F O R M 1 0 - Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


     (X)  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
            EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1997

     ( )  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
            EXCHANGE ACT OF 1934

              For the transition period from ________ to _________

                          Commission File Number 1-6948



                                 SPX CORPORATION
             (Exact Name of Registrant as Specified in its Charter)



        Delaware                                38-1016240
(State of Incorporation)            (I.R.S. Employer Identification No.)



             700 Terrace Point Drive, Muskegon, Michigan 49443-3301
                     (Address of Principal Executive Office)



        Registrant's Telephone Number including Area Code (616) 724-5000


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


                                                       Yes   X            No



             Common shares outstanding April 25, 1997 -- 14,978,800






PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
SPX CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) (Unaudited) March 31 December 31 1997 1996 ---------- ---------- ASSETS Current assets: Cash and temporary investments $ 111,456 $ 12,312 Receivables 147,464 96,495 Inventories 126,562 109,258 Deferred income tax asset and refunds 42,208 42,208 Net assets under agreement for sale - 133,795 Prepaid and other current assets 17,977 14,073 ---------- ---------- Total current assets $ 445,667 $ 408,141 Investments - 3,464 Property, plant and equipment, at cost 258,153 251,310 Accumulated depreciation (135,517) (127,445) Net property, plant and equipment $ 122,636 $ 123,865 Goodwill 62,154 58,665 Other assets 15,065 21,908 ---------- ---------- Total assets $ 645,522 $ 616,043 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of long-term debt $ 130,967 $ 1,430 Accounts payable 75,537 53,011 Accrued liabilities 139,619 115,016 Income taxes payable 46,716 4,973 ---------- ---------- Total current liabilities $ 392,839 $ 174,430 Long-term liabilities 91,852 92,618 Deferred income taxes 7,051 15,219 Minority interest 1,434 - Long-term debt 23,623 227,859 Shareholders' equity: Common stock $ 165,632 $ 163,969 Paid in capital 62,970 60,756 Retained deficit (25,737) (48,688) Common stock held in treasury (50,000) (50,000) Unearned compensation (21,004) (20,797) Cumulative translation adjustments (3,138) 677 ---------- ---------- Total shareholders' equity $ 128,723 $ 105,917 ---------- ---------- Total liabilities and shareholders' equity $ 645,522 $ 616,043 ========== ==========
SPX CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three months ended March 31 1997 1996 --------- --------- Revenues $ 236,662 $ 292,308 Costs and expenses Cost of products sold 174,167 228,433 Selling, general and administrative 45,389 46,942 Goodwill/Intangible amortization 962 1,877 Minority and equity interests 30 (893) Restructuring charge - 2,424 --------- --------- Operating income $ 16,114 $ 13,525 Other expense (income), net (65,736) 105 Interest expense, net 4,328 8,814 --------- --------- Income before income taxes $ 77,522 $ 4,606 Provision for income taxes 42,817 1,842 --------- --------- Income from operations $ 34,705 $ 2,764 Extraordinary item, net of tax (10,330) - --------- --------- Net income $ 24,375 $ 2,764 ========= ========= Income (loss) per share: From operations $ 2.39 $ 0.20 Extraordinary item, net of tax (0.71) - --------- --------- Net income $ 1.68 $ 0.20 ========= ========= Dividends per share $ 0.10 $ 0.10 Weighted average number of common shares outstanding 14,546 13,530
SPX CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended March 31 1997 1996 --------- --------- Cash flows from operating activities: Net income from operating activities $ 24,375 $ 2,764 Adjustments to reconcile net income to net cash from operating activities - Extraordinary item 10,330 - Depreciation and amortization 7,217 10,845 Minority and equity interests 30 (893) Restructuring charge - 2,424 Gain on sale of business, net of taxes (31,160) - Compensation recognized under employee stock plan 1,161 1,136 Deferred taxes (2,427) 228 Change in operating assets and liabilities: Receivables (41,543) (22,388) Inventories (10,588) 2,412 Prepaid and other assets (2,196) 258 Accounts payable and accrued liabilities 7,357 25,797 Income taxes payable 1,362 1,326 Long-term liabilities 753 (82) Other, net (309) (1,086) --------- --------- Net cash provided by (used by) operating activities $(35,638) $ 22,741 Cash flows used by investing activities: Proceeds from sale of business $ 223,000 $ - Investments in businesses (5,109) - Capital expenditures (4,939) (4,500) --------- --------- Net cash provided by (used) by investing activities $ 212,952 $ (4,500) Cash flows provided by financing activities: Net payments under debt agreements $(79,148) $ (8,006) Net shares sold under stock option plan 1,945 1,125 Dividends paid (1,424) (1,350) --------- --------- Net cash provided by (used by) financing activities $(78,627) $ (8,231) Effect of exchange rate changes on cash 457 - --------- --------- Net increase in cash and temporary investments $ 99,144 $ 10,010 Cash and temporary investments, beg. of period 12,312 17,069 --------- --------- Cash and temporary investments, end of period $ 111,456 $ 27,079 ========= =========
SPX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 1. The interim financial statements reflect the adjustments which are, in the opinion of management, necessary to a fair statement of the results of the interim periods presented. Adjustments are of a normal recurring nature. The preparation of the company's consolidated condensed financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Information regarding the company's segments was as follows:
Three months ended March 31 1997 1996 --------- --------- (in millions) Revenues: Service Solutions $ 143.8 $ 156.6 Original Equipment Components 92.9 135.7 --------- --------- Total $ 236.7 $ 292.3 ========= ========= Operating income (loss): Service Solutions $ 10.1 $ 7.0 Original Equipment Components 11.6 11.5 General Corporate (5.6) (5.0) --------- --------- Total $ 16.1 $ 13.5 ========= ========= Capital Expenditures: Service Solutions $ 1.5 $ 0.5 Original Equipment Components 3.2 3.8 General Corporate 0.2 0.2 --------- --------- Total $ 4.9 $ 4.5 ========= ========= Depreciation and Amortization: Service Solutions $ 2.7 $ 3.5 Original Equipment Components 4.1 6.9 General Corporate 0.4 0.4 --------- --------- Total $ 7.2 $ 10.8 ========= ========= March 31 December 31 1997 1996 --------- --------- Identifiable Assets: Service Solutions $ 333.7 $ 291.5 Original Equipment Components 144.9 271.5 General Corporate 166.9 53.0 --------- --------- Total $ 645.5 $ 616.0 ========= =========
SPX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 3. On February 7, 1997, the company completed the sale of substantially all of the assets and rights used in the manufacture and distribution of piston rings and cylinder liners, known as the Sealed Power Division ("SPD"). The sale to Dana Corporation was for $223 million gross cash proceeds. SPD included the accounts of Sealed Power, a U.S. division, SP Europe Limited Partnership, 70% owned, Allied Ring Corporation, 50% owned, and Promec, 40% owned. In addition, the buyer assumed substantially all of the liabilities and obligations of the business, excluding liabilities relating to income and other taxes, certain liabilities arising outside the ordinary course of business, debt, and certain employee related liabilities. The transaction includes a ten year noncompetition agreement precluding the company from competing with SPD. The company recorded a pretax gain of $71.9 million, or $31.2 million after-tax on the transaction (included in other expense (income), net.) The accompanying consolidated condensed financial statements include the results of SPD through February 7, 1997, and the results of the Hy-Lift division through November 1, 1996, their dates of disposition. The following unaudited proforma first quarter 1997 and 1996 selected financial data reflects the disposition of these divisions as if they had occurred as beginning of the periods, respectively. The unaudited proforma selected results of operations do not purport to represent what the company's results of operations would actually have been had the dispositions in fact occurred as of January 1, 1997, or January 1, 1996, or project the results for any future date or period.
Three months ending March 31, 1997 Proforma Adj. 1997 1996 Reported Divested Other Proforma Proforma ------- ------- ------- ------- ------- (in millions, except per share) Revenues $ 236.7 $(23.5) $ 213.2 $ 217.8 Cost of products sold 174.2 (19.6) 154.6 162.0 ------- ------- ------- ------- Gross margin $ 62.5 $ (3.9) $ 58.6 $ 55.8 SG&A 45.4 (1.0) 44.4 43.2 Goodwill/intangible amort. 1.0 (0.2) 0.8 1.4 Minority and equity - - - (0.1) Restructuring charges - - - 2.4 ------- ------- ------- ------- Operating income $ 16.1 $ (2.7) $ 13.4 $ 8.9 Other (income) expense (65.7) - (71.9)(a) 6.2 .1 Interest expense, net 4.3 - 1.0(b) 3.3 7.2 ------- ------- ------- ------- ------- Income before income taxes $ 77.5 $ (2.7) $(70.9) $ 3.9 $ 1.6 Provision for income taxes 42.8 (1.0) (40.3)(c) 1.5 0.6 ------- ------- ------- ------- ------- Income (d) $ 34.7 $ (1.7) $(30.6) $ 2.4 $ 1.0 ======= ======= ======= ======= ======= Income per share $ 2.39 $ 0.17 $ 0.07 Weighted average number of shares 14.5 14.5 13.5
(a) Adjustment to exclude the gain on the sale of SPD. (b) Adjustment to interest expense, net, assuming the use of net proceeds to reduce revolving credit and other debt. (c) Adjustment to income tax expense to reflect an effective tax rate of 37% in 1997 and 38% in 1996. (d) Income excludes extraordinary item, net of taxes. SPX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS MARCH 31, 1997 (Unaudited) 4. During the first quarter of 1997, the company recorded a $6.5 million charge ($4.1 million after-tax) in other expense (income), net. This charge reflects anticipated future legal costs associated with the ongoing litigation with Snap-on Incorporated. 5. On March 11, 1997, the company commenced a cash tender offer for all $128,415,000 (principal amount) of its outstanding 11 3/4% Senior Subordinated Notes, due 2002 (the "Notes"), at a purchase price determined by reference to a fixed spread of 35 basis points over the yield to maturity of the United States Treasury 5 3/8% Notes due May 31, 1998, on March 25, 1997, of which an amount equal to 1% of principal amount of each Note purchased constituted a consent payment that was paid for Notes tendered on or prior to March 25, 1997. The tender offer expired on April 9, 1997 and $126,734,000 of the Notes were tendered. The company paid for these Notes on April 14, 1997. As a result of the company's irrevocable agreement with note holders tendering as of March 25 1997, the company recorded an extraordinary pretax charge of $16.4 million, or $10.3 million after-tax, for the cost to repurchase the notes. 6. Subsequent Event - Equity Self-tender offer. On April 10, 1997, a Dutch Auction self-tender offer was announced for the purchase of up to 2.7 million common shares of the company at a price ranging from $48 to $56 per share. This tender offer expires on May 8, 1997. The purchase of common stock tendered will be financed with the new revolving credit agreement. 7. During the first quarter of 1997, the company terminated its practice of selling undivided fractional interests in domestic trade accounts receivable. At December 31, 1996, approximately $26 million had been sold under this practice. 8. During the first quarter of 1997, the company made three strategic investments totaling $5.1 million. Effective the beginning of 1997, the company acquired an additional 30% of JATEK which raised the company's ownership in this Japanese company to 80%. Also effective the beginning of 1997, the company purchased an additional 10% of IBS Filtran which raised the company's ownership to 60% in this German company. Effective March 1, 1997, the company acquired A.R. Brasch Marketing Inc., which provides technical service and training materials for vehicle manufacturers. A.R. Brasch has annual sales approaching $10 million. Had these acquisitions taken place on January 1 of the respective years, consolidated revenues and income would not have been significantly different from reported results. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition The following unaudited information should be read in conjunction with the company's unaudited consolidated financial statements and the related footnotes. Results of Operations - First Quarter 1997 vs. First Quarter 1996 Consolidated:
Three months ended March 31, ------------------- 1997 1996 ------- ------- (in millions) Revenues: Service Solutions $ 143.8 $ 156.6 Original Equipment Components 92.9 135.7 ------- ------- Total $ 236.7 $ 292.3 ======= ======= Operating income (loss): Service Solutions $ 10.1 $ 7.0 Original Equipment Components 11.6 11.5 General corporate expense (5.6) (5.0) ------- ------- Total $ 16.1 $ 13.5 Other expense (income), net (65.7) 0.1 Interest expense, net 4.3 8.8 ------- ------- Income before income taxes $ 77.5 $ 4.6 Provision for income taxes 42.8 1.8 ------- ------- Income from continuing operations $ 34.7 $ 2.8 Extraordinary item, net of tax (10.3) - ------- ------- Net income $ 24.4 $ 2.8 ======= ======= Capital expenditures $ 4.9 $ 4.5 Depreciation and amortization 7.2 10.8
March 31, 1997 December 31, 1996 (in millions) Identifiable assets $ 645.5 $ 616.0 General corporate expenses and other consolidated items that are not allocated to the segments are explained below, followed by segment information. General Corporate expense These expenses represent general unallocated expenses. The first quarter of 1997 expense was greater than the first quarter of 1996 principally due to higher incentive compensation expense. Other expense (income), net These expense and income items represent expenses and income not included in the determination of operating results. Included are gains or losses on currency exchange, translation gains or losses of financial statements in highly inflationary countries, fees incurred on the sale of accounts receivable under the company's accounts receivable securitization program (discontinued during the first quarter of 1997), gains or losses on the sale of fixed assets, and unusual non-operational gains or losses. In the first quarter of 1997, the company completed the sale of the Sealed Power division to Dana Corporation for $223 million in cash. The company recorded a $71.9 million gain on the sale, and the after-tax gain was $31.2 million, or $2.14 per share. The results of operations of Sealed Power are included in the company's consolidated results through the date of divestiture, February 7, 1997. First quarter 1997 other expense (income), net, also includes a $6.5 million charge for estimated costs of pending litigation with Snap-on Incorporated. These costs include estimates of legal and other related fees to defend this litigation through its conclusion. Interest Expense, net First quarter 1997 interest expense was less than the first quarter 1996 interest expense due to lower debt levels. Provision for Income Taxes The overall income tax provision includes $40.7 million provided on the sale of the Sealed Power division. Without this item, the effective income tax rate for the first quarter of 1997 was 37% which represents the company's current estimated rate for the year. Extraordinary item, net of taxes In the first quarter of 1997, the company recorded a pretax charge of $16.4 million, $10.3 million after-tax, to reflect the costs to repurchase $126.4 million of its 11 3/4% Senior Subordinated Notes tendered as of March 25, 1997, pursuant to the company's tender offer for these notes. Service Solutions (formerly Specialty Service Tools):
Three months ended March 31, ---------------------------- 1997 1996 ---------- ---------- (in millions) Revenues............................. $ 143.8 $ 156.6 Gross Profit......................... 45.5 44.9 % of revenues...................... 31.7% 28.7% Selling, general & administrative.... 34.9 34.3 % of revenues...................... 24.3% 21.9% Goodwill/intangible amortization..... 0.5 1.1 Minority and equity interests........ - 0.1 Restructuring charge................. - 2.4 ---------- ---------- Operating income..................... $ 10.1 $ 7.0 ========== ========== Capital expenditures................. $ 1.5 $ .5 Depreciation and amortization........ 2.7 3.5
March 31, 1997 December 31, 1996 (in millions) Identifiable assets.................. $ 333.7 $ 291.5 Revenues First quarter 1997 revenues decreased $12.8 million, or 8.2%, from the first quarter of 1996. The most significant explanation for the lower revenues was that 1996 included approximately $20 million in dealer equipment sales to one customer. First quarter 1997 revenues include approximately $5 million of sales due to the consolidation of JATEK, which was 80% owned as of the beginning of the year. Gross margin First quarter 1997 gross margin of 31.7% was higher than the 28.7% gross margin in 1996. The increase in the gross margin was a direct result of the significant dealer equipment sales in 1996. Dealer equipment sales have a relatively low (less than 15%) gross margin. Also increasing the first quarter of 1997 gross margin were productivity improvements resulting from the 1996 restructuring. Selling, General and Administrative ("SG&A") First quarter 1996 SG&A expense was $34.9 million, or 24.3% of revenues, compared to $34.3 million, or 21.9% of revenues, in 1996. The significant dealer equipment sales in the first quarter of 1996 had relatively low SG&A costs, which lowered the 1996 SG&A percent to revenues. Goodwill/Intangible Amortization First quarter of 1997 expense was lower than 1996 primarily due the company's write-off of Automotive Diagnostics' goodwill during the fourth quarter of 1996. Minority and equity interests In 1996, this line represented the equity (earnings) or losses of JATEK, previously 50% owned. Effective the beginning of 1997, the company acquired an additional 30% of JATEK and its results are now consolidated. Beginning in 1997, the 20% minority interest in JATEK's results is reflected in this line. Restructuring Charge During 1996, the company incurred restructuring costs to consolidate five Specialty Service Tool divisions into two divisions. Operating Income 1997 first quarter operating income of $10.1 million compares to first quarter 1996 operating income of $7.0 million. The increase was primarily attributable to sales mix, cost reductions and reduced goodwill expense. First quarter 1996 was impacted by $2.4 million of restructuring costs. Capital Expenditures First quarter 1997 capital expenditures were $1.5 million compared to first quarter of 1996 capital expenditures of $.5 million. Capital expenditures for 1997 are expected to approximate $12 million. Identifiable Assets First quarter 1997 identifiable assets increased approximately $42 million from year-end 1996. The increase was predominately receivables and inventories. The increase in receivables was a result of higher revenues in February and March of 1997 compared to November and December of 1996. The increase in inventories was a result of the normal seasonal buildup of inventory to support higher second quarter business activity. Original Equipment Components:
Three months ended March 31, ---------------------------- 1997 1996 ---------- ---------- (in millions) Revenues........................... $ 92.9 $ 135.7 Gross Profit....................... 17.0 19.0 % of revenues.................... 18.3% 14.0% Selling, general & administrative.. 4.9 7.7 % of revenues.................... 5.3% 5.7% Goodwill/intangible amortization... .4 0.8 Minority and equity interests...... .1 (1.0) ---------- ---------- Operating income................... $ 11.6 $ 11.5 ========== ========== Capital expenditures................. $ 3.2 $ 3.8 Depreciation and amortization........ 4.1 6.9
March 31, 1997 December 31, 1996 (in millions) Identifiable assets.................. $ 144.9 $ 271.5 Revenues First quarter 1997 revenues were down $42.8 million from the first quarter 1996 revenues due to the divestitures of the Sealed Power and Hy-Lift divisions. The first quarter of 1997 includes $23.5 million of revenues from Sealed Power and the first quarter of 1996 includes $74.5 million of revenues from Sealed Power and Hy-Lift. Gross Profit First quarter 1997 gross margin of 18.3% compares favorably to the first quarter 1996 gross margin of 14.0%. The increase was due to the disposal of Hy-Lift and Sealed Power, both lower margin businesses. Selling, General and Administrative ("SG&A") SG&A was $4.9 million, or 5.3% of revenues, in the first quarter of 1997 compared to $7.7 million, or 5.7% of revenues, in 1996. This reflects the segment's continuing cost containment efforts and the effect of divestitures. Goodwill/Intangible Amortization Goodwill and intangible amortization expense was lower in 1997 due to the sale of SPD. Minority and equity interests In 1996, minority and equity interests reflected the equity earnings of Promec and Allied Ring Corporation (sold as part of the Sealed Power divestiture in February 1997) and IBS Filtran, 50% owned during 1996. In 1997, this amount represents the 40% minority interest in IBS Filtran's results. The company acquired an additional 10% of IBS Filtran as of the beginning of 1997 and is now consolidating its results. Operating Income First quarter 1997 operating income was $11.6 million compared to $11.5 million in the first quarter of 1996. Capital Expenditures Capital expenditures in the first quarter of 1997 were $3.2 million and $3.8 million in the first quarter of 1996. Capital expenditures for 1997 are expected to approximate $15 million and will be focused upon certain capacity expansions, cost reductions and maintenance of the operations. Identifiable Assets Identifiable assets decreased approximately $127 million from year-end 1996 reflecting the sale of SPD. Liquidity and Financial Condition The company's liquidity needs arise primarily from capital investment in equipment, funding working capital requirements to support business growth initiatives and to meet interest costs. Management believes that operations and the credit arrangements will be sufficient to supply funds needed by the company in 1997. Cash Flow
Three months ended March 31, 1997 1996 --------- --------- (in millions) Cash flow from: Operating activities...... $ (35.6) $ 22.7 Investing activities...... 213.0 (4.5) Financing activities...... (78.3) (8.2) --------- --------- Net Cash Flow............ $ 99.1 $ 10.0 ========= =========
Cash flow from operating activities in the first quarter of 1997 was an outflow of $35.6 million. This was principally due to seasonal buildups of accounts receivable and inventory. The cash outflow includes the $26 million effect of terminating the accounts receivable securitization program during quarter. Cash flow from operating activities in 1996 was improved due to a significant increase in accounts payable. Cash flow from investing activities during the first quarter of 1997 includes the $223 of cash received on the sale of Sealed Power, offset by $5.1 million invested in A.R. Brasch, and in IBS Filtran (acquired additional 10% ownership) and capital expenditures of $4.9 million. Capital expenditures of $4.5 million were made in 1996. Capital expenditures for 1997 should approximate $27 million for the year. Cash flow from financing activities during the first quarter of 1997 reflects the company's quarterly dividend payment, shares sold under the stock option plan and a $79.1 million reduction in borrowings. Total Debt During the first quarter of 1997, the company initiated a new financial capital plan. This plan included: 1. A tender offer, dated March 11, 1997, to purchase all outstanding 11 3/4% Senior Subordinated Notes. This tender offer expired April 9, 1997 and $126.7 million of the notes were purchased. The company used existing cash and cash equivalents and its revolving credit facility to purchase the notes. 2. Secured a commitment on March 31, 1997 for a new $400 million revolving credit agreement from The First National Bank of Chicago. The agreement will provide debt capacity for business operations, acquisitions, and the repurchase of common stock. The new revolving credit agreement was signed on May 7, 1997. 3. An announcement, on April 10, 1997, of a Dutch Auction self-tender offer for up to 2.7 million common shares of the company at a price ranging from $48 to $56 per share. This tender offer expires on May 8, 1997. The purchase of common stock tendered will be financed with the new revolving credit agreement. 4. Concurrent with the announcement of the Dutch Auction, the company announced the elimination of the quarterly cash dividend. The company has authorized up to 200,000 shares of common stock to be prospectively purchased in the open market if future distributions to shareholders are deemed appropriate by management. At March 31, 1997, the following summarizes the debt outstanding and unused credit availability:
Total Amount Unused Credit Commitment Outstanding Availability --------- --------- --------- (in millions) New revolving credit........ $ 400.0 $ - $ 384.1(a) Swingline loan facility..... 5.0 - 5.0 Senior subordinated notes (b) 128.4 128.4 - Industrial revenues bonds... 15.1 15.1 - Other....................... 12.4 11.1 1.3 --------- --------- --------- Total debt................ $ 560.9 $ 154.6 $ 390.4 ========= ========= =========
(a) Decreased by $15.9 million of facility letters of credit outstanding at March 31, 1997, which reduce the unused credit availability. (b) As of April 14, 1997, $126.7 million were repurchased using available cash and equivalents and revolving credit. The company is required to maintain compliance with restrictive covenants contained in the new revolving credit agreement. Under the most restrictive financial covenants, the company is required to maintain the following ratios: (1) Maintain a Debt - EBITDA Ratio of 3.75 to 1.0 for fiscal quarters ending June, September and December of 1997, a ratio of 3.5 to 1.0 for fiscal quarters ending March, June and September of 1998, and a ratio of 3.0 to 1.0 thereafter, (2) Maintain a Fixed Charge Coverage Ratio of 1.5 to 1.0 for fiscal quarters ending in June and September of 1997, a ratio of 1.75 to 1.0 for fiscal quarters ending December 1997 and March, June, and September of 1998, and a ratio of 2.0 to 1.0 thereafter. Management believes that the unused credit availability on the new revolving credit facility is sufficient to complete the new financial capital plan and to meet operational cash requirements, working capital requirements and capital expenditures for 1997. After payment of the notes tendered in April of 1997, aggregate future maturities of total debt are not material for the next five years. The new revolving credit agreement will expire in 2002 and borrowings on the revolver would become due, however, management believes that the revolving credit agreement would likely be extended or that alternate financing will be available to the company. Other Matters As of the end of 1997, the company must adopt Statement of Financial Accounting Standards, No. 128, "Earnings Per Share." This standard will require presentation of basic and diluted earnings per share information instead of the current primary and fully diluted earnings per share required by APB Opinion No.15. The company's review indicates that the new basic earnings per share would have been insignificantly higher than the reported primary earnings per share for the first quarter of 1997 and 1996. This is due to the exclusion of the effect of outstanding options in the basic earnings per share computation versus the primary earnings per share computation. The company estimates that the diluted earnings per share for the first quarter of 1997 and 1996 would have been virtually the same as the reported primary earnings per share for these periods. -------------------- The foregoing discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains forward looking statements which reflect management's current views with respect to future events and financial performance. These forward looking statements are subject to certain risks and uncertainties, including but not limited to those matters discussed above. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements, which speak only as of the date hereof. Reference is made to the company's 1996 Annual Report on Form 10-K for additional cautionary statements and discussion of certain important factors as they relate to forward looking statements. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders The company held the Annual Meeting of Shareholders on April 23, 1997 at which shareholders elected two directors to three year terms expiring in 2000, approved amendments to the company's 1992 Stock Compensation Plan which increased the shares available by 1,200,000, and approved the adoption of the company's 1997 Non-Employee Directors' Compensation Plan. The results of the voting in connection with the above items were as follows: Voting on Directors For Withheld -------------------- ------- -------- John B. Blystone 12,298,238 334,417 Frank A. Ehmann 12,297,563 335,092 Voting on For Against Abstain -------------------- ------- ------- ------- Amendments to the 1992 Stock Compensation Plan 10,240,514 790,714 102,480 Adoption of the 1997 Non-Employee Directors' Compensation Plan 9,367,884 1,673,674 120,824 Item 5. Other Information On April 11, 1997, the company filed with the Securities and Exchange Commission an Issuer Tender Offer Statement on Schedule 13E-4 which contains information with respect to the company's self-tender offer for the purchase of up to 2.7 million common shares of the company at a price ranging from $48 to $56 per share. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (2) None. (4) Credit Agreement between SPX Corporation and The First National Bank of Chicago, as agent for the banks named therein, dated as of May 7, 1997. (10) None. (11) Statement regarding computation of earnings per share. See Consolidated Condensed Statements of Income. (15) None. (18) None. (19) None. (20) None. (22) None. (23) None. (24) None. (27) Financial data schedule. (99) None. (b) Reports on Form 8-K The company, on April 25, 1997, filed Form 8-K which provided information regarding the completion of the tender offer for the company's 11 3/4% Senior Subordinated Notes. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SPX CORPORATION (Registrant) Date: May 8, 1997 By /s/ John B. Blystone --------------------- John B. Blystone Chairman, President and Chief Executive Officer Date: May 8, 1997 By /s/ Patrick J. O'Leary ----------------------- Patrick J. O'Leary Vice President, Finance, Treasurer and Chief Financial and Accounting Officer

                                  $400,000,000
                                CREDIT AGREEMENT


                                      AMONG


                                SPX CORPORATION,

                                  as Borrower,

                            THE LENDERS NAMED HEREIN


                                       and


                       THE FIRST NATIONAL BANK OF CHICAGO,

                                    as Agent


                                   DATED AS OF


                                   May 7, 1997








                 ARRANGED BY FIRST CHICAGO CAPITAL MARKETS, INC.







                                TABLE OF CONTENTS



ARTICLE I
    
 DEFINITIONS............................................................. .....1

ARTICLE II

 THE CREDITS..................................................................16
 2.1.    Revolving Credit Advances............................................16
 2.2.    Ratable Loans........................................................17
 2.3.    Types of Advances....................................................17
 2.4.    Commitment Fee; Reductions in Aggregate Commitment...................17
 2.5.    Minimum Amount of Each Advance.......................................17
 2.6.    Optional Principal Payments..........................................17
 2.7.    Mandatory Commitment Reductions and Prepayments......................17
 2.8.    Method of Selecting Types and Interest Periods for New Advances......18
 2.9.    Conversion and Continuation of Outstanding Advances..................19
 2.10.   Changes in Interest Rate, etc........................................19
 2.11.   Rates Applicable After Default.......................................19
 2.12.   Method of Payment....................................................20
 2.13.   Notes; Telephonic Notices............................................20
 2.14.   Interest Payment Dates; Interest and Fee Basis.......................20
 2.15.   Notification by Agent................................................21
 2.16.   Lending Installations................................................21
 2.17.   Non-Receipt of Funds by the Agent....................................21
 2.18.   Taxes................................................................21
 2.19.   Agent's Fees.........................................................23
 2.20.   Facility Letters of Credit...........................................23
 2.20.1  Issuance of Facility Letters of Credit...............................23
 2.20.2  Participating Interests..............................................23
 2.20.3  Facility Letter of Credit Reimbursement Obligations..................24
 2.20.4  Procedure for Issuance...............................................25
 2.20.5  Nature of the Lenders' Obligations...................................26
 2.20.6  Facility Letter of Credit Fees.......................................26

ARTICLE III

CHANGE IN CIRCUMSTANCES.......................................................27
 3.1.    Yield Protection.....................................................27
 3.2.    Changes in Capital Adequacy Regulations..............................28
 3.3.    Availability of Types of Advances....................................28
 3.4.    Funding Indemnification..............................................28
 3.5.    Lender Statements; Survival of Indemnity.............................29

                                       -i-




ARTICLE IV

CONDITIONS PRECEDENT..........................................................29
 4.1.    Initial Loan and Facility Letter of Credit...........................29
 4.2.    Each Advance and Facility Letter of Credit...........................31

ARTICLE V

REPRESENTATIONS AND WARRANTIES................................................32
 5.1.    Corporate or Partnership Existence and Standing......................32
 5.2.    Authorization and Validity...........................................32
 5.3.    Compliance with Laws and Contracts...................................32
 5.4.    Governmental Consents................................................33
 5.5.    Financial Statements.................................................33
 5.6.    Material Adverse Change..............................................33
 5.7.    Taxes................................................................33
 5.8.    Litigation and Contingent Obligations................................34
 5.9.    Capitalization.......................................................34
 5.10.   ERISA................................................................34
 5.11.   Defaults.............................................................35
 5.12.   Federal Reserve Regulations..........................................35
 5.13.   Investment Company...................................................35
 5.14.   Certain Fees.........................................................35
 5.15.   Solvency.............................................................35
 5.16.   Ownership of Properties..............................................36
 5.17.   Indebtedness.........................................................36
 5.18.   Employee Controversies...............................................36
 5.19.   Material Agreements..................................................36
 5.20.   Environmental Laws...................................................36
 5.21.   Insurance............................................................37
 5.22.   Disclosure...........................................................37

ARTICLE VI

COVENANTS.....................................................................38
 6.1.    Financial Reporting..................................................38
 6.2.    Use of Proceeds......................................................39
 6.3.    Notice of Default....................................................39
 6.4.    Conduct of Business..................................................39
 6.5.    Taxes................................................................40
 6.6.    Insurance............................................................40
 6.7.    Compliance with Laws.................................................40
 6.8.    Maintenance of Properties............................................40

                                      -ii-





 6.9.    Inspection...........................................................40
 6.10.   Capital Stock and Dividends..........................................41
 6.11.   Indebtedness.........................................................41
 6.12.   Merger...............................................................42
 6.13.   Sale of Assets.......................................................42
 6.14.   Sale of Accounts.....................................................43
 6.15.   Investments and Purchases............................................43
 6.16.   Liens................................................................44
 6.17.   Affiliates...........................................................45
 6.18.   Additional Subsidiary Guarantors.....................................45
 6.19.   Subordinated Indebtedness............................................45
 6.20.   Environmental Matters................................................45
 6.21.   Change in Corporate or Partnership Structure; Fiscal Year............46
 6.22.   Financial Covenants..................................................46
 6.22.1. Debt-EBITDA Ratio....................................................46
 6.22.2. Fixed Charge Coverage Ratio..........................................46
 6.23.   ERISA Compliance.....................................................47

ARTICLE VII

         DEFAULTS.............................................................47

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................................49
 8.1.    Acceleration.........................................................49
 8.2.    Amendments...........................................................50
 8.3.    Preservation of Rights...............................................51

ARTICLE IX

GENERAL PROVISIONS............................................................51
 9.1.    Survival of Representations..........................................51
 9.2.    Governmental Regulation..............................................51
 9.3.    Taxes................................................................51
 9.4.    Headings.............................................................52
 9.5.    Entire Agreement.....................................................52
 9.6.    Several Obligations; Benefits of this Agreement......................52
 9.7.    Expenses; Indemnification............................................52
 9.8.    Numbers of Documents.................................................52
 9.9.    Accounting...........................................................53
 9.10.   Severability of Provisions...........................................53
 9.11.   Nonliability of Lenders..............................................53
 9.12.   CHOICE OF LAW........................................................53

                                      -iii-





 9.13.   CONSENT TO JURISDICTION..............................................54
 9.14.   WAIVER OF JURY TRIAL.................................................54
 9.15.   Disclosure...........................................................54
 9.16.   Counterparts.........................................................54

ARTICLE X

THE AGENT.....................................................................55
 10.1.   Appointment..........................................................55
 10.2.   Powers...............................................................55
 10.3.   General Immunity.....................................................55
 10.4.   No Responsibility for Loans, Recitals, etc...........................55
 10.5.   Action on Instructions of Lenders....................................55
 10.6.   Employment of Agents and Counsel.....................................56
 10.7.   Reliance on Documents; Counsel.......................................56
 10.8.   Agent's Reimbursement and Indemnification............................56
 10.9.   Rights as a Lender...................................................56
 10.10.  Lender Credit Decision...............................................56
 10.11.  Successor Agent......................................................57
 10.12.  Notice of Default....................................................57
 10.13.  Co-Agent.............................................................57

ARTICLE XI

SETOFF; RATABLE PAYMENTS......................................................57
 11.1.   Setoff...............................................................57
 11.2.   Ratable Payments.....................................................57

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............................58
 12.1.    Successors and Assigns..............................................58
 12.2.    Participations......................................................58
 12.2.1.  Permitted Participants; Effect.  ...................................58
 12.2.2.  Voting Rights.......................................................59
 12.2.3.  Benefit of Setoff...................................................59
 12.3.    Assignments.........................................................59
 12.3.1.  Permitted Assignments...............................................59
 12.3.2.  Effect; Effective Date..............................................59
 12.4.    Dissemination of Information........................................60
 12.5.    Tax Treatment.......................................................60


                                      -iv-





ARTICLE XIII

NOTICES.......................................................................60
 13.1.   Giving Notice........................................................60
 13.2.   Change of Address....................................................61

ARTICLE XIV

CONFIDENTIALITY...............................................................61


                                       -v-





                                    EXHIBITS

Exhibit A (Section 1)               Revolving Credit Note
Exhibit B (Section 6.1(d))          Compliance Certificate
Exhibit C (Section 12.3.1)          Assignment Agreement
Exhibit D (Section 1)               Reimbursement Agreement
Exhibit E (Section 1)               Subsidiary Guaranty



                                    SCHEDULES

Schedule 1.1(a)            -        Sales and Other Dispositions
Schedule 1.1(b)            -        Existing Letters of Credit
Schedule 5.3               -        Approvals and Consents
Schedule 5.8               -        Litigation and Material Contingent
                                    Obligations
Schedule 5.9               -        Subsidiaries
Schedule 5.10              -        ERISA
Schedule 5.17              -        Indebtedness
Schedule 6.15              -        Investments
Schedule 6.16              -        Liens


                                      -vi-





                                CREDIT AGREEMENT


         This  Credit  Agreement,  dated  as  of  May  7,  1997,  is  among  SPX
CORPORATION, a Delaware corporation,  the Lenders and THE FIRST NATIONAL BANK OF
CHICAGO, individually and as Agent.


                              W I T N E S S E T H:

         WHEREAS,  the  Borrower  has  requested  the Lenders to make  financial
accommodations   available  to  it  in  the   aggregate   principal   amount  of
$400,000,000,  the  proceeds  of which  the  Borrower  will use for the  working
capital  needs  and  general   corporate   purposes  of  the  Borrower  and  its
Subsidiaries,  including the repayment of Indebtedness and the repurchase of the
Borrower's common stock to the extent permitted hereby;

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings  herein contained,  and for other good and valuable  consideration,
the receipt and sufficiency of which are hereby acknowledged,  the Borrower, the
Lenders and the Agent hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         As used in this Agreement:

         "Advance"  means a  borrowing  hereunder  consisting  of the  aggregate
amount of the several  Loans made on the same  Borrowing  Date by the Lenders to
the Borrower of the same Type and, in the case of Eurodollar  Advances,  for the
same Interest Period.

         "Affiliate" of any Person means any other Person directly or indirectly
controlling,  controlled by or under common  control with such Person.  A Person
shall be deemed to control another Person if the controlling  Person owns 10% or
more of any class of voting  securities  (or other  ownership  interests) of the
controlled Person or possesses,  directly or indirectly,  the power to direct or
cause the  direction of the  management  or policies of the  controlled  Person,
whether through ownership of stock, by contract or otherwise.

         "Agent"  means First  Chicago in its  capacity as agent for the Lenders
pursuant to Article X, and not in its individual  capacity as a Lender,  and any
successor Agent appointed pursuant to Article X.

     "Aggregate  Available   Commitment"  means,  at  any  time,  the  Aggregate
Commitment minus the Facility Letter of Credit Obligations.

         "Aggregate  Commitment"  means the  aggregate of the  Revolving  Credit
Commitments of all the Lenders  hereunder.  The initial Aggregate  Commitment is
$400,000,000.


                                       -1-





         "Agreement" means this Credit Agreement, as it may be amended, modified
or restated and in effect from time to time.

         "Agreement  Accounting  Principles" means generally accepted accounting
principles as in effect from time to time; provided,  however, that for purposes
of all  computations  required  to be made with  respect  to  compliance  by the
Borrower with Section 6.22, such term shall mean generally  accepted  accounting
principles as in effect on the date hereof,  applied in a manner consistent with
those used in preparing the Financial Statements referred to in Section 5.5.

         "Alternate Base Rate" means,  for any day, a rate of interest per annum
equal to the higher of (a) the Corporate Base Rate for such day, and (b) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.

     "Alternate  Base Rate Advance" means an Advance which bears interest at the
Alternate Base Rate.

     "Alternate  Base  Rate  Loan"  means a Loan  which  bears  interest  at the
Alternate Base Rate.

         "Applicable  Commitment Fee Percentage" means the percentage determined
by reference to the Debt-EBITDA Ratio as follows:

         Debt-EBITDA Ratio              Applicable Commitment Fee Percentage
         -----------------              ------------------------------------
Greater than         
or Equal to         But less than       

3.0:1.0                ----                              .25%
2.5:1.0               3.0:1.0                            .225%
2.0:1.0               2.5:1.0                            .20%
1.0:1.0               2.0:1.0                            .175%
                      1.0:1.0                            .15%

The Applicable Commitment Fee Percentage shall be subject to adjustment (upwards
or downwards,  as appropriate) based on the Debt-EBITDA Ratio in accordance with
the above table.  The DebtEBITDA Ratio shall be calculated by the Borrower as of
the end of each of its Fiscal  Quarters  commencing  June 30,  1997 and shall be
reported to the Agent  pursuant to a certificate  delivered in  accordance  with
Section  6.1(d).  The  adjustment,  if any,  to the  Applicable  Commitment  Fee
Percentage  shall be effective  commencing  on the first  Business Day after the
delivery of such officer's  certificate.  Until so adjusted after June 30, 1997,
the Applicable  Commitment  Fee Percentage  shall be .20%. In the event that the
Borrower  shall at any time fail to furnish to the Lenders any of the  financial
statements  required to be delivered  pursuant to Sections  6.1(a) and 6.1(b) or
the  officer's   certificate  required  to  be  delivered  with  such  financial
statements  pursuant to Section 6.1(d),  the maximum  Applicable  Commitment Fee
Percentage  shall  apply  until  such  time as  such  financial  statements  and
officer's certificate are so delivered.


                                       -2-





         "Applicable Eurodollar Margin" means the margin determined by reference
to the DebtEBITDA Ratio as follows:


                                                Applicable Eurodollar
              Debt-EBITDA Ratio                 Margin (in basis points)
              -----------------                 ------------------------
Greater than or equal to 3.5:1                           100.0

Greater than or equal to 3.0:1 but
 less than 3.5:1                                          87.5

Greater than or equal to 2.5:1 but
 less than 3.0:1                                          75.0

Greater than or equal to 2.0:1 but
 less than 2.5:1                                          62.5

Greater than or equal to 1.0:1 but
 less than 2.0:1                                          50.0

Less than 1.0:1                                           37.5

The  Applicable  Eurodollar  Margin shall be subject to  adjustment  (upwards or
downwards, as appropriate) based on the Debt-EBITDA Ratio in accordance with the
above table.  The DebtEBITDA Ratio shall be calculated by the Borrower as of the
end of each of its  Fiscal  Quarters  commencing  June  30,  1997  and  shall be
reported to the Agent  pursuant to a certificate  delivered in  accordance  with
Section 6.1(d).  The  adjustment,  if any, to the Applicable  Eurodollar  Margin
shall be effective  commencing  on the first  Business Day after the delivery of
such  officer's  certificate.  Until  so  adjusted  after  June  30,  1997,  the
Applicable  Eurodollar  Margin  shall be .625%.  In the event that the  Borrower
shall at any time fail to furnish to the Lenders any of the financial statements
required to be delivered pursuant to Sections 6.1(a) and 6.1(b) or the officer's
certificate  required to be delivered with such financial statements pursuant to
Section 6.1(d), the maximum Applicable  Eurodollar Margin shall apply until such
time as such financial statements and officer's certificate are so delivered.

          "Arranger"  means  First  Chicago  Capital   Markets,   Inc.  and  its
     successors and assigns.

          "Article" means an article of this Agreement  unless another  document
     is specifically referenced.

         "Asset  Disposition"  means any sale,  transfer or other disposition of
any asset of the  Borrower or any  Subsidiary  in a single  transaction  or in a
series of  related  transactions  other  than the sale of (a)  inventory  in the
ordinary course,  (b) sales or dispositions of machinery and equipment no longer
used or useful in the Borrower's  business,  (c) sales or other  dispositions of
Property  described in Schedule  1.1(a),  (d) sales of Investments  described in
Section  6.15 (a) - (e) in the  ordinary  course of  business  and (e)  accounts
receivable sold in connection with any Receivables Financing permitted hereby.

                                       -3-





         "Authorized  Officer"  means  any of  the  chairman,  president,  chief
financial officer or treasurer of the Borrower, acting singly.

         "Bankruptcy  Code" means Title 11,  United  States Code,  sections 1 et
seq., as the same may be amended from time to time, and any successor thereto or
replacement therefor which may be hereafter enacted.

          "Borrower"  means SPX  Corporation,  a Delaware  corporation,  and its
     successors and assigns.

         "Borrowing Date" means a date on which an Advance is made or a Facility
Letter of Credit is issued hereunder.

         "Borrowing Notice" is defined in Section 2.8.

         "Business Day" means (a) with respect to any borrowing, payment or rate
selection  of  Eurodollar  Advances,  a day (other than a Saturday or Sunday) on
which  banks  generally  are open in  Chicago  and New York for the  conduct  of
substantially all of their commercial  lending  activities and on which dealings
in United States dollars are carried on in the London interbank market,  and (b)
for all other  purposes,  a day (other than a Saturday or Sunday) on which banks
generally  are open in Chicago  for the  conduct of  substantially  all of their
commercial lending activities.

         "Capital Expenditures" means, without duplication, any expenditures for
any  purchase  or  other   acquisition  for  value  of  any  asset  or  for  any
improvements,  replacements, substitutions or additions therefor or thereto that
would be  classified  on a  consolidated  balance  sheet of the Borrower and its
Subsidiaries  prepared in accordance with Agreement  Accounting  Principles as a
fixed or  capital  asset  excluding  (a) the cost of  assets  acquired  with the
proceeds of purchase money  Indebtedness or under Capitalized Lease Obligations,
(b)  expenditures of insurance  proceeds to rebuild or replace any asset after a
casualty loss, and (c) leasehold improvement expenditures for which the Borrower
or a Subsidiary is reimbursed promptly by the lessor.

         "Capitalized  Lease" of a Person  means any lease of  Property  by such
Person as lessee which would be  capitalized  on a balance  sheet of such Person
prepared in accordance with Agreement Accounting Principles.

         "Capitalized  Lease  Obligations"  of a Person  means the amount of the
obligations  of such Person under  Capitalized  Leases which would be shown as a
liability  on a  balance  sheet  of such  Person  prepared  in  accordance  with
Agreement Accounting Principles.

         "Change" is defined in Section 3.2.

         "Change in Control" means (a) the acquisition by any Person,  or two or
more Persons acting in concert,  including  without  limitation any  acquisition
effected by means of any transaction contemplated by Section 6.12, of beneficial
ownership  (within  the  meaning of Rule 13d-3 of the  Securities  and  Exchange
Commission under the Securities Exchange Act of 1934, as amended) of 25% or more
of the  outstanding  shares of voting stock of the  Borrower,  or (b) during any
period of

                                       -4-





25 consecutive  calendar months,  commencing on the date of this Agreement,  the
ceasing of those individuals (the "Continuing Directors") who (i) were directors
of the Borrower on the first day of each such period or (ii) subsequently became
directors of the Borrower and whose initial  election or initial  nomination for
election  subsequent  to that date was approved by a majority of the  Continuing
Directors  then on the board of  directors  of the  Borrower,  to  constitute  a
majority of the board of directors of the Borrower.

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

         "Commitment"  means, for each Lender,  the obligation of such Lender to
make Loans and  participate  in Facility  Letters of Credit not exceeding in the
aggregate the amount set forth opposite its signature  below, as such amount may
be modified from time to time pursuant to the terms hereof.

         "Condemnation" is defined in Section 7.8.

         "Consolidated"  or  "consolidated",  when used in  connection  with any
calculation,  means a calculation to be determined on a  consolidated  basis for
the  Borrower and its  Subsidiaries  (other than for purposes of Section 6.1) in
accordance with Agreement Accounting Principles.

         "Consolidated  Interest  Charges" means, with respect to any period for
which  the  amount  thereof  is to be  determined,  the sum of (i) all  interest
expense  on  Indebtedness  during  such  period and (ii) all debt  discount  and
expense  amortized  or required to be amortized  during such period,  in each of
cases (i) and (ii) with respect to the Borrower and its Subsidiaries  determined
on a consolidated basis in accordance with Agreement Accounting Principles.

         "Consolidated  Net Income"  means,  for any  computation  period,  with
respect to the Borrower on a  consolidated  basis with its  Subsidiaries  (other
than any Subsidiary  which is restricted  from declaring or paying  dividends or
otherwise  advancing funds to its parent whether by contract or otherwise),  net
income  earned  during  such  period in  accordance  with  Agreement  Accounting
Principles;  provided,  however,  that Consolidated Net Income shall not include
and  shall be  computed  without  regard  to (a) any  gains in  excess of losses
resulting  from the sale,  conversion  or other  disposition  of capital  assets
(i.e.,  assets  other  than  current  assets),  (b) any  income or  losses  from
discontinued operations or (c) extraordinary items.

         "Consolidated  Person" means,  for the taxable year of reference,  each
Person which is a member of the affiliated group of the Borrower if consolidated
returns are or shall be filed for such  affiliated  group for federal income tax
purposes or any combined or unitary  group of which the Borrower is a member for
state income tax purposes.

         "Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person  assumes,  guarantees,  endorses,  contingently
agrees to purchase or provide funds for the payment of, or otherwise  becomes or
is contingently  liable upon, the Indebtedness of any other Person, or agrees to
maintain the net worth or working  capital or other  financial  condition of any
other Person, or otherwise assures the payment of the Indebtedness of such other
Person

                                       -5-





including, without limitation, any comfort letter or application for a Letter of
Credit. For purposes of calculating  financial covenants  hereunder,  Contingent
Obligations  shall not include,  with respect to the Borrower,  any  obligations
incurred under or in connection  with any Receivables  Financing,  to the extent
such obligations are non-recourse to the Borrower and its Subsidiaries.

         "Controlled   Group"  means  all  members  of  a  controlled  group  of
corporations and all trades or businesses  (whether or not  incorporated)  under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.

         "Conversion/Continuation Notice" is defined in Section 2.9.

         "Corporate  Base Rate"  means a rate per annum  equal to the  corporate
base rate of interest  announced by First  Chicago  from time to time,  changing
when and as said  corporate  base rate  changes.  The  Corporate  Base Rate is a
reference  rate and does not  necessarily  represent  the lowest or best rate of
interest  actually  charged to any customer.  First Chicago may make  commercial
loans or other loans at rates of interest at, above or below the Corporate  Base
Rate.

         "Debt-EBITDA  Ratio" means,  as of the end of any Fiscal  Quarter,  the
ratio of (a) Total Debt as of the end of such  Fiscal  Quarter to (b) EBITDA for
the four Fiscal Quarters then ended.

         "Default" means an event described in Article VII.

         "EBITDA" means, for any applicable computation period, Consolidated Net
Income, plus (a) Taxes of the Borrower and its Subsidiaries for such period, (b)
Consolidated   Interest   Charges  for  such  period,   and  (c)   amortization,
depreciation and other non-cash charges deducted in determining Consolidated Net
Income for such period,  all as  determined  according  to Agreement  Accounting
Principles;  provided,  that, without duplication,  EBITDA shall not include the
following items which are reflected in the Borrower's financial statements:  (i)
a goodwill write-off of $67,800,000  during 1996, (ii) restructuring  charges of
$15,800,000   recorded  during  1996,  (iii)  premiums  for  the  repurchase  of
Subordinated  Notes of  $26,700,000  in 1996 and  1997 and (iv)  costs  and fees
related to accounts receivable securitizations. For an acquisition made pursuant
to Section  6.15(h) that is not accounted  for as a pooling of interest,  if the
Borrower  provides  the  Agent  with  a  computation  (prepared  an  appropriate
financial officer) for the prior four Fiscal Quarters of EBITDA relating to such
acquired  Person  (which  computation  shall  exclude  any  non-cash  charges or
acquisition  expenses which were incurred by the acquired  Person),  then EBITDA
shall also  include on a  pro-forma  basis in  Consolidated  Net Income for such
period  the most  recent  four  Fiscal  Quarters  of  EBITDA  relating  to those
operations  of  such  acquired   Person  which  will  be  continued  after  such
acquisition  (such continuing  operations shall be treated as if they had been a
Subsidiary of the Borrower for the preceding four Fiscal Quarters).

         "Environmental Laws" is defined in Section 5.20.

         "Environmental Permits" is defined in Section 5.20.


                                       -6-





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

          "Eurodollar  Advance"  means an Advance  which  bears  interest at the
     Eurodollar Rate.

         "Eurodollar  Base Rate" means with respect to any  Eurodollar  Advance:
(a) for any one,  two,  three or six month  Interest  Period  applicable to such
Eurodollar  Advance,  the rate  determined  by the Agent to be the rate at which
deposits in U.S.  dollars are offered by First Chicago to  first-class  banks in
the  London  interbank  market at  approximately  11:00 a.m.  (London  time) two
Business Days prior to the first day of such Interest Period, in the approximate
amount of First  Chicago's  relevant  Eurodollar  Advance  and having a maturity
approximately  equal to such Interest Period;  or (b) for any seven day Interest
Period applicable to such Eurodollar  Advance,  the rate determined by the Agent
to be the rate at which  deposits  in  immediately  available  U.S.  dollars are
offered  by First  Chicago  to  first-class  banks in the  interbank  market  at
approximately 10:00 a.m. (Chicago time) two Business Days prior to the first day
of such Interest  Period,  for delivery on the first day of such Interest Period
in the approximate amount of First Chicago's relevant Eurodollar Loan and having
a maturity approximately equal to such Interest Period.

          "Eurodollar  Loan" means a Loan which bears interest at the Eurodollar
     Rate.

         "Eurodollar Rate" means,  with respect to a Eurodollar  Advance for the
relevant Interest Period, the sum of (a) the quotient of (i) the Eurodollar Base
Rate applicable to such Interest  Period,  divided by (ii) one minus the Reserve
Requirement  (expressed as a decimal)  applicable to such Interest Period,  plus
(b) the Applicable  Eurodollar  Margin.  The Eurodollar Rate shall be rounded to
the next higher multiple of 1/16 of 1% if the rate is not such a multiple.

         "Existing  Letters of Credit" means the Facility  Letters of Credit (as
defined in the Prior Agreement)  identified on Schedule 1.1(b) hereto and issued
pursuant to the Prior Agreement.

         "Facility  Letter of Credit"  means a standby  Letter of Credit  issued
pursuant  to  Section  2.20 and,  from and after the  initial  Revolving  Credit
Advance, shall also include the Existing Letters of Credit.

         "Facility  Letter  of  Credit  Obligations"  means,  as at the  time of
determination  thereof,  the  sum  of (a)  the  Reimbursement  Obligations  then
outstanding  and  (b)  the  aggregate  then  undrawn  face  amount  of the  then
outstanding Facility Letters of Credit.

          "Facility  Letter of Credit  Sublimit"  means an  aggregate  amount of
     $35,000,000.

         "Facility Termination Date" means May 7, 2002.

         "Federal Funds  Effective  Rate" means,  for any period,  a fluctuating
interest  rate per  annum  equal  for each day  during  such  period  to (a) the
weighted  average of the rates on  overnight  Federal  funds  transactions  with
members of the Federal  Reserve System arranged by Federal funds brokers on such
day, as published  for such day (or, if such day is not a Business  Day, for the
immediately

                                       -7-





preceding  Business Day) by the Federal Reserve Bank of New York, or (b) if such
rate is not so published for any day which is a Business Day, the average of the
quotations  at  approximately  10:00  a.m.  (Chicago  time)  on such day on such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized standing selected by the Agent in its sole discretion.

         "Financial Statements" is defined in Section 5.5.

         "First  Chicago"  means  The  First  National  Bank of  Chicago  in its
individual capacity, and its successors.

         "Fiscal Quarter" means one of the four three-month  accounting  periods
comprising a Fiscal Year.

         "Fiscal Year" means the twelve-month  accounting period ending December
31 of each year.

         "Fixed Charge  Coverage  Ratio" means,  for any applicable  computation
period,  the ratio of (a) EBITDA for such period plus Rentals for such period of
the Borrower and its Subsidiaries minus the sum of Capital Expenditures for such
period by the  Borrower  and its  Subsidiaries,  to (b) Fixed  Charges  for such
period.

         "Fixed Charges" means, for any applicable  computation  period, the sum
of (a)  Consolidated  Interest  Charges  for such period and (b) any Rentals for
such period of the Borrower and its Subsidiaries.

         "Governmental  Authority" means any government (foreign or domestic) or
any state or other  political  subdivision  thereof  or any  governmental  body,
agency,  authority,  department or commission  (including without limitation any
taxing  authority or political  subdivision) or any  instrumentality  or officer
thereof  (including  without  limitation  any  court  or  tribunal)   exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining  to  government  and any  corporation,  partnership  or other  entity
directly or  indirectly  owned or controlled by or subject to the control of any
of the foregoing.

         "Hazardous Materials" is defined in Section 5.20.

         "Indebtedness" of a Person means,  without  duplication,  such Person's
(a) obligations for borrowed money,  (b) obligations  representing  the deferred
purchase price of Property or services  (other than accounts  payable arising in
the ordinary course of such Person's  business payable on terms customary in the
trade), (c) obligations,  whether or not assumed, secured by Liens on or payable
out of the  proceeds or  production  from  Property  now or  hereafter  owned or
acquired  by  such  Person,  (d)  obligations  which  are  evidenced  by  notes,
acceptances, or other instruments,  (e) Capitalized Lease Obligations,  (f) Rate
Hedging Obligations,  (g) Contingent Obligations, (h) obligations for which such
Person  is  obligated  pursuant  to or in  respect  of a Letter of  Credit,  (i)
repurchase  obligations  or  liabilities of such Person with respect to accounts
receivable or notes  receivable  sold by such Person and (j) with respect to the
Borrower,  obligations  incurred  under or in  connection  with any  Receivables
Financing, notwithstanding the manner in which such

                                       -8-





obligations  are  characterized  on a balance sheet of the Borrower  prepared in
accordance with Agreement Accounting  Principles,  provided that for purposes of
calculating  Total  Debt  and the  financial  covenants  hereunder,  obligations
described  in clauses  (i) and (j) shall be  included  only to the  extent  such
obligations  are  with  recourse  (other  than  any  recourse  in  respect  of a
contingent  obligation to repurchase upon any breach of  representations  (other
than with  respect to  collectability)  or  covenants  related  thereto)  to the
Borrower or any of its  Subsidiaries,  notwithstanding  the manner in which such
obligations  are  characterized  on a  balance  sheet  of the  Borrower  and its
Subsidiaries prepared in accordance with Agreement Accounting Principles.

         "Interest Period" means, with respect to a Eurodollar Advance, a period
of seven days or one,  two,  three or six months  commencing  on a Business  Day
selected by the Borrower pursuant to this Agreement.  An Interest Period of one,
two,  three or six months shall end on (but  exclude) the day which  corresponds
numerically  to such date one, two,  three or six months  thereafter;  provided,
however,  that if there is no such numerically  corresponding  day in such next,
second,  third or sixth succeeding  month, such Interest Period shall end on the
last Business Day of such next,  second,  third or sixth succeeding month. If an
Interest  Period would  otherwise end on a day which is not a Business Day, such
Interest  Period  shall  end on the  next  succeeding  Business  Day;  provided,
however,  that if, with respect to an Interest  Period of one, two, three or six
months,  said next succeeding  Business Day falls in a new calendar month,  such
Interest Period shall end on the immediately preceding Business Day.

         "Investment"   of  a  Person  means  any  loan,   advance  (other  than
commission,  travel and similar  advances to officers and employees  made in the
ordinary  course  of  business),   extension  of  credit  (other  than  accounts
receivable  arising in the ordinary course of business on terms customary in the
trade),  deposit  account or contribution of capital by such Person to any other
Person or any  investment  in, or purchase or other  acquisition  of, the stock,
partnership interests, notes, debentures or other securities of any other Person
made by such Person.

          "Issuer"  means  First  Chicago or any  successor  issuer of  Facility
     Letters of Credit.

         "Lenders" means the lending  institutions listed on the signature pages
of this Agreement and their respective successors and assigns.

         "Lending  Installation"  means,  with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.

         "Letter  of  Credit"  of a Person  means a letter of credit or  similar
instrument  which is issued  upon the  application  of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

          "Letter of Credit Cash Collateral  Account" is defined in Section 8.1.
     Such  account and the related  cash  collateralization  shall be subject to
     documentation satisfactory to the Agent.

         "Lien"  means  any  lien  (statutory  or  other),   mortgage,   pledge,
hypothecation,  assignment,  deposit  arrangement,  encumbrance  or  preference,
priority or other security agreement or preferential

                                       -9-





arrangement of any kind or nature whatsoever (including, without limitation, the
interest of a vendor or lessor under any conditional sale,  Capitalized Lease or
other title retention agreement).

         "Loan" means,  with respect to a Lender,  such Lender's  portion of any
Advance and "Loans"  means with  respect to the  Lenders,  the  aggregate of all
Advances.

         "Loan  Documents"  means  this  Agreement,  the  Notes  and  the  other
documents and agreements contemplated hereby and executed by the Borrower or any
Subsidiary in favor of the Agent or any Lender.

        "Margin Stock" has the meaning assigned to that term under Regulation U.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
business,  Property,  condition (financial or other),  financial  performance or
results of operations of the Borrower and its Subsidiaries taken as a whole, (b)
the ability of the Borrower or any Subsidiary to perform its  obligations  under
the Loan  Documents,  or (c) the validity or  enforceability  of any of the Loan
Documents or the rights or remedies of the Agent or the Lenders thereunder.

         "Multiemployer  Plan" means a Plan maintained  pursuant to a collective
bargaining  agreement  or any other  arrangement  to which the  Borrower  or any
member of the  Controlled  Group is a party to which more than one  employer  is
obligated to make contributions.

         "Net Available  Proceeds" means, with respect to any Asset Disposition,
the sum of cash or readily  marketable cash equivalents  received  (including by
way of cash  received  as proceeds  of the sale or in  discounting  of a note or
receivable,  but  excluding  any  other  consideration  received  in the form of
assumption by the acquiring Person of debt or other obligations  relating to the
properties  or assets so disposed of or  received  in any other  non-cash  form)
therefrom, whether at the time of such disposition or subsequent thereto, net of
all legal, title and recording tax expenses,  commissions  (including investment
banking  fees)  and  other  fees and all costs  and  expenses  incurred  and all
federal, state, local and other taxes required to be accrued as a liability as a
consequence of such transactions and net of all payments made by the Borrower or
any of its  Subsidiaries  on any  Indebtedness  which is secured by such  assets
pursuant to a Permitted  Lien upon or with  respect to such assets or which must
by the terms of such  Lien,  or in order to obtain a  necessary  consent to such
Asset Disposition,  or by applicable law be repaid out of the proceeds from such
Asset Disposition.

         "Note" means any one or more of the Revolving Credit Notes.

         "Notice of Assignment" is defined in Section 12.3.2.

         "Notice of Issuance" is defined in Section 2.20.4.

         "Obligations"  means all unpaid  principal  of and  accrued  and unpaid
interest on the Notes,  the Facility Letter of Credit  Obligations and all other
liabilities (if any), whether actual or contingent, of the Borrower with respect
to Facility Letters of Credit, all accrued and unpaid fees

                                      -10-





and all  expenses,  reimbursements,  indemnities  and other  obligations  of the
Borrower or any  Subsidiary  to the  Lenders or to any Lender,  the Agent or any
indemnified party hereunder arising under any of the Loan Documents.

         "Participants" is defined in Section 12.2.1.

          "Payment Date" means the last day of each March,  June,  September and
     December.

          "PBGC" means the Pension Benefit Guaranty Corporation or any successor
     thereto.

         "Permitted Lien" is defined in Section 6.16.

         "Person" means any natural person,  corporation,  firm,  joint venture,
partnership, limited liability company, association,  enterprise, trust or other
entity or  organization,  or any  government  or  political  subdivision  or any
agency, department or instrumentality thereof.

         "Plan" means an employee  pension  benefit  plan, as defined in Section
3(2) of ERISA,  as to which the Borrower or any member of the  Controlled  Group
may have any liability.

         "Prior Agreement" is defined in Section 4.1(m).

         "Property"  of a  Person  means  any and all  property,  whether  real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.

         "pro-rata" means, when used with respect to a Lender, and any described
aggregate or total amount,  an amount equal to such Lender's  pro-rata  share or
portion based on its percentage of the Aggregate  Commitment or if the Aggregate
Commitment has been terminated, its percentage of the aggregate principal amount
of outstanding Advances.

         "Purchase"   means  any   transaction,   or  any   series  of   related
transactions,  consummated on or after the date of this Agreement,  by which the
Borrower or any of its  Subsidiaries  (a) acquires any going  business or all or
substantially  all of the  assets of any  Person or  division  thereof,  whether
through purchase of assets,  merger or otherwise,  or (b) directly or indirectly
acquires (in one  transaction  or as the most recent  transaction in a series of
transactions)  at least a majority (in number of votes) of the  securities  of a
Person which have  ordinary  voting  power for the election of directors  (other
than  securities  having  such  power  only  by  reason  of the  happening  of a
contingency)  or a majority (by  percentage or voting power) of the  outstanding
partnership interests of a partnership.

         "Purchasers" is defined in Section 12.3.1.

         "Rate Hedging Obligations" of a Person means any and all obligations of
such  Person,  whether  absolute or  contingent  and  howsoever  and  whensoever
created, arising, evidenced or acquired (including all renewals,  extensions and
modifications  thereof  and  substitutions  therefor),  under  (a)  any  and all
agreements,  devices  or  arrangements  designed  to protect at least one of the
parties  thereto from the  fluctuations  of interest  rates,  exchange  rates or
forward rates applicable to

                                      -11-





such party's assets,  liabilities or exchange transactions,  including,  but not
limited  to,   dollar-denominated  or  cross-currency   interest  rate  exchange
agreements,  forward currency exchange  agreements,  interest rate cap or collar
protection agreements,  forward rate currency or interest rate options, puts and
warrants, and (b) any and all cancellations,  buybacks, reversals,  terminations
or assignments of any of the foregoing.

         "Receivables  Financing" means  obligations of the Borrower incurred or
issued  pursuant to a securitized  receivables  facility in an amount which does
not exceed  $50,000,000,  on terms and  conditions,  including those relating to
advance rates, reasonably satisfactory to the Required Lenders.

         "Regulation  D" means  Regulation  D of the Board of  Governors  of the
Federal Reserve System as from time to time in effect and any successor  thereto
or other  regulation  or  official  interpretation  of said  Board of  Governors
relating to reserve requirements applicable to depositary institutions.

         "Regulation  G" means  Regulation  G of the Board of  Governors  of the
Federal  Reserve  System as from time to time in effect  and shall  include  any
successor  or other  regulation  or  official  interpretation  of said  Board of
Governors  relating  to the  extension  of credit by Persons  other than  banks,
brokers  and dealers for the purpose of  purchasing  or carrying  margin  stocks
applicable to such Persons.

         "Regulation  T" means  Regulation  T of the Board of  Governors  of the
Federal  Reserve  System as from time to time in effect  and shall  include  any
successor  or other  regulation  or  official  interpretation  of such  Board of
Governors  relating to the extension of credit by securities brokers and dealers
for the purpose of  purchasing  or carrying  margin  stocks  applicable  to such
Persons.

         "Regulation  U" means  Regulation  U of the Board of  Governors  of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of  purchasing  or carrying  margin
stocks applicable to such Persons.

         "Regulation  X" means  Regulation  X of the Board of  Governors  of the
Federal  Reserve  System as from time to time in effect  and shall  include  any
successor  or other  regulation  or  official  interpretation  of said  Board of
Governors  relating to the extension of credit by the specified  lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.

         "Reimbursement  Agreement"  means a letter  of credit  application  and
reimbursement  agreement  substantially in the form of Exhibit D hereto (or such
other form as the Issuer may from time to time employ in the ordinary  course of
business).

         "Reimbursement  Obligations" means, at any time, the aggregate (without
duplication)  of the  Obligations  of the  Borrower to the  Lenders,  the Issuer
and/or the Agent in respect of all unreimbursed  payments or disbursements  made
by the  Lenders,  the Issuer  and/or the Agent under or in respect of draws made
under the Facility Letters of Credit.

                                      -12-





          "Release"  is defined  in the  Comprehensive  Environmental  Response,
     Compensation and Liability Act, as amended, 42 U.S.C. ss.9601 et seq.

         "Rentals" of a Person means the  aggregate  rental  expense  associated
with fixed amounts payable by such Person under any lease of Property, excluding
any supplemental rent payments  calculated by reference to costs of maintenance,
repairs, insurance, taxes, assessments, water rates or similar charges.

         "Reportable  Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section,  with respect to a Plan,
excluding,  however,  such events as to which the PBGC has by regulation  waived
the  requirement of Section  4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event.

         "Required  Lenders" means Lenders in the aggregate  having at least 51%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the  aggregate  holding at least 51% of the sum of (i) the  aggregate
unpaid principal  amount of the outstanding  Loans plus (ii) the Facility Letter
of Credit Obligations.

         "Reserve  Requirement"  means, with respect to an Interest Period,  the
maximum  aggregate  reserve  requirement  (including  all  basic,  supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

         "Revolving  Credit Advance" means an Advance made by the Lenders to the
Borrower pursuant to Section 2.1.

         "Revolving Credit Commitment" means, for each Lender, the obligation of
such  Lender  to make  Loans  not  exceeding,  in  aggregate  amount at any time
outstanding,  the amount set forth opposite its signature below and as set forth
in any  Notice  of  Assignment  relating  to any  assignment  which  has  become
effective  pursuant to Section 12.3.2,  as such amount may be modified from time
to time pursuant to the terms hereof.

         "Revolving Credit Loan" means, with respect to a Lender,  such Lender's
pro-rata portion of all Revolving Credit Advances.

         "Revolving  Credit Note" means a promissory note in  substantially  the
form of  Exhibit  A hereto,  with  appropriate  insertions,  duly  executed  and
delivered  to the Agent by the  Borrower and payable to the order of a Lender in
the  amount  of  its  Revolving  Credit  Commitment,  including  any  amendment,
modification, renewal or replacement of such promissory note.

         "Risk-Based Capital Guidelines" is defined in Section 3.2.

         "SEC Reports"  means  Borrower's  Form 10-K for the year ended December
31, 1996 and the Schedule  13E-4 dated April 11, 1997 filed by the Borrower with
the United States Securities and Exchange Commission.


                                      -13-





         "Section" means a numbered  section of this  Agreement,  unless another
document is specifically referenced.

         "Single  Employer  Plan"  means a Plan  subject  to  Title  IV of ERISA
maintained by the Borrower or any member of the  Controlled  Group for employees
of  the  Borrower  or  any  member  of  the  Controlled  Group,   other  than  a
Multiemployer Plan.

         "Solvent" means, when used with respect to a Person,  that (a) the fair
saleable  value of the assets of such Person is in excess of the total amount of
the present value of its liabilities  (including for purposes of this definition
all liabilities (including loss reserves as determined by the Borrower), whether
or not  reflected  on a balance  sheet  prepared in  accordance  with  Agreement
Accounting  Principles  and whether  direct or  indirect,  fixed or  contingent,
secured or unsecured,  disputed or  undisputed),  (b) such Person is able to pay
its debts or  obligations  in the  ordinary  course as they  mature and (c) such
Person does not have  unreasonably  small  capital to carry out its  business as
conducted and as proposed to be conducted.  "Solvency"  shall have a correlative
meaning.

         "Subordinated  Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written  satisfaction of the Required Lenders.  Subordinated  Indebtedness shall
include, without limitation,  the Indebtedness of the Borrower in respect of the
Subordinated Notes.

         "Subordinated  Notes" means the 11 3/4% senior  subordinated  notes due
June 1, 2002 issued by the Borrower  pursuant to the Indenture  dated as of June
6, 1994, as amended, with The Bank of New York, as trustee.

         "Subsidiary" of a Person means (a) any corporation more than 50% of the
outstanding  securities  having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its  Subsidiaries or by such Person and one or more of its  Subsidiaries,  or
(b) any partnership,  association,  limited liability company,  joint venture or
similar business  organization  more than 50% of the ownership  interests having
ordinary  voting  power  of which  shall at the time be so owned or  controlled.
Unless otherwise  expressly  provided,  all references  herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.

         "Subsidiary  Guaranty"  means  a  guaranty  substantially  in the  form
attached  hereto as  Exhibit  E  executed  and  delivered,  or  joined  in, by a
Subsidiary  Guarantor in favor of the Agent,  on behalf of the  Lenders,  as the
same may be amended,  restated,  supplemented or otherwise modified from time to
time.

         "Subsidiary   Guarantors"  means  Kodiak  Partners  Corp.,  a  Delaware
corporation,  Kodiak  Partners II Corp., a Delaware  corporation,  SPX Sales and
Service,  Inc., a Delaware  corporation,  A.R. Brasch Marketing Inc., a Michigan
corporation,   and  Sealed  Power  Limited   Partnership,   a  Delaware  limited
partnership,  and  any  Subsidiary  of the  Borrower  which  has  joined  in the
Subsidiary Guaranty pursuant to Section 6.18.


                                      -14-





         "Substantial  Portion"  means,  with  respect  to the  Property  of the
Borrower and its  Subsidiaries,  Property which (a) represents  more than 15% of
the consolidated assets of the Borrower and its Subsidiaries,  as would be shown
in the consolidated financial statements of the Borrower and its Subsidiaries as
at the end of the quarter next preceding the date on which such determination is
made or (b) is responsible for more than 15% of the consolidated net sales or of
EBITDA of the Borrower and its Subsidiaries for the 12-month period ending as of
the end of the quarter next preceding the date of determination.

         "Taxes" means,  with respect to the Borrower and its  Subsidiaries as a
consolidated group, federal,  state, foreign or other income or franchise taxes,
including without limitation the Michigan Single Business Tax.

         "Termination  Event" means,  with respect to a Plan which is subject to
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Borrower or
any other  member of the  Controlled  Group from such Plan during a plan year in
which  the  Borrower  or  any  other  member  of  the  Controlled  Group  was  a
"substantial  employer" as defined in Section  4001(a)(2) of ERISA or was deemed
such under  Section  4068(f) of ERISA,  (c) the  termination  of such Plan,  the
filing  of a notice  of intent to  terminate  such Plan or the  treatment  of an
amendment of such Plan as a termination  under Section 4041(c) of ERISA, (d) the
institution  by the PBGC of  proceedings to terminate such Plan or (e) any event
or condition which might constitute  grounds under Section 4042 of ERISA for the
termination of, or appointment of a trustee to administer, such Plan.

         "Total Debt" means,  without  duplication,  (a) all Indebtedness of the
Borrower and its Subsidiaries, on a consolidated basis, required to be reflected
on a balance sheet prepared in accordance with Agreement Accounting  Principles,
plus, without  duplication (b) (i) the face amount of all outstanding Letters of
Credit  (including  Facility Letters of Credit) in respect of which the Borrower
or any Subsidiary has any actual or contingent  reimbursement  obligation,  plus
(ii) the principal  amount of all Indebtedness of any Person in respect of which
the  Borrower or any  Subsidiary  has a  Contingent  Obligation,  plus (iii) the
amount  of all  Indebtedness  of the  Borrower  or any  Subsidiary  of the  kind
described in subpart (c) of the definition of Indebtedness.

         "Transferee" is defined in Section 12.4.

         "Type" means,  with respect to any Advance,  its nature as an Alternate
Base Rate Advance or Eurodollar Advance.

         "Unfunded Liability" means the amount (if any) by which the accumulated
benefit obligation as defined in SFAS 87 exceeds the fair market value of assets
allocable to such benefits, determined as of the most recent fiscal year end.

         "Unmatured  Default"  means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

         "Wholly-Owned  Subsidiary"  of a Person means (a) any Subsidiary all of
the  outstanding  voting  securities  of  which  shall  at the  time be owned or
controlled, directly or indirectly, by such

                                      -15-





Person  or one or more  Wholly-Owned  Subsidiaries  of such  Person,  or by such
Person and one or more  Wholly-Owned  Subsidiaries  of such  Person,  or (b) any
partnership,  association,  joint venture,  limited liability company or similar
business  organization  100% of the ownership  interests  having ordinary voting
power of which  shall at the time be so owned or  controlled.  Unless  otherwise
expressly provided,  all references herein to a "Wholly-Owned  Subsidiary" shall
mean a WhollyOwned Subsidiary of the Borrower.

         The  foregoing  definitions  shall be  equally  applicable  to both the
singular and plural forms of the defined terms.


                                   ARTICLE II

                                   THE CREDITS

         2.1. Revolving Credit Advances.  (a) From and including the date hereof
to but not including the Facility  Termination  Date, each Lender severally (and
not jointly) agrees, on the terms and conditions set forth in this Agreement, to
make Revolving  Credit Loans to the Borrower from time to time in amounts not to
exceed in the aggregate at any one time outstanding  (after giving effect to the
intended  use  of  proceeds  of  any  Advance  used  to  repay  any  outstanding
Reimbursement  Obligations  or  previously  made  Advances)  the  amount  of its
pro-rata  share of the  Aggregate  Available  Commitment  existing at such time.
Subject to the terms of this  Agreement,  the  Borrower  may  borrow,  repay and
reborrow Revolving Credit Advances at any time prior to the Facility Termination
Date.

                    (b) The  Borrower  hereby  agrees  that if at any  time  the
aggregate  balance of the  Revolving  Credit  Loans and the  Facility  Letter of
Credit  Obligations  exceeds the  Aggregate  Commitment  (whether as a result of
reductions in the Aggregate Commitment pursuant to Section 2.4(b) or Section 2.7
or  otherwise),  the  Borrower  shall  repay  immediately  its then  outstanding
Revolving  Credit Loans in such amount as may be  necessary  to  eliminate  such
excess;  provided,  that if an excess remains after repayment of all outstanding
Revolving Credit Loans, then the Borrower shall cash  collateralize the Facility
Letter  of  Credit  Obligations  by  deposit  into the  Letter  of  Credit  Cash
Collateral Account of such amount as may be necessary to eliminate such excess.

                    (c) The  Borrower's  obligation to pay the principal of, and
interest on, the  Revolving  Credit  Loans shall be  evidenced by the  Revolving
Credit Notes. Although the Revolving Credit Notes shall be dated the date of the
initial  Revolving Credit Advance,  interest in respect thereof shall be payable
only for the periods during which the Revolving  Credit Loans evidenced  thereby
are outstanding  and,  although the stated amount of each Revolving  Credit Note
shall be equal to the applicable  Lender's  Revolving  Credit  Commitment,  each
Revolving  Credit  Note shall be  enforceable,  with  respect to the  Borrower's
obligation to pay the principal amount thereof, only to the extent of the unpaid
principal amount of the Revolving Credit Loan at the time evidenced thereby.


                                      -16-





                    (d) Each Revolving  Credit Advance and Revolving Credit Loan
shall mature,  and the principal  amount thereof and the unpaid accrued interest
thereon shall be due and payable, on the Facility Termination Date.

          2.2. Ratable Loans. Each Advance hereunder shall consist of Loans made
     from the  several  Lenders  ratably in  proportion  to the ratio that their
     respective Revolving Credit Commitments bear to the Aggregate Commitment.

          2.3.  Types of  Advances.  The  Advances  may be  Alternate  Base Rate
     Advances or Eurodollar  Advances,  or a combination thereof, as selected by
     the Borrower in accordance with Sections 2.8 and 2.9.

         2.4.  Commitment  Fee;  Reductions  in  Aggregate  Commitment.  (a) The
Borrower  agrees to pay to the Agent for the account of each Lender a commitment
fee equal to the  Applicable  Commitment  Fee  Percentage  per annum  times such
Lender's pro-rata share of (i) the Aggregate  Commitment,  minus (ii) the sum of
the outstanding balance of the Revolving Credit Loans and the Facility Letter of
Credit  Obligations,  calculated  on a daily  basis from the date  hereof to and
including the Facility  Termination Date, payable on each Payment Date hereafter
in arrears and on the Facility  Termination  Date. All accrued  commitment  fees
shall be payable on the effective date of any  termination of the obligations of
the Lenders to make Loans hereunder.

                    (b)  The  Borrower  may  permanently  reduce  the  Aggregate
Commitment in whole, or in part ratably among the Lenders in a minimum aggregate
amount of $5,000,000 or any integral  multiple of $1,000,000 in excess  thereof,
upon at least three (3) Business Days' written notice to the Agent, which notice
shall  specify the amount of any such  reduction;  provided,  however,  that the
amount of the Aggregate  Commitment  may not be reduced below the sum of (i) the
aggregate  principal  amount of the outstanding  Revolving  Credit Advances plus
(ii) the  outstanding  Facility  Letter of Credit  Obligations.  Reductions made
pursuant to this  Section  2.4(b) shall be in addition to  reductions  occurring
pursuant to Section 2.7.

         2.5. Minimum Amount of Each Advance.  Each Eurodollar  Advance shall be
in the minimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
thereof), and each Alternate Base Rate Advance shall be in the minimum amount of
$1,000,000  (and in  multiples  of  $100,000  if in excess  thereof);  provided,
however,  that (a) any  Alternate  Base Rate Advance may be in the amount of the
unused  Aggregate  Commitment;  and (b) in no  event  shall  more  than ten (10)
Eurodollar Advances be permitted to be outstanding at any time.

         2.6. Optional  Principal  Payments.  The Borrower may from time to time
pay, without penalty or premium,  all outstanding  Alternate Base Rate Advances,
or, in a minimum  aggregate  amount of  $1,000,000  or any integral  multiple of
$100,000 in excess thereof,  any portion of the outstanding  Alternate Base Rate
Advances upon two Business  Days' prior notice to the Agent.  Subject to Section
3.4 and upon like  notice,  the  Borrower may from time to time pay a Eurodollar
Advance or any portion  thereof in a minimum amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof.


                                      -17-





         2.7. Mandatory Commitment Reductions and Prepayments. (a) The Aggregate
Commitment shall be automatically and permanently  reduced by an amount equal to
100% of the aggregate Net Available  Proceeds in excess of $10,000,000  realized
from all Asset  Dispositions  in any  calendar  year (other than the proceeds of
Asset  Dispositions  which (i) are invested,  within twelve months of such sale,
lease or other  disposal,  in other capital  assets  (including  any goodwill in
connection  therewith),   whether  directly,  through  the  purchase  of  equity
interests  in  another  Person,  or  otherwise  and  (ii)  as to  which,  within
forty-five (45) days after the receipt thereof,  the Borrower notifies the Agent
of its intent to so invest such  proceeds,  the amount of such  proceeds and the
date of receipt thereof,  such reduction to be effective  concurrently  with the
receipt of such notice) by the Borrower or any Subsidiary.

                    (b) Mandatory  commitment  reductions under this Section 2.7
shall be cumulative and in addition to reductions  occurring pursuant to Section
2.4.

                    (c) Any  reduction in the Aggregate  Commitment  pursuant to
this  Section  2.7 or  otherwise  shall  ratably  reduce  the  Revolving  Credit
Commitment of each Lender.

                    (d)  Concurrently  with any mandatory  commitment  reduction
pursuant  to this  Section  2.7,  the  Borrower  shall  prepay  the  Loans,  and
thereafter cash  collateralize such Facility Letter of Credit Obligations to the
extent required by Section 2.1(b).

         2.8. Method of Selecting  Types and Interest  Periods for New Advances.
The  Borrower  shall  select  the  Type  of  Advance  and,  in the  case of each
Eurodollar  Advance,  the Interest  Period  applicable to each such Advance from
time to time; provided,  however, that unless the Agent otherwise consents,  for
the period  ending on the  earlier of (i) ninety  days after the date hereof and
(ii) the date on which the Agent has determined the syndication of the Loans has
closed,  the Borrower shall keep all of the Loans in a Eurodollar Advance with a
seven-day  Interest  Period which ends on the same date, in Alternate  Base Rate
Advances, or in a combination of Alternate Base Rate Advances and one Eurodollar
Advance  meeting the foregoing  requirements;  provided,  further that after the
close of such  syndication,  no Eurodollar  Loan may have an Interest  Period of
less than one month.  The Borrower  shall give the Agent  irrevocable  notice (a
"Borrowing  Notice") not later than 10:00 a.m.  (Chicago  time) on the Borrowing
Date of each  Alternate  Base Rate Advance and at least three (3) Business  Days
before the Borrowing Date for each Eurodollar Advance, specifying:

          (a) the  Borrowing  Date,  which  shall  be a  Business  Day,  of such
          Advance;

          (b) the aggregate amount of such Advance;

          (c) the Type of Advance selected; and

          (d) in the  case of  each  Eurodollar  Advance,  the  Interest  Period
          applicable thereto.

Not later than noon (Chicago  time) on each  Borrowing  Date,  each Lender shall
make available its Loan or Loans, in funds immediately  available in Chicago, to
the Agent at its address specified

                                      -18-





pursuant to Article  XIII.  The Agent will make the funds so  received  from the
Lenders available to the Borrower at the Agent's aforesaid address.

         2.9.  Conversion and  Continuation of Outstanding  Advances.  Alternate
Base Rate Advances  shall  continue as Alternate  Base Rate Advances  unless and
until such Alternate Base Rate Advances are converted into Eurodollar  Advances.
Each Eurodollar  Advance shall continue as a Eurodollar Advance until the end of
the then  applicable  Interest  Period  therefor,  at which time such Eurodollar
Advance shall be  automatically  converted  into an Alternate  Base Rate Advance
unless the Borrower shall have given the Agent a Conversion/Continuation  Notice
requesting  that, at the end of such Interest  Period,  such Eurodollar  Advance
continue  as a  Eurodollar  Advance  for the same or  another  Interest  Period.
Subject to the terms of Section 2.5, the Borrower may elect from time to time to
convert  all or any part of an  Advance  of any  Type  into  any  other  Type of
Advance; provided,  however, that any conversion of any Eurodollar Advance shall
be made on, and only on, the last day of the Interest Period applicable thereto.
The Borrower shall give the Agent irrevocable notice (a "Conversion/Continuation
Notice") of each conversion of an Alternate Base Rate Advance or continuation of
a  Eurodollar  Advance not later than 10:00 a.m.  (Chicago  time) on the date of
conversion,  in the case of a conversion into an Alternate Base Rate Advance, or
at  least  three  (3)  Business  Days,  in the  case  of a  conversion  into  or
continuation  of a  Eurodollar  Advance,  prior  to the  date  of the  requested
conversion or continuation, specifying:

          (a) the  requested  date,  which  shall  be a  Business  Day,  of such
          conversion or continuation;

          (b) the  aggregate  amount  and  Type of the  Advance  which  is to be
          converted or continued; and

          (c) the amount and Type(s) of Advance(s) into which such Advance is to
          be  converted or  continued  and, in the case of a conversion  into or
          continuation  of a  Eurodollar  Advance,  the duration of the Interest
          Period applicable thereto.

         2.10.  Changes in Interest Rate,  etc. Each Alternate Base Rate Advance
shall bear  interest at the  Alternate  Base Rate from and including the date of
such Advance or the date on which such Advance was  converted  into an Alternate
Base Rate Advance to (but not  including)  the date on which such Alternate Base
Rate Advance is paid or converted to a Eurodollar  Advance.  Changes in the rate
of interest on that portion of any Advance  maintained as an Alternate Base Rate
Advance will take effect  simultaneously  with each change in the Alternate Base
Rate.  Each  Eurodollar  Advance shall bear interest at the Eurodollar Rate from
and including the first day of the Interest  Period  applicable  thereto to, but
not  including,  the last  day of such  Interest  Period  at the  interest  rate
determined as applicable to such Eurodollar  Advance. No Interest Period may end
after the Facility Termination Date.

     2.11.Rates  Applicable  After  Default.  Notwithstanding  anything  to  the
contrary  contained in Section 2.8 or 2.9, no Advance may be made as,  converted
into or continued as a Eurodollar  Advance (except with the consent of the Agent
and the Required Lenders) when any Default or Unmatured Default has occurred and
is continuing. During the continuance of a Default, at the

                                      -19-





election of the Required Lenders (or the Agent,  with the written consent of the
Required Lenders),  each Eurodollar Advance and Alternate Base Rate Advance (for
the  remainder  of the  applicable  Interest  Period  in the case of  Eurodollar
Advances) shall bear interest at the Alternate Base Rate plus 2% per annum.

         2.12.  Method of Payment.  All  payments of the  Obligations  hereunder
shall be  made,  without  setoff,  deduction  or  counterclaim,  in  immediately
available  funds to the  Agent at the  Agent's  address  specified  pursuant  to
Article  XIII, or at any other Lending  Installation  of the Agent  specified in
writing by the Agent to the Borrower,  by noon  (Chicago  time) on the date when
due and shall be applied ratably,  unless otherwise  required by this Agreement,
by the Agent among the  Lenders.  Each payment  made after noon  (Chicago  time)
shall be  deemed to have been made on the next  succeeding  Business  Day.  Each
payment  delivered to the Agent for the account of any Lender shall be delivered
promptly  by the Agent to such  Lender in the same type of funds  that the Agent
received at such Lender's address  specified  pursuant to Article XIII or at any
Lending  Installation  specified  in a notice  received  by the Agent  from such
Lender. The Agent is hereby authorized, upon confirmation by the Borrower of the
amount, to charge the account of the Borrower  maintained with First Chicago for
each payment of principal, interest and fees as it becomes due hereunder.

         2.13. Notes;  Telephonic  Notices.  Each Lender is hereby authorized to
record  the  principal  amount of each of its Loans  and each  repayment  on the
schedule attached to its Revolving Credit Note; provided,  however, that neither
the  failure to so record  nor any error in such  recordation  shall  affect the
Borrower's  obligations  under such Note.  The Borrower  hereby  authorizes  the
Lenders and the Agent to extend, convert or continue Advances, effect selections
of Types of Advances and to transfer  funds based on telephonic  notices made by
any person or persons  the Agent or any Lender in good faith  believes  to be an
Authorized Officer or assistant  treasurer of the Borrower.  The Borrower agrees
to deliver promptly to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender,  of each  telephonic  notice  signed by an
Authorized Officer. If the written  confirmation differs in any material respect
from the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.

         2.14. Interest Payment Dates;  Interest and Fee Basis. Interest accrued
on each  Alternate  Base Rate  Advance  shall be payable on each  Payment  Date,
commencing with the first such date to occur after the date hereof,  on any date
on which an  Alternate  Base Rate  Advance is  prepaid  due to  acceleration  or
otherwise, and at maturity.  Interest accrued on that portion of the outstanding
principal amount of any Alternate Base Rate Advance  converted into a Eurodollar
Advance on a day other than a Payment  Date shall be payable on the next Payment
Date  following  the date of  conversion.  Interest  accrued on each  Eurodollar
Advance shall be payable in arrears on the last day of its  applicable  Interest
Period,  on any date on which the  Eurodollar  Advance  is  prepaid,  whether by
acceleration or otherwise, and at maturity.  Interest accrued on each Eurodollar
Advance having an Interest Period longer than three months shall also be payable
on the  last day of each  three-month  interval  during  such  Interest  Period.
Interest on Eurodollar  Advances and  commitment  fees shall be  calculated  for
actual days elapsed on the basis of a 360-day  year.  Interest on all  Alternate
Base Rate Advances shall be calculated for actual days elapsed on the basis of a
365-day year, or when appropriate, a 366-day year. Interest shall be payable for
the day an Advance is made but not for

                                      -20-





the day of any payment on the amount  paid if payment is received  prior to noon
(Chicago  time) at the place of  payment.  If any  payment  of  principal  of or
interest on an Advance  shall  become due on a day which is not a Business  Day,
such payment shall be made on the next succeeding  Business Day and, in the case
of a principal  payment,  such  extension of time shall be included in computing
interest in connection with such payment.

         2.15.  Notification by Agent. Promptly after receipt thereof, the Agent
will notify each Lender of the contents of each Aggregate  Commitment  reduction
notice, Borrowing Notice, Conversion/Continuation Notice, Notice of Issuance and
repayment notice received by it hereunder.  The Agent will notify each Lender of
the  interest  rate  applicable  to  each  Eurodollar   Advance   promptly  upon
determination  of such  interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.

         2.16.  Lending  Installations.  Each  Lender  may book its Loans at any
Lending  Installation  selected  by such  Lender  and  may  change  its  Lending
Installation  from time to time. All terms of this Agreement  shall apply to any
such Lending  Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending  Installation.  Each Lender may, by written or telex
notice to the Agent and the Borrower,  designate a Lending  Installation through
which Loans will be made by it and for whose  account  Loan  payments  are to be
made.

         2.17.  Non-Receipt  of Funds by the  Agent.  Unless the  Borrower  or a
Lender,  as the case may be, notifies the Agent prior to the date on which it is
scheduled  to make  payment  to the  Agent of (a) in the case of a  Lender,  the
proceeds of a Loan, or (b) in the case of the Borrower,  a payment of principal,
interest or fees to the Agent for the account of the  Lenders,  that it does not
intend to make such  payment,  the Agent may assume  that such  payment has been
made.  The Agent may,  but shall not be  obligated  to,  make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
the Borrower has not in fact made such payment to the Agent,  the Lenders shall,
on demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on the
date such  amount was so made  available  by the Agent  until the date the Agent
recovers  such amount at a rate per annum equal to the Federal  Funds  Effective
Rate for such day. If any Lender has not in fact made such payment to the Agent,
such Lender or the Borrower  shall,  on demand by the Agent,  repay to the Agent
the amount so made available  together with interest  thereon in respect of each
day during the period  commencing on the date such amount was so made  available
by the Agent until the date the Agent  recovers  such amount at a rate per annum
equal to (a) in the case of repayment by a Lender,  the Federal Funds  Effective
Rate for such day, or (b) in the case of repayment by the Borrower, the interest
rate applicable to the relevant Loan.

         2.18.  Taxes.  (a) Except as set forth below,  any payments made by the
Borrower  under  this  Agreement  shall be made free and clear of,  and  without
deduction  or  withholding  for or on account of, any present or future  income,
stamp or other taxes, levies,  imposts,  duties,  charges,  fees,  deductions or
withholdings,  now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes or
any other tax based  upon net  income  imposed on the Agent or any Lender by the
jurisdiction  in  which  the  Agent  or such  Lender  is  incorporated,  has its
principal place of business or maintains a Lending Installation at

                                      -21-





which any of the Obligations are booked. If any such non-excluded taxes, levies,
imposts,  duties,  charges,  fees,  deductions  or  withholdings  ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or any
Lender  hereunder,  the amounts so payable to the Agent or such Lender  shall be
increased to the extent  necessary  to yield to the Agent or such Lender  (after
payment of all  Non-Excluded  Taxes)  interest or any such other amounts payable
hereunder  at the  rates or in the  amounts  specified  in or  pursuant  to this
Agreement;  provided,  however,  that the  Borrower  shall  not be  required  to
increase any such amounts  payable to any Lender that is not organized under the
laws of the U.S.  or a state  thereof if such  Lender  fails to comply  with the
requirements  of paragraph (b) of this Section 2.18.  Whenever any  Non-Excluded
Taxes are payable by the Borrower,  as promptly as  practicable  thereafter  the
Borrower  shall send to the Agent for its own account or for the account of such
Lender,  as the case may be, a certified  copy of an original  official  receipt
received by the Borrower showing payment  thereof.  If the Borrower fails to pay
any Non-Excluded  Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required documentary evidence,
the Borrower shall  indemnify the Agent and the Lenders for any taxes,  interest
or penalties  that may become  payable by any Agent or any Lender as a result of
any such  failure.  The  agreements  in this  Section  2.18  shall  survive  the
termination  of this  Agreement  and the  payment of all other  amounts  payable
hereunder.  Notwithstanding the foregoing, no Lender shall be entitled to demand
any payment under this Section 2.18(a) more than one year following the last day
of the fiscal year of such Lender  during which the liability in respect of such
Non-Excluded  Taxes was incurred;  provided,  that the foregoing shall in no way
limit the  right of any  Lender to demand or  receive  any  payment  under  this
Section  2.18(a)  to the extent  that such  payment  relates to the  retroactive
application  of any  Non-Excluded  Taxes if such  demand is made within one year
after the implementation of such Non-Excluded Taxes.

                    (b) At least five  Business  Days prior to the first date on
which interest or fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated  under the laws of the United States of America,
or a state thereof,  agrees that it will deliver to each of the Borrower and the
Agent two duly completed  copies of United States Internal  Revenue Service Form
1001 or 4224,  certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without  deduction or withholding of
any United States  federal  income  taxes.  Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent
two additional  copies of such form (or a successor  form) on or before the date
that such form expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it, and
such amendments  thereto or extensions or renewals  thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled  to receive  payments  under this  Agreement  and the Notes  without
deduction or withholding  of any United States  federal income taxes,  unless an
event (including,  without limitation,  any change in treaty, law or regulation)
has occurred  prior to the date on which any such  delivery  would  otherwise be
required which renders all such forms  inapplicable  or which would prevent such
Lender from duly  completing and delivering any such form with respect to it and
such  Lender  advises  the  Borrower  and the Agent  that it is not  capable  of
receiving payments without any deduction or withholding of United States federal
income tax.


                                      -22-





     2.19.Agent's  Fees.  The  Borrower  shall pay to the Agent those  fees,  in
addition to the commitment fees referenced in Section 2.4(a), in the amounts and
at the times separately agreed to between the Agent and the Borrower.


     2.20. Facility Letters of Credit.

     2.20.1 Issuance of Facility Letters of Credit.  (a) From and after the date
hereof,  the  Issuer  agrees,  upon the terms and  conditions  set forth in this
Agreement,  to issue at the request and for the account of the Borrower,  one or
more Facility Letters of Credit; provided, however, that the Issuer shall not be
under any  obligation  to issue,  and shall not issue,  any  Facility  Letter of
Credit if (i) any order, judgment or decree of any Governmental  Authority shall
purport  by its  terms to enjoin or  restrain  such  Issuer  from  issuing  such
Facility Letter of Credit, or any law or governmental rule, regulation,  policy,
guideline  or  directive  (whether  or not  having  the  force of law)  from any
Governmental  Authority shall prohibit, or request that the Issuer refrain from,
the issuance of Facility  Letters of Credit in  particular  or shall impose upon
the Issuer with  respect to any  Facility  Letter of Credit any  restriction  or
reserve  or  capital   requirement  (for  which  the  Issuer  is  not  otherwise
compensated) or any unreimbursed loss, cost or expense which was not applicable,
in effect and known to the Issuer as of the date of this Agreement and which the
Issuer in good faith deems material to it; (ii) one or more of the conditions to
such  issuance  contained in Section 4.2 is not then  satisfied;  or (iii) after
giving effect to such issuance, the aggregate outstanding amount of the Facility
Letter  of  Credit  Obligations  would  exceed  the  Facility  Letter  of Credit
Sublimit.

                    (b) In no  event  shall:  (i) the  aggregate  amount  of the
         Facility  Letter of Credit  Obligations at any time exceed the Facility
         Letter  of  Credit  Sublimit;  (ii)  the  sum at any  time  of (A)  the
         aggregate  amount of Facility Letter of Credit  Obligations and (B) the
         aggregate  principal balance of outstanding  Advances exceed the amount
         of the  Aggregate  Commitment;  or  (iii)  the  expiration  date of any
         Facility  Letter of Credit  (including,  without  limitation,  Facility
         Letters  of  Credit  issued  with an  automatic  "evergreen"  provision
         providing for renewal absent advance notice by the applicable  Borrower
         or the  Issuer),  or the  date  for  payment  of  any  draft  presented
         thereunder and accepted by the Issuer,  be later than the date five (5)
         Business Days prior to the Facility Termination Date.

                    2.20.2   Participating   Interests.   Immediately  upon  the
         issuance  by the  Issuer of a Facility  Letter of Credit in  accordance
         with Section 2.20.4 (and in the case of the Existing Letters of Credit,
         upon the making of the initial  Revolving Credit Advance),  each Lender
         shall be deemed to have irrevocably and  unconditionally  purchased and
         received from the Issuer, without recourse, representation or warranty,
         an undivided  participation interest equal to its pro-rata share of the
         Aggregate Commitment of the principal amount of such Facility Letter of
         Credit  and each  draw paid by the  Issuer  thereunder.  Each  Lender's
         obligation  to pay its  proportionate  share  of all  draws  under  the
         Facility  Letters  of  Credit,   absent  gross  negligence  or  willful
         misconduct by the Issuer in honoring any such draw, shall

                                      -23-





         be absolute,  unconditional  and  irrevocable and in each case shall be
         made without counterclaim or set-off by such Lender.

                    2.20.3 Facility Letter of Credit Reimbursement  Obligations.
         (a) The Borrower  agrees to pay to the Issuer (i) on each date that any
         amount  is  drawn  under  such  Facility  Letter  of  Credit a sum (and
         interest on such sum as  provided  in clause  (ii) below)  equal to the
         amount so drawn  plus all  other  charges  and  expenses  with  respect
         thereto specified in Section 2.20.6 or in the applicable  Reimbursement
         Agreement  and (ii)  interest on any and all amounts  remaining  unpaid
         under this Section  2.20.3 until payment in full at the Alternate  Base
         Rate plus the margin  specified in Section 2.11. The Borrower agrees to
         pay to  the  Issuer  the  amount  of  all  Facility  Letter  of  Credit
         Reimbursement  Obligations  owing in respect of any Facility  Letter of
         Credit  immediately  when  due,  under  all  circumstances,  including,
         without limitation, any of the following circumstances: (a) any lack of
         validity or  enforceability  of this Agreement or any of the other Loan
         Documents;  (b) the existence of any claim,  set-off,  defense or other
         right which the  Borrower  may have at any time  against a  beneficiary
         named in a Facility  Letter of Credit,  any  transferee of any Facility
         Letter  of  Credit  (or any  Person  for whom any such  beneficiary  or
         transferee may be acting),  any Lender or any other Person,  whether in
         connection  with this  Agreement,  any Facility  Letter of Credit,  the
         transactions   contemplated   herein  or  any  unrelated   transactions
         (including  any  underlying  transaction  between the  Borrower and the
         beneficiary named in any Facility Letter of Credit);  (c) the validity,
         sufficiency  or  genuineness  of any  document  which  the  Issuer  has
         determined  in good  faith  complies  on its face with the terms of the
         applicable  Facility  Letter of Credit,  even if such  document  should
         later prove to have been forged, fraudulent, invalid or insufficient in
         any  respect  or any  statement  therein  shall  have  been  untrue  or
         inaccurate  in any respect;  or (d) the  surrender or impairment of any
         security for the performance or observance of any of the terms hereof.

                    (b)  Notwithstanding  any  provisions to the contrary in any
         Reimbursement  Agreement,  the Borrower  agrees to reimburse the Issuer
         for amounts  which the Issuer pays under any Facility  Letter of Credit
         no later than the time  specified  in this  Agreement.  If the Borrower
         does not pay any Facility  Letter of Credit  Reimbursement  Obligations
         when due, the Borrower  shall be deemed to have  immediately  requested
         that the  Lenders  make an  Alternate  Base  Rate  Advance  under  this
         Agreement  in a principal  amount equal to such  unreimbursed  Facility
         Letter of Credit  Reimbursement  Obligations.  The Agent shall promptly
         notify the Lenders of such deemed request and, without the necessity of
         compliance  with the  requirements of Sections 2.5 and 4.2, each Lender
         shall make available to the Agent its Loan in the manner prescribed for
         Alternate Base Rate Advances.  The proceeds of such Loans shall be paid
         over by the Agent to the Issuer  for the  account  of the  Borrower  in
         satisfaction   of  such   unreimbursed   Facility   Letter   of  Credit
         Reimbursement Obligations, which shall thereupon be deemed satisfied by
         the proceeds of, and replaced by, such Alternate Base Rate Advance.

                    (c) If the Issuer makes a payment on account of any Facility
         Letter of Credit and is not  concurrently  reimbursed  therefor  by the
         Borrower and if for any reason an  Alternate  Base Rate Advance may not
         be made pursuant to paragraph (b) above, then as promptly as

                                      -24-





         practical  during  normal  banking  hours on the date of its receipt of
         such notice or, if not  practicable  on such date,  not later than noon
         (Chicago time) on the Business Day immediately  succeeding such date of
         notification, each Lender shall deliver to the Agent for the account of
         the Issuer, in immediately available funds, the purchase price for such
         Lender's  interest  in such  unreimbursed  Facility  Letter  of  Credit
         Reimbursement  Obligations,  which  shall  be an  amount  equal to such
         Lender's pro-rata share of such payment. Each Lender shall, upon demand
         by the Issuer,  pay the Issuer interest on such Lender's pro-rata share
         of such draw from the date of  payment by the Issuer on account of such
         Facility  Letter of Credit  until the date of delivery of such funds to
         the Issuer by such Lender at a rate per annum, computed for actual days
         elapsed based on a 360-day year,  equal to the Federal Funds  Effective
         Rate for such period; provided, that such payments shall be made by the
         Lenders  only in the event  and to the  extent  that the  Issuer is not
         reimbursed  in full by the  applicable  Borrower  for  interest  on the
         amount of any draw on such Facility Letter of Credit.

                    (d) At any time  after  the  Issuer  has made a  payment  on
         account  of any  Facility  Letter of Credit and has  received  from any
         other Lender such Lender's  pro-rata share of such payment,  the Issuer
         shall,  forthwith upon its receipt of any reimbursement (in whole or in
         part) by the Borrower for such payment, or of any other amount from the
         Borrower  or any other  Person in respect of such  payment  (including,
         without  limitation,  any payment of  interest or penalty  fees and any
         payment under any collateral  account  agreement of the Borrower or any
         Loan Document but excluding any transfer of funds from any other Lender
         pursuant  to Section  2.20.3(b)),  transfer  to such other  Lender such
         other  Lender's  ratable share of such  reimbursement  or other amount;
         provided,  that  interest and penalty fees shall accrue for the benefit
         of such  Lender from the time such Lender has made a payment on account
         of any Facility Letter of Credit; provided,  further, that in the event
         that the receipt by the Issuer of such reimbursement or other amount is
         found to have been a transfer in fraud of creditors  or a  preferential
         payment  under  the  United  States  Bankruptcy  Code  or is  otherwise
         required to be  returned,  such  Lender  shall  promptly  return to the
         Issuer any portion thereof previously transferred by the Issuer to such
         Lender, but without interest to the extent that interest is not payable
         by the Issuer in connection therewith.

                    2.20.4 Procedure for Issuance. Prior to the issuance of each
         Facility  Letter of Credit,  and as a condition of such  issuance,  the
         Borrower shall deliver to the Issuer a Reimbursement  Agreement  signed
         by the Borrower,  together with such other documents or items as may be
         required  pursuant  to the terms  thereof,  and the  proposed  form and
         content  of  such  Facility   Letter  of  Credit  shall  be  reasonably
         satisfactory  to the Issuer.  Each  Facility  Letter of Credit shall be
         issued no earlier  than two (2)  Business  Days  (unless  waived by the
         Issuer) after delivery of the foregoing  documents,  which delivery may
         be by the Borrower to the Issuer by telecopy, telex or other electronic
         means followed by delivery of executed  originals  within five (5) days
         thereafter.  The documents so delivered shall be in compliance with the
         requirements set forth in Section 2.20.1(b),  and shall specify therein
         (i) the stated amount of the Facility Letter of Credit requested,  (ii)
         the effective  date of issuance of such  requested  Facility  Letter of
         Credit,  which  shall be a Business  Day,  (iii) the date on which such
         requested  Facility  Letter of Credit is to  expire,  which  shall be a
         Business  Day prior to the date  five (5)  Business  Days  prior to the
         Facility Termination Date, and (iv) the entity for

                                      -25-





         whose benefit the requested  Facility Letter of Credit is to be issued,
         which  shall be the  Borrower  or a  Subsidiary.  The  delivery  of the
         foregoing  documents  and  information  shall  constitute  a "Notice of
         Issuance"  for  purposes  of this  Agreement.  Subject to the terms and
         conditions  of  Section   2.20.1  and  provided  that  the   applicable
         conditions  set forth in Section  4.2 have been  satisfied,  the Issuer
         shall,  on the  requested  date,  issue a Facility  Letter of Credit on
         behalf  of the  Borrower  in  accordance  with the  Issuer's  usual and
         customary business practices. In addition, any amendment of an existing
         Facility  Letter of Credit  shall be deemed to be an  issuance of a new
         Facility Letter of Credit and shall be subject to the  requirements set
         forth above.

                    2.20.5  Nature of the Lenders'  Obligations.  (a) As between
         the  Borrower and the  Lenders,  the Borrower  assumes all risks of the
         acts and omissions of, or misuse of the Facility  Letters of Credit by,
         the  respective  beneficiaries  of the Facility  Letters of Credit.  In
         furtherance  and not in limitation of the foregoing,  the Lenders shall
         not be responsible for (i) the form, validity,  sufficiency,  accuracy,
         genuineness  or legal effect of any document  submitted by any party in
         connection  with the application for an issuance of, or any draw under,
         a Facility  Letter of Credit,  even if it should in fact prove to be in
         any or all respects invalid,  insufficient,  inaccurate,  fraudulent or
         forged; (ii) the validity or sufficiency of any instrument transferring
         or assigning or purporting  to transfer or assign a Facility  Letter of
         Credit or the rights or benefits  thereunder  or proceeds  thereof,  in
         whole or in part,  which may prove to be invalid or ineffective for any
         reason;  (iii) the failure of the  beneficiary of a Facility  Letter of
         Credit to comply fully with conditions  required to be satisfied by any
         Person other than the Issuer in order to draw upon such Facility Letter
         of  Credit;  (iv)  errors,   omissions,   interruptions  or  delays  in
         transmission or delivery of any messages,  by mail,  cable,  telegraph,
         telex or  otherwise;  (v)  errors in the  interpretation  of  technical
         terms; (vi) the  misapplication by the beneficiary of a Facility Letter
         of Credit of the proceeds of any drawing under such Facility  Letter of
         Credit; or (vii) any consequences arising from causes beyond control of
         the Issuer;  provided,  that the Issuer shall not hereby be relieved of
         any  liability  arising  out of its own  gross  negligence  or  willful
         misconduct.

                    (b) In  furtherance  and  extension and not in limitation of
         the  specific  provisions  hereinabove  set forth,  any action taken or
         omitted by the Issuer under or in connection with the Facility  Letters
         of Credit or any  related  certificates,  if taken or  omitted  in good
         faith,  shall  not put the  Agent or any  Lender  under  any  resulting
         liability  to  the  Borrower  or  relieve  the  Borrower  of any of its
         obligations hereunder to the Issuer or any such Person.

                    2.20.6  Facility  Letter of Credit Fees. The Borrower hereby
         agrees  to pay to the  Agent  for  the  account  of the  Issuer  or the
         Lenders,  as  applicable,  a letter of credit fee with  respect to each
         Facility  Letter  of Credit  from and  including  the date of  issuance
         thereof until the date such  Facility  Letter of Credit is fully drawn,
         canceled or expired, (a) for the account of the Issuer, computed at the
         rate of .25% per annum on the  aggregate  initial  face  amount of such
         Facility  Letter  of  Credit  and (b) for the  ratable  account  of the
         Lenders,  computed  at  a  rate  per  annum  equal  to  the  Applicable
         Eurodollar  Margin from time to time in effect, on the aggregate amount
         from  time to time  available  to be drawn on such  Facility  Letter of
         Credit. Such fee payable for the account of the Issuer shall be payable
         upon the

                                      -26-





         date of issuance of the relevant  Facility  Letter of Credit.  Such fee
         payable for the account of the Lenders shall be calculated with respect
         to  actual  days  elapsed  on the basis of a 360- day year and shall be
         payable quarterly in arrears on each Payment Date in each year and upon
         the  expiration,  cancellation  or  utilization in full of any Facility
         Letter of Credit. In addition to the foregoing,  the Borrower agrees to
         pay the Issuer any other fees  customarily  charged by it in respect of
         standby Letters of Credit issued by it.

                                   ARTICLE III

                             CHANGE IN CIRCUMSTANCES


     3.1. Yield Protection.  If, after the date hereof,  the adoption of, or any
change in, any law or any governmental or quasi-governmental  rule,  regulation,
policy,  guideline or directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of any Lender therewith,

                    (a)   subjects   any  Lender  or  any   applicable   Lending
Installation  to any tax,  duty,  charge or  withholding on or from payments due
from the Borrower (excluding taxation of the overall net income of any Lender or
applicable Lending Installation imposed by the jurisdiction in which such Lender
or Lending Installation is incorporated,  has its principal place of business or
maintains a Lending Installation at which any of the Obligations are booked), or
changes the basis of taxation of  principal,  interest or any other  payments to
any Lender or Lending  Installation in respect of its Loans, its interest in the
Facility Letters of Credit or other amounts due it hereunder, or

                    (b) imposes or  increases or deems  applicable  any reserve,
assessment,  insurance charge,  special deposit or similar  requirement  against
assets of,  deposits  with or for the  account  of, or credit  extended  by, any
Lender  or  any  applicable  Lending   Installation  (other  than  reserves  and
assessments  taken into account in determining  the interest rate  applicable to
Eurodollar Advances), or

                    (c) imposes any other  condition,  the result of which is to
increase  the cost to any  Lender  or any  applicable  Lending  Installation  of
making,  funding or maintaining  Loans or issuing or  participating  in Facility
Letters  of  Credit  or  reduces  any  amount  receivable  by any  Lender or any
applicable Lending  Installation in connection with Loans or Facility Letters of
Credit,  or requires any Lender or any applicable  Lending  Installation to make
any  payment  calculated  by  reference  to the amount of Loans  held,  Facility
Letters of Credit issued or  participated  in, or interest  received by it by an
amount deemed material by such Lender,

 then  within 15 days of  demand by such  Lender,  the  Borrower  shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender  determines is  attributable  to making,  funding and
maintaining its Loans, its interest in the Facility  Letters of Credit,  and its
Commitment. Notwithstanding the foregoing, no Lender shall be entitled to demand
any  compensation  under this Section 3.1 more than 180 days  following the last
day of the  Interest  Period or stated  expiry  date of the  Facility  Letter of
Credit in respect of which such demand is made;

                                      -27-





provided,  that the  foregoing  shall in no way limit the right of any Lender to
demand or receive such compensation to the extent that such compensation relates
to the retroactive  application of any law,  regulation,  guideline or directive
described  in this  Section 3.1 if such demand is made within 180 days after the
implementation of such retroactive law, interpretation, guideline or directive.

         3.2. Changes in Capital Adequacy  Regulations.  If a Lender  determines
the amount of capital required or expected to be maintained by such Lender,  any
Lending  Installation of such Lender or any corporation  controlling such Lender
is  increased  as a result of a Change,  then,  within 15 days of demand by such
Lender,  the Borrower  shall pay such Lender the amount  necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender  determines is attributable to this Agreement,  its Loans, its
interest in the Facility  Letters of Credit,  or its obligation to make Loans or
participate in or issue Facility  Letters of Credit hereunder (after taking into
account such Lender's or such controlling  corporation's  policies as to capital
adequacy).  Notwithstanding the foregoing, no Lender shall be entitled to demand
any  compensation  pursuant to this Section 3.2 more than one year following the
last day of the fiscal year of such Lender during which such capital requirement
was  applicable  and in respect of which  such  Lender is seeking  compensation;
provided,  that the  foregoing  shall in no way limit the right of any Lender to
demand or receive such compensation to the extent that such compensation relates
to the retroactive  application of any law,  regulation,  guideline or directive
described above if such demand is made within one year after the  implementation
of such retroactive law, interpretation,  guideline or directive. "Change" means
(a) any  change  after  the date of this  Agreement  in the  Risk-Based  Capital
Guidelines,  or (b) any adoption of or change in any other law,  governmental or
quasi-governmental  rule,  regulation,  policy,  guideline,  interpretation,  or
directive  (whether  or not  having  the  force of law)  after  the date of this
Agreement  which  affects  the  amount of capital  required  or  expected  to be
maintained  by  any  Lender  or any  Lending  Installation  or  any  corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (a) the risk-based
capital  guidelines in effect in the United States on the date of this Agreement
and  (b)  the  corresponding  capital  regulations   promulgated  by  regulatory
authorities  outside the United States  implementing the July 1988 report of the
Basle  Committee  on  Banking  Regulation  and  Supervisory  Practices  entitled
"International  Convergence of Capital  Measurements and Capital  Standards" and
any amendments to such regulations adopted prior to the date of this Agreement.

         3.3.  Availability of Types of Advances.  If any Lender determines that
maintenance of its Eurodollar Advances at a suitable Lending  Installation would
violate any  applicable  law,  rule,  regulation,  or directive,  whether or not
having the force of law, or if the Required Lenders  determine that (a) deposits
of a type and maturity  appropriate  to match fund  Eurodollar  Advances are not
available,  or (b) the interest  rate  applicable  to a Type of Advance does not
accurately  or fairly  reflect the cost of making or  maintaining  such Advance,
then the Agent shall  suspend the  availability  of the affected Type of Advance
until such circumstance no longer exists and require any Eurodollar  Advances of
the affected Type to be repaid.

     3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable  Interest Period,  whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date  specified by the Borrower for any reason other than default by
the Lenders, the Borrower will indemnify the Agent and each

                                      -28-





Lender  for any loss or cost  incurred  by it  resulting  therefrom,  including,
without  limitation,  any  loss or cost in  liquidating  or  employing  deposits
acquired to fund or maintain the Eurodollar Advance.

         3.5. Lender Statements; Survival of Indemnity. To the extent reasonably
possible,  each Lender shall designate an alternate  Lending  Installation  with
respect to its  Eurodollar  Advances to reduce any  liability of the Borrower to
such Lender under Sections 3.1 and 3.2 or to avoid the  unavailability of a Type
of Advance under Section 3.3, so long as such designation is not disadvantageous
to such Lender.  Each Lender shall deliver a written statement of such Lender to
the  Borrower  (with a copy to the Agent) as to the amount  due,  if any,  under
Sections 3.1, 3.2 or 3.4. Such written  statement  shall set forth in reasonable
detail the calculations  upon which such Lender determined such amount and shall
be final,  conclusive  and  binding on the  Borrower  in the absence of manifest
error.  Determination  of amounts payable under such Sections in connection with
Eurodollar  Advances  shall be  calculated  as though  each  Lender  funded  its
Eurodollar  Advances  through the purchase of a deposit of the type and maturity
corresponding  to the deposit used as a reference in determining  the Eurodollar
Rate  applicable to such Loan,  whether in fact that is the case or not.  Unless
otherwise  provided herein, the amount specified in the written statement of any
Lender shall be payable within 15 days of receipt by the Borrower of the written
statement. The obligations of the Borrower under Sections 3.1, 3.2 and 3.4 shall
survive payment of the Obligations and termination of this Agreement.


                                   ARTICLE IV

                              CONDITIONS PRECEDENT

         4.1. Initial Loan and Facility Letter of Credit.  The Lenders shall not
be required to make the initial  Revolving  Credit  Advance and the Issuer shall
not be  required to issue any  Facility  Letter of Credit  hereunder  unless the
Borrower has furnished to the Agent with sufficient copies for the Lenders:

          (a) Charter  Documents.  Copies of the certificate of incorporation of
     the Borrower,  together  with all  amendments,  and a  certificate  of good
     standing,  both certified by the  appropriate  governmental  officer in its
     jurisdiction of incorporation.

          (b) By-Laws and  Resolutions.  Copies,  certified by the  Secretary or
     Assistant  Secretary  of the  Borrower,  of its by-laws and of its Board of
     Directors' resolutions authorizing the execution,  delivery and performance
     of the Loan Documents to which the Borrower is a party.

          (c) Secretary's  Certificate.  An incumbency certificate,  executed by
     the Secretary or Assistant Secretary of the Borrower,  which shall identify
     by name and title and bear the  signature  of the  officers of the Borrower
     authorized  to sign the Loan  Documents and to make  borrowings  hereunder,
     upon which  certificate the Agent and the Lenders shall be entitled to rely
     until informed of any change in writing by the Borrower.


                                      -29-





                    (d) Officer's Certificate. A certificate,  dated the initial
Borrowing  Date,  signed by an Authorized  Officer of the Borrower,  in form and
substance  satisfactory  to the Agent,  to the effect  that:  (i) on the initial
Borrowing  Date (both before and after giving  effect to the making of the Loans
and the issuance of any initial Facility Letters of Credit hereunder) no Default
or Unmatured  Default has  occurred and is  continuing;  (ii) no  injunction  or
temporary  restraining order which would prohibit the making of the Loans or the
issuance of any Facility  Letter of Credit,  or,  except as disclosed in the SEC
Reports,  other litigation which could reasonably be expected to have a Material
Adverse  Effect  is  pending  or,  to  the  best  of  such  Person's  knowledge,
threatened;  (iii)  each of the  representations  and  warranties  set  forth in
Article V of this Agreement is true and correct in all material  respects on and
as of the date hereof; and (iv) no event or change has occurred which has caused
or evidences a material adverse change in the consolidated  financial  condition
or operations of the Borrower and its  Subsidiaries  (except as disclosed in the
SEC Reports) from that  reflected in the December 31, 1996 audited  consolidated
financial statements of the Borrower.

          (e) Legal Opinions.  A written  opinion of Gardner,  Carton & Douglas,
     counsel to the Borrower, addressed to the Agent and the Lenders in form and
     substance  acceptable  to the  Agent  and its  counsel  and an  opinion  of
     Christopher J. Kearney, General Counsel of the Borrower.

          (f)  Revolving  Credit  Notes.  Revolving  Credit Notes payable to the
     order of each of the Lenders duly executed by the Borrower.

          (g)  Loan  Documents.   Executed  originals  of  this  Agreement,  the
     Subsidiary Guaranty and each of the other Loan Documents, which shall be in
     full force and effect, together with all schedules, exhibits, certificates,
     instruments,  opinions,  documents and financial  statements required to be
     delivered pursuant hereto and thereto.

          (h) Letters of Direction.  Written money  transfer  instructions  with
     respect  to the  initial  Advances  and to  future  Advances  in  form  and
     substance  acceptable  to the Agent and its counsel  addressed to the Agent
     and signed by an Authorized Officer, together with such other related money
     transfer authorizations as the Agent may have reasonably requested.

          (i) Solvency  Certificate.  A written  solvency  certificate  from the
     chief financial officer of the Borrower in form and content satisfactory to
     the Agent,  dated the initial  Borrowing Date, with respect to the Solvency
     of the Borrower on a consolidated  basis,  after giving effect to the Loans
     and the stock  repurchase  contemplated  by  clause  the  Borrower's  stock
     buy-back plan announced by the Borrower on April 11, 1997.

          (j)  Subsidiary  Guarantor  Charter  Documents.  With  respect to each
     existing  Subsidiary  Guarantor,  copies of the articles or certificates of
     incorporation,  partnership  agreement or other  charter  documents of such
     Subsidiary  Guarantor,  together  with all  amendments,  and, to the extent
     applicable,   a  certificate  of  good  standing,  both  certified  by  the
     appropriate governmental officer in its jurisdiction of incorporation.

          (k) Subsidiary Guarantor By-Laws and Resolutions. With respect to each
     existing  Subsidiary  Guarantor,  copies,  certified  by the  Secretary  or
     Assistant Secretary of such

                                      -30-





Subsidiary Guarantor, of the by-laws and Board of Directors' resolutions of such
Subsidiary Guarantor authorizing the execution,  delivery and performance of the
Subsidiary Guaranty.

                    (l)  Subsidiary  Guarantor   Secretary's   Certificate.   An
incumbency certificate, executed by the Secretary or Assistant Secretary of each
existing Subsidiary  Guarantor,  which shall identify by name and title and bear
the signature of the officers of such  Subsidiary  Guarantor  authorized to sign
the Subsidiary  Guaranty upon which  certificate the Agent and the Lenders shall
be entitled to rely until informed of any change in writing by the Borrower.

                    (m) Repayment of Indebtedness.  Evidence satisfactory to the
Agent that all of the  Indebtedness  of the Borrower under the Credit  Agreement
dated as of March 24,  1994  among the  Borrower,  The  First  National  Bank of
Chicago,  individually and as agent,  and the lenders party thereto,  as amended
(the "Prior  Agreement"),  has been repaid in full and such credit agreement and
all related loan documents have been  terminated,  except as to those provisions
of the Prior Agreement which by their terms survive such termination.

                    (n)  Consents,  Approvals,  etc.  Copies of all consents and
approvals,  if any, of any  Governmental  Authority or other Person  required in
connection  with the execution,  delivery and performance by the Borrower or any
of its Subsidiaries of the Loan Documents (including without limitation consents
and approvals from any holders of Subordinated Notes or other indebtedness), and
such consents and approvals shall be in full force and effect.

                    (o) Other.  Such other documents as the Agent,  any Lender
or their counsel may have reasonably requested.

     4.2. Each Advance and Facility  Letter of Credit.  The Lenders shall not be
required to make any Advance and the Issuer  shall not be obligated to issue any
Facility Letter of Credit, unless on the applicable Borrowing Date:

                    (a) There  exists no Default or  Unmatured  Default and none
would  result  from such  Advance or the  issuance  of such  Facility  Letter of
Credit;

                    (b) The representations and warranties  contained in Article
V are true and  correct as of such  Borrowing  Date  except  for  changes in the
Schedules  hereto  (submitted  to the Agent and each  Lender in  writing  by the
Borrower) reflecting transactions permitted by this Agreement;

                    (c)    A Borrowing Notice or Notice of Issuance shall have 
been properly submitted; and

                    (d) All legal matters incident to the making of such Advance
or issuance  of such  Facility  Letter of Credit  shall be  satisfactory  to the
Lenders and their counsel.

         Each Borrowing Notice with respect to each such Advance and each Notice
of Issuance  with respect to each Facility  Letter of Credit shall  constitute a
representation  and warranty by the Borrower  that the  conditions  contained in
this Section 4.2 have been satisfied. Any Lender may

                                      -31-





require a duly completed  compliance  certificate in  substantially  the form of
Exhibit  B hereto as a  condition  to making an  Advance  or the  issuance  of a
Facility Letter of Credit.


                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES


         The Borrower  represents and warrants to the Lenders that,  both before
and after giving effect to the consummation of the Loans and the issuance of the
Facility Letters of Credit:

         5.1.  Corporate or  Partnership  Existence  and  Standing.  Each of the
Borrower  and  each  Subsidiary  is a  corporation  duly  incorporated,  validly
existing and in good standing under the laws of its respective  jurisdiction  of
incorporation  and  is  duly  qualified  and  in  good  standing  as  a  foreign
corporation and is duly authorized to conduct its business in each  jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.

         5.2.  Authorization  and  Validity.  The Borrower  and each  Subsidiary
Guarantor have all requisite  power and authority  (corporate and otherwise) and
legal right to execute and deliver  each of the Loan  Documents to which it is a
party, to consummate the  transactions  contemplated  therein and to perform its
obligations  thereunder.  The  execution  and  delivery by the Borrower and each
Subsidiary  Guarantor  of  the  Loan  Documents  to  which  it is a  party,  the
consummation  of the  transactions  contemplated  therein and the performance of
their  respective  obligations  thereunder  have been duly  authorized by proper
corporate or  partnership  proceedings,  as  applicable,  and the Loan Documents
constitute  legal,  valid  and  binding  obligations  of the  Borrower  or  such
Subsidiary  Guarantor,  as applicable,  enforceable against the Borrower or such
Subsidiary Guarantor,  as applicable,  in accordance with their terms, except as
enforceability  may  be  limited  by  bankruptcy,  insolvency  or  similar  laws
affecting the enforcement of creditors' rights generally and general  principles
of equity.

         5.3.  Compliance  with  Laws  and  Contracts.   The  Borrower  and  its
Subsidiaries  have  complied  in  all  material  respects  with  all  applicable
statutes, rules, regulations, orders and restrictions of any domestic or foreign
government or any  instrumentality or agency thereof,  having  jurisdiction over
the conduct of their respective  businesses or the ownership of their respective
properties,  except  in each  case for  matters  which,  individually  or in the
aggregate,  could not reasonably be expected to have a Material  Adverse Effect.
Neither the execution and delivery by the Borrower and each Subsidiary Guarantor
of the Loan Documents to which it is a party, the application of the proceeds of
the Loans, the consummation of the Loans or any other  transaction  contemplated
in the Loan Documents nor  compliance  with the provisions of the Loan Documents
will,  or at the  relevant  time did,  (a)  violate  any law,  rule,  regulation
(including Regulations G, T, U or X), order, writ, judgment,  injunction, decree
or award  binding on the Borrower or any  Subsidiary  or the  Borrower's  or any
Subsidiary's  charter,  articles or certificate of  incorporation  or by-laws or
partnership agreement,  (b) violate the provisions of or require the approval or
consent of any party to any  indenture,  instrument  or  agreement  to which the
Borrower or any Subsidiary is a party or is

                                      -32-





subject,  or by which  it,  or its  property,  is  bound,  or  conflict  with or
constitute a default thereunder,  or result in the creation or imposition of any
Lien  (other  than  Liens  permitted  by the Loan  Documents)  in,  of or on the
property  of the  Borrower or any  Subsidiary  pursuant to the terms of any such
indenture,   instrument  or  agreement,  or  (c)  require  any  consent  of  the
stockholders or partners of any Person,  except,  in the case of clauses (b) and
(c) of this Section 5.3, for approvals or consents  which will be obtained on or
before the initial  Advance and are  disclosed on Schedule 5.3 or which has been
obtained  on or before the  applicable  Advance or  issuance  of the  applicable
Facility Letter of Credit,  except for any violation of, or failure to obtain an
approval or consent required under, any such indenture,  instrument or agreement
that could not reasonably be expected to have a Material Adverse Effect.

         5.4.  Governmental  Consents.  Except  for  any  such  order,  consent,
approval,  qualification,  license,  authorization  or validation which has been
obtained, no order, consent, approval, qualification, license, authorization, or
validation of, or filing,  recording or  registration  with, or exemption by, or
other action in respect of, any Governmental Authority,  any securities exchange
or any other Person is or at the relevant time was required to authorize,  or is
or at the relevant time was required in connection with the execution, delivery,
consummation  or performance  of, or the legality,  validity,  binding effect or
enforceability of, any of the Loan Documents, the application of the proceeds of
the Loans or any other transaction  contemplated in the Loan Documents.  Neither
the  Borrower  nor any  Subsidiary  is in default  under or in  violation of any
foreign,  federal, state or local law, rule, regulation,  order, writ, judgment,
injunction,  decree or award  binding upon or applicable to the Borrower or such
Subsidiary,  in each case the  consequences  of which default or violation could
reasonably be expected to have a Material Adverse Effect.

         5.5.  Financial  Statements.  The Borrower has heretofore  furnished to
each of the Lenders (a) the  December 31, 1996  audited  consolidated  financial
statements  of the  Borrower  and  its  Subsidiaries  and  (b)  draft  unaudited
consolidated  financial  statements of the Borrower and its Subsidiaries through
March 31, 1997 (collectively, the "Financial Statements"). Each of the Financial
Statements was prepared in accordance with Agreement  Accounting  Principles and
fairly  presents the  consolidated  financial  condition  and  operations of the
Borrower  and its  Subsidiaries  at such dates and the  consolidated  results of
their operations for the respective  periods then ended (except,  in the case of
such unaudited statements, for normal year-end audit adjustments).

     5.6.  Material Adverse Change.  Since December 31, 1996, no event or change
has occurred which has caused or evidences a Material  Adverse Effect (except as
disclosed in the SEC Reports).

     5.7. Taxes.  The Borrower and its  Subsidiaries  have filed or caused to be
filed on a timely  basis and in  correct  form all  United  States  federal  and
applicable foreign,  state and local tax returns and all other tax returns which
are required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment  received by the Borrower or any  Subsidiary,  except
such  taxes,  if any,  as are  being  contested  in good  faith  and as to which
adequate  reserves have been provided in accordance  with  Agreement  Accounting
Principles and as to which no Lien exists.  The United States income tax returns
of the Borrower on a consolidated basis have been audited by the

                                      -33-





Internal  Revenue Service through Fiscal Year 1994. All years subsequent to 1994
are open and  subject  to audit.  No tax Liens have been filed and no claims are
being asserted with respect to any such taxes which could reasonably be expected
to have a Material  Adverse  Effect.  The charges,  accruals and reserves on the
books of the  Borrower  and its  Subsidiaries  in  respect of any taxes or other
governmental charges are in accordance with Agreement Accounting Principles.

         5.8.  Litigation  and Contingent  Obligations.  There is no litigation,
arbitration,  proceeding,  inquiry  or  governmental  investigation  (including,
without  limitation,  by  the  Federal  Trade  Commission)  pending  or,  to the
knowledge of any of their officers, threatened against or affecting the Borrower
or any Subsidiary or any of their respective  properties  except as set forth on
Schedule 5.8 hereto,  and no such matter set forth therein  could  reasonably be
expected to have a Material Adverse Effect or to prevent, enjoin or unduly delay
the making of the Loans or  Advances  or the  issuance  of  Facility  Letters of
Credit under this  Agreement.  Neither the Borrower nor any  Subsidiary  has any
material contingent  obligations except as set forth on Schedule 5.8 hereto. The
Borrower  is not  obligated,  contingently  or  otherwise,  to  make  additional
Investments in any entity in which it currently has a direct or indirect  equity
interest.

         5.9.  Capitalization.  Schedule 5.9 hereto contains an accurate list of
all of the existing Subsidiaries as of the date of this Agreement, setting forth
their respective  jurisdictions of incorporation or formation and the percentage
of their capital stock owned by the Borrower or other  Subsidiaries.  All of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized  and validly  issued and are fully paid and  non-assessable,  and all
such shares of each such Subsidiary are free and clear of all Liens,  other than
the Liens created by the Loan Documents.  No authorized but unissued or treasury
shares of capital stock of any  Subsidiary  are subject to any option,  warrant,
right to call or  commitment  of any kind or  character,  except as set forth on
Schedule 5.9 hereto.  Except as set forth on Schedule 5.9 hereto,  no Subsidiary
has any outstanding stock or securities convertible into or exchangeable for any
shares  of its  capital  stock,  or any  right  issued  to  any  Person  (either
preemptive  or other) to subscribe  for or to  purchase,  or any options for the
purchase  of,  or any  agreements  providing  for the  issuance  (contingent  or
otherwise) of, or any calls,  commitments or claims of any character relating to
any of its  capital  stock  or any  stock  or  securities  convertible  into  or
exchangeable  for any of its capital  stock other than as expressly set forth in
the charter, certificate or articles of incorporation, or partnership agreement,
of such  Subsidiary.  Neither the Borrower nor any  Subsidiary is subject to any
obligation  (contingent  or otherwise)  to  repurchase  or otherwise  acquire or
retire any shares of its capital stock or any convertible securities,  rights or
options of the type described in the preceding  sentence except as otherwise set
forth on Schedule 5.9 hereto.  References in this section to "capital stock" and
shares shall,  with respect to any Subsidiary which is a partnership,  be deemed
references to partnership interests.

         5.10. ERISA.  Except as disclosed on Schedule 5.10 hereto,  neither the
Borrower  nor any other  member of the  Controlled  Group  maintains  any Single
Employer  Plans as of the Closing Date. No Single  Employer Plan has an Unfunded
Liability in excess of $1,000,000.  Neither the Borrower nor any other member of
the  Controlled  Group  maintains,   or  is  obligated  to  contribute  to,  any
Multiemployer  Plan or has  incurred,  or is reasonably  expected to incur,  any
withdrawal  liability  to any  Multiemployer  Plan.  Each Plan  complies  in all
material  respects  with all  applicable  requirements  of law and  regulations.
Neither the Borrower nor any other member of the Controlled

                                      -34-





Group has, with respect to any Plan,  failed to make any contribution or pay any
amount  required  under  Section  412 of the Code or Section 302 of ERISA or the
terms of such Plan.  There are no pending or, to the  knowledge of the Borrower,
threatened  claims,  actions,  investigations  or lawsuits against any Plan, any
fiduciary  thereof,  or the Borrower or any other member of the Controlled Group
with  respect to a Plan which  could  reasonably  be expected to have a Material
Adverse Effect.  The Borrower has not engaged in any prohibited  transaction (as
defined in Section 4975 of the Code or Section 406 of ERISA) in connection  with
any Plan which would subject the Borrower to any material liability.  Within the
last five years  neither the  Borrower  nor any other  member of the  Controlled
Group has engaged in a transaction which resulted in a Single Employer Plan with
an Unfunded  Liability being transferred out of the Controlled Group which could
reasonably be expected to have a Material Adverse Effect.  No Termination  Event
has occurred or is  reasonably  expected to occur with respect to any Plan which
is subject to Title IV of ERISA.

          5.11.  Defaults.  No Default or Unmatured  Default has occurred and is
     continuing.

         5.12.  Federal  Reserve  Regulations.  Neither  the  Borrower  nor  any
Subsidiary is engaged,  directly or  indirectly,  principally,  or as one of its
important  activities,  in the  business  of  extending,  or  arranging  for the
extension of, credit for the purpose of purchasing or carrying  Margin Stock. No
part of the proceeds of any Loan will be used in a manner  which would  violate,
or result in a  violation  of,  Regulation  G,  Regulation  T,  Regulation  U or
Regulation  X.  Neither the making of any Advance  hereunder  nor the use of the
proceeds thereof nor the issuance of any Facility Letter of Credit, will violate
or be inconsistent with the provisions of Regulation G, Regulation T, Regulation
U or Regulation X. Following the application of the proceeds of the Loans,  less
than 25% of the value (as determined by any reasonable  method) of the assets of
the Borrower and its  Subsidiaries  which are subject to any limitation on sale,
pledge,  or other  restriction  hereunder  taken as a whole have been,  and will
continue to be, represented by Margin Stock.

     5.13.  Investment  Company.  Neither the Borrower nor any Subsidiary is, or
after giving effect to any Advance will be, an "investment company" or a company
"controlled"  by an  "investment  company"  within the meaning of the Investment
Company Act of 1940, as amended.

         5.14.  Certain Fees. No broker's or finder's fee or commission  was, is
or will be payable by the Borrower or any Subsidiary  with respect to any of the
transactions  contemplated  by this  Agreement.  The Borrower  hereby  agrees to
indemnify the Agent and the Lenders against and agrees that it will hold each of
them harmless from any claim,  demand or liability for broker's or finder's fees
or commissions  alleged to have been incurred by the Borrower in connection with
any  of the  transactions  contemplated  by  this  Agreement  and  any  expenses
(including,  without  limitation,  attorneys' fees and time charges of attorneys
for the Agent or any Lender,  which  attorneys  may be employees of the Agent or
any Lender) arising in connection with any such claim, demand or liability.  The
Borrower's  obligations under this Section 5.14 shall survive the termination of
this Agreement and the payment of the Obligations.

     5.15.  Solvency.  As of  the  date  hereof,  after  giving  effect  to  the
consummation of the transactions  contemplated by the Loan Documents  (including
the stock repurchase pursuant to the Borrower's stock buy-back plan announced by
the Borrower on April 11, 1997) and the payment of

                                      -35-





all fees,  costs and  expenses  payable  by the  Borrower  with  respect  to the
transactions  contemplated by the Loan Documents,  each of the Borrower and each
Subsidiary Guarantor is Solvent.

         5.16.  Ownership of  Properties.  Except as set forth on Schedule  6.16
hereto,  the Borrower and its Subsidiaries have a subsisting  leasehold interest
in, or good and  marketable  title  to,  free of all  Liens,  other  than  those
permitted  by  Section  6.16 or by any of the other Loan  Documents,  all of the
properties  and assets  reflected in the Financial  Statements as being owned by
it, except for assets sold, transferred or otherwise disposed of in the ordinary
course of business  since the date thereof or as otherwise  disclosed in the SEC
Reports.  To the knowledge of the Borrower,  there are no actual,  threatened or
alleged  defaults  with respect to any leases of real  property  under which the
Borrower  or any  Subsidiary  is lessee  or lessor  which  could  reasonably  be
expected to have a Material  Adverse Effect.  The Borrower and its  Subsidiaries
own or  possess  rights  to use  all  licenses,  patents,  patent  applications,
copyrights,  service marks,  trademarks and trade names necessary to continue to
conduct their business as heretofore conducted,  and, except as disclosed in the
SEC Reports, no such license,  patent,  copyrights,  service mark,  trademark or
trade name has been declared  invalid,  been limited by order of any court or by
agreement  or is  the  subject  of any  infringement,  interference  or  similar
proceeding or challenge,  except for  challenges  which could not  reasonably be
expected to have a Material Adverse Effect.

         5.17. Indebtedness.  Attached hereto as Schedule 5.17 is a complete and
correct  list  of  all   Indebtedness  of  the  Borrower  and  its  Subsidiaries
outstanding  on the  date  of  this  Agreement  (other  than  Indebtedness  in a
principal  amount not exceeding  $1,000,000  for a single item of  Indebtedness)
showing the aggregate  principal amount which was outstanding on such date after
giving effect to the making of the Loans.

         5.18. Employee  Controversies.  There are no strikes, work stoppages or
controversies  pending or threatened  between the Borrower or any Subsidiary and
any of its  employees,  other than employee  grievances  arising in the ordinary
course of business, which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

         5.19. Material Agreements. Neither the Borrower nor any Subsidiary is a
party  to any  agreement  or  instrument  or  subject  to any  charter  or other
corporate or partnership  restriction which could reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any Subsidiary is in default
in the  performance,  observance  or  fulfillment  of  any  of the  obligations,
covenants or conditions contained in any agreement to which it is a party, which
default could reasonably be expected to have a Material Adverse Effect.

         5.20.   Environmental  Laws.  There  are  no  claims,   investigations,
litigation,  administrative  proceedings,  notices,  requests  for  information,
whether  pending or, to the knowledge of Borrower,  threatened,  or judgments or
orders   asserting   violations   of   applicable   federal,   state  and  local
environmental,  health  and safety  statutes,  regulations,  ordinances,  codes,
rules,  orders,  decrees,  directives  and standards  ("Environmental  Laws") or
relating  to  any  toxic  or  hazardous  waste,  substance  or  chemical  or any
pollutant,  contaminant,  chemical  or  other  substance  defined  or  regulated
pursuant to any Environmental  Law,  including,  without  limitation,  asbestos,
petroleum,  crude oil or any fraction thereof ("Hazardous  Materials")  asserted
against the Borrower or any of

                                      -36-





its Subsidiaries,  except in each case for matters which, individually or in the
aggregate,  could not reasonably be expected to have a Material  Adverse Effect.
To the best  knowledge of Borrower,  neither the Borrower nor any Subsidiary has
caused or permitted any Hazardous  Materials to be released,  either on or under
real property,  currently or formerly, legally or beneficially owned or operated
by the  Borrower  or any  Subsidiary  or on or under real  property to which the
Borrower or any of its Subsidiaries  transported,  arranged for the transport or
disposal of, or disposed of Hazardous  Materials,  in violation of Environmental
Laws,  except in each case for matters which,  individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect. The Borrower
and each of its Subsidiaries (i) have obtained and are in substantial compliance
with all permits,  certificates,  licenses,  approvals and other  authorizations
("Environmental  Permits") required for the operation of their business and (ii)
have  filed  all  required   notifications   or  reports  relating  to  chemical
substances,  air  emissions,  effluent  discharges  and the storage,  treatment,
transport  and  disposal of  Hazardous  Materials,  except  where the failure to
obtain such permit,  certificate,  license, approval or authorization or to file
any such  notification  or report could not,  individually  or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
the Borrower does not  reasonably  expect the Borrower and its  Subsidiaries  to
incur  liabilities  exceeding  $5,000,000  in the aggregate for all of them with
respect to remediation costs required pursuant to applicable  Environmental Laws
and  Environmental  Permits or related to the  generation,  treatment,  storage,
disposal,  release,  investigation or cleanup of Hazardous Materials, and to the
best knowledge of the Borrower, no facts or circumstances exist which could give
rise to such liabilities.

     5.21.  Insurance.  The property,  casualty and other insurance in existence
and carried by the Borrower and its Subsidiaries  complies with the requirements
of Section 6.6.

         5.22.  Disclosure.  None of (a) the  information,  exhibits  or reports
furnished or to be furnished by the Borrower or any  Subsidiary  to the Agent or
to any Lender in connection with the  negotiation of the Loan Documents,  or (b)
the  representations  or warranties of the Borrower or any Subsidiary  Guarantor
contained in this Agreement,  the other Loan  Documents,  or any other document,
certificate or written statement  furnished to the Agent or the Lenders by or on
behalf of the Borrower or any  Subsidiary  Guarantor for use in connection  with
the  transactions  contemplated by this Agreement  contained,  taken as a whole,
contains or will  contain any untrue  statement  of a material  fact or omitted,
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances  in which the same were made.  The Borrower  has  delivered to the
Lenders  its pro forma  balance  sheet and income  statement  for the year ended
December  31,  1996 set forth in the  Borrower's  Schedule  13E-4 filed with the
Securities  and Exchange  Commission  and  projections  for the Borrower and its
Subsidiaries on a consolidated basis for fiscal years 1997-2002, dated March 25,
1997. The financial  information  contained in such materials is based upon good
faith estimates and assumptions believed by the Borrower to be reasonable at the
time  made.  There is no fact known to the  Borrower  (other  than  matters of a
general  economic nature) that has had or could reasonably be expected to have a
Material  Adverse Effect and that has not been disclosed herein or in such other
documents,  certificates  and  statements  furnished  to the  Lenders for use in
connection with the transactions contemplated by this Agreement.


                                      -37-





                                   ARTICLE VI

                                    COVENANTS

         During the term of this  Agreement,  unless the Required  Lenders shall
otherwise consent in writing:

     6.1. Financial Reporting.  The Borrower will maintain,  for itself and each
Subsidiary,  a system of accounting  established and  administered in accordance
with generally accepted accounting principles, consistently applied, and furnish
to the Agent:

                    (a) As soon as  practicable  and in any event within 90 days
after the close of each of its fiscal years,  an audit report  unqualified as to
scope certified by Arthur Andersen LLP (or another firm of nationally recognized
independent  certified public accountants) prepared in accordance with Agreement
Accounting  Principles on a consolidated  basis for itself and its Subsidiaries,
including  balance  sheets as of the end of such period,  related  statements of
income and a  statement  of cash flows,  accompanied  by a  certificate  of said
accountants  that,  in  the  course  of  the  examination  necessary  for  their
certification  of the foregoing,  they have obtained no knowledge of any Default
or Unmatured Default, or if, in the opinion of such accountants,  any Default or
Unmatured Default shall exist,  stating the nature and status thereof;  provided
that the requirement of this clause (a) to furnish audited financial  statements
of the  Borrower  and  its  Subsidiaries  shall  be  satisfied  if the  Borrower
furnishes the Agent with the Borrower's  Annual Report on Form 10-K,  filed with
the Securities and Exchange Commission and containing such information.

                    (b) As soon as  practicable  and in any event within 45 days
after the close of the  first  three  quarterly  periods  of each of its  fiscal
years, for itself and its Subsidiaries, consolidated unaudited balance sheets as
at the close of each such  period and  consolidated  statements  of income and a
statement of cash flows for the period from the beginning of such fiscal year to
the end of such quarter,  all certified by its chief financial officer as fairly
presenting the financial condition and results of operations of the Borrower and
its  Subsidiaries,  provided that the  requirement of this clause (b) to furnish
financial  statements of the Borrower and its Subsidiaries shall be satisfied if
the Borrower  furnishes the Agent with the Borrower's  Quarterly  Report on Form
10-Q,  filed with the  Securities and Exchange  Commission  and containing  such
information.

                    (c) As soon as  available,  but in any event not later  than
the last  Business Day in February of each year, a copy of the plan and forecast
(including a projected  consolidated  and  consolidating  balance sheet,  income
statement  and funds flow  statement) of the Borrower and its  Subsidiaries  for
such fiscal year.

                    (d)  Together  with the  financial  statements  required  by
clauses (a) and (b) above, a compliance certificate in substantially the form of
Exhibit B hereto signed by its chief financial  officer showing the calculations
necessary to determine compliance with this Agreement,  setting forth the status
of the reinvestment of any Net Available Proceeds pursuant to Section 2.7(a) and
stating  that no Default  or  Unmatured  Default  exists,  or if any  Default or
Unmatured Default exists, stating the nature and status thereof.

                                      -38-





                    (e) Promptly after becoming available, any management letter
prepared by the firm of independent  public accountants which prepared the audit
report relating to the consolidated financial statements of the Borrower and its
Subsidiaries for any fiscal year.

                    (f) As soon as  possible  and in any  event  within  10 days
after the Borrower knows that any Termination Event has occurred with respect to
any Plan, a statement,  signed by the chief  financial  officer of the Borrower,
describing said Termination  Event and the action which the Borrower proposes to
take with respect thereto.

                    (g) As soon as  possible  and in any  event  within  10 days
after the Borrower  learns  thereof,  notice of the assertion or commencement of
any claim,  action, suit or proceeding  (including any of the foregoing relating
to any  Environmental  Law or Release)  against or affecting the Borrower or any
Subsidiary which could reasonably be expected to have a Material Adverse Effect.

                    (h) Promptly  upon the filing or  availability  thereof,  as
applicable,  copies  of  each  financial  statement,  report,  notice  or  proxy
statement  sent  by  the  Borrower  to   stockholders   generally  and  of  each
registration  statement  (excluding any  registration  statement  filed with the
Securities  and  Exchange  Commission  on Form S-8)  (exclusive  of exhibits) or
prospectus  and annual,  quarterly,  monthly or other  regular  report which the
Borrower  or any of its  Subsidiaries  files with the  Securities  and  Exchange
Commission or any successor agency.

                    (i)  Such   other   information   (including   non-financial
information)  as the  Agent  or any  Lender  may  from  time to time  reasonably
request, including unaudited consolidating financial statements.

         6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Revolving  Credit  Advances for the working  capital
needs and general  corporate  purposes  of the  Borrower  and its  Subsidiaries,
including the repayment of  Indebtedness  and the  repurchase of the  Borrower's
common stock to the extent permitted hereby.  The Borrower will not, nor will it
permit any  Subsidiary  to,  directly  or  indirectly,  use any of the  Facility
Letters of Credit or the  proceeds  of any  Advances  to  purchase  or carry any
"margin  stock" (as defined in  Regulation U) in violation of Regulation G, T, U
or X.

         6.3.  Notice  of  Default.  The  Borrower  will,  and will  cause  each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
(a) any Default or Unmatured Default and (b) of any other development, financial
or other, which could reasonably be expected to have a Material Adverse Effect.

         6.4.  Conduct  of  Business.  The  Borrower  will,  and will cause each
Subsidiary  to,  carry on and conduct its  business  in  substantially  the same
manner and in  substantially  the same fields of  enterprise  as it is presently
conducted  and,  except as otherwise  permitted by Section  6.12,  do all things
necessary to remain duly incorporated or organized, validly existing and in good
standing as a domestic corporation or limited partnership in its jurisdiction of
incorporation  or formation and maintain all requisite  authority to conduct its
business in each  jurisdiction  in which its  business is  conducted;  provided,
however, that nothing in this Section 6.4 shall prevent the abandonment or

                                      -39-





termination  of the  Borrower's  authorization  to do  business  in any  foreign
jurisdiction  or of  the  corporate  existence,  rights  and  franchises  of any
Subsidiary if such  abandonment  or  termination is in the best interests of the
Borrower and not disadvantageous in any material respect to the Lenders.

         6.5.  Taxes.  The Borrower  will,  and will cause each  Subsidiary  to,
timely file complete and correct United States  federal and applicable  foreign,
state and local tax  returns  required  by  applicable  law and pay when due all
material taxes,  assessments and governmental  charges and levies upon it or its
income, profits or Property;  provided,  however, that any such tax, assessment,
charge or levy need not be paid if (i) the same shall  currently be contested in
good  faith  in  proceedings   which  are,  in  the  opinion  of  the  Borrower,
appropriate;  (ii) the Borrower or such Subsidiary shall have provided  accruals
which are adequate to pay and discharge any such tax,  assessment,  charge, levy
or  indebtedness  which could  reasonably  be  anticipated  at the time of their
examination; and (iii) no proceedings shall have been commenced to foreclose any
Lien which may have attached as security therefor.

         6.6.  Insurance.  The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable  insurance  companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound  business  practice;  provided,  however,  that the  Borrower  or any such
Subsidiary  may  effect  workmen's   compensation   insurance  with  respect  to
operations in any particular  jurisdiction through an insurance fund operated by
such jurisdiction. Except as aforesaid, all such insurance shall be carried with
insurers  of  good  standing.  Anything  in  this  Section  6.6 to the  contrary
notwithstanding,  all  insurance  policies  required  to be  maintained  by this
Section 6.6 may contain or be subject to  co-insurance,  deductibles  or similar
clauses or exclusions which in effect result in  self-insurance  or retention of
risks in amounts customary in the Borrower's industry. The Borrower will furnish
to the Agent and any Lender upon request full  information  as to the  insurance
carried.

         6.7.  Compliance  with Laws.  The  Borrower  will,  and will cause each
Subsidiary  to,  comply  with  all  laws,  rules,  regulations,  orders,  writs,
judgments,  injunctions,  decrees  or  awards  to which it may be  subject,  the
failure to comply  with which  could  reasonably  be expected to have a Material
Adverse Effect.

         6.8. Maintenance of Properties.  The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain,  preserve,  protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times; provided,  however,
that,  subject to the  provisions of Section  6.13,  nothing in this Section 6.8
shall prevent the retirement,  sale or other  disposition of any property of the
Borrower or any such  Subsidiary  no longer used or useful in the conduct of its
respective  businesses if such retirement,  sale or other  disposition is in the
best interests of the Borrower and not  disadvantageous  in any material respect
to the Lenders.

     6.9.  Inspection.  The Borrower  will,  and will cause each  Subsidiary to,
permit  the Agent  and the  Lenders,  by their  respective  representatives  and
agents,  to inspect any of the  Property,  corporate  or  partnership  books and
financial records of the Borrower and each Subsidiary, to

                                      -40-





examine and make copies of the books of accounts and other financial  records of
the  Borrower  and each  Subsidiary,  and to discuss the  affairs,  finances and
accounts of the Borrower and each  Subsidiary  with, and to be advised as to the
same by, their respective officers at such reasonable times and intervals as the
Lenders may  designate.  The Borrower  will keep or cause to be kept,  and cause
each  Subsidiary to keep or cause to be kept,  appropriate  records and books of
account  in which  complete  entries  are to be made  reflecting  its and  their
business and financial transactions,  such entries to be made in accordance with
Agreement Accounting Principles consistently applied.

         6.10.  Capital Stock and Dividends.  The Borrower will not, nor will it
permit any Subsidiary to, declare or pay any dividends or make any distributions
on its capital stock or partnership interests or redeem, repurchase or otherwise
acquire or retire any of its capital stock or partnership  interests at any time
outstanding  (other than dividends,  redemptions,  repurchases,  acquisitions or
retirements payable solely in its own capital stock or partnership  interests or
in cash in lieu of fractional  shares in respect  thereof),  except that (a) any
Subsidiary may declare and pay dividends or make  distributions  to the Borrower
or a  Wholly-Owned  Subsidiary  of the  Borrower  and (b)  any  non-Wholly-Owned
Subsidiary may declare and pay dividends  ratably to its  shareholders,  and (c)
the  Borrower  may declare and pay  dividends,  make  distributions  and redeem,
repurchase, reacquire or retire its capital stock in a Permitted Transaction (as
defined  below) so long as no Default or  Unmatured  Default has occurred and is
continuing either before or after giving effect thereto. "Permitted Transaction"
shall mean (i) the  repurchase  by the  Borrower of its common stock on or after
the date  hereof  and prior to May 1, 1998 for  aggregate  consideration  not in
excess of  $150,000,000;  and (ii) in  addition  to any  repurchase  pursuant to
clause (i) above,  the repurchase by the Borrower of up to 500,000 shares of its
common stock.

     6.11.  Indebtedness.  The  Borrower  will  not,  nor  will  it  permit  any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

                    (a)    the Loans;

                    (b)  Indebtedness  existing  on the date  hereof  and either
described in Schedule 5.17 hereto or not required to be so described,  including
any  refundings  or  refinancings  thereof,  so  long  as  the  amount  of  such
Indebtedness  so refunded or replaced does not exceed the amount  committed with
respect thereto as of the date hereof;

                    (c)  Indebtedness of any Subsidiary owing to the Borrower or
any other Subsidiary, if permitted by Section 6.15;

                    (d)  Indebtedness of the Borrower  pursuant to a Receivables
Financing,  so long as (i) at the time such  Indebtedness  is incurred and after
giving  effect  thereto,  no Default or  Unmatured  Default has  occurred and is
continuing and (ii) the aggregate amount of Indebtedness outstanding at any time
under this clause (d) shall not exceed $50,000,000;

                    (e)  Indebtedness  of foreign  Subsidiaries  of the Borrower
incurred for working capital  purposes,  the obligations in respect of which are
supported by Facility  Letters of Credit issued  hereunder at the request of the
Borrower and for the Borrower's account;

                                      -41-





                    (f) Indebtedness under Rate Hedging  Agreements  incurred in
the ordinary course of business and not for speculative purposes;

                    (g)  Indebtedness  of a Person  existing  at the  time  such
Person, a division of a Person or a line of business is acquired by the Borrower
or a Subsidiary  by Purchase,  so long as such  Indebtedness  was not created in
anticipation of such Person,  division or line of business being acquired by the
Borrower or such Subsidiary; and

                    (h) Other  Indebtedness  created,  incurred or assumed after
the date hereof not  enumerated in clauses (a) through (g) above;  provided that
the aggregate outstanding principal amount of such Indebtedness shall not exceed
$20,000,000 at any one time outstanding.

         6.12.  Merger. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into, or sell all or  substantially  all of its
assets to, any other  Person,  except that (a) a  Subsidiary  may merge into the
Borrower or any Wholly-Owned  Subsidiary of the Borrower; (b) subject to Section
6.15, any  Subsidiary  may merge or  consolidate  with any Person other than the
Borrower  or any  Wholly-Owned  Subsidiary;  provided,  that (i) the  surviving,
continuing  or resulting  Person  shall be a  Wholly-Owned  Subsidiary  and (ii)
immediately after such merger or consolidation,  there shall exist no Default or
Unmatured  Default;  (c)  subject to Section  6.15,  the  Borrower  may merge or
consolidate  with  any  corporation  other  than  any  Wholly-Owned  Subsidiary,
provided,  that (i) the surviving,  continuing or resulting corporation shall be
the  Borrower and (ii)  immediately  after such merger or  consolidation,  there
shall exist no Default or Unmatured  Default;  and (d) subject to Section  6.13,
any Subsidiary may merge or consolidate  with, or sell all or substantially  all
of its assets to, any other  Person  other than the  Borrower or a  Wholly-Owned
Subsidiary  in  a  merger,   consolidation  or  sale  in  which  the  surviving,
continuing, transferee or resulting Person shall not be a Subsidiary.

         6.13.  Sale of Assets.  The  Borrower  will not, nor will it permit any
Subsidiary to, lease,  sell,  transfer or otherwise  dispose of its Property (by
merger or  otherwise),  to any other Person except for (a) sales of inventory in
the ordinary  course of business,  (b) any other sale,  transfer or  disposition
excluded from the  definition of Asset  Disposition or permitted by Section 6.14
and (c) leases,  sales,  transfers or other dispositions of its Property that in
any  calendar  year,  together  with all other  Property of the Borrower and its
Subsidiaries  previously leased, sold or disposed of (other than in transactions
permitted by subsection  (a) or (b) of this Section 6.13) in such calendar year,
do not exceed 15% of the book value of the Borrower's  consolidated assets as of
the beginning of such calendar year;  provided that neither the Borrower nor any
Subsidiary shall consummate a lease, sale,  transfer or other disposition of its
Property  which,  together  with all  other  Property  of the  Borrower  and its
Subsidiaries leased, sold or disposed of after the date of this Agreement (other
than in  transactions  permitted by subsection (a) or (b) of this Section 6.13),
exceeds 25% of the book value of the  Borrower's  consolidated  assets as of the
beginning of the year in which such transaction occurs.  Within twelve months of
the receipt thereof, the Borrower shall reinvest,  as contemplated by clause (i)
of the first  parenthetical of Section 2.7 (a), any Net Available  Proceeds from
Asset  Dispositions  (excluding  the first  $10,000,000  of such proceeds in any
calendar  year) which,  pursuant to such Section,  did not result in a mandatory
commitment reduction.


                                      -42-





     6.14. Sale of Accounts.  Except with respect to any Receivables  Financings
permitted  hereunder,  the Borrower will not, nor will it permit any  Subsidiary
to, sell or otherwise  dispose of any notes  receivable or accounts  receivable,
with or without recourse.

         6.15.  Investments  and  Purchases.  The Borrower will not, nor will it
permit any  Subsidiary to, make or suffer to exist any  Investments  (including,
without   limitation,   loans  and  advances  to,  and  other   Investments  in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or  remain  a  partner  in any  partnership  or  joint  venture,  or to make any
Purchases of any Person, except:

     (a) Short-term obligations of, or fully guaranteed by, the United States of
America;

     (b)  Commercial  paper rated A-l or better by Standard  and Poor's  Ratings
Group,  a  division  of the  McGraw-Hill  Companies  or P-l or better by Moody's
Investors Service, Inc.;

     (c) Demand deposit accounts maintained in the ordinary course of business;

     (d)  Certificates  of deposit  issued by and time deposits with  commercial
banks  (whether  domestic  or foreign)  having  capital and surplus in excess of
$100,000,000;

     (e) Investments in any mutual fund organized  under the Investment  Company
Act of 1940 which invests only in instruments described in clauses (a), (b), and
(d) above;

     (f) Existing Investments in Subsidiaries and other Investments in existence
on the date hereof and described in Schedule 6.15 hereto;

     (g) Additional  Investments in Subsidiaries which do not during the term of
this Agreement  aggregate in excess of $75,000,000 for all such  Investments and
do  not  aggregate  in  excess  of  $20,000,000   for   Investments  in  foreign
Subsidiaries; provided, that at the time of any such Investment and after giving
effect  thereto no Default or Unmatured  Default has occurred and is continuing;
and

     (h) Purchases by the Borrower or its  Subsidiaries  and  Investments by the
Borrower  or its  Subsidiaries  not  permitted  by clauses (a) through (g) above
which  do not  during  the  term  of  this  Agreement  aggregate  in  excess  of
$150,000,000  (including  assumed  Indebtedness);  provided  that (i) no  single
Purchase may exceed $50,000,000 (including assumed  Indebtedness),  except for a
Purchase previously disclosed in writing to the Agent by the Borrower, which may
be purchased  for an  aggregate  amount of no more than  $70,000,000  (including
assumed  Indebtedness),  (ii) at the time of any such Investment or Purchase and
after giving effect thereto, no Default or Unmatured Default has occurred and is
continuing  and (iii) at least five (5) Business Days prior to such Purchase the
Borrower delivers to the Agent a computation of covenant compliance certified by
its chief financial  officer  demonstrating  compliance by the Borrower on a pro
forma basis (giving  effect to the proposed  Purchase) with Section 6.22 for the
most  recently  ended four Fiscal  Quarters and on a projected  basis  (assuming
consummation of the proposed Purchase) for the next succeeding

                                      -43-





four Fiscal Quarters and (iv) the aggregate of the Investments  pursuant to this
clause (h) in Persons  which are not,  and do not thereby  become,  Subsidiaries
shall not exceed $25,000,000.

     6.16.  Liens.  The Borrower will not, nor will it permit any Subsidiary to,
create,  incur,  or suffer to exist  any Lien in, of or on the  Property  of the
Borrower or any of its Subsidiaries  (including  without  limitation the capital
stock of any Subsidiary), except for the following (each a "Permitted Lien"):

     (a) Liens for taxes,  assessments or governmental  charges or levies on its
Property if the same shall not at the time be delinquent  or  thereafter  can be
paid without  penalty,  or are being  contested in good faith and by appropriate
proceedings  and for  which  adequate  reserves  in  accordance  with  generally
accepted principles of accounting shall have been set aside on its books;

     (b) Liens imposed by law, such as carriers',  warehousemen's and mechanics'
liens and other similar liens arising in the ordinary  course of business  which
secure payment of obligations  not more than 60 days past due or which are being
contested  in good  faith by  appropriate  proceedings  and for  which  adequate
reserves shall have been set aside on its books;

     (c) Liens arising out of pledges or deposits  under  worker's  compensation
laws,  unemployment  insurance,  old age pensions,  or other social  security or
retirement benefits, or similar legislation;

     (d) Utility easements, building restrictions and such other encumbrances or
charges against real property as are of a nature generally existing with respect
to properties of a similar character and which do not in any material way affect
the  marketability of the same or interfere with the use thereof in the business
of the Borrower or the Subsidiaries;

     (e) Attachment, judgment and other similar Liens arising in connection with
court proceedings, provided that execution or other enforcement of such Liens is
effectively  stayed and the claims secured thereby are being actively  contested
in good faith and by appropriate proceedings;

     (f) Liens on Property of a Subsidiary  securing only  obligations  owing to
the Borrower or another  Subsidiary,  so long as the  Indebtedness so secured is
permitted by Section 6.11;

     (g) Liens  existing on Property at the time  acquired by the  Borrower or a
Subsidiary,  whether by purchase, merger,  consolidation or otherwise, and Liens
existing  on the  property of a Person at the time it becomes a  Subsidiary,  so
long as such Liens were not created in  anticipation  of such Person  becoming a
Subsidiary;

     (h) (i)  Liens  evidencing  purchase  money or  construction  mortgages  on
Property acquired after the date hereof and securing  Indebtedness not exceeding
the  purchase  price of such  Property,  (ii) Liens  evidencing  Capital  Leases
relating  to  Property  first  placed  in  service  after the date  hereof,  the
Capitalized  Lease  Obligation  with  respect to which shall not exceed the fair
value of such  property at such first  service date (and any related Lien placed
on such property by the lessor

                                      -44-





under such Capital  Lease if the rentals due  thereunder  will fully service the
Indebtedness  secured by such Lien or by  providing  that the lessee  under such
Capital  Lease  will  make  rental  payments  directly  to the  holder  of  such
Indebtedness,  to assure that such lessee will not be  disturbed  in its use and
occupancy  of such  property so long as it is in  compliance  with such  Capital
Lease);  (iii) Liens created after the date hereof in connection with industrial
development  or  pollution  control  financings,  but only if each  such Lien is
limited to the specific  property,  project or facilities  then being  financed;
(iv) chattel  mortgage,  conditional  sale or other title  retention  agreements
securing the purchase price of personal  property acquired after the date hereof
and not extending to any other property of the Borrower or any  Subsidiary,  and
(v)  other  Liens  (other  than any Lien  imposed  by ERISA or  pursuant  to any
Environmental  Law) incurred in the ordinary  course of business;  provided that
the aggregate  amount of Indebtedness and other  obligations  outstanding at any
time and secured pursuant to this clause (h) (excluding any such Liens permitted
by clause (g) above) may not exceed $20,000,000;

     (i) Liens  associated with any Receivables  Financing  permitted under this
Agreement; and

     (j) Liens  existing  on the date  hereof and  described  in  Schedule  6.16
hereto.

         6.17.  Affiliates.  The  Borrower  will not,  and will not  permit  any
Subsidiary to, enter into any transaction  (including,  without limitation,  the
purchase  or sale of any  Property  or  service)  with,  or make any  payment or
transfer  to,  any  Affiliate  except  upon  fair and  reasonable  terms no less
favorable  to the  Borrower  or  such  Subsidiary  than  the  Borrower  or  such
Subsidiary  would  obtain in a  comparable  arms-length  transaction;  provided,
however,  that, without limiting Section 6.15, this Section 6.17 shall not apply
to  any   transaction,   payment  or  transfer  between  the  Borrower  and  any
Wholly-Owned  Subsidiary or between any  Wholly-Owned  Subsidiary  and any other
Wholly-Owned Subsidiary.

         6.18. Additional Subsidiary  Guarantors.  The Borrower shall cause each
Subsidiary which becomes a Wholly-Owned  Subsidiary after the date hereof and is
organized  under  the laws of the  United  States  of  America  or any  State or
territory  thereof and has or acquires assets with a fair market value in excess
of  $1,000,000  to join the  Subsidiary  Guaranty as a  Guarantor  pursuant to a
joinder agreement in the form attached to the Subsidiary  Guaranty within thirty
(30) days of such Person becoming such a Subsidiary.

         6.19.  Subordinated  Indebtedness.  The Borrower will not, and will not
permit any Subsidiary to, make any amendment or  modification  to the indenture,
note or other agreement evidencing or governing any Subordinated Indebtedness or
directly or  indirectly  voluntarily  prepay,  defease or in substance  defease,
purchase,  redeem,  retire or otherwise acquire,  any Subordinated  Indebtedness
other than the  Subordinated  Notes,  which the Borrower  may prepay,  purchase,
defease or in substance defease, retire, redeem or otherwise acquire.

     6.20. Environmental Matters. The Borrower shall and shall cause each of its
Subsidiaries  to (a) at all  times  comply  in all  material  respects  with all
applicable  Environmental  Laws and (b) promptly take any and all reasonable and
necessary remedial actions as required by any

                                      -45-





Environmental  Laws  in  response  to  the  presence,  storage,  use,  disposal,
transportation or Release of any Hazardous Materials on, under or about any real
property owned,  leased or operated by the Borrower or any of its  Subsidiaries.
In the event that the Borrower or any Subsidiary  undertakes any remedial action
with respect to any Hazardous Material on, under or about any real property, the
Borrower or such  Subsidiary  shall conduct and complete such remedial action in
compliance with all applicable Environmental Laws.  Notwithstanding anything set
forth above to the contrary,  the Borrower shall have the  unequivocal  right to
contest  and defend  itself in good faith  against  any  orders or  requests  to
perform any remedial action or any claims with respect to the Borrower's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or Release of any Hazardous Material.

         6.21.  Change in Corporate or Partnership  Structure;  Fiscal Year. The
Borrower  shall  not,  nor shall it permit  any  Subsidiary  to,  (a) permit any
amendment  or  modification  to be  made  to  its  certificate  or  articles  of
incorporation,  by-laws or partnership  agreement which is materially adverse to
the interests of the Lenders  (provided that the Borrower shall notify the Agent
of  any  other  amendment  or  modification   thereto  as  soon  as  practicable
thereafter) or (b) change its fiscal year to end on any date other than December
31 of each year.

     6.22.  Financial  Covenants.  Subject to normal  year-end and closing audit
adjustments for calculations or determinations made in accordance with Agreement
Accounting  Principles  prior to the end of their fiscal year, the Borrower on a
consolidated basis with its Subsidiaries shall:

     6.22.1.  Debt-EBITDA  Ratio.  (a)  Maintain  as of the end of  each  Fiscal
Quarter a  Debt-EBITDA  Ratio of not more than the  following  for the following
respective periods:

    Period                                                              Ratio

    For Fiscal Quarters ending on or after June 30, 1997
    and on or prior to December 31, 1997..........................   3.75 to 1.0

    For Fiscal Quarters ending after December 31, 1997
    and on or prior to September 30, 1998.........................   3.5  to 1.0

    For Fiscal Quarters ending on or after December 31, 1998 .....   3.0  to 1.0


     6.22.2. Fixed Charge Coverage Ratio.  Maintain as of the end of each Fiscal
Quarter for the four Fiscal Quarters then ended a Fixed Charge Coverage Ratio of
not less than the following for the following respective periods:

    Period                                                              Ratio

    For Fiscal Quarters ending on or after June 30, 1997
    and on or prior to September 30, 1997........................... 1.5  to 1.0


                                      -46-





    For Fiscal Quarters ending after September 30, 1997
    and on or prior to September 30, 1998 .......................... 1.75 to 1.0

    For Fiscal Quarters ending on or after December 31, 1998........ 2.0  to 1.0

    6.23. ERISA Compliance.

                  With  respect  to any  Plan,  neither  the  Borrower  nor  any
Subsidiary shall:

          (a) engage in any "prohibited transaction" (as such term is defined in
     Section 406 of ERISA or Section 4975 of the Code) for which a civil penalty
     pursuant to Section  502(i) of ERISA or a tax  pursuant to Section  4975 of
     the Code in excess of $1,000,000 could be imposed;

          (b)  incur  any  "accumulated  funding  deficiency"  (as such  term is
     defined in Section  302 of ERISA) in excess of  $1,000,000,  whether or not
     waived;

          (c)  permit  the  occurrence  of any  Termination  Event  which  could
     reasonably be expected to have a Material Adverse Effect;

          (d) be an  "employer"  (as such term is  defined  in  Section  3(5) of
     ERISA) required to contribute to any  Multiemployer  Plan or a "substantial
     employer" (as such term in defined in Section 4001(a)(2) of ERISA) required
     to contribute to any Multiple Employer Plan for which a withdrawal from any
     such plan could  reasonably be expected to have a Material  Adverse Effect;
     or

          (e)  permit  the  establishment  or  amendment  of any Plan or fail to
     comply with the applicable provisions of ERISA and the Code with respect to
     any Plan which  could  result in  liability  to the  Borrower  or any other
     member of the  Controlled  Group which,  individually  or in the aggregate,
     could reasonably be expected to have a Material Adverse Effect.


                                   ARTICLE VII

                                    DEFAULTS


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

         7.1. Any representation or warranty made or deemed made by or on behalf
of the Borrower or any of its  Subsidiaries to the Lenders or the Agent under or
in connection with this Agreement,  any Loan, any Facility Letter of Credit,  or
any  certificate or information  delivered in connection  with this Agreement or
any other Loan Document shall be false in any material respect on the date as of
which made or deemed made or delivered pursuant to Section 4.2.


                                      -47-





         7.2.  Nonpayment  of (a)  principal  of any  Note or any  Reimbursement
Obligation  when due, or (b)  interest  upon any Note or any  commitment  fee or
other fee or obligations  under any of the Loan Documents within five days after
the same becomes due.

         7.3.  The breach by the Borrower of any of the terms or  provisions  of
Sections 6.2, 6.3(a),  6.10 through 6.17, or Sections 6.19, 6.20 (other than any
notification required by clause (a) thereof), 6.22, or 6.23.

         7.4. The breach by the Borrower (other than a breach which  constitutes
a Default  under  Section 7.1, 7.2 or 7.3) of any of the terms or  provisions of
this  Agreement  which is not  remedied  within  thirty (30) days after  written
notice from the Agent or any Lender.

         7.5.  Failure of the  Borrower  or any of its  Subsidiaries  to pay any
Indebtedness  aggregating  in  excess  of  $10,000,000;  or the  default  by the
Borrower or any of its Subsidiaries in the performance of any term, provision or
condition  contained  in any  agreement  or  agreements  under  which  any  such
Indebtedness was created or is governed, or the occurrence of any other event or
the existence of any other condition, the effect of any of which is to cause, or
to permit the holder or holders of such Indebtedness to cause, such Indebtedness
to become  due prior to its stated  maturity;  or any such  Indebtedness  of the
Borrower or any of its  Subsidiaries  shall be declared to be due and payable or
required to be prepaid  (other than by a regularly  scheduled  payment) prior to
the stated maturity thereof.

         7.6.  The Borrower or any of its  Subsidiaries  shall (a) have an order
for relief entered with respect to it under the Federal  bankruptcy  laws as now
or hereafter in effect, (b) make an assignment for the benefit of creditors, (c)
apply for,  seek,  consent to, or acquiesce in, the  appointment  of a receiver,
custodian,  trustee,  examiner,  liquidator  or similar  official  for it or any
Substantial  Portion of its Property,  (d) institute any  proceeding  seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to  adjudicate it a bankrupt or  insolvent,  or seeking  dissolution,
winding up, liquidation, reorganization,  arrangement, adjustment or composition
of it or  its  debts  under  any  law  relating  to  bankruptcy,  insolvency  or
reorganization  or relief of debtors or fail to file an answer or other pleading
denying the material  allegations of any such  proceeding  filed against it, (e)
take any  corporate  or  partnership  action to  authorize  or effect any of the
foregoing  actions  set forth in this  Section  7.6,  (f) consent to, or fail to
contest in good faith any appointment or proceeding  described in Section 7.7 or
(g) become unable to pay, not pay, or admit in writing its inability to pay, its
debts generally as they become due.

         7.7.  Without the  application,  approval or consent of the Borrower or
any of its Subsidiaries,  a receiver,  trustee, examiner,  liquidator or similar
official shall be appointed for the Borrower or any of its  Subsidiaries  or any
Substantial Portion of its Property, or a proceeding described in Section 7.6(d)
shall be  instituted  against the Borrower or any of its  Subsidiaries  and such
appointment  continues  undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) consecutive days.

          7.8. Any court, government or governmental agency shall condemn, seize
or  otherwise  appropriate,  or take  custody  or  control  of (each a 
"Condemnation"), all or any portion of the

                                      -48-





Property of the Borrower and its  Subsidiaries  which,  when taken together with
all other Property of the Borrower and its  Subsidiaries  so condemned,  seized,
appropriated,  or taken  custody or control of, during the  twelve-month  period
ending  with the  month in which any such  Condemnation  occurs,  constitutes  a
Substantial Portion.

         7.9. The Borrower or any of its  Subsidiaries  shall fail within thirty
days to pay,  bond or otherwise  discharge any  judgment(s)  or order(s) for the
payment of money  aggregating in excess of $10,000,000  (other than judgments or
orders as to which a responsible insurer has acknowledged  liability),  which is
not stayed on appeal or otherwise  being  appropriately  contested in good faith
and as to which no enforcement proceedings have been commenced.

         7.10.  The  occurrence  of any  violation of any  Environmental  Law or
Environmental  Permit by the  Borrower  or any of its  Subsidiaries,  which,  in
either case, could reasonably be expected to have a Material Adverse Effect.

         7.11.    Any Change in Control shall occur.

         7.12. The occurrence of any "default",  as defined in any Loan Document
(other  than this  Agreement  or the Notes) or the breach of any of the terms or
provisions of any Loan Document (other than this Agreement or the Notes),  which
default or breach continues beyond any period of grace therein provided.

         7.13.  The  Subsidiary  Guaranty  shall fail to remain in full force or
effect or any action shall be taken to  discontinue  or to assert the invalidity
or unenforceability of the Subsidiary Guaranty,  except as otherwise provided in
or permitted by the Subsidiary Guaranty,  or any Subsidiary Guarantor shall fail
to comply with any of the terms or provisions of the Subsidiary  Guaranty or any
Subsidiary  Guarantor  denies  that  it has  any  further  liability  under  the
Subsidiary Guaranty or gives notice to such effect.


                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES


         8.1.  Acceleration.  If any  Default  described  in Section  7.6 or 7.7
occurs with  respect to the  Borrower,  the  obligations  of the Lenders to make
Loans  hereunder  shall  automatically   terminate  and  the  Obligations  shall
immediately become due and payable without any election or action on the part of
the Agent or any Lender and without  presentment,  demand,  protest or notice of
any kind, all of which Borrower hereby  expressly  waives.  If any other Default
occurs, the Required Lenders may (or the Agent, at the direction of the Required
Lenders,  shall)  terminate  or suspend the  obligations  of the Lenders to make
Loans  hereunder,  or declare the  Obligations  to be due and payable,  or both,
whereupon the  Obligations  shall become  immediately  due and payable,  without
presentment,  demand,  protest or notice of any kind,  all of which the Borrower
hereby expressly waives. In addition to the foregoing,  following the occurrence
and during the continuance of a

                                      -49-





Default,  so long as any Facility  Letter of Credit has not been fully drawn and
has not been  canceled  or  expired by its terms,  upon  demand by the  Required
Lenders (or the Agent with the consent of the  Required  Lenders)  the  Borrower
shall  deposit in an account  (the "Letter of Credit Cash  Collateral  Account")
maintained with First Chicago in the name of the Agent,  for the ratable benefit
of the Lenders and the Agent,  cash in an amount equal to the aggregate  undrawn
face amount of all outstanding Facility Letters of Credit and all fees and other
amounts due or which may become due with respect  thereto.  The  Borrower  shall
have no  control  over funds in the Letter of Credit  Cash  Collateral  Account,
which funds  shall be invested by the Agent from time to time in its  discretion
in  certificates  of deposit of First  Chicago  having a maturity not  exceeding
thirty days. Such funds shall be promptly  applied by the Agent to reimburse the
Issuer for drafts drawn from time to time under the Facility  Letters of Credit.
Such funds, if any,  remaining in the Letter of Credit Cash  Collateral  Account
following (i) the payment of all Obligations in full,  (ii) the  cancellation or
expiration  of all  outstanding  Facility  Letters of Credit,  (iii) the cure or
waiver of any such Default  mentioned above, or (iv) the consent of the Required
Lenders,  shall,  unless the Agent is otherwise directed by a court of competent
jurisdiction, be promptly paid over to the Borrower.

         If, within ten Business Days after  acceleration of the maturity of the
Obligations  or  termination  of the  obligations  of the  Lenders to make Loans
hereunder  as a result of any Default  (other than any Default as  described  in
Section  7.6 or 7.7 with  respect to the  Borrower)  and before any  judgment or
decree  for the  payment of the  Obligations  due shall  have been  obtained  or
entered,  the Required Lenders (in their sole discretion)  shall so direct,  the
Agent  shall,  by notice to the  Borrower,  rescind and annul such  acceleration
and/or termination.

         8.2.  Amendments.  Subject to the  provisions of this Article VIII, the
Required  Lenders  (or the Agent with the  consent  in  writing of the  Required
Lenders) and the Borrower may enter into agreements  supplemental hereto for the
purpose of adding or modifying any  provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender:

                  (a)  Extend the final  maturity  of any Loan or Note or reduce
the principal  amount thereof,  or reduce the rate or extend the time of payment
of interest thereon or of fees payable hereunder;

                  (b)      Reduce the percentage specified in the definition of
 Required Lenders;

                  (c)  Reduce  the  amount or extend  the  payment  date for the
mandatory  payments or  reductions in the Aggregate  Commitment  required  under
Section  2.1 or 2.7,  or  increase  the amount of the  Aggregate  Commitment  or
Revolving  Credit  Commitment of any Lender hereunder (other than an increase in
the  Revolving  Credit  Commitment  of any  Lender as a result of an  assignment
consummated  between such Lender and another Lender  pursuant to Section 12.3.1)
or increase the amount of the Aggregate Revolving Credit Commitment;

                  (d)      Extend the Facility Termination Date or permit any
Facility Letter of Credit to have an expiry date beyond the Facility Termination
 Date;

                                      -50-





     (e) Amend this Section 8.2;

     (f) Release any Subsidiary Guarantor from the Subsidiary  Guaranty,  except
pursuant to the terms thereof; or

     (g) Permit any assignment by the Borrower of its  Obligations or its rights
or obligations hereunder.

No amendment of any  provision  of this  Agreement  relating to the Agent or the
Issuer  shall be  effective  without  the  written  consent  of the Agent or the
Issuer,  as  applicable.  The Agent may waive payment of the fee required  under
Section  12.3.2  without  obtaining  the  consent  of any  other  party  to this
Agreement.

         8.3. Preservation of Rights. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents  shall impair such right or
be construed to be a waiver of any Default or an acquiescence  therein,  and the
making of a Loan or the issuance of a Facility Letter of Credit  notwithstanding
the  existence  of a Default or the  inability  of the  Borrower  to satisfy the
conditions   precedent  to  such  Loan  shall  not   constitute  any  waiver  or
acquiescence.  Any  single  or  partial  exercise  of any such  right  shall not
preclude  any other or further  exercise  thereof or the  exercise  of any other
right, and no waiver,  amendment or other variation of the terms,  conditions or
provisions  of the Loan  Documents  whatsoever  shall be valid unless in writing
signed by the Lenders  required  pursuant to Section  8.2,  and then only to the
extent in such writing  specifically  set forth.  All remedies  contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent and the Lenders until the Obligations have been paid in full.


                                   ARTICLE IX

                               GENERAL PROVISIONS


     9.1. Survival of Representations. All representations and warranties of the
Borrower  contained  in this  Agreement  or of the  Borrower  or any  Subsidiary
contained  in any Loan  Document  shall  survive  delivery  of the Notes and the
making of the Loans herein contemplated.

     9.2. Governmental  Regulation.  Anything contained in this Agreement to the
contrary  notwithstanding,  no Lender shall be obligated to extend credit to the
Borrower  in  violation  of  any  limitation  or  prohibition  provided  by  any
applicable statute or regulation.

     9.3. Taxes. Any stamp, documentary or similar taxes, assessments or charges
payable or ruled  payable by any  Governmental  Authority in respect of the Loan
Documents  shall be paid by the Borrower,  together with interest and penalties,
if any. The  Borrower's  obligations  under this  Section 9.3 shall  survive the
termination of this Agreement and the payment of the Obligations.


                                      -51-





     9.4.  Headings.  Section headings in the Loan Documents are for convenience
of  reference  only,  and  shall not  govern  the  interpretation  of any of the
provisions of the Loan Documents.

         9.5. Entire  Agreement.  The Loan Documents embody the entire agreement
and  understanding  among the Borrower,  the Agent and the Lenders and supersede
all prior agreements and  understandings  among the Borrower,  the Agent and the
Lenders  relating to the subject  matter thereof other than the fee letter dated
March 31, 1997 in favor of First Chicago.

         9.6. Several  Obligations;  Benefits of this Agreement.  The respective
obligations  of the  Lenders  hereunder  are several and not joint and no Lender
shall be the  partner  or agent of any other  (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its  obligations  hereunder  shall not relieve any other  Lender from any of its
obligations  hereunder,  nor shall any Lender be liable  for any other  Lender's
failure to perform.  This Agreement shall not,  except as expressly  provided in
Section  9.7, be  construed so as to confer any right or benefit upon any Person
other than the parties to this  Agreement and their  respective  successors  and
assigns.

         9.7. Expenses; Indemnification.  The Borrower shall reimburse the Agent
and the Arranger for (a) any costs, internal charges and out-of-pocket  expenses
(including reasonable attorneys' fees and expenses and time charges of attorneys
for the Agent or the Arranger,  which attorneys may be employees of the Agent or
the Arranger)  paid or incurred by the Agent or the Arranger in connection  with
the  preparation,   negotiation,   execution,   delivery,  review,  syndication,
amendment,  modification, and administration of the Loan Documents and (b) after
a Default,  for the fees of any  non-legal  advisor or  professional  engaged in
connection with the collection,  enforcement or preservation of rights under, or
a restructuring  of, the Loan  Documents.  The Borrower also agrees to reimburse
the Agent,  the  Arranger  and the Lenders for any costs,  internal  charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent,  the Arranger and the Lenders,  which  attorneys may be
employees  of the Agent,  the  Arranger  and the  Lenders),  paid or incurred in
connection  with the collection and  enforcement  of or  preservation  of rights
under the Loan  Documents.  The Borrower  further agrees to indemnify the Agent,
the Arranger and each Lender, its directors,  officers and employees against all
losses,  claims,  damages,  penalties,   judgments,   liabilities  and  expenses
(including,  without  limitation,  all  expenses of  litigation  or  preparation
therefor  whether  or not the  Agent,  the  Arranger  or such  Lender is a party
thereto)  which any of them may pay or incur  arising out of or relating to this
Agreement,  the other Loan Documents,  the transactions  contemplated  hereby or
thereby or the direct or indirect  application  or proposed  application  of the
proceeds of any Loan hereunder or the use or intended use of any Facility Letter
of Credit  hereunder;  except  to the  extent  that they  arise out of the gross
negligence  or willful  misconduct  of the party  seeking  indemnification.  The
obligations  of the Borrower under this Section 9.7 shall survive the payment of
the Obligations and the termination of this Agreement.

     9.8. Numbers of Documents. All statements,  notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient  counterparts
so that the Agent may, and the Agent shall, furnish one to each of the Lenders.


                                      -52-





     9.9. Accounting.  Except as provided to the contrary herein, all accounting
terms  used  herein  shall  be  interpreted  and all  accounting  determinations
hereunder shall be made in accordance with Agreement Accounting Principles.

     9.10.  Severability of Provisions.  Any provision in any Loan Document that
is held to be inoperative,  unenforceable, or invalid in any jurisdiction shall,
as to that  jurisdiction,  be  inoperative,  unenforceable,  or invalid  without
affecting  the  remaining  provisions  in that  jurisdiction  or the  operation,
enforceability,  or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

     9.11.  Nonliability of Lenders.  The relationship  between the Borrower and
the Lenders and the Agent shall be solely that of borrower  and lender.  Neither
the  Agent nor any  Lender  shall  have any  fiduciary  responsibilities  to the
Borrower.  Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in  connection  with any
phase of the Borrower's business or operations. The Borrower shall rely entirely
upon its own judgment with respect to its business,  and any review,  inspection
or supervision  of, or information  supplied to the Borrower by the Agent or the
Lenders is for the  protection  of the Agent and the  Lenders  and  neither  the
Borrower  nor any other  Person is entitled to rely  thereon.  The  Borrower (a)
agrees  that  neither  the Agent nor any  Lender  shall  have  liability  to the
Borrower (whether  sounding in tort,  contract or otherwise) for losses suffered
by the Borrower in  connection  with,  arising out of, or in any way related to,
the  transactions  contemplated  and the  relationship  established  by the Loan
Documents,  or any act,  omission or event  occurring in  connection  therewith,
unless it is  determined  by a judgment of a court that is binding on the Agent,
or such Lender, final and not subject to review on appeal, that such losses were
the result of acts or omissions on the part of the Agent or such Lender,  as the
case may be,  constituting  gross  negligence,  willful  misconduct  or  knowing
violations of law, and (b) waives, releases and agrees not to sue upon any claim
against  the  Agent  or any  Lender  (whether  sounding  in  tort,  contract  or
otherwise)  except a claim based upon gross  negligence,  willful  misconduct or
knowing  violations  of law.  Whether or not such damages are related to a claim
that is subject to the waiver  effected  above and whether or not such waiver is
effective,  neither  the Agent nor any  Lender  shall  have any  liability  with
respect to, and the Borrower hereby waives,  releases and agrees not to sue for,
any  punitive,  special,  indirect  or  consequential  damages  suffered  by the
Borrower  in  connection  with,  arising  out of, or in any way  related  to the
transactions contemplated or the relationship established by the Loan Documents,
or any act,  omission or event occurring in connection  therewith,  unless it is
determined by a judgment of a court that is binding on the Agent or such Lender,
as the case may be, final and not subject to review on appeal, that such damages
were the result of acts or omissions on the part of the Agent or such Lender, as
the case may be,  constituting  gross negligence,  willful misconduct or knowing
violations of law.

     9.12.  CHOICE OF LAW.  THE LOAN  DOCUMENTS  (OTHER THAN THOSE  CONTAINING A
CONTRARY  EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS,  WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS,  OF THE STATE
OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


                                      -53-





         9.13. CONSENT TO JURISDICTION.  THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING  ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING  MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND  IRREVOCABLY  WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER  HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING  PROCEEDINGS  AGAINST THE BORROWER IN THE COURTS OF
ANY OTHER  JURISDICTION.  ANY JUDICIAL  PROCEEDING  BY THE BORROWER  AGAINST THE
AGENT OR ANY  LENDER  OR ANY  AFFILIATE  OF THE AGENT OR ANY  LENDER  INVOLVING,
DIRECTLY OR  INDIRECTLY,  ANY MATTER IN ANY WAY  ARISING OUT OF,  RELATED TO, OR
CONNECTED  WITH ANY LOAN  DOCUMENT  SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS;  PROVIDED,  THAT SUCH  PROCEEDINGS  MAY BE BROUGHT IN OTHER  COURTS IF
JURISDICTION MAY NOT BE OBTAINED IN A COURT IN CHICAGO, ILLINOIS.

         9.14.  WAIVER OF JURY TRIAL.  THE  BORROWER,  THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY  JUDICIAL  PROCEEDING  INVOLVING,  DIRECTLY OR
INDIRECTLY,  ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY  ARISING  OUT OF,  RELATED TO, OR  CONNECTED  WITH ANY LOAN  DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

         9.15.  Disclosure.  Each Lender hereby (a) acknowledges and agrees that
First Chicago and/or its Affiliates from time to time may hold other investments
in,  make  other  loans  to or  have  other  relationships  with  the  Borrower,
including,  without limitation,  in connection with any Receivables Financing or
any interest rate hedging  instruments or agreements or swap  transactions,  and
(b) waives any  liability  of First  Chicago or such  Affiliate  to any  Lender,
respectively,  arising  out of or  resulting  from  such  investments,  loans or
relationships  other than  liabilities  arising out of the gross  negligence  or
willful misconduct of First Chicago or its Affiliates.

         9.16.  Counterparts.  This  Agreement  may be executed in any number of
counterparts,  all of which taken together shall  constitute one agreement,  and
any of the  parties  hereto may  execute  this  Agreement  by  signing  any such
counterpart.  This Agreement shall be effective when it has been executed by the
Borrower,  the Agent and the  Lenders and each party has  notified  the Agent by
telex or telephone, that it has taken such action.



                                      -54-





                                    ARTICLE X

                                    THE AGENT


         10.1.  Appointment.  First Chicago is hereby  appointed Agent hereunder
and under each other Loan Document, and each of the Lenders authorizes the Agent
to act as the agent of such  Lender.  The  Agent  agrees to act as such upon the
express  conditions  contained  in this  Article  X. The Agent  shall not have a
fiduciary  relationship  in respect of the  Borrower  or any Lender by reason of
this Agreement, any other Loan Document or any transaction contemplated hereby.

         10.2.  Powers.  The Agent shall have and may exercise such powers under
the Loan  Documents as are  specifically  delegated to the Agent by the terms of
each thereof,  together with such powers as are reasonably  incidental  thereto.
The Agent shall have no implied duties to the Lenders,  or any obligation to the
Lenders to take any action thereunder,  except any action specifically  provided
by the Loan Documents to be taken by the Agent.

         10.3.  General  Immunity.  Neither the Agent nor any of its  directors,
officers,  agents or employees shall be liable to the Borrower or any Lender for
any action  taken or omitted  to be taken by it or them  hereunder  or under any
other Loan  Document or in  connection  herewith or therewith  except for its or
their own gross negligence or willful misconduct.

         10.4. No Responsibility for Loans, Recitals, etc. Neither the Agent nor
any of its directors,  officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (a) any statement,  warranty
or  representation  made in  connection  with any Loan Document or any borrowing
hereunder,  (b)  the  performance  or  observance  of any of  the  covenants  or
agreements  of  any  obligor  under  any  Loan  Document,   including,   without
limitation,  any agreement by an obligor to furnish information directly to each
Lender,  (c) the  satisfaction of any condition  specified in Article IV, except
receipt  of items  required  to be  delivered  to the  Agent  and not  waived at
closing,  or (d) the validity,  effectiveness,  sufficiency,  enforceability  or
genuineness of any Loan Document or any other instrument or writing furnished in
connection  therewith.  The Agent  shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Borrower to the Agent at
such time, but is voluntarily  furnished by the Borrower to the Agent (either in
its capacity as Agent or in its individual capacity).

         10.5.  Action on Instructions of Lenders.  The Agent shall in all cases
be fully protected in acting, or in refraining from acting,  hereunder and under
any other Loan Document in accordance  with written  instructions  signed by the
Required Lenders, (or, to the extent required by Section 8.2, all Lenders),  and
such  instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all holders of Notes. The Agent shall be
fully  justified in failing or refusing to take any action  hereunder  and under
any other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro-rata against any and all liability,  cost and expense that it
may incur by reason of taking or continuing to take any such action,  other than
any such  liability,  cost or expense  resulting  from its gross  negligence  or
willful misconduct.


                                      -55-





         10.6.  Employment  of Agents and Counsel.  The Agent may execute any of
its duties as Agent  hereunder  and under any other Loan  Document by or through
employees,  agents  and  attorneys-in-fact  and shall not be  answerable  to the
Lenders,  except  as to money or  securities  received  by it or its  authorized
agents,  for the default or misconduct  of any such agents or  attorneys-in-fact
selected by it with  reasonable  care.  The Agent shall be entitled to advice of
counsel  concerning all matters  pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.

         10.7.  Reliance on Documents;  Counsel.  The Agent shall be entitled to
rely upon any Note, notice, consent,  certificate,  affidavit, letter, telegram,
statement,  paper or  document  believed  by it to be genuine and correct and to
have been  signed or sent by the proper  person or  persons,  and, in respect of
legal matters,  upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

         10.8. Agent's  Reimbursement and Indemnification.  The Lenders agree to
reimburse and  indemnify  the Agent  ratably in  proportion to their  respective
Commitments (or if the Commitments have been terminated,  in proportion to their
Commitments  immediately  prior to such  termination)  (a) for any  amounts  not
reimbursed by the Borrower for which the Agent is entitled to  reimbursement  by
the Borrower under the Loan  Documents,  (b) for any other expenses  incurred by
the  Agent on  behalf  of the  Lenders,  in  connection  with  the  preparation,
execution,  delivery,  administration and enforcement of the Loan Documents, and
(c) for any  liabilities,  obligations,  losses,  damages,  penalties,  actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any kind and  nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of the Loan  Documents or any other  document
delivered in connection therewith or the transactions  contemplated  thereby, or
the  enforcement  of any of the terms  thereof or of any such  other  documents;
provided,  that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross  negligence or willful  misconduct  of the Agent.  The
obligations of the Lenders under this Section 10.8 shall survive  payment of the
Obligations and termination of this Agreement.

         10.9. Rights as a Lender. In the event the Agent is a Lender, the Agent
shall  have the same  rights  and  powers  hereunder  and under  any other  Loan
Document  as any  Lender  and may  exercise  the same as  though it were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is a
Lender,  unless  the  context  otherwise  indicates,  include  the  Agent in its
individual  capacity.  The Agent may accept  deposits  from,  lend money to, and
generally engage in any kind of trust,  debt,  equity or other  transaction,  in
addition to those  contemplated  by this  Agreement or any other Loan  Document,
with the  Borrower  or any of its  Subsidiaries  in which the  Borrower  or such
Subsidiary is not restricted hereby from engaging with any other Person.

         10.10.  Lender Credit Decision.  Each Lender  acknowledges that it has,
independently  and without reliance upon the Agent or any other Lender and based
on the financial  statements  prepared by the Borrower and such other  documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents.  Each Lender
also  acknowledges  that it will,  independently  and without  reliance upon the
Agent or any other  Lender and based on such  documents  and  information  as it
shall deem appropriate at the time,

                                      -56-





continue to make its own credit  decisions in taking or not taking  action under
this Agreement and the other Loan Documents.

         10.11.  Successor  Agent.  The Agent  may  resign at any time by giving
written notice thereof to the Lenders and the Borrower. The Agent may be removed
at any time for cause by the  Required  Lenders.  Upon any such  resignation  or
removal,  the Required Lenders shall have the right to appoint, on behalf of the
Lenders,  a successor Agent (which Agent,  if not a Lender,  shall be reasonably
acceptable to the Borrower).  If no successor Agent shall have been so appointed
by the Required Lenders and shall have accepted such  appointment  within thirty
days after the retiring  Agent's  giving notice of  resignation or within thirty
days  after  the  removal  of such  Agent,  then the  retiring  Agent  shall use
reasonable efforts to appoint, on behalf of the Lenders, a successor Agent. Such
successor Agent shall be a commercial bank having capital and retained  earnings
of at  least  $50,000,000.  Upon  the  acceptance  of any  appointment  as Agent
hereunder by a successor Agent,  such successor Agent shall thereupon succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
retiring  Agent,  and the retiring Agent shall be discharged from its duties and
obligations  hereunder  and under the other Loan  Documents.  After any retiring
Agent's  resignation  or removal  hereunder  as Agent,  the  provisions  of this
Article X shall  continue  in effect for its  benefit in respect of any  actions
taken or omitted  to be taken by it while it was  acting as the Agent  hereunder
and under the other Loan Documents.

         10.12.  Notice  of  Default.  The  Agent  shall  not be  deemed to have
knowledge  or notice of the  occurrence  of any  Default  or  Unmatured  Default
hereunder  unless the Agent has  received  notice from a Lender or the  Borrower
referring to this  Agreement  describing  such Default or Unmatured  Default and
stating that such notice is a "notice of  default".  In the event that the Agent
receives  such a notice,  the Agent  shall  give  prompt  notice  thereof to the
Lenders.

         10.13.   Co-Agent.  There shall be no rights, obligation or liabilities
afforded to or imposed upon any Co-Agent by virtue of its status as such.


                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS


     11.1.  Setoff. In addition to, and without limitation of, any rights of the
Lenders  under  applicable  law,  if the  Borrower  becomes  insolvent,  however
evidenced,  or any Default occurs,  any and all deposits  (including all account
balances,  whether  provisional  or  final  and  whether  or  not  collected  or
available) and any other Indebtedness at any time held or owing by any Lender to
or for the credit or account of the  Borrower  may be offset and applied  toward
the payment of the Obligations then due to such Lender.

     11.2. Ratable Payments. If any Lender, whether by setoff or otherwise,  has
payment  made to it upon its Loans  (other than  payments  received  pursuant to
Sections  3.1, 3.2 or 3.4) in a greater  proportion  than its pro-rata  share of
such Loans, such Lender agrees, promptly upon demand, to

                                      -57-





purchase  a portion  of the Loans  held by the other  Lenders so that after such
purchase each Lender will hold its ratable  proportion of Loans.  If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise,  receives  collateral or other protection for its Obligations or such
amounts  which may be subject to  setoff,  such  Lender  agrees,  promptly  upon
demand,  to take  such  action  necessary  such  that all  Lenders  share in the
benefits of such  collateral  ratably in proportion to their Loans.  In case any
such payment is disturbed by legal process,  or otherwise,  appropriate  further
adjustments  shall be  made.  If an  amount  to be set off is to be  applied  to
Indebtedness of the Borrower to a Lender,  other than Indebtedness  evidenced by
any of the Notes held by such Lender,  such amount  shall be applied  ratably to
such other Indebtedness and to the Indebtedness evidenced by such Notes.


                                   ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS


         12.1.  Successors  and Assigns.  The terms and  provisions  of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders  and  their  respective  successors  and  assigns,  except  that (a) the
Borrower shall not have the right to assign its rights or obligations  under the
Loan Documents,  and (b) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (b) of this Section, any Lender may at
any time,  without the consent of the  Borrower or the Agent,  assign all or any
portion of its rights under this  Agreement  and its Notes to a Federal  Reserve
Bank; provided, however, that no such assignment to a Federal Reserve Bank shall
release the  transferor  Lender from its  obligations  hereunder.  The Agent may
treat the payee of any Note as the owner thereof for all purposes  hereof unless
and until such payee  complies with Section 12.3 in the case of an assignment or
transfer  thereof.  Any assignee or  transferee  of a Note agrees by  acceptance
thereof to be bound by all the terms and provisions of the Loan  Documents.  Any
request,  authority  or consent of any  Person,  who at the time of making  such
request or giving such authority or consent is the holder of any Note,  shall be
conclusive and binding on any subsequent holder,  transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.

         12.2.    Participations.

                  12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary  course of its business and in accordance  with  applicable law, at any
time sell to one or more banks or other entities ("Participants")  participating
interests  in any Loan owing to such Lender,  any Note held by such Lender,  any
Lender's  interest in Facility Letters of Credit,  any Commitment of such Lender
or any other interest of such Lender under the Loan  Documents.  In the event of
any such sale by a Lender of  participating  interests  to a  Participant,  such
Lender's  obligations  under the Loan  Documents  shall remain  unchanged,  such
Lender shall  remain  solely  responsible  to the other  parties  hereto for the
performance of such obligations, such Lender shall remain the holder of any such
Note for all  purposes  under the Loan  Documents,  all  amounts  payable by the
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the

                                      -58-





Borrower  and the Agent shall  continue to deal  solely and  directly  with such
Lender in connection with such Lender's  rights and  obligations  under the Loan
Documents.

                  12.2.2. Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any amendment,  modification
or waiver of any  provision  of the Loan  Documents  other  than any  amendment,
modification  or waiver which  effects any of the  modifications  referenced  in
clauses (a) through (g) of Section 8.2.

                  12.2.3.  Benefit  of Setoff.  The  Borrower  agrees  that each
Participant shall be deemed to have the right of setoff provided in Section 11.1
in  respect  of its  participating  interest  in  amounts  owing  under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under the Loan Documents;  provided,  that each
Lender shall retain the right of setoff provided in Section 11.1 with respect to
the amount of  participating  interests  sold to each  Participant.  The Lenders
agree to share with each Participant,  and each  Participant,  by exercising the
right of setoff provided in Section 11.1, agrees to share with each Lender,  any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with Section 11.2 as if each Participant were a Lender.

         12.3.    Assignments.

                  12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more  banks or other  entities  ("Purchasers")  all or any part of its
rights  and  obligations  under the Loan  Documents.  Such  assignment  shall be
substantially  in the form of  Exhibit C hereto or in such  other form as may be
agreed to by the  parties  thereto.  The  consent of the Agent and the  Borrower
shall be required  prior to an assignment  becoming  effective with respect to a
Purchaser which is not a Lender or an Affiliate thereof.  Such consent shall not
be unreasonably withheld.

                  12.3.2. Effect; Effective Date. Upon (a) delivery to the Agent
of a notice of  assignment,  substantially  in the form attached as Exhibit I to
Exhibit C hereto (a "Notice of Assignment"), together with any consents required
by Section 12.3.1,  and (b) payment by the transferor Lender (or, in the case of
a Lender making an assignment  pursuant to Section 12.3.3,  the Borrower),  of a
$3,500 fee to the Agent for processing such  assignment,  such assignment  shall
become  effective on the effective  date specified in such Notice of Assignment.
On and after the effective date of such assignment, (a) such Purchaser shall for
all purposes be a Lender  party to this  Agreement  and any other Loan  Document
executed  by the  Lenders  and shall have all the rights  and  obligations  of a
Lender  under the Loan  Documents,  to the same extent as if it were an original
party hereto,  and (b) the  transferor  Lender shall be released with respect to
the percentage of the Aggregate  Commitment and Loans assigned to such Purchaser
without any further consent or action by the Borrower, the Lenders or the Agent.
Upon the consummation of any assignment to a Purchaser  pursuant to this Section
12.3.2, the transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement  Notes are issued to such transferor Lender and
new Notes or, as appropriate,  replacement  Notes, are issued to such Purchaser,
in each case in principal  amounts  reflecting  their  Commitments,  as adjusted
pursuant to such assignment and the transferor Lender shall deliver the replaced
Note, marked canceled, to the Borrower.

                                      -59-





                  12.3.3.  If any Lender  shall make  demand for  payment  under
Section 2.18,  3.1 or 3.2, or shall deliver any notice to the Agent  pursuant to
Section 3.3 resulting in the  suspension of certain  obligations  of the Lenders
with  respect to  Eurodollar  Advances,  then  within 60 days of such demand for
payment or such notice of such suspension,  as the case may be, the Borrower may
demand that such Lender  assign in  accordance  with this Section 12.3 to one or
more Purchasers  designated by the Borrower and acceptable to the Agent all (but
not less  than  all) of such  Lender's  rights  and  obligations  under the Loan
Documents within the next 30 days, subject to receipt of payment in full by such
Lender of all amounts due it hereunder,  including  amounts owing under Sections
2.18, 3.1 and 3.2.

         12.4. Dissemination of Information. The Borrower authorizes each Lender
to disclose to any  Participant  or Purchaser  or any other Person  acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective  Transferee  any and all  information  in such  Lender's  possession
concerning the  creditworthiness of the Borrower and its Subsidiaries;  provided
that, prior to any such  disclosure,  such Lender shall notify the Transferee or
prospective  Transferee  (a)  of the  confidential  nature  of the  Confidential
Borrower  Information (as hereinafter defined) relating to the Borrower received
by it from such Lender and (b) that by the acceptance of such  information  such
Transferee or prospective Transferee is bound by the confidentiality  provisions
of Section 14.1.

         12.5.  Tax  Treatment.   If  any  interest  in  any  Loan  Document  is
transferred  to  any  Transferee  which  is  organized  under  the  laws  of any
jurisdiction  other than the United States or any State thereof,  the transferor
Lender shall cause such Transferee,  concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.18.


                                  ARTICLE XIII

                                     NOTICES


         13.1. Giving Notice. Except as otherwise permitted by Section 2.15 with
respect to borrowing notices, all notices and other  communications  provided to
any party hereto under this  Agreement  or any other Loan  Document  shall be in
writing, by facsimile,  first class U.S. mail or overnight courier and addressed
or delivered to such party at its address set forth below its  signature  hereto
or at such other  address as may be  designated by such party in a notice to the
other  parties,  with a copy, in the case of notice to the Borrower with respect
to a Default,  to Gardner,  Carton & Douglas,  Suite 3400,  Quaker Tower, 321 N.
Clark Street, Chicago, Illinois 60010, Attn: Derick C. Marsh, Telecopy No. (312)
644-3381.  Any notice, if mailed and properly addressed with first class postage
prepaid, return receipt requested, shall be deemed given three (3) Business Days
after deposit in the U.S. mail; any notice,  if transmitted by facsimile,  shall
be deemed given when transmitted and  acknowledgment of receipt by an officer of
the  recipient is received;  and any notice given by overnight  courier shall be
deemed given when received by the  addressee.  Wherever  under this Agreement or
under any other Loan Document any  certificate  or other writing is given by any
director,  officer  or  employee  of  the  Borrower  or  any  Subsidiary,   such
certificate or other writing

                                      -60-





shall be  delivered  by such  director,  officer  or  employee  on behalf of the
Borrower or such  Subsidiary  in his or her  capacity as a director,  officer or
employee and not in his or her individual capacity.

     13.2.  Change of Address.  The Borrower,  the Agent and any Lender may each
change the  address  for service of notice upon it by a notice in writing to the
other parties hereto.

                                   ARTICLE XIV

                                 CONFIDENTIALITY


         14.1.  Confidentiality.  In  connection  with  this  Agreement  and the
transactions  contemplated hereby (including,  without limitation,  Sections 6.1
and 6.9),  the  Borrower  may  provide  the  Agent or any  Lender  with  certain
confidential,  non-public or  proprietary  written  information  concerning  the
Borrower's  business.  The Agent and each Lender  agree to hold any  information
designated  as  such  in  writing  by  the  Borrower   ("Confidential   Borrower
Information")  provided to it hereunder in  confidence  and agree that except as
otherwise  expressly  provided herein,  they will not disclose to any Person any
portion of the Confidential  Borrower  Information so provided without the prior
written consent of the Borrower.  It is understood,  however,  that Confidential
Borrower  Information shall not include  information that is or becomes publicly
available or information which becomes available to the Agent or any Lender on a
non-confidential  basis  from a source  that is not  known to such  Person to be
subject  to a  confidentiality  agreement  with  the  Borrower.  It  is  further
understood that Confidential  Borrower Information may be disclosed by the Agent
or any Lender  (a) to such  Person's  directors,  officers,  employees,  agents,
advisors  and  consultants  on a  "need  to  know"  and  confidential  basis  in
connection with this Agreement and the transactions  contemplated hereby, (b) to
other  Lenders  and  prospective  Lenders  who  have  been  advised  (i)  of the
confidential nature of such Confidential  Borrower  Information and (ii) that by
the acceptance of such  information  such other Lender or prospective  Lender is
bound by the confidentiality provisions of this Section 14.1, (c) at the request
of any regulatory or examining  authority having  jurisdiction over such Person,
and (d) pursuant to subpoena or other legal process or as otherwise  required by
law, in which case,  the Agent or any Lender,  as the case may be, shall provide
the Borrower  with notice of such  disclosure  promptly so that the Borrower may
seek a protective order or appropriate remedy if available,  unless provision of
any such notice would  result in a violation of any such  subpoena or order of a
court of competent  jurisdiction.  The  respective  obligations of the Agent and
each Lender hereunder with respect to Confidential  Borrower  Information  shall
survive the termination of this Agreement.

                           [signature pages to follow]

                                      -61-





         IN  WITNESS  WHEREOF,  the  Borrower,  the  Lenders  and the Agent have
executed this Agreement as of the date first above written.

                                        SPX CORPORATION


                                          By: /s/ Patrick J. O'Leary

                                          Print Name:  Patrick J. O'Leary
                                          Title:  Vice President, Finance
                                                  Treasurer and Chief
                                                  Financial and Accounting
                                                  Officer

                                          Address:  700 Terrace Point Drive
                                                    Muskegon, Michigan  49443
                                                    Attn: Patrick J. O'Leary

                                            Telecopy: (616) 724-5309
                                            Telephone: (616) 724-5600


Commitments

Revolving Credit                        THE FIRST NATIONAL BANK OF CHICAGO,
   Commitment                                    Individually and as Agent

$400,000,000                              By: /s/ Patricia H. Besser

                                          Print Name:  Patricia H. Besser
                                          Title:  Vice President

                                          Address: One First National Plaza
                                                       Chicago, Illinois  60670
                                                       Attn:  Patricia H. Besser

                                          Telecopy:  (312) 732-5161
                                          Telephone:  (312) 732-6695



Aggregate Commitment: $400,000,000




                                                      -62-





Document Number:  0178885.08
5-7-97/09:00am

                                                      -63-





 

5 3-MOS DEC-31-1997 MAR-31-1997 111,456 0 147,464 (8,815) 126,562 445,667 258,153 (135,517) 645,522 392,839 128,400 0 0 165,632 (36,909) 645,522 236,662 236,662 173,796 46,752 (65,736) 0 4,328 77,522 42,817 34,705 0 (10,330) 0 24,375 1.68 1.68