connection with such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall
effect a capital reorganization or reclassification of the Common Stock or Other
Securities (other than a capital reorganization or reclassification resulting in
the issue of Additional Shares of Common Stock for which adjustment in the
Purchase Price is provided in Section 3.2.1 or 3.2.2), then, and in the case of
each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder of this
Warrant, upon the exercise hereof at any time after the consummation of such
transaction shall be entitled to receive (at the aggregate Purchase Price in
effect at the time of such consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such consummation), in lieu of
the Common Stock or Other Securities issuable upon such exercise prior to such
consummation, the amount of securities, cash or other property to which such
Holder would actually have been entitled as a stockholder upon such consummation
if such Holder had exercised this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as possible
to the adjustments provided for in Sections 3 through 5.

                4.2. Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Purchase Agreement to the contrary, the
Company shall not effect any of the transactions described in clauses (a)
through (d) of Section 4.1 unless, prior to the consummation thereof, each
Person (other than the Company) which may be required to deliver any stock,
securities, cash or property upon the exercise of this Warrant as provided
herein shall assume, by written instrument delivered to, and reasonably
satisfactory to, the Holder of this Warrant, (a) the obligations of the Company
under this Warrant (and if the Company shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release the
Company from, any continuing obligations of the Company under this Warrant), (b)
the obligations of the Company under the Purchase Agreement and the Registration
Rights Agreement and (c) the obligation to deliver to the Holder such shares of
stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section 4, the Holder may be entitled to receive. Nothing in
this Section 4 shall be deemed to authorize the Company to enter into any
transaction not otherwise permitted by the Purchase Agreement.

                5. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the provisions of Section 3 or Section 4 hereof are not strictly
applicable or if strictly applicable would not fairly protect the purchase
rights of the Holder in accordance with the essential intent and principles of
such Sections, then, in each such case, the Board of Directors of the Company
shall make an adjustment in the application of such provisions, in accordance
with such essential intent and principles, so as to preserve, without dilution,
the purchase rights represented by this Warrant.

                6. NO DILUTION OR IMPAIRMENT. The Company shall not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization, transfer of assets, dissolution, issue or sale of
securities or any other

                                      -14-
<PAGE>   80

voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
reasonably necessary or appropriate in order to protect the rights of the Holder
of this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) shall not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) shall take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of stock, free from all taxes,
liens, security interests, encumbrances, preemptive rights and charges on the
exercise of the Warrants from time to time outstanding, (c) shall not take any
action which results in any adjustment of the Purchase Price if the total number
of shares of Common Stock (or Other Securities) issuable after the action upon
the exercise of all of the Warrants would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the Company's certificate
of incorporation and available for the purpose of issue upon such exercise, and
(d) shall not issue any capital stock of any class which is preferred as to
dividends or as to the distribution of assets upon voluntary or involuntary
dissolution, liquidation or winding-up, unless the rights of the holders thereof
shall be limited to a fixed sum or percentage of par value or a sum determined
by reference to a formula based on a published index of interest rates, an
interest rate publicly announced by a financial institution or a similar
indicator of interest rates in respect of participation in dividends and to a
fixed sum or percentage of par value in any such distribution of assets.

                7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment
or readjustment in the shares of Common Stock (or Other Securities) issuable
upon the exercise of this Warrant, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate, signed by the Chairman of the Board,
President or one of the Vice Presidents of the Company, and by the Chief
Financial Officer, the Treasurer or one of the Assistant Treasurers of the
Company, setting forth such adjustment or readjustment and showing in reasonable
detail the method of calculation thereof and the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or to be received by the Company for any Additional
Shares of Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be outstanding, and
(c) the Purchase Price in effect immediately prior to such issue or sale and as
adjusted and readjusted (if required by Section 3) on account thereof. The
Company shall forthwith mail a copy of each such certificate to each holder of a
Warrant and shall, upon the written request at any time of any holder of a
Warrant, furnish to such holder a like certificate. The Company shall also keep
copies of all such certificates at its principal office and shall cause the same
to be available for inspection at such office during normal business hours by
any holder of a Warrant or any prospective purchaser of a Warrant designated by
the holder thereof. The Company shall, upon the request in writing of the Holder
(at the Company's expense), retain independent public accountants of recognized
national standing selected by the Board of Directors of the Company to make any
computation required in connection with adjustments under this Warrant, and a
certificate signed by such firm shall be conclusive

                                      -15-
<PAGE>   81

evidence of the correctness of such adjustment, which shall be binding on the
Holder and the Company.

                8. NOTICES OF CORPORATE ACTION. In the event of:

                (a) any taking by the Company of a record of the holders of any
        class of securities for the purpose of determining the holders thereof
        who are entitled to receive any dividend or other distribution, or any
        right to subscribe for, purchase or otherwise acquire any shares of
        stock of any class or any other securities or property, or to receive
        any other right, or

                (b) any capital reorganization of the Company, any
        reclassification or recapitalization of the capital stock of the
        Company, any consolidation or merger involving the Company and any other
        Person, any transaction or series of transactions in which more than 50%
        of the voting securities of the Company are transferred to another
        Person, or any transfer, sale or other disposition of all or
        substantially all the assets of the Company to any other Person, or

                (c) any voluntary or involuntary dissolution, liquidation or
        winding-up of the Company,

the Company shall mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, sale, disposition, dissolution, liquidation or winding-up is to take
place and the time, if any such time is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution, liquidation or
winding-up. Such notice shall be mailed at least 20 days prior to the date
therein specified but in no event earlier than the public announcement of such
proposed transaction or event.

                9. REGISTRATION OF COMMON STOCK. If any shares of Common Stock
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company shall, at its expense and as expeditiously as possible,
use its best efforts to cause such shares to be duly registered or approved, as
the case may be. At any such time as Common Stock is listed on any national
securities exchange or trade market, the Company shall, at its expense, obtain
promptly and maintain the approval for listing on each such exchange or trade
market, upon official notice of issuance, the shares of Common Stock issuable
upon exercise of the then outstanding Warrants and maintain the listing of such
shares after their issuance; and the Company shall also list on such national
securities exchange or trade market, shall register under the Exchange Act and
shall maintain such listing of, any Other Securities that at any time are
issuable upon

                                      -16-
<PAGE>   82

exercise of the Warrants, if and at the time that any securities of the same
class shall be listed on such national securities exchange or trade market by
the Company.

                10. RESERVATION OF STOCK, ETC. The Company shall at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrants, 150% of the number of shares of Common Stock (or Other Securities)
from time to time issuable upon exercise of all Warrants at the time outstanding
and otherwise in accordance with the terms of the Purchase Agreement. All shares
of Common Stock (or Other Securities) issuable upon exercise of any Warrants
shall be duly authorized and, when issued upon such exercise, shall be validly
issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges. The transfer agent for the Common
Stock, which may be the Company (the "Transfer Agent"), and every subsequent
Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of any of the purchase rights represented by this Warrant, are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be requisite for
such purpose. The Company shall keep copies of this Warrant on file with the
Transfer Agent for the Common Stock and with every subsequent Transfer Agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by this Warrant. The Company shall supply such
Transfer Agent with duly executed stock certificates for such purpose. All
Warrant Certificates surrendered upon the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of stock which have been issued upon
the exercise of such Warrants. Subsequent to the Expiration Date, no shares of
stock need be reserved in respect of any unexercised Warrant.

                11. REGISTRATION AND TRANSFER OF WARRANTS, ETC.

                11.1. Warrant Register; Ownership of Warrants. Each Warrant
issued by the Company shall be numbered and shall be registered in a warrant
register (the "Warrant Register") as it is issued and transferred, which Warrant
Register shall be maintained by the Company at its principal office or, at the
Company's election and expense, by a Warrant Agent or the Company's transfer
agent. The Company shall be entitled to treat the registered Holder of any
Warrant on the Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other Person, and shall not be affected by
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. A Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.

                11.2. Transfer of Warrants. This Warrant and all rights
hereunder are transferable in whole or in part, without charge to the Holder
hereof, upon surrender of this Warrant with a properly executed Form of
Assignment attached hereto as Exhibit B at the principal office of the Company
together with an opinion of counsel, in generally

                                      -17-
<PAGE>   83

acceptable form, to the effect that such Warrant may be transferred pursuant to
an exemption from registration under the Securities Act of 1933 (or such other
office or agency of the Company as it may in writing designate to the Holder).
Upon any partial transfer, the Company shall at its expense issue and deliver to
the Holder a new Warrant of like tenor, in the name of the Holder, which shall
be exercisable for such number of shares of Common Stock with respect to which
rights under this Warrant were not so transferred and to the transferee a new
Warrant of like tenor, in the name of the transferee, which shall be exercisable
for such number of shares of Common Stock with respect to which rights under
this Warrant were so transferred.

                11.3. Replacement of Warrants. On receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.

                11.4. Adjustments To Purchase Price and Number of Shares.
Notwithstanding any adjustment in the Purchase Price or in the number or kind of
shares of Common Stock purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.

                11.5. Fractional Shares. Notwithstanding any adjustment pursuant
to Section 3 in the number of shares of Common Stock covered by this Warrant or
any other provision of this Warrant, the Company shall not be required to issue
fractions of shares upon exercise of this Warrant or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, the Company
shall make payment to the Holder, at the time of exercise of this Warrant as
herein provided, in an amount in cash equal to such fraction multiplied by the
Current Market Price of a share of Common Stock on the date of Warrant exercise.

                12. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates that
there would be no adequate remedy at law to the Holder of this Warrant in the
event of any default or threatened default by the Company in the performance of
or compliance with any of the terms of this Warrant and accordingly, the Company
agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by the
Holder hereof in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or

                                      -18-
<PAGE>   84

acquiescence in any such breach. No remedy shall be exclusive of any other
remedy. All available remedies shall be cumulative.

                13. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a stockholder of the Company or as imposing any obligation on the
Holder to purchase any securities or as imposing any liabilities on the Holder
as a stockholder of the Company, whether such obligation or liabilities are
asserted by the Company or by creditors of the Company.

                14. NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given hereunder must be in writing
and will be deemed to have been delivered (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile, (iii) three days after
being sent by U.S. certified mail, return receipt requested, or (iv) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

                If to the Company:

                      NTN Communications, Inc.
                      The Campus
                      5966 LaPlace Court
                      Carlsbad, California  92008
                      Telephone:  (760) 438-7400
                      Facsimile:   (760) 930-1187
                      Attn:  Stanley B. Kinsey

                If to a Holder, to its address and facsimile number on the
register maintained by the Company. Each party shall provide five days' prior
written notice to the other party of any change in address or facsimile number.
Notwithstanding the foregoing, the exercise of any Warrant shall be effective in
the manner provided in Section 2.

                15. AMENDMENTS. This Warrant and any term hereof may not be
amended, modified, supplemented or terminated, and waivers or consents to
departures from the provisions hereof may not be given, except by written
instrument duly executed by the party against which enforcement of such
amendment, modification, supplement, termination or consent to departure is
sought.

                16. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof", "herein" and "hereunder"
and words of similar import when used

                                      -19-
<PAGE>   85

in this Warrant shall refer to this Warrant as a whole and not to any particular
provision of this Warrant, and Section and paragraph references are to the
Sections and paragraphs of this Warrant unless otherwise specified; (4) the word
"including" and words of similar import when used in this Warrant shall mean
"including, without limitation," unless otherwise specified; (5) "or" is not
exclusive; and (6) provisions apply to successive events and transactions.

                17. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of laws principles thereof).

                18. JUDICIAL PROCEEDINGS. Any legal action, suit or proceeding
brought against the Company with respect to this Warrant may be brought in any
federal court in the District of Delaware or any state court located in New
Castle County, State of Delaware, and by execution and delivery of this Warrant,
the Company hereby irrevocably and unconditionally waives any claim (by way of
motion, as a defense or otherwise) of improper venue, that it is not subject
personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court. The Company hereby irrevocably and unconditionally
consents to the service of process of any of the aforementioned courts in any
such action, suit or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, at its address set forth or provided for in
Section 14, such service to become effective 10 days after such mailing. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section. The Company irrevocably submits to the exclusive jurisdiction of the
aforementioned courts in such action, suit or proceeding.

                19. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock
(and Other Securities) issuable upon exercise of this Warrant (or upon
conversion of any shares of Common Stock issued upon such exercise) shall
constitute Registrable Securities (as such term is defined in the Registration
Rights Agreement). Each holder of this Warrant shall be entitled to all of the
benefits afforded to a holder of any such Registrable Securities under the
Registration Rights Agreement and such holder, by its acceptance of this
Warrant, agrees to be bound by and to comply with the terms and conditions of
the Registration Rights Agreement applicable to such holder as a holder of such
Registrable Securities.

                                      -20-
<PAGE>   86

                20. LIMITATION ON EXERCISE. Notwithstanding any provision to the
contrary contained herein, in no event shall the Holder be entitled to exercise
this Warrant, nor will the Company recognize such exercise, such that upon
giving effect to such exercise, the aggregate number of shares of Common Stock
then beneficially owned by the Holder and its "affiliates" as defined in Rule
144 of the Act would exceed 4.99% of the total issued and outstanding shares of
the Common Stock following such exercise; provided, however, that Holder may
elect to waive this restriction upon not less than sixty-one (61) days prior
written notice to the Company. For purposes of this Section, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act. For purposes of this Section 20, the Company shall not be held liable under
the penalty provisions of Section 2.6 as long as the Company acts in good faith
in its non-recognition of such exercise.

                                            NTN COMMUNICATIONS, INC.
                                               By:
                                               ---------------------------------
                                               Name:
                                               Title:

                                      -21-
<PAGE>   87

                                    [FORM OF]
                           ELECTION TO PURCHASE SHARES
                         AND TRANSFER AGENT INSTRUCTIONS

                The undersigned hereby irrevocably elects to exercise the
Warrant to purchase ____ shares of Common Stock, par value $.005 per share
("Common Stock"), of NTN COMMUNICATIONS, INC. (the "Company") and hereby [makes
payment of $________ in consideration therefor] [or] [makes payment in
consideration therefor by reduction pursuant to Section 2.1(b)(ii) of the
Warrant of the number of shares of Common Stock otherwise issuable to the Holder
upon Warrant exercise by ______ shares] [or] [makes payment in consideration
therefor by delivery of the following Common Stock Certificates of the Company
pursuant to Section 2.1(b)(iii) of the Warrant, certificates of which are
attached hereto for cancellation _______ [list certificates by number and
amount]]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:

ISSUE TO:
         -----------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

--------------------------------------------------------------------------------
                  (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:
           ---------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

                If the number of shares of Common Stock purchased hereby is less
than the number of shares of Common Stock covered by the Warrant, the
undersigned requests that a new Warrant representing the number of shares of
Common Stock not so purchased be issued and delivered as follows:

ISSUE TO:
         -----------------------------------------------------------------------
                                (NAME OF HOLDER)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

DELIVER TO:
           ---------------------------------------------------------------------
                                    (NAME OF HOLDER)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

Dated:                                      [NAME OF HOLDER]
      ---------------------------

                                            By
                                               ---------------------------------
                                               Name:
                                               Title:

<PAGE>   88

        __________________, as transfer agent and registrar of the Common Stock,
is hereby authorized and directed to issue the above number of shares of Common
Stock in the name of the above referenced entity or person and to deliver the
certificates representing such shares using an overnight delivery service.

                                            NTN COMMUNICATIONS, INC.

                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:

<PAGE>   89

                                                   EXHIBIT B to
                                                   Common Stock Purchase Warrant

                              [FORM OF] ASSIGNMENT

                FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto the Assignee named below all of the rights of the undersigned to
purchase Common Stock, par value $.005 per share ("Common Stock") of NTN
COMMUNICATIONS, INC. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:

<TABLE>
<CAPTION>
Name of Assignee                     Address                    No. of Shares
----------------                     -------                    -------------
<S>                                  <C>                        <C>

</TABLE>

and does hereby irrevocably constitute and appoint ________ as Attorney to make
such transfer on the books of NTN COMMUNICATIONS, INC. maintained for that
purpose, with full power of substitution in the premises.

Dated:                                      [NAME OF HOLDER]
      ---------------------------

                                            By
                                               ---------------------------------
                                               Name:
                                               Title:

<PAGE>   90

                                                                       EXHIBIT C

                         REGISTRATION RIGHTS AGREEMENT

                REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
November 14, 2000, by and among NTN Communications, Inc., a Delaware
corporation, with headquarters located at 5966 La Place Court, Carlsbad,
California 92008 (the "COMPANY"), and the undersigned buyers (each, a "BUYER"
and collectively, the "BUYERS").

                WHEREAS:

                A. In connection with the Securities Purchase Agreement by and
among the Company and the Buyers and dated of even date herewith (the
"SECURITIES PURCHASE Agreement"), the Company has agreed, upon the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyers shares (the "SHARES") of the Company's common stock, $.005
par value per share (the "COMMON STOCK");

                B. In consideration for the Buyers agreeing to purchase the
Shares, the Company shall issue and deliver to the Buyers common stock purchase
warrants and additional common stock purchase warrants (collectively, the
"WARRANTS") to purchase additional shares of Common Stock pursuant to the terms
of the Securities Purchase Agreement (the shares of Common Stock issued or
issuable upon exercise of the Warrants are hereinafter referred to as the
"WARRANT SHARES"); and

                C. To induce the Buyers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 ACT"), and applicable state securities laws;

                NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Buyers hereby agree as follows:

                1. DEFINITIONS.

                As used in this Agreement, the following terms shall have the
following meanings:

                a. "INVESTOR" means a Buyer and any transferee or assignee
thereof to whom a Buyer assigns its rights under this Agreement and who agrees
to become bound by the provisions of this Agreement in accordance with Section
10.

                b. "PERSON" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, an
entity, a governmental or political subdivision thereof or a governmental
agency.

                c. "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"), and the declaration or ordering of effectiveness of
<PAGE>   91

such Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC").

                d. "REGISTRABLE SECURITIES" means (i) the Shares, (ii) the
Warrant Shares, (iii) any Additional Shares (as such term is defined in the
Securities Purchase Agreement) and (iv) any shares of capital stock issued or
issuable with respect to the Shares, the Warrant Shares, the Additional Shares
or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event.

                f. "REGISTRATION STATEMENT" means a registration statement of
the Company filed under the 1933 Act.

                Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

                2. REGISTRATION.

                a. Mandatory Registration. The Company shall prepare, and, on or
prior to thirty (30) days after the initial issuance date of the Shares (the
"CLOSING DATE"), file with the SEC a Registration Statement or Registration
Statements (as is necessary) on Form S-3 (or, if such form is unavailable for
such a registration, on such other form as is available for such a registration,
subject to the consent of each Buyer and the provisions of Section 2(c), which
consent will not be unreasonably withheld), covering the resale of all of the
Registrable Securities, which Registration Statement(s) shall state that, in
accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement(s) also covers such indeterminate number of additional shares of
Common Stock as may become issuable upon exercise of the Warrants to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
Such Registration Statement shall initially register for resale that number of
shares of Common Stock equal to 125% of the number of Registrable Securities
issuable as of the date immediately preceding the date the Registration
Statement is initially filed with the SEC as if such date of registration was a
date on which the Warrants were exercised or exercisable, subject to adjustment
as provided in Section 3(b). Such registered shares of Common Stock shall be
allocated among the Investors pro rata based on the total number of Registrable
Securities issued or issuable as of each date that a Registration Statement, as
amended, relating to the resale of the Registrable Securities is declared
effective by the SEC. The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC within ninety (90) days
after the Closing Date (the "Scheduled Effective Date"). If the Registration
statement is not declared effective by the SEC on or before the Scheduled
Effective Date, then for each consecutive thirty (30) day period following the
Scheduled Effective Date, each Investor shall, until such time as the
Registration Statement is declared effective by the SEC (all such payments to be
made in cash and nonrefundable on the first day of each thirty (30) day period),
be entitled to an amount equal to the product of (i) one percent, multiplied by
(ii) the Purchase Price paid by such Investor.

                b. Counsel and Investment Bankers. Subject to Section 5 hereof,
in connection with any offering pursuant to Section 2, the Buyers shall have the
right to select, at the Buyers' sole expense, legal counsel and an investment
banker or bankers and manager or

                                      -2-
<PAGE>   92

managers to administer their interest in the offering. The Company shall
reasonably cooperate with any such counsel.

                c. Eligibility for Form S-3. The Company represents, warrants
and covenants that as of the date hereof it meets the requirements for the use
of Form S-3 for registration of the sale by the Buyers and any other Investor of
the Registrable Securities and thereafter shall use its best efforts to remain
eligible to use Form S-3, and the Company has filed and shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
obtain and maintain such eligibility for the use of Form S-3. In the event that
Form S-3 is not available for sale by the Investors of the Registrable
Securities, then the Company (i) with the consent of each Investor pursuant to
Section 2(a), shall register the sale of the Registrable Securities on another
appropriate form and not more than twenty (20) days after being notified that
Form S-3 is not available and (ii) the Company shall undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.

                3. RELATED OBLIGATIONS.

                At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2(a), the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

                a. The Company shall promptly prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities (on or prior
to the thirtieth (30th) day after the Closing Date and solely (unless otherwise
consented to by the Investors) for the registration of Registrable Securities
pursuant to Section 2(a)) and use its best efforts to cause such Registration
Statement(s) relating to Registrable Securities to become effective as soon as
possible after such filing (but no later than ninety (90) days after the Closing
Date), and keep the Registration Statement(s) effective pursuant to Rule 415 at
all times until the earlier of (i) the date as of which the Investors may sell
all of the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
(A) the Investors shall have sold all the Registrable Securities and (B) none of
the Warrants is outstanding, which Registration Statement(s) (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

                b. The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
Registration Statement(s) and the prospectus(es) used in connection with the
Registration Statement(s), which prospectus(es) are to be filed pursuant to Rule
424 promulgated under the 1933 Act, as may be necessary to keep the Registration
Statement(s) effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all

                                      -3-
<PAGE>   93

Registrable Securities of the Company covered by the Registration Statement(s)
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement(s). In the event the
number of shares available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable Securities, the
Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefor, if applicable), or both, so as
to cover all of the Registrable Securities, in each case, as soon as
practicable, but in any event within twenty (20) days after the necessity
therefor arises (based on the market price of the Common Stock and other
relevant factors on which the Company reasonably elects to rely). The Company
shall use its best efforts to cause any such necessary amendment and/or new
Registration Statement to become effective as soon as practicable following the
filing thereof. In addition any such amendment or new Registration Statement
shall for purposes of Section 3(a) above be deemed to be a "Registration
Statement". For purposes of the foregoing provisions, if applicable, the number
of shares available under a Registration Statement shall be deemed "insufficient
to cover all of the Registrable Securities" if at any time the number of shares
of Common Stock available for resale under such Registration Statement is less
than the product of (i) the sum of the number of Shares held by the Investors
plus the number of Warrant Shares, plus the number of Additional Shares issuable
pursuant to the Securities Purchase Agreement as of the effective date of the
Registration Statement, multiplied by (ii) 1.25. For purposes of the calculation
set forth in the foregoing sentence, such calculation shall assume that the
Warrants are then fully exercisable into shares of Common Stock at the then
prevailing Exercise Price (as defined in the Warrants).

                c. The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement(s) and its legal counsel
without charge (i) promptly after the same is prepared and filed with the SEC at
least one copy of the Registration Statement and any amendment thereto, and if
requested financial statements and schedules, all documents incorporated therein
by reference and all exhibits, the prospectus(es) included in such Registration
Statement(s) (including each preliminary prospectus) and, with regards to the
Registration Statement, any correspondence by or on behalf of the Company to the
SEC or the staff of the SEC and any correspondence from the SEC or the staff of
the SEC to the Company or its representatives, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents, including any preliminary prospectus, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor. The Company will promptly respond to any and all
comments received from the SEC, with a view towards causing any Registration
Statement or any amendment thereto to be declared effective by the SEC as soon
as practicable and shall, subject to Section 3(h), promptly file an acceleration
request as soon as practicable following the resolution or clearance of all SEC
comments or, if applicable, following notification by the SEC that the
Registration Statement or any amendment thereto will not be subject to review.

                d. The Company shall its use best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement(s)
under such other securities or "blue sky" laws of such jurisdictions in the
United States as any Investor reasonably requests, (ii)

                                      -4-
<PAGE>   94

prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or "blue sky" laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

                e. In the event Investors who hold a majority of the Registrable
Securities being offered in the offering select underwriters for the offering,
the Company shall, subject to Section 2(b) hereof, enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.

                f. As promptly as practicable after becoming aware of such
event, the Company shall notify each Investor in writing of the happening of any
event as a result of which the prospectus included in a Registration Statement,
as then in effect, includes an untrue statement of a material fact or omission
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and promptly prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to each Investor (or such other
number of copies as such Investor may reasonably request). The Company shall
also promptly notify each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the Company's
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.

                g. The Company shall use its best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (and, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

                                      -5-
<PAGE>   95

               h. The Company shall permit each Investor and a single firm of
counsel, initially Schulte Roth & Zabel LLP or such other counsel as thereafter
designated as selling stockholders' counsel by the Investors who hold a majority
of the Registrable Securities being sold, to review and comment upon the
Registration Statement(s) and all amendments and supplements thereto at least
seven (7) days prior to their filing with the SEC, and not file any document in
a form to which such counsel reasonably objects. The Company shall not submit a
request for acceleration of the effectiveness of a Registration Statement(s) or
any amendment or supplement thereto without the prior approval of such counsel,
which consent shall not be unreasonably withheld.

               i. At the request of the Investors who hold a majority of the
Registrable Securities being sold, the Company shall furnish, on the date that
Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (i) if required by an underwriter, a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the underwriters and the Investors.

               j. The Company shall make available for inspection by (i) any
Investor, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "INSPECTORS") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "RECORDS"), during normal business hours, as
shall be reasonably deemed necessary by each Inspector to enable each Inspector
to exercise its due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector may
reasonably request for purposes of such due diligence; provided, however, that
each Inspector shall hold in strict confidence and shall not make any disclosure
(except to an Investor who agrees to hold such information in strict confidence)
or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this
agreement. Each Investor agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Investor) shall be deemed to limit the Investors' ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.

                                      -6-
<PAGE>   96

                k. The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information
concerning an Investor is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to
such Investor and allow such Investor, at the Investor's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

                l. The Company shall use its best efforts either to (i) cause
all the Registrable Securities covered by a Registration Statement to be listed
on each securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities covered
by the Registration Statement on the Nasdaq National Market System for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. as such with respect to such Registrable Securities.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 3(l).

                m. The Company shall cooperate with the Investors who hold
Registrable Securities being offered and, to the extent applicable, any managing
underwriter or underwriters, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, if there is no managing underwriter or underwriters, the Investors may
reasonably request and registered in such names as the managing underwriter or
underwriters, if any, or the Investors may request. Not later than the date on
which any Registration Statement registering the resale of Registrable
Securities is declared effective, the Company shall deliver to its transfer
agent instructions, accompanied by any reasonably required opinion of counsel,
that permit sales of unlegended securities in a timely fashion that complies
with then mandated securities settlement procedures for regular way market
transactions.

                n. The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.

                o. The Company shall provide a CUSIP number, a transfer agent
and registrar of all such Registrable Securities not later than the effective
date of such Registration Statement.

                p. If requested by the managing underwriters or an Investor, the
Company shall immediately incorporate in a prospectus supplement or
post-effective amendment such

                                      -7-
<PAGE>   97

information as the managing underwriters and the Investors agree should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Securities to be sold in such offering; make all required filings of
such prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any Registration Statement if
requested by a shareholder or any underwriter of such Registrable Securities.

                q. The Company shall use its best efforts to cause the
Registrable Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

                r. The Company shall otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.

                4. OBLIGATIONS OF THE INVESTORS.

                a. At least eight (8) days prior to the first anticipated filing
date of the Registration Statement, the Company shall notify each Investor or
its counsel in writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the registration
pursuant to this Agreement with respect to the Registrable Securities of a
particular Investor that such Investor shall furnish to the Company such
information as may be requested in writing by the Company regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

                b. Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement(s) hereunder unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.

                c. Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration Statement(s)
covering such Registrable Securities until such Investor's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the
first sentence of 3(f) and, if so directed by the Company, such Investor shall
deliver to the Company (at the expense of the Company) or destroy all copies in
such Investor's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.

                                      -8-
<PAGE>   98

                d. No Investor may participate in any underwritten registration
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements approved by
the Investors entitled hereunder to approve such arrangements, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions.

                5. EXPENSES OF REGISTRATION.

                All reasonable expenses incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and 3, excluding
underwriter's discounts and commissions, but including, without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company. In addition, the Company
shall pay all of the Investors' reasonable costs (including legal fees) incurred
in connection with the successful enforcement of the Investors' rights
hereunder.

                6. INDEMNIFICATION.

                In the event any Registrable Securities are included in a
Registration Statement under this Agreement:

                a. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor who holds such
Registrable Securities, the directors, officers, partners, employees, agents and
each Person, if any, who controls any Investor within the meaning of the 1933
Act or the Securities Exchange Act of 1934, as amended (the "1934 ACT"), and any
underwriter (as defined in the 1933 Act) for the Investors, and the directors
and officers of, and each Person, if any, who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, reasonable attorneys' fees, amounts paid in
settlement or expenses, joint or several (collectively, "CLAIMS"), incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are offered,
or the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which the statements therein were made, not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the

                                      -9-
<PAGE>   99

statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "VIOLATIONS"). Subject to the
restrictions set forth in Section 6(d) with respect to the number of legal
counsel, the Company shall reimburse the Investors and each such underwriter or
controlling person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (ii) with respect
to any preliminary prospectus, shall not inure to the benefit of any such person
from whom the person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any person
controlling such person) if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected in the prospectus, as then
amended or supplemented; and (iii) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

                b. In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to severally and not
jointly indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each
of its officers who signs the Registration Statement, each Person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim or Indemnified Damages to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(d), such Investor will reimburse any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 8 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the

                                      -10-
<PAGE>   100

transfer of the Registrable Securities by the Investors pursuant to Section 9.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 7(b) with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented.

                c. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.

                d. Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action or proceeding (including any governmental action or proceeding) involving
a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section
6, deliver to the indemnifying party a written notice of the commencement
thereof, and the indemnifying party shall have the right (at its expense) to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall diligently pursue such defense and
that an Indemnified Person or Indemnified Party shall have the right to retain
its own counsel with the fees and expenses to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, as the case may be, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The Company shall pay reasonable fees for only one
separate legal counsel for the Investors, and such legal counsel shall be
selected by the Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates.
The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations

                                      -11-
<PAGE>   101

relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

                e. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

                f. The indemnity agreements contained herein shall be in
addition to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

                7. CONTRIBUTION.

                To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6; (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

                8. REPORTS UNDER THE 1934 ACT.

                With a view to making available to the Investors the benefits of
Rule 144 promulgated under the 1933 Act or any other similar rule or regulation
of the SEC that may at any time permit the Investors to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees to:

                a. make and keep public information available, as those terms
are understood and defined in Rule 144;

                b. file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and

                c. furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied

                                      -12-
<PAGE>   102

with the reporting requirements of Rule 144, the 1933 Act and the 1934 Act, and
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

                9. ASSIGNMENT OF REGISTRATION RIGHTS.

                The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assignable by the Investors to
any transferee or assignee (a "TRANSFEREE") of Registrable Securities if: (i)
the Investor agrees in writing with the Transferee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and
address of such Transferee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such securities
by the Transferee is restricted under the 1933 Act and applicable state
securities laws; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the Transferee agrees in
writing with the Company to be bound by all of the provisions contained herein;
(v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement; (vi) such Transferee shall be
an "accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the 1933 Act; and (vii) in the event the assignment occurs
subsequent to the date of effectiveness of the Registration Statement required
to be filed pursuant to Section 2(a), the Transferee agrees to pay all
reasonable expenses of amending or supplementing such Registration Statement to
reflect such assignment.

                10. AMENDMENT OF REGISTRATION RIGHTS.

                Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investors who hold two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.

                11. MISCELLANEOUS.

                a. A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

                b. Any notices consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested; (iii) three (3) days
after being sent by U.S. certified mail, return receipt requested; or (iv) one
(1) day after

                                      -13-
<PAGE>   103

deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:

                If to the Company:

                             NTN Communications, Inc.
                             5966 La Place Court
                             Carlsbad, CA 92008
                             Telephone: (760) 438-7400
                             Facsimile:   (760) 930-1187
                             Attention:   President

                With a copy to:

                             O'Melveny & Myers
                             400 South Hope Street
                             Los Angeles, CA 90071
                             Telephone: (213) 430-6509
                             Facsimile:   (213) 430-6407
                             Attention: C. James Levine, Esq.

                             if to a Buyer, to its address and facsimile number
                             on the Schedule of Buyers attached hereto, with
                             copies to such Buyer's counsel as set forth on the
                             Schedule of Buyers.

                Each party shall provide five (5) days prior notice to the other
party of any change in address, phone number or facsimile number.

                c. Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

                d. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York without regard to the
principles of conflict of laws. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

                e. This Agreement, the Warrants and the Securities Purchase
Agreement (including all schedules and exhibits thereto) constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. The aforementioned
documents supersede all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof and thereof.

                                      -14-
<PAGE>   104

                f. Subject to the requirements of Section 9, this Agreement
shall inure to the benefit of and be binding upon the permitted successors and
assigns of each of the parties hereto.

                g. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

                h. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this
Agreement.

                i. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                      -15-
<PAGE>   105

                IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be duly executed as of day and year first above written.

                                           COMPANY:

                                           NTN COMMUNICATIONS, INC.

                                           By:
                                              ---------------------------------
                                              Name:
                                              Title:

                                           BUYERS:

                                           BAYSTAR CAPITAL, L.P.,
                                           a Delaware limited partnership

                                           BY:  BayStar Capital Management LLC,
                                                Its General Partner

                                           By:
                                              ---------------------------------
                                              Name:
                                              Title:

                                              1500 West Market Street, Suite 200
                                              Mequon, WI 53092
                                              Fax:  (415) 835-3777

                                           BAYSTAR INTERNATIONAL LTD.,
                                           a British Virgin Islands corporation

                                           BY:  BayStar International
                                                Management LLC,
                                                Its Investment Manager

                                           By:
                                              ---------------------------------
                                              Name:
                                              Title:

                                              1500 West Market Street, Suite 200
                                              Mequon, WI 53092
                                              Fax:  (415) 835-3777

<PAGE>   106

                               SCHEDULE OF BUYERS

<TABLE>
<CAPTION>
                                      INVESTOR ADDRESS AND         INVESTOR'S LEGAL COUNSEL AND
        INVESTOR NAME                   FACSIMILE NUMBER                 COUNSEL'S ADDRESS
        -------------                   ----------------                 -----------------
<S>                            <C>                                 <C>
BayStar Capital, L.P           c/o BayStar Capital Management LLC  Eleazer Klein, Esq.
                               1500 West Market Street             Schulte Roth & Zabel LLP
                               Suite 200                           900 Third Avenue
                               Mequon, WI 53092                    New York, New York  10022
                               Attention: Brian Davidson           Fax:  (212) 593-5955

BayStar International, Ltd.    c/o BayStar International           Eleazer Klein, Esq.
                               Management LLC                      Schulte Roth & Zabel LLP
                               1500 West Market Street             900 Third Avenue
                               Suite 200                           New York, New York  10022
                               Mequon, WI 53092                    Fax:  (212) 593-5955
                               Attention: Brian Davidson
</TABLE>

<PAGE>   107
                                    EXHIBIT D

                           TRANSFER AGENT INSTRUCTIONS

                            NTN COMMUNICATIONS, INC.

                                NOVEMBER 14, 2000

American Stock Transfer & Trust Company
6201 15th Avenue, 2nd Floor
Brooklyn, New York 11219
Facsimile: (718) 921-8188
Attention: [____________]

Ladies and Gentlemen:

         Reference is made to that certain Securities Purchase Agreement (the
"Purchase Agreement"), dated as of November 14, 2000, by and among NTN
Communications, Inc., a Delaware corporation (the "Company"), each of BayStar
Capital, L.P. and BayStar International, Ltd. (collectively, the "Buyers") and
that certain Registration Rights Agreement, dated as of November 14, 2000, by
and among the Company and the Buyers. Capitalized terms which are defined in the
Agreement are used herein as so defined.

         Pursuant to the Purchase Agreement, the Company (i) has issued to the
Buyers, shares (the "Common Shares") of common stock, par value $.005 per share
of the Company (the "Common Stock") in an aggregate amount of $2 million (ii)
may issue to the Buyers shares of Common Stock as a price protection mechanism
(the "Additional Shares") and (iii) is issuing to the Buyers, Warrants to
purchase an aggregate of _______ shares of Common Stock of the Company and
Additional Warrants to purchase an aggregate of _______ additional shares of
Common Stock of the Company.

         This letter shall serve as our irrevocable authorization and direction
to you (provided that you are acting as the transfer agent of the Company at
such time):

         (i) upon receipt of the Reissuance Notice and Transfer Agent
     Instructions in the form attached hereto as Exhibit I, to issue to the
     Buyer, shares of Common Stock of the Company;
<PAGE>   108

         (ii) to issue shares (the "Warrant Shares") of Common Stock of the
     Company to or upon the order of a Buyer, from time to time upon delivery to
     you of a Election to Purchase and Transfer Agent Instructions in the form
     attached hereto as Exhibit II.

         You acknowledge and agree that the shares of Common Stock representing
the Common Shares, the Additional Shares and the Warrant Shares upon issuance or
reissuance, as the case may be, to a party other than the Buyers shall not bear
any legend restricting transfer of the Common Shares, the Additional Shares or
the Warrant Shares and shall not be subject to any stop-transfer restriction;
provided, however, that if the Common Shares, the Additional Shares or the
Warrant Shares are to be issued to the Buyers other than in conformity with Rule
144(k) or are not registered for resale under the Securities Act of 1933, as
amended, or if sales of Common Shares, the Additional Shares or Warrant Shares
may not be made in conformity with Rule 144(k) under the Securities Act of 1933,
then the certificates for the Common Shares, the Additional Shares or the
Warrant Shares, as the case may be, shall bear the following legend:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
         SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
         TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
         STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
         AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
         IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
         SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO
         RULE 144 UNDER SAID ACT."

and provided further that the Company may from time to time notify you to place
stop-transfer restrictions on the certificates for the Common Shares, Warrant
Shares and Additional Shares in the event a registration statement covering such
shares is subject to amendment for events then current.

         Please be advised that the Buyers are relying upon this letter as an
inducement to enter into the Agreement and, accordingly, each Buyer is a third
party beneficiary to these instructions.

         Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact Zach Vela, Chief Financial
Officer, NTN Communications, Inc., 5966 LaPlace Court, Carlsbad, California
(760) 438-7400.

                                      -2-
<PAGE>   109
                                       NTN COMMUNICATIONS, INC.

                                       By:
                                          -----------------------------------
                                          Name:
                                          Title:

THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO
this ___ day of November, 2000

American Stock Transfer & Trust Company

By:
   ---------------------------------
   Name:
   Title:

Enclosures
cc:      BayStar Capital, L.P.
         BayStar International, Ltd.
         Eleazer N. Klein, Esq.

                                      -3-
<PAGE>   110

                                    EXHIBIT I

                            NTN COMMUNICATIONS, INC.

                                REISSUANCE NOTICE
                         AND TRANSFER AGENT INSTRUCTIONS

         The undersigned hereby requests that the number of shares set forth
below, of the Common Stock, par value $.005, of NTN Communications, Inc., a
Delaware corporation (the "COMPANY") shall be transferred and reissued to the
transferee, identified below by delivery and cancellation of the following
shares of Common Stock, certificates of which are attached hereto for
cancellation ______________________________[list certificate numbers]. The
undersigned hereby certifies that the holder is the beneficial owner of the
shares evidenced by the attached stock certificate(s) and transferred such
shares in accordance with the registration statement underlying the transfer of
such shares and the requirement of delivering a current prospectus has been
complied with in connection with such transfer. Certificates representing the
reissued shares should be issued and delivered without any legend restricting
transfer of such shares.

ISSUE TO:
         -----------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

--------------------------------------------------------------------------------
                  (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:
           ---------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

                                           [NAME OF BUYER]

Dated:                                      By:
      ------------------------------           ---------------------------------
                                               Name:
                                               Title:

                                      -4-
<PAGE>   111

                                   EXHIBIT II

                           ELECTION TO PURCHASE SHARES
                         AND TRANSFER AGENT INSTRUCTIONS

         The undersigned hereby irrevocably elects to exercise the Warrant or
Additional Warrant to purchase ____ shares of Common Stock, par value $.005 per
share ("Common Stock"), of NTN COMMUNICATIONS, INC. and hereby makes payment of
$________ in consideration therefor. The undersigned hereby requests that
certificates for such shares be issued and delivered as follows:

ISSUE TO:
         -----------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

--------------------------------------------------------------------------------
                  (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

DELIVER TO:
           ---------------------------------------------------------------------
                                     (NAME)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

         If the number of shares of Common Stock purchased hereby is less than
the number of shares of Common Stock covered by the Warrant or the Additional
Warrant, the undersigned requests that a new Warrant or Additional Warrant
representing the number of shares of Common Stock not so purchased be issued and
delivered as follows:

ISSUE TO:
         -----------------------------------------------------------------------
                                 (NAME OF BUYER)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

DELIVER TO:
           ---------------------------------------------------------------------
                                (NAME OF HOLDER)

--------------------------------------------------------------------------------
                          (ADDRESS, INCLUDING ZIP CODE)

         To the extent that the foregoing shares are being issued to a party
other than the undersigned, the certificates should be issued and delivered
without any legend restricting transfer of such shares and in connection
therewith the undersigned hereby certifies that such shares are being
transferred in accordance with the registration statement underlying the
transfer of such shares and the requirement of delivering a current prospectus
has been complied with in connection with such transfer.

Dated:                                   [NAME OF BUYER]
      ---------------------------
                                         By
                                            ----------------------------------
                                            Name:
                                            Title:

                                      -5-

<PAGE>   112
                                    EXHIBIT E

                     [Letterhead of O'Melveny & Myers, LLP]

                                                              November 14, 2000

BayStar Capital L.P.
c/o BayStar Capital Management, LLC
1500 West Market Street
Mequon, Wisconsin  53092

BayStar International, Ltd.
c/o BayStar International Management, LLC
1500 West Market Street
Mequon, Wisconsin  53092

Ladies and Gentlemen:

                  We have acted as special counsel to NTN Communications, Inc.,
a Delaware corporation (the "Company"), in connection with the issuance and sale
of shares of common stock, par value $.005 per share (the "Common Stock") of the
Company in an aggregate principal amount of $2 million (the shares to be issued,
the "Common Shares") and warrants to purchase Common Stock pursuant to the
Securities Purchase Agreement (the "Purchase Agreement"), dated as of the date
hereof, by and among the Company and each of you. We are providing this opinion
to you at the request of the Company pursuant to Section 7(d) of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings assigned to such terms in the Purchase Agreement.

                  In connection with rendering the opinions set forth herein, we
have examined a copy of each of the Purchase Agreement, the Registration Rights
Agreement, the Warrants, the Additional Warrants (collectively, the "Transaction
Documents"), the Company's Certificate of Incorporation, as amended to date, its
Bylaws, as amended to date, the proceedings of the Company's Board of Directors
taken in connection with the sale and issuance of the Securities and such other
documents and instruments as we have deemed necessary. We also have examined the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, as amended by Amendment No. 1 thereto on Form 10-K/A (the "Form 10-K"). As
to certain matters of fact, we have relied upon a certificate of officers of the
Company (the "Company Certificate"). In addition, we have obtained and relied
upon those certificates of public officials we considered appropriate.
<PAGE>   113
Baystar Capital L.P.
Baystar International, Ltd.
November 14, 2000
Page 2

                  In conducting our examination, we have assumed the following:
(i) the genuineness of all signatures (other than the signatures on behalf of
the Company), the legal capacity of natural persons, the authenticity and
accuracy of all documents submitted to us as originals, and the conformity to
originals of all documents submitted to us as copies, (ii) that the Transaction
Documents have been duly and validly authorized, executed, and delivered by the
party or parties thereto other than the Company, and (iii) that each of the
Transaction Documents constitutes the valid and binding agreement of the party
or parties thereto other than the Company, enforceable against such party or
parties in accordance with the terms of such agreement.

                  On the basis of such examination, our reliance upon the
assumptions in this opinion and our consideration of those questions of law we
considered relevant, and subject to the limitations and qualifications in this
opinion, we are of the opinion that:

                  1. The Company is a corporation validly existing and in good
         standing under the laws of the State of Delaware, with corporate power
         to own its properties and assets, to carry on its business as described
         in its Form 10-K, to enter into the Transaction Documents and to
         perform its obligations under the Transaction Documents. The Company is
         qualified as a foreign corporation to do business in the States of
         California, New York and Kentucky and is in good standing in such
         states.

                  2. The execution, delivery and performance of the Transaction
         Documents have been duly authorized by all necessary corporate action
         on the part of the Company and the Transaction Documents have been duly
         executed and delivered by the Company and no further consent or
         authorization of the Company, its Board of Directors or its
         stockholders is required therefor.

                  3. The Transaction Documents constitute the legally valid and
         binding agreements of the Company, enforceable against the Company in
         accordance with their respective terms, except as may be limited by
         bankruptcy, insolvency, reorganization, moratorium, liquidation or
         similar laws relating to or affecting creditors' rights generally
         (including, without limitation, fraudulent conveyance laws) and by
         general principles of equity, including, without limitation, concepts
         of materiality, reasonableness, good faith and fair dealing and the
         possible unavailability of specific performance or injunctive relief,
         regardless of whether considered in a proceeding in equity or at law.

                  4. The issuance and sale of the Common Shares, the Additional
         Shares, the Warrants and the Additional Warrants have been duly
         authorized by all necessary corporate action on the part of the Company
         and, upon payment for and delivery of the Common Shares and the
         Additional Shares in accordance with the Purchase Agreement and the
         countersigning of the certificate or certificates representing the
         Common Shares and the Additional Shares by a duly authorized signatory
         of the registrar for the Common
<PAGE>   114
Baystar Capital L.P.
Baystar International, Ltd.
November 14, 2000
Page 3

         Stock, the Common Shares and the Additional Shares will be validly
         issued, fully paid and non-assessable.

                  5. The issuance and sale of the Warrants and the Additional
         Warrants have been duly authorized by all necessary corporate action on
         the part of the Company and, upon payment for and delivery of the
         Warrants in accordance with the Purchase Agreement, the Warrants and
         the Additional Warrants will be legally valid and binding obligations
         of the Company.

                  6. The Warrant Shares have been duly authorized by all
         necessary corporate action on the part of the Company and, upon payment
         of the exercise price for and delivery of the Warrant Shares in
         accordance with the Warrants and Additional Warrants and the
         countersigning of the certificate or certificates representing the
         Warrant Shares by a duly authorized signatory of the registrar for the
         Common Stock, the Warrant Shares will be validly issued, fully paid and
         non-assessable. At least 1,500,000 shares of Common Stock have been
         duly reserved for issuance by the Company for the Warrant Shares and
         the Additional Shares, which number is sufficient to meet the Company's
         obligations to issue Warrant Shares as of the Closing Date.

                  7. Upon payment for and delivery to the Buyers in New York of
         the Securities in accordance with the Purchase Agreement, assuming the
         Buyer is acquiring the Securities without notice of any adverse claim,
         the Buyers will acquire the Securities free and clear of any adverse
         claim as defined in Article 8 of the Uniform Commercial Code in effect
         in the State of New York and the Securities shall be free of all taxes
         with respect to the issue thereof, except we express no opinion with
         jurisdictions other than the States of California or New York or the
         federal law of the United States.

                  8. The authorized capital stock of the Company consists of
         70,000,000 shares of Common Stock and 10,000,000 shares of Preferred
         Stock. Holders of the capital stock of the Company are not entitled to
         any preemptive right to subscribe to the Common Shares, the Additional
         Shares, the Warrants, the Warrant Shares or any additional shares of
         the Company's capital stock under the Company's Certificate of
         Incorporation or Bylaws or under the General Corporation Law of the
         State of Delaware. There are no preemptive rights to subscribe to the
         Common Shares, the Additional Shares, the Warrants, the Warrant Shares
         or any additional shares of the Company's capital stock under any
         agreement listed as a material contract in an exhibit to the Form 10-K
         or identified in the Company Certificate (the "Material Contracts").

                  9. Assuming the accuracy of your representations in Section 5
         of the Purchase Agreement, it is not necessary in connection with the
         sale of the Common Shares, the Additional Shares, the Warrants and the
         Additional Warrants pursuant to the Purchase Agreement to register the
         Common Shares, the Additional Shares, the Warrants and the Additional
         Warrants under the 1933 Act, or to qualify the offer or sale of the
<PAGE>   115
Baystar Capital L.P.
Baystar International, Ltd.
November 14, 2000
Page 4

         Common Shares, the Additional Shares, the Warrants and the Additional
         Warrants under the California Corporate Securities Law. We express no
         opinion as to the securities laws of any other state.

                  10. No authorization, filing, order, consent, permit, or
         approval of any California, New York or federal governmental authority
         (including any court or regulatory agency) or the American Stock
         Exchange ("AMEX") that we have, in the exercise of customary
         professional diligence, recognized as applicable to the Company or to
         transactions of the type contemplated by the Transaction Documents or
         with any third party pursuant to any Material Contract is required on
         the part of the Company for the execution and delivery of, and
         performance of its obligations under the Transaction Documents with the
         exception of the filing of a Form D with the SEC, notice filings with
         the California Department of Corporations and [insert name of NY blue
         sky filing office], and the filing with AMEX for additional listings of
         the Common Shares, the Additional Shares and the Warrant Shares. Based
         on the factual representations contained in the Company Certificate,
         the Company is not a member of a "self - regulatory organization" as
         defined in the Securities Exchange Act of 1934, as amended.

                  11. The execution and delivery by the Company of the
         Transaction Documents do not, and the Company's performance of its
         obligations under the Transaction Documents will not, (i) violate the
         Company's Certificate of Incorporation or Bylaws, (ii) violate, breach
         or result in a default (or an event which, with the giving of notice or
         lapse of time or both, constitutes or would constitute a default)
         under, give rise to any right of termination, cancellation or
         acceleration under, or result in the creation of any lien, charge, or
         encumbrance on or against any of the properties of the Company pursuant
         to any terms or existing restrictions on the Company under any Material
         Contract, or (iii) breach or otherwise violate any existing obligation
         of or restriction on the Company under any order, judgment or decree of
         any California, New York or federal court or governmental authority
         binding on the Company identified in the Company Certificate.

                  12. The execution and delivery by the Company of the
         Transaction Documents do not, and the Company's performance of its
         obligations under the Transaction Documents will not, violate the
         current General Corporation Law of the State of Delaware or any current
         California, New York or federal statute, rule or regulation that we
         have, in the exercise of customary professional diligence, recognized
         as applicable to the Company or to transactions of the type
         contemplated by the Transaction Documents.

                  13. The Company is not an investment company required to
         register under the Investment Company Act of 1940, as amended.

                  Our opinion in paragraph 2 above as to no requirement for
stockholder approval for the issuance of Additional Shares assumes that the
Company will not conduct any future
<PAGE>   116
Baystar Capital L.P.
Baystar International, Ltd.
November 14, 2000
Page 5

offering that would require any approval of its stockholders by or under the
rules and regulations of AMEX, as required under the terms of the Purchase
Agreement.

                  Our opinion in paragraph 3 above as to the enforceability of
the Transaction Documents is subject to public policy considerations, statutes
or court decisions that may limit the rights of a party to obtain
indemnification against its own negligence, willful misconduct or unlawful
conduct.

                  For the purposes of the opinions expressed in paragraphs 10,
11 and 12, we have assumed that the Company will not take any future
discretionary action (including a decision not to act) permitted by the
Transaction Documents that would cause the performance of the Transaction
Documents to violate any California, New York, or federal statute, rule or
regulation, constitute a violation or breach of or default under any of the
Material Contracts, orders, judgments or decrees referred to in clauses (ii) and
(iii) of paragraph 11, or require an order, consent, permit or approval to be
obtained from a California, New York or federal governmental authority.

                  Except for the matters described in Schedule 3(h) of the
Purchase Agreement, we have not, since September 1, 2000 given substantive
attention on behalf of the Company to, or represented the Company or any of its
subsidiaries in connection with, any actions, suits or proceedings pending or
threatened against the Company before any court, arbitrator or governmental
agency, which (a) seek to effect the enforceability of the Transaction Documents
or (b) seek damages in excess of $250,000. We call your attention to the fact
that our engagement is limited to specific matters as to which we are consulted
by the Company and its subsidiaries.

                  We express no opinion as to the effect of subsequent issuances
of securities of the Company to the extent that such issuances may result in the
Company not having enough remaining authorized but unissued shares of Common
Stock for the issuance of the Additional Shares in excess of the number reserved
by the Company as described in paragraph 6. We also advise you that, as a result
of the operation of the antidilution or adjustment provisions of the Warrants
and the Additional Warrants, the Warrants and the Additional Warrants may become
exercisable into more shares of Common Stock than remain authorized but
unissued.

                  The law covered by this opinion is limited to the present
federal law of the United States, the present law of the States of California
and New York and the present General Corporation Law of the State of Delaware.
We express no opinion as to the laws of any other jurisdiction and no opinion
regarding the statutes, administrative decisions, rules, regulations or
requirements of any county, municipality, subdivision or local authority of any
jurisdiction. We express no opinion as to the effect of subsequent issuances of
securities of the Company to the extent that such issuances may be integrated
with the issuance of the Securities under Rule 502 of Regulation D promulgated
under the Securities Act.
<PAGE>   117
Baystar Capital L.P.
Baystar International, Ltd.
November 14, 2000
Page 6

                  This opinion is furnished by us as special counsel for the
Company and may be relied upon by you only in connection with the Purchase
Agreement. It may not be used or relied upon by your for any other purpose or by
any other person, nor may copies be delivered to any other person, without in
each instance our prior written consent. This opinion is expressly limited to
the matters set forth above and we render no opinion, whether by implication or
otherwise, as to any other matters. We assume no obligation to update or
supplement this opinion to reflect any facts or circumstances that arise after
the date of this opinion and come to our attention, or any future changes in
laws.

                                                              Very truly yours,
<PAGE>   118
                                    EXHIBIT F

                            NTN COMMUNICATIONS, INC.

                  RESOLUTIONS ADOPTED BY THE BOARD OF DIRECTORS
                     AT A MEETING HELD ON NOVEMBER 12, 2000

         WHEREAS, this Board of Directors has determined to issue and sell,
through a private offering (the "Offering") of shares of the Company's Common
Stock, $.005 par value (the "Common Stock"), for an aggregate purchase price of
$2.0 million and warrants to purchase Common Stock;

         WHEREAS, in connection with the Offering, there has been presented to
and considered by this Board of Directors the following documents in draft form:

                  a)       Stock Purchase Agreement between the Company and each
                           of the investors in the Offering (collectively, the
                           "Investors");

                  b)       Registration Rights Agreement between the Company and
                           each Investor;

                  c)       Form of Common Stock Purchase Warrants immediately
                           exercisable (the "Warrants");

                  d)       Form of Common Stock Purchase Warrants with the six
                           month vesting provision (the "Additional Warrants");
                           and

                  e)       Term Sheet dated November 7, 2000 from BayStar
                           Capital L.P.;

         WHEREAS, this Board of Directors has determined that it is in the best
interests of the Corporation to consummate the Offering and the issuance and
sale of Common Stock pursuant thereto, and in connection therewith, to execute,
deliver and perform the Company's obligations under each of the Stock Purchase
Agreement, the Registration Rights Agreement and the Warrants and the Additional
Warrants;

         NOW, THEREFORE, BE IT RESOLVED, that the Offering is hereby authorized
and approved.

         RESOLVED FURTHER, that in connection with the Offering, each of the
Stock Purchase Agreement, the Registration Rights Agreement, the Warrants and
the Additional Warrants is hereby approved in the forms presented to this Board
of Directors.

         RESOLVED FURTHER, that each of the officers of the Company are hereby
authorized to execute and deliver to the Investors, in the name and on behalf of
the Company, and to cause the Company to perform its obligations under, the
Stock Purchase Agreement, the Registration Rights Agreement, the Warrants and
the Additional Warrants in the forms presented to this Board of Directors, with
such changes, amendments, modifications and supplements
<PAGE>   119
thereto as any of such officers shall determine to be necessary and appropriate
and any other documents, agreements or instruments to be entered in connection
therewith to which the Company is a party, the necessity and appropriateness of
which to be conclusively evidenced by their execution thereof.

         RESOLVED FURTHER, that this Board of Directors hereby authorizes the
issuance and sale of the shares of Common Stock and the shares underlying the
Warrants and the Additional Warrants (the "Warrant Shares"; collectively, the
"Offered Shares") offered pursuant to the terms of each of the Stock Purchase
Agreement, the Warrants and the Additional Warrants.

         RESOLVED FURTHER, that there shall be reserved from the Company's
authorized but unissued shares of Common Stock, such number of shares equal to
not less than 150% of the number of shares of Common Stock necessary to provide
for the issuance in the aggregate of the Warrant Shares upon exercise of the
Warrants and in the aggregate, an amount of not less than 1,500,000 shares of
Common Stock necessary to provide for the issuance of Additional Shares (as
defined in the Stock Purchase Agreement), if applicable, and the Warrant Shares
upon exercise of the Warrants and the Additional Warrants.

         RESOLVED FURTHER, that upon issuance of the Offered Shares pursuant to
the terms of the Stock Purchase Agreement, the Warrants or the Additional
Warrants and receipt by the Company of the consideration specified in the Stock
Purchase Agreement, the Warrants or the Additional Warrants, respectively,
therefore, the Offered Shares shall be validly issued, fully paid and
non-assessable.

         RESOLVED, that pursuant to the Registration Rights Agreement, a
Registration Statement on Form S-3 (the "Registration Statement") and the
prospectus included therein, for the registration under the Securities Act of
1933, as amended, of the Offered Shares (including the Warrant Shares), may be
filed by the Company and the same hereby is, approved in all respects and that
the officers and directors of the Company be, and each of them hereby is,
authorized and directed to execute, in the name and on behalf of the Company,
the Registration Statement.

         RESOLVED FURTHER, that the officers of the Company be, and each hereby
is, authorized in the name and on behalf of the Company, to take any and all
action which they deem necessary or advisable in order to effect the
registration or qualification (or exemption there from) of the Offering for
issue, offer, sale or trade under the Blue Sky or securities law of any of the
States or jurisdictions of the United States and in connection therewith to
execute, acknowledge, verify, deliver, file or cause to be published any
applications, reports, consents to service of process, appointments of attorneys
to receive service of process and other papers and instruments which may be
registered under such laws, and to take any and all further action which they
may deem necessary or advisable in order to maintain any such registration or
qualification for as long as they deem necessary or required by law.

         RESOLVED FURTHER, that the officers of the Company be, and each hereby
is, authorized to make any application and perform on behalf of the Company any
and all such acts
<PAGE>   120
as they may deem necessary or advisable in order to successfully apply for
inclusion of the Offered Shares on the American Stock Exchange and that the
officers of the Company be, and each hereby is, authorized to enter into any
supplemental listing or other agreement as may be necessary or advisable to
conform with the requirements for inclusion of the Offered Shares on the
American Stock Exchange.

         RESOLVED, that each of the officers of the Company is, and each of them
with full power to act without the others hereby is, authorized, in the name and
on behalf of the Company, to do or cause to be done any and all things necessary
or advisable in order to comply with the listing requirements of the American
Stock Exchange, including, without limitation, the payment of any required fees.

         RESOLVED FURTHER, that the officers of the Company be, and each hereby
is, authorized to request and authorize the Company's transfer agent to issue,
countersign and register certificates representing the Offered Shares in such
denominations as set forth in the Stock Purchase Agreement and the Warrants and
registered in the names of the Investors.

         RESOLVED FURTHER, that there is hereby adopted the form of any and all
resolutions required by any such authority or authorities to be filed in
connection with such papers and documents if (1) in the opinion of the proper
officers of the Company executing the same the adoption of such resolutions is
necessary or advisable, and (2) the Secretary of the Company evidences such
adoption by inserting in the minute book of the Company copies of such
resolutions, which resolutions shall thereupon be deemed to be adopted by the
Board of Directors and incorporated in the minute book of the Company as a part
of these resolutions, with the same force and effect as if part of these
resolutions.

         RESOLVED FURTHER, that the officers of the Company be, and each of them
hereby is, authorized and shall be directed to execute on behalf of the Company
and in its name, and to file or cause to be filed with the Securities and
Exchange Commission and appropriate state securities law officials, all
documents necessary to implement the foregoing resolutions (including the
Company's obligations under the Registration Rights Agreement), including any
amendments or supplements thereto, that are required under federal and state
securities laws.

         RESOLVED FURTHER, that the corporate seal of the Company may be affixed
to any instrument or document executed pursuant to the foregoing resolutions by
impression or affixing the corporate seal or by imprinting or otherwise
reproducing thereon a facsimile thereof.

         RESOLVED FURTHER, that the officers of the Company are, and each of
them hereby is, authorized, in the name and of behalf of the Company or
otherwise, to make all such arrangements to do and perform all such acts and
things and to execute and deliver all such officers' certificates and such
instruments and documents as they may deem necessary or appropriate in order to
fully effectuate the purpose of each and all of the foregoing resolutions,
(hereby ratifying and confirming any and all actions taken heretofore and
hereafter to accomplish such purposes).
<PAGE>   121
         RESOLVED FURTHER, that the officers of the Company be, and each of them
hereby is, authorized to do and perform any and all such acts, including
execution of any and all documents and certificates, as such officers shall deem
necessary or advisable, to carry out the purposes of the foregoing resolutions.

         RESOLVED FURTHER, that any actions taken by such officers of the
Company prior to the date of the foregoing resolutions adopted hereby that are
within the authority conferred thereby are hereby ratified, confirmed and
approved as acts and deeds of the Company.

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