SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For quarterly period ended October 2, 1999

Commission File Number 1-7724

SNAP-ON INCORPORATED
(Exact name of registrant as specified in its charter)

Delaware                                     39-0622040
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

10801 Corporate Drive, Pleasant Prairie, Wisconsin                53158-1603
(Address of principal executive offices)                 (zip code)

Registrant's telephone number, including area code:   (414) 656-5200 

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date:

Class                                Outstanding at October 30, 1999
Common stock, $1 par value                            58,518,811 shares

SNAP-ON INCORPORATED

INDEX

Page

Part I.     Financial Information

Consolidated Statements of Earnings -
Thirteen and Thirty-nine Weeks Ended
October 2, 1999 and October 3, 1998                       3

Consolidated Balance Sheets -
October 2, 1999 and January 2, 1999                      4-5

Consolidated Statements of Cash Flows -
Thirty-nine Weeks Ended
October 2, 1999 and October 3, 1998                       6

Notes to Consolidated Unaudited Financial Statements     7-14

Management's Discussion and Analysis of
Financial Condition and Results of Operations           15-21

Part II.    Other Information                                              22-23

PART I. FINANCIAL INFORMATION

SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(Unaudited)

Thirteen Weeks Ended        Thirty-nine Weeks Ended
October 2,       October 3,   October 2,      October 3,
1999            1998          1999           1998     
----            ----          ----           ----     

Net sales                          $   453,157    $   427,272    $ 1,378,895    $ 1,295,877

Cost of goods sold                    (234,738)      (225,184)      (716,310)      (677,554)

Cost of goods sold -
discontinued products                   --          (50,562)          --          (50,562)

Operating expenses                    (170,504)      (176,366)      (527,215)      (525,346)

Restructuring and other
non-recurring charges                 (5,315)       (82,559)       (14,285)       (82,559)

Net finance income                      12,267         14,657         46,400         47,529

Interest expense                        (5,262)        (5,883)       (15,360)       (15,365)

Other income (expense) - net            16,558            604          3,319         (1,624)
-----------    -----------    -----------    -----------

Earnings (loss) before
income taxes                     66,163        (98,021)       155,444         (9,604)

Income tax provision (benefit)          23,613        (24,024)        55,654          7,806
-----------    -----------    -----------    -----------

Net earnings (loss)                $    42,550    $   (73,997)   $    99,790    $   (17,410)
===========    ===========    ===========    ===========

Earnings (loss) per weighted
average common share - basic     $       .73    $     (1.24)   $      1.71    $      (.29)
===========    ===========    ===========    ===========

Earnings (loss) per weighted
average common share - diluted   $       .72    $     (1.24)   $      1.69    $      (.29)
===========    ===========    ===========    ===========

Weighted average common shares
outstanding - basic                   58,491         58,995         58,482         59,359

Effect of dilutive options                 424           --              424           --
-----------    -----------    -----------    -----------

Weighted average common shares
outstanding - diluted                 58,915         58,995         58,906         59,359
===========    ===========    ===========    ===========

Dividends declared per
common share                     $      --      $      --      $       .67    $       .64
===========    ===========    ===========    ===========

The accompanying notes are an integral part of these statements.

3

SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)

(Unaudited)
October 2,       January 2,
1999            1999    
------------      --------------
ASSETS
Current Assets
Cash and cash equivalents                 $     42,688      $     15,041

Accounts receivable, less allowances           568,660           554,703

Inventories
Finished stock                              453,489           359,358
Work in process                              58,268            38,357
Raw materials                                81,854            74,192
Excess of current cost over LIFO cost       (95,541)          (96,471)
------------      ------------
Total inventory                             498,070           375,436

Prepaid expenses and other assets             189,536           134,652
------------      ------------
Total current assets                      1,298,954         1,079,832

Property and equipment
Land                                            21,346            19,572
Buildings and improvements                     216,139           175,385
Machinery and equipment                        516,866           388,862
------------      ------------
754,351           583,819
Accumulated depreciation                      (403,349)         (311,789)
------------      ------------
Total property and equipment                351,002           272,030

Deferred income tax benefits                      48,197            60,139
Intangibles                                      454,256           172,517
Other assets                                      54,537            90,402
-------------     -------------

Total assets                           $2,206,946        $1,674,920
=============     =============

The accompanying notes are an integral part of these statements.

4

SNAP-ON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)

(Unaudited)
October 2,    January 2,
1999          1999   
------------  -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                $   152,015   $     89,442
Notes payable and current maturities
of long-term debt                                   37,018         93,117
Accrued compensation                                 41,267         42,105
Dealer deposits                                      40,367         42,421
Deferred subscription revenue                        41,558         34,793
Accrued restructuring reserve                        15,791         26,165
Other accrued liabilities                           176,266        130,010
-----------    -----------
Total current liabilities                        504,282        458,053

Long-term debt                                        669,715        246,644
Deferred income taxes                                  18,128          9,587
Retiree health care benefits                           91,525         89,124
Pension and other long-term liabilities               112,511        109,245
-----------    -----------
Total liabilities                              1,396,161        912,653

SHAREHOLDERS' EQUITY
Preferred stock - authorized 15,000,000 shares
of $1 par value; none outstanding                        -              -
Common stock - authorized 250,000,000 shares
of $1 par value; issued -
October 2, 1999 - 66,717,746 shares
January 2, 1999 - 66,685,169 shares                  66,718         66,685
Additional paid-in capital                             96,936        117,384
Retained earnings                                     943,787        883,207
Accumulated other comprehensive income (loss)         (35,242)       (30,231)
Grantor stock trust at fair market value - 
6,694,196 and 6,924,019 shares                     (212,963)      (241,042)
Treasury stock at cost - 1,509,140 and
1,016,224 shares                                    (48,451)       (33,736)
-----------    -----------

Total shareholders' equity                       810,785        762,267
-----------    -----------

Total liabilities and shareholders'
equity                                     $2,206,946     $1,674,920
===========    ===========

The accompanying notes are an integral part of these statements.

5

SNAP-ON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Thirty-nine Weeks Ended 
October 2,     October 3,
1999          1998   
-----------   -----------
OPERATING ACTIVITIES
Net earnings (loss)                               $   99,790     $  (17,410)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation                                        28,751         25,715
Amortization                                         8,828          7,099
Deferred income taxes                               20,364         (4,310)
(Gain) on sale of assets                            (1,183)        (4,412)
(Gain) on currency hedge for purchase
price commitment, net of tax                      (1,085)            -
Charges due to restructuring and other
non-recurring charges, net of tax                  9,504         96,461
Changes in operating assets and liabilities:
Decrease in receivables                             52,904         56,514
(Increase) in inventories                          (42,483)       (66,935)
Decrease in prepaid and other assets                54,265         50,261
(Decrease) in accounts payable                     (24,296)       (16,127)
(Decrease) in accruals and other liabilities        (2,398)       (53,882)
-----------    ----------

Net cash provided by operating activities            202,961         72,974

INVESTING ACTIVITIES
Capital expenditures                                 (27,189)       (32,332)
Acquisitions of businesses                          (481,752)       (76,155)
Disposal of property and equipment                     6,276          7,115
----------    -----------

Net cash used in investing activities               (502,665)      (101,372)

FINANCING ACTIVITIES
Payment of long-term debt                                  -         (3,543)
Increase in long-term debt                             6,743         47,412
Increase in short-term borrowings-net                346,296         78,830
Purchase of treasury stock                           (14,714)       (75,723)
Proceeds from stock plans                              7,663          7,333
Cash dividends paid                                  (39,210)       (38,030)
----------     ----------

Net cash provided by financing activities              306,778         16,279

Effect of exchange rate changes on cash                   (416)           (90)
----------     ----------

Increase (decrease) in cash and cash equivalents         6,658        (12,209)

Cash and cash equivalents at beginning of period        15,041         25,679
----------     ----------

Cash and cash equivalents at end of period          $   21,699      $  13,470
==========     ==========

The accompanying notes are an integral part of these statements.

6

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

1.  This report should be read in conjunction  with the  consolidated  financial
statements  and  related  notes  included in Snap-on  Incorporated's  Annual
Report for the year ended January 2, 1999.

In  the  opinion  of  management,  all  adjustments  (consisting  of  normal
recurring  adjustments and adjustments  related to  restructuring  and other
non-recurring  charges) necessary to a fair statement of financial condition
and results of  operations  for the  thirteen  and  thirty-nine  weeks ended
October 2, 1999 have been made. Management also believes that the results of
operations for the thirteen and thirty-nine  weeks ended October 2, 1999 are
not necessarily  indicative of the results to be expected for the full year.
Certain   prior-year   amounts  have  been   reclassified  to  conform  with
current-year presentation.

2.  Snap-on Incorporated (the "Corporation")  normally declares and pays in cash
four regular,  quarterly  dividends.  However, the third quarter dividend in
each  year  is  declared  in  June,  giving  rise to two  regular  quarterly
dividends appearing in the second quarter and correspondingly, three regular
quarterly dividends appearing in the first twenty-six weeks' statements.

3.  Income tax paid for the  thirty-nine  week period ended  October 2, 1999 and
October 3, 1998 was $11.0 million and $43.4  million.  Interest paid for the
thirty-nine  week period ended October 2, 1999 and October 3, 1998 was $20.3
million and $16.9 million.

4.  In 1998, the Corporation  announced a  simplification  initiative  ("Project
Simplify")   which  is  a  broad   program  of  internal   rationalizations,
consolidations  and  reorganizations.  The goal is to make the Corporation's
business  operations  simpler and more  effective.  Project  Simplify,  upon
completion in the first  quarter of 2000,  will result in the closing of six
manufacturing  facilities,  seven  warehouses  and 47 small offices in North
America and Europe;  the elimination of 1,100 positions;  the discontinuance
of 12,000 stock keeping units ("SKUs") of inventory;  and the  consolidation
of certain  business units.  Total charges for Project Simplify are composed
of  restructuring   charges,   other   non-recurring   charges  and  related
transitional costs.

For the  third  quarter  and first  nine  months  of 1999,  the  Corporation
recorded pre-tax charges of $5.3 million and $14.3 million, respectively, of
other  non-recurring  charges  related  to Project  Simplify.  For the third
quarter of 1998,  when  Project  Simplify  was  announced,  the  Corporation
recorded  pre-tax  charges  of $133.1  million  of  restructuring  and other
non-recurring  charges.  Total charges for Project Simplify as of October 2,
1999  were  $164.1  million.  This  amount  consists  of  $75.6  million  of
restructuring charges and $88.5 million of other non-recurring charges.

7

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

The composition of the Corporation's $75.6 million  restructuring  charges is as
follows:

Original                 Write-down              Restructuring
Restructuring  Additions  of Assets to    Cash     Reserves as of
(Amounts in thousands)         Reserves    to Reserves  Fair Value    Payments  October 3, 1999

Expenditures for severance
and other exit costs     $ 21,105    $  1,969    $   --        $(13,093)    $  9,981
Loss on the write-down
of intangibles and
goodwill                   36,240         298     (36,538)         --           --
Charges for warranty
provisions                  9,660        --          --          (3,850)       5,810
Loss on the write-down
of assets                   5,978         357      (6,335)         --           --
--------    --------    --------      --------     --------
Total restructuring
reserves                $ 72,983    $  2,624    $(42,873)     $(16,943)    $ 15,791
========    ========    ========      ========     ========

The  Corporation  has recorded  restructuring  charges of $15.5  million for
severance  and of  $7.6  million  for  non-cancelable  lease  agreements  on
facilities  to be closed  and  other  exit  costs  associated  with  Project
Simplify.  Severance  costs  provided  for  worldwide  salaried  and  hourly
employees relate to facility closures,  elimination of staffing redundancies
and  operational  streamlining.  As of October 2, 1999,  959 employees of an
estimated 1,100 have separated from the Corporation,  and severance payments
of $8.4 million have been made. The  elimination of the remaining  positions
is expected  by the first  quarter of 2000.  The  Corporation  has  adjusted
property,  plant and  equipment  and other  assets to net  realizable  value
through a $6.3 million restructuring charge.

As part of the restructuring  efforts, the Corporation has also written down
impaired  goodwill  and  other  intangible  assets of  certain  discontinued
business units by $36.5 million.  The majority of this write-down relates to
Computer Aided Services, Inc. and Edge Diagnostic Systems. No net realizable
value was assessed for these  intangible  assets due to the closure of these
operations and the  discontinuance  of their product  lines.  As part of the
elimination of these business units and their product lines, the Corporation
has  recorded a charge in the amount of $9.7  million to provide  additional
warranty support, at no cost to the customer, for products already sold. The
warranty  reserve  has been  included  in Cost of Goods Sold -  Discontinued
Products  while all  remaining  restructuring  charges have been included in
Restructuring   and  Other   Non-recurring   Charges  on  the   accompanying
Consolidated Statements of Earnings.

Other non-recurring  Charges:  As part of Project Simplify,  the Corporation
has recorded  other  non-recurring  charges in the amount of $88.5  million.
These charges include the elimination of $50.9 million of discontinued  SKUs
of inventory,  costs to resolve certain legal matters in the amount of $18.7
million  and  other  transitional  costs in the  amount  of  $18.9  million.
Transitional  costs,  which  are  comprised  of  employee  incentives  ($2.1
million),  relocation costs ($7.9 million) and  professional  services ($8.9
million),  do not  qualify  for  restructuring  accrual  treatment  and  are
therefore  expensed  when  incurred.  The  reduction of SKUs is an effort to
reduce  the  transaction   costs  and  working  capital   intensity  of  the
Corporation's product offering, and refocus on high volume growth products.

8

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

The charge for certain legal matters  includes legal costs to conclude these
matters.  The non-recurring charge related to the reduction of SKUs has been
included as part of Cost of Goods Sold -  Discontinued  Products,  while the
remaining  non-recurring  charges have been  included in  Restructuring  and
Other Non-recurring Charges on the accompanying  Consolidated  Statements of
Earnings.

5.  On September 30, 1999,  the  Corporation  completed its  acquisition  of the
Sandvik Saws and Tools business,  formerly a wholly-owned  operating unit of
Sandvik AB, for  approximately  US$400  million (SEK 3,300 million) in cash.
Pursuant to the Share Purchase Agreement,  the Corporation  acquired 100% of
the voting securities of SB Tools S.a.r.l. ("SB Tools"), a controlled entity
of CTT Cutting Tool  Technology  B.V., a wholly-owned  subsidiary of Sandvik
AB. Pursuant to a reorganization  which occurred within the Sandvik group of
companies and at the time of closing,  SB Tools was the owner,  directly and
indirectly, of the companies within the Sandvik group conducting the line of
business known as the Sandvik Saws and Tools business. The acquired business
will operate within the Corporation as the Bahco Group.  The acquisition was
financed through internally  generated funds and an expansion of an existing
commercial  paper credit  facility  supported by a recently  completed  $600
million  multi-currency  revolving credit facility. The acquisition is being
accounted for under the purchase method of accounting. The purchase includes
facilities, a number of brand names and trademarks, and certain other assets
and  liabilities,  all of which have been  included  in the  October 2, 1999
consolidated balance sheet. The assets and liabilities have been recorded at
historical  cost until an audited  financial  statement and  estimated  fair
market  values  of the  assets  acquired  and the  liabilities  assumed  are
available  and final  purchase  price  adjustments  are  made.  As a result,
goodwill of $240.0  million has been recorded  representing  the  difference
between  the  purchase  price  and the  historical  cost of the  assets  and
liabilities assumed.  Upon determination of the estimated fair market values
of the assets acquired and liabilities  assumed, the cost of the acquisition
will be allocated in accordance with criteria  established  under Accounting
Principles Board Opinion No. 16, "Business Combinations",  and goodwill will
be adjusted accordingly. It is anticipated that the resulting goodwill is to
be assigned a 40 year life.  Because the purchase occurred at the end of the
quarter,  there was no effect  recorded  to the  consolidated  statement  of
earnings for the quarter or nine months ended October 2, 1999.

The Bahco Group is a manufacturer and supplier of professional tool products
and  employs  approximately  2,400  people.  Of those,  approximately  1,000
employees are in Sweden.  Products are  manufactured at 11 plants in Sweden,
Germany,  Portugal,  France,  England, the United States and Argentina.  The
business had 1998 sales of US$325  million (SEK 2,700  million) (60% Europe,
26% U.S.  and Latin  America,  and 14% in  Asia/Pacific  and the rest of the
world).  The  Corporation  anticipates  this  transaction  to be  neutral to
earnings in the fourth quarter of 1999 and accretive thereafter.

6.  Earnings per share  calculations  were  computed by dividing net earnings by
the corresponding  weighted average number of common shares  outstanding for
the period.  The dilutive  effect of the potential  exercise of  outstanding
options to purchase shares of common stock is calculated  using the treasury
stock method.

9

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

7.  In June 1998,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  No.  133,  "Accounting  for  Derivative  Instruments  and Hedging
Activities,"  which  establishes  accounting  and  reporting  standards  for
derivative  instruments  and  for  hedging  activities.   The  Statement  of
Financial  Accounting  Standards  ("SFAS") No. 133 was  effective for fiscal
years  beginning after June 15, 1999. In June 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities--Deferral
of the Effective  Date of FASB  Statement No. 133".  SFAS No. 137 defers the
effective date of SFAS No. 133 for one year to fiscal years  beginning after
June 15, 2000. The  Corporation  is currently  evaluating the impact of this
pronouncement.

8.  Total comprehensive income,  consisting of net earnings and foreign currency
translation adjustments, for the thirteen and thirty-nine week periods ended
October 2, 1999 and October 3, 1998, was as follows:

Thirteen Weeks Ended         Thirty-nine Weeks Ended
October 2,     October 3,    October 2,      October 3,
(Amounts in thousands)                       1999          1998           1999            1998
----          ----           ----            ----

Net earnings (loss)                      $ 42,550      $ (73,997)     $ 99,790       $ (17,410)
Foreign currency translation                4,216          5,185        (5,011)          4,331 
--------      ---------      --------       ----------
Total comprehensive income (loss)        $ 46,766      $ (68,812)     $ 94,779       $ (13,079)
========      =========      ========       =========

9.  The Corporation uses derivative  instruments to manage well-defined interest
rate and foreign currency exposures. The Corporation does not use derivative
instruments  for trading  purposes.  The criteria used to determine if hedge
accounting  treatment is appropriate are (i) the designation of the hedge to
an  underlying  exposure,  (ii) whether or not overall risk is being reduced
and (iii) if there is a  correlation  between  the  value of the  derivative
instrument and the underlying obligation.

Interest Rate Derivative  Instruments:  The Corporation enters into interest
rate swap  agreements to manage  interest  costs and risks  associated  with
changing interest rates. The differentials paid or received on interest rate
agreements are accrued and  recognized as  adjustments to interest  expense.
Gains and losses realized upon  settlement of these  agreements are deferred
and amortized to interest expense over a period relevant to the agreement if
the underlying hedged instrument remains outstanding,  or immediately if the
underlying hedged instrument is settled.

Foreign Currency Derivative Instruments: 
The Corporation has operations in a number of countries and has intercompany
transactions  among them and, as a result,  is exposed to changes in foreign
currency exchange rates. The Corporation  manages most of these exposures on
a  consolidated  basis,  which  allows  netting  certain  exposures  to take
advantage  of any  natural  offsets.  To the  extent the net  exposures  are
hedged,  forward  contracts  are used.  Gains and/or losses on these foreign
currency  hedges are  included in income in the period in which the exchange
rates change. In the second quarter of 1999, the Corporation  entered into a
forward  currency  hedge to buy 3.2  billion of Swedish  Krona on the US$400
million  equivalent  purchase price commitment for the Sandvik  acquisition.
The hedge was marked to market at the end of the second quarter resulting in
a $13.6 million pre-tax  unrealized loss. At the end of the third quarter, a
$15.3  million  pre-tax  gain was  recognized  at the  close of the  Sandvik
acquisition on September 30, 1999. For the thirty-nine weeks ended September
30,  1999, a $1.7 million  pre-tax 

10

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

gain  was  realized.  The  pre-tax  gain  is  included  in the  consolidated
statements of earnings  under other income  (expense) - net.  Other than the
forward  currency  hedge  related to the Sandvik  acquisition,  gains and/or
losses  from  foreign   currency  hedges  have  not  been  material  to  the
consolidated financial statements.

10. Tejas Testing  Technology  One, L.C. and Tejas Testing  Technology Two, L.C.
(the "Tejas Companies"), former subsidiaries of the Corporation,  previously
entered  into  contracts  with  the  Texas  Natural  Resources  Conservation
Commission ("TNRCC"), an agency of the State of Texas, to perform automotive
emissions  testing  services.   The  Corporation   guaranteed  payment  (the
"Guaranty") of the Tejas  Companies'  obligations  under a seven-year  lease
agreement  in the amount of  approximately  $98.8  million  plus an interest
factor,  pursuant  to  which  the  Tejas  Companies  leased  the  facilities
necessary  to perform  the  contracts.  The  Guaranty  was  assigned  to the
lessor's  lenders.  The Tejas Companies  agreed to indemnify the Corporation
for any payments it must make under the Guaranty.

The State of Texas  subsequently  terminated the emissions program described
in the  contracts.  The Tejas  companies  filed for bankruptcy and commenced
litigation  in state  and  federal  court  against  the  TNRCC  and  related
entities.  The  Corporation  had  recorded  as assets  the net  amounts  the
Corporation  paid under the  Guaranty  that it expected to receive  from the
State of Texas  pursuant  to a  settlement  agreement  approved  by the U.S.
Bankruptcy Court. Under this settlement agreement,  the obligation under the
Guaranty  previously  recorded as a  contingent  liability  in the amount of
$38.5  million  was  satisfied,  leaving  an  expected  receivable  of $55.2
million.  In 1998, the  Corporation  received  $18.2 million,  leaving a net
receivable  balance of $37.0  million prior to the third quarter of 1999. In
September  1999,  the  Corporation  received a $36.0 million cash payment in
early  and  final  settlement.  As a  result,  the  Corporation  recorded  a
non-recurring  $1.0 million  charge against the $37.0 million net receivable
previously  included in the Consolidated  Balance Sheets under Other Assets.
The $1.0  million  charge is  included  in the  consolidated  statements  of
earnings under other income (expense) - net.

In April 1996, the  Corporation  filed a complaint  against SPX  Corporation
("SPX")  alleging  infringement of the  Corporation's  patents and asserting
claims relating to SPX's hiring of the former president of Sun Electric. SPX
filed a counterclaim, alleging infringement of certain SPX patents. Upon the
Corporation's  request  for  reexamination,  the U.S.  Patent and  Trademark
Office initially rejected SPX's patents as invalid, but recently reconfirmed
them.   Neither  the  complaint  nor  the  counterclaim   contains  specific
allegations of damages;  however, the parties' claims could involve multiple
millions of dollars.  It is not  possible at this time to assess the outcome
of any of the claims.

The  Corporation  is  involved  in various  legal  matters,  which are being
defended and handled in the ordinary course of business.  Although it is not
possible to predict the outcome of these matters,  management  believes that
the results will not have a material impact on the  Corporation's  financial
statements.

11. In  1998,  the  Corporation  created  a  Grantor  Stock  Trust  ("GST").  In
conjunction  with the formation of the GST, the Corporation sold 7.1 million
shares of  treasury  stock to the GST.  The sale of these  shares had no net
impact  on  shareholders'  equity  or  on  the  Corporation's  

11

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

Consolidated  Statements  of Earnings.  The GST is a funding  mechanism  for
certain  benefit  programs  and  compensation  arrangements,  including  the
incentive  stock program and employee and  franchised  dealer stock purchase
plans.  The Northern  Trust  Company,  as trustee of the GST,  will vote the
common  stock  held by the  GST  based  on the  directions  of  non-director
employees   holding   vested   options  and  certain   employee  and  dealer
participants  in  those  stock  purchase  plans,  as set  forth  in the  GST
Agreement.  The GST is recorded as Grantor  Stock Trust at Fair Market Value
on the accompanying Consolidated Balance Sheets. Shares owned by the GST are
accounted  for  as  a  reduction  to  shareholders'  equity  until  used  in
connection with employee benefits.  Each period, the shares owned by the GST
are valued at the closing market price,  with  corresponding  changes in the
GST balance reflected in additional paid-in capital.

12. In January 1999, the Corporation recorded a gain in accordance with SFAS No.
125. of $40 million (reported in the  Corporation's  1998 annual report as a
preliminary estimate of $44 million before post-closing adjustments) pre-tax
that resulted from the sale of $141.1 million of U.S.  installment  accounts
receivables  to Newcourt  Financial  USA Inc.  ("Newcourt").  A  significant
portion of the receivables sold to Newcourt were previously securitized with
a third party.  The  Corporation  reacquired  these  previously  securitized
receivables  through an arm's length  transaction  and they were recorded at
cost. These receivables,  along with previously  unsecuritized  receivables,
were sold to Newcourt  resulting in a pre-tax gain of $40 million.  The gain
is being recognized over a two-year period.

13. In 1998, the Corporation adopted Statement of Financial Accounting Standards
No.  131,   "Disclosures   about  Segments  of  an  Enterprise  and  Related
Information,"  which  changes the way the  Corporation  reports  information
about its operating  segments.  The  information  for 1998 has been restated
from  the  prior  years'  presentation  in  order  to  conform  to the  1999
presentation.

The Corporation's  segments are based on the organization  structure that is
used by management  for making  operating and  investment  decisions and for
assessing  performance.  Based on this management approach,  the Corporation
has five reportable segments:  North America  Transportation,  North America
Other,  Europe,  International  and  Financial  Services.  The North America
Transportation  segment consists of the  Corporation's  business  operations
serving  primarily the  franchised  dealer  channel in the United States and
Canada.  The North  America  Other  segment  consists  of the  Corporation's
business operations serving the direct sales and distributor channels in the
United  States and Canada,  as well as the  Corporation's  exports  from the
United States.  The Europe segment consists of the Corporation's  operations
in  Europe  and  Africa.   The   International   segment   consists  of  the
Corporation's operations in the Asia/Pacific region and Latin America. These
four  segments  derive  revenues  primarily  from  the  sale  of  tools  and
equipment.  The Financial Services segment derives royalty income,  based on
new loan  originations,  and management  fees from Snap-on Credit LLC, a 50%
owned joint venture with Newcourt.  Earnings from this segment also includes
a portion of the amortization of the  approximately $40 million pre-tax gain
that  resulted  from  the   Corporation's   sale  of  installment   accounts
receivables  to Newcourt.  The overall gain is being  recognized  over a two
year period.  The Financial Services segment also provides limited financing
to technicians, shop owners and dealers.

The Corporation evaluates the performance of its operating segments based on
earnings  before  taxes,  interest  expense,  other  income/expense-net  and
restructuring and other non-recurring  charges. The

12

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

Corporation   accounts  for  intersegment   sales  and  transfers  based  on
established sales prices between the segments,  which represent cost plus an
intercompany  markup.  The Corporation  allocates shared service expenses to
those  segments  that  utilize the  services  based on their  percentage  of
revenues from external sources.  The Corporation has charged license fees to
its North  America  segments  based on their  percentages  of certain  North
America sales.  Expenses  related to restructuring  and other  non-recurring
charges are not allocated to the reportable segments.

Financial data by segment for the thirteen and thirty-nine weeks ended:

Thirteen Weeks Ended        Thirty-nine Weeks Ended
October 2,     October 3,    October 2,      October 3,
(Amounts in thousands)                       1999          1998           1999            1998
----          ----           ----            ----
Revenues from external customers:

North America Transportation          $   210,377   $    207,040   $   655,762     $   629,596
North America Other                       127,777        105,412       360,650         330,828
Europe                                     93,527         96,711       301,977         279,612
International                              21,476         18,109        60,506          55,841
-----------   ------------   -----------     -----------
Total from reportable segments        $   453,157   $    427,272   $ 1,378,895     $ 1,295,877
===========   ============   ===========     ===========

Thirteen Weeks Ended        Thirty-nine Weeks Ended
October 2,     October 3,    October 2,      October 3,
(Amounts in thousands)                       1999          1998         1999            1998
----          ----         ----            ----
Intersegment revenues:

North America Transportation               $    --       $     --       $      --       $        11
North America Other                             60,291         56,870       192,401         171,262
Europe                                           2,188          1,931         7,403           5,293
International                                        2              1             5              48
-----------   ------------   -----------     -----------
Total from reportable segments                  62,481         58,802       199,809         176,614
Elimination of intersegment
revenue                                       (62,481)       (58,802)     (199,809)       (176,614)
-----------   ------------   -----------     -----------
Total consolidated intersegment
revenue                                   $    --       $    --        $      --       $       --
===========   ============   ===========     ===========

Earnings:
North America Transportation               $    25,838   $     18,451   $    73,252     $    47,509
North America Other                             25,093         11,237        64,019          52,553
Europe                                          (1,800)        (2,786)        1,298          (2,884)
International                                   (1,216)        (1,180)       (3,199)         (4,201)
Financial Services                              12,267         14,657        46,400          47,529
-----------   ------------   -----------     -----------
Total from reportable segments                  60,182         40,379       181,770         140,506
Restructuring and other
non-recurring charges                         (5,315)      (133,121)      (14,285)       (133,121)
Interest expense                                (5,262)        (5,883)      (15,360)        (15,365)
Other income (expense) - net                    16,558            604         3,319          (1,624)
-----------   ------------   -----------     -----------
Total consolidated earnings before taxes   $    66,163   $    (98,021)  $   155,444     $    (9,604)
===========   ============   ===========     ===========

13

SNAP-ON INCORPORATED
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS (continued)

Financial data by segment as of:       October 2,      January 2,
(Amounts in thousands)                    1999           1999
----           ----
Total assets:
North America Transportation           $  520,473     $  516,372
North America Other                       615,687        591,831
Europe                                    988,781        407,663
International                              65,822         56,293
Financial Services                        132,577        231,092
----------     ----------
Total from reportable segments         $2,323,340     $1,803,251
==========     ==========

14.  In 1998, In August 1999, the corporation completed a $600 million revolving
credit  facility to support its commercial  paper  program.  A $200 million
credit  facility is effective for a five-year term and terminates on August
23, 2004.  A $400  million  credit  facility is a 364-day  facility  with a
one-year  term out option which allows the  Corporation  to elect to borrow
under the credit  facility  for an  additional  year after the  termination
date.  These  facilities  were used to finance the  Sandvik  Saws and Tools
acquisition.

14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Overview:  The  Corporation  posted record net sales,  earnings and earnings per
share for the third quarter and first nine months of 1999.  Net sales  increased
6.1% to $453.2  million for the third quarter and increased 6.4% to $1.4 billion
for the first nine months of 1999 as compared to the comparable  1998 periods of
$427.3 million and $1.3 billion.  The increase in net sales in the third quarter
and first  nine  months of 1999 over 1998 was  driven by  increases  across  all
business segments in North America.  Reported net earnings for the third quarter
and first nine months of 1999 were $42.6  million and $99.8  million as compared
to $74.0  million net loss and $17.4  million net loss in the  comparable  prior
year  periods.  Reported  diluted  earnings per share for the third  quarter and
first nine  months of 1999 were $0.72 per share and $1.69 per share as  compared
to a loss of $1.24 per  share  and a loss of $0.29  per share in the  comparable
prior year periods.

Net  earnings  for the third  quarter,  excluding  other  non-recurring  charges
related to Project  Simplify of $3.2  million  after-tax,  a gain on the forward
currency hedge on the US$400 million  equivalent  purchase price  commitment for
the Sandvik  acquisition  of $9.8 million  after-tax  and a  non-recurring  $0.7
million  after-tax charge resulting from settlement of litigation with the State
of Texas ("non-recurring items"),  improved to $36.6 million from $22.5 million,
an increase of 63.1% from the same year-ago  period.  Net earnings for the first
nine months of 1999,  excluding other  non-recurring  charges related to Project
Simplify of $8.8 million  after-tax,  a gain on a currency hedge of $1.1 million
after-tax  and the  settlement  of  litigation  with the  State of Texas of $0.7
million  after-tax,  increased 36.9% to $108.2 million,  versus $79.1 million in
the same period a year ago. Net earnings for the third  quarter of $22.5 million
and first nine months of 1998 of $79.1 million excludes $52.9 million  after-tax
of restructuring  charges and $43.6 million  after-tax of non-recurring  charges
related to the  announcement  of Project  Simplify in the third quarter of 1998.
Diluted  earnings  per share for the 1999 third  quarter  were $0.62,  excluding
non-recurring  items.  For the first nine months of 1999,  diluted  earnings per
share were $1.84, excluding non-recurring items.

Operating  expenses as a percentage of net sales decreased to 37.6% in the third
quarter  of 1999 from  41.3% in prior year  period.  For the nine month  period,
operating  expenses as a percentage of net sales decreased to 38.2% in 1999 from
40.5% in the  prior  year  period.  The  declines  in  operating  expenses  as a
percentage of net sales reflect favorable  operating leverage and the effects of
savings from Project Simplify.

The  Corporation's  simplification  initiative,  Project  Simplify,  is a  broad
program  of  internal   rationalizations,   consolidations  and  reorganizations
intended  to  make  the  Corporation's  business  operations  simpler  and  more
effective.  The actions associated with Project Simplify, upon completion in the
first quarter of 2000, are expected to lead to the closing of six  manufacturing
facilities,  seven  warehouses and 47 small offices in North America and Europe;
the elimination of more than 1,100  positions;  the elimination of nearly 12,000
SKUs; and the  consolidation  of certain  business  units.  As of the end of the
third quarter of 1999, 959 positions were eliminated,  50 facilities were closed
and the SKU reduction  activities  have yielded in excess of the planned  12,000
target.  The closing of the remaining 10 facilities  and the  elimination of the
remaining  141  positions is expected to be  completed  by the first  quarter of
2000. The  Corporation  expects to realize annual cost savings of  approximately

15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

$60 million from the initiative.  The Corporation expects to achieve $30 million
in 1999 and $60 million in 2000.

In the third  quarter and first nine months of 1999,  $5.3 million ($3.2 million
or $0.06 per share after-tax) and $14.3 million ($8.8 million or $0.16 per share
after-tax) of other non-recurring  charges were taken in connection with Project
Simplify,  primarily  for  reassignment  of personnel  and costs for  facilities
consolidation.  Of the expected total charge of approximately  $185.0 million to
be recorded  through  the first  quarter of 2000,  a total of $164.1  million in
pre-tax charges have been recorded  through the third quarter of 1999 (including
$133.1 million in the third quarter of 1998, $16.8 million in the fourth quarter
of 1998,  $1.9 million in the first quarter of 1999,  $7.0 million in the second
quarter  of 1999 and $5.3  million  in the third  quarter  1999).  Approximately
one-half  of the  total  charges  will be  non-cash  with  the  remaining  costs
requiring cash outflows which will be and are being provided from operations.

Finance  income for the third quarter of 1999 was $12.3  million,  a decrease of
16.3% from third quarter 1998 of $14.7 million,  reflecting the expected decline
resulting  from the reduced  level of extended  credit  receivables.  This lower
level is the  result of the sale of  extended  credit  receivables  in the first
quarter of 1999 to Snap-on Credit LLC.  Finance income for the first nine months
of 1999 was $46.4 million, a decrease of 2.4% from the comparable 1998 period of
$47.5  million.  The decrease in finance income for the nine month period is due
to reduced level of extended credit receivables in the second and third quarters
of 1999 as compared to 1998,  partially  offset by gains on the initial  sale of
non-recourse  receivables to Snap-on Credit LLC and strong  originations  in the
first quarter of 1999.

Segment  Results:   North  America  Transportation  sales  consist  of  business
operations  serving the dealer  channel in the U.S.  and  Canada.  For the third
quarter of 1999,  sales were  $210.4  million,  an  increase  of 1.6% over third
quarter 1998 sales of $207.0 million.  For the first nine months of 1999,  sales
were $655.8  million,  an increase of 4.2% over  nine-month 1998 sales of $629.6
million. Renewed focus on Snap-on's traditional product lines - hand tools, tool
storage and power tools - resulted in a significantly  better product mix during
the quarter and nine month periods.  Lower  emission  related sales in the third
quarter  contributed  to a smaller  increase in the third  quarter  than for the
nine-month period over last year.

North  America  Other sales  consist of business  operations  serving the direct
sales and distributor  channels in the U.S. and Canada,  as well as exports from
the U.S. For the third quarter of 1999,  sales were $127.8 million,  an increase
of 21.2% over third  quarter  1998 sales of $105.4  million.  For the first nine
months of 1999,  sales were $360.7 million,  an increase of 9.0% over nine-month
1998 sales of $330.8 million.  These increases reflect growth in diagnostics and
equipment sales to the  Corporation's  growing base of national and OEM accounts
as well as continued  consistent  growth in sales of information  products.  The
increase for the nine month period includes the negative effect of the reduction
in emissions sales and a discontinued product line during 1999.

Europe sales consist of business  operations in Europe and Africa. For the third
quarter of 1999,  sales  were  $93.5  million,  an  decrease  of 3.3% over third
quarter  1998  sales of $96.7  million,  reflecting  the  result  of a  negative
currency impact and continued weakness in exports (particularly in equipment) to
distributors  in Eastern Europe and Asia,  partially  offset by sales from small
acquisitions  completed  

16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

during the third  quarter  last year.  For the first nine months of 1999,  sales
were $302.0  million,  an increase of 8.0% over  nine-month 1998 sales of $279.6
million,  reflecting  sales from small  acquisitions  completed during the third
quarter last year,  partially offset by negative  currency impacts and continued
weakness in exports to distributors in Eastern Europe and Asia.

International sales consist of business operations in the Asia/Pacific and Latin
America  markets,  with the majority  derived from Japan and Australia.  For the
third quarter of 1999, sales were $21.5 million, an increase of 18.6% over third
quarter 1998 sales of $18.1  million.  For the first nine months of 1999,  sales
were $60.5  million,  an  increase of 8.4% over  nine-month  1998 sales of $55.8
million. Although reported results increased year over year, operations continue
to be affected by the weakened business conditions in the Asia/Pacific region.

Sandvik  Acquisition:  On September  30, 1999,  the  Corporation  completed  its
acquisition  of the Sandvik  Saws and Tools  business,  formerly a  wholly-owned
operating  unit of  Sandvik  AB, for  approximately  US$400  million  (SEK 3,300
million) in cash.  Pursuant to the Share  Purchase  Agreement,  the  Corporation
acquired 100% of the voting  securities  of SB Tools  S.a.r.l.  ("SB Tools"),  a
controlled entity of CTT Cutting Tool Technology B.V., a wholly-owned subsidiary
of Sandvik AB.  Pursuant to a  reorganization  which occurred within the Sandvik
group of companies and at the time of closing, SB Tools was the owner,  directly
and indirectly, of the companies within the Sandvik group conducting the line of
business  known as the Sandvik Saws and Tools  business.  The acquired  business
will operate within the  Corporation  as the Bahco Group.  The  acquisition  was
financed  through  working  capital and an expansion  of an existing  commercial
paper  credit   facility   supported  by  a  recently   completed  $600  million
multi-currency revolving credit facility. The acquisition is being accounted for
under the purchase method of accounting.  The purchase  includes  facilities,  a
number of brand names and trademarks,  and certain other assets and liabilities,
all of which have been  included  in the  October 2, 1999  consolidated  balance
sheet. The assets and liabilities have been recorded at historical cost until an
audited  financial  statement  and  estimated  fair market  values of the assets
acquired and the  liabilities  assumed are  available and final  purchase  price
adjustments are made. As a result,  goodwill of $240.0 million has been recorded
representing  the difference  between the purchase price and the historical cost
of the assets and liabilities assumed.  Upon determination of the estimated fair
market values of the assets  acquired and liabilities  assumed,  the cost of the
acquisition  will be allocated in  accordance  with criteria  established  under
Accounting Principles Bulletin No. 16 "Business  Combinations" and goodwill will
be  adjusted  accordingly.  Because  the  purchase  occurred  at the  end of the
quarter,  there was no effect recorded to the consolidated statement of earnings
for the quarter or nine months ended October 2, 1999.

The Bahco Group is a manufacturer and supplier of professional tool products and
employs approximately 2,400 people. Of those,  approximately 1,000 employees are
in Sweden. Products are manufactured at 11 plants in Sweden, Germany,  Portugal,
France, England, the United States and Argentina. The business had 1998 sales of
US$325 million (SEK 2,700 million) (60% Europe, 26% U.S. and Latin America,  and
14% in Asia/Pacific and the rest of the world). The Corporation anticipates this
transaction  to be  neutral  to  earnings  in the  fourth  quarter  of 1999  and
accretive thereafter.

17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

FINANCIAL CONDITION

The  following  discussion  of financial  condition  excludes the effects of the
Bahco Group acquisition.

Liquidity:  Cash and cash  equivalents  increased to $21.7 million at the end of
the  third  quarter  from  $15.0  million  at the end of 1998.  Working  capital
increased to $683.0 million at third quarter end, from $621.8 million at the end
of 1998.

In September  1994,  the  Corporation  filed a  registration  statement with the
Securities  and Exchange  Commission  that allows the  Corporation to issue from
time to time up to $300 million of unsecured indebtedness.  In October 1995, the
Corporation  issued  $100  million  of  its  notes  to  the  public.  The  shelf
registration  gives  the  Corporation   financing  flexibility  to  operate  the
business.

In August  1999,  the  corporation  completed a $600  million  revolving  credit
facility to support its commercial paper program. A $200 million credit facility
is  effective  for a five-year  term and  terminates  on August 23, 2004. A $400
million  credit  facility is a 364-day  facility with a one-year term out option
which allows the Corporation to elect to borrow under the credit facility for an
additional  year  after the  termination  date.  These  facilities  were used to
finance the Sandvik Saws and Tools acquisition.

The  Corporation  believes it has  sufficient  sources of  liquidity  to support
working capital requirements,  finance capital  expenditures,  pay dividends and
provide for costs of Project Simplify.

Accounts  receivable  less  allowances:   Accounts  receivable  less  allowances
decreased 9.6% to $501.2 million at the end of the third quarter,  compared with
$554.7  million at the end of 1998,  mainly  reflecting  the sale of  additional
non-securitized receivables to Snap-on Credit LLC in the first quarter of 1999.

Inventories:  Inventories  increased  10.8% to $415.9  million in the 1999 third
quarter,  compared  with $375.4  million at the end of 1998,  reflecting  normal
seasonal  increases to support the higher fourth quarter level of seasonal sales
activity.

Liabilities:  Total  short-term and long-term debt was $692.6 million at the end
of  the  third  quarter,  compared  with  $339.8  million  at the  end of  1998,
reflecting  the cash  purchase of Sandvik Saws and Tools at the end of the third
quarter of 1999.

Average shares outstanding: Average shares outstanding for diluted EPS and basic
EPS in 1999's third  quarter were 58.9  million and 58.5 million  shares  versus
60.0 million for both  diluted EPS and basic EPS in last year's  third  quarter.
Average  shares  outstanding  for  diluted  EPS and basic EPS in the first  nine
months of 1999 were 58.9 million and 58.5 million shares versus 59.4 million for
both diluted EPS and basic EPS in last year's nine month period.

Share  repurchase:  In 1996, the  Corporation's  board of directors  approved an
ongoing  authorization  to  repurchase  stock in an  amount  equivalent  to that
necessary  to  prevent  dilution  created by shares  issued  for stock  options,
employee and dealer stock purchase plans, and other corporate purposes.  On June
27, 1997,  the  Corporation's  board of directors  authorized  the repurchase of
$100.0 million of the Corporation's common stock over a two-year period. On June
26, 1998, the  Corporation's  board of directors  authorized an additional share
repurchase program aggregating $100.0 million of the 

18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Corporation's  common  stock.  In the first quarter of 1999,  the  Corporation's
board of directors  authorized an additional share  repurchase  program of $50.0
million.  The  Corporation  repurchased  $14.7 million or 492,800  shares in the
first quarter of 1999. The Corporation did not repurchase any additional  shares
of its common stock in the second or third  quarter of 1999.  The  Corporation's
outstanding authorizations are approximately $140 million.

Foreign  currency:  The Corporation  operates in a number of countries and, as a
result,  is exposed to changes in foreign currency exchange rates. Most of these
exposures  are  managed on a  consolidated  basis to take  advantage  of natural
offsets  through  netting.  To the extent  that the net  exposures  are  hedged,
forward   contracts  are  used.  Refer  to  Note  9  for  a  discussion  of  the
Corporation's  accounting policies for the use of derivative instruments and for
a discussion  of the  purchase  price  commitment  hedge used in the Bahco Group
acquisition.

Year  2000  Update:  The  Corporation  is  engaged  in a  comprehensive  project
involving its information  systems,  embedded systems,  third-party systems, and
products. The objective of this project is to identify,  develop,  implement and
test any modifications that are required so that these systems and products will
achieve a Year 2000 date  conversion  with no  disruption  to the  Corporation's
business   operations.   A  committee  has  been   established   and  given  the
responsibility for achieving this objective.

For the Corporation's  information systems, the committee has completed the risk
assessment phase of this project.  In North America,  the  implementation of the
BaaN enterprise-wide  system, which is Year 2000 compliant,  has been completed.
The remediation and testing of the Corporation's  critical business systems have
been  completed.  No significant  issues have been  identified.  The Corporation
believes  its  critical  business  systems  will  continue to function  properly
before, during, and after the century date change.

The  Corporation has completed the risk  assessment,  remediation and testing of
the  critical  embedded  systems  at its  facilities  and  manufacturing  plants
worldwide. No significant issues have been identified.  The Corporation believes
it will be able to manufacture and distribute products without disruption due to
date related problems with internal systems.

For  third-party  systems,  the  Corporation  has  communicated  with suppliers,
dealers,  financial  institutions  and others  with which the  Corporation  does
business. Substantially all of those contacted indicated that they either are or
plan on a timely basis to be Year 2000 compliant.

The Corporation  tested its current product line for Year 2000 compliance and no
date-related  issues have been reported in these products.  The Corporation also
tested its previously  manufactured  products  likely to still be in use and has
established  mechanisms  to  address  any  date  related  issues  found  and  to
communicate  with customers  regarding the handling of these issues,  whether or
not covered by the product  warranty.  The Corporation does not expect any costs
associated with these product efforts to be material.

19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

The  Corporation  could  potentially  experience  disruptions  to  some  mission
critical operations as a result of Year 2000 problems.  The Corporation believes
that its most reasonably  likely  worst-case Year 2000 scenarios would relate to
problems outside of the Corporation's  control rather than with its own products
or  internal  systems.  These  problems  might  include  failure  by  suppliers,
customers  and other third parties to remediate  their own  potential  year 2000
problems, as well as risks related to infrastructure  (e.g.,  electricity supply
and  water  and sewer  service).  Nonetheless,  the  Corporation  has  developed
contingency  plans for its critical  business systems and processes to deal with
potential internal issues. These plans include the following:
o   Enhanced  support  for the  information  technology  infrastructure  and
systems,  including twenty-four hours, seven days a week support for the
corporate data center operations which includes the corporate enterprise
BaaN system,  with  arrangements  for  additional  support from external
resources, if necessary.
o   Procedures  to  deal  with   unanticipated   date-related   problems  at
significant suppliers,  including assistance with manual workarounds and
the use of alternate suppliers.  In limited situations,  the Corporation
could not identify an alternate supplier.
o   Procedures  for routing  customer  orders to and  shipping  product from
alternate distribution centers.
o   Creation of a central issues management  process to monitor,  manage and
communicate  regarding any issues or  disruptions  arising in the period
before,   during  and  after  the  century  date  change,  with  special
arrangements  for staff to be on-site or on-call in this period to react
quickly to any critical issues that may arise.
The  Corporation's  contingency  plans cannot  guarantee  that mission  critical
systems  or  business  functions  will not be  affected  by Year 2000  problems,
especially those outside the Corporation's control.

Based on information  currently known to it, the  Corporation  believes that all
critical  areas  of its  business  are  Year  2000  compliant  and  expects  the
non-business  critical  areas to be Year 2000 compliant by the end of the fourth
quarter of 1999. None of the Corporation's other information technology projects
have been delayed as a result of these  issues.  The  Corporation  believes that
total  costs for all of its Year 2000  compliance  activities  will  approximate
between $4 million and $5.4 million  through  December 1999.  Through the end of
the third quarter of 1999, the  Corporation has spent $3.7 million on these Year
2000 issues, with funding provided by cash flows from operations.  The estimated
costs do not include any potential costs related to customer or other claims, or
potential amounts related to executing contingency plans, such as costs incurred
as a result of an  infrastructure  or supplier  failure.  All cost estimates are
based on the current assessment of the projects and are subject to change as the
projects progress.  Based on currently  available  information,  the Corporation
does not believe that the Year 2000 matters  discussed above related to internal
systems,  embedded  systems or products  sold to customers  will have a material
adverse  effect on the  Corporation's  financial  condition  or its  results  of
operations.  There can be no  assurance  that the  failure  to ensure  Year 2000
capability  by a supplier,  customer or another  party would not have a material
adverse  effect on the  Corporation's  financial  condition  or its  results  of
operations.

On  September  30,  1999,  the  Corporation  acquired the Sandvik Saws and Tools
Division  of  Sandvik  AB, now known as the Bahco  Group.  The  Corporation  has
reviewed information relative to Bahco's

20

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Year  2000   compliance   program  during  its  pre-closing  due  diligence  and
subsequently and has found a limited degree of  non-compliance.  The Corporation
has entered into an  Information  Technology  Agreement  with Sandvik AB and has
assurances  that any Year 2000 issues will be resolved in a timely  manner.  The
Corporation  does not  expect  this to have a  material  adverse  effect  on the
Corporation's financial condition or its results of operations.

Euro  Conversion:  On January 1, 1999,  certain member countries of the European
Union  established  fixed  conversion  rates between their  existing  currencies
("legacy  currencies")  and one common  currency - the euro.  The euro trades on
currency  exchanges  and may be  used in  business  transactions.  Beginning  in
January 2002, the new euro-denominated  bills and coins will be used, and legacy
currencies  will be withdrawn  from  circulation.  The  Corporation's  operating
subsidiaries affected by the euro conversion are developing plans to address the
systems and business  issues  affected by the euro  currency  conversion.  These
issues include,  among others, (i) the need to adapt computer and other business
systems and equipment to accommodate euro-denominated transactions, and (ii) the
competitive impact of cross-border price transparency,  which may affect pricing
strategies.  The Corporation  does not expect this conversion to have a material
impact on its financial condition or results of operations.

Safe  Harbor:  Statements  in  this  document  that  are not  historical  facts,
including   statements  (i)  that  include  the  words  "believes,"   "expects,"
"anticipates,"  or "estimates" or words of similar  importance with reference to
the Corporation or management;  (ii) specifically identified as forward-looking;
or (iii) describing the Corporation's or management's  future plans,  objectives
or goals, are forward-looking statements. The Corporation or its representatives
may also make similar forward-looking  statements from time to time orally or in
writing.  The Corporation  cautions the reader that these statements are subject
to risks,  uncertainties  or other  factors  that could cause (and in some cases
have caused) actual  results to differ  materially  from those  described in any
such  statement.  Those  important  factors include the timing and progress with
which  the   Corporation   can  continue  to  implement  the  Project   Simplify
initiatives;  the Year  2000  issue;  the  Corporation's  ability  to  withstand
external  negative  factors  including  changes  in trade,  monetary  and fiscal
policies,  laws and  regulations,  or other  activities of  governments or their
agencies; significant changes in the current competitive environment,  inflation
or employee and labor relations; currency fluctuations or the material worsening
of the economic and political situation in Asia or other parts of the world; and
the achievement of productivity improvements and cost reductions.  These factors
may not  constitute  all  factors  that  could  cause  actual  results to differ
materially  from  those  discussed  in  any   forward-looking   statement.   The
Corporation  operates in a continually  changing  business  environment  and new
factors  emerge from time to time. The  Corporation  cannot predict such factors
nor can it assess the impact,  if any, of such factors on the Corporation or its
results. Accordingly,  forward-looking statements should not be relied upon as a
prediction of actual results.  The Corporation  disclaims any  responsibility to
update any forward-looking statement provided in this document.

Item 3: Qualitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305 of Regulation  S-K, there were no material  changes for the
quarter ended October 2, 1999.

21

PART II. OTHER INFORMATION

Item 6: Exhibits and Reports on Form 8-K

Item 6(a):  Exhibits 

Exhibit 10(a)   Five Year Credit Agreement between the  Corporation  and Salomon
Smith  Barney Inc, Banc One  Capital  Markets Inc. and The First
National Bank of Chicago.

Exhibit 10(b)  364-Day  Credit Agreement  between  the  Corporation  and Salomon
Smith  Barney  Inc, Banc One Capital Markets Inc. and  The  First
National Bank of Chicago.

Exhibit 27     Financial Data Schedule

Item 6(b):  Reports on Form 8-K Filed During the Reporting Period

Date Filed         Date of Report            Item

October 15, 1999      September 30, 1999     Item 2.  The Corporation filed a 
report outlining the
completion of its 
acquisition of Sandvik
Saws and Tools.

22

SIGNATURES

Pursuant to the  requirements  of the Securities  Exchange Act of 1934,  Snap-on
Incorporated  has duly  caused  this  report to be  signed on its  behalf by the
undersigned duly authorized persons.

SNAP-ON INCORPORATED

Date:  November 16, 1999      /s/ R. A. Cornog                               
R. A. CORNOG
(Chairman, President and Chief Executive Officer)

Date:  November 16, 1999      /s/ N. T. Smith                                
N. T. SMITH
(Principal Accounting Officer and Controller)

23

EXHIBIT INDEX

EXHIBIT NO.         DESCRIPTION

Exhibit 10(a)   Five Year Credit Agreement between the  Corporation  and Salomon
Smith  Barney Inc, Banc One  Capital  Markets Inc. and The First
National Bank of Chicago.

Exhibit 10(b)  364-Day  Credit Agreement  between  the  Corporation  and Salomon
Smith  Barney  Inc, Banc One Capital Markets Inc. and  The  First
National Bank of Chicago.

Exhibit 27     Financial Data Schedule

FIVE YEAR CREDIT AGREEMENT

Dated as of August 23, 1999

SNAP-ON  INCORPORATED,  a Delaware  corporation (the  "Borrower"),  the
banks,  financial  institutions  and other  institutional  lenders (the "Initial
Lenders")  listed on the signature  pages hereof,  SALOMON SMITH BARNEY INC., as
lead arranger and book manager,  BANC ONE CAPITAL  MARKETS INC., as co-arranger,
CITIBANK,  N.A.  ("Citibank"),  as  administrative  agent (the  "Agent") for the
Lenders (as  hereinafter  defined) and THE FIRST  NATIONAL  BANK OF CHICAGO,  as
syndication agent, agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.  Certain Defined Terms.  As used in this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

"Advance"  means a Revolving  Credit  Advance or a Competitive
Bid Advance.

"Affiliate"  means,  as to any Person,  any other Person that,
directly or indirectly,  controls,  is controlled by or is under common
control  with such Person or is a director  or officer of such  Person.
For purposes of this  definition,  the term  "control"  (including  the
terms  "controlling",  "controlled by" and "under common control with")
of a Person means the possession,  direct or indirect,  of the power to
vote 5% or more of the  Voting  Stock of such  Person  or to  direct or
cause the  direction  of the  management  and  policies of such Person,
whether   through  the  ownership  of  Voting  Stock,  by  contract  or
otherwise.

"Agent's   Account"   means  (a)  in  the  case  of   Advances
denominated  in  Dollars,  the account of the Agent  maintained  by the
Agent at Citibank at its office at 399 Park Avenue,  New York, New York
10043, Account No. 36852248, Attention: Bank Loan Syndications,  (b) in
the case of Advances  denominated in any Foreign Currency,  the account
of the  Sub-Agent  designated in writing from time to time by the Agent
to the  Borrower  and the Lenders for such  purpose and (c) in any such
case,  such other account of the Agent as is designated in writing from
time to time by the  Agent to the  Borrower  and the  Lenders  for such
purpose.

"Applicable  Lending  Office"  means,  with  respect  to  each
Lender,  such Lender's  Domestic  Lending  Office in the case of a Base
Rate Advance and such Lender's  Eurocurrency Lending Office in the case
of a  Eurocurrency  Rate Advance and, in the case of a Competitive  Bid
Advance, the office of such Lender notified by such Lender to the Agent
as its Applicable  Lending Office with respect to such  Competitive Bid
Advance.

"Applicable  Margin" means (a) for Base Rate Advances,  0% per
annum and (b) for  Eurocurrency  Rate Advances,  a percentage per annum
determined  by  reference  to the Public  Debt Rating in effect on such
date as set forth below:

========================== ===================================
Public Debt Rating            Applicable Margin for
S&P/Moody's             Eurocurrency Rate Advances
========================== ===================================
Level 1
AA+ or Aa1                               0.090%
========================== ===================================
Level 2
Lower than Level 1 but                   0.135%
at least AA- or Aa3
========================== ===================================
Level 3
Lower than Level 2 but                   0.175%
at least A+ or A1
========================== ===================================
Level 4
Lower than Level 3 but                   0.210%
at least A or A2
========================== ===================================
Level 5
Lower than Level 4 but                   0.375%
at least BBB+ or Baa1
========================== ===================================
Level 6
Lower than Level 5 but                   0.525%
at least BBB or Baa2
========================== ===================================
Level 7
Lower than Level 6                       0.800%
========================== ===================================

"Applicable  Percentage"  means,  as of any date, a percentage
per annum  determined  by reference to the Public Debt Rating in effect
on such date as set forth below:

========================== ===================================
Public Debt Rating            Applicable Percentage
S&P/Moody's
========================== ===================================
Level 1
AA+ or Aa1                               0.060%
========================== ===================================
Level 2
Lower than Level 1 but                   0.065%
at least AA- or Aa3
========================== ===================================
Level 3
Lower than Level 2 but                   0.075%
at least A+ or A1
========================== ===================================
Level 4
Lower than Level 3 but                   0.090%
at least A or A2
========================== ===================================
Level 5
Lower than Level 4 but                   0.125%
at least BBB+ or Baa1
========================== ===================================
Level 6
Lower than Level 5 but                   0.150%
at least BBB or Baa2
========================== ===================================
Level 7
Lower than Level 6                       0.200%
========================== ===================================

"Applicable  Utilization  Fee" means,  as of any date that the
aggregate  Advances  exceed  25%  of  the  aggregate   Commitments,   a
percentage per annum  determined by reference to the Public Debt Rating
in effect on such date as set forth below:

========================== ===================================
Public Debt Rating          Applicable Utilization Fee
S&P/Moody's
========================== ===================================
Level 1
AA+ or Aa1                               0.075%
========================== ===================================
Level 2
Lower than Level 1 but                   0.100%
at least AA- or Aa3
========================== ===================================
Level 3
Lower than Level 2 but                   0.100%
at least A+ or A1
========================== ===================================
Level 4
Lower than Level 3 but                   0.125%
at least A or A2
========================== ===================================
Level 5
Lower than Level 4 but                   0.125%
at least BBB+ or Baa1
========================== ===================================
Level 6
Lower than Level 5 but                   0.150%
at least BBB or Baa2
========================== ===================================
Level 7
Lower than Level 6                       0.200%
========================== ===================================

"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee,  and accepted by the
Agent, in substantially the form of Exhibit C hereto.

"Base Rate"  means a  fluctuating  interest  rate per annum in
effect  from time to time,  which rate per annum  shall at all times be
equal to the highest of:

(a)  the  rate  of  interest  announced  publicly  by
Citibank  in New  York,  New  York,  from  time  to  time,  as
Citibank's base rate;

(b) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest  1/4 of 1%, to the next  higher 1/4 of 1%)
of (i) 1/2 of 1% per  annum,  plus (ii) the rate  obtained  by
dividing (A) the latest three-week moving average of secondary
market  morning  offering  rates  in  the  United  States  for
three-month  certificates  of deposit of major  United  States
money market banks,  such three-week  moving average (adjusted
to the basis of a year of 360 days) being determined weekly on
each  Monday  (or,  if such day is not a Business  Day, on the
next succeeding Business Day) for the three-week period ending
on the previous  Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal  Reserve Bank of New York or, if such  publication
shall be suspended or  terminated,  on the basis of quotations
for such  rates  received  by  Citibank  from  three  New York
certificate of deposit dealers of recognized standing selected
by  Citibank,  by (B) a  percentage  equal to 100%  minus  the
average  of  the  daily  percentages   specified  during  such
three-week  period by the Board of  Governors  of the  Federal
Reserve System (or any successor) for  determining the maximum
reserve  requirement  (including,  but  not  limited  to,  any
emergency, supplemental or other marginal reserve requirement)
for Citibank  with  respect to  liabilities  consisting  of or
including  (among other  liabilities)  three-month U.S. dollar
non-personal  time deposits in the United  States,  plus (iii)
the  average  during  such  three-week  period  of the  annual
assessment  rates  estimated by Citibank for  determining  the
then  current  annual  assessment  payable by  Citibank to the
Federal Deposit  Insurance  Corporation (or any successor) for
insuring  U.S.  dollar  deposits  of  Citibank  in the  United
States; and

(c) 1/2 of one  percent  per annum  above the Federal
Funds Rate.

"Base  Rate  Advance"   means  a  Revolving   Credit   Advance
denominated  in Dollars  that bears  interest  as  provided  in Section
2.07(a)(i).

"Borrowing"   means  a  Revolving   Credit   Borrowing   or  a
Competitive Bid Borrowing.

"Business  Day" means a day of the year on which banks are not
required  or  authorized  by law to close in New York City and,  if the
applicable  Business Day relates to any  Eurocurrency  Rate Advances or
LIBO Rate  Advances,  on which  dealings  are  carried on in the London
interbank  market and banks are open for  business in London and in the
country of issue of the currency of such  Eurocurrency  Rate Advance or
LIBO Rate  Advance  (or, in the case of an Advance  denominated  in the
euro,  in  Frankfurt,  Germany)  and, if the  applicable  Business  Day
relates to any Local Rate Advances on which banks are open for business
in the country of issue of the currency of such Local Rate Advance.

"Commitment"  means as to any Lender (a) the Dollar amount set
forth opposite such Lender's name on the signature  pages hereof or (b)
if such Lender has entered  into any  Assignment  and  Acceptance,  the
Dollar  amount set forth for such Lender in the Register  maintained by
the Agent  pursuant to Section  8.07(d),  as such amount may be reduced
pursuant to Section 2.05.

"Committed  Currencies"  means  lawful  currency of the United
Kingdom of Great Britain and Northern  Ireland,  lawful currency of the
Federal Republic of Germany, lawful currency of the Republic of France,
lawful  currency  of The Swiss  Federation,  lawful  currency of Spain,
lawful currency of Italy, lawful currency of Canada, lawful currency of
Australia,  lawful  currency of Japan,  lawful currency of the European
Economic  and  Monetary  Union  and any other  currency  that is freely
convertible into Dollars and available to all Lenders.

"Competitive  Bid Advance" means an advance by a Lender to the
Borrower as part of a  Competitive  Bid  Borrowing  resulting  from the
competitive bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance, a LIBO Rate Advance or a Local Rate Advance.

"Competitive  Bid Borrowing"  means a borrowing  consisting of
simultaneous  Competitive  Bid Advances  from each of the Lenders whose
offer  to make one or more  Competitive  Bid  Advances  as part of such
borrowing has been accepted  under the  competitive  bidding  procedure
described in Section 2.03.

"Competitive Bid Note" means a promissory note of the Borrower
payable  to the  order  of any  Lender,  in  substantially  the form of
Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such
Lender resulting from a Competitive Bid Advance made by such Lender.

"Competitive  Bid  Reduction"  has the  meaning  specified  in
Section 2.01.

"Confidential Information" means information that the Borrower
furnishes  to the Agent or any  Lender,  but does not  include any such
information  that is or becomes  generally  available  to the public or
that is or becomes  available to the Agent or such Lender from a source
other than the Borrower.

"Consolidated"  refers to the  consolidation  of  accounts  in
accordance with GAAP.

"Convert",  "Conversion"  and  "Converted"  each  refers  to a
conversion  of  Revolving  Credit  Advances of one Type into  Revolving
Credit Advances of the other Type pursuant to Section 2.08 or 2.09.

"Debt"  of any  Person  means,  without  duplication,  (a) all
indebtedness of such Person for borrowed money,  (b) all obligations of
such  Person for the  deferred  purchase  price of property or services
(other than trade payables not overdue by more than 90 days incurred in
the ordinary course of such Person's business),  (c) all obligations of
such Person  evidenced by notes,  bonds,  debentures  or other  similar
instruments,  (d) all  obligations  of such  Person  created or arising
under any  conditional  sale or other title  retention  agreement  with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender  under such  agreement in the event of
default are limited to repossession or sale of such property),  (e) all
obligations  of such  Person as lessee  under  leases that have been or
should be, in accordance with GAAP, recorded as capital leases, (f) all
obligations,  contingent  or  otherwise,  of such  Person in respect of
acceptances, letters of credit or similar extensions of credit, (g) all
net obligations of such Person in respect of Hedge Agreements,  (h) all
Debt of others  referred  to in clauses (a) through (g) above or clause
(i) below  guaranteed  directly  or  indirectly  in any  manner by such
Person, or in effect  guaranteed  directly or indirectly by such Person
through an agreement  (1) to pay or purchase such Debt or to advance or
supply funds for the payment or purchase of such Debt, (2) to purchase,
sell or lease (as lessee or lessor)  property,  or to  purchase or sell
services,  primarily  for the  purpose of  enabling  the debtor to make
payment of such Debt or to assure the holder of such Debt against loss,
(3) to supply  funds to or in any  other  manner  invest in the  debtor
(including  any agreement to pay for property or services  irrespective
of whether such  property is received or such services are rendered) or
(4)  otherwise  to assure a  creditor  against  loss,  and (i) all Debt
referred to in clauses  (a) through (h) above  secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise,
to be secured by) any Lien on property (including,  without limitation,
accounts and contract  rights)  owned by such Person,  even though such
Person has not  assumed or become  liable for the payment of such Debt;
provided,  however,  that the term "Debt" shall not include obligations
incurred in connection with sales of accounts receivable or other asset
securitization  transactions  by  the  Borrower  or any  Subsidiary  or
Affiliate of the Borrower,  except to the extent that such  transaction
creates a liability which is required by generally accepted  accounting
principles  to be included  on the  Consolidated  balance  sheet of the
Borrower and its Subsidiaries.

"Default"  means any Event of  Default or any event that would
constitute an Event of Default but for the  requirement  that notice be
given or time elapse or both.

"Disclosed  Litigation"  has the meaning  specified in Section
3.01(b).

"Dollars"  and the "$" sign each means lawful  currency of the
United States of America.

"Domestic  Lending Office" means,  with respect to any Lender,
the office of such Lender  specified as its "Domestic  Lending  Office"
opposite  its  name on  Schedule  I  hereto  or in the  Assignment  and
Acceptance  pursuant to which it became a Lender,  or such other office
of such  Lender as such  Lender  may from time to time  specify  to the
Borrower and the Agent.

"Effective Date" has the meaning specified in Section 3.01.

"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Agent and, unless an
Event  of  Default  has  occurred  and is  continuing  at the  time any
assignment is effected in accordance  with Section 8.07,  the Borrower,
such  approval not to be  unreasonably  withheld or delayed;  provided,
however,  that  neither the  Borrower  nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.

"Environmental  Action" means any action, suit, demand, demand
letter,  claim,  notice  of  non-compliance  or  violation,  notice  of
liability or potential liability,  investigation,  proceeding,  consent
order or consent  agreement  relating  in any way to any  Environmental
Law,  Environmental  Permit or  Hazardous  Materials  or  arising  from
alleged   injury  or  threat  of  injury  to  health,   safety  or  the
environment,  including, without limitation, (a) by any governmental or
regulatory  authority  for  enforcement,  cleanup,  removal,  response,
remedial  or other  actions or damages and (b) by any  governmental  or
regulatory  authority  or any third  party for  damages,  contribution,
indemnification, cost recovery, compensation or injunctive relief.

"Environmental Law" means any federal, state, local or foreign
statute,  law,  ordinance,  rule,  regulation,  code, order,  judgment,
decree  or  judicial  or  agency  interpretation,  policy  or  guidance
relating to pollution or protection of the environment,  health, safety
or natural resources,  including, without limitation, those relating to
the  use,  handling,  transportation,   treatment,  storage,  disposal,
release or discharge of Hazardous Materials.

"Environmental    Permit"   means   any   permit,    approval,
identification  number,  license or other authorization  required under
any Environmental Law.

"Equivalent"  in Dollars of any  Foreign  Currency on any date
means the equivalent in Dollars of such Foreign Currency  determined by
using the quoted spot rate at which the Sub-Agent's principal office in
London offers to exchange  Dollars for such Foreign  Currency in London
prior to 4:00 P.M.  (London  time) (unless  otherwise  indicated by the
terms of this  Agreement)  on such date as is required  pursuant to the
terms of this Agreement,  and the  "Equivalent" in any Foreign Currency
of Dollars  means the  equivalent  in such Foreign  Currency of Dollars
determined  by using the  quoted  spot  rate at which  the  Sub-Agent's
principal office in London offers to exchange such Foreign Currency for
Dollars in London prior to 4:00 P.M.  (London time)  (unless  otherwise
indicated by the terms of this  Agreement)  on such date as is required
pursuant to the terms of this Agreement.

"ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

"ERISA  Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the Borrower's  controlled  group,  or under
common control with the Borrower,  within the meaning of Section 414 of
the Internal Revenue Code.

"ERISA  Event"  means (a) (i) the  occurrence  of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day  notice  requirement  with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section  4043(b) of ERISA (without  regard to subsection (2) of such
Section)  are met with a  contributing  sponsor,  as defined in

Section  4001(a)(13)  of ERISA,  of a Plan,  and an event  described in
paragraph (9), (10),  (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably  expected  to occur  with  respect  to such Plan  within the
following 30 days;  (b) the  application  for a minimum  funding waiver
with respect to a Plan; (c) the provision by the  administrator  of any
Plan of a notice of intent to terminate  such Plan  pursuant to Section
4041(a)(2) of ERISA  (including  any such notice with respect to a plan
amendment  referred to in Section 4041(e) of ERISA);  (d) the cessation
of operations  at a facility of the Borrower or any ERISA  Affiliate in
the  circumstances  described  in  Section  4062(e)  of ERISA;  (e) the
withdrawal  by the  Borrower  or any ERISA  Affiliate  from a  Multiple
Employer  Plan  during  a plan  year  for  which  it was a  substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
for the  imposition of a lien under Section  302(f) of ERISA shall have
been met with respect to any Plan;  (g) the adoption of an amendment to
a Plan  requiring  the  provision of security to such Plan  pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
to  terminate  a  Plan  pursuant  to  Section  4042  of  ERISA,  or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes  grounds for the termination of, or the appointment of
a trustee to administer, a Plan.

"Eurocurrency  Liabilities"  has the meaning  assigned to that
term in  Regulation D of the Board of Governors of the Federal  Reserve
System, as in effect from time to time.

"Eurocurrency  Lending  Office"  means,  with  respect  to any
Lender,  the  office  of such  Lender  specified  as its  "Eurocurrency
Lending  Office"  opposite  its name on  Schedule  I  hereto  or in the
Assignment and Acceptance  pursuant to which it became a Lender (or, if
no such office is  specified,  its Domestic  Lending  Office),  or such
other  office  of such  Lender  as such  Lender  may from  time to time
specify to the Borrower and the Agent.

"Eurocurrency  Rate" means,  for any Interest  Period for each
Eurocurrency Rate Advance  comprising part of the same Revolving Credit
Borrowing,  an  interest  rate per  annum  equal to the rate per  annum
obtained  by  dividing  (a) the rate per annum  (rounded  upward to the
nearest whole multiple of 1/100 of 1% per annum) appearing on Dow Jones
Markets  Telerate  Page  3750 (or any  successor  page)  as the  London
interbank  offered  rate for  deposits  in  Dollars  or the  applicable
Committed  Currency  at  approximately  11:00  A.M.  (London  time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such  Interest  Period or, if for any reason such rate is
not  available,  the  average  (rounded  upward  to the  nearest  whole
multiple  of  1/100  of 1% per  annum,  if such  average  is not such a
multiple)  of the rate per annum at which  deposits  in  Dollars or the
applicable  Committed  Currency is offered by the  principal  office of
each of the  Reference  Banks in London,  England to prime banks in the
London  interbank  market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to such Reference  Bank's  Eurocurrency  Rate Advance  comprising
part of such Revolving Credit  Borrowing to be outstanding  during such
Interest Period and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage
for such  Interest  Period.  If the Dow Jones Markets Page 3750 (or any
successor page) is unavailable,  the Eurocurrency Rate for any Interest
Period for each Eurocurrency  Rate Advance  comprising part of the same
Revolving  Credit  Borrowing  shall be  determined  by the Agent on the
basis of applicable  rates  furnished to and received by the Agent from
the  Reference  Banks two  Business  Days  before the first day of such
Interest Period, subject, however, to the provisions of Section 2.08.

"Eurocurrency  Rate Advance" means a Revolving  Credit Advance
denominated  in Dollars or a Committed  Currency that bears interest as
provided in Section 2.07(a)(ii).

"Eurocurrency Rate Reserve Percentage" for any Interest Period
for all  Eurocurrency  Rate Advances or LIBO Rate  Advances  comprising
part of the same Borrowing means the reserve percentage  applicable two
Business  Days  before  the first  day of such  Interest  Period  under
regulations  issued from time to time by the Board of  Governors of the
Federal  Reserve System (or any successor) for  determining the maximum
reserve  requirement  (including,  without  limitation,  any emergency,
supplemental or other marginal  reserve  requirement) for a member bank
of the  Federal  Reserve  System  in New  York  City  with  respect  to
liabilities   or  assets   consisting  of  or  including   Eurocurrency
Liabilities (or with respect to any

other  category of liabilities  that includes  deposits by reference to
which the  interest  rate on  Eurocurrency  Rate  Advances or LIBO Rate
Advances is determined) having a term equal to such Interest Period.

"Events of Default" has the meaning specified in Section 6.01.

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

"Fixed Rate  Advances"  has the meaning  specified  in Section
2.03(a)(i),  which  Advances  shall be denominated in Dollars or in any
Foreign Currency.

"Foreign  Currency" means any Committed Currency and any other
lawful  currency  (other than Dollars) that is freely  transferable  or
convertible into Dollars.

"GAAP" has the meaning specified in Section 1.03.

"Hazardous   Materials"  means  (a)  petroleum  and  petroleum
products,  byproducts  or breakdown  products,  radioactive  materials,
asbestos-containing materials,  polychlorinated biphenyls and radon gas
and  (b) any  other  chemicals,  materials  or  substances  designated,
classified  or  regulated  as  hazardous  or toxic or as a pollutant or
contaminant under any Environmental Law.

"Hedge  Agreements"  means  interest rate swap,  cap or collar
agreements,  interest  rate future or option  contracts,  currency swap
agreements,  currency  future or  option  contracts  and other  similar
agreements.

"Information  Memorandum"  means  the  information  memorandum
dated  July  23,  1999  used  by  the  Agent  in  connection  with  the
syndication of the Commitments.

"Interest  Period" means, for each  Eurocurrency  Rate Advance
comprising  part of the same Revolving  Credit  Borrowing and each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing, the
period commencing on the date of such Eurocurrency Rate Advance or LIBO
Rate  Advance or the date of the  Conversion  of any Base Rate  Advance
into such  Eurocurrency  Rate Advance and ending on the last day of the
period selected by the Borrower  pursuant to the provisions  below and,
thereafter, with respect to Eurocurrency Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest
Period  and  ending  on the  last  day of the  period  selected  by the
Borrower  pursuant to the provisions  below.  The duration of each such
Interest Period shall be one, two, three or six months, as the Borrower
may,  upon notice  received by the Agent not later than 11:00 A.M. (New
York  City  time) on the third  Business  Day prior to the first day of
such Interest Period, select; provided, however, that:

(i) the Borrower  may not select any Interest  Period
that ends after the Termination Date;

(ii) Interest Periods commencing on the same date for
Eurocurrency  Rate  Advances   comprising  part  of  the  same
Revolving   Credit   Borrowing  or  for  LIBO  Rate   Advances
comprising part of the same Competitive Bid Borrowing shall be
of the same duration;

(iii)  whenever the last day of any  Interest  Period
would  otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the 

next succeeding Business Day, provided, however, that, if such
extension  would cause the last day of such Interest Period to
occur in the next following  calendar  month,  the last day of
such  Interest  Period  shall  occur  on  the  next  preceding
Business Day; and

(iv)  whenever the first day of any  Interest  Period
occurs on a day of an initial  calendar  month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial  calendar  month by the number of months
equal to the number of months in such  Interest  Period,  such
Interest  Period  shall end on the last  Business  Day of such
succeeding calendar month.

"Internal  Revenue  Code" means the  Internal  Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

"Lenders" means the Initial Lenders and each Person that shall
become a party hereto pursuant to Section 8.07.

"LIBO Rate" means,  for any Interest  Period for all LIBO Rate
Advances  comprising  part of the same  Competitive  Bid Borrowing,  an
interest  rate  per  annum  equal to the rate  per  annum  obtained  by
dividing (a) the rate per annum  (rounded  upward to the nearest  whole
multiple  of 1/100 of 1% per  annum)  appearing  on Dow  Jones  Markets
Telerate  Page 3750 (or any  successor  page) as the  London  interbank
offered  rate for  deposits  in  Dollars  or the  applicable  Committed
Currency at  approximately  11:00 A.M.  (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest  Period or, if for any reason such rate is not available,
the average  (rounded  upward to the nearest whole multiple of 1/100 of
1% per annum,  if such  average is not such a multiple) of the rate per
annum at which deposits in Dollars or the applicable  Foreign  Currency
is offered by the principal  office of each of the  Reference  Banks in
London,  England to prime banks in the London interbank market at 11:00
A.M.  (London  time) two  Business  Days  before  the first day of such
Interest  Period in an amount  substantially  equal to the amount  that
would  be the  Reference  Banks'  respective  ratable  shares  of  such
Borrowing if such Borrowing were to be a Revolving  Credit Borrowing to
be  outstanding  during such Interest  Period and for a period equal to
such  Interest  Period  by (b) a  percentage  equal to 100%  minus  the
Eurocurrency  Rate Reserve  Percentage for such Interest Period. If the
Dow  Jones  Markets  Telerate  Page  3750  (or any  successor  page) is
unavailable,  the LIBO Rate for any Interest  Period for each LIBO Rate
Advance  comprising part of the same Competitive Bid Borrowing shall be
determined by the Agent on the basis of applicable  rates  furnished to
and received by the Agent from the  Reference  Banks two Business  Days
before the first day of such Interest Period, subject,  however, to the
provisions of Section 2.08.

"LIBO  Rate   Advances"   means  a  Competitive   Bid  Advance
denominated in Dollars or in any Foreign  Currency and bearing interest
based on the LIBO Rate.

"Lien"  means any lien,  security  interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement,  right of way or other encumbrance
on title to real property.

"Local  Rate  Advance"   means  a   Competitive   Bid  Advance
denominated in any Foreign  Currency  sourced from the  jurisdiction of
issuance of such Foreign Currency and bearing interest at a fixed rate.

"Material Adverse Change" means any material adverse change in
the  business,   condition   (financial  or   otherwise),   operations,
performance,  properties  or  prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole.

"Material  Adverse Effect" means a material  adverse effect on
(a) the  business,  condition  (financial  or  otherwise),  operations,
performance,  properties  or  prospects of the Borrower or the Borrower
and its  Subsidiaries  taken as a whole, (b) the rights and remedies of
the Agent or any  Lender  under this  Agreement  or any Note or (c) the
ability of the Borrower to perform its obligations under this Agreement
or any Note.

"Multiemployer Plan" means a multiemployer plan, as defined in
Section  4001(a)(3)  of  ERISA,  to which  the  Borrower  or any  ERISA
Affiliate is making or accruing an obligation to make contributions, or
has  within  any of the  preceding  five plan  years made or accrued an
obligation to make contributions.

"Multiple  Employer  Plan" means a single  employer  plan,  as
defined in Section  4001(a)(15)  of ERISA,  that (a) is maintained  for
employees  of the  Borrower  or any  ERISA  Affiliate  and at least one
Person other than the Borrower and the ERISA  Affiliates  or (b) was so
maintained and in respect of which the Borrower or any ERISA  Affiliate
could have  liability  under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.

"Note"  means a  Revolving  Credit Note or a  Competitive  Bid
Note.

"Notice  of  Revolving  Credit   Borrowing"  has  the  meaning
specified in Section 2.02(a).

"Notice  of   Competitive   Bid  Borrowing"  has  the  meaning
specified in Section 2.03(a).

"Payment Office" means, for any Foreign Currency,  such office
of  Citibank  as shall be from time to time  selected  by the Agent and
notified by the Agent to the Borrower and the Lenders.

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

"Permitted  Liens" means such of the  following as to which no
enforcement,  collection,  execution,  levy or  foreclosure  proceeding
shall  have  been  commenced:  (a)  Liens for  taxes,  assessments  and
governmental  charges or levies to the extent not  required  to be paid
under  Section  5.01(b)  hereof;  (b)  Liens  imposed  by law,  such as
materialmen's,  mechanics',  carriers', workmen's and repairmen's Liens
and other  similar  Liens  arising in the  ordinary  course of business
securing  obligations that are not overdue for a period of more than 45
days;  (c)  pledges or deposits to secure  obligations  under  workers'
compensation  laws  or  similar  legislation  or to  secure  public  or
statutory  obligations;  and (d)  easements,  rights  of way and  other
encumbrances  on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes.

"Person"   means  an  individual,   partnership,   corporation
(including   a   business   trust),   joint   stock   company,   trust,
unincorporated association, joint venture, limited liability company or
other entity,  or a government or any political  subdivision  or agency
thereof.

"Plan"  means a Single  Employer  Plan or a Multiple  Employer
Plan.

"Public Debt Rating" means,  as of any date, the lowest rating
that has been most recently announced by either S&P or Moody's,  as the
case may be,  for any class of  non-credit  enhanced  long-term  senior
unsecured  debt issued by the Borrower.  For purposes of the foregoing,
(a) if only one of S&P and  Moody's  shall have in effect a Public Debt
Rating,  the  Applicable  Margin,  the  Applicable  Percentage  and the
Applicable  Utilization  Fee shall be  determined  by  reference to the
available rating; (b) if neither S&P nor Moody's shall have in effect a
Public Debt Rating, the Applicable  Margin,  the Applicable  Percentage
and the Applicable Utilization Fee will be set in accordance with Level
7 under the definition of "Applicable Margin",  "Applicable Percentage"
or "Applicable Utilization Fee", as the case may be; (c) if the ratings
established by S&P and Moody's shall fall within different levels,  the
Applicable  Margin,  the  Applicable   Percentage  and  the  Applicable
Utilization  Fee  shall  be  based  upon the  higher  of such  ratings,
provided that if the lower of such ratings is more than one level below
the higher of such ratings, the Applicable  Percentage,  the Applicable
Margin  and the  Applicable  Utilization  Fee  shall be  determined  by
reference to the level that is one level above such lower  rating;  (d)
if any rating  established  by S&P or Moody's  shall be  changed,  such
change  shall be effective as of the date on which such change is first
announced  publicly by the rating agency making such change; and (e) if
S&P or Moody's shall change the basis on which ratings are established,
each  reference to the Public Debt Rating  announced by S&P or

Moody's,  as the case may be, shall refer to the then equivalent rating
by S&P or Moody's, as the case may be.

"Reference  Banks" means Citibank,  The First National Bank of
Chicago and Bank of America, N.A.

"Register" has the meaning specified in Section 8.07(d).

"Related  Person"  means  each  of  the  following:   (a)  the
Borrower,  (b) any  Subsidiary  of the  Borrower  or (c)  any  employee
benefit  plan of the Borrower or of any  Subsidiary  of the Borrower or
any Person  organized,  appointed or established by the Borrower for or
pursuant to the terms of any such plan.

"Required  Lenders"  means at any time Lenders owed at least a
majority in  interest of the then  aggregate  unpaid  principal  amount
(based on the  Equivalent  in Dollars  at such  time) of the  Revolving
Credit  Advances owing to Lenders,  or, if no such principal  amount is
then outstanding, Lenders having at least a majority in interest of the
Commitments.

"Revolving Credit Advance" means an advance by a Lender to the
Borrower as part of a Revolving  Credit  Borrowing and refers to a Base
Rate Advance or a  Eurocurrency  Rate Advance (each of which shall be a
"Type" of Revolving Credit Advance).

"Revolving Credit  Borrowing" means a borrowing  consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.

"Revolving  Credit  Note"  means  a  promissory  note  of  the
Borrower  payable to the order of any Lender,  delivered  pursuant to a
request made under  Section 2.16 in  substantially  the form of Exhibit
A-1 hereto,  evidencing the aggregate  indebtedness  of the Borrower to
such Lender  resulting from the Revolving  Credit Advances made by such
Lender.

"Sandvik  Funding  Date" has the meaning  specified in Section
3.02.

"Single  Employer  Plan"  means a  single  employer  plan,  as
defined in Section  4001(a)(15)  of ERISA,  that (a) is maintained  for
employees  of the Borrower or any ERISA  Affiliate  and no Person other
than the Borrower and the ERISA Affiliates or (b) was so maintained and
in  respect of which the  Borrower  or any ERISA  Affiliate  could have
liability  under  Section 4069 of ERISA in the event such plan has been
or were to be terminated.

"Sub-Agent" means Citibank International plc.

"Subsidiary" of any Person means any corporation, partnership,
joint venture,  limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having  ordinary  voting  power to  elect a  majority  of the  Board of
Directors  of such  corporation  (irrespective  of  whether at the time
capital stock of any other class or classes of such  corporation  shall
or might have voting power upon the occurrence of any contingency), (b)
the  interest  in the  capital  or profits  of such  limited  liability
company, partnership or joint venture or (c) the beneficial interest in
such trust or estate is at the time  directly  or  indirectly  owned or
controlled by such Person,  by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries;  it
being  understood  that Snap-On  Credit LLC,  which is 50% owned by the
Borrower,  shall not be deemed to be a "Subsidiary" of the Borrower for
purposes of this Agreement.

"Termination  Date"  means the  earlier of (a) August 23, 2004
and (b) the date of termination in whole of the Commitments pursuant to
Section 2.05 or 6.01.

"Voting Stock" means capital stock issued by a corporation, or
equivalent  interests  in any other  Person,  the  holders of which are
ordinarily,  in the absence of contingencies,  entitled to vote for the
election of directors (or persons performing similar functions) of such
Person,  even  if the  right  so to  vote  has  been  suspended  by the
happening of such a contingency.

SECTION 1.02.  Computation  of Time Periods.  In this  Agreement in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
mean "to but excluding".

SECTION 1.03.  Accounting  Terms. All accounting terms not specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial statements referred to in Section 4.01(e) ("GAAP").

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01.  The Revolving  Credit  Advances.  Each Lender  severally
agrees,  on the terms and conditions  hereinafter  set forth,  to make Revolving
Credit Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate amount
(based in  respect of any  Revolving  Credit  Advances  to be  denominated  in a
Committed  Currency  on the  Equivalent  in  Dollars  determined  on the date of
delivery of the applicable  Notice of Revolving Credit  Borrowing) not to exceed
at any time  outstanding such Lender's  Commitment,  provided that the aggregate
amount of the  Commitments of the Lenders shall be deemed used from time to time
to the extent of the aggregate  amount (based in respect of any  Competitive Bid
Advance  denominated in a Foreign  Currency on the Equivalent in Dollars at such
time) of the  Competitive  Bid Advances then  outstanding and such deemed use of
the aggregate  amount of the  Commitments  shall be allocated  among the Lenders
ratably  according  to their  respective  Commitments  (such  deemed  use of the
aggregate  amount  of the  Commitments  being a  "Competitive  Bid  Reduction");
provided,  further, that until the Sandvik Funding Date, the aggregate amount of
all Revolving  Credit  Advances made by any Lender shall not exceed one third of
such  Lender's  Commitment.  Each  Revolving  Credit  Borrowing  shall  be in an
aggregate amount of $10,000,000 or an integral  multiple of $1,000,000 in excess
thereof (or the Equivalent thereof in any Committed  Currency  determined on the
date of delivery of the  applicable  Notice of Revolving  Credit  Borrowing) and
shall consist of Revolving Credit Advances of the same Type made on the same day
by the Lenders ratably  according to their  respective  Commitments.  Within the
limits of each Lender's  Commitment,  the Borrower may borrow under this Section
2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01.

SECTION 2.02. Making the Revolving Credit Advances.  (a) Each Revolving
Credit  Borrowing  shall be made on notice,  given not later than (x) 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Revolving  Credit  Borrowing  in  the  case  of  a  Revolving  Credit  Borrowing
consisting of Eurocurrency Rate Advances  denominated in Dollars,  (y) 4:00 P.M.
(London  time) on the  third  Business  Day  prior  to the date of the  proposed
Revolving  Credit  Borrowing  in  the  case  of  a  Revolving  Credit  Borrowing
consisting of Eurocurrency Rate Advances  denominated in any Committed Currency,
or (z) 11:00 A.M.  (New York City time) on the first  Business  Day prior to the
date of the  proposed  Revolving  Credit  Borrowing  in the case of a  Revolving
Credit Borrowing consisting of Base Rate Advances,  by the Borrower to the Agent
(and, in the case of a Revolving  Credit  Borrowing  consisting of  Eurocurrency
Rate Advances, simultaneously to the Sub-Agent), which shall give to each Lender
prompt notice  thereof by  telecopier or telex.  Each such notice of a Revolving
Credit  Borrowing  (a  "Notice  of  Revolving  Credit  Borrowing")  shall  be by
telephone,   confirmed  immediately  in  writing,  or  telecopier  or  telex  in
substantially the form of Exhibit B-1 hereto,  specifying  therein the requested
(i) date of such Revolving Credit  Borrowing,  (ii) Type of Advances  comprising
such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit
Borrowing,  and (iv) in the case of a Revolving Credit  Borrowing  consisting of
Eurocurrency  Rate Advances,  initial Interest Period and currency for each such
Revolving  Credit Advance.  Each Lender shall,  before 11:00 A.M. (New York City
time) on the date of such Revolving Credit Borrowing, in the case of a Revolving
Credit Borrowing  consisting of Advances denominated in Dollars, and before 4:00
P.M. (London time) on the date of such Revolving Credit  Borrowing,  in the case
of a  Revolving  Credit  Borrowing  consisting  of 

Eurocurrency Rate Advances denominated in any Committed Currency, make available
for the account of its Applicable  Lending Office to the Agent at the applicable
Agent's  Account,  in same day  funds,  such  Lender's  ratable  portion of such
Revolving  Credit  Borrowing.  After the Agent's  receipt of such funds and upon
fulfillment  of the  applicable  conditions  set forth in Article III, the Agent
will make such funds available to the Borrower at the Agent's  address  referred
to in Section 8.02 or at the applicable Payment Office, as the case may be.

(b) Anything in subsection  (a) above to the contrary  notwithstanding,
(i) the Borrower may not select  Eurocurrency  Rate  Advances for any  Revolving
Credit  Borrowing if the aggregate  amount of such Revolving Credit Borrowing is
less than  $10,000,000 or if the obligation of the Lenders to make  Eurocurrency
Rate Advances shall then be suspended  pursuant to Section 2.08 or 2.12 and (ii)
the  Eurocurrency  Rate Advances may not be outstanding as part of more than six
separate Revolving Credit Borrowings.

(c) Each Notice of Revolving  Credit Borrowing shall be irrevocable and
binding on the Borrower.  In the case of any Revolving Credit Borrowing that the
related  Notice of Revolving  Credit  Borrowing  specifies is to be comprised of
Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any
loss,  cost or expense  incurred  by such  Lender as a result of any  failure to
fulfill on or before  the date  specified  in such  Notice of  Revolving  Credit
Borrowing for such  Revolving  Credit  Borrowing the  applicable  conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated  profits),  cost or expense incurred by reason of the liquidation or
reemployment  of  deposits  or other  funds  acquired by such Lender to fund the
Revolving  Credit  Advance to be made by such  Lender as part of such  Revolving
Credit  Borrowing  when  such  Revolving  Credit  Advance,  as a result  of such
failure, is not made on such date.

(d) Unless the Agent shall have received  notice from a Lender prior to
the date of any  Revolving  Credit  Borrowing  that  such  Lender  will not make
available to the Agent such Lender's  ratable  portion of such Revolving  Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving  Credit  Borrowing in accordance with
subsection  (a) of this  Section  2.02 and the Agent may, in reliance  upon such
assumption,  make available to the Borrower on such date a corresponding amount.
If and to the  extent  that such  Lender  shall  not have so made  such  ratable
portion available to the Agent, such Lender and the Borrower  severally agree to
repay to the Agent forthwith on demand such  corresponding  amount together with
interest  thereon,  for each day from the date such amount is made  available to
the  Borrower  until the date such amount is repaid to the Agent,  at (i) in the
case of the Borrower, the higher of (A) the interest rate applicable at the time
to Revolving Credit Advances  comprising such Revolving Credit Borrowing and (B)
the cost of funds  incurred  by the Agent in respect of such  amount and (ii) in
the case of such  Lender,  (A) the  Federal  Funds Rate in the case of  Advances
denominated in Dollars or (B) the cost of funds incurred by the Agent in respect
of such amount in the case of Advances denominated in Committed  Currencies.  If
such Lender shall repay to the Agent such corresponding  amount,  such amount so
repaid shall  constitute such Lender's  Revolving Credit Advance as part of such
Revolving Credit Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Revolving  Credit  Advance to
be made by it as part of any Revolving  Credit  Borrowing  shall not relieve any
other Lender of its obligation,  if any,  hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit  Borrowing,  but no Lender shall be
responsible  for the failure of any other  Lender to make the  Revolving  Credit
Advance  to be made by such  other  Lender on the date of any  Revolving  Credit
Borrowing.

SECTION 2.03. The Competitive Bid Advances.  (a) Each Lender  severally
agrees that the Borrower may make  Competitive Bid Borrowings under this Section
2.03 from time to time on any  Business  Day  during  the  period  from the date
hereof  until the date  occurring 30 days prior to the  Termination  Date in the
manner set forth below;  provided that, following the making of each Competitive
Bid Borrowing,  the aggregate amount of the Advances then outstanding  (based in
respect of any Advance  denominated  in a Foreign  Currency on the Equivalent in
Dollars at the time such  Competitive  Bid  Borrowing  is  requested)  shall not
exceed the aggregate amount of the Commitments of the Lenders  (computed without
regard to any  Competitive  Bid  Reduction);  provided  further  that  until the
Sandvik  Funding Date,  following the making of each  Competitive Bid Borrowing,
the aggregate amount of the Advances then  outstanding  (based in respect of any
Advance  denominated  in a Foreign  Currency on the Equivalent in Dollars at the
time such Competitive Bid Borrowing is requested) shall not exceed 

the aggregate  amount of one third of the  Commitments of the Lenders  (computed
without regard to any Competitive Bid Reduction).

(i) The Borrower may request a Competitive Bid Borrowing under
this Section  2.03 by  delivering  to the Agent (and,  in the case of a
Competitive Bid Borrowing not consisting of Fixed Rate Advances or LIBO
Rate  Advances  to be  denominated  in Dollars,  simultaneously  to the
Sub-Agent),  by  telecopier  or telex,  a notice of a  Competitive  Bid
Borrowing (a "Notice of Competitive Bid  Borrowing"),  in substantially
the form of Exhibit B-2 hereto,  specifying  therein the  requested (A)
date of such proposed  Competitive Bid Borrowing,  (B) aggregate amount
of such proposed Competitive Bid Borrowing, (C) interest rate basis and
day count convention to be offered by the Lenders, (D) currency of such
proposed  Competitive  Bid Borrowing,  (E) in the case of a Competitive
Bid Borrowing consisting of LIBO Rate Advances,  Interest Period, or in
the case of a  Competitive  Bid  Borrowing  consisting  of  Fixed  Rate
Advances or Local Rate  Advances,  maturity  date for repayment of each
Fixed Rate  Advance  or Local  Rate  Advance to be made as part of such
Competitive Bid Borrowing  (which maturity date may not be earlier than
the date occurring  seven days after the date of such  Competitive  Bid
Borrowing  or later than the  earlier of (I) 180 days after the date of
such  Competitive  Bid Borrowing and (II) the  Termination  Date),  (F)
interest  payment date or dates relating  thereto,  (G) location of the
Borrower's  account  to which  funds are to be  advanced  and (H) other
terms (if any) to be applicable to such Competitive Bid Borrowing,  not
later  than (w) 10:00 A.M.  (New York City time) at least two  Business
Days prior to the date of the proposed  Competitive  Bid Borrowing,  if
the Borrower shall specify in the Notice of  Competitive  Bid Borrowing
that the rates of interest to be offered by the Lenders  shall be fixed
rates per annum  (the  Advances  comprising  any such  Competitive  Bid
Borrowing  being referred to herein as "Fixed Rate  Advances") and that
the Advances  comprising such proposed  Competitive Bid Borrowing shall
be denominated in Dollars, (x) 10:00 A.M. (New York City time) at least
four  Business Days prior to the date of the proposed  Competitive  Bid
Borrowing,  if the Borrower  shall specify in the Notice of Competitive
Bid  Borrowing  that  the  Advances  comprising  such  Competitive  Bid
Borrowing shall be LIBO Rate Advances denominated in Dollars, (y) 10:00
A.M.  (London time) at least two Business Days prior to the date of the
proposed  Competitive  Bid Borrowing,  if the Borrower shall specify in
the Notice of Competitive  Bid Borrowing  that the Advances  comprising
such  proposed  Competitive  Bid  Borrowing  shall be either Fixed Rate
Advances  denominated  in any Foreign  Currency or Local Rate  Advances
denominated in any Foreign Currency and (z) 10:00 A.M. (London time) at
least four Business Days prior to the date of the proposed  Competitive
Bid Borrowing,  if the Borrower shall instead  specify in the Notice of
Competitive Bid Borrowing that the Advances comprising such Competitive
Bid Borrowing  shall be LIBO Rate Advances  denominated  in any Foreign
Currency.  The Agent shall in turn promptly  notify each Lender of each
request  for a  Competitive  Bid  Borrowing  received  by it  from  the
Borrower  by  sending  such  Lender  a copy of the  related  Notice  of
Competitive Bid Borrowing.

(ii) Each Lender may, if, in its sole discretion, it elects to
do so,  irrevocably  offer to make one or more Competitive Bid Advances
to the Borrower as part of such proposed Competitive Bid Borrowing at a
rate or  rates  of  interest  specified  by  such  Lender  in its  sole
discretion, by notifying the Agent or the Sub-Agent, as the case may be
(which shall give prompt notice  thereof to the  Borrower),  (A) before
9:30 A.M. (New York City time) on the date of such proposed Competitive
Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of
Fixed Rate Advances  denominated in Dollars, (B) before 10:00 A.M. (New
York City time) three  Business  Days before the date of such  proposed
Competitive  Bid Borrowing,  in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances,  denominated  in Dollars,  (C) before
12:00 noon (London  time) on the Business Day prior to the date of such
proposed  Competitive  Bid Borrowing,  in the case of a Competitive Bid
Borrowing  consisting of either Fixed Rate Advances  denominated in any
Foreign  Currency  or Local Rate  Advances  denominated  in any Foreign
Currency and (D) before 12:00 noon (London time) on the third  Business
Day prior to the date of such proposed  Competitive  Bid Borrowing,  in
the  case of a  Competitive  Bid  Borrowing  consisting  of  LIBO  Rate
Advances denominated in any Foreign Currency, of the minimum amount and
maximum amount of each  Competitive Bid Advance which such Lender would
be willing to make as part of such proposed  Competitive  Bid Borrowing
(which  amounts or the Equivalent  thereof in Dollars,  as the case may
be, of such proposed  Competitive  Bid may,  subject to the provisos to
the first  sentence  of this  Section

2.03(a), exceed such Lender's Commitment, if any), the rate or rates of
interest  therefor and such  Lender's  Applicable  Lending  Office with
respect to such Competitive Bid Advance;  provided that if the Agent in
its capacity as a Lender shall, in its sole  discretion,  elect to make
any such offer,  it shall notify the Borrower of such offer at least 30
minutes  before  the  time  and on the  date on  which  notice  of such
election is to be given to the Agent or to the  Sub-Agent,  as the case
may be, by the other  Lenders.  If any Lender  shall  elect not to make
such an offer,  such Lender shall so notify the Agent before 10:00 A.M.
(New York City time) or the  Sub-Agent  before 12:00 noon (London time)
on the  date on which  notice  of such  election  is to be given to the
Agent or to the  Sub-Agent,  as the case may be, by the other  Lenders,
and such  Lender  shall not be  obligated  to, and shall not,  make any
Competitive  Bid  Advance as part of such  Competitive  Bid  Borrowing;
provided  that the failure by any Lender to give such notice  shall not
cause such Lender to be obligated to make any  Competitive  Bid Advance
as part of such proposed Competitive Bid Borrowing.

(iii) The Borrower  shall, in turn, (A) before 10:30 A.M. (New
York City time) on the date of such proposed Competitive Bid Borrowing,
in the case of a  Competitive  Bid  Borrowing  consisting of Fixed Rate
Advances  denominated in Dollars,  (B) before 11:00 A.M. (New York City
time) three Business Days before the date of such proposed  Competitive
Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances denominated in Dollars, (C) before 3:00 P.M. (London
time)  on  the  Business  Day  prior  to  the  date  of  such  proposed
Competitive  Bid Borrowing,  in the case of a Competitive Bid Borrowing
consisting  of either Fixed Rate  Advances  denominated  in any Foreign
Currency or Local Rate Advances denominated in any Foreign Currency and
(D) before 3:00 P.M.  (London time) on the third  Business Day prior to
the  date  of  such  Competitive  Bid  Borrowing,  in  the  case  of  a
Competitive Bid Borrowing  consisting of LIBO Rate Advances denominated
in any Foreign Currency, either:

(x) cancel such  Competitive  Bid  Borrowing by giving the
Agent notice to that effect, or

(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (ii) above, in its sole discretion,
by giving  notice to the Agent or to the  Sub-Agent,  as the case
may be, of the  amount of each  Competitive  Bid  Advance  (which
amount shall be equal to or greater than the minimum amount,  and
equal  to or  less  than  the  maximum  amount,  notified  to the
Borrower  by the Agent or the  Sub-Agent,  as the case may be, on
behalf of such Lender for such  Competitive Bid Advance  pursuant
to  paragraph  (ii)  above) to be made by each  Lender as part of
such  Competitive Bid Borrowing,  and reject any remaining offers
made by Lenders  pursuant to  paragraph  (ii) above by giving the
Agent  or the  Sub-Agent,  as the  case  may be,  notice  to that
effect.  The Borrower  shall accept the offers made by any Lender
or  Lenders  to make  Competitive  Bid  Advances  in order of the
lowest to the highest rates of interest  offered by such Lenders.
If two or more Lenders have offered the same interest  rate,  the
amount to be borrowed  at such  interest  rate will be  allocated
among such  Lenders in  proportion  to the amount  that each such
Lender offered at such interest rate.

(iv) If the Borrower  notifies the Agent or the Sub-Agent,  as
the case may be,  that such  Competitive  Bid  Borrowing  is  cancelled
pursuant to paragraph  (iii)(x) above,  the Agent or the Sub-Agent,  as
the case may be,  shall give prompt  notice  thereof to the Lenders and
such Competitive Bid Borrowing shall not be made.

(v) If the Borrower  accepts one or more of the offers made by
any Lender or Lenders  pursuant to paragraph  (iii)(y) above, the Agent
or the Sub-Agent, as the case may be, shall in turn promptly notify (A)
each  Lender  that has made an offer as  described  in  paragraph  (ii)
above,  of the  date  and  aggregate  amount  of such  Competitive  Bid
Borrowing  and  whether or not any offer or offers  made by such Lender
pursuant to paragraph  (ii) above have been  accepted by the  Borrower,
(B) each  Lender that is to make a  Competitive  Bid Advance as part of
such  Competitive Bid Borrowing,  of the amount of each Competitive Bid
Advance  to be made  by such  Lender  as part of such  Competitive  Bid
Borrowing,  and (C)  each  Lender  that is to  make a  Competitive  Bid
Advance as part of such Competitive Bid Borrowing,  upon

receipt,  that the  Agent  or the  Sub-Agent,  as the case may be,  has
received  forms  of  documents  appearing  to  fulfill  the  applicable
conditions  set forth in Article  III.  Each  Lender  that is to make a
Competitive  Bid  Advance  as part of such  Competitive  Bid  Borrowing
shall,  before  11:00  A.M.  (New  York  City  time),  in the  case  of
Competitive  Bid  Advances to be  denominated  in Dollars or 11:00 A.M.
(London  time),   in  the  case  of  Competitive  Bid  Advances  to  be
denominated in any Foreign  Currency,  on the date of such  Competitive
Bid  Borrowing  specified in the notice  received from the Agent or the
Sub-Agent,  as the case may be, pursuant to clause (A) of the preceding
sentence or any later time when such Lender shall have received  notice
from the Agent or the Sub-Agent,  as the case may be pursuant to clause
(C) of the preceding  sentence,  make  available for the account of its
Applicable Lending Office to the Agent (x) in the case of a Competitive
Bid Borrowing  denominated  in Dollars,  at its address  referred to in
Section  8.02,  in  same  day  funds,  such  Lender's  portion  of such
Competitive  Bid  Borrowing  in  Dollars  and  (y)  in  the  case  of a
Competitive Bid Borrowing in a Foreign Currency,  at the Payment Office
for such Foreign  Currency as shall have been  notified by the Agent to
the Lenders prior thereto,  in same day funds, such Lender's portion of
such  Competitive  Bid  Borrowing  in  such  Foreign   Currency.   Upon
fulfillment of the  applicable  conditions set forth in Article III and
after  receipt  by the Agent of such  funds,  the Agent  will make such
funds  available  to the  Borrower  at the  location  specified  by the
Borrower in its Notice of  Competitive  Bid  Borrowing.  Promptly after
each Competitive Bid Borrowing the Agent will notify each Lender of the
amount of the Competitive Bid Borrowing, the consequent Competitive Bid
Reduction  and the dates  upon  which such  Competitive  Bid  Reduction
commenced and will terminate.

(vi) If the Borrower  notifies the Agent or the Sub-Agent,  as
the case may be,  that it accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph  (iii)(y) above, such notice of
acceptance  shall be  irrevocable  and  binding  on the  Borrower.  The
Borrower shall  indemnify each Lender against any loss, cost or expense
incurred  by such  Lender as a result of any  failure  to fulfill on or
before the date  specified  in the related  Notice of  Competitive  Bid
Borrowing for such Competitive Bid Borrowing the applicable  conditions
set forth in  Article  III,  including,  without  limitation,  any loss
(including loss of anticipated  profits),  cost or expense  incurred by
reason of the  liquidation or  reemployment  of deposits or other funds
acquired by such Lender to fund the  Competitive Bid Advance to be made
by such  Lender as part of such  Competitive  Bid  Borrowing  when such
Competitive  Bid Advance,  as a result of such failure,  is not made on
such date.

(b) Each  Competitive Bid Borrowing shall be in an aggregate  amount of
$10,000,000 (or the Equivalent thereof in any Foreign Currency, determined as of
the time of the applicable  Notice of Competitive  Bid Borrowing) or an integral
multiple of  $1,000,000  (or the  Equivalent  thereof in any  Foreign  Currency,
determined as of the time of the applicable Notice of Competitive Bid Borrowing)
in excess thereof and,  following the making of each  Competitive Bid Borrowing,
the  Borrower  shall be in  compliance  with the  limitations  set  forth in the
provisos to the first sentence of subsection (a) above.

(c) Within the limits and on the  conditions  set forth in this Section
2.03,  the Borrower may from time to time borrow under this Section 2.03,  repay
or prepay  pursuant to  subsection  (d) below,  and reborrow  under this Section
2.03,  provided that a Competitive  Bid Borrowing shall not be made within three
Business Days of the date of any other Competitive Bid Borrowing.

(d) The  Borrower  shall  repay to the  Agent for the  account  of each
Lender that has made a  Competitive  Bid Advance,  on the maturity  date of each
Competitive Bid Advance (such maturity date being that specified by the Borrower
for  repayment  of  such  Competitive  Bid  Advance  in the  related  Notice  of
Competitive  Bid Borrowing  delivered  pursuant to  subsection  (a)(i) above and
provided in the Competitive  Bid Note evidencing such  Competitive Bid Advance),
the then unpaid principal  amount of such Competitive Bid Advance.  The Borrower
shall  have no right to  prepay  any  principal  amount of any  Competitive  Bid
Advance unless,  and then only on the terms,  specified by the Borrower for such
Competitive  Bid  Advance in the related  Notice of  Competitive  Bid  Borrowing
delivered  pursuant to subsection  (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.

(e) The Borrower shall pay interest on the unpaid  principal  amount of
each  Competitive  Bid Advance from the date of such  Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection  (a)(ii) above,  payable on the interest  payment date or
dates specified by the Borrower for such  Competitive Bid Advance in the related
Notice of  Competitive  Bid Borrowing  delivered  pursuant to subsection  (a)(i)
above, as provided in the  Competitive Bid Note evidencing such  Competitive Bid
Advance.  Upon the occurrence and during the continuance of an Event of Default,
the  Borrower  shall pay  interest  on the  amount of  unpaid  principal  of and
interest on each  Competitive Bid Advance owing to a Lender,  payable in arrears
on the date or dates interest is payable  thereon,  at a rate per annum equal at
all times to 2% per annum  above the rate per annum  required to be paid on such
Competitive  Bid Advance under the terms of the  Competitive Bid Note evidencing
such  Competitive Bid Advance unless  otherwise  agreed in such  Competitive Bid
Note.

(f) The  indebtedness of the Borrower  resulting from each  Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced  by a separate  Competitive  Bid Note of the  Borrower  payable to the
order of the Lender making such Competitive Bid Advance.

SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the  aggregate  amount of
such Lender's  Commitment  from the  Effective  Date in the case of each Initial
Lender and from the later of the Effective Date and the effective date specified
in the  Assignment  and  Acceptance  pursuant to which it became a Lender in the
case of each other Lender until the  Termination  Date at a rate per annum equal
to the  Applicable  Percentage  in effect from time to time,  payable in arrears
quarterly  on  the  last  day of  each  March,  June,  September  and  December,
commencing September 30, 1999, and on the Termination Date.

(b)  Agent's  Fees.  The  Borrower  shall  pay to the Agent for its own
account  such fees as may from time to time be agreed  between the  Borrower and
the Agent.

SECTION 2.05. Optional Termination or Reduction of the Commitments. The
Borrower shall have the right,  upon at least three Business Days' notice to the
Agent,  to terminate in whole or reduce  ratably in part the unused  portions of
the respective Commitments of the Lenders,  provided that each partial reduction
shall be in the  aggregate  amount of  $10,000,000  or an  integral  multiple of
$1,000,000 in excess thereof and provided  further that the aggregate  amount of
the  Commitments  of the Lenders  shall not be reduced to an amount that is less
than the aggregate principal amount of the Competitive Bid Advances  denominated
in Dollars then outstanding plus the Equivalent in Dollars (determined as of the
date of the  notice of  prepayment)  of the  aggregate  principal  amount of the
Competitive Bid Advances denominated in Foreign Currencies then outstanding.

SECTION  2.06.  Repayment of Revolving  Credit  Advances.  The Borrower
shall  repay  to the  Agent  for  the  ratable  account  of the  Lenders  on the
Termination Date the aggregate principal amount of the Revolving Credit Advances
then outstanding.

SECTION  2.07.  Interest on Revolving  Credit  Advances.  (a) Scheduled
Interest. The Borrower shall pay interest on the unpaid principal amount of each
Revolving  Credit  Advance owing to each Lender from the date of such  Revolving
Credit  Advance  until  such  principal  amount  shall be paid in  full,  at the
following rates per annum:

(i) Base Rate Advances.  During such periods as such Revolving
Credit  Advance is a Base Rate  Advance,  a rate per annum equal at all
times to the sum of (x) the Base Rate in effect  from time to time plus
(y) the  Applicable  Margin  in  effect  from time to time plus (z) the
Applicable  Utilization  Fee in effect  from time to time,  payable  in
arrears  quarterly on the last day of each March,  June,  September and
December  during such  periods  and on the date such Base Rate  Advance
shall be Converted or paid in full.

(ii) Eurocurrency  Rate Advances.  During such periods as such
Revolving  Credit  Advance is a Eurocurrency  Rate Advance,  a rate per
annum equal at all times during each Interest Period for such

Revolving  Credit Advance to the sum of (x) the  Eurocurrency  Rate for
such Interest  Period for such  Revolving  Credit  Advance plus (y) the
Applicable  Margin in effect from time to time plus (z) the  Applicable
Utilization Fee in effect from time to time,  payable in arrears on the
last day of such  Interest  Period and, if such  Interest  Period has a
duration of more than three months, on each day that occurs during such
Interest  Period every three months from the first day of such Interest
Period  and on  the  date  such  Eurocurrency  Rate  Advance  shall  be
Converted or paid in full.

(b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each Revolving Credit Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above,  at a rate per annum
equal at all times to 2% per annum above the rate per annum  required to be paid
on such Revolving  Credit Advance pursuant to clause (a)(i) or (a)(ii) above and
(ii) to the fullest extent permitted by law, the amount of any interest,  fee or
other amount  payable  hereunder  that is not paid when due,  from the date such
amount shall be due until such amount shall be paid in full,  payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum  required to be paid
on Base Rate Advances pursuant to clause (a)(i) above.

SECTION  2.08.  Interest Rate  Determination.  (a) The Agent shall give
prompt  notice to the Borrower and the Lenders of the  applicable  interest rate
determined  by the Agent for  purposes of Section  2.07(a)(i)  or (ii),  and the
rate, if any,  furnished by each  Reference  Bank for the purpose of determining
the interest rate under Section 2.07(a)(ii).

(b) If, with respect to any  Eurocurrency  Rate Advances,  the Required
Lenders notify the Agent that (i) they are unable to obtain matching deposits in
the London  inter-bank market at or about 11:00 A.M. (London time) on the second
Business  Day before the making of a  Borrowing  in  sufficient  amounts to fund
their  respective  Revolving  Credit Advances as a part of such Borrowing during
its Interest  Period or (ii) the  Eurocurrency  Rate for any Interest Period for
such Advances will not adequately  reflect the cost to such Required  Lenders of
making,  funding or maintaining their respective  Eurocurrency Rate Advances for
such Interest  Period,  the Agent shall forthwith so notify the Borrower and the
Lenders,  whereupon (A) the Borrower  will, on the last day of the then existing
Interest Period therefor, (1) if such Eurocurrency Rate Advances are denominated
in Dollars,  either (x) prepay such  Advances or (y) Convert such  Advances into
Base Rate Advances and (2) if such Eurocurrency Rate Advances are denominated in
any Committed Currency, either (x) prepay such Advances or (y) redenominate such
Advances  into an  Equivalent  amount of Dollars and Convert such  Advances into
Base Rate Advances and (B) the  obligation of the Lenders to make, or to Convert
Revolving  Credit Advances into,  Eurocurrency  Rate Advances shall be suspended
until the Agent shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist; provided that, if the circumstances set
forth in clause (ii) above are applicable,  the Borrower may elect, by notice to
the Agent and the Lenders,  to continue such Advances in such Committed Currency
for  Interest  Periods  of not  longer  than one  month,  which  Advances  shall
thereafter  bear  interest  at a rate per annum equal to the  Applicable  Margin
plus, for each Lender,  the cost to such Lender  (expressed as a rate per annum)
of funding  its  Eurocurrency  Rate  Advances by  whatever  means it  reasonably
determines  to be  appropriate.  Each Lender shall certify its cost of funds for
each Interest  Period to the Agent and the Borrower as soon as practicable  (but
in any  event  not  later  than ten  Business  Days  after the first day of such
Interest Period).

(c) If the  Borrower  shall fail to select the duration of any Interest
Period for any  Eurocurrency  Rate  Advances in accordance  with the  provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith  so  notify  the  Borrower  and the  Lenders  and such  Advances  will
automatically, on the last day of the then existing Interest Period therefor, be
continued as Eurocurrency Rate Advances having an interest period of one month.

(d) On the date on which  the  aggregate  unpaid  principal  amount  of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment  or  otherwise,  to less than  $10,000,000,  such  Advances  shall
automatically Convert into Base Rate Advances.

(e) Upon the  occurrence  and  during the  continuance  of any Event of
Default, (i) each Eurocurrency Rate Advance will automatically,  on the last day
of the then existing  Interest Period therefor,  (A) if such  Eurocurrency  Rate
Advances are  denominated  in Dollars,  be Converted into Base Rate Advances and
(B) if  such  Eurocurrency  Rate  Advances  are  denominated  in  any  Committed
Currency, be redenominated into an Equivalent amount of Dollars and be Converted
into Base Rate  Advances and (ii) the  obligation  of the Lenders to make, or to
Convert Advances into,  Eurocurrency Rate Advances shall be suspended;  provided
that  Borrower  may  elect,  by notice to the Agent and the  Lenders  within one
Business  Day of such  Event of  Default,  to  continue  such  Advances  in such
Committed  Currency,  whereupon the Agent may require that each Interest  Period
relating to such Eurocurrency Rate Advances shall bear interest at the Overnight
Eurocurrency Rate for a period of three Business Days and thereafter,  each such
Interest  Period shall have a duration of not longer than one month.  "Overnight
Eurocurrency  Rate" means the rate per annum  applicable to an overnight  period
beginning on one  Business Day and ending on the next  Business Day equal to the
sum of 1%, the Applicable  Interest Rate Margin and the average,  rounded upward
to the  nearest  whole  multiple  of 1/16 of 1%, if such  average  is not such a
multiple, of the respective rates per annum quoted by each Reference Bank to the
Agent on request as the rate at which it is offering  overnight  deposits in the
relevant  currency in amounts  comparable to such Reference Bank's  Eurocurrency
Rate Advances.

(f) If Dow Jones Markets  Telerate Page 3750 is  unavailable  and fewer
than two Reference Banks furnish timely information to the Agent for determining
the Eurocurrency  Rate or LIBO Rate for any  Eurocurrency  Rate Advances or LIBO
Rate Advances, as the case may be,

(i) the Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such  Eurocurrency  Rate
Advances or LIBO Rate Advances, as the case may be,

(ii)  with  respect  to  Eurocurrency  Rate  Advances,  each such
Advance  will  automatically,  on the  last  day of  the  then  existing
Interest  Period  therefor,  (A) if such  Eurocurrency  Rate  Advance is
denominated in Dollars,  be prepaid by the Borrower or be  automatically
Converted  into a Base Rate  Advance and (B) if such  Eurocurrency  Rate
Advance is  denominated  in any  Committed  Currency,  be prepaid by the
Borrower or be automatically  redenominated into an Equivalent amount of
Dollars and be Converted into a Base Rate Advance (or if such Advance is
then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii) the  obligation  of the Lenders to make  Eurocurrency  Rate
Advances or LIBO Rate Advances or to Convert  Revolving  Credit Advances
into Eurocurrency Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances  causing such
suspension no longer exist.

SECTION 2.09.  Optional  Conversion of Revolving Credit  Advances.  The
Borrower may on any Business  Day, upon notice given to the Agent not later than
11:00 A.M.  (New York City time) on the third  Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert  all  Revolving  Credit  Advances  denominated  in  Dollars  of one Type
comprising  the same Borrowing into  Revolving  Credit  Advances  denominated in
Dollars  of  the  other  Type;  provided,   however,   that  any  Conversion  of
Eurocurrency  Rate Advances  into Base Rate  Advances  shall be made only on the
last  day of an  Interest  Period  for  such  Eurocurrency  Rate  Advances,  any
Conversion of Base Rate Advances into  Eurocurrency Rate Advances shall be in an
amount not less than the  minimum  amount  specified  in Section  2.02(b) and no
Conversion  of any  Revolving  Credit  Advances  shall  result in more  separate
Revolving  Credit  Borrowings  than permitted under Section  2.02(b).  Each such
notice of a Conversion shall, within the restrictions  specified above,  specify
(i) the date of such Conversion,  (ii) the Dollar  denominated  Revolving Credit
Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate
Advances,  the duration of the initial  Interest  Period for each such  Advance.
Each notice of Conversion shall be irrevocable and binding on the Borrower.

SECTION 2.10.  Prepayments of Revolving Credit Advances.  (a) Optional.
The Borrower may,  upon notice at least two Business  Days' prior to the date of
such prepayment,  in the case of Eurocurrency Rate Advances,  and not later than
11:00 A.M. (New York City time) on the date of such  prepayment,  in the case of
Base Rate  Advances,  to the  Agent  stating  the  proposed  date and  aggregate
principal  amount of the  prepayment,  and if

such notice is given the Borrower shall, prepay the outstanding principal amount
of the Revolving  Credit Advances  comprising part of the same Revolving  Credit
Borrowing in whole or ratably in part without premium or penalty,  together with
accrued interest to the date of such prepayment on the principal amount prepaid;
provided,  however,  that (x) each partial  prepayment  shall be in an aggregate
principal amount of $10,000,000 or an integral  multiple of $1,000,000 in excess
thereof or the  Equivalent  thereof in a Committed  Currency  (determined on the
date notice of prepayment is given) and (y) in the event of any such  prepayment
of a Eurocurrency Rate Advance, the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c).

(b) Mandatory Prepayments. (i) If the Agent notifies the Borrower that,
on any interest  payment date, the sum of (A) the aggregate  principal amount of
all Advances  denominated in Dollars then outstanding plus (B) the Equivalent in
Dollars  (determined  on the third  Business Day prior to such interest  payment
date) of the aggregate  principal amount of all Advances  denominated in Foreign
Currencies  then  outstanding  exceeds 103% of the aggregate  Commitments of the
Lenders on such date, the Borrower shall, within two Business Days after receipt
of such notice, prepay the outstanding principal amount of any Advances owing by
the Borrower in an aggregate  amount  sufficient to reduce such sum to an amount
not to exceed 100% of the aggregate Commitments of the Lenders on such date.

(ii) Each  prepayment  made  pursuant to this Section  2.10(b) shall be
made  together with any interest  accrued to the date of such  prepayment on the
principal  amounts  prepaid and, in the case of any prepayment of a Eurocurrency
Rate  Advance,  a LIBO Rate Advance or a Local Rate Advance on a date other than
the last day of an Interest  Period or at its maturity,  any additional  amounts
which the  Borrower  shall be  obligated  to reimburse to the Lenders in respect
thereof pursuant to Section  8.04(c).  The Agent shall give prompt notice of any
prepayment  required under this Section 2.10(b) to the Borrower and the Lenders.

SECTION  2.11.   Increased  Costs.  (a)  If,  due  to  either  (i)  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation or (ii) the  compliance  with any guideline or request  issued by any
central bank or other governmental authority including,  without limitation, any
agency of the  European  Union or similar  monetary or  multinational  authority
after the date hereof  (whether or not having the force of law),  there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining  Eurocurrency  Rate  Advances or LIBO Rate Advances  (excluding  for
purposes of this Section 2.11 any such increased  costs resulting from (i) Taxes
or Other Taxes (as to which  Section 2.14 shall  govern) and (ii) changes in the
basis of taxation of overall  net income or overall  gross  income by the United
States or by the  foreign  jurisdiction  or state  under the laws of which  such
Lender is  organized or is otherwise  subject to tax),  then the Borrower  shall
from time to time, upon demand by such Lender (with a copy of such demand to the
Agent),  pay to the Agent for the  account  of such  Lender  additional  amounts
sufficient to compensate such Lender for such increased cost,  provided that the
Borrower shall not be required to pay any such additional  amounts to the extent
such  additional  amounts  accrued prior to the date that is six months prior to
the date of such notice.  A certificate as to the amount of such increased cost,
submitted to the Borrower and the Agent by such Lender,  shall be conclusive and
binding for all purposes, absent manifest error.

(b) If any Lender determines that compliance with any law or regulation
or any  guideline  or  request  from  any  central  bank or  other  governmental
authority  (whether or not having the force of law)  affects or would affect the
amount of capital  required or expected to be  maintained  by such Lender or any
corporation  controlling  such  Lender  and that the  amount of such  capital is
increased by or based upon the  existence of such  Lender's  commitment  to lend
hereunder and other  commitments of this type,  then, upon demand by such Lender
(with a copy of such demand to the Agent),  the Borrower  shall pay to the Agent
for the account of such  Lender,  from time to time as specified by such Lender,
additional  amounts  sufficient to compensate such Lender or such corporation in
the light of such  circumstances,  to the  extent  that such  Lender  reasonably
determines  such  increase in capital to be allocable  to the  existence of such
Lender's  commitment  to  lend  hereunder.  A  certificate  as to  such  amounts
submitted to the Borrower and the Agent by such Lender shall be  conclusive  and
binding for all purposes, absent manifest error.

SECTION 2.12.  Illegality.  Notwithstanding any other provision of this
Agreement,  if any Lender shall notify the Agent that the introduction of or any
change in or in the  interpretation  of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its  Eurocurrency  Lending  Office to perform its  obligations
hereunder  to make  Eurocurrency  Rate  Advances  in 

Dollars  or any  Committed  Currency  or LIBO Rate  Advances  in  Dollars or any
Foreign Currency or to fund or maintain Eurocurrency Rate Advances in Dollars or
any Committed  Currency or LIBO Rate Advances in Dollars or any Foreign Currency
hereunder,  (a) each Eurocurrency Rate Advance or LIBO Rate Advance, as the case
may be, will  automatically,  upon such demand,  (i) if such  Eurocurrency  Rate
Advance or LIBO Rate Advance is denominated in Dollars, be Converted into a Base
Rate Advance or an Advance that bears  interest at the rate set forth in Section
2.07(a)(i),  as the case may be, and (ii) if such  Eurocurrency  Rate Advance or
LIBO Rate Advance is denominated in any Foreign Currency,  be redenominated into
an Equivalent  amount of Dollars and be Converted into a Base Rate Advance or an
Advance that bears interest at the rate set forth in Section 2.07(a)(i),  as the
case may be, and (b) the  obligation  of the Lenders to make  Eurocurrency  Rate
Advances or LIBO Rate  Advances or to Convert  Revolving  Credit  Advances  into
Eurocurrency  Rate Advances shall be suspended  until the Agent shall notify the
Borrower  and the Lenders that the  circumstances  causing  such  suspension  no
longer exist.

SECTION 2.13.  Payments and  Computations.  (a) The Borrower shall make
each payment  hereunder,  except with respect to principal of,  interest on, and
other amounts relating to, Advances denominated in a Foreign Currency, not later
than 11:00 A.M. (New York City time) on the day when due in Dollars to the Agent
at the  applicable  Agent's  Account in same day funds.  The Borrower shall make
each payment  hereunder  with respect to  principal  of,  interest on, and other
amounts relating to, Advances denominated in a Foreign Currency,  not later than
11:00 A.M. (at the Payment Office for such Foreign Currency) on the day when due
in  such  Foreign  Currency  to the  Agent,  by  deposit  of such  funds  to the
applicable Agent's Account in same day funds. The Agent will promptly thereafter
cause to be  distributed  like funds  relating  to the payment of  principal  or
interest or  facility  fees  ratably  (other than  amounts  payable  pursuant to
Section  2.03,  2.11,  2.14 or  8.04(c)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other  amount  payable to any Lender to such  Lender for the  account of its
Applicable  Lending  Office,  in each case to be applied in accordance  with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording  of the  information  contained  therein in the  Register  pursuant to
Section 8.07(c),  from and after the effective date specified in such Assignment
and Acceptance,  the Agent shall make all payments hereunder and under the Notes
in respect of the interest  assigned thereby to the Lender assignee  thereunder,
and the parties to such  Assignment  and Acceptance  shall make all  appropriate
adjustments  in such payments for periods prior to such  effective date directly
between themselves.

(b) The Borrower hereby  authorizes  each Lender,  if and to the extent
payment  owed to such  Lender is not made when due  hereunder  or under the Note
held by such  Lender,  to  charge  from time to time  against  any or all of the
Borrower's accounts with such Lender any amount so due. Each Lender that charges
an account of the Borrower in accordance with this Section agrees to promptly so
notify the  Borrower,  provided  that the failure to give such notice  shall not
affect the validity of such charge.

(c) All  computations  of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days,  as the case may be, all
computations  of interest  based on the  Eurocurrency  Rate or the Federal Funds
Rate and of  facility  fees shall be made by the Agent on the basis of a year of
360 days and  computations  in respect of Competitive Bid Advances shall be made
by the  Agent  or the  Sub-Agent,  as the  case  may  be,  as  specified  in the
applicable  Notice of  Competitive  Bid Borrowing  (or, in each case of Advances
denominated in Foreign  Currencies where market practice differs,  in accordance
with market practice), in each case for the actual number of days (including the
first day but  excluding  the last day)  occurring  in the period for which such
interest or facility  fees are payable.  Each  determination  by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

(d) Whenever  any payment  hereunder or under the Notes shall be stated
to be due on a day other than a Business  Day, such payment shall be made on the
next  succeeding  Business Day, and such extension of time shall in such case be
included in the  computation of payment of interest or facility fee, as the case
may be;  provided,  however,  that,  if such  extension  would cause  payment of
interest on or principal of Eurocurrency  Rate Advances or LIBO Rate Advances to
be made in the next following  calendar month, such payment shall be made on the
next preceding Business Day.

(e) Unless the Agent shall have received notice from the Borrower prior
to the  date on which  any  payment  is due to the  Lenders  hereunder  that the
Borrower  will not make such  payment  in full,  the Agent may  assume  that the
Borrower  has made such  payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender.  If and to the
extent the  Borrower  shall not have so made such  payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest  thereon,  for each day from the date such
amount is  distributed  to such Lender  until the date such  Lender  repays such
amount to the  Agent,  at (i) the  Federal  Funds  Rate in the case of  Advances
denominated  in  Dollars  or (ii)  the cost of funds  incurred  by the  Agent in
respect  of  such  amount  in  the  case  of  Advances  denominated  in  Foreign
Currencies.

SECTION 2.14. Taxes. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made,  in  accordance  with Section  2.13,  free and
clear of and without deduction for any and all present or future taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto,  excluding,  in the case of each Lender and the Agent, taxes imposed on
its overall net income,  and franchise taxes imposed on it in lieu of net income
taxes, by the  jurisdictions  in which such Lender or the Agent (as the case may
be) is otherwise subject to tax (all such non-excluded taxes,  levies,  imposts,
deductions,  charges,  withholdings  and  liabilities  in  respect  of  payments
hereunder or under the Notes being hereinafter  referred to as "Taxes").  If the
Borrower  shall be required by law to deduct any Taxes from or in respect of any
sum payable  hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section  2.14) such  Lender or the Agent (as the case may be)  receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower  shall make such  deductions  and (iii) the Borrower shall pay
the full amount deducted to the relevant  taxation  authority or other authority
in accordance with applicable law.

(b) In addition,  the Borrower shall pay any present or future stamp or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution,  delivery or  registration  of,  performing  under, or otherwise with
respect  to,  this  Agreement  or the Notes  (hereinafter  referred to as "Other
Taxes").

(c) The Borrower shall indemnify each Lender and the Agent for and hold
it harmless against the full amount of Taxes or Other Taxes (including,  without
limitation,  taxes of any kind imposed by any  jurisdiction  on amounts  payable
under this Section  2.14) imposed on or paid by such Lender or the Agent (as the
case may be) and any liability (including  penalties,  interest and expenses not
incurred by reason of gross negligence or willful misconduct on the part of such
Lender  or  the  Agent)  arising   therefrom  or  with  respect  thereto.   This
indemnification  shall be made  within 30 days from the date such  Lender or the
Agent (as the case may be) makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall  furnish to the Agent,  at its address  referred to in Section  8.02,  the
original or a certified copy of a receipt  evidencing such payment.  In the case
of any  payment  hereunder  or under the  Notes by or on behalf of the  Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower  by a  payor  that  is not a  United  States  person,  if the  Borrower
determines  that no Taxes are payable in respect  thereof,  the  Borrower  shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel as requested by and acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e),  the terms  "United  States"  and  "United  States  person"  shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

(e) Each Lender organized under the laws of a jurisdiction  outside the
United  States,  on or prior to the date of its  execution  and delivery of this
Agreement in the case of each Initial  Lender and on the date of the  Assignment
and  Acceptance  pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as requested in writing by the Borrower
(but only so long as such Lender remains  lawfully able to do so), shall provide
each of the Agent and the Borrower with two original  Internal  Revenue  Service
forms 1001 or 4224, as appropriate, or any successor or other form prescribed by
the  Internal  Revenue  Service,  certifying  that such Lender is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant

to this  Agreement  or the Notes.  If the form  provided by a Lender at the time
such Lender first  becomes a party to this  Agreement  indicates a United States
interest  withholding  tax rate in excess of zero,  withholding tax at such rate
shall be considered  excluded  from Taxes unless and until such Lender  provides
the  appropriate  forms  certifying  that  a  lesser  rate  applies,   whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form;  provided,  however,  that, if at the date of
the  Assignment  and Acceptance  pursuant to which a Lender  assignee  becomes a
party to this  Agreement,  the Lender  assignor was  entitled to payments  under
subsection  (a) in  respect of United  States  withholding  tax with  respect to
interest paid at such date,  then, to such extent,  the term Taxes shall include
(in  addition  to  withholding  taxes that may be imposed in the future or other
amounts  otherwise  includable in Taxes) United States  withholding tax, if any,
applicable with respect to the Lender  assignee on such date. In addition,  each
Lender agrees that from time to time after the Effective  Date, when a change in
circumstances renders the previous  certification  obsolete or inaccurate in any
material respect, it will deliver to the Borrower and the Agent two new accurate
and complete  original  signed copies of Internal  Revenue  Service Form 4224 or
1001,  as the case may be, and such other  forms as may be  required in order to
confirm or establish  the  entitlement  of such Lender to a continued  exemption
from or  reduction  in United  States  withholding  tax with respect to payments
under this Agreement or any Note, unless any change in treaty, law or regulation
has occurred after the date such Lender becomes a party  hereunder 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 so
advises the Borrower and the Agent. If any form or document  referred to in this
subsection (e) requires the disclosure of  information,  other than  information
necessary to compute the tax payable and information required on the date hereof
by  Internal  Revenue  Service  form 1001 or 4224,  that the  Lender  reasonably
considers  to be  confidential,  the  Lender  shall give  notice  thereof to the
Borrower  and shall not be  obligated  to include in such form or document  such
confidential information.

(f) Each Initial Lender hereby  confirms as of the Effective  Date, and
each other  Lender  confirms  as of the  effective  date of the  Assignment  and
Acceptance  pursuant to which it becomes a party  hereto,  in favor of the Agent
and the  Borrower  that  either (i) such  Lender is not  resident  in the United
Kingdom and is beneficially entitled to the Advances and the interest thereon or
(ii) it is a bank as defined  for the  purposes of Section 349 of the Income and
Corporation Taxes Act of 1988 of the United Kingdom and is beneficially entitled
to the Advances and the interest  thereon,  and each Lender agrees to notify the
Agent if there is any change in its position  from that set forth in this clause
(f).

(g) For any period with respect to which a Lender has failed to provide
the Borrower with the appropriate  form described in Section 2.14(e) (other than
if such failure is due to a change in law  occurring  subsequent  to the date on
which a form  originally was required to be provided,  or if such form otherwise
is not required under  subsection (e) above),  such Lender shall not be entitled
to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure;  provided,  however,  that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder,  the Borrower  shall take such steps as the Lender  shall  reasonably
request to assist the Lender to recover such Taxes.

(h) Any Lender claiming any additional amounts payable pursuant to this
Section  2.14 agrees to use  reasonable  efforts  (consistent  with its internal
policy and legal and regulatory  restrictions) to change the jurisdiction of its
Eurocurrency  Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not, in the  reasonable  judgment of such Lender,  be otherwise
disadvantageous to such Lender.

SECTION 2.15. Sharing of Payments,  Etc. If any Lender shall obtain any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or otherwise) on account of the Revolving  Credit Advances owing to it
(other than pursuant to Section 2.11,  2.14 or 8.04(c)) in excess of its ratable
share of payments on account of the Revolving  Credit  Advances  obtained by all
the Lenders,  such Lender shall  forthwith  purchase from the other Lenders such
participations  in the  Revolving  Credit  Advances  owing  to them as  shall be
necessary to cause such  purchasing  Lender to share the excess payment  ratably
with each of them; provided,  however, that if all or any portion of such excess
payment is thereafter  recovered from such purchasing Lender, such purchase from
each Lender  shall be rescinded  and such Lender  shall repay to the  purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such  Lender's  ratable share  (according to the  proportion of 

(i) the amount of such Lender's  required  repayment to (ii) the total amount so
recovered  from the  purchasing  Lender) of any interest or other amount paid or
payable by the  purchasing  Lender in respect of the total amount so  recovered.
The Borrower agrees that any Lender so purchasing a  participation  from another
Lender  pursuant to this  Section 2.15 may, to the fullest  extent  permitted by
law,  exercise all its rights of payment  (including  the right of set-off) with
respect  to such  participation  as fully  as if such  Lender  were  the  direct
creditor of the  Borrower  in the amount of such  participation.

SECTION  2.16.  Evidence  of Debt.  (a) Each Lender  shall  maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness of the Borrower to such Lender resulting from each Revolving Credit
Advance  owing to such  Lender  from  time to time,  including  the  amounts  of
principal  and  interest  payable  and  paid to such  Lender  from  time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon
notice by any Lender to the  Borrower  (with a copy of such notice to the Agent)
to the effect that a Revolving  Credit Note is required or  appropriate in order
for such  Lender to  evidence  (whether  for  purposes  of a  permitted  pledge,
enforcement or otherwise) the Revolving  Credit Advances owing to, or to be made
by, such Lender,  the Borrower shall promptly execute and deliver to such Lender
a  Revolving  Credit  Note  payable to the order of such  Lender in a  principal
amount up to the Commitment of such Lender.

(b) The Register  maintained by the Agent  pursuant to Section  8.07(d)
shall include a control account,  and a subsidiary  account for each Lender,  in
which  accounts  (taken  together)  shall be recorded (i) the date and amount of
each Borrowing made  hereunder,  the Type of Advances  comprising such Borrowing
and, if appropriate,  the Interest Period applicable thereto,  (ii) the terms of
each Assignment and Acceptance delivered to and accepted by it, (iii) the amount
of any  principal  or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iv) the amount of any sum received by
the Agent from the Borrower hereunder and each Lender's share thereof.

(c) Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Lender in its account or accounts  pursuant to
subsection  (a) above,  shall be prima facie evidence of the amount of principal
and  interest due and payable or to become due and payable from the Borrower to,
in the case of the  Register,  each Lender  and, in the case of such  account or
accounts,  such Lender, under this Agreement,  absent manifest error;  provided,
however,  that the failure of the Agent or such Lender to make an entry,  or any
finding that an entry is incorrect,  in the Register or such account or accounts
shall not limit or otherwise  affect the  obligations of the Borrower under this
Agreement.

SECTION 2.17.  Use of Proceeds.  The proceeds of the Advances  shall be
available (and the Borrower  agrees that it shall use such proceeds)  solely for
general corporate purposes of the Borrower and its Subsidiaries.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01.  Conditions  Precedent to  Effectiveness of Sections 2.01
and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and
as of the first date (the  "Effective  Date") on which the following  conditions
precedent have been satisfied:

(a) There shall have occurred no Material Adverse Change since
December 31, 1998.

(b)  There  shall  exist  no  action,   suit,   investigation,
litigation  or  proceeding   affecting  the  Borrower  or  any  of  its
Subsidiaries  pending or  threatened  before  any  court,  governmental
agency  or  arbitrator  that (i) would be  reasonably  likely to have a
Material  Adverse  Effect other than the matters  described on Schedule
3.01(b) hereto (the "Disclosed  Litigation") or (ii) purports to affect
the legality,  validity or enforceability of this Agreement or any Note
or the consummation of the transactions  contemplated hereby, and there
shall have been no adverse change in the status, or financial effect on
the

Borrower or any of its Subsidiaries,  of the Disclosed  Litigation from
that described on Schedule 3.01(b) hereto.

(c) Nothing  shall have come to the  attention  of the Lenders
during the course of their due diligence  investigation to lead them to
believe that the Information  Memorandum was or has become  misleading,
incorrect or incomplete in any material  respect;  without limiting the
generality  of the  foregoing,  the Lenders  shall have been given such
access to the  management,  records,  books of account,  contracts  and
properties  of the  Borrower  and its  Subsidiaries  as they shall have
reasonably requested.

(d) All  governmental  and third party  consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained  (without the imposition of any conditions  that are
not  acceptable to the Lenders) and shall remain in effect,  and no law
or regulation  shall be applicable  in the  reasonable  judgment of the
Lenders  that  restrains,   prevents  or  imposes   materially  adverse
conditions upon the transactions contemplated hereby.

(e) The Borrower shall have notified each Lender and the Agent
in writing as to the proposed Effective Date.

(f) The Borrower shall have paid all accrued fees and expenses
of the Agent and the Lenders  (including  the accrued fees and expenses
of counsel to the Agent).

(g) On the Effective Date, the following  statements  shall be
true and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Borrower,  dated
the Effective Date, stating that:

(i) The representations  and warranties  contained in
Section 4.01 are correct on and as of the Effective Date, and

(ii) No event has  occurred  and is  continuing  that
constitutes a Default.

(h) The Agent shall have  received on or before the  Effective
Date  the  following,  each  dated  such  day,  in form  and  substance
satisfactory  to the Agent and (except for the Revolving  Credit Notes)
in sufficient copies for each Lender:

(i) The  Revolving  Credit  Notes to the order of the
Lenders to the extent  requested  by any  Lender  pursuant  to
Section 2.16.

(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower  approving this Agreement and the
Notes,  and  of  all  documents   evidencing  other  necessary
corporate  action and  governmental  approvals,  if any,  with
respect to this Agreement and the Notes.

(iii) A certificate  of the Secretary or an Assistant
Secretary  of the  Borrower  certifying  the  names  and  true
signatures of the officers of the Borrower  authorized to sign
this  Agreement  and the Notes and the other  documents  to be
delivered hereunder.

(iv)  A  favorable  opinion  of  Susan  F.  Marrinan,
General  Counsel of the Borrower,  and a favorable  opinion of
Foley & Lardner, counsel to the Borrower, substantially in the
form of Exhibit D-1 and Exhibit D-2 hereto, respectively,  and
as to such other  matters as any Lender  through the Agent may
reasonably request.

(v) A  favorable  opinion  of  Shearman  &  Sterling,
counsel for the Agent,  in form and substance  satisfactory to
the Agent.

(i) The  Borrower  shall  have  repaid in full of all  amounts
outstanding and terminated the commitments of the lenders under each of
(i) the  $75,000,000  364-Day  revolving  credit  agreement dated as 

of March 23,  1998  between  the  Borrower  and  Citibank  and (ii) the
$100,000,000 five year revolving credit agreement dated as of September
5, 1997 among the Borrower,  Citibank, Bank of America NT&SA, The First
National Bank of Chicago and Bank of Montreal,  and each of the Lenders
that is a party to either such credit  agreement  hereby  waives,  upon
execution  of this  Agreement,  any notice  requirement  of such credit
agreement relating to the termination of commitments thereunder.

(j) The  conditions  precedent  set forth in  Section  3.01(a)
through (i) of the 364-Day Credit Agreement dated as of August 23, 1999
among the Borrower,  the lenders parties thereto,  Salomon Smith Barney
Inc., as lead arranger and book manager, Banc One Capital Markets Inc.,
as  co-arranger,  Citibank,  as  administrative  agent,  and The  First
National  Bank of  Chicago,  as  syndication  agent,  shall  have  been
satisfied.

SECTION  3.02.  Conditions  Precedent  to  Sandvik  Funding  Date.  The
obligation of each Lender to make Advances in an aggregate  amount  greater than
one-third of such Lender's  Commitment  shall become  effective on and as of the
date (the "Sandvik  Funding Date") on which the Borrower  delivers a certificate
to the Lenders  certifying  that the following  conditions  precedent  have been
satisfied:

(a) All  governmental  and third party  consents  and approval
necessary  in  connection  with the  acquisition  of the saw and  tools
assets of Sandvik AB (the  "Acquisition")  shall have been obtained and
shall remain in effect;  all applicable  waiting  periods in connection
with the Acquisition  shall have expired without any action being taken
by  any  competent  authority,  and  no  law  or  regulation  shall  be
applicable in the judgment of the Required  Lenders,  in each case that
restrains,  prevents or imposes  materially adverse conditions upon the
Acquisition, the Borrower or any of its Subsidiaries.

(b) The  conditions  precedent to the  Acquisition  shall have
shall  have been  consummated  (except  only the  delivery  of  closing
documents and the payment of the purchase price therefor) in compliance
with all applicable laws.

SECTION 3.03.  Conditions Precedent to Each Revolving Credit Borrowing.
The obligation of each Lender to make a Revolving Credit Advance on the occasion
of each Revolving Credit Borrowing shall be subject to the conditions  precedent
that the Effective  Date shall have  occurred and on the date of such  Revolving
Credit  Borrowing  (a) the following  statements  shall be true (and each of the
giving of the applicable Notice of Revolving Credit Borrowing and the acceptance
by the  Borrower  of the  proceeds  of such  Revolving  Credit  Borrowing  shall
constitute a  representation  and  warranty by the Borrower  that on the date of
such Borrowing such statements are true):

(i) the  representations  and warranties  contained in Section
4.01  (except  the  representations  set forth in the last  sentence of
subsection (e) thereof and in subsection (f)(i) thereof) are correct on
and as of such date,  before and after giving effect to such  Revolving
Credit Borrowing and to the application of the proceeds  therefrom,  as
though made on and as of such date, and

(ii) no event has occurred and is continuing,  or would result
from such  Revolving  Credit  Borrowing or from the  application of the
proceeds therefrom, that constitutes a Default;

and (b) the  Agent  shall  have  received  such  other  approvals,  opinions  or
documents as any Lender through the Agent may reasonably request.

SECTION 3.04.  Conditions  Precedent to Each Competitive Bid Borrowing.
The  obligation of each Lender that is to make a Competitive  Bid Advance on the
occasion of a Competitive Bid Borrowing to make such  Competitive Bid Advance as
part of such  Competitive  Bid Borrowing is subject to the conditions  precedent
that (i) the Agent  shall  have  received  the  written  confirmatory  Notice of
Competitive  Bid Borrowing with respect  thereto,  (ii) on or before the date of
such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the
Agent shall have  received a  Competitive  Bid Note payable to the order of such
Lender for each of the one or more  Competitive  Bid Advances to be made by such
Lender as part of such Competitive Bid Borrowing, 

in a principal  amount  equal to the  principal  amount of the  Competitive  Bid
Advance to be  evidenced  thereby and  otherwise on such terms as were agreed to
for such  Competitive  Bid Advance in accordance with Section 2.03, and (iii) on
the date of such  Competitive  Bid Borrowing the following  statements  shall be
true  (and each of the  giving  of the  applicable  Notice  of  Competitive  Bid
Borrowing and the acceptance by the Borrower of the proceeds of such Competitive
Bid Borrowing  shall  constitute a  representation  and warranty by the Borrower
that on the date of such Competitive Bid Borrowing such statements are true):

(a) the representations and warranties  contained in Section 4.01
are  correct on and as of the date of such  Competitive  Bid  Borrowing,
before and after giving effect to such  Competitive Bid Borrowing and to
the application of the proceeds  therefrom,  as though made on and as of
such date,

(b) no event has occurred and is continuing, or would result from
such  Competitive  Bid Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and

(c) no event has occurred and no circumstance  exists as a result
of which the information  concerning the Borrower that has been provided
to the Agent and each  Lender by the  Borrower  in  connection  herewith
would  include an untrue  statement of a material  fact or omit to state
any material fact or any fact necessary to make the statements contained
therein,  in the light of the circumstances  under which they were made,
not misleading.

SECTION  3.05.  Determinations  Under  Section  3.01.  For  purposes of
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender  shall be deemed to have  consented  to,  approved  or  accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent  responsible  for the  transactions  contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders,  designates as the proposed Effective Date, specifying
its  objection  thereto.  The Agent  shall  promptly  notify the  Lenders of the
occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Representations  and  Warranties  of the  Borrower.  The
Borrower represents and warrants as follows:

(a) The  Borrower is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware.

(b) The execution, delivery and performance by the Borrower of
this   Agreement  and  the  Notes  to  be  delivered  by  it,  and  the
consummation of the transactions  contemplated  hereby,  are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action,  and do not contravene (i) the Borrower's  charter or
by-laws  or  (ii)  law or any  contractual  restriction  binding  on or
affecting the Borrower.

(c) No  authorization  or approval or other  action by, and no
notice to or filing with, any governmental authority or regulatory body
or any  other  third  party  is  required  as a  condition  to the  due
execution,  delivery and  performance by the Borrower of this Agreement
or the Notes to be delivered by it.

(d) This  Agreement  has  been,  and  each of the  Notes to be
delivered by it when delivered  hereunder will have been, duly executed
and delivered by the Borrower. This Agreement is, and each of the Notes
when  delivered  hereunder  will  be,  the  legal,  valid  and  binding
obligation  of  the  Borrower   enforceable  against  the  Borrower  in
accordance with their respective terms.

(e) The  Consolidated  balance  sheet of the  Borrower and its
Subsidiaries  as at December  31,  1998,  and the related  Consolidated
statements   of  income  and  cash  flows  of  the   Borrower  and  its
Subsidiaries for the fiscal year then ended,  accompanied by an opinion
of  Arthur  Andersen  LLP,  independent  public  accountants,  and  the
Consolidated  balance sheet of the Borrower and its  Subsidiaries as at
June 30, 1999,  and the related  Consolidated  statements of income and
cash flows of the Borrower and its Subsidiaries for the six months then
ended,  duly certified by the chief financial  officer of the Borrower,
copies of which have been  furnished  to each Lender,  fairly  present,
subject,  in the case of said balance  sheet as at June 30,  1999,  and
said statements of income and cash flows for the six months then ended,
to year-end audit adjustments,  the Consolidated financial condition of
the Borrower and its Subsidiaries as at such dates and the Consolidated
results of the operations of the Borrower and its  Subsidiaries for the
periods ended on such dates, all in accordance with generally  accepted
accounting principles  consistently  applied.  Since December 31, 1998,
there has been no Material Adverse Change.

(f)  There  is  no  pending  or   threatened   action,   suit,
investigation, litigation or proceeding, including, without limitation,
any  Environmental  Action,  affecting  the  Borrower  or  any  of  its
Subsidiaries  before any court,  governmental agency or arbitrator that
(i) would be reasonably likely to have a Material Adverse Effect (other
than the Disclosed Litigation) or (ii) purports to affect the legality,
validity  or  enforceability  of  this  Agreement  or any  Note  or the
consummation of the  transactions  contemplated  hereby,  and there has
been no materially adverse change in the status, or financial effect on
the Borrower or any of its  Subsidiaries,  of the Disclosed  Litigation
from that described on Schedule 3.01(b) hereto.

(g) The  Borrower is not engaged in the  business of extending
credit for the purpose of purchasing  or carrying  margin stock (within
the meaning of  Regulation  U issued by the Board of  Governors  of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase  or carry any margin  stock or to extend  credit to others for
the purpose of purchasing or carrying any margin stock.

(h) The Borrower is not an "investment  company", or a company
"controlled"  by an  "investment  company",  within the  meaning of the
Investment Company Act of 1940, as amended.

(i) The Borrower has (i) initiated a review and  assessment of
all  areas  within  its and  each  of its  Subsidiaries'  business  and
operations   (including  those  affected  by  suppliers,   vendors  and
customers)  that could be adversely  affected by the risk that computer
applications  used  by the  Borrower  or any  of its  Subsidiaries  (or
suppliers,  vendors  and  customers)  may be  unable to  recognize  and
perform properly date sensitive functions involving certain dates prior
to and any date after December 31, 1999 (the "Year 2000 Problem"), (ii)
developed a plan and timetable for  addressing the Year 2000 Problem on
a timely basis and (iii) to date,  implemented  that plan in accordance
with such timetable. Based on the foregoing, the Borrower believes that
all computer  applications  (including those of its suppliers,  vendors
and  customers)  that are  material to its or any of its  Subsidiaries'
business and operations are reasonably expected on a timely basis to be
able to perform properly date-sensitive functions for all dates before,
on and after January 1, 2000, except to the extent that a failure to do
so would not reasonably be expected to have a Material Adverse Effect.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION  5.01.  Affirmative  Covenants.  So long as any  Advance  shall
remain unpaid or any Lender shall have any  Commitment  hereunder,  the Borrower
will:

(a) Compliance with Laws, Etc.  Comply,  and cause each of its
Subsidiaries to comply, in all material  respects,  with all applicable
and material laws,  rules,  regulations and orders,  such compliance to
include,  without  limitation,  compliance with ERISA and Environmental
Laws.

(b) Payment of Taxes,  Etc. Pay and discharge,  and cause each
of its Subsidiaries to pay and discharge,  before the same shall become
delinquent,  (i) all taxes,  assessments  and  governmental  charges or
levies  imposed upon it or upon its property and (ii) all lawful claims
that,  if  unpaid,  might  by law  become  a Lien  upon  its  property;
provided,   however,   that   neither  the  Borrower  nor  any  of  its
Subsidiaries  shall be  required  to pay or  discharge  any  such  tax,
assessment,  charge or claim that is being  contested in good faith and
by proper  proceedings and as to which  appropriate  reserves are being
maintained,  unless and until any Lien resulting  therefrom attaches to
its property and becomes enforceable against its other creditors.

(c) Maintenance of Insurance.  Maintain, and cause each of its
Subsidiaries  to maintain,  insurance  with  responsible  and reputable
insurance  companies or  associations in such amounts and covering such
risks as is usually carried by companies engaged in similar  businesses
and owning  similar  properties  in the same general areas in which the
Borrower  or such  Subsidiary  operates;  provided,  however,  that the
Borrower and its  Subsidiaries  may  self-insure  to the same extent as
other  companies  engaged in  similar  businesses  and  owning  similar
properties  in the same  general  areas in which the  Borrower  or such
Subsidiary  operates and to the extent consistent with prudent business
practice.

(d)  Preservation of Corporate  Existence,  Etc.  Preserve and
maintain,  and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided,   however,   that  the  Borrower  and  its  Subsidiaries  may
consummate any merger or consolidation  permitted under Section 5.02(b)
and  provided  further  that  neither  the  Borrower  nor  any  of  its
Subsidiaries  shall be required to preserve  any right or  franchise if
the  Board  of  Directors  of the  Borrower  or such  Subsidiary  shall
determine that the  preservation  thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be,  and  that  the  loss  thereof  is not  disadvantageous  in any
material respect to the Borrower, such Subsidiary or the Lenders.

(e) Visitation Rights. At any reasonable time and from time to
time and, so long as no Default has  occurred and is  continuing,  upon
reasonable notice, permit the Agent or any of the Lenders or any agents
or representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the  properties of,
the Borrower and any of its  Subsidiaries,  and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries  with
any of their officers or directors and with their independent certified
public accountants.

(f) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account,  in which full and correct
entries shall be made of all financial  transactions and the assets and
business of the Borrower and each such  Subsidiary in  accordance  with
generally accepted accounting principles in effect from time to time.

(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its  Subsidiaries  to maintain and  preserve,  all of its
properties  that are used or useful in the  conduct of its  business in
good working order and condition, ordinary wear and tear excepted.

(h) Transactions with Affiliates.  Conduct,  and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
this Agreement with any of their  Affiliates on terms that are fair and
reasonable  and no less  favorable to the  Borrower or such  Subsidiary
than it would obtain in a comparable  arm's-length  transaction  with a
Person  not  an   Affiliate,   provided   that  the  Borrower  and  its
Subsidiaries  may transact  business with Snap-On Credit LLC on a basis
consistent with past practice.

(i) Reporting Requirements. Furnish to the Lenders:

(i) as soon as  available  and in any event within 45
days after the end of each of the first three quarters of each
fiscal year of the Borrower, the Consolidated balance sheet of
the  Borrower  and  its  Subsidiaries  as of the  end of  such
quarter and  Consolidated  statements of income and cash flows
of the Borrower and its Subsidiaries for the period commencing
at the end of the

previous  fiscal year and ending with the end of such quarter,
duly certified  (subject to year-end audit adjustments) by the
chief financial officer or treasurer of the Borrower as having
been prepared in accordance with generally accepted accounting
principles and certificates of the chief financial  officer or
treasurer of the Borrower as to  compliance  with the terms of
this  Agreement  and setting  forth in  reasonable  detail the
calculations  necessary to demonstrate compliance with Section
5.03, provided that in the event of any change in GAAP used in
the  preparation  of such financial  statements,  the Borrower
shall also  provide,  if necessary  for the  determination  of
compliance  with Section  5.03, a statement of  reconciliation
conforming such financial statements to GAAP;

(ii) as soon as available  and in any event within 90
days after the end of each fiscal year of the Borrower, a copy
of the annual  audit report for such year for the Borrower and
its Subsidiaries, containing the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal
year and  Consolidated  statements of income and cash flows of
the Borrower  and its  Subsidiaries  for such fiscal year,  in
each case accompanied by an opinion acceptable to the Required
Lenders by Arthur  Andersen  LLP or other  independent  public
accountants acceptable to the Required Lenders,  provided that
in the event of any change in GAAP used in the  preparation of
such financial statements, the Borrower shall also provide, if
necessary for the  determination  of  compliance  with Section
5.03, a statement of reconciliation  conforming such financial
statements to GAAP;

(iii) as soon as  possible  and in any  event  within
five days after the  occurrence of each Default  continuing on
the date of such statement, a statement of the chief financial
officer or treasurer of the Borrower  setting forth details of
such  Default and the action that the  Borrower  has taken and
proposes to take with respect thereto;

(iv)  promptly  after the sending or filing  thereof,
copies of all reports  that the  Borrower  sends to any of its
securityholders  as  such,  and  copies  of  all  reports  and
registration  statements  that the Borrower or any  Subsidiary
files  with the  Securities  and  Exchange  Commission  or any
national securities exchange;

(v) promptly after the commencement  thereof,  notice
of all actions and proceedings before any court,  governmental
agency or  arbitrator  affecting  the  Borrower  or any of its
Subsidiaries of the type described in Section 4.01(f); and

(vi) such other  information  respecting the Borrower
or any of its Subsidiaries as any Lender through the Agent may
from time to time reasonably request.

SECTION 5.02. Negative  Covenants.  So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

(a) Liens,  Etc.  Create or suffer to exist,  or permit any of
its  Subsidiaries  to create  or  suffer to exist,  any Lien on or with
respect  to any of its  properties,  whether  now  owned  or  hereafter
acquired,  or assign, or permit any of its Subsidiaries to assign,  any
right to receive income, other than:

(i) Permitted Liens,

(ii)  purchase  money  Liens  upon  or  in  any  real
property or equipment  acquired or held by the Borrower or any
Subsidiary  in the  ordinary  course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred  solely for the purpose of financing the  acquisition
of such  property  or  equipment,  or Liens  existing  on such
property or  equipment at the time of its  acquisition  (other
than  any  such  Liens  created  in   contemplation   of  such
acquisition  that were not incurred to finance the acquisition
of such property) or extensions,  renewals or  replacements of
any  of  the  foregoing  for  the  same  or a  lesser  amount,
provided,  however, that no

such  Lien  shall  extend to or cover  any  properties  of any
character  other than the real  property  or  equipment  being
acquired, and no such extension,  renewal or replacement shall
extend to or cover any properties not  theretofore  subject to
the Lien being extended, renewed or replaced, provided further
that  the  aggregate  principal  amount  of  the  indebtedness
secured by the Liens referred to in this clause (ii) shall not
exceed $25,000,000,

(iii) the Liens  existing on the  Effective  Date and
described on Schedule 5.02(a) hereto,

(iv) Liens on  property  of a Person  existing at the
time  such  Person  is merged  into or  consolidated  with the
Borrower  or any  Subsidiary  of the  Borrower  or  becomes  a
Subsidiary of the Borrower;  provided that such Liens were not
created in  contemplation  of such  merger,  consolidation  or
acquisition  and do not extend to any assets  other than those
of the Person so merged into or consolidated with the Borrower
or  such  Subsidiary  or  acquired  by the  Borrower  or  such
Subsidiary,

(v)  other  Liens   securing  Debt  in  an  aggregate
principal  amount  not  to  exceed  $50,000,000  at  any  time
outstanding,

(vi)  sales  of   accounts   receivable   arising  in
connection  a  transaction  described  in the  proviso  to the
definition of "Debt" in Section 1.01, and

(vii) the  replacement,  extension  or renewal of any
Lien  permitted  by clause  (iii) or (iv) above upon or in the
same property  theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any  direct  or  contingent  obligor)  of the Debt  secured
thereby.

(b)  Mergers,  Etc.  Merge or  consolidate  with or  into,  or
convey,  transfer,  lease  or  otherwise  dispose  of  (whether  in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, any Person, or
permit any of its Subsidiaries to do so, except that (i) any Subsidiary
of the Borrower may merge or  consolidate  with or into,  or dispose of
assets to, any other Subsidiary of the Borrower, (ii) any Subsidiary of
the  Borrower  may merge into or dispose of assets to the  Borrower and
(iii) the  Borrower  may merge into a wholly  owned  Subsidiary  of the
Borrower  that  has no  material  assets  or  liabilities  for the sole
purpose of changing the state of  incorporation  of the Borrower if the
surviving  corporation  shall  expressly  assume the liabilities of the
Borrower  under this Agreement and the Notes,  provided,  in each case,
that no Default  shall have  occurred and be  continuing at the time of
such proposed transaction or would result therefrom.

(c) Accounting  Changes.  Make or permit, or permit any of its
Subsidiaries  to make or permit,  any change in accounting  policies or
reporting  practices,  except as required  or  permitted  by  generally
accepted accounting principles.

(d) Change in Nature of Business.  Make,  or permit any of its
Subsidiaries to make, any material change in the nature of the business
of the Borrower and its Subsidiaries  taken as a whole as carried on at
the date hereof.

SECTION 5.03.  Financial Covenant.  So long as any Advance shall remain
unpaid or any Lender shall have any  Commitment  hereunder,  the  Borrower  will
maintain  a ratio of  Consolidated  Debt to the sum of  Consolidated  Debt  plus
shareholders' equity of not greater than 0.60:1.00.

ARTICLE VI

EVENTS OF DEFAULT

SECTION  6.01.  Events  of  Default.  If any of  the  following  events
("Events of Default") shall occur and be continuing:

(a)  The  Borrower  shall  fail to pay  any  principal  of any
Advance when the same becomes due and  payable;  or the Borrower  shall
fail to pay any  interest on any  Advance or make any other  payment of
fees or other amounts  payable under this  Agreement or any Note within
three Business Days after the same becomes due and payable; or

(b) Any representation or warranty made by the Borrower herein
or by the Borrower (or any of its  officers)  in  connection  with this
Agreement  shall prove to have been  incorrect in any material  respect
when made; or

(c) (i) The  Borrower  shall fail to  perform  or observe  any
term, covenant or agreement  contained in Section 5.01(d),  (e) or (i),
5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any
other term,  covenant or agreement  contained in this  Agreement on its
part  to  be  performed  or  observed  if  such  failure  shall  remain
unremedied  for 30 days after  written  notice  thereof shall have been
given to the Borrower by the Agent or any Lender; or

(d) The Borrower or any of its Subsidiaries  shall fail to pay
any principal of or premium or interest on any Debt that is outstanding
in a principal or net amount of at least  $25,000,000  in the aggregate
(but  excluding  Debt  outstanding  hereunder)  of the Borrower or such
Subsidiary  (as the case may be), when the same becomes due and payable
(whether by  scheduled  maturity,  required  prepayment,  acceleration,
demand  or  otherwise),  and such  failure  shall  continue  after  the
applicable  grace  period,  if  any,  specified  in  the  agreement  or
instrument  relating  to such Debt;  or any other  event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument,  if the effect of such event
or condition is to accelerate,  or to permit the  acceleration  of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable,  or  required  to be  prepaid  or  redeemed  (other  than by a
regularly  scheduled required  prepayment or redemption),  purchased or
defeased, or an offer to prepay, redeem,  purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or

(e) The Borrower or any of its  Subsidiaries  shall  generally
not pay its debts as such debts  become  due, or shall admit in writing
its  inability  to pay its  debts  generally,  or shall  make a general
assignment  for the benefit of creditors;  or any  proceeding  shall be
instituted  by or  against  the  Borrower  or any  of its  Subsidiaries
seeking  to  adjudicate   it  a  bankrupt  or  insolvent,   or  seeking
liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief,  or  composition  of it or its debts under any law
relating  to  bankruptcy,  insolvency  or  reorganization  or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver,  trustee,  custodian or other similar official for it or
for any  substantial  part of its property and, in the case of any such
proceeding  instituted  against it (but not  instituted by it),  either
such proceeding shall remain undismissed or unstayed for a period of 60
days,  or any of the  actions  sought  in such  proceeding  (including,
without  limitation,  the entry of an order for relief against,  or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any  substantial  part of its property)  shall occur; or
the Borrower or any of its Subsidiaries shall take any corporate action
to authorize any of the actions set forth above in this subsection (e);
or

(f)  Judgments or orders for the payment of money in excess of
$25,000,000 in the aggregate shall be rendered  against the Borrower or
any  of  its  Subsidiaries   with  respect  to  which  (i)  enforcement
proceedings  shall  have  been  commenced  by any  creditor  upon  such
judgments or orders or (ii) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgments or orders, by
reason  of a  pending  appeal or  otherwise,  shall  not be in  effect;
provided,  however,  that any such  judgment  or order  shall not be an
Event of Default or included in the calculation of the aggregate amount
of judgments or orders under this Section 6.01(f) if and for so long as
(i) the  amount of such  judgment  or order is  covered  by a valid and
binding  policy of  insurance  between  the  defendant  and the insurer
covering

payment  thereof and (ii) such  insurer,  which shall be rated at least
"A" by A.M.  Best  Company,  has been notified of, and has not disputed
the claim made for payment of, the amount of such judgment or order; or

(g) Any  non-monetary  judgment  or order  shall  be  rendered
against  the  Borrower  or  any  of  its  Subsidiaries  that  would  be
reasonably  expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order,  by reason of a pending appeal or otherwise,
shall not be in effect; or

(h) (i) Any  Person or two or more  Persons  acting in concert
(other  than  any  Related  Person)  shall  have  acquired   beneficial
ownership  (within  the  meaning  of Rule 13d-3 of the  Securities  and
Exchange  Commission  under  the  Securities  Exchange  Act  of  1934),
directly  or  indirectly,  of Voting  Stock of the  Borrower  (or other
securities convertible into such Voting Stock) representing 15% or more
of the combined  voting power of all Voting Stock of the  Borrower;  or
(ii) during any period of up to 24 consecutive months, commencing after
the date of this  Agreement,  individuals  who at the beginning of such
24-month  period were  directors  of the  Borrower  shall cease for any
reason  to  constitute  a  majority  of the board of  directors  of the
Borrower;  or (iii) any Person or two or more Persons acting in concert
(other  than any  Related  Person)  shall have  acquired by contract or
otherwise,  or shall have entered into a contract or arrangement  that,
upon consummation, will result in its or their acquisition of the power
to exercise,  directly or indirectly,  a controlling influence over the
management or policies of the Borrower; or

(i) The Borrower or any of its ERISA  Affiliates  shall incur,
or  shall  be  reasonably  likely  to  incur  liability  in  excess  of
$25,000,000  in  the  aggregate  as a  result  of one  or  more  of the
following:  (i) the occurrence of any ERISA Event;  (ii) the partial or
complete withdrawal of the Borrower or any of its ERISA Affiliates from
a Multiemployer  Plan; or (iii) the  reorganization or termination of a
Multiemployer Plan;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent,  of the  Required  Lenders,  by notice  to the  Borrower,  declare  the
obligation of each Lender to make Advances to be terminated,  whereupon the same
shall  forthwith  terminate,  and  (ii)  shall at the  request,  or may with the
consent,  of the  Required  Lenders,  by notice  to the  Borrower,  declare  the
Advances,  all  interest  thereon  and all  other  amounts  payable  under  this
Agreement to be forthwith  due and payable,  whereupon  the  Advances,  all such
interest  and all such amounts  shall  become and be forthwith  due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby  expressly  waived by the Borrower;  provided,  however,  that in the
event of an actual or deemed  entry of an order for relief  with  respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall  automatically be terminated and (B) the Advances,  all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

ARTICLE VII

THE AGENT

SECTION 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms  hereof,  together with such powers and  discretion as are  reasonably
incidental  thereto.  As to any  matters  not  expressly  provided  for by  this
Agreement  (including,  without  limitation,  enforcement  or  collection of the
Notes),  the Agent shall not be required to exercise any  discretion or take any
action,  but shall be  required  to act or to refrain  from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders,  and such  instructions  shall be binding upon all Lenders
and all  holders  of  Notes;  provided,  however,  that the  Agent  shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this  Agreement  or  applicable  law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

SECTION 7.02.  Agent's Reliance,  Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in  connection  with this  Agreement,
except  for its or their own gross  negligence  or willful  misconduct.  Without
limitation of the  generality  of the  foregoing,  the Agent:  (i) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent receives and accepts an Assignment and Acceptance entered into by such
Lender,  as assignor,  and an Eligible  Assignee,  as  assignee,  as provided in
Section  8.07;  (ii) may consult with legal counsel  (including  counsel for the
Borrower),  independent  public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel,  accountants or experts; (iii)
makes no warranty or  representation  to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with this  Agreement;  (iv) shall not have any
duty to ascertain or to inquire as to the  performance  or  observance of any of
the terms, covenants or conditions of this Agreement on the part of the Borrower
or to inspect the property  (including  the books and records) of the  Borrower;
(v) shall not be  responsible  to any  Lender for the due  execution,  legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no  liability  under or in respect of this  Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram or telex) believed by it to be genuine and signed or sent by the proper
party or parties.

SECTION 7.03. Citibank and Affiliates.  With respect to its Commitment,
the Advances made by it and the Note issued to it,  Citibank shall have the same
rights and powers under this  Agreement as any other Lender and may exercise the
same as though it were not the Agent;  and the term "Lender" or "Lenders" shall,
unless  otherwise  expressly  indicated,  include  Citibank  in  its  individual
capacity.  Citibank and its Affiliates may accept  deposits from, lend money to,
act as trustee under indentures of, accept investment  banking  engagements from
and generally  engage in any kind of business  with,  the  Borrower,  any of its
Subsidiaries  and any Person who may do business  with or own  securities of the
Borrower  or any such  Subsidiary,  all as if  Citibank  were not the  Agent and
without any duty to account therefor to the Lenders.

SECTION 7.04. 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  referred to in Section  4.01 and such other
documents  and  information  as it has deemed  appropriate,  made its own credit
analysis  and  decision  to  enter  into  this   Agreement.   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,  continue to make its own credit decisions in taking or
not taking action under this Agreement.

SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent
(to the  extent  not  reimbursed  by the  Borrower),  ratably  according  to the
respective  principal amounts of the Revolving Credit Advances then owed to each
of them (or if no Revolving Credit Advances are at the time outstanding, ratably
according to the respective amounts of their Commitments),  from and against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way  relating to or arising  out of this  Agreement  or any action  taken or
omitted  by the Agent  under  this  Agreement  (collectively,  the  "Indemnified
Costs"),  provided  that no  Lender  shall  be  liable  for any  portion  of the
Indemnified  Costs  resulting  from the  Agent's  gross  negligence  or  willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent  promptly  upon  demand  for its  ratable  share of any  out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in connection
with  the  preparation,   execution,  delivery,  administration,   modification,
amendment or enforcement  (whether through  negotiations,  legal  proceedings or
otherwise) of, or legal advice in respect of rights or  responsibilities  under,
this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the  Borrower.  In the case of any  investigation,  litigation  or proceeding
giving rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Agent, any Lender or a
third party.

SECTION  7.06.  Successor  Agent.  The Agent may  resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any  time  with or  without  cause  by the  Required 

Lenders.  Upon any such resignation or removal,  the Required Lenders shall have
the right to appoint a successor Agent with the consent,  not to be unreasonably
withheld or delayed,  of the  Borrower so long as no Default has occurred and is
continuing.  If no successor  Agent shall have been so appointed by the Required
Lenders,  and shall have  accepted  such  appointment,  within 30 days after the
retiring  Agent's  giving of  notice of  resignation  or the  Required  Lenders'
removal of the retiring  Agent,  then the  retiring  Agent may, on behalf of the
Lenders and with the consent, not to be unreasonably withheld or delayed, of the
Borrower  so long as no  Default  has  occurred  and is  continuing,  appoint  a
successor  Agent,  which shall be a commercial  bank organized under the laws of
the  United  States of  America  or of any State  thereof  and having a combined
capital  and  surplus  of at  least  $500,000,000.  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,  discretion,
privileges  and duties of the retiring  Agent,  and the retiring  Agent shall be
discharged  from its duties and  obligations  under  this  Agreement.  After any
retiring  Agent's  resignation or removal  hereunder as Agent, the provisions of
this  Article VII shall inure to its benefit as to any actions  taken or omitted
to be taken by it while it was Agent under this Agreement.

SECTION 7.07.  Sub-Agent.  The Sub-Agent has been designated under this
Agreement to carry out duties of the Agent.  The  Sub-Agent  shall be subject to
each of the obligations in this Agreement to be performed by the Sub-Agent,  and
each of the Borrower and the Lenders agrees that the Sub-Agent shall be entitled
to exercise  each of the rights and shall be entitled to each of the benefits of
the Agent under this Agreement as relate to the  performance of its  obligations
hereunder.

SECTION  7.08.  Other  Agents.  Each Lender  hereby  acknowledges  that
neither the syndication  agent nor any other Lender designated as any "Co-Agent"
on the  signature  pages hereof has any  liability  hereunder  other than in its
capacity as a Lender.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments,  Etc. No amendment or waiver of any provision
of this Agreement or the Revolving Credit Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required  Lenders,  and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given; provided,  however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders,  do any of the  following:  (a)
waive  any of the  conditions  specified  in  Section  3.01,  (b)  increase  the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the  Revolving  Credit  Advances or
any fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal  of, or interest on, the Revolving  Credit  Advances or any
fees or other  amounts  payable  hereunder,  (e)  change the  percentage  of the
Commitments or of the aggregate  unpaid principal amount of the Revolving Credit
Advances,  or the number of Lenders,  that shall be required  for the Lenders or
any of them to take any action  hereunder  or (f) amend this Section  8.01;  and
provided further that no amendment,  waiver or consent shall,  unless in writing
and signed by the Agent in addition to the Lenders  required  above to take such
action,  affect the rights or duties of the Agent  under this  Agreement  or any
Note.

SECTION  8.02.  Notices,  Etc.  All  notices  and other  communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex  communication)  and  sent by  reputable  overnight  courier,  telecopied,
telegraphed,  telexed or delivered,  if to the Borrower, at its address at 10801
Corporate Drive, Pleasant Prairie,  Wisconsin 53158, Attention:  Donald S. Huml,
Senior Vice President and Chief  Financial  Officer,  and Jefferey F. Kostrzewa,
Director  Treasury  Operations  and  Finance,  with copies to 2810 80th  Street,
Kenosha, Wisconsin 53141-1410, Attention: Susan F. Marrinan, General Counsel; if
to any Initial Lender,  at its Domestic  Lending Office  specified  opposite its
name on  Schedule I hereto;  if to any other  Lender,  at its  Domestic  Lending
Office specified in the Assignment and Acceptance  pursuant to which it became a
Lender;  and if to the  Agent,  at its  address at Two Penns  Way,  New  Castle,
Delaware 19720,  Attention:  Bank Loan  Syndications  Department;  or, as to the
Borrower  or the Agent,  at such other  address as shall be  designated  by such
party in a written  notice to the other parties and, as to each other party,  at
such other address as shall be  designated by such party in a written  notice to

the Borrower and the Agent. All such notices and communications shall, when sent
by overnight  courier,  telecopied,  telegraphed  or telexed,  be effective when
deposited with the courier,  telecopied,  delivered to the telegraph  company or
confirmed   by  telex   answerback,   respectively,   except  that  notices  and
communications  to the Agent  pursuant  to  Article  II, III or VII shall not be
effective  until  received by the Agent.  Delivery by  telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or the
Notes or of any Exhibit hereto to be executed and delivered  hereunder  shall be
effective as delivery of a manually executed counterpart thereof.

SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
or the Agent to exercise,  and no delay in  exercising,  any right  hereunder or
under any Note  shall  operate  as a waiver  thereof;  nor  shall any  single or
partial  exercise  of any such  right  preclude  any other or  further  exercise
thereof or the exercise of any other right.  The  remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

SECTION  8.04.  Costs and Expenses.  (a) The Borrower  agrees to pay on
demand all costs and expenses of the Agent in connection  with the  preparation,
execution,  delivery,   administration,   modification  and  amendment  of  this
Agreement,  the  Notes  and  the  other  documents  to be  delivered  hereunder,
including,  without limitation,  (A) all due diligence,  syndication  (including
printing,   distribution   and   bank   meetings),   transportation,   computer,
duplication,  appraisal,  consultant,  and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to  advising  the  Agent  as to  its  rights  and  responsibilities  under  this
Agreement.  The Borrower  further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation,  reasonable
counsel fees and expenses),  in connection with the enforcement (whether through
negotiations,  legal proceedings or otherwise) of this Agreement,  the Notes and
the other documents to be delivered  hereunder,  including,  without limitation,
reasonable  fees and  expenses  of  counsel  for the  Agent  and each  Lender in
connection with the enforcement of rights under this Section 8.04(a).

(b) The Borrower  agrees to indemnify  and hold  harmless the Agent and
each  Lender  and  each of  their  Affiliates  and  their  officers,  directors,
employees,  agents and advisors (each, an "Indemnified  Party") from and against
any and all  claims,  damages,  losses,  liabilities  and  expenses  (including,
without  limitation,  reasonable  fees and  expenses of counsel)  incurred by or
asserted or awarded against any  Indemnified  Party, in each case arising out of
or in  connection  with or by  reason  of  (including,  without  limitation,  in
connection with any investigation,  litigation or proceeding or preparation of a
defense in  connection  therewith)  (i) the Notes,  this  Agreement,  any of the
transactions  contemplated  herein or the actual or proposed use of the proceeds
of the Advances or (ii) the actual or alleged presence of Hazardous Materials on
any  property of the Borrower or any of its  Subsidiaries,  except to the extent
(x)  such  claim,   damage,  loss,  liability  or  expense  resulted  from  such
Indemnified  Party's gross negligence or willful  misconduct or (ii) such claim,
damage, loss or expense arises from a litigation or proceeding among Lenders. In
the case of an  investigation,  litigation  or  other  proceeding  to which  the
indemnity in this Section  8.04(b)  applies,  such indemnity  shall be effective
whether or not such  investigation,  litigation  or proceeding is brought by the
Borrower,  its directors,  shareholders or creditors or an Indemnified  Party or
any other  Person or any  Indemnified  Party is  otherwise  a party  thereto and
whether  or not  the  transactions  contemplated  hereby  are  consummated.  The
Borrower   also  agrees  not  to  assert  any  claim  for   special,   indirect,
consequential or punitive  damages against the Agent,  any Lender,  any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability,  arising out of or otherwise relating to
the Notes, this Agreement,  any of the transactions  contemplated  herein or the
actual or proposed use of the proceeds of the Advances.

(c) If any payment of principal of, or Conversion of, any  Eurocurrency
Rate Advance, LIBO Rate Advance or Local Rate Advance is made by the Borrower to
or for the account of a Lender other than on the last day of the Interest Period
for such  Advance,  as a result of a payment or  Conversion  pursuant to Section
2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant
to Section 6.01 or for any other reason,  or by an Eligible Assignee to a Lender
other  than on the last day of the  Interest  Period  for such  Advance  upon an
assignment of rights and  obligations  under this Agreement  pursuant to Section
8.07 as a result of a demand by the Borrower  pursuant to Section  8.07(a),  the
Borrower  shall,  upon demand by such Lender  (with a copy of such demand to the
Agent),  pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses,  costs or expenses that it may
reasonably incur as a result of such payment or 

Conversion,   including,   without  limitation,  any  loss  (including  loss  of
anticipated  profits),  cost or expense incurred by reason of the liquidation or
reemployment  of  deposits  or other  funds  acquired  by any  Lender to fund or
maintain such Advance.

(d) Without  prejudice  to the  survival of any other  agreement of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
Sections  2.11,  2.14 and 8.04 shall  survive the payment in full of  principal,
interest and all other amounts payable hereunder and under the Notes.

SECTION 8.05. Right of Set-off.  Upon (i) the occurrence and during the
continuance  of any Event of Default  and (ii) the making of the  request or the
granting of the consent  specified  by Section  6.01 to  authorize  the Agent to
declare the Notes due and payable  pursuant to the  provisions  of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by such  Lender or such
Affiliate (but not including any insurance premiums) to or for the credit or the
account of the Borrower  against any and all of the  obligations of the Borrower
now or hereafter existing under this Agreement and the Note held by such Lender,
whether or not such Lender  shall have made any demand  under this  Agreement or
such Note and although such  obligations  may be  unmatured.  Each Lender agrees
promptly to notify the Borrower after any such set-off and application, provided
that the  failure to give such  notice  shall not affect  the  validity  of such
set-off and application. The rights of each Lender and its Affiliates under this
Section  are in  addition  to other  rights  and  remedies  (including,  without
limitation,  other rights of set-off)  that such Lender and its  Affiliates  may
have.

SECTION 8.06.  Binding Effect.  This Agreement  shall become  effective
(other than  Sections  2.01 and 2.03,  which shall only  become  effective  upon
satisfaction  of the  conditions  precedent  set forth in Section  3.01) when it
shall have been  executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial  Lender that such Initial Lender has executed
it and  thereafter  shall be  binding  upon  and  inure  to the  benefit  of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations.  (a) Each Lender may and,
if demanded by the  Borrower (so long as no Default  shall have  occurred and be
continuing  and  following a demand by such Lender  pursuant to Section  2.11 or
2.14 or a notice  given by such Lender  pursuant to Section  2.12) upon at least
five Business  Days' notice to such Lender and the Agent,  will assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including,  without  limitation,  all  or a  portion  of  its  Commitment,  the
Revolving  Credit  Advances  owing to it and the Revolving  Credit Note or Notes
held by it);  provided,  however,  that (i) each such  assignment  shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement  (other than any right to make  Competitive Bid Advances,  Competitive
Bid Advances owing to it and Competitive Bid Notes),  (ii) except in the case of
an  assignment to a Person that,  immediately  prior to such  assignment,  was a
Lender or an assignment of all of a Lender's rights and  obligations  under this
Agreement,  the amount of the Commitment of the assigning  Lender being assigned
pursuant to each such  assignment  (determined  as of the date of the Assignment
and Acceptance with respect to such  assignment)  shall in no event be less than
$8,000,000 or an integral  multiple of $1,000,000 in excess thereof,  (iii) each
such assignment shall be to an Eligible Assignee, (iv) each such assignment made
as a result of a demand by the Borrower  pursuant to this Section  8.07(a) shall
be  arranged  by the  Borrower  after  consultation  with the Agent and shall be
either an  assignment  of all of the rights  and  obligations  of the  assigning
Lender  under this  Agreement or an  assignment  of a portion of such rights and
obligations  made  concurrently  with  another  such  assignment  or other  such
assignments  that  together  cover  all of the  rights  and  obligations  of the
assigning Lender under this Agreement,  (v) no Lender shall be obligated to make
any such  assignment  as a result of a demand by the  Borrower  pursuant to this
Section  8.07(a)  unless and until such Lender  shall have  received one or more
payments  from  either the  Borrower  or one or more  Eligible  Assignees  in an
aggregate amount at least equal to the aggregate outstanding principal amount of
the Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal  amount and all other amounts  payable to such
Lender under this Agreement,  and (vi) the parties to each such assignment shall
execute  and  deliver to the Agent,  for its  acceptance  and  recording  in the
Register, an Assignment and Acceptance,  together 

with any Revolving  Credit Note subject to such  assignment and a processing and
recordation  fee of  $3,000.  Upon  such  execution,  delivery,  acceptance  and
recording,  from and after the effective date  specified in each  Assignment and
Acceptance,  (x) the  assignee  thereunder  shall be a party  hereto and, to the
extent that rights and  obligations  hereunder have been assigned to it pursuant
to such Assignment and  Acceptance,  have the rights and obligations of a Lender
hereunder  and (y) the Lender  assignor  thereunder  shall,  to the extent  that
rights and  obligations  hereunder  have been  assigned  by it  pursuant to such
Assignment  and  Acceptance,  relinquish  its  rights and be  released  from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and  obligations  under this  Agreement,  such Lender  shall cease to be a party
hereto).

(b) By executing  and  delivering  an Assignment  and  Acceptance,  the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties  hereto as follows:  (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or  warranty  and  assumes no  responsibility  with  respect to any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this Agreement or any other instrument or document  furnished  pursuant
hereto;  (ii) such  assigning  Lender  makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to the  financial  condition  of the
Borrower  or  the  performance  or  observance  by  the  Borrower  of any of its
obligations  under this Agreement or any other instrument or document  furnished
pursuant  hereto;  (iii) such  assignee  confirms that it has received a copy of
this Agreement,  together with copies of the financial statements referred to in
Section  4.01  and  such  other  documents  and  information  as it  has  deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance upon the Agent,  such assigning Lender or any other Lender and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee  appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and  discretion  under this  Agreement as
are  delegated to the Agent by the terms  hereof,  together with such powers and
discretion as are reasonably  incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations  that
by the terms of this Agreement are required to be performed by it as a Lender.

(c) Upon its receipt of an  Assignment  and  Acceptance  executed by an
assigning Lender and an assignee  representing that it is an Eligible  Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall,  if such  Assignment  and  Acceptance  has been completed and is in
substantially  the form of Exhibit C hereto,  (i)  accept  such  Assignment  and
Acceptance,  (ii) record the information  contained  therein in the Register and
(iii) give prompt notice thereof to the Borrower.

(d) The Agent shall maintain at its address referred to in Section 8.02
a copy of each  Assignment and Acceptance  delivered to and accepted by it and a
register for the  recordation  of the names and addresses of the Lenders and the
Commitment  of, and principal  amount of the Advances owing to, each Lender from
time to time (the  "Register").  The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the Agent
and the Lenders may treat each Person  whose name is recorded in the Register as
a Lender  hereunder for all purposes of this  Agreement.  The Register  shall be
available for  inspection by the Borrower or any Lender at any  reasonable  time
and from time to time upon reasonable prior notice.

(e) Each Lender may sell  participations  to one or more banks or other
entities  (other than the Borrower or any of its  Affiliates)  in or to all or a
portion of its rights and obligations under this Agreement  (including,  without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this  Agreement  (including,  without  limitation,  its  Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender  shall  remain the holder of any such Note for all purposes of
this  Agreement,  (iv) the  Borrower,  the  Agent and the  other  Lenders  shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's  rights and  obligations  under this  Agreement and (v) no  participant
under any such  participation  shall have any right to approve any  amendment

or waiver of any provision of this  Agreement or any Note, or any consent to any
departure by the Borrower  therefrom,  except to the extent that such amendment,
waiver or consent  would reduce the  principal  of, or interest on, the Notes or
any fees or other amounts payable hereunder,  in each case to the extent subject
to such  participation,  or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.  The Borrower agrees that
each  participant  shall be entitled to the benefits of Sections 2.11,  2.14 and
8.04(b) and (c) to the same extent as if it were a Lender and had  acquired  its
interest  by  assignment  pursuant  to  this  Section  8.07;  provided  that  no
participant shall be entitled to receive any greater amount pursuant to any such
section  than the  transferor  Lender  would  have been  entitled  to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such participation occurred.

(f) Any Lender may, in connection with any assignment or  participation
or proposed assignment or participation  pursuant to this Section 8.07, disclose
to the  assignee  or  participant  or  proposed  assignee  or  participant,  any
information relating to the Borrower furnished to such Lender by or on behalf of
the  Borrower;  provided  that,  prior to any such  disclosure,  the assignee or
participant  or proposed  assignee or  participant  shall agree to preserve  the
confidentiality  of  any  Confidential  Information  relating  to  the  Borrower
received by it from such Lender.

(g)  Notwithstanding  any other  provision set forth in this Agreement,
any Lender may at any time  create a security  interest in all or any portion of
its rights under this Agreement  (including,  without  limitation,  the Advances
owing to it and any Note or Notes  held by it) in favor of any  Federal  Reserve
Bank in  accordance  with  Regulation A of the Board of Governors of the Federal
Reserve System.

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender shall
disclose any Confidential Information to any other Person without the consent of
the  Borrower,  other than (a) to the Agent's or such  Lender's  Affiliates  and
their officers,  directors,  employees, agents and advisors and, as contemplated
by Section 8.07(f),  to actual or prospective  assignees and  participants,  and
then  only  on a  confidential  basis,  (b) as  required  by any  law,  rule  or
regulation or judicial  process,  and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.

SECTION  8.09.  Governing  Law.  This  Agreement and the Notes shall be
governed by, and  construed  in  accordance  with,  the laws of the State of New
York.

SECTION 8.10. Execution in Counterparts. This Agreement may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Agreement.

SECTION 8.11.  Judgment.  (a) If for the purposes of obtaining judgment
in any court it is  necessary  to convert a sum due  hereunder  in Dollars  into
another currency,  the parties hereto agree, to the fullest extent that they may
effectively  do so,  that the rate of  exchange  used  shall be that at which in
accordance with normal banking  procedures the Agent could purchase Dollars with
such  other  currency  at  Citibank's  principal  office in London at 11:00 A.M.
(London  time) on the Business  Day  preceding  that on which final  judgment is
given.

(b) If for the  purposes  of  obtaining  judgment  in any  court  it is
necessary to convert a sum due hereunder in a Foreign Currency into Dollars, the
parties agree to the fullest  extent that they may  effectively  do so, that the
rate of exchange used shall be that at which in accordance  with normal  banking
procedures  the Agent could  purchase  such  Foreign  Currency  with  Dollars at
Citibank's  principal  office  in  London  at 11:00  A.M.  (London  time) on the
Business Day preceding that on which final judgment is given.

(c) The obligation of the Borrower in respect of any sum due from it in
any  currency  (the  "Primary  Currency")  to any Lender or the Agent  hereunder
shall, notwithstanding any judgment in any other currency, be discharged only to
the extent  that on the  Business  Day  following  receipt by such Lender or the
Agent  (as the case  may be),  of any sum  adjudged  to be so due in such  other
currency,  such Lender or the Agent 

(as the case may be) may in accordance with normal banking  procedures  purchase
the applicable  Primary Currency with such other currency;  if the amount of the
applicable  Primary  Currency  so  purchased  is less  than such sum due to such
Lender or the Agent (as the case may be) in the applicable Primary Currency, the
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to  indemnify  such Lender or the Agent (as the case may be) against  such loss,
and if the amount of the applicable  Primary Currency so purchased  exceeds such
sum due to any  Lender  or the  Agent  (as the  case  may be) in the  applicable
Primary Currency,  such Lender or the Agent (as the case may be) agrees to remit
to the Borrower such excess.

SECTION 8.12. Jurisdiction,  Etc. (a) Each of the parties hereto hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction  of any New York State court or federal  court of the
United States of America  sitting in New York City, and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement or the Notes, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such New York State court or, to the extent  permitted by law,
in such federal court. The Borrower hereby  irrevocably  consents to the service
of process in any action or proceeding in such courts by the mailing  thereof by
any parties hereto by registered or certified  mail,  postage  prepaid,  with an
additional notice by telecopier or by reputable  overnight delivery service,  to
the  Borrower at its address  specified  pursuant to Section  8.02.  Each of the
parties  hereto  agrees that a final  judgment in any such action or  proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect  any  right  that any  party may  otherwise  have to bring any  action or
proceeding  relating  to  this  Agreement  or the  Notes  in the  courts  of any
jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally  waives,
to the fullest  extent it may legally and  effectively do so, any objection that
it may now or  hereafter  have to the  laying  of venue of any  suit,  action or
proceeding  arising out of or relating to this Agreement or the Notes in any New
York State or federal  court.  Each of the  parties  hereto  hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

SECTION  8.13.  Substitution  of  Currency.  If a change in any Foreign
Currency  occurs  pursuant to any  applicable  law,  rule or  regulation  of any
governmental,  monetary or multi-national  authority, this Agreement (including,
without limitation,  the definitions of Eurocurrency Rate and LIBO Rate) will be
amended  to  the  extent  determined  by the  Agent  (acting  reasonably  and in
consultation  with the  Borrower)  to be  necessary  to  reflect  the  change in
currency and to put the Lenders and the Borrower in the same position, so far as
possible, that they would have been in if no change in such Foreign Currency had
occurred.  No such change in currency  nor any economic  consequences  resulting
therefrom  shall (a) give rise to any right to terminate  prematurely,  contest,
cancel,  rescind,  alter, modify or renegotiate the provisions of this Agreement
or (b) discharge,  excuse or otherwise affect the performance of any obligations
of any of the Borrower or the Lenders under this Agreement.

SECTION 8.15. Waiver of Jury Trial. Each of the Borrower, the Agent and
the Lenders hereby  irrevocably waives all right to trial by jury in any action,
proceeding  or  counterclaim  (whether  based on  contract,  tort or  otherwise)
arising out of or relating to this  Agreement or the Notes or the actions of the
Agent  or  any  Lender  in  the  negotiation,  administration,   performance  or
enforcement thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

SNAP-ON INCORPORATED

By /s/ Don Huml
Title:  Senior Vice President-Finance
and Chief Financial Officer

CITIBANK, N.A.,
as Agent

By  /s/ Robert D. Wetrus
Title: Vice President

Initial Lenders

Commitment                     Administrative Agent

$50,000,000                             CITIBANK, N.A.

By /s/ Robert D. Wetrus
Title: Vice President

Syndication Agent

$50,000,000                             THE FIRST NATIONAL BANK OF CHICAGO

By /s/ Deborah Stevens
Title:  Senior Vice President

Co-Agents

$25,000,000                             BANK OF AMERICA, N.A.

By /s/ M.H. Claggett
Title: Vice President

$25,000,000                             MORGAN GUARANTY BANK AND TRUST COMPANY
OF NEW YORK

By /s/ So Vanna Day
Title: Vice President

$25,000,000                             SVENSKA HANDELSBANKEN AB (publ)

By  /s/ Geoffrey Walker
Title: Senior Vice President

By /s/ Henrik Jensen
Title: Vice President

Lenders

$16,666,667                             BARCLAYS BANK PLC

By /s/ Marlene Wechselblatt
Title: Vice President

$5,000,000                              FIRSTAR BANK MILWAUKEE, N.A.

By /s/ R. Bruce Anthony
Title: Assistant Vice President

$3,333,333                              CIBC INC.

By /s/ Dominic Sorresso
Title: Executive Director

$200,000,000 Total of the Commitments

SCHEDULE I
SNAP-ON INCORPORATED
FIVE YEAR CREDIT AGREEMENT
APPLICABLE LENDING OFFICES

----------------------- -------------------------- ----------------------------
Name of Initial Lender  Domestic Lending Office    Eurocurrency Lending Office
----------------------- -------------------------- ----------------------------
Bank of America, N.A.   101 N. Tryon               101 N. Tryon
Charlotte, NC 60697        Charlotte, NC 60697
Attn: Sidney Bridges       Attn: Sidney Bridges
T: 704 386-8542            T: 704 386-8542
F: 704 409-0090            F: 704 409-0090
----------------------- -------------------------- ----------------------------
Barclays Bank plc       222 Broadway               222 Broadway
New York, NY 10038         New York, NY 10038
Attn: C. Tenn              Attn: C. Tenn
T: 212 412-3728            T: 212 412-3728
F: 212 412-5308            F: 212 412-5308
----------------------- -------------------------- ----------------------------
CIBC Inc.               Two Paces West             Two Paces West
2727 Paces Ferry Road,     2727 Paces Ferry Road,
Suite 1200                 Suite 1200
Atlanta, GA 30339          Atlanta, GA 30339
Attn: Charlene Harris      Attn: Charlene Harris
T: 770 319-4881            T: 770 319-4881
F: 770 319-4950            F: 770 319-4950
----------------------- -------------------------- ----------------------------
Citibank, N.A.          Two Penns Way              Two Penns Way
New Castle, DE 19720       New Castle, DE 19720
Attn: Maureen Prytula      Attn: Maureen Prytula
T: 302 894-6089            T: 302 894-6089
F: 302 894-6120            F: 302 894-6120
----------------------- -------------------------- ----------------------------
Firstar Bank            777 E. Wisconsin Ave.      777 E. Wisconsin Ave.
Milwaukee, N.A.        Milwaukee, WI 53202        Milwaukee, WI 53202
Attn: Bruce Anthony        Attn: Bruce Anthony
T: 414 765-4724            T: 414 765-4724
F: 414 765-5367            F: 414 765-5367
----------------------- -------------------------- ----------------------------
The First National Bank One First National Plaza,  One First National Plaza,
of Chicago             Suite 0088                 Suite 0088
Chicago, IL 60670          Chicago, IL 60670
Attn: Edna Guerra          Attn: Edna Guerra
T: 312 732-9609            T: 312 732-9609
F: 312 732-2715            F: 312 732-2715
----------------------- -------------------------- ----------------------------
Morgan Guaranty Bank    60 Wall Street             c/o J.P. Morgan Services Inc.
and Trust Company      New York, NY 100260-0060   Euro-Loan Servicing Unit
of New York            Attn:                      500 Stanton Christiana Road
T:                         Newark DE 19713
F;                         Attn:
T;
F; 302 634-1094
----------------------- -------------------------- ----------------------------
Svenska Handelsbanken   153 East 53rd Street       153 East 53rd Street
AB (publ)              New York, NY 10022         New York, NY 10022
Attn: Henrik Jenson        Attn: Henrik Jenson
T: 212 326-5125            T: 212 326-5125
F: 212 326-5151            F: 212 326-5151
----------------------- -------------------------- ----------------------------

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 199_

FOR VALUE RECEIVED, the undersigned,  SNAP-ON INCORPORATED,  a Delaware
corporation  (the   "Borrower"),   HEREBY  PROMISES  TO  PAY  to  the  order  of
_________________________  (the  "Lender")  for the  account  of its  Applicable
Lending  Office on the  Termination  Date (as  defined in the  Credit  Agreement
referred to below) the principal sum of U.S.$[amount of the Lender's  Commitment
in figures] or, if less, the aggregate  principal amount of the Revolving Credit
Advances  made by the Lender to the  Borrower  pursuant  to the Five Year Credit
Agreement dated as of August 23, 1999 among the Borrower, the Lender and certain
other lenders parties  thereto,  Salomon Smith Barney Inc., as Lead Arranger and
Book Manager, Banc One Capital Markets Inc., as Co-Arranger,  The First National
Bank of Chicago,  as  Syndication  Agent,  and  Citibank,  N.A. as Agent for the
Lender and such other  lenders (as amended or  modified  from time to time,  the
"Credit  Agreement";  the terms  defined  therein  being used  herein as therein
defined) outstanding on such date.

The Borrower promises to pay interest on the unpaid principal amount of
each Revolving  Credit  Advance from the date of such  Revolving  Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.

Both principal and interest in respect of each Revolving Credit Advance
(i) in Dollars  are payable in lawful  money of the United  States of America to
the Agent at its  account  maintained  at 399 Park  Avenue,  New York,  New York
10043, in same day funds and (ii) in any Committed  Currency are payable in such
currency at the  applicable  Payment  Office in same day funds.  Each  Revolving
Credit  Advance  owing to the  Lender by the  Borrower  pursuant  to the  Credit
Agreement,  and all  payments  made on account of  principal  thereof,  shall be
recorded by the Lender and, prior to any transfer  hereof,  endorsed on the grid
attached hereto which is part of this Promissory Note.

This Promissory  Note is one of the Revolving  Credit Notes referred to
in,  and is  entitled  to the  benefits  of, the  Credit  Agreement.  The Credit
Agreement,  among other things,  (i) provides for the making of Revolving Credit
Advances by the Lender to the Borrower from time to time in an aggregate  amount
not to  exceed  at any time  outstanding  the U.S.  dollar  amount  first  above
mentioned,  the indebtedness of the Borrower  resulting from each such Revolving
Credit Advance being evidenced by this Promissory Note, (ii) contains provisions
for determining the Dollar  Equivalent of Revolving Credit Advances  denominated
in Committed  Currencies and (iii) contains  provisions for  acceleration of the
maturity  hereof  upon the  happening  of  certain  stated  events  and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

SNAP-ON INCORPORATED

By     
Title:

ADVANCES AND PAYMENTS OF PRINCIPAL

Amount of
Amount of     Principal Paid    Unpaid Principal      Notation
Date         Advance        or Prepaid           Balance          Made By
----         -------        ----------           -------          -------

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

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

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

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

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

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

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

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

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

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

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

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

EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 199_

FOR VALUE RECEIVED, the undersigned,  SNAP-ON INCORPORATED,  a Delaware
corporation  (the   "Borrower"),   HEREBY  PROMISES  TO  PAY  to  the  order  of
_________________________  (the  "Lender")  for the  account  of its  Applicable
Lending Office (as defined in the Five Year Credit  Agreement dated as of August
23,  1999 among the  Borrower,  the Lender and  certain  other  lenders  parties
thereto,  Salomon Smith Barney Inc., as Lead Arranger and Book Manager, Banc One
Capital  Markets Inc., as  Co-Arranger,  The First National Bank of Chicago,  as
Syndication  Agent,  and Citibank,  N.A., as Agent for the Lender and such other
lenders (as amended or modified from time to time, the "Credit  Agreement";  the
terms   defined   therein   being   used   herein  as  therein   defined)),   on
_______________,  199_, the principal  amount of  [U.S.$_______________]  [for a
Competitive Bid Advance in a Foreign Currency,  list currency and amount of such
Advance].

The Borrower  promises to pay interest on the unpaid  principal  amount
hereof from the date hereof until such principal  amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

Interest Rate:  _____% per annum  (calculated on the basis of a year of
_____ days for the actual number of days elapsed).

Both   principal   and   interest   are  payable  in  lawful  money  of
________________  to  Citibank,  as agent,  for the account of the Lender at the
office of  _________________________,  at  _________________________ in same day
funds.

This  Promissory  Note is one of the  Competitive Bid Notes referred to
in,  and is  entitled  to the  benefits  of, the  Credit  Agreement.  The Credit
Agreement,  among other things,  contains  provisions  for  acceleration  of the
maturity hereof upon the happening of certain stated events.

The Borrower hereby waives presentment,  demand,  protest and notice of
any kind.  No  failure  to  exercise,  and no delay in  exercising,  any  rights
hereunder  on the part of the holder  hereof  shall  operate as a waiver of such
rights.

This  Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York.

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING

Citibank,  N.A.,  as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way 
New Castle, Delaware 19720
[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The undersigned,  SNAP-ON INCORPORATED,  refers to the Five Year Credit
Agreement,  dated as of August 23,  1999 (as  amended or  modified  from time to
time,  the "Credit  Agreement",  the terms defined  therein being used herein as
therein  defined),  among the  undersigned,  certain  Lenders  parties  thereto,
Salomon Smith Barney Inc.,  as Lead Arranger and Book Manager,  Banc One Capital
Markets Inc., as Co-Arranger, The First National Bank of Chicago, as Syndication
Agent,  and  Citibank,  N.A.,  as Agent for said  Lenders,  and hereby gives you
notice,  irrevocably,  pursuant to Section 2.02 of the Credit Agreement that the
undersigned  hereby  requests  a  Revolving  Credit  Borrowing  under the Credit
Agreement,  and in that connection sets forth below the information  relating to
such Revolving Credit Borrowing (the "Proposed  Revolving Credit  Borrowing") as
required by Section 2.02(a) of the Credit Agreement:

(i)  The  Business  Day  of  the  Proposed   Revolving  Credit
Borrowing is _______________, 199_.

(ii) The Type of Advances  comprising  the Proposed  Revolving
Credit Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].

(iii) The aggregate  amount of the Proposed  Revolving  Credit
Borrowing is [$_______________]  [for a Revolving Credit Borrowing in a
Committed  Currency,  list  currency  and  amount of  Revolving  Credit
Borrowing].

[(iv) The initial Interest Period for each  Eurocurrency  Rate
Advance  made as part of the  Proposed  Revolving  Credit  Borrowing is
_____ month[s].]

The undersigned hereby certifies that the following statements are true
on the  date  hereof,  and will be true on the  date of the  Proposed  Revolving
Credit Borrowing:

(A) the  representations  and warranties  contained in Section
4.01 of the Credit Agreement (except the  representations  set forth in
the last  sentence of subsection  (e) thereof and in subsection  (f)(i)
thereof)  are correct,  before and after giving  effect to the Proposed
Revolving  Credit  Borrowing  and to the  application  of the  proceeds
therefrom, as though made on and as of such date; and

(B) no event has occurred and is  continuing,  or would result
from such Proposed  Revolving  Credit Borrowing or from the application
of the proceeds therefrom, that constitutes a Default.

Very truly yours,

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING

Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720
[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The undersigned,  SNAP-ON INCORPORATED,  refers to the Five Year Credit
Agreement,  dated as of August 23,  1999 (as  amended or  modified  from time to
time,  the "Credit  Agreement",  the terms defined  therein being used herein as
therein  defined),  among the  undersigned,  certain  Lenders  parties  thereto,
Salomon Smith Barney Inc.,  as Lead Arranger and Book Manager,  Banc One Capital
Markets Inc., as Co-Arranger, The First National Bank of Chicago, as Syndication
Agent,  and  Citibank,  N.A.,  as Agent for said  Lenders,  and hereby gives you
notice,  irrevocably,  pursuant to Section 2.03 of the Credit Agreement that the
undersigned  hereby  requests  a  Competitive  Bid  Borrowing  under the  Credit
Agreement, and in that connection sets forth the terms on which such Competitive
Bid Borrowing  (the  "Proposed  Competitive  Bid  Borrowing") is requested to be
made:

(A)  Date of Competitive Bid Borrowing     ________________________
(B)  Amount of Competitive Bid Borrowing   ________________________
(C)  [Maturity Date] [Interest Period]     ________________________
(D)  Interest Rate Basis                   ________________________
(E)  Day Count Convention                  ________________________
(F)  Interest Payment Date(s)              ________________________
(G)  Currency                              ________________________
(H)  Borrower's Account Location           ________________________
[(I) Prepayments Permitted                 ________________________]
(J)  ___________________                   ________________________

The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Competitive Bid
Borrowing:

(a) the  representations  and warranties  contained in Section
4.01 are  correct,  before  and after  giving  effect  to the  Proposed
Competitive  Bid  Borrowing  and to  the  application  of the  proceeds
therefrom, as though made on and as of such date;

(b) no event has occurred and is  continuing,  or would result
from the Proposed  Competitive Bid Borrowing or from the application of
the proceeds therefrom, that constitutes a Default;

(c) no event  has  occurred  and no  circumstance  exists as a
result of which the  information  concerning the  undersigned  that has
been  provided  to the Agent  and each  Lender  by the  undersigned  in
connection with the Credit  Agreement would include an untrue statement
of a  material  fact or omit to  state  any  material  fact or any fact
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading; and

(d) the  aggregate  amount  of the  Proposed  Competitive  Bid
Borrowing,  if accepted by the Borrower, and all other Borrowings to be
made on the same day under the Credit Agreement is within the aggregate
amount of the unused Commitments of the Lenders.

Very truly yours,

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT C - FORM OF
ASSIGNMENT AND ACCEPTANCE

Reference is made to the Five Year Credit  Agreement dated as of August
23,  1999 (as  amended or modified  from time to time,  the "Credit  Agreement")
among Snap-On Incorporated, a Delaware corporation (the "Borrower"), the Lenders
(as  defined  in the Credit  Agreement),  Salomon  Smith  Barney  Inc.,  as Lead
Arranger and Book Manager,  Banc One Capital Markets Inc., as  Co-Arranger,  The
First National Bank of Chicago,  as Syndication  Agent,  and Citibank,  N.A., as
agent for the Lenders (the "Agent").  Terms defined in the Credit  Agreement are
used herein with the same meaning.

The  "Assignor"  and the  "Assignee"  referred  to on Schedule I hereto
agree as follows:

1. The  Assignor  hereby  sells and  assigns to the  Assignee,  and the
Assignee hereby  purchases and assumes from the Assignor,  an interest in and to
the Assignor's  rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Competitive  Bid Advances and  Competitive  Bid
Notes) equal to the  percentage  interest  specified on Schedule 1 hereto of all
outstanding  rights and obligations  under the Credit  Agreement  (other than in
respect of Competitive  Bid Advances and  Competitive  Bid Notes).  After giving
effect to such sale and assignment,  the Assignee's Commitment and the amount of
the  Revolving  Credit  Advances  owing to the Assignee  will be as set forth on
Schedule 1 hereto.

2. The Assignor (i)  represents  and warrants  that it is the legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of the Credit Agreement or any other  instrument or document  furnished
pursuant  thereto;  (iii) makes no  representation  or  warranty  and assumes no
responsibility  with respect to the  financial  condition of the Borrower or the
performance  or observance by the Borrower of any of its  obligations  under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Credit Note, if any held by the Assignor.

3. The Assignee (i) confirms  that it has received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 4.01 thereof and such other  documents and  information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance  upon the Agent,  the  Assignor  or any other  Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  decisions  in taking or not taking  action under the Credit
Agreement;  (iii) represents to the Assignor, the Agent and the Borrower that it
is an Eligible  Assignee;  (iv) appoints and  authorizes  the Agent to take such
action as agent on its behalf and to exercise such powers and  discretion  under
the  Credit  Agreement  as are  delegated  to the  Agent by the  terms  thereof,
together with such powers and discretion as are reasonably  incidental  thereto;
(v) agrees  that it will  perform  in  accordance  with  their  terms all of the
obligations  that by the  terms  of the  Credit  Agreement  are  required  to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
forms required under Section 2.14 of the Credit Agreement.

4. Following the execution of this Assignment and  Acceptance,  it will
be  delivered  to the Agent for  acceptance  and  recording  by the  Agent.  The
effective date for this Assignment and Acceptance  (the "Effective  Date") shall
be the date of acceptance  hereof by the Agent,  unless  otherwise  specified on
Schedule 1 hereto.

5. Upon such acceptance and recording by the Agent, as of the Effective
Date,  (i) the  Assignee  shall be a party to the Credit  Agreement  and, to the
extent  provided  in  this  Assignment  and  Acceptance,  have  the  rights  and
obligations of a Lender  thereunder and (ii) the Assignor  shall,  to the extent
provided  in this  Assignment  and  Acceptance,  relinquish  its  rights  and be
released from its obligations under the Credit Agreement.

6. Upon such acceptance and recording by the Agent,  from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the  Revolving  Credit  Notes  in  respect  of  the  interest   assigned  hereby
(including, without limitation, all payments of principal, interest and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all  appropriate  adjustments  in payments  under the Credit  Agreement  and the
Revolving  Credit Notes for periods prior to the Effective Date directly between
themselves.

7. This  Assignment and Acceptance  shall be governed by, and construed
in accordance with, the laws of the State of New York.

8. This  Assignment  and  Acceptance  may be  executed in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier  shall
be effective as delivery of a manually  executed  counterpart of this Assignment
and Acceptance.

IN WITNESS WHEREOF,  the Assignor and the Assignee have caused Schedule
1 to this  Assignment and Acceptance to be executed by their officers  thereunto
duly authorized as of the date specified thereon.

Schedule 1
to
Assignment and Acceptance

Percentage interest assigned:                                     _____%

Assignee's Commitment:                                        $__________

Aggregate outstanding principal amount of 
Revolving Credit Advances assigned:                          $__________

Principal amount of Revolving Credit Note
payable to Assignee:                                         $__________

Principal amount of Revolving Credit Note
payable to Assignor:                                         $__________

Effective Date 1:     _______________, 199_

[NAME OF ASSIGNOR], as Assignor

By     
Title:

Dated:  _______________, 199_

[NAME OF ASSIGNEE], as Assignee

By     
Title:

Dated:  _______________, 199_

Domestic Lending Office:
[Address]

Eurocurrency Lending Office:
[Address]

-------------
1  This date should be no earlier than five Business Days after the delivery of
this Assignment and Acceptance to the Agent.

Accepted [and Approved] 2 this
__________ day of _______________, 199_

CITIBANK, N.A., as Agent

By                           
Title:

[Approved this __________ day
of _______________, 199_

SNAP-ON INCORPORATED

By                           ]3
Title:

----------------
2   Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".
3   Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".

EXHIBIT D - FORM OF
OPINION OF COUNSEL
FOR THE BORROWER

EXECUTION COPY WITH
EXHIBITS D-1 AND D-2
AND SHEARMAN & STERLING
OPINION AS SEPARATELY EXECUTED

U.S. $200,000,000

FIVE YEAR CREDIT AGREEMENT

Dated as of August 23, 1999

Among

SNAP-ON INCORPORATED

as Borrower

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

SALOMON SMITH BARNEY INC.

as Lead Arranger and Book Manager

and

BANC ONE CAPITAL MARKETS INC.

as Co-Arranger

and

CITIBANK, N.A.

as Administrative Agent

and

THE FIRST NATIONAL BANK OF CHICAGO

as Syndication Agent

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01.  Certain Defined Terms        1
SECTION 1.02.  Computation of Time Periods 11
SECTION 1.03.  Accounting Terms     11

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01.  The Revolving Credit Advances       11
SECTION 2.02.  Making the Revolving Credit Advances      11
SECTION 2.03.  The Competitive Bid Advances13
SECTION 2.04.  Fees  16
SECTION 2.05.  Termination or Reduction of the Commitments      17
-------------------------------------------
SECTION 2.06.  Repayment of Revolving Credit Advances    17
--------------------------------------
SECTION 2.07.  Interest on Revolving Credit Advances     17
-------------------------------------
SECTION 2.08.  Interest Rate Determination 18
---------------------------
SECTION 2.09.  Optional Conversion of Revolving Credit Advances 19
------------------------------------------------
SECTION 2.10.  Prepayments of Revolving Credit Advances  20
----------------------------------------
SECTION 2.11.  Increased Costs      20
---------------
SECTION 2.12.  Illegality   21
----------
SECTION 2.13.  Payments and Computations   21
-------------------------
SECTION 2.14.  Taxes 22
-----
SECTION 2.15.  Sharing of Payments, Etc.   24
------------------------
SECTION 2.16.  Evidence of Debt     24
----------------
SECTION 2.17.  Use of Proceeds      25
---------------

ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01.  Conditions Precedent to Effectiveness of Sections 2.01
and 2.03  27
SECTION 3.02.  Conditions Precedent to Sandvik Funding Date     28
SECTION 3.04.  Conditions Precedent to Each Competitive 
Bid Borrowing   29
SECTION 3.04.  Determinations Under Section 3.01  29

ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01.  Representations and Warranties of the Borrower    30

ARTICLE V COVENANTS OF THE BORROWER
SECTION 5.01.  Affirmative Covenants        31
SECTION 5.02.  Negative Covenants   33
SECTION 5.03.  Financial Covenant   34

ARTICLE VI EVENTS OF DEFAULT
SECTION 6.01.  Events of Default    34

ARTICLE VII THE AGENT

SECTION 7.01.  Authorization and Action    36
SECTION 7.02.  Agent's Reliance, Etc.      37
SECTION 7.03.  Citibank and Affiliates     37
SECTION 7.04.  Lender Credit Decision      37
SECTION 7.05.  Indemnification      37
SECTION 7.06.  Successor Agent      38
SECTION 7.07.  Sub-Agent    38

SECTION 7.08.  Other Agents.38

ARTICLE VIII MISCELLANEOUS
SECTION 8.01.  Amendments, Etc.     38
SECTION 8.02.  Notices, Etc.39
SECTION 8.03.  No Waiver; Remedies  39
SECTION 8.04.  Costs and Expenses   39
SECTION 8.05.  Right of Set-off     40
SECTION 8.06.  Binding Effect       40
SECTION 8.07.  Assignments and Participations     40
SECTION 8.08.  Confidentiality      42
SECTION 8.09.  Governing Law43
SECTION 8.10.  Execution in Counterparts   43
SECTION 8.11.  Judgment     43
SECTION 8.12.  Jurisdiction, Etc.   43
SECTION 8.13.  Substitution of Currency    44
SECTION 8.15.  Waiver of Jury Trial 44

Schedules

Schedule I - List of Applicable Lending Offices

Schedule 3.01(b) - Disclosed Litigation

Schedule 5.02(a) - Existing Liens

Exhibits

Exhibit A-1   -   Form of Revolving Credit Note

Exhibit A-2   -   Form of Competitive Bid Note

Exhibit B-1   -   Form of Notice of Revolving Credit Borrowing

Exhibit B-2   -   Form of Notice of Competitive Bid Borrowing

Exhibit C     -   Form of Assignment and Acceptance

Exhibit D-1   -   Form of Opinion of Counsel for the Borrower

Exhibit D-2   -   Form of Opinion of Counsel for the Borrower

364-DAY CREDIT AGREEMENT

Dated as of August 23, 1999

SNAP-ON  INCORPORATED,  a Delaware  corporation (the  "Borrower"),  the
banks,  financial  institutions  and other  institutional  lenders (the "Initial
Lenders")  listed on the signature  pages hereof,  SALOMON SMITH BARNEY INC., as
lead arranger and book manager,  BANC ONE CAPITAL  MARKETS INC., as co-arranger,
CITIBANK,  N.A.  ("Citibank"),  as  administrative  agent (the  "Agent") for the
Lenders (as  hereinafter  defined) and THE FIRST  NATIONAL  BANK OF CHICAGO,  as
syndication agent, agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.  Certain Defined Terms.  As used in this  Agreement,  the
following  terms shall have the following  meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

"Advance"  means a Revolving  Credit  Advance or a Competitive
Bid Advance.

"Affiliate"  means,  as to any Person,  any other Person that,
directly or indirectly,  controls,  is controlled by or is under common
control  with such Person or is a director  or officer of such  Person.
For purposes of this  definition,  the term  "control"  (including  the
terms  "controlling",  "controlled by" and "under common control with")
of a Person means the possession,  direct or indirect,  of the power to
vote 5% or more of the  Voting  Stock of such  Person  or to  direct or
cause the  direction  of the  management  and  policies of such Person,
whether   through  the  ownership  of  Voting  Stock,  by  contract  or
otherwise.

"Agent's   Account"   means  (a)  in  the  case  of   Advances
denominated  in  Dollars,  the account of the Agent  maintained  by the
Agent at Citibank at its office at 399 Park Avenue,  New York, New York
10043, Account No. 36852248, Attention: Bank Loan Syndications,  (b) in
the case of Advances  denominated in any Foreign Currency,  the account
of the  Sub-Agent  designated in writing from time to time by the Agent
to the  Borrower  and the Lenders for such  purpose and (c) in any such
case,  such other account of the Agent as is designated in writing from
time to time by the  Agent to the  Borrower  and the  Lenders  for such
purpose.

"Applicable  Lending  Office"  means,  with  respect  to  each
Lender,  such Lender's  Domestic  Lending  Office in the case of a Base
Rate Advance and such Lender's  Eurocurrency Lending Office in the case
of a  Eurocurrency  Rate Advance and, in the case of a Competitive  Bid
Advance, the office of such Lender notified by such Lender to the Agent
as its Applicable  Lending Office with respect to such  Competitive Bid
Advance.

"Applicable  Margin" means (a) for Base Rate Advances,  0% per
annum and (b) for Eurocurrency  Rate Advances,  as of any date prior to
the Term Loan Conversion  Date,  0.15% per annum and, as of any date on
and after the Term Loan Conversion Date, 0.55% per annum.

"Applicable Percentage" means 0.05% per annum.

"Applicable  Utilization  Fee" means,  as of any date prior to
the Term Loan  Conversion Date that the aggregate  principal  amount of
the Advances exceeds 25% of the aggregate Commitments, 0.10% per annum.

"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee,  and accepted by the
Agent, in substantially the form of Exhibit C hereto.

"Assuming   Lender"  has  the  meaning  specified  in  Section
2.18(c).

"Assumption  Agreement"  has the meaning  specified in Section
2.18(c).

"Base Rate"  means a  fluctuating  interest  rate per annum in
effect  from time to time,  which rate per annum  shall at all times be
equal to the highest of:

(a)  the  rate  of  interest  announced  publicly  by
Citibank  in New  York,  New  York,  from  time  to  time,  as
Citibank's base rate;

(b) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest  1/4 of 1%, to the next  higher 1/4 of 1%)
of (i) 1/2 of 1% per  annum,  plus (ii) the rate  obtained  by
dividing (A) the latest three-week moving average of secondary
market  morning  offering  rates  in  the  United  States  for
three-month  certificates  of deposit of major  United  States
money market banks,  such three-week  moving average (adjusted
to the basis of a year of 360 days) being determined weekly on
each  Monday  (or,  if such day is not a Business  Day, on the
next succeeding Business Day) for the three-week period ending
on the previous  Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal  Reserve Bank of New York or, if such  publication
shall be suspended or  terminated,  on the basis of quotations
for such  rates  received  by  Citibank  from  three  New York
certificate of deposit dealers of recognized standing selected
by  Citibank,  by (B) a  percentage  equal to 100%  minus  the
average  of  the  daily  percentages   specified  during  such
three-week  period by the Board of  Governors  of the  Federal
Reserve System (or any successor) for  determining the maximum
reserve  requirement  (including,  but  not  limited  to,  any
emergency, supplemental or other marginal reserve requirement)
for Citibank  with  respect to  liabilities  consisting  of or
including  (among other  liabilities)  three-month U.S. dollar
non-personal  time deposits in the United  States,  plus (iii)
the  average  during  such  three-week  period  of the  annual
assessment  rates  estimated by Citibank for  determining  the
then  current  annual  assessment  payable by  Citibank to the
Federal Deposit  Insurance  Corporation (or any successor) for
insuring  U.S.  dollar  deposits  of  Citibank  in the  United
States; and

(c) 1/2 of one  percent  per annum  above the Federal
Funds Rate.

"Base  Rate  Advance"   means  a  Revolving   Credit   Advance
denominated  in Dollars  that bears  interest  as  provided  in Section
2.07(a)(i).

"Borrowing"   means  a  Revolving   Credit   Borrowing   or  a
Competitive Bid Borrowing.

"Business  Day" means a day of the year on which banks are not
required  or  authorized  by law to close in New York City and,  if the
applicable  Business Day relates to any  Eurocurrency  Rate Advances or
LIBO Rate  Advances,  on which  dealings  are  carried on in the London
interbank  market and banks are open for  business in London and in the
country of issue of the currency of such  Eurocurrency  Rate Advance or
LIBO Rate  Advance  (or, in the case of an Advance  denominated  in the
euro,  in  Frankfurt,  Germany)  and, if the  applicable  Business  Day
relates to any Local Rate Advances on which banks are open for business
in the country of issue of the currency of such Local Rate Advance.

"Commitment"  means as to any Lender (a) the Dollar amount set
forth opposite such Lender's name on the signature pages hereof, (b) if
such Lender has become a Lender  hereunder  pursuant  to an  Assumption
Agreement,  the Dollar amount set forth in such Assumption Agreement or
(c) if such Lender

has entered into any Assignment and  Acceptance,  the Dollar amount set
forth for such Lender in the Register  maintained by the Agent pursuant
to Section  8.07(d),  as such amount may be reduced pursuant to Section
2.05.

"Committed  Currencies"  means  lawful  currency of the United
Kingdom of Great Britain and Northern  Ireland,  lawful currency of the
Federal Republic of Germany, lawful currency of the Republic of France,
lawful  currency  of The Swiss  Federation,  lawful  currency of Spain,
lawful currency of Italy, lawful currency of Canada, lawful currency of
Australia,  lawful  currency of Japan,  lawful currency of the European
Economic  and  Monetary  Union  and any other  currency  that is freely
convertible into Dollars and available to all Lenders.

"Competitive  Bid Advance" means an advance by a Lender to the
Borrower as part of a  Competitive  Bid  Borrowing  resulting  from the
competitive bidding procedure described in Section 2.03 and refers to a
Fixed Rate Advance, a LIBO Rate Advance or a Local Rate Advance.

"Competitive  Bid Borrowing"  means a borrowing  consisting of
simultaneous  Competitive  Bid Advances  from each of the Lenders whose
offer  to make one or more  Competitive  Bid  Advances  as part of such
borrowing has been accepted  under the  competitive  bidding  procedure
described in Section 2.03.

"Competitive Bid Note" means a promissory note of the Borrower
payable  to the  order  of any  Lender,  in  substantially  the form of
Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such
Lender resulting from a Competitive Bid Advance made by such Lender.

"Competitive  Bid  Reduction"  has the  meaning  specified  in
Section 2.01.

"Confidential Information" means information that the Borrower
furnishes  to the Agent or any  Lender,  but does not  include any such
information  that is or becomes  generally  available  to the public or
that is or becomes  available to the Agent or such Lender from a source
other than the Borrower.

"Consenting  Lender"  has the  meaning  specified  in  Section
2.18(b).

"Consolidated"  refers to the  consolidation  of  accounts  in
accordance with GAAP.

"Convert",  "Conversion"  and  "Converted"  each  refers  to a
conversion  of  Revolving  Credit  Advances of one Type into  Revolving
Credit Advances of the other Type pursuant to Section 2.08 or 2.09.

"Debt"  of any  Person  means,  without  duplication,  (a) all
indebtedness of such Person for borrowed money,  (b) all obligations of
such  Person for the  deferred  purchase  price of property or services
(other than trade payables not overdue by more than 90 days incurred in
the ordinary course of such Person's business),  (c) all obligations of
such Person  evidenced by notes,  bonds,  debentures  or other  similar
instruments,  (d) all  obligations  of such  Person  created or arising
under any  conditional  sale or other title  retention  agreement  with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender  under such  agreement in the event of
default are limited to repossession or sale of such property),  (e) all
obligations  of such  Person as lessee  under  leases that have been or
should be, in accordance with GAAP, recorded as capital leases, (f) all
obligations,  contingent  or  otherwise,  of such  Person in respect of
acceptances, letters of credit or similar extensions of credit, (g) all
net obligations of such Person in respect of Hedge Agreements,  (h) all
Debt of others  referred  to in clauses (a) through (g) above or clause
(i) below  guaranteed  directly  or  indirectly  in any  manner by such
Person, or in effect  guaranteed  directly or indirectly by such Person
through an agreement  (1) to pay or purchase such Debt or to advance or
supply funds for the payment or purchase of such Debt, (2) to purchase,
sell or lease (as lessee or lessor)  property,  or to  purchase or sell
services,  primarily  for the  purpose of  enabling  the debtor to make
payment of such Debt or to assure the holder of such Debt against loss,
(3) to supply  funds to or in any  other  manner  invest in the  debtor
(including  any agreement to pay for property or services  irrespective
of whether such  property is received or such services are rendered) or
(4)  otherwise  to assure a  creditor

against  loss,  and (i) all Debt referred to in clauses (a) through (h)
above  secured by (or for which the holder of such Debt has an existing
right,  contingent or otherwise, to be secured by) any Lien on property
(including, without limitation,  accounts and contract rights) owned by
such Person,  even though such Person has not assumed or become  liable
for the payment of such Debt; provided,  however,  that the term "Debt"
shall not  include  obligations  incurred in  connection  with sales of
accounts receivable or other asset  securitization  transactions by the
Borrower or any Subsidiary or Affiliate of the Borrower,  except to the
extent that such  transaction  creates a liability which is required by
generally  accepted  accounting   principles  to  be  included  on  the
Consolidated balance sheet of the Borrower and its Subsidiaries.

"Default"  means any Event of  Default or any event that would
constitute an Event of Default but for the  requirement  that notice be
given or time elapse or both.

"Disclosed  Litigation"  has the meaning  specified in Section
3.01(b).

"Dollars"  and the "$" sign each means lawful  currency of the
United States of America.

"Domestic  Lending Office" means,  with respect to any Lender,
the office of such Lender  specified as its "Domestic  Lending  Office"
opposite its name on Schedule I hereto or in the  Assumption  Agreement
or the Assignment and Acceptance  pursuant to which it became a Lender,
or such  other  office of such  Lender as such  Lender may from time to
time specify to the Borrower and the Agent.

"Effective Date" has the meaning specified in Section 3.01.

"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Agent and, unless an
Event  of  Default  has  occurred  and is  continuing  at the  time any
assignment is effected in accordance  with Section 8.07,  the Borrower,
such  approval not to be  unreasonably  withheld or delayed;  provided,
however,  that  neither the  Borrower  nor an Affiliate of the Borrower
shall qualify as an Eligible Assignee.

"Environmental  Action" means any action, suit, demand, demand
letter,  claim,  notice  of  non-compliance  or  violation,  notice  of
liability or potential liability,  investigation,  proceeding,  consent
order or consent  agreement  relating  in any way to any  Environmental
Law,  Environmental  Permit or  Hazardous  Materials  or  arising  from
alleged   injury  or  threat  of  injury  to  health,   safety  or  the
environment,  including, without limitation, (a) by any governmental or
regulatory  authority  for  enforcement,  cleanup,  removal,  response,
remedial  or other  actions or damages and (b) by any  governmental  or
regulatory  authority  or any third  party for  damages,  contribution,
indemnification, cost recovery, compensation or injunctive relief.

"Environmental Law" means any federal, state, local or foreign
statute,  law,  ordinance,  rule,  regulation,  code, order,  judgment,
decree  or  judicial  or  agency  interpretation,  policy  or  guidance
relating to pollution or protection of the environment,  health, safety
or natural resources,  including, without limitation, those relating to
the  use,  handling,  transportation,   treatment,  storage,  disposal,
release or discharge of Hazardous Materials.

"Environmental    Permit"   means   any   permit,    approval,
identification  number,  license or other authorization  required under
any Environmental Law.

"Equivalent"  in Dollars of any  Foreign  Currency on any date
means the equivalent in Dollars of such Foreign Currency  determined by
using the quoted spot rate at which the Sub-Agent's principal office in
London offers to exchange  Dollars for such Foreign  Currency in London
prior to 4:00 P.M.  (London  time) (unless  otherwise  indicated by the
terms of this  Agreement)  on such date as is required  pursuant to the
terms of this Agreement,  and the  "Equivalent" in any Foreign Currency
of Dollars  means the  equivalent  in such Foreign  Currency of Dollars
determined  by using the  quoted  spot  rate at which  the  Sub-Agent's
principal office in London offers to exchange such Foreign Currency for
Dollars in London prior to 4:00

P.M.  (London  time) (unless  otherwise  indicated by the terms of this
Agreement)  on such date as is  required  pursuant to the terms of this
Agreement.

"ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

"ERISA  Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the Borrower's  controlled  group,  or under
common control with the Borrower,  within the meaning of Section 414 of
the Internal Revenue Code.

"ERISA  Event"  means (a) (i) the  occurrence  of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day  notice  requirement  with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section  4043(b) of ERISA (without  regard to subsection (2) of such
Section)  are met with a  contributing  sponsor,  as defined in Section
4001(a)(13) of ERISA,  of a Plan,  and an event  described in paragraph
(9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably
expected  to occur with  respect to such Plan within the  following  30
days; (b) the  application for a minimum funding waiver with respect to
a Plan; (c) the provision by the  administrator of any Plan of a notice
of intent to  terminate  such Plan  pursuant to Section  4041(a)(2)  of
ERISA  (including  any such  notice  with  respect to a plan  amendment
referred  to in  Section  4041(e)  of  ERISA);  (d)  the  cessation  of
operations at a facility of the Borrower or any ERISA  Affiliate in the
circumstances described in Section 4062(e) of ERISA; (e) the withdrawal
by the Borrower or any ERISA  Affiliate  from a Multiple  Employer Plan
during a plan year for which it was a substantial  employer, as defined
in Section  4001(a)(2) of ERISA;  (f) the conditions for the imposition
of a lien  under  Section  302(f)  of ERISA  shall  have  been met with
respect  to any  Plan;  (g)  the  adoption  of an  amendment  to a Plan
requiring  the  provision of security to such Plan  pursuant to Section
307 of ERISA;  or (h) the  institution  by the PBGC of  proceedings  to
terminate a Plan pursuant to Section 4042 of ERISA,  or the  occurrence
of any event or  condition  described  in  Section  4042 of ERISA  that
constitutes  grounds for the  termination  of, or the  appointment of a
trustee to administer, a Plan.

"Eurocurrency  Liabilities"  has the meaning  assigned to that
term in  Regulation D of the Board of Governors of the Federal  Reserve
System, as in effect from time to time.

"Eurocurrency  Lending  Office"  means,  with  respect  to any
Lender,  the  office  of such  Lender  specified  as its  "Eurocurrency
Lending  Office"  opposite  its name on  Schedule  I  hereto  or in the
Assumption Agreement or the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is  specified,  its  Domestic
Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.

"Eurocurrency  Rate" means,  for any Interest  Period for each
Eurocurrency Rate Advance  comprising part of the same Revolving Credit
Borrowing,  an  interest  rate per  annum  equal to the rate per  annum
obtained  by  dividing  (a) the rate per annum  (rounded  upward to the
nearest whole multiple of 1/100 of 1% per annum) appearing on Dow Jones
Markets  Telerate  Page  3750 (or any  successor  page)  as the  London
interbank  offered  rate for  deposits  in  Dollars  or the  applicable
Committed  Currency  at  approximately  11:00  A.M.  (London  time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such  Interest  Period or, if for any reason such rate is
not  available,  the  average  (rounded  upward  to the  nearest  whole
multiple  of  1/100  of 1% per  annum,  if such  average  is not such a
multiple)  of the rate per annum at which  deposits  in  Dollars or the
applicable  Committed  Currency is offered by the  principal  office of
each of the  Reference  Banks in London,  England to prime banks in the
London  interbank  market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to such Reference  Bank's  Eurocurrency  Rate Advance  comprising
part of such Revolving Credit  Borrowing to be outstanding  during such
Interest Period and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage
for such  Interest  Period.  If the Dow Jones Markets Page 3750 (or any
successor page) is unavailable,  the Eurocurrency Rate for any Interest
Period for each Eurocurrency  Rate Advance  

comprising  part  of the  same  Revolving  Credit  Borrowing  shall  be
determined by the Agent on the basis of applicable  rates  furnished to
and received by the Agent from the  Reference  Banks two Business  Days
before the first day of such Interest Period, subject,  however, to the
provisions of Section 2.08.

"Eurocurrency  Rate Advance" means a Revolving  Credit Advance
denominated  in Dollars or a Committed  Currency that bears interest as
provided in Section 2.07(a)(ii).

"Eurocurrency Rate Reserve Percentage" for any Interest Period
for all  Eurocurrency  Rate Advances or LIBO Rate  Advances  comprising
part of the same Borrowing means the reserve percentage  applicable two
Business  Days  before  the first  day of such  Interest  Period  under
regulations  issued from time to time by the Board of  Governors of the
Federal  Reserve System (or any successor) for  determining the maximum
reserve  requirement  (including,  without  limitation,  any emergency,
supplemental or other marginal  reserve  requirement) for a member bank
of the  Federal  Reserve  System  in New  York  City  with  respect  to
liabilities   or  assets   consisting  of  or  including   Eurocurrency
Liabilities (or with respect to any other category of liabilities  that
includes   deposits  by  reference  to  which  the  interest   rate  on
Eurocurrency Rate Advances or LIBO Rate Advances is determined)  having
a term equal to such Interest Period.

"Events of Default" has the meaning specified in Section 6.01.

"Extension Date" has the meaning specified in Section 2.18(b).

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

"Fixed Rate  Advances"  has the meaning  specified  in Section
2.03(a)(i),  which  Advances  shall be denominated in Dollars or in any
Foreign Currency.

"Foreign  Currency" means any Committed Currency and any other
lawful  currency  (other than Dollars) that is freely  transferable  or
convertible into Dollars.

"GAAP" has the meaning specified in Section 1.03.

"Hazardous   Materials"  means  (a)  petroleum  and  petroleum
products,  byproducts  or breakdown  products,  radioactive  materials,
asbestos-containing materials,  polychlorinated biphenyls and radon gas
and  (b) any  other  chemicals,  materials  or  substances  designated,
classified  or  regulated  as  hazardous  or toxic or as a pollutant or
contaminant under any Environmental Law.

"Hedge  Agreements"  means  interest rate swap,  cap or collar
agreements,  interest  rate future or option  contracts,  currency swap
agreements,  currency  future or  option  contracts  and other  similar
agreements.

"Information  Memorandum"  means  the  information  memorandum
dated  July  23,  1999  used  by  the  Agent  in  connection  with  the
syndication of the Commitments.

"Interest  Period" means, for each  Eurocurrency  Rate Advance
comprising  part of the same Revolving  Credit  Borrowing and each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing, the
period commencing on the date of such Eurocurrency Rate Advance or LIBO
Rate  Advance or the date of the  Conversion  of any Base Rate  Advance
into such  Eurocurrency  Rate Advance and ending on the last day of the
period selected by the Borrower  pursuant to the provisions  below and,

thereafter, with respect to Eurocurrency Rate Advances, each subsequent
period commencing on the last day of the immediately preceding Interest
Period  and  ending  on the  last  day of the  period  selected  by the
Borrower  pursuant to the provisions  below.  The duration of each such
Interest Period shall be one, two, three or six months, as the Borrower
may,  upon notice  received by the Agent not later than 11:00 A.M. (New
York  City  time) on the third  Business  Day prior to the first day of
such Interest Period, select; provided, however, that:

(i) the Borrower  may not select any Interest  Period
that ends  after  the  Termination  Date or, if the  Revolving
Credit Advances have been converted to a term loan pursuant to
Section  2.06  prior to such  selection,  that ends  after the
Maturity Date;

(ii) Interest Periods commencing on the same date for
Eurocurrency  Rate  Advances   comprising  part  of  the  same
Revolving   Credit   Borrowing  or  for  LIBO  Rate   Advances
comprising part of the same Competitive Bid Borrowing shall be
of the same duration;

(iii)  whenever the last day of any  Interest  Period
would  otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided,  however, that, if
such  extension  would  cause  the last  day of such  Interest
Period to occur in the next following calendar month, the last
day of such Interest  Period shall occur on the next preceding
Business Day; and

(iv)  whenever the first day of any  Interest  Period
occurs on a day of an initial  calendar  month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial  calendar  month by the number of months
equal to the number of months in such  Interest  Period,  such
Interest  Period  shall end on the last  Business  Day of such
succeeding  calendar month. 

"Internal  Revenue  Code" means the  Internal  Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.

"Lenders" means the Initial Lenders, each Assuming Lender that
shall  become a party  hereto  pursuant to Section 2.18 and each Person
that shall become a party hereto pursuant to Section 8.07.

"LIBO Rate" means,  for any Interest  Period for all LIBO Rate
Advances  comprising  part of the same  Competitive  Bid Borrowing,  an
interest  rate  per  annum  equal to the rate  per  annum  obtained  by
dividing (a) the rate per annum  (rounded  upward to the nearest  whole
multiple  of 1/100 of 1% per  annum)  appearing  on Dow  Jones  Markets
Telerate  Page 3750 (or any  successor  page) as the  London  interbank
offered  rate for  deposits  in  Dollars  or the  applicable  Committed
Currency at  approximately  11:00 A.M.  (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest  Period or, if for any reason such rate is not available,
the average  (rounded  upward to the nearest whole multiple of 1/100 of
1% per annum,  if such  average is not such a multiple) of the rate per
annum at which deposits in Dollars or the applicable  Foreign  Currency
is offered by the principal  office of each of the  Reference  Banks in
London,  England to prime banks in the London interbank market at 11:00
A.M.  (London  time) two  Business  Days  before  the first day of such
Interest  Period in an amount  substantially  equal to the amount  that
would  be the  Reference  Banks'  respective  ratable  shares  of  such
Borrowing if such Borrowing were to be a Revolving  Credit Borrowing to
be  outstanding  during such Interest  Period and for a period equal to
such  Interest  Period  by (b) a  percentage  equal to 100%  minus  the
Eurocurrency  Rate Reserve  Percentage for such Interest Period. If the
Dow  Jones  Markets  Telerate  Page  3750  (or any  successor  page) is
unavailable,  the LIBO Rate for any Interest  Period for each LIBO Rate
Advance  comprising part of the same Competitive Bid Borrowing shall be
determined by the Agent on the basis of applicable  rates  furnished to
and received by the Agent from the  Reference  Banks two Business  Days
before the first day of such Interest Period, subject,  however, to the
provisions of Section 2.08.

"LIBO  Rate   Advances"   means  a  Competitive   Bid  Advance
denominated in Dollars or in any Foreign  Currency and bearing interest
based on the LIBO Rate.

"Lien"  means any lien,  security  interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement,  right of way or other encumbrance
on title to real property.

"Local  Rate  Advance"   means  a   Competitive   Bid  Advance
denominated in any Foreign  Currency  sourced from the  jurisdiction of
issuance of such Foreign Currency and bearing interest at a fixed rate.

"Material Adverse Change" means any material adverse change in
the  business,   condition   (financial  or   otherwise),   operations,
performance,  properties  or  prospects of the Borrower or the Borrower
and its Subsidiaries taken as a whole.

"Material  Adverse Effect" means a material  adverse effect on
(a) the  business,  condition  (financial  or  otherwise),  operations,
performance,  properties  or  prospects of the Borrower or the Borrower
and its  Subsidiaries  taken as a whole, (b) the rights and remedies of
the Agent or any  Lender  under this  Agreement  or any Note or (c) the
ability of the Borrower to perform its obligations under this Agreement
or any Note.

"Maturity Date" means the earlier of (a) the first anniversary
of the Termination Date and (b) the date of termination in whole of the
aggregate Commitments pursuant to Section 2.05 or 6.01.

"Multiemployer Plan" means a multiemployer plan, as defined in
Section  4001(a)(3)  of  ERISA,  to which  the  Borrower  or any  ERISA
Affiliate is making or accruing an obligation to make contributions, or
has  within  any of the  preceding  five plan  years made or accrued an
obligation to make contributions.

"Multiple  Employer  Plan" means a single  employer  plan,  as
defined in Section  4001(a)(15)  of ERISA,  that (a) is maintained  for
employees  of the  Borrower  or any  ERISA  Affiliate  and at least one
Person other than the Borrower and the ERISA  Affiliates  or (b) was so
maintained and in respect of which the Borrower or any ERISA  Affiliate
could have  liability  under Section 4064 or 4069 of ERISA in the event
such plan has been or were to be terminated.

"Non-Consenting  Lender" has the meaning  specified in Section
2.18(b).

"Note"  means a  Revolving  Credit Note or a  Competitive  Bid
Note.

"Notice  of  Revolving  Credit   Borrowing"  has  the  meaning
specified in Section 2.02(a).

"Notice  of   Competitive   Bid  Borrowing"  has  the  meaning
specified in Section 2.03(a).

"Payment Office" means, for any Foreign Currency,  such office
of  Citibank  as shall be from time to time  selected  by the Agent and
notified by the Agent to the Borrower and the Lenders.

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

"Permitted  Liens" means such of the  following as to which no
enforcement,  collection,  execution,  levy or  foreclosure  proceeding
shall  have  been  commenced:  (a)  Liens for  taxes,  assessments  and
governmental  charges or levies to the extent not  required  to be paid
under  Section  5.01(b)  hereof;  (b)  Liens  imposed  by law,  such as
materialmen's,  mechanics',  carriers', workmen's and repairmen's Liens
and other  similar  Liens  arising in the  ordinary  course of business
securing  obligations that are not overdue for a period of more than 45
days;  (c)  pledges or deposits to secure  obligations  under  workers'
compensation  laws  or  similar  legislation  or to  secure  public  or
statutory  obligations;  and (d)  easements,  rights  of way and  other
encumbrances  on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes.

"Person"   means  an  individual,   partnership,   corporation
(including   a   business   trust),   joint   stock   company,   trust,
unincorporated association, joint venture, limited liability company or
other entity,  or a government or any political  subdivision  or agency
thereof.

"Plan"  means a Single  Employer  Plan or a Multiple  Employer
Plan.

"Reference  Banks" means Citibank,  The First National Bank of
Chicago and Bank of America, N.A..

"Register" has the meaning specified in Section 8.07(d).

"Related  Person"  means  each  of  the  following:   (a)  the
Borrower,  (b) any  Subsidiary  of the  Borrower  or (c)  any  employee
benefit  plan of the Borrower or of any  Subsidiary  of the Borrower or
any Person  organized,  appointed or established by the Borrower for or
pursuant to the terms of any such plan.

"Required  Lenders"  means at any time Lenders owed at least a
majority in  interest of the then  aggregate  unpaid  principal  amount
(based on the  Equivalent  in Dollars  at such  time) of the  Revolving
Credit  Advances owing to Lenders,  or, if no such principal  amount is
then outstanding, Lenders having at least a majority in interest of the
Commitments.

"Revolving Credit Advance" means an advance by a Lender to the
Borrower as part of a Revolving  Credit  Borrowing and refers to a Base
Rate Advance or a  Eurocurrency  Rate Advance (each of which shall be a
"Type" of Revolving Credit Advance).

"Revolving Credit  Borrowing" means a borrowing  consisting of
simultaneous Revolving Credit Advances of the same Type made by each of
the Lenders pursuant to Section 2.01.

"Revolving  Credit  Note"  means  a  promissory  note  of  the
Borrower  payable to the order of any Lender,  delivered  pursuant to a
request made under  Section 2.16 in  substantially  the form of Exhibit
A-1 hereto,  evidencing the aggregate  indebtedness  of the Borrower to
such Lender  resulting from the Revolving  Credit Advances made by such
Lender.

"Sandvik  Funding  Date" has the meaning  specified in Section
3.02.

"Single  Employer  Plan"  means a  single  employer  plan,  as
defined in Section  4001(a)(15)  of ERISA,  that (a) is maintained  for
employees  of the Borrower or any ERISA  Affiliate  and no Person other
than the Borrower and the ERISA Affiliates or (b) was so maintained and
in  respect of which the  Borrower  or any ERISA  Affiliate  could have
liability  under  Section 4069 of ERISA in the event such plan has been
or were to be terminated.

"Sub-Agent" means Citibank International plc.

"Subsidiary" of any Person means any corporation, partnership,
joint venture,  limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having  ordinary  voting  power to  elect a  majority  of the  Board of
Directors  of such  corporation  (irrespective  of  whether at the time
capital stock of any other class or classes of such  corporation  shall
or might have voting power upon the occurrence of any contingency), (b)
the  interest  in the  capital  or profits  of such  limited  liability
company, partnership or joint venture or (c) the beneficial interest in
such trust or estate is at the time  directly  or  indirectly  owned or
controlled by such Person,  by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries;  it
being  understood  that Snap-On  Credit LLC,  which is 50% owned by the
Borrower,  shall not be deemed to be a "Subsidiary" of the Borrower for
purposes of this Agreement.

"Term Loan  Conversion  Date"  means the  Termination  Date on
which  all  Revolving  Credit  Advances  outstanding  on such  date are
converted into a term loan pursuant to Section 2.06.

"Term Loan  Election"  has the  meaning  specified  in Section
2.06.

"Termination  Date" means the earlier of (a) August 21,  2000,
subject to the extension  thereof  pursuant to Section 2.18 and (b) the
date of  termination  in whole of the  Commitments  pursuant to Section
2.05 or  6.01;  provided,  however,  that the  Termination  Date of any
Lender  that is a  Non-Consenting  Lender  to any  requested  extension
pursuant  to  Section  2.18  shall be the  Termination  Date in  effect
immediately prior to the applicable  Extension Date for all purposes of
this Agreement.

"Voting Stock" means capital stock issued by a corporation, or
equivalent  interests  in any other  Person,  the  holders of which are
ordinarily,  in the absence of contingencies,  entitled to vote for the
election of directors (or persons performing similar functions) of such
Person,  even  if the  right  so to  vote  has  been  suspended  by the
happening of such a contingency.

SECTION 1.02.  Computation  of Time Periods.  In this  Agreement in the
computation of periods of time from a specified date to a later  specified date,
the word "from" means "from and  including"  and the words "to" and "until" each
mean "to but excluding".

SECTION 1.03.  Accounting  Terms. All accounting terms not specifically
defined  herein  shall  be  construed  in  accordance  with  generally  accepted
accounting  principles  consistent  with those applied in the preparation of the
financial statements referred to in Section 4.01(e) ("GAAP").

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01.  The Revolving  Credit  Advances.  Each Lender  severally
agrees,  on the terms and conditions  hereinafter  set forth,  to make Revolving
Credit Advances to the Borrower from time to time on any Business Day during the
period from the Effective Date until the Termination Date in an aggregate amount
(based in  respect of any  Revolving  Credit  Advances  to be  denominated  in a
Committed  Currency  on the  Equivalent  in  Dollars  determined  on the date of
delivery of the applicable  Notice of Revolving Credit  Borrowing) not to exceed
at any time  outstanding such Lender's  Commitment,  provided that the aggregate
amount of the  Commitments of the Lenders shall be deemed used from time to time
to the extent of the aggregate  amount (based in respect of any  Competitive Bid
Advance  denominated in a Foreign  Currency on the Equivalent in Dollars at such
time) of the  Competitive  Bid Advances then  outstanding and such deemed use of
the aggregate  amount of the  Commitments  shall be allocated  among the Lenders
ratably  according  to their  respective  Commitments  (such  deemed  use of the
aggregate  amount  of the  Commitments  being a  "Competitive  Bid  Reduction");
provided,  further, that until the Sandvik Funding Date, the aggregate amount of
all Revolving  Credit  Advances made by any Lender shall not exceed one third of
such  Lender's  Commitment.  Each  Revolving  Credit  Borrowing  shall  be in an
aggregate amount of $10,000,000 or an integral  multiple of $1,000,000 in excess
thereof (or the Equivalent thereof in any Committed  Currency  determined on the
date of delivery of the  applicable  Notice of Revolving  Credit  Borrowing) and
shall consist of Revolving Credit Advances of the same Type made on the same day
by the Lenders ratably  according to their  respective  Commitments.  Within the
limits of each Lender's  Commitment,  the Borrower may borrow under this Section
2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01.

SECTION 2.02. Making the Revolving Credit Advances.  (a) Each Revolving
Credit  Borrowing  shall be made on notice,  given not later than (x) 11:00 A.M.
(New York City time) on the third Business Day prior to the date of the proposed
Revolving  Credit  Borrowing  in  the  case  of  a  Revolving  Credit  Borrowing
consisting of Eurocurrency Rate Advances  denominated in Dollars,  (y) 4:00 P.M.
(London  time) on the  third  Business  Day  prior  to the date of the  proposed
Revolving  Credit  Borrowing  in  the  case  of  a  Revolving  Credit  Borrowing
consisting of Eurocurrency Rate Advances  denominated in any Committed Currency,
or (z) 11:00 A.M.  (New York City time) on

the  first  Business  Day  prior to the date of the  proposed  Revolving  Credit
Borrowing in the case of a Revolving  Credit  Borrowing  consisting of Base Rate
Advances,  by the Borrower to the Agent (and, in the case of a Revolving  Credit
Borrowing  consisting  of  Eurocurrency  Rate  Advances,  simultaneously  to the
Sub-Agent),  which shall give to each Lender prompt notice thereof by telecopier
or telex.  Each such  notice of a  Revolving  Credit  Borrowing  (a  "Notice  of
Revolving Credit  Borrowing")  shall be by telephone,  confirmed  immediately in
writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto,
specifying  therein the requested (i) date of such Revolving  Credit  Borrowing,
(ii)  Type  of  Advances  comprising  such  Revolving  Credit  Borrowing,  (iii)
aggregate amount of such Revolving Credit  Borrowing,  and (iv) in the case of a
Revolving Credit  Borrowing  consisting of Eurocurrency  Rate Advances,  initial
Interest Period and currency for each such Revolving Credit Advance. Each Lender
shall,  before  11:00 A.M.  (New York City  time) on the date of such  Revolving
Credit  Borrowing,  in the case of a Revolving  Credit  Borrowing  consisting of
Advances  denominated in Dollars, and before 4:00 P.M. (London time) on the date
of such Revolving Credit Borrowing,  in the case of a Revolving Credit Borrowing
consisting of Eurocurrency Rate Advances  denominated in any Committed Currency,
make available for the account of its Applicable  Lending Office to the Agent at
the applicable Agent's Account, in same day funds, such Lender's ratable portion
of such Revolving Credit Borrowing.  After the Agent's receipt of such funds and
upon  fulfillment  of the  applicable  conditions  set forth in Article III, the
Agent will make such funds  available  to the  Borrower at the  Agent's  address
referred to in Section 8.02 or at the applicable Payment Office, as the case may
be.

(b) Anything in subsection  (a) above to the contrary  notwithstanding,
(i) the Borrower may not select  Eurocurrency  Rate  Advances for any  Revolving
Credit  Borrowing if the aggregate  amount of such Revolving Credit Borrowing is
less than  $10,000,000 or if the obligation of the Lenders to make  Eurocurrency
Rate Advances shall then be suspended  pursuant to Section 2.08 or 2.12 and (ii)
the  Eurocurrency  Rate Advances may not be outstanding as part of more than six
separate Revolving Credit Borrowings.

(c) Each Notice of Revolving  Credit Borrowing shall be irrevocable and
binding on the Borrower.  In the case of any Revolving Credit Borrowing that the
related  Notice of Revolving  Credit  Borrowing  specifies is to be comprised of
Eurocurrency Rate Advances, the Borrower shall indemnify each Lender against any
loss,  cost or expense  incurred  by such  Lender as a result of any  failure to
fulfill on or before  the date  specified  in such  Notice of  Revolving  Credit
Borrowing for such  Revolving  Credit  Borrowing the  applicable  conditions set
forth in Article III, including, without limitation, any loss (including loss of
anticipated  profits),  cost or expense incurred by reason of the liquidation or
reemployment  of  deposits  or other  funds  acquired by such Lender to fund the
Revolving  Credit  Advance to be made by such  Lender as part of such  Revolving
Credit  Borrowing  when  such  Revolving  Credit  Advance,  as a result  of such
failure, is not made on such date.

(d) Unless the Agent shall have received  notice from a Lender prior to
the date of any  Revolving  Credit  Borrowing  that  such  Lender  will not make
available to the Agent such Lender's  ratable  portion of such Revolving  Credit
Borrowing, the Agent may assume that such Lender has made such portion available
to the Agent on the date of such Revolving  Credit  Borrowing in accordance with
subsection  (a) of this  Section  2.02 and the Agent may, in reliance  upon such
assumption,  make available to the Borrower on such date a corresponding amount.
If and to the  extent  that such  Lender  shall  not have so made  such  ratable
portion available to the Agent, such Lender and the Borrower  severally agree to
repay to the Agent forthwith on demand such  corresponding  amount together with
interest  thereon,  for each day from the date such amount is made  available to
the  Borrower  until the date such amount is repaid to the Agent,  at (i) in the
case of the Borrower, the higher of (A) the interest rate applicable at the time
to Revolving Credit Advances  comprising such Revolving Credit Borrowing and (B)
the cost of funds  incurred  by the Agent in respect of such  amount and (ii) in
the case of such  Lender,  (A) the  Federal  Funds Rate in the case of  Advances
denominated in Dollars or (B) the cost of funds incurred by the Agent in respect
of such amount in the case of Advances denominated in Committed  Currencies.  If
such Lender shall repay to the Agent such corresponding  amount,  such amount so
repaid shall  constitute such Lender's  Revolving Credit Advance as part of such
Revolving Credit Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Revolving  Credit  Advance to
be made by it as part of any Revolving  Credit  Borrowing  shall not relieve any
other Lender of its obligation,  if any,  hereunder to make its Revolving Credit
Advance on the date of such Revolving Credit  Borrowing,  but no Lender shall be
responsible  for 

the failure of any other Lender to make the Revolving  Credit Advance to be made
by such other Lender on the date of any Revolving Credit Borrowing.

SECTION 2.03. The Competitive Bid Advances.  (a) Each Lender  severally
agrees that the Borrower may make  Competitive Bid Borrowings under this Section
2.03 from time to time on any  Business  Day  during  the  period  from the date
hereof  until the date  occurring 30 days prior to the  Termination  Date in the
manner set forth below;  provided that, following the making of each Competitive
Bid Borrowing,  the aggregate amount of the Advances then outstanding  (based in
respect of any Advance  denominated  in a Foreign  Currency on the Equivalent in
Dollars at the time such  Competitive  Bid  Borrowing  is  requested)  shall not
exceed the aggregate amount of the Commitments of the Lenders  (computed without
regard to any  Competitive  Bid  Reduction);  provided  further  that  until the
Sandvik  Funding Date,  following the making of each  Competitive Bid Borrowing,
the aggregate amount of the Advances then  outstanding  (based in respect of any
Advance  denominated  in a Foreign  Currency on the Equivalent in Dollars at the
time such Competitive Bid Borrowing is requested) shall not exceed the aggregate
amount of one third of the Commitments of the Lenders  (computed  without regard
to any Competitive Bid Reduction).

(i) The Borrower may request a Competitive Bid Borrowing under
this Section  2.03 by  delivering  to the Agent (and,  in the case of a
Competitive Bid Borrowing not consisting of Fixed Rate Advances or LIBO
Rate  Advances  to be  denominated  in Dollars,  simultaneously  to the
Sub-Agent),  by  telecopier  or telex,  a notice of a  Competitive  Bid
Borrowing (a "Notice of Competitive Bid  Borrowing"),  in substantially
the form of Exhibit B-2 hereto,  specifying  therein the  requested (A)
date of such proposed  Competitive Bid Borrowing,  (B) aggregate amount
of such proposed Competitive Bid Borrowing, (C) interest rate basis and
day count convention to be offered by the Lenders, (D) currency of such
proposed  Competitive  Bid Borrowing,  (E) in the case of a Competitive
Bid Borrowing consisting of LIBO Rate Advances,  Interest Period, or in
the case of a  Competitive  Bid  Borrowing  consisting  of  Fixed  Rate
Advances or Local Rate  Advances,  maturity  date for repayment of each
Fixed Rate  Advance  or Local  Rate  Advance to be made as part of such
Competitive Bid Borrowing  (which maturity date may not be earlier than
the date occurring  seven days after the date of such  Competitive  Bid
Borrowing  or later than the  earlier of (I) 180 days after the date of
such  Competitive  Bid Borrowing and (II) the  Termination  Date),  (F)
interest  payment date or dates relating  thereto,  (G) location of the
Borrower's  account  to which  funds are to be  advanced  and (H) other
terms (if any) to be applicable to such Competitive Bid Borrowing,  not
later  than (w) 10:00 A.M.  (New York City time) at least two  Business
Days prior to the date of the proposed  Competitive  Bid Borrowing,  if
the Borrower shall specify in the Notice of  Competitive  Bid Borrowing
that the rates of interest to be offered by the Lenders  shall be fixed
rates per annum  (the  Advances  comprising  any such  Competitive  Bid
Borrowing  being referred to herein as "Fixed Rate  Advances") and that
the Advances  comprising such proposed  Competitive Bid Borrowing shall
be denominated in Dollars, (x) 10:00 A.M. (New York City time) at least
four  Business Days prior to the date of the proposed  Competitive  Bid
Borrowing,  if the Borrower  shall specify in the Notice of Competitive
Bid  Borrowing  that  the  Advances  comprising  such  Competitive  Bid
Borrowing shall be LIBO Rate Advances denominated in Dollars, (y) 10:00
A.M.  (London time) at least two Business Days prior to the date of the
proposed  Competitive  Bid Borrowing,  if the Borrower shall specify in
the Notice of Competitive  Bid Borrowing  that the Advances  comprising
such  proposed  Competitive  Bid  Borrowing  shall be either Fixed Rate
Advances  denominated  in any Foreign  Currency or Local Rate  Advances
denominated in any Foreign Currency and (z) 10:00 A.M. (London time) at
least four Business Days prior to the date of the proposed  Competitive
Bid Borrowing,  if the Borrower shall instead  specify in the Notice of
Competitive Bid Borrowing that the Advances comprising such Competitive
Bid Borrowing  shall be LIBO Rate Advances  denominated  in any Foreign
Currency.  The Agent shall in turn promptly  notify each Lender of each
request  for a  Competitive  Bid  Borrowing  received  by it  from  the
Borrower  by  sending  such  Lender  a copy of the  related  Notice  of
Competitive Bid Borrowing.

(ii) Each Lender may, if, in its sole discretion, it elects to
do so,  irrevocably  offer to make one or more Competitive Bid Advances
to the Borrower as part of such proposed Competitive Bid Borrowing at a
rate or  rates  of  interest  specified  by  such  Lender  in its  sole
discretion, by notifying the Agent or the Sub-Agent, as the case may be
(which shall give prompt notice  thereof to the  Borrower),  (A) before
9:30 A.M. (New York City time) on the date of such proposed Competitive
Bid Borrowing, in the 

case of a Competitive  Bid Borrowing  consisting of Fixed Rate Advances
denominated  in  Dollars,  (B) before  10:00 A.M.  (New York City time)
three  Business Days before the date of such proposed  Competitive  Bid
Borrowing,  in the case of a Competitive  Bid  Borrowing  consisting of
LIBO Rate  Advances,  denominated  in  Dollars,  (C) before  12:00 noon
(London  time) on the Business  Day prior to the date of such  proposed
Competitive  Bid Borrowing,  in the case of a Competitive Bid Borrowing
consisting  of either Fixed Rate  Advances  denominated  in any Foreign
Currency or Local Rate Advances denominated in any Foreign Currency and
(D) before 12:00 noon (London time) on the third  Business Day prior to
the date of such proposed  Competitive Bid Borrowing,  in the case of a
Competitive Bid Borrowing  consisting of LIBO Rate Advances denominated
in any Foreign  Currency,  of the minimum  amount and maximum amount of
each Competitive Bid Advance which such Lender would be willing to make
as part of such proposed  Competitive  Bid Borrowing  (which amounts or
the Equivalent thereof in Dollars, as the case may be, of such proposed
Competitive  Bid may,  subject to the provisos to the first sentence of
this Section  2.03(a),  exceed such Lender's  Commitment,  if any), the
rate or rates of interest therefor and such Lender's Applicable Lending
Office with respect to such  Competitive Bid Advance;  provided that if
the Agent in its capacity as a Lender  shall,  in its sole  discretion,
elect to make any such  offer,  it shall  notify the  Borrower  of such
offer  at  least 30  minutes  before  the time and on the date on which
notice  of  such  election  is to be  given  to  the  Agent  or to  the
Sub-Agent,  as the case may be, by the  other  Lenders.  If any  Lender
shall elect not to make such an offer,  such Lender shall so notify the
Agent before 10:00 A.M.  (New York City time) or the  Sub-Agent  before
12:00 noon (London  time) on the date on which notice of such  election
is to be given to the Agent or to the Sub-Agent, as the case may be, by
the other Lenders, and such Lender shall not be obligated to, and shall
not, make any Competitive  Bid Advance as part of such  Competitive Bid
Borrowing;  provided that the failure by any Lender to give such notice
shall not cause such Lender to be obligated to make any Competitive Bid
Advance as part of such proposed Competitive Bid Borrowing.

(iii) The Borrower  shall, in turn, (A) before 10:30 A.M. (New
York City time) on the date of such proposed Competitive Bid Borrowing,
in the case of a  Competitive  Bid  Borrowing  consisting of Fixed Rate
Advances  denominated in Dollars,  (B) before 11:00 A.M. (New York City
time) three Business Days before the date of such proposed  Competitive
Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of
LIBO Rate Advances denominated in Dollars, (C) before 3:00 P.M. (London
time)  on  the  Business  Day  prior  to  the  date  of  such  proposed
Competitive  Bid Borrowing,  in the case of a Competitive Bid Borrowing
consisting  of either Fixed Rate  Advances  denominated  in any Foreign
Currency or Local Rate Advances denominated in any Foreign Currency and
(D) before 3:00 P.M.  (London time) on the third  Business Day prior to
the  date  of  such  Competitive  Bid  Borrowing,  in  the  case  of  a
Competitive Bid Borrowing  consisting of LIBO Rate Advances denominated
in any Foreign Currency, either:

(x) cancel such  Competitive  Bid Borrowing by giving
the Agent notice to that effect, or

(y)  accept  one or  more of the  offers  made by any
Lender or Lenders  pursuant to  paragraph  (ii) above,  in its
sole  discretion,  by  giving  notice  to the  Agent or to the
Sub-Agent,  as  the  case  may  be,  of  the  amount  of  each
Competitive  Bid Advance  (which  amount  shall be equal to or
greater than the minimum amount, and equal to or less than the
maximum  amount,  notified to the Borrower by the Agent or the
Sub-Agent,  as the case may be, on behalf of such  Lender  for
such Competitive Bid Advance pursuant to paragraph (ii) above)
to be made  by each  Lender  as part of such  Competitive  Bid
Borrowing,  and reject any  remaining  offers  made by Lenders
pursuant  to  paragraph  (ii) above by giving the Agent or the
Sub-Agent,  as the case may be,  notice  to that  effect.  The
Borrower shall accept the offers made by any Lender or Lenders
to make Competitive Bid Advances in order of the lowest to the
highest rates of interest  offered by such Lenders.  If two or
more Lenders have offered the same interest  rate,  the amount
to be borrowed at such interest  rate will be allocated  among
such Lenders in proportion to the amount that each such Lender
offered at such interest rate.

(iv) If the Borrower  notifies the Agent or the Sub-Agent,  as
the case may be,  that such  Competitive  Bid  Borrowing  is  cancelled
pursuant to paragraph  (iii)(x) above,  the Agent or the Sub-Agent,  as
the case may be,  shall give prompt  notice  thereof to the Lenders and
such Competitive Bid Borrowing shall not be made.

(v) If the Borrower  accepts one or more of the offers made by
any Lender or Lenders  pursuant to paragraph  (iii)(y) above, the Agent
or the Sub-Agent, as the case may be, shall in turn promptly notify (A)
each  Lender  that has made an offer as  described  in  paragraph  (ii)
above,  of the  date  and  aggregate  amount  of such  Competitive  Bid
Borrowing  and  whether or not any offer or offers  made by such Lender
pursuant to paragraph  (ii) above have been  accepted by the  Borrower,
(B) each  Lender that is to make a  Competitive  Bid Advance as part of
such  Competitive Bid Borrowing,  of the amount of each Competitive Bid
Advance  to be made  by such  Lender  as part of such  Competitive  Bid
Borrowing,  and (C)  each  Lender  that is to  make a  Competitive  Bid
Advance as part of such Competitive Bid Borrowing,  upon receipt,  that
the Agent or the  Sub-Agent,  as the case may be, has received forms of
documents  appearing to fulfill the applicable  conditions set forth in
Article III. Each Lender that is to make a  Competitive  Bid Advance as
part of such  Competitive Bid Borrowing  shall,  before 11:00 A.M. (New
York  City  time),  in the  case  of  Competitive  Bid  Advances  to be
denominated  in  Dollars or 11:00 A.M.  (London  time),  in the case of
Competitive Bid Advances to be denominated in any Foreign Currency,  on
the date of such  Competitive  Bid  Borrowing  specified  in the notice
received from the Agent or the Sub-Agent,  as the case may be, pursuant
to clause  (A) of the  preceding  sentence  or any later time when such
Lender shall have received  notice from the Agent or the Sub-Agent,  as
the case may be pursuant to clause (C) of the preceding sentence,  make
available for the account of its Applicable Lending Office to the Agent
(x) in the case of a Competitive Bid Borrowing  denominated in Dollars,
at its address  referred to in Section  8.02,  in same day funds,  such
Lender's  portion of such  Competitive Bid Borrowing in Dollars and (y)
in the case of a Competitive  Bid Borrowing in a Foreign  Currency,  at
the  Payment  Office  for such  Foreign  Currency  as shall  have  been
notified by the Agent to the Lenders prior thereto,  in same day funds,
such Lender's portion of such Competitive Bid Borrowing in such Foreign
Currency.  Upon  fulfillment of the applicable  conditions set forth in
Article  III and after  receipt by the Agent of such  funds,  the Agent
will  make  such  funds  available  to the  Borrower  at  the  location
specified by the Borrower in its Notice of  Competitive  Bid Borrowing.
Promptly  after each  Competitive  Bid  Borrowing the Agent will notify
each  Lender  of the  amount  of the  Competitive  Bid  Borrowing,  the
consequent  Competitive  Bid  Reduction  and the dates  upon which such
Competitive Bid Reduction commenced and will terminate.

(vi) If the Borrower  notifies the Agent or the Sub-Agent,  as
the case may be,  that it accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph  (iii)(y) above, such notice of
acceptance  shall be  irrevocable  and  binding  on the  Borrower.  The
Borrower shall  indemnify each Lender against any loss, cost or expense
incurred  by such  Lender as a result of any  failure  to fulfill on or
before the date  specified  in the related  Notice of  Competitive  Bid
Borrowing for such Competitive Bid Borrowing the applicable  conditions
set forth in  Article  III,  including,  without  limitation,  any loss
(including loss of anticipated  profits),  cost or expense  incurred by
reason of the  liquidation or  reemployment  of deposits or other funds
acquired by such Lender to fund the  Competitive Bid Advance to be made
by such  Lender as part of such  Competitive  Bid  Borrowing  when such
Competitive  Bid Advance,  as a result of such failure,  is not made on
such date.

(b) Each  Competitive Bid Borrowing shall be in an aggregate  amount of
$10,000,000 (or the Equivalent thereof in any Foreign Currency, determined as of
the time of the applicable  Notice of Competitive  Bid Borrowing) or an integral
multiple of  $1,000,000  (or the  Equivalent  thereof in any  Foreign  Currency,
determined as of the time of the applicable Notice of Competitive Bid Borrowing)
in excess thereof and,  following the making of each  Competitive Bid Borrowing,
the  Borrower  shall be in  compliance  with the  limitations  set  forth in the
provisos to the first sentence of subsection (a) above.

(c) Within the limits and on the  conditions  set forth in this Section
2.03,  the Borrower may from time to time borrow under this Section 2.03,  repay
or prepay  pursuant to  subsection  (d) below,  and reborrow 

under this Section 2.03,  provided that a Competitive Bid Borrowing shall not be
made  within  three  Business  Days of the  date of any  other  Competitive  Bid
Borrowing.

(d) The  Borrower  shall  repay to the  Agent for the  account  of each
Lender that has made a  Competitive  Bid Advance,  on the maturity  date of each
Competitive Bid Advance (such maturity date being that specified by the Borrower
for  repayment  of  such  Competitive  Bid  Advance  in the  related  Notice  of
Competitive  Bid Borrowing  delivered  pursuant to  subsection  (a)(i) above and
provided in the Competitive  Bid Note evidencing such  Competitive Bid Advance),
the then unpaid principal  amount of such Competitive Bid Advance.  The Borrower
shall  have no right to  prepay  any  principal  amount of any  Competitive  Bid
Advance unless,  and then only on the terms,  specified by the Borrower for such
Competitive  Bid  Advance in the related  Notice of  Competitive  Bid  Borrowing
delivered  pursuant to subsection  (a)(i) above and set forth in the Competitive
Bid Note evidencing such Competitive Bid Advance.

(e) The Borrower shall pay interest on the unpaid  principal  amount of
each  Competitive  Bid Advance from the date of such  Competitive Bid Advance to
the date the principal amount of such Competitive Bid Advance is repaid in full,
at the rate of interest for such Competitive Bid Advance specified by the Lender
making such Competitive Bid Advance in its notice with respect thereto delivered
pursuant to subsection  (a)(ii) above,  payable on the interest  payment date or
dates specified by the Borrower for such  Competitive Bid Advance in the related
Notice of  Competitive  Bid Borrowing  delivered  pursuant to subsection  (a)(i)
above, as provided in the  Competitive Bid Note evidencing such  Competitive Bid
Advance.  Upon the occurrence and during the continuance of an Event of Default,
the  Borrower  shall pay  interest  on the  amount of  unpaid  principal  of and
interest on each  Competitive Bid Advance owing to a Lender,  payable in arrears
on the date or dates interest is payable  thereon,  at a rate per annum equal at
all times to 2% per annum  above the rate per annum  required to be paid on such
Competitive  Bid Advance under the terms of the  Competitive Bid Note evidencing
such  Competitive Bid Advance unless  otherwise  agreed in such  Competitive Bid
Note.

(f) The  indebtedness of the Borrower  resulting from each  Competitive
Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be
evidenced  by a separate  Competitive  Bid Note of the  Borrower  payable to the
order of the Lender making such Competitive Bid Advance.

SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a facility fee on the  aggregate  amount of
such Lender's  Commitment  from the  Effective  Date in the case of each Initial
Lender and from the later of the Effective Date and the effective date specified
in the Assumption  Agreement or in the  Assignment  and  Acceptance  pursuant to
which it became a Lender in the case of each other  Lender  until the earlier of
the Term Loan Conversion Date and the Termination Date at a rate per annum equal
to the  Applicable  Percentage  in effect from time to time,  payable in arrears
quarterly  on  the  last  day of  each  March,  June,  September  and  December,
commencing  September  30,  1999,  and on the Term Loan  Conversion  Date or the
Termination Date, as the case may be.

(b)  Agent's  Fees.  The  Borrower  shall  pay to the Agent for its own
account  such fees as may from time to time be agreed  between the  Borrower and
the Agent.

SECTION  2.05.  Termination  or  Reduction  of  the  Commitments.   (a)
Optional.  The Borrower shall have the right, upon at least three Business Days'
notice to the Agent,  to terminate in whole or reduce ratably in part the unused
portions  of the  respective  Commitments  of the  Lenders,  provided  that each
partial reduction shall be in the aggregate amount of $10,000,000 or an integral
multiple of $1,000,000 in excess thereof and provided further that the aggregate
amount of the  Commitments of the Lenders shall not be reduced to an amount that
is less than the  aggregate  principal  amount of the  Competitive  Bid Advances
denominated  in  Dollars  then   outstanding  plus  the  Equivalent  in  Dollars
(determined  as of the  date  of the  notice  of  prepayment)  of the  aggregate
principal  amount  of  the  Competitive  Bid  Advances  denominated  in  Foreign
Currencies then outstanding.

(b) Mandatory.  On the  Termination  Date, if the Borrower has
made the Term Loan  Election in  accordance  with Section 2.06 prior to
such date, and from time to time after the  Termination  Date upon each
prepayment of the Revolving  Credit  Advances,  the  Commitments of the
Lenders shall be 

automatically and permanently  reduced on a pro rata basis by an amount
equal to the amount by which (i) the aggregate Commitments  immediately
prior to such  reduction  exceeds (ii) the aggregate  unpaid  principal
amount of all Revolving Credit Advances outstanding at such time.

SECTION  2.06.  Repayment of Revolving  Credit  Advances.  The Borrower
shall,  subject  to the next  succeeding  sentence,  repay to the  Agent for the
ratable account of the Lenders on the Termination  Date the aggregate  principal
amount of the Revolving Credit Advances then outstanding. The Borrower may, upon
not less than 15 days' notice to the Agent,  elect (the "Term Loan Election") to
convert all of the Revolving Credit Advances outstanding on the Termination Date
in effect at such time into a term loan which the  Borrower  shall repay in full
ratably  to the  Lenders  on the  Maturity  Date;  provided  that the Term  Loan
Election may not be exercised if (a) a Default has occurred and is continuing on
the date of notice of the Term  Loan  Election  or on the date on which the Term
Loan  Election is to be effected or (b) the Borrower has  requested an extension
of the  Termination  Date in  accordance  with Section  2.18 and the  applicable
Extension Date has not occurred.  All Revolving Credit Advances converted into a
term loan pursuant to this Section 2.06 shall  continue to constitute  Revolving
Credit  Advances  except that the Borrower may not reborrow  pursuant to Section
2.01  after all or any  portion  of such  Revolving  Credit  Advances  have been
prepaid pursuant to Section 2.10.

SECTION  2.07.  Interest on Revolving  Credit  Advances.  (a) Scheduled
Interest. The Borrower shall pay interest on the unpaid principal amount of each
Revolving  Credit  Advance owing to each Lender from the date of such  Revolving
Credit  Advance  until  such  principal  amount  shall be paid in  full,  at the
following rates per annum:

(i) Base Rate Advances.  During such periods as such Revolving
Credit  Advance is a Base Rate  Advance,  a rate per annum equal at all
times to the sum of (x) the Base Rate in effect  from time to time plus
(y) the  Applicable  Margin  in  effect  from time to time plus (z) the
Applicable  Utilization  Fee in effect  from time to time,  payable  in
arrears  quarterly on the last day of each March,  June,  September and
December  during such  periods  and on the date such Base Rate  Advance
shall be Converted or paid in full.

(ii) Eurocurrency  Rate Advances.  During such periods as such
Revolving  Credit  Advance is a Eurocurrency  Rate Advance,  a rate per
annum equal at all times during each Interest Period for such Revolving
Credit  Advance  to the  sum of (x)  the  Eurocurrency  Rate  for  such
Interest  Period  for  such  Revolving  Credit  Advance  plus  (y)  the
Applicable  Margin in effect from time to time plus (z) the  Applicable
Utilization Fee in effect from time to time,  payable in arrears on the
last day of such  Interest  Period and, if such  Interest  Period has a
duration of more than three months, on each day that occurs during such
Interest  Period every three months from the first day of such Interest
Period  and on  the  date  such  Eurocurrency  Rate  Advance  shall  be
Converted or paid in full.

(b) Default Interest. Upon the occurrence and during the continuance of
an Event of Default, the Borrower shall pay interest on (i) the unpaid principal
amount of each Revolving Credit Advance owing to each Lender, payable in arrears
on the dates referred to in clause (a)(i) or (a)(ii) above,  at a rate per annum
equal at all times to 2% per annum above the rate per annum  required to be paid
on such Revolving  Credit Advance pursuant to clause (a)(i) or (a)(ii) above and
(ii) to the fullest extent permitted by law, the amount of any interest,  fee or
other amount  payable  hereunder  that is not paid when due,  from the date such
amount shall be due until such amount shall be paid in full,  payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum  required to be paid
on Base Rate Advances pursuant to clause (a)(i) above.

SECTION  2.08.  Interest Rate  Determination.  (a) The Agent shall give
prompt  notice to the Borrower and the Lenders of the  applicable  interest rate
determined  by the Agent for  purposes of Section  2.07(a)(i)  or (ii),  and the
rate, if any,  furnished by each  Reference  Bank for the purpose of determining
the interest rate under Section 2.07(a)(ii).

(b) If, with respect to any  Eurocurrency  Rate Advances,  the Required
Lenders notify the Agent that (i) they are unable to obtain matching deposits in
the London  inter-bank market at or about 11:00 A.M.

(London  time) on the second  Business  Day before the making of a Borrowing  in
sufficient amounts to fund their respective  Revolving Credit Advances as a part
of such Borrowing during its Interest Period or (ii) the  Eurocurrency  Rate for
any Interest  Period for such Advances will not  adequately  reflect the cost to
such  Required  Lenders  of  making,  funding or  maintaining  their  respective
Eurocurrency  Rate Advances for such Interest Period,  the Agent shall forthwith
so notify the Borrower and the Lenders,  whereupon (A) the Borrower will, on the
last day of the then existing Interest Period therefor, (1) if such Eurocurrency
Rate Advances are denominated in Dollars, either (x) prepay such Advances or (y)
Convert such Advances into Base Rate Advances and (2) if such  Eurocurrency Rate
Advances  are  denominated  in any  Committed  Currency,  either (x) prepay such
Advances or (y) redenominate  such Advances into an Equivalent amount of Dollars
and Convert such Advances into Base Rate Advances and (B) the  obligation of the
Lenders to make, or to Convert Revolving Credit Advances into, Eurocurrency Rate
Advances  shall be  suspended  until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist; provided
that, if the  circumstances  set forth in clause (ii) above are applicable,  the
Borrower  may elect,  by notice to the Agent and the Lenders,  to continue  such
Advances in such Committed  Currency for Interest Periods of not longer than one
month,  which Advances shall  thereafter bear interest at a rate per annum equal
to the  Applicable  Margin  plus,  for  each  Lender,  the  cost to such  Lender
(expressed  as a rate per annum) of funding its  Eurocurrency  Rate  Advances by
whatever  means it reasonably  determines to be  appropriate.  Each Lender shall
certify its cost of funds for each Interest Period to the Agent and the Borrower
as soon as practicable  (but in any event not later than ten Business Days after
the first day of such Interest Period).

(c) If the  Borrower  shall fail to select the duration of any Interest
Period for any  Eurocurrency  Rate  Advances in accordance  with the  provisions
contained in the definition of "Interest Period" in Section 1.01, the Agent will
forthwith  so  notify  the  Borrower  and the  Lenders  and such  Advances  will
automatically, on the last day of the then existing Interest Period therefor, be
continued as Eurocurrency Rate Advances having an interest period of one month.

(d) On the date on which  the  aggregate  unpaid  principal  amount  of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment  or  otherwise,  to less than  $10,000,000,  such  Advances  shall
automatically Convert into Base Rate Advances.

(e) Upon the  occurrence  and  during the  continuance  of any Event of
Default, (i) each Eurocurrency Rate Advance will automatically,  on the last day
of the then existing  Interest Period therefor,  (A) if such  Eurocurrency  Rate
Advances are  denominated  in Dollars,  be Converted into Base Rate Advances and
(B) if  such  Eurocurrency  Rate  Advances  are  denominated  in  any  Committed
Currency, be redenominated into an Equivalent amount of Dollars and be Converted
into Base Rate  Advances and (ii) the  obligation  of the Lenders to make, or to
Convert Advances into,  Eurocurrency Rate Advances shall be suspended;  provided
that  Borrower  may  elect,  by notice to the Agent and the  Lenders  within one
Business  Day of such  Event of  Default,  to  continue  such  Advances  in such
Committed  Currency,  whereupon the Agent may require that each Interest  Period
relating to such Eurocurrency Rate Advances shall bear interest at the Overnight
Eurocurrency Rate for a period of three Business Days and thereafter,  each such
Interest  Period shall have a duration of not longer than one month.  "Overnight
Eurocurrency  Rate" means the rate per annum  applicable to an overnight  period
beginning on one  Business Day and ending on the next  Business Day equal to the
sum of 1%, the Applicable  Interest Rate Margin and the average,  rounded upward
to the  nearest  whole  multiple  of 1/16 of 1%, if such  average  is not such a
multiple, of the respective rates per annum quoted by each Reference Bank to the
Agent on request as the rate at which it is offering  overnight  deposits in the
relevant  currency in amounts  comparable to such Reference Bank's  Eurocurrency
Rate Advances.

(f) If Dow Jones Markets  Telerate Page 3750 is  unavailable  and fewer
than two Reference Banks furnish timely information to the Agent for determining
the Eurocurrency  Rate or LIBO Rate for any  Eurocurrency  Rate Advances or LIBO
Rate Advances, as the case may be,

(i) the Agent  shall  forthwith  notify the  Borrower  and the
Lenders  that  the  interest  rate  cannot  be   determined   for  such
Eurocurrency Rate Advances or LIBO Rate Advances, as the case may be,

(ii) with respect to  Eurocurrency  Rate  Advances,  each such
Advance  will  automatically,  on the  last  day of the  then  existing
Interest  Period  therefor,  (A) if such  Eurocurrency  Rate Advance is

denominated in Dollars,  be prepaid by the Borrower or be automatically
Converted  into a Base Rate Advance and (B) if such  Eurocurrency  Rate
Advance is  denominated  in any Committed  Currency,  be prepaid by the
Borrower or be automatically redenominated into an Equivalent amount of
Dollars and be  Converted  into a Base Rate Advance (or if such Advance
is then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii) the obligation of the Lenders to make  Eurocurrency Rate
Advances or LIBO Rate Advances or to Convert  Revolving Credit Advances
into  Eurocurrency  Rate  Advances  shall be suspended  until the Agent
shall  notify  the  Borrower  and the  Lenders  that the  circumstances
causing such suspension no longer exist.

SECTION 2.09.  Optional  Conversion of Revolving Credit  Advances.  The
Borrower may on any Business  Day, upon notice given to the Agent not later than
11:00 A.M.  (New York City time) on the third  Business Day prior to the date of
the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12,
Convert  all  Revolving  Credit  Advances  denominated  in  Dollars  of one Type
comprising  the same Borrowing into  Revolving  Credit  Advances  denominated in
Dollars  of  the  other  Type;  provided,   however,   that  any  Conversion  of
Eurocurrency  Rate Advances  into Base Rate  Advances  shall be made only on the
last  day of an  Interest  Period  for  such  Eurocurrency  Rate  Advances,  any
Conversion of Base Rate Advances into  Eurocurrency Rate Advances shall be in an
amount not less than the  minimum  amount  specified  in Section  2.02(b) and no
Conversion  of any  Revolving  Credit  Advances  shall  result in more  separate
Revolving  Credit  Borrowings  than permitted under Section  2.02(b).  Each such
notice of a Conversion shall, within the restrictions  specified above,  specify
(i) the date of such Conversion,  (ii) the Dollar  denominated  Revolving Credit
Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate
Advances,  the duration of the initial  Interest  Period for each such  Advance.
Each notice of  Conversion  shall be  irrevocable  and binding on the  Borrower.

SECTION 2.10.  Prepayments of Revolving Credit Advances.  (a) Optional.
The Borrower may,  upon notice at least two Business  Days' prior to the date of
such prepayment,  in the case of Eurocurrency Rate Advances,  and not later than
11:00 A.M. (New York City time) on the date of such  prepayment,  in the case of
Base Rate  Advances,  to the  Agent  stating  the  proposed  date and  aggregate
principal  amount of the  prepayment,  and if such notice is given the  Borrower
shall, prepay the outstanding  principal amount of the Revolving Credit Advances
comprising  part of the same Revolving  Credit  Borrowing in whole or ratably in
part without premium or penalty,  together with accrued  interest to the date of
such prepayment on the principal  amount prepaid;  provided,  however,  that (x)
each partial prepayment shall be in an aggregate principal amount of $10,000,000
or an  integral  multiple  of  $1,000,000  in excess  thereof or the  Equivalent
thereof in a Committed Currency  (determined on the date notice of prepayment is
given)  and (y) in the  event  of any such  prepayment  of a  Eurocurrency  Rate
Advance,  the Borrower  shall be  obligated to reimburse  the Lenders in respect
thereof pursuant to Section 8.04(c).

(b) Mandatory Prepayments. (i) If the Agent notifies the Borrower that,
on any interest  payment date, the sum of (A) the aggregate  principal amount of
all Advances  denominated in Dollars then outstanding plus (B) the Equivalent in
Dollars  (determined  on the third  Business Day prior to such interest  payment
date) of the aggregate  principal amount of all Advances  denominated in Foreign
Currencies  then  outstanding  exceeds 103% of the aggregate  Commitments of the
Lenders on such date, the Borrower shall, within two Business Days after receipt
of such notice, prepay the outstanding principal amount of any Advances owing by
the Borrower in an aggregate  amount  sufficient to reduce such sum to an amount
not to exceed 100% of the aggregate Commitments of the Lenders on such date.

(ii) Each  prepayment  made  pursuant to this Section  2.10(b) shall be
made  together with any interest  accrued to the date of such  prepayment on the
principal  amounts  prepaid and, in the case of any prepayment of a Eurocurrency
Rate  Advance,  a LIBO Rate Advance or a Local Rate Advance on a date other than
the last day of an Interest  Period or at its maturity,  any additional  amounts
which the  Borrower  shall be  obligated  to reimburse to the Lenders in respect
thereof pursuant to Section  8.04(c).  The Agent shall give prompt notice of any
prepayment required under this Section 2.10(b) to the Borrower and the Lenders.

SECTION  2.11.   Increased  Costs.  (a)  If,  due  to  either  (i)  the
introduction  of or  any  change  in or in  the  interpretation  of  any  law or
regulation or (ii) the  compliance  with any guideline or request  issued by any

central bank or other governmental authority including,  without limitation, any
agency of the  European  Union or similar  monetary or  multinational  authority
after the date hereof  (whether or not having the force of law),  there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining  Eurocurrency  Rate  Advances or LIBO Rate Advances  (excluding  for
purposes of this Section 2.11 any such increased  costs resulting from (i) Taxes
or Other Taxes (as to which  Section 2.14 shall  govern) and (ii) changes in the
basis of taxation of overall  net income or overall  gross  income by the United
States or by the  foreign  jurisdiction  or state  under the laws of which  such
Lender is  organized or is otherwise  subject to tax),  then the Borrower  shall
from time to time, upon demand by such Lender (with a copy of such demand to the
Agent),  pay to the Agent for the  account  of such  Lender  additional  amounts
sufficient to compensate such Lender for such increased cost,  provided that the
Borrower shall not be required to pay any such additional  amounts to the extent
such  additional  amounts  accrued prior to the date that is six months prior to
the date of such notice.  A certificate as to the amount of such increased cost,
submitted to the Borrower and the Agent by such Lender,  shall be conclusive and
binding for all purposes, absent manifest error.

(b) If any Lender determines that compliance with any law or regulation
or any  guideline  or  request  from  any  central  bank or  other  governmental
authority  (whether or not having the force of law)  affects or would affect the
amount of capital  required or expected to be  maintained  by such Lender or any
corporation  controlling  such  Lender  and that the  amount of such  capital is
increased by or based upon the  existence of such  Lender's  commitment  to lend
hereunder and other  commitments of this type,  then, upon demand by such Lender
(with a copy of such demand to the Agent),  the Borrower  shall pay to the Agent
for the account of such  Lender,  from time to time as specified by such Lender,
additional  amounts  sufficient to compensate such Lender or such corporation in
the light of such  circumstances,  to the  extent  that such  Lender  reasonably
determines  such  increase in capital to be allocable  to the  existence of such
Lender's  commitment  to  lend  hereunder.  A  certificate  as to  such  amounts
submitted to the Borrower and the Agent by such Lender shall be  conclusive  and
binding for all purposes, absent manifest error.

SECTION 2.12.  Illegality.  Notwithstanding any other provision of this
Agreement,  if any Lender shall notify the Agent that the introduction of or any
change in or in the  interpretation  of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its  Eurocurrency  Lending  Office to perform its  obligations
hereunder  to make  Eurocurrency  Rate  Advances  in  Dollars  or any  Committed
Currency or LIBO Rate Advances in Dollars or any Foreign  Currency or to fund or
maintain Eurocurrency Rate Advances in Dollars or any Committed Currency or LIBO
Rate  Advances  in  Dollars  or  any  Foreign  Currency   hereunder,   (a)  each
Eurocurrency  Rate  Advance  or LIBO  Rate  Advance,  as the case  may be,  will
automatically,  upon such demand,  (i) if such Eurocurrency Rate Advance or LIBO
Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance or
an Advance that bears interest at the rate set forth in Section  2.07(a)(i),  as
the case may be, and (ii) if such Eurocurrency Rate Advance or LIBO Rate Advance
is  denominated in any Foreign  Currency,  be  redenominated  into an Equivalent
amount of Dollars and be  Converted  into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.07(a)(i),  as the case may be,
and (b) the obligation of the Lenders to make Eurocurrency Rate Advances or LIBO
Rate Advances or to Convert  Revolving  Credit Advances into  Eurocurrency  Rate
Advances  shall be  suspended  until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.

SECTION 2.13.  Payments and  Computations.  (a) The Borrower shall make
each payment  hereunder,  except with respect to principal of,  interest on, and
other amounts relating to, Advances denominated in a Foreign Currency, not later
than 11:00 A.M. (New York City time) on the day when due in Dollars to the Agent
at the  applicable  Agent's  Account in same day funds.  The Borrower shall make
each payment  hereunder  with respect to  principal  of,  interest on, and other
amounts relating to, Advances denominated in a Foreign Currency,  not later than
11:00 A.M. (at the Payment Office for such Foreign Currency) on the day when due
in  such  Foreign  Currency  to the  Agent,  by  deposit  of such  funds  to the
applicable Agent's Account in same day funds. The Agent will promptly thereafter
cause to be  distributed  like funds  relating  to the payment of  principal  or
interest or  facility  fees  ratably  (other than  amounts  payable  pursuant to
Section  2.03,  2.11,  2.14 or  8.04(c)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other  amount  payable to any Lender to such  Lender for the  account of its
Applicable  Lending  Office,  in each case to be applied in accordance  with the
terms of this Agreement. Upon any Assuming Lender becoming a Lender hereunder as
a result of an extension of the  Termination  Date pursuant to Section 2.18, and
upon the Agent's receipt of such Lender's

Assumption  Agreement and recording of the information  contained therein in the
Register, from and after the applicable Extension Date, the Agent shall make all
payments hereunder and under any Notes issued in connection therewith in respect
of the interest assumed thereby to the Assuming  Lender.  Upon its acceptance of
an Assignment and Acceptance and recording of the information  contained therein
in the Register  pursuant to Section 8.07(c),  from and after the effective date
specified in such Assignment and  Acceptance,  the Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender  assignee  thereunder,  and the parties to such Assignment and Acceptance
shall make all  appropriate  adjustments  in such  payments for periods prior to
such effective date directly between themselves.

(b) The Borrower hereby  authorizes  each Lender,  if and to the extent
payment  owed to such  Lender is not made when due  hereunder  or under the Note
held by such  Lender,  to  charge  from time to time  against  any or all of the
Borrower's accounts with such Lender any amount so due. Each Lender that charges
an account of the Borrower in accordance with this Section agrees to promptly so
notify the  Borrower,  provided  that the failure to give such notice  shall not
affect the validity of such charge.

(c) All  computations  of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days,  as the case may be, all
computations  of interest  based on the  Eurocurrency  Rate or the Federal Funds
Rate and of  facility  fees shall be made by the Agent on the basis of a year of
360 days and  computations  in respect of Competitive Bid Advances shall be made
by the  Agent  or the  Sub-Agent,  as the  case  may  be,  as  specified  in the
applicable  Notice of  Competitive  Bid Borrowing  (or, in each case of Advances
denominated in Foreign  Currencies where market practice differs,  in accordance
with market practice), in each case for the actual number of days (including the
first day but  excluding  the last day)  occurring  in the period for which such
interest or facility  fees are payable.  Each  determination  by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

(d) Whenever  any payment  hereunder or under the Notes shall be stated
to be due on a day other than a Business  Day, such payment shall be made on the
next  succeeding  Business Day, and such extension of time shall in such case be
included in the  computation of payment of interest or facility fee, as the case
may be;  provided,  however,  that,  if such  extension  would cause  payment of
interest on or principal of Eurocurrency  Rate Advances or LIBO Rate Advances to
be made in the next following  calendar month, such payment shall be made on the
next preceding Business Day.

(e) Unless the Agent shall have received notice from the Borrower prior
to the  date on which  any  payment  is due to the  Lenders  hereunder  that the
Borrower  will not make such  payment  in full,  the Agent may  assume  that the
Borrower  has made such  payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender.  If and to the
extent the  Borrower  shall not have so made such  payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest  thereon,  for each day from the date such
amount is  distributed  to such Lender  until the date such  Lender  repays such
amount to the  Agent,  at (i) the  Federal  Funds  Rate in the case of  Advances
denominated  in  Dollars  or (ii)  the cost of funds  incurred  by the  Agent in
respect  of  such  amount  in  the  case  of  Advances  denominated  in  Foreign
Currencies.

SECTION 2.14. Taxes. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made,  in  accordance  with Section  2.13,  free and
clear of and without deduction for any and all present or future taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto,  excluding,  in the case of each Lender and the Agent, taxes imposed on
its overall net income,  and franchise taxes imposed on it in lieu of net income
taxes, by the  jurisdictions  in which such Lender or the Agent (as the case may
be) is otherwise subject to tax (all such non-excluded taxes,  levies,  imposts,
deductions,  charges,  withholdings  and  liabilities  in  respect  of  payments
hereunder or under the Notes being hereinafter  referred to as "Taxes").  If the
Borrower  shall be required by law to deduct any Taxes from or in respect of any
sum payable  hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section  2.14) such  Lender or the Agent (as the case may be)  receives an
amount equal to the sum it would have received had no such deductions 

been made,  (ii) the Borrower shall make such  deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant  taxation  authority or other
authority in accordance with applicable law.

(b) In addition,  the Borrower shall pay any present or future stamp or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution,  delivery or  registration  of,  performing  under, or otherwise with
respect  to,  this  Agreement  or the Notes  (hereinafter  referred to as "Other
Taxes").

(c) The Borrower shall indemnify each Lender and the Agent for and hold
it harmless against the full amount of Taxes or Other Taxes (including,  without
limitation,  taxes of any kind imposed by any  jurisdiction  on amounts  payable
under this Section  2.14) imposed on or paid by such Lender or the Agent (as the
case may be) and any liability (including  penalties,  interest and expenses not
incurred by reason of gross negligence or willful misconduct on the part of such
Lender  or  the  Agent)  arising   therefrom  or  with  respect  thereto.   This
indemnification  shall be made  within 30 days from the date such  Lender or the
Agent (as the case may be) makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall  furnish to the Agent,  at its address  referred to in Section  8.02,  the
original or a certified copy of a receipt  evidencing such payment.  In the case
of any  payment  hereunder  or under the  Notes by or on behalf of the  Borrower
through an account or branch outside the United States or by or on behalf of the
Borrower  by a  payor  that  is not a  United  States  person,  if the  Borrower
determines  that no Taxes are payable in respect  thereof,  the  Borrower  shall
furnish, or shall cause such payor to furnish, to the Agent, at such address, an
opinion of counsel as requested by and acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e),  the terms  "United  States"  and  "United  States  person"  shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

(e) Each Lender organized under the laws of a jurisdiction  outside the
United  States,  on or prior to the date of its  execution  and delivery of this
Agreement in the case of each Initial  Lender and on the date of the  Assumption
Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender,  and from time to time thereafter as requested
in writing by the  Borrower  (but only so long as such Lender  remains  lawfully
able to do so),  shall  provide  each of the  Agent  and the  Borrower  with two
original  Internal  Revenue Service forms 1001 or 4224, as  appropriate,  or any
successor or other form prescribed by the Internal Revenue  Service,  certifying
that such Lender is exempt from or entitled to a reduced  rate of United  States
withholding tax on payments pursuant to this Agreement or the Notes. If the form
provided  by a Lender  at the time  such  Lender  first  becomes a party to this
Agreement  indicates a United States interest  withholding tax rate in excess of
zero,  withholding  tax at such rate  shall be  considered  excluded  from Taxes
unless and until such Lender  provides the appropriate  forms  certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered  excluded  from Taxes for periods  governed  by such form;  provided,
however, that, if at the date of the Assignment and Acceptance pursuant to which
a Lender  assignee  becomes a party to this  Agreement,  the Lender assignor was
entitled  to  payments  under   subsection  (a)  in  respect  of  United  States
withholding  tax with  respect  to  interest  paid at such date,  then,  to such
extent,  the term Taxes shall include (in addition to withholding taxes that may
be imposed in the future or other amounts otherwise  includable in Taxes) United
States  withholding tax, if any,  applicable with respect to the Lender assignee
on such date.  In addition,  each Lender agrees that from time to time after the
Effective   Date,   when  a  change  in   circumstances   renders  the  previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Agent two new accurate and complete  original signed copies
of  Internal  Revenue  Service  Form 4224 or 1001,  as the case may be, and such
other forms as may be required in order to confirm or establish the  entitlement
of such Lender to a  continued  exemption  from or  reduction  in United  States
withholding  tax with  respect to  payments  under this  Agreement  or any Note,
unless any change in treaty,  law or regulation has occurred after the date such
Lender becomes a party  hereunder  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 so advises the  Borrower and the Agent.
If any  form  or  document  referred  to in this  subsection  (e)  requires  the
disclosure of information,  other than information  necessary to compute the tax
payable and information  required on the date hereof by Internal Revenue Service
form 1001 or 4224, that the Lender 

reasonably considers to be confidential, the Lender shall give notice thereof to
the Borrower and shall not be obligated to include in such form or document such
confidential information.

(f) Each Initial Lender hereby  confirms as of the Effective  Date, and
each other  Lender  confirms  as of the  effective  date of the  Assignment  and
Acceptance  pursuant to which it becomes a party  hereto,  in favor of the Agent
and the  Borrower  that  either (i) such  Lender is not  resident  in the United
Kingdom and is beneficially entitled to the Advances and the interest thereon or
(ii) it is a bank as defined  for the  purposes of Section 349 of the Income and
Corporation Taxes Act of 1988 of the United Kingdom and is beneficially entitled
to the Advances and the interest  thereon,  and each Lender agrees to notify the
Agent if there is any change in its position  from that set forth in this clause
(f).

(g) For any period with respect to which a Lender has failed to provide
the Borrower with the appropriate  form described in Section 2.14(e) (other than
if such failure is due to a change in law  occurring  subsequent  to the date on
which a form  originally was required to be provided,  or if such form otherwise
is not required under  subsection (e) above),  such Lender shall not be entitled
to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by
the United States by reason of such failure;  provided,  however,  that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder,  the Borrower  shall take such steps as the Lender  shall  reasonably
request to assist the Lender to recover such Taxes.

(h) Any Lender claiming any additional amounts payable pursuant to this
Section  2.14 agrees to use  reasonable  efforts  (consistent  with its internal
policy and legal and regulatory  restrictions) to change the jurisdiction of its
Eurocurrency  Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such  additional  amounts that may  thereafter
accrue and would not, in the  reasonable  judgment of such Lender,  be otherwise
disadvantageous to such Lender.

SECTION 2.15. Sharing of Payments,  Etc. If any Lender shall obtain any
payment (whether  voluntary,  involuntary,  through the exercise of any right of
set-off,  or otherwise) on account of the Revolving  Credit Advances owing to it
(other than pursuant to Section 2.11,  2.14 or 8.04(c)) in excess of its ratable
share of payments on account of the Revolving  Credit  Advances  obtained by all
the Lenders,  such Lender shall  forthwith  purchase from the other Lenders such
participations  in the  Revolving  Credit  Advances  owing  to them as  shall be
necessary to cause such  purchasing  Lender to share the excess payment  ratably
with each of them; provided,  however, that if all or any portion of such excess
payment is thereafter  recovered from such purchasing Lender, such purchase from
each Lender  shall be rescinded  and such Lender  shall repay to the  purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such  Lender's  ratable share  (according to the  proportion of (i) the
amount of such Lender's required repayment to (ii) the total amount so recovered
from the  purchasing  Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered.  The Borrower
agrees  that any  Lender so  purchasing  a  participation  from  another  Lender
pursuant  to this  Section  2.15 may, to the fullest  extent  permitted  by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

SECTION  2.16.  Evidence  of Debt.  (a) Each Lender  shall  maintain in
accordance  with its usual  practice  an  account  or  accounts  evidencing  the
indebtedness of the Borrower to such Lender resulting from each Revolving Credit
Advance  owing to such  Lender  from  time to time,  including  the  amounts  of
principal  and  interest  payable  and  paid to such  Lender  from  time to time
hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon
notice by any Lender to the  Borrower  (with a copy of such notice to the Agent)
to the effect that a Revolving  Credit Note is required or  appropriate in order
for such  Lender to  evidence  (whether  for  purposes  of a  permitted  pledge,
enforcement or otherwise) the Revolving  Credit Advances owing to, or to be made
by, such Lender,  the Borrower shall promptly execute and deliver to such Lender
a  Revolving  Credit  Note  payable to the order of such  Lender in a  principal
amount up to the Commitment of such Lender.

(b) The Register  maintained by the Agent  pursuant to Section  8.07(d)
shall include a control account,  and a subsidiary  account for each Lender,  in
which  accounts  (taken  together)  shall be recorded (i) the date and amount of
each Borrowing made  hereunder,  the Type of Advances  comprising such Borrowing
and, if 

appropriate,  the Interest  Period  applicable  thereto,  (ii) the terms of each
Assumption  Agreement  and  each  Assignment  and  Acceptance  delivered  to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable  from the Borrower to each Lender  hereunder  and (iv)
the amount of any sum received by the Agent from the Borrower hereunder and each
Lender's share thereof.

(c) Entries made in good faith by the Agent in the Register pursuant to
subsection (b) above, and by each Lender in its account or accounts  pursuant to
subsection  (a) above,  shall be prima facie evidence of the amount of principal
and  interest due and payable or to become due and payable from the Borrower to,
in the case of the  Register,  each Lender  and, in the case of such  account or
accounts,  such Lender, under this Agreement,  absent manifest error;  provided,
however,  that the failure of the Agent or such Lender to make an entry,  or any
finding that an entry is incorrect,  in the Register or such account or accounts
shall not limit or otherwise  affect the  obligations of the Borrower under this
Agreement.

SECTION 2.17.  Use of Proceeds.  The proceeds of the Advances  shall be
available (and the Borrower  agrees that it shall use such proceeds)  solely for
general corporate purposes of the Borrower and its Subsidiaries.

SECTION 2.18.  Extension of Termination  Date. (a) At least 30 days but
not more than 45 days prior to the  Termination  Date, the Borrower,  by written
notice to the Agent,  may request an extension of the Termination Date in effect
at such time by 364 days from its then scheduled expiration;  provided, however,
that the  Borrower  shall  not have made the Term Loan  Election  for  Revolving
Credit  Advances  outstanding on such  Termination  Date prior to such time. The
Agent shall promptly  notify each Lender of such request,  and each Lender shall
in turn, in its sole discretion, not later than 20 days prior to the Termination
Date,  notify the  Borrower  and the Agent in writing as to whether  such Lender
will consent to such extension. If any Lender shall fail to notify the Agent and
the Borrower in writing of its consent to any such request for  extension of the
Termination  Date at least 20 days prior to the  Termination  Date,  such Lender
shall be deemed to be a Non-Consenting  Lender with respect to such request. The
Agent shall notify the Borrower not later than 15 days prior to the  Termination
Date of the  decision of the Lenders  regarding  the  Borrower's  request for an
extension of the Termination Date.

(b) If all the  Lenders  consent  in  writing  to any such  request  in
accordance  with  subsection (a) of this Section 2.18, the  Termination  Date in
effect at such time shall,  effective as at the Termination Date (the "Extension
Date"),  be extended  for 364 days;  provided  that on each  Extension  Date the
applicable conditions set forth in Article III shall be satisfied.  If less than
all of the Lenders  consent in writing to any such  request in  accordance  with
subsection (a) of this Section 2.18, the Termination Date in effect at such time
shall,  effective as at the applicable  Extension  Date, be extended as to those
Lenders that so consented (each a "Consenting Lender") but shall not be extended
as to any other Lender (each a "Non-Consenting  Lender"). To the extent that the
Termination  Date is not extended as to any Lender pursuant to this Section 2.18
and the Commitment of such Lender is not assumed in accordance  with  subsection
(c) of this  Section  2.18 on or prior to the  applicable  Extension  Date,  the
Commitment of such Non-Consenting Lender shall automatically  terminate in whole
on such unextended  Termination  Date without any further notice or other action
by the  Borrower,  such  Lender or any  other  Person;  provided  that such Non-
Consenting  Lender's  rights  under  Sections  2.11,  2.14  and  8.04,  and  its
obligations  under Section 7.05,  shall  survive the  Termination  Date for such
Lender as to matters  occurring  prior to such date. It is understood and agreed
that no Lender shall have any obligation whatsoever to agree to any request made
by the Borrower for any requested extension of the Termination Date.

(c) If  less  than  all of the  Lenders  consent  to any  such  request
pursuant to  subsection  (a) of this Section 2.18,  the Agent shall  promptly so
notify the  Consenting  Lenders,  and each  Consenting  Lender  may, in its sole
discretion, give written notice to the Agent not later than 10 days prior to the
Termination Date of the amount of the  Non-Consenting  Lenders'  Commitments for
which it is willing to accept an assignment.  If the  Consenting  Lenders notify
the Agent  that they are  willing to accept  assignments  of  Commitments  in an
aggregate   amount  that   exceeds  the  amount  of  the   Commitments   of  the
Non-Consenting Lenders, such Commitments shall be allocated among the Consenting
Lenders willing to accept such assignments in such amounts as are agreed between
the  Borrower  and the  Agent.  If after  giving  effect to the  assignments  of
Commitments  described  above there remains any  Commitments  of  Non-Consenting
Lenders,  the Borrower may arrange for one or more  Consenting 

Lenders or other Eligible  Assignees  (each, an "Assuming  Lender") to assume by
execution of an assumption  agreement in form and substance  satisfactory to the
Borrower and the Agent (each,  an "Assumption  Agreement"),  effective as of the
Extension Date, any Non-Consenting  Lender's remaining Commitment and all of the
obligations  of such  Non-Consenting  Lender  under  this  Agreement  thereafter
arising,  without recourse to or warranty by, or expense to, such Non-Consenting
Lender;  provided,  however,  that  the  amount  of the  Commitment  of any such
Assuming Lender as a result of such substitution  shall in no event be less than
$10,000,000 unless the amount of the Commitment of such Non-Consenting Lender is
less than  $10,000,000,  in which case such Assuming  Lender shall assume all of
such lesser amount; and provided further that:

(i) any such  Consenting  Lender or Assuming Lender shall have
paid to such  Non-Consenting  Lender (A) the aggregate principal amount
of, and any interest  accrued and unpaid to the  effective  date of the
assignment on, the outstanding Advances, if any, of such Non-Consenting
Lender  plus (B) any  accrued  but unpaid  facility  fees owing to such
Non-Consenting Lender as of the effective date of such assignment;

(ii)   all   additional    costs    reimbursements,    expense
reimbursements and indemnities payable to such  Non-Consenting  Lender,
and all other accrued and unpaid  amounts owing to such  Non-Consenting
Lender  hereunder,  as of the effective date of such  assignment  shall
have been paid to such Non-Consenting Lender; and

(iii) with respect to any such Assuming Lender, the applicable
processing and  recordation fee required under Section 8.07(a) for such
assignment shall have been paid;

provided further that such  Non-Consenting  Lender's rights under Sections 2.11,
2.14 and 8.04,  and its  obligations  under  Section  7.05,  shall  survive such
substitution as to matters  occurring  prior to the date of substitution  and at
least three  Business Days prior to any Extension  Date,  (A) each such Assuming
Lender, if any, shall have delivered to the Borrower and the Agent an Assumption
Agreement,  duly executed by such Assuming Lender, such  Non-Consenting  Lender,
the Borrower and the Agent, (B) any such Consenting  Lender shall have delivered
confirmation  in writing  satisfactory  to the  Borrower and the Agent as to the
increase  in the amount of its  Commitment  and (C) each  Non-Consenting  Lender
being  replaced  pursuant to this Section 2.18 shall have delivered to the Agent
any Note or Notes  held by such  Non-Consenting  Lender.  Upon  the  payment  or
prepayment  of all  amounts  referred to in clauses  (i),  (ii) and (iii) of the
immediately preceding sentence,  each such Consenting Lender or Assuming Lender,
as of the Extension  Date, will be substituted  for such  Non-Consenting  Lender
under this  Agreement and shall be a Lender for all purposes of this  Agreement,
without any further  acknowledgment by or the consent of the other Lenders,  and
the  obligations of each such  Non-Consenting  Lender  hereunder  shall,  by the
provisions hereof, be released and discharged.

(d) If Lenders  holding  Commitments  equal to not less than 50% of the
Commitments  outstanding  immediately  prior to the Extension Date (after giving
effect to any  assignments  pursuant to  subsection  (b) of this  Section  2.18)
consent in writing to a requested extension (whether by execution or delivery of
an Assumption  Agreement or otherwise)  not later than one Business Day prior to
such Extension Date, the Agent shall so notify the Borrower,  and, so long as no
Default  shall have occurred and be  continuing  as of such  Extension  Date, or
shall occur as a consequence  thereof, the Termination Date then in effect shall
be extended for the additional one-year period as described in subsection (a) of
this Section 2.18, and all references in this  Agreement,  and in the Notes,  if
any, to the "Termination Date" shall, with respect to each Consenting Lender and
each Assuming Lender for such Extension Date,  refer to the Termination  Date as
so extended.  Promptly following each Extension Date, the Agent shall notify the
Lenders (including,  without limitation,  each Assuming Lender) of the extension
of the scheduled  Termination Date in effect immediately prior thereto and shall
thereupon  record in the Register the relevant  information with respect to each
such Consenting Lender and each such Assuming Lender.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01.  Conditions  Precedent to  Effectiveness of Sections 2.01
and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and
as of the first date (the  "Effective  Date") on which the following  conditions
precedent have been satisfied:

(a) There shall have occurred no Material Adverse Change since
December 31, 1998.

(b)  There  shall  exist  no  action,   suit,   investigation,
litigation  or  proceeding   affecting  the  Borrower  or  any  of  its
Subsidiaries  pending or  threatened  before  any  court,  governmental
agency  or  arbitrator  that (i) would be  reasonably  likely to have a
Material  Adverse  Effect other than the matters  described on Schedule
3.01(b) hereto (the "Disclosed  Litigation") or (ii) purports to affect
the legality,  validity or enforceability of this Agreement or any Note
or the consummation of the transactions  contemplated hereby, and there
shall have been no adverse change in the status, or financial effect on
the Borrower or any of its  Subsidiaries,  of the Disclosed  Litigation
from that described on Schedule 3.01(b) hereto.

(c) Nothing  shall have come to the  attention  of the Lenders
during the course of their due diligence  investigation to lead them to
believe that the Information  Memorandum was or has become  misleading,
incorrect or incomplete in any material  respect;  without limiting the
generality  of the  foregoing,  the Lenders  shall have been given such
access to the  management,  records,  books of account,  contracts  and
properties  of the  Borrower  and its  Subsidiaries  as they shall have
reasonably requested.

(d) All  governmental  and third party  consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained  (without the imposition of any conditions  that are
not  acceptable to the Lenders) and shall remain in effect,  and no law
or regulation  shall be applicable  in the  reasonable  judgment of the
Lenders  that  restrains,   prevents  or  imposes   materially  adverse
conditions upon the transactions contemplated hereby.

(e) The Borrower shall have notified each Lender and the Agent
in writing as to the proposed Effective Date.

(f) The Borrower shall have paid all accrued fees and expenses
of the Agent and the Lenders  (including  the accrued fees and expenses
of counsel to the Agent).

(g) On the Effective Date, the following  statements  shall be
true and the Agent shall have received for the account of each Lender a
certificate signed by a duly authorized officer of the Borrower,  dated
the Effective Date, stating that:

(i) The representations  and warranties  contained in
Section 4.01 are correct on and as of the Effective Date, and

(ii) No event has  occurred  and is  continuing  that
constitutes a Default. 

(h) The Agent shall have  received on or before the  Effective
Date  the  following,  each  dated  such  day,  in form  and  substance
satisfactory  to the Agent and (except for the Revolving  Credit Notes)
in sufficient copies for each Lender:

(i) The  Revolving  Credit  Notes to the order of the
Lenders to the extent  requested  by any  Lender  pursuant  to
Section 2.16.

(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower  approving this Agreement and the
Notes,  and  of  all  documents   evidencing  other  necessary
corporate  action and  governmental  approvals,  if any,  with
respect to this Agreement and the Notes.

(iii) A certificate  of the Secretary or an Assistant
Secretary  of the  Borrower  certifying  the  names  and  true
signatures of the officers of the Borrower  authorized to sign
this  Agreement  and the Notes and the other  documents  to be
delivered hereunder.

(iv)  A  favorable  opinion  of  Susan  F.  Marrinan,
General  Counsel of the Borrower,  and a favorable  opinion of
Foley & Lardner, counsel to the Borrower, substantially in the
form of Exhibit D-1 and Exhibit D-2 hereto, respectively,  and
as to such other  matters as any Lender  through the Agent may
reasonably request.

(v) A  favorable  opinion  of  Shearman  &  Sterling,
counsel for the Agent,  in form and substance  satisfactory to
the Agent.

(i) The  Borrower  shall  have  repaid in full of all  amounts
outstanding and terminated the commitments of the lenders under each of
(i) the  $75,000,000  364-Day  revolving  credit  agreement dated as of
March  23,  1998  between  the  Borrower  and  Citibank  and  (ii)  the
$100,000,000 five year revolving credit agreement dated as of September
5, 1997 among the Borrower,  Citibank, Bank of America NT&SA, The First
National Bank of Chicago and Bank of Montreal,  and each of the Lenders
that is a party to either such credit  agreement  hereby  waives,  upon
execution  of this  Agreement,  any notice  requirement  of such credit
agreement relating to the termination of commitments thereunder.

(j) The  conditions  precedent  set forth in  Section  3.01(a)
through (i) of the Five-Year  Credit  Agreement  dated as of August 23,
1999 among the Borrower,  the lenders  parties  thereto,  Salomon Smith
Barney  Inc.,  as lead  arranger  and book  manager,  Banc One  Capital
Markets Inc., as co-arranger,  Citibank,  as administrative  agent, and
The First National Bank of Chicago,  as syndication  agent,  shall have
been satisfied.

SECTION  3.02.  Conditions  Precedent  to  Sandvik  Funding  Date.  The
obligation of each Lender to make Advances in an aggregate  amount  greater than
one-third of such Lender's  Commitment  shall become  effective on and as of the
date (the "Sandvik  Funding Date") on which the Borrower  delivers a certificate
to the Lenders  certifying  that the following  conditions  precedent  have been
satisfied:

(a) All  governmental  and third party  consents  and approval
necessary  in  connection  with the  acquisition  of the saw and  tools
assets of Sandvik AB (the  "Acquisition")  shall have been obtained and
shall remain in effect;  all applicable  waiting  periods in connection
with the Acquisition  shall have expired without any action being taken
by  any  competent  authority,  and  no  law  or  regulation  shall  be
applicable in the judgment of the Required  Lenders,  in each case that
restrains,  prevents or imposes  materially adverse conditions upon the
Acquisition, the Borrower or any of its Subsidiaries.

(b) The  conditions  precedent to the  Acquisition  shall have
shall  have been  consummated  (except  only the  delivery  of  closing
documents and the payment of the purchase price therefor) in compliance
with all applicable laws.

SECTION 3.03.  Conditions  Precedent to Each Revolving Credit Borrowing
and Extension  Date.  The  obligation of each Lender to make a Revolving  Credit
Advance on the occasion of each Revolving Credit Borrowing and each extension of
Commitments  pursuant  to  Section  2.18  shall  be  subject  to the  conditions
precedent  that the  Effective  Date shall have occurred and on the date of such
Revolving  Credit  Borrowing or the applicable  Extension Date (a) the following
statements  shall be true (and each of the  giving of the  applicable  Notice of
Revolving Credit Borrowing,  request for Commitment Extension and the acceptance
by the  Borrower  of the  proceeds  of such  Revolving  Credit  Borrowing  shall
constitute a  representation  and  warranty by the Borrower  that on the date of
such Borrowing or such Extension Date such statements are true):

(i) the  representations  and warranties  contained in Section
4.01  (except,  in  the  case  of  Revolving  Credit  Borrowings,   the
representations  set  forth  in the last  sentence  of  subsection  (e)
thereof and in subsection (f)(i) thereof) are correct on and as of such
date, before and after giving effect to such 

Revolving   Credit   Borrowing  or  such  Extension  Date  and  to  the
application of the proceeds therefrom, as though made on and as of such
date, and

(ii) no event has occurred and is continuing,  or would result
from such Revolving Credit  Borrowing,  such Extension Date or from the
application of the proceeds therefrom, that constitutes a Default;

and (b) the  Agent  shall  have  received  such  other  approvals,  opinions  or
documents as any Lender through the Agent may reasonably request.

SECTION 3.04.  Conditions  Precedent to Each Competitive Bid Borrowing.
The  obligation of each Lender that is to make a Competitive  Bid Advance on the
occasion of a Competitive Bid Borrowing to make such  Competitive Bid Advance as
part of such  Competitive  Bid Borrowing is subject to the conditions  precedent
that (i) the Agent  shall  have  received  the  written  confirmatory  Notice of
Competitive  Bid Borrowing with respect  thereto,  (ii) on or before the date of
such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the
Agent shall have  received a  Competitive  Bid Note payable to the order of such
Lender for each of the one or more  Competitive  Bid Advances to be made by such
Lender as part of such Competitive Bid Borrowing, in a principal amount equal to
the principal amount of the Competitive Bid Advance to be evidenced  thereby and
otherwise  on such terms as were agreed to for such  Competitive  Bid Advance in
accordance  with Section  2.03,  and (iii) on the date of such  Competitive  Bid
Borrowing the following  statements shall be true (and each of the giving of the
applicable  Notice  of  Competitive  Bid  Borrowing  and the  acceptance  by the
Borrower of the proceeds of such  Competitive Bid Borrowing  shall  constitute a
representation and warranty by the Borrower that on the date of such Competitive
Bid Borrowing such statements are true):

(a) the  representations  and warranties  contained in Section
4.01  are  correct  on and as of  the  date  of  such  Competitive  Bid
Borrowing,  before  and after  giving  effect to such  Competitive  Bid
Borrowing and to the application of the proceeds  therefrom,  as though
made on and as of such date,

(b) no event has occurred and is  continuing,  or would result
from such  Competitive  Bid  Borrowing or from the  application  of the
proceeds therefrom, that constitutes a Default, and

(c) no event  has  occurred  and no  circumstance  exists as a
result of which the  information  concerning the Borrower that has been
provided  to the Agent and each Lender by the  Borrower  in  connection
herewith  would include an untrue  statement of a material fact or omit
to state any material fact or any fact necessary to make the statements
contained therein,  in the light of the circumstances  under which they
were made, not misleading.

SECTION  3.05.  Determinations  Under  Section  3.01.  For  purposes of
determining  compliance  with the  conditions  specified in Section  3.01,  each
Lender  shall be deemed to have  consented  to,  approved  or  accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent  responsible  for the  transactions  contemplated by this Agreement
shall have received notice from such Lender prior to the date that the Borrower,
by notice to the Lenders,  designates as the proposed Effective Date, specifying
its  objection  thereto.  The Agent  shall  promptly  notify the  Lenders of the
occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01.  Representations  and  Warranties  of the  Borrower.  The
Borrower represents and warrants as follows:

(a) The  Borrower is a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of Delaware.

(b) The execution, delivery and performance by the Borrower of
this   Agreement  and  the  Notes  to  be  delivered  by  it,  and  the
consummation of the transactions  contemplated  hereby,  are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action,  and do not contravene (i) the Borrower's  charter or
by-laws  or  (ii)  law or any  contractual  restriction  binding  on or
affecting the Borrower.

(c) No  authorization  or approval or other  action by, and no
notice to or filing with, any governmental authority or regulatory body
or any  other  third  party  is  required  as a  condition  to the  due
execution,  delivery and  performance by the Borrower of this Agreement
or the Notes to be delivered by it.

(d) This  Agreement  has  been,  and  each of the  Notes to be
delivered by it when delivered  hereunder will have been, duly executed
and delivered by the Borrower. This Agreement is, and each of the Notes
when  delivered  hereunder  will  be,  the  legal,  valid  and  binding
obligation  of  the  Borrower   enforceable  against  the  Borrower  in
accordance with their respective terms.

(e) The  Consolidated  balance  sheet of the  Borrower and its
Subsidiaries  as at December  31,  1998,  and the related  Consolidated
statements   of  income  and  cash  flows  of  the   Borrower  and  its
Subsidiaries for the fiscal year then ended,  accompanied by an opinion
of  Arthur  Andersen  LLP,  independent  public  accountants,  and  the
Consolidated  balance sheet of the Borrower and its  Subsidiaries as at
June 30, 1999,  and the related  Consolidated  statements of income and
cash flows of the Borrower and its Subsidiaries for the six months then
ended,  duly certified by the chief financial  officer of the Borrower,
copies of which have been  furnished  to each Lender,  fairly  present,
subject,  in the case of said balance  sheet as at June 30,  1999,  and
said statements of income and cash flows for the six months then ended,
to year-end audit adjustments,  the Consolidated financial condition of
the Borrower and its Subsidiaries as at such dates and the Consolidated
results of the operations of the Borrower and its  Subsidiaries for the
periods ended on such dates, all in accordance with generally  accepted
accounting principles  consistently  applied.  Since December 31, 1998,
there has been no Material  Adverse Change.  (f) There is no pending or
threatened  action,  suit,  investigation,  litigation  or  proceeding,
including,  without limitation, any Environmental Action, affecting the
Borrower  or any of its  Subsidiaries  before any  court,  governmental
agency  or  arbitrator  that (i) would be  reasonably  likely to have a
Material  Adverse Effect (other than the Disclosed  Litigation) or (ii)
purports to affect the  legality,  validity or  enforceability  of this
Agreement  or  any  Note  or  the   consummation  of  the  transactions
contemplated hereby, and there has been no materially adverse change in
the  status,  or  financial  effect  on  the  Borrower  or  any  of its
Subsidiaries,  of the  Disclosed  Litigation  from  that  described  on
Schedule 3.01(b) hereto.

(g) The  Borrower is not engaged in the  business of extending
credit for the purpose of purchasing  or carrying  margin stock (within
the meaning of  Regulation  U issued by the Board of  Governors  of the
Federal Reserve System), and no proceeds of any Advance will be used to
purchase  or carry any margin  stock or to extend  credit to others for
the purpose of purchasing or carrying any margin stock.

(h) The Borrower is not an "investment  company", or a company
"controlled"  by an  "investment  company",  within the  meaning of the
Investment Company Act of 1940, as amended.

(i) The Borrower has (i) initiated a review and  assessment of
all  areas  within  its and  each  of its  Subsidiaries'  business  and
operations   (including  those  affected  by  suppliers,   vendors  and
customers)  that could be adversely  affected by the risk that computer
applications  used  by the  Borrower  or any  of its  Subsidiaries  (or
suppliers,  vendors  and  customers)  may be  unable to  recognize  and
perform properly date sensitive functions involving certain dates prior
to and any date after December 31, 1999 (the "Year 2000 Problem"), (ii)
developed a plan and timetable for  addressing the Year 2000 Problem on
a timely basis and (iii) to date,  implemented  that plan in accordance
with such timetable. Based on the foregoing, the

Borrower  believes that all computer  applications  (including those of
its suppliers,  vendors and customers)  that are material to its or any
of its Subsidiaries' business and operations are reasonably expected on
a timely basis to be able to perform properly date-sensitive  functions
for all dates  before,  on and after  January  1,  2000,  except to the
extent that a failure to do so would not reasonably be expected to have
a Material Adverse Effect.

ARTICLE V

COVENANTS OF THE BORROWER

SECTION  5.01.  Affirmative  Covenants.  So long as any  Advance  shall
remain unpaid or any Lender shall have any  Commitment  hereunder,  the Borrower
will:

(a) Compliance with Laws, Etc.  Comply,  and cause each of its
Subsidiaries to comply, in all material  respects,  with all applicable
and material laws,  rules,  regulations and orders,  such compliance to
include,  without  limitation,  compliance with ERISA and Environmental
Laws.

(b) Payment of Taxes,  Etc. Pay and discharge,  and cause each
of its Subsidiaries to pay and discharge,  before the same shall become
delinquent,  (i) all taxes,  assessments  and  governmental  charges or
levies  imposed upon it or upon its property and (ii) all lawful claims
that,  if  unpaid,  might  by law  become  a Lien  upon  its  property;
provided,   however,   that   neither  the  Borrower  nor  any  of  its
Subsidiaries  shall be  required  to pay or  discharge  any  such  tax,
assessment,  charge or claim that is being  contested in good faith and
by proper  proceedings and as to which  appropriate  reserves are being
maintained,  unless and until any Lien resulting  therefrom attaches to
its property and becomes enforceable against its other creditors.

(c) Maintenance of Insurance.  Maintain, and cause each of its
Subsidiaries  to maintain,  insurance  with  responsible  and reputable
insurance  companies or  associations in such amounts and covering such
risks as is usually carried by companies engaged in similar  businesses
and owning  similar  properties  in the same general areas in which the
Borrower  or such  Subsidiary  operates;  provided,  however,  that the
Borrower and its  Subsidiaries  may  self-insure  to the same extent as
other  companies  engaged in  similar  businesses  and  owning  similar
properties  in the same  general  areas in which the  Borrower  or such
Subsidiary  operates and to the extent consistent with prudent business
practice.

(d)  Preservation of Corporate  Existence,  Etc.  Preserve and
maintain,  and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided,   however,   that  the  Borrower  and  its  Subsidiaries  may
consummate any merger or consolidation  permitted under Section 5.02(b)
and  provided  further  that  neither  the  Borrower  nor  any  of  its
Subsidiaries  shall be required to preserve  any right or  franchise if
the  Board  of  Directors  of the  Borrower  or such  Subsidiary  shall
determine that the  preservation  thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be,  and  that  the  loss  thereof  is not  disadvantageous  in any
material respect to the Borrower, such Subsidiary or the Lenders.

(e) Visitation Rights. At any reasonable time and from time to
time and, so long as no Default has  occurred and is  continuing,  upon
reasonable notice, permit the Agent or any of the Lenders or any agents
or representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the  properties of,
the Borrower and any of its  Subsidiaries,  and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries  with
any of their officers or directors and with their independent certified
public accountants.

(f) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account,  in which full and correct
entries shall be made of all financial  transactions and the assets and
business of the Borrower and each such  Subsidiary in  accordance  with
generally accepted accounting principles in effect from time to time.

(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its  Subsidiaries  to maintain and  preserve,  all of its
properties  that are used or useful in the  conduct of its  business in
good working order and condition, ordinary wear and tear excepted.

(h) Transactions with Affiliates.  Conduct,  and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
this Agreement with any of their  Affiliates on terms that are fair and
reasonable  and no less  favorable to the  Borrower or such  Subsidiary
than it would obtain in a comparable  arm's-length  transaction  with a
Person  not  an   Affiliate,   provided   that  the  Borrower  and  its
Subsidiaries  may transact  business with Snap-On Credit LLC on a basis
consistent with past practice.

(i) Reporting Requirements. Furnish to the Lenders:

(i) as soon as  available  and in any event within 45
days after the end of each of the first three quarters of each
fiscal year of the Borrower, the Consolidated balance sheet of
the  Borrower  and  its  Subsidiaries  as of the  end of  such
quarter and  Consolidated  statements of income and cash flows
of the Borrower and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end
of such quarter,  duly  certified  (subject to year-end  audit
adjustments)  by the chief  financial  officer or treasurer of
the  Borrower  as having  been  prepared  in  accordance  with
generally accepted  accounting  principles and certificates of
the chief financial officer or treasurer of the Borrower as to
compliance  with the terms of this Agreement and setting forth
in reasonable detail the calculations necessary to demonstrate
compliance  with Section  5.03,  provided that in the event of
any change in GAAP used in the  preparation  of such financial
statements,  the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.03, a statement
of  reconciliation  conforming  such  financial  statements to
GAAP;

(ii) as soon as available  and in any event within 90
days after the end of each fiscal year of the Borrower, a copy
of the annual  audit report for such year for the Borrower and
its Subsidiaries, containing the Consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal
year and  Consolidated  statements of income and cash flows of
the Borrower  and its  Subsidiaries  for such fiscal year,  in
each case accompanied by an opinion acceptable to the Required
Lenders by Arthur  Andersen  LLP or other  independent  public
accountants acceptable to the Required Lenders,  provided that
in the event of any change in GAAP used in the  preparation of
such financial statements, the Borrower shall also provide, if
necessary for the  determination  of  compliance  with Section
5.03, a statement of reconciliation  conforming such financial
statements to GAAP;

(iii) as soon as  possible  and in any  event  within
five days after the  occurrence of each Default  continuing on
the date of such statement, a statement of the chief financial
officer or treasurer of the Borrower  setting forth details of
such  Default and the action that the  Borrower  has taken and
proposes to take with respect thereto;

(iv)  promptly  after the sending or filing  thereof,
copies of all reports  that the  Borrower  sends to any of its
securityholders  as  such,  and  copies  of  all  reports  and
registration  statements  that the Borrower or any  Subsidiary
files  with the  Securities  and  Exchange  Commission  or any
national securities exchange;

(v) promptly after the commencement  thereof,  notice
of all actions and proceedings before any court,  governmental
agency or  arbitrator  affecting  the  Borrower  or any of its
Subsidiaries of the type described in Section 4.01(f); and

(vi) such other  information  respecting the Borrower
or any of its Subsidiaries as any Lender through the Agent may
from time to time reasonably request.

SECTION 5.02. Negative  Covenants.  So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not:

(a) Liens,  Etc.  Create or suffer to exist,  or permit any of
its  Subsidiaries  to create  or  suffer to exist,  any Lien on or with
respect  to any of its  properties,  whether  now  owned  or  hereafter
acquired,  or assign, or permit any of its Subsidiaries to assign,  any
right to receive income, other than:

(i) Permitted Liens,

(ii)  purchase  money  Liens  upon  or  in  any  real
property or equipment  acquired or held by the Borrower or any
Subsidiary  in the  ordinary  course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred  solely for the purpose of financing the  acquisition
of such  property  or  equipment,  or Liens  existing  on such
property or  equipment at the time of its  acquisition  (other
than  any  such  Liens  created  in   contemplation   of  such
acquisition  that were not incurred to finance the acquisition
of such property) or extensions,  renewals or  replacements of
any  of  the  foregoing  for  the  same  or a  lesser  amount,
provided,  however, that no such Lien shall extend to or cover
any  properties of any character  other than the real property
or equipment being acquired, and no such extension, renewal or
replacement  shall  extend  to or  cover  any  properties  not
theretofore  subject  to the Lien being  extended,  renewed or
replaced, provided further that the aggregate principal amount
of the  indebtedness  secured by the Liens referred to in this
clause (ii) shall not exceed $25,000,000,

(iii) the Liens  existing on the  Effective  Date and
described on Schedule 5.02(a) hereto,

(iv) Liens on  property  of a Person  existing at the
time  such  Person  is merged  into or  consolidated  with the
Borrower  or any  Subsidiary  of the  Borrower  or  becomes  a
Subsidiary of the Borrower;  provided that such Liens were not
created in  contemplation  of such  merger,  consolidation  or
acquisition  and do not extend to any assets  other than those
of the Person so merged into or consolidated with the Borrower
or  such  Subsidiary  or  acquired  by the  Borrower  or  such
Subsidiary,

(v)  other  Liens   securing  Debt  in  an  aggregate
principal  amount  not  to  exceed  $50,000,000  at  any  time
outstanding,

(vi)  sales  of   accounts   receivable   arising  in
connection  a  transaction  described  in the  proviso  to the
definition of "Debt" in Section 1.01, and

(vii) the  replacement,  extension  or renewal of any
Lien  permitted  by clause  (iii) or (iv) above upon or in the
same property  theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any  direct  or  contingent  obligor)  of the Debt  secured
thereby.

(b)  Mergers,  Etc.  Merge or  consolidate  with or  into,  or
convey,  transfer,  lease  or  otherwise  dispose  of  (whether  in one
transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to, any Person, or
permit any of its Subsidiaries to do so, except that (i) any Subsidiary
of the Borrower may merge or  consolidate  with or into,  or dispose of
assets to, any other Subsidiary of the Borrower, (ii) any Subsidiary of
the  Borrower  may merge into or dispose of assets to the  Borrower and
(iii) the  Borrower  may merge into a wholly  owned  Subsidiary  of the
Borrower  that  has no  material  assets  or  liabilities  for the sole
purpose of changing the state of  incorporation  of the Borrower if the
surviving  corporation  shall  expressly  assume the liabilities of the
Borrower  under this Agreement and the Notes,  provided,  in each case,
that no Default  shall have  occurred and be  continuing at the time of
such proposed transaction or would result therefrom.

(c)  Accounting  Changes.  Make or  permit,  or  permit  any of its
Subsidiaries  to make or permit,  any change in  accounting  policies or
reporting  practices,  except as  required  or  permitted  by  generally
accepted accounting principles.

(d)  Change in  Nature  of  Business.  Make,  or permit  any of its
Subsidiaries  to make, any material change in the nature of the business
of the Borrower and its  Subsidiaries  taken as a whole as carried on at
the date hereof.

SECTION 5.03.  Financial Covenant.  So long as any Advance shall remain
unpaid or any Lender shall have any  Commitment  hereunder,  the  Borrower  will
maintain  a ratio of  Consolidated  Debt to the sum of  Consolidated  Debt  plus
shareholders' equity of not greater than 0.60:1.00.

ARTICLE VI

EVENTS OF DEFAULT

SECTION  6.01.  Events  of  Default.  If any of  the  following  events
("Events of Default") shall occur and be continuing:

(a)  The  Borrower  shall  fail to pay  any  principal  of any
Advance when the same becomes due and  payable;  or the Borrower  shall
fail to pay any  interest on any  Advance or make any other  payment of
fees or other amounts  payable under this  Agreement or any Note within
three Business Days after the same becomes due and payable; or

(b) Any representation or warranty made by the Borrower herein
or by the Borrower (or any of its  officers)  in  connection  with this
Agreement  shall prove to have been  incorrect in any material  respect
when made; or

(c) (i) The  Borrower  shall fail to  perform  or observe  any
term, covenant or agreement  contained in Section 5.01(d),  (e) or (i),
5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any
other term,  covenant or agreement  contained in this  Agreement on its
part  to  be  performed  or  observed  if  such  failure  shall  remain
unremedied  for 30 days after  written  notice  thereof shall have been
given to the Borrower by the Agent or any Lender; or

(d) The Borrower or any of its Subsidiaries  shall fail to pay
any principal of or premium or interest on any Debt that is outstanding
in a principal or net amount of at least  $25,000,000  in the aggregate
(but  excluding  Debt  outstanding  hereunder)  of the Borrower or such
Subsidiary  (as the case may be), when the same becomes due and payable
(whether by  scheduled  maturity,  required  prepayment,  acceleration,
demand  or  otherwise),  and such  failure  shall  continue  after  the
applicable  grace  period,  if  any,  specified  in  the  agreement  or
instrument  relating  to such Debt;  or any other  event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument,  if the effect of such event
or condition is to accelerate,  or to permit the  acceleration  of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable,  or  required  to be  prepaid  or  redeemed  (other  than by a
regularly  scheduled required  prepayment or redemption),  purchased or
defeased, or an offer to prepay, redeem,  purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or

(e) The Borrower or any of its  Subsidiaries  shall  generally
not pay its debts as such debts  become  due, or shall admit in writing
its  inability  to pay its  debts  generally,  or shall  make a general
assignment  for the benefit of creditors;  or any  proceeding  shall be
instituted  by or  against  the  Borrower  or any  of its  Subsidiaries
seeking  to  adjudicate   it  a  bankrupt  or  insolvent,   or  seeking
liquidation,  winding  up,  reorganization,   arrangement,  adjustment,
protection,  relief,  or  composition  of it or its debts under any law
relating  to  bankruptcy,  insolvency  or  reorganization  or relief of
debtors, or seeking the entry of an order for 

relief or the  appointment of a receiver,  trustee,  custodian or other
similar  official  for it or for any  substantial  part of its property
and, in the case of any such proceeding  instituted against it (but not
instituted by it), either such proceeding  shall remain  undismissed or
unstayed for a period of 60 days, or any of the actions  sought in such
proceeding  (including,  without limitation,  the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian or
other  similar  official  for,  it or for any  substantial  part of its
property) shall occur; or the Borrower or any of its Subsidiaries shall
take any  corporate  action to  authorize  any of the actions set forth
above in this subsection (e); or

(f)  Judgments or orders for the payment of money in excess of
$25,000,000 in the aggregate shall be rendered  against the Borrower or
any  of  its  Subsidiaries   with  respect  to  which  (i)  enforcement
proceedings  shall  have  been  commenced  by any  creditor  upon  such
judgments or orders or (ii) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgments or orders, by
reason  of a  pending  appeal or  otherwise,  shall  not be in  effect;
provided,  however,  that any such  judgment  or order  shall not be an
Event of Default or included in the calculation of the aggregate amount
of judgments or orders under this Section 6.01(f) if and for so long as
(i) the  amount of such  judgment  or order is  covered  by a valid and
binding  policy of  insurance  between  the  defendant  and the insurer
covering payment thereof and (ii) such insurer, which shall be rated at
least "A" by A.M.  Best  Company,  has been  notified  of,  and has not
disputed the claim made for payment of, the amount of such  judgment or
order; or

(g) Any  non-monetary  judgment  or order  shall  be  rendered
against  the  Borrower  or  any  of  its  Subsidiaries  that  would  be
reasonably  expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order,  by reason of a pending appeal or otherwise,
shall not be in effect; or

(h) (i) Any  Person or two or more  Persons  acting in concert
(other  than  any  Related  Person)  shall  have  acquired   beneficial
ownership  (within  the  meaning  of Rule 13d-3 of the  Securities  and
Exchange  Commission  under  the  Securities  Exchange  Act  of  1934),
directly  or  indirectly,  of Voting  Stock of the  Borrower  (or other
securities convertible into such Voting Stock) representing 15% or more
of the combined  voting power of all Voting Stock of the  Borrower;  or
(ii) during any period of up to 24 consecutive months, commencing after
the date of this  Agreement,  individuals  who at the beginning of such
24-month  period were  directors  of the  Borrower  shall cease for any
reason  to  constitute  a  majority  of the board of  directors  of the
Borrower;  or (iii) any Person or two or more Persons acting in concert
(other  than any  Related  Person)  shall have  acquired by contract or
otherwise,  or shall have entered into a contract or arrangement  that,
upon consummation, will result in its or their acquisition of the power
to exercise,  directly or indirectly,  a controlling influence over the
management or policies of the Borrower; or

(i) The Borrower or any of its ERISA  Affiliates  shall incur,
or  shall  be  reasonably  likely  to  incur  liability  in  excess  of
$25,000,000  in  the  aggregate  as a  result  of one  or  more  of the
following:  (i) the occurrence of any ERISA Event;  (ii) the partial or
complete withdrawal of the Borrower or any of its ERISA Affiliates from
a Multiemployer  Plan; or (iii) the  reorganization or termination of a
Multiemployer Plan;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent,  of the  Required  Lenders,  by notice  to the  Borrower,  declare  the
obligation of each Lender to make Advances to be terminated,  whereupon the same
shall  forthwith  terminate,  and  (ii)  shall at the  request,  or may with the
consent,  of the  Required  Lenders,  by notice  to the  Borrower,  declare  the
Advances,  all  interest  thereon  and all  other  amounts  payable  under  this
Agreement to be forthwith  due and payable,  whereupon  the  Advances,  all such
interest  and all such amounts  shall  become and be forthwith  due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby  expressly  waived by the Borrower;  provided,  however,  that in the
event of an actual or deemed  entry of an order for relief  with  respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall  automatically be terminated and (B) the Advances,  all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

ARTICLE VII

THE AGENT

SECTION 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes  the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms  hereof,  together with such powers and  discretion as are  reasonably
incidental  thereto.  As to any  matters  not  expressly  provided  for by  this
Agreement  (including,  without  limitation,  enforcement  or  collection of the
Notes),  the Agent shall not be required to exercise any  discretion or take any
action,  but shall be  required  to act or to refrain  from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders,  and such  instructions  shall be binding upon all Lenders
and all  holders  of  Notes;  provided,  however,  that the  Agent  shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this  Agreement  or  applicable  law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

SECTION 7.02.  Agent's Reliance,  Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in  connection  with this  Agreement,
except  for its or their own gross  negligence  or willful  misconduct.  Without
limitation of the  generality  of the  foregoing,  the Agent:  (i) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent  receives  and  accepts an  Assumption  Agreement  entered  into by an
Assuming  Lender as provided in Section  2.18 or an  Assignment  and  Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section  8.07;  (ii) may consult  with legal  counsel  (including
counsel for the  Borrower),  independent  public  accountants  and other experts
selected  by it and shall not be liable  for any  action  taken or omitted to be
taken  in good  faith  by it in  accordance  with the  advice  of such  counsel,
accountants or experts;  (iii) makes no warranty or representation to any Lender
and shall not be  responsible  to any Lender for any  statements,  warranties or
representations  (whether  written or oral) made in or in  connection  with this
Agreement;  (iv)  shall not have any duty to  ascertain  or to inquire as to the
performance  or observance of any of the terms,  covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property  (including the
books and records) of the Borrower;  (v) shall not be  responsible to any Lender
for  the  due  execution,  legality,  validity,   enforceability,   genuineness,
sufficiency  or value of this  Agreement  or any other  instrument  or  document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this  Agreement  by acting upon any  notice,  consent,  certificate  or other
instrument or writing (which may be by telecopier,  telegram or telex)  believed
by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03. Citibank and Affiliates.  With respect to its Commitment,
the Advances made by it and the Note issued to it,  Citibank shall have the same
rights and powers under this  Agreement as any other Lender and may exercise the
same as though it were not the Agent;  and the term "Lender" or "Lenders" shall,
unless  otherwise  expressly  indicated,  include  Citibank  in  its  individual
capacity.  Citibank and its Affiliates may accept  deposits from, lend money to,
act as trustee under indentures of, accept investment  banking  engagements from
and generally  engage in any kind of business  with,  the  Borrower,  any of its
Subsidiaries  and any Person who may do business  with or own  securities of the
Borrower  or any such  Subsidiary,  all as if  Citibank  were not the  Agent and
without any duty to account therefor to the Lenders.

SECTION 7.04. 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  referred to in Section  4.01 and such other
documents  and  information  as it has deemed  appropriate,  made its own credit
analysis  and  decision  to  enter  into  this   Agreement.   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,  continue to make its own credit decisions in taking or
not taking  action under this  Agreement.  

SECTION 7.05. Indemnification. The Lenders agree to indemnify the Agent
(to the  extent  not  reimbursed  by the  Borrower),  ratably  according  to the
respective  principal amounts of the Revolving Credit Advances then owed to each
of them (or if no Revolving Credit Advances are at the time outstanding, ratably

according to the respective amounts of their Commitments),  from and against any
and  all  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits,  costs,  expenses  or  disbursements  of any  kind or  nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent in
any way  relating to or arising  out of this  Agreement  or any action  taken or
omitted  by the Agent  under  this  Agreement  (collectively,  the  "Indemnified
Costs"),  provided  that no  Lender  shall  be  liable  for any  portion  of the
Indemnified  Costs  resulting  from the  Agent's  gross  negligence  or  willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent  promptly  upon  demand  for its  ratable  share of any  out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in connection
with  the  preparation,   execution,  delivery,  administration,   modification,
amendment or enforcement  (whether through  negotiations,  legal  proceedings or
otherwise) of, or legal advice in respect of rights or  responsibilities  under,
this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the  Borrower.  In the case of any  investigation,  litigation  or proceeding
giving rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Agent, any Lender or a
third party.

SECTION  7.06.  Successor  Agent.  The Agent may  resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any  time  with or  without  cause  by the  Required  Lenders.  Upon any such
resignation or removal,  the Required  Lenders shall have the right to appoint a
successor Agent with the consent, not to be unreasonably withheld or delayed, of
the  Borrower  so long as no  Default  has  occurred  and is  continuing.  If no
successor Agent shall have been so appointed by the Required Lenders,  and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
of notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders and with the consent,  not
to be  unreasonably  withheld or delayed,  of the Borrower so long as no Default
has  occurred and is  continuing,  appoint a successor  Agent,  which shall be a
commercial  bank organized  under the laws of the United States of America or of
any  State  thereof  and  having a  combined  capital  and  surplus  of at least
$500,000,000.  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,  discretion,  privileges  and duties of the
retiring  Agent,  and the retiring Agent shall be discharged from its duties and
obligations  under this  Agreement.  After any retiring  Agent's  resignation or
removal  hereunder as Agent,  the  provisions of this Article VII shall inure to
its  benefit as to any  actions  taken or omitted to be taken by it while it was
Agent under this Agreement.

SECTION 7.07.  Sub-Agent.  The Sub-Agent has been designated under this
Agreement to carry out duties of the Agent.  The  Sub-Agent  shall be subject to
each of the obligations in this Agreement to be performed by the Sub-Agent,  and
each of the Borrower and the Lenders agrees that the Sub-Agent shall be entitled
to exercise  each of the rights and shall be entitled to each of the benefits of
the Agent under this Agreement as relate to the  performance of its  obligations
hereunder.

SECTION  7.08.  Other  Agents.  Each Lender  hereby  acknowledges  that
neither the syndication  agent nor any other Lender designated as any "Co-Agent"
on the  signature  pages hereof has any  liability  hereunder  other than in its
capacity as a Lender.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments,  Etc. No amendment or waiver of any provision
of this Agreement or the Revolving Credit Notes, nor consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required  Lenders,  and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given; provided,  however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders,  do any of the  following:  (a)
waive  any of the  conditions  specified  in  Section  3.01,  (b)  increase  the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the  Revolving  Credit  Advances or
any fees or other amounts payable hereunder, (d) postpone any date fixed for any
payment of principal  of, or interest on, the Revolving  Credit  Advances or any
fees or other  amounts  payable  hereunder,  (e)  change the  percentage  of the
Commitments or of the aggregate  unpaid principal amount of the Revolving Credit
Advances,  or 

the number of Lenders,  that shall be required for the Lenders or any of them to
take any action  hereunder or (f) amend this Section 8.01; and provided  further
that no amendment,  waiver or consent shall, unless in writing and signed by the
Agent in addition to the Lenders required above to take such action,  affect the
rights or duties of the Agent under this Agreement or any Note.

SECTION  8.02.  Notices,  Etc.  All  notices  and other  communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex  communication)  and  sent by  reputable  overnight  courier,  telecopied,
telegraphed,  telexed or delivered,  if to the Borrower, at its address at 10801
Corporate Drive, Pleasant Prairie,  Wisconsin 53158, Attention:  Donald S. Huml,
Senior Vice President and Chief  Financial  Officer,  and Jefferey F. Kostrzewa,
Director  Treasury  Operations  and  Finance,  with copies to 2810 80th  Street,
Kenosha, Wisconsin 53141-1410, Attention: Susan F. Marrinan, General Counsel; if
to any Initial Lender,  at its Domestic  Lending Office  specified  opposite its
name on  Schedule I hereto;  if to any other  Lender,  at its  Domestic  Lending
Office  specified in the  Assumption  Agreement or the Assignment and Acceptance
pursuant to which it became a Lender; and if to the Agent, at its address at Two
Penns  Way,  New  Castle,  Delaware  19720,  Attention:  Bank Loan  Syndications
Department;  or, as to the Borrower or the Agent, at such other address as shall
be designated by such party in a written  notice to the other parties and, as to
each other party,  at such other address as shall be designated by such party in
a  written  notice  to  the  Borrower  and  the  Agent.  All  such  notices  and
communications shall, when sent by overnight courier, telecopied, telegraphed or
telexed, be effective when deposited with the courier, telecopied,  delivered to
the telegraph  company or confirmed by telex  answerback,  respectively,  except
that notices and  communications to the Agent pursuant to Article II, III or VII
shall not be effective until received by the Agent. Delivery by telecopier of an
executed  counterpart  of any  amendment  or  waiver  of any  provision  of this
Agreement  or the Notes or of any Exhibit  hereto to be executed  and  delivered
hereunder  shall be  effective  as delivery of a manually  executed  counterpart
thereof.

SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
or the Agent to exercise,  and no delay in  exercising,  any right  hereunder or
under any Note  shall  operate  as a waiver  thereof;  nor  shall any  single or
partial  exercise  of any such  right  preclude  any other or  further  exercise
thereof or the exercise of any other right.  The  remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

SECTION  8.04.  Costs and Expenses.  (a) The Borrower  agrees to pay on
demand all costs and expenses of the Agent in connection  with the  preparation,
execution,  delivery,   administration,   modification  and  amendment  of  this
Agreement,  the  Notes  and  the  other  documents  to be  delivered  hereunder,
including,  without limitation,  (A) all due diligence,  syndication  (including
printing,   distribution   and   bank   meetings),   transportation,   computer,
duplication,  appraisal,  consultant,  and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to  advising  the  Agent  as to  its  rights  and  responsibilities  under  this
Agreement.  The Borrower  further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation,  reasonable
counsel fees and expenses),  in connection with the enforcement (whether through
negotiations,  legal proceedings or otherwise) of this Agreement,  the Notes and
the other documents to be delivered  hereunder,  including,  without limitation,
reasonable  fees and  expenses  of  counsel  for the  Agent  and each  Lender in
connection with the enforcement of rights under this Section 8.04(a).

(b) The Borrower  agrees to indemnify  and hold  harmless the Agent and
each  Lender  and  each of  their  Affiliates  and  their  officers,  directors,
employees,  agents and advisors (each, an "Indemnified  Party") from and against
any and all  claims,  damages,  losses,  liabilities  and  expenses  (including,
without  limitation,  reasonable  fees and  expenses of counsel)  incurred by or
asserted or awarded against any  Indemnified  Party, in each case arising out of
or in  connection  with or by  reason  of  (including,  without  limitation,  in
connection with any investigation,  litigation or proceeding or preparation of a
defense in  connection  therewith)  (i) the Notes,  this  Agreement,  any of the
transactions  contemplated  herein or the actual or proposed use of the proceeds
of the Advances or (ii) the actual or alleged presence of Hazardous Materials on
any  property of the Borrower or any of its  Subsidiaries,  except to the extent
(x)  such  claim,   damage,  loss,  liability  or  expense  resulted  from  such
Indemnified  Party's gross negligence or willful  misconduct or (ii) such claim,
damage, loss or expense arises from a litigation or proceeding among Lenders. In
the case of an  investigation,  litigation  or  other  proceeding  to which  the
indemnity in this Section  8.04(b)  applies,  such indemnity  shall be effective
whether or not such  investigation,  litigation  or proceeding is brought by the
Borrower,  its directors,  shareholders or creditors or an Indemnified  Party or
any other 

Person or any Indemnified  Party is otherwise a party thereto and whether or not
the transactions  contemplated hereby are consummated.  The Borrower also agrees
not to assert any claim for special, indirect, consequential or punitive damages
against  the  Agent,  any  Lender,  any of  their  Affiliates,  or any of  their
respective directors,  officers, employees,  attorneys and agents, on any theory
of liability, arising out of or otherwise relating to the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances.

(c) If any payment of principal of, or Conversion of, any  Eurocurrency
Rate Advance, LIBO Rate Advance or Local Rate Advance is made by the Borrower to
or for the account of a Lender other than on the last day of the Interest Period
for such  Advance,  as a result of a payment or  Conversion  pursuant to Section
2.08(d) or (e), 2.10 or 2.12, acceleration of the maturity of the Notes pursuant
to Section 6.01 or for any other reason,  or by an Eligible Assignee to a Lender
other  than on the last day of the  Interest  Period  for such  Advance  upon an
assignment of rights and  obligations  under this Agreement  pursuant to Section
8.07 as a result of a demand by the Borrower  pursuant to Section  8.07(a),  the
Borrower  shall,  upon demand by such Lender  (with a copy of such demand to the
Agent),  pay to the Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses,  costs or expenses that it may
reasonably incur as a result of such payment or Conversion,  including,  without
limitation,  any loss (including loss of anticipated  profits),  cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.

(d) Without  prejudice  to the  survival of any other  agreement of the
Borrower hereunder,  the agreements and obligations of the Borrower contained in
Sections  2.11,  2.14 and 8.04 shall  survive the payment in full of  principal,
interest and all other amounts payable hereunder and under the Notes.

SECTION 8.05. Right of Set-off.  Upon (i) the occurrence and during the
continuance  of any Event of Default  and (ii) the making of the  request or the
granting of the consent  specified  by Section  6.01 to  authorize  the Agent to
declare the Notes due and payable  pursuant to the  provisions  of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest  extent  permitted by law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by such  Lender or such
Affiliate (but not including any insurance premiums) to or for the credit or the
account of the Borrower  against any and all of the  obligations of the Borrower
now or hereafter existing under this Agreement and the Note held by such Lender,
whether or not such Lender  shall have made any demand  under this  Agreement or
such Note and although such  obligations  may be  unmatured.  Each Lender agrees
promptly to notify the Borrower after any such set-off and application, provided
that the  failure to give such  notice  shall not affect  the  validity  of such
set-off and application. The rights of each Lender and its Affiliates under this
Section  are in  addition  to other  rights  and  remedies  (including,  without
limitation,  other rights of set-off)  that such Lender and its  Affiliates  may
have.

SECTION 8.06.  Binding Effect.  This Agreement  shall become  effective
(other than  Sections  2.01 and 2.03,  which shall only  become  effective  upon
satisfaction  of the  conditions  precedent  set forth in Section  3.01) when it
shall have been  executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial  Lender that such Initial Lender has executed
it and  thereafter  shall be  binding  upon  and  inure  to the  benefit  of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations.  (a) Each Lender may and,
if demanded by the  Borrower (so long as no Default  shall have  occurred and be
continuing  and  following a demand by such Lender  pursuant to Section  2.11 or
2.14 or a notice  given by such Lender  pursuant to Section  2.12) upon at least
five Business  Days' notice to such Lender and the Agent,  will assign to one or
more Persons all or a portion of its rights and obligations under this Agreement
(including,  without  limitation,  all  or a  portion  of  its  Commitment,  the
Revolving  Credit  Advances  owing to it and the Revolving  Credit Note or Notes
held by it);  provided,  however,  that (i) each such  assignment  shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement  (other than any right to make  Competitive Bid Advances,  Competitive
Bid Advances owing to it and 

Competitive  Bid Notes),  (ii) except in the case of an  assignment  to a Person
that, immediately prior to such assignment, was a Lender or an assignment of all
of a Lender's  rights and obligations  under this  Agreement,  the amount of the
Commitment  of the  assigning  Lender  being  assigned  pursuant  to  each  such
assignment  (determined as of the date of the  Assignment  and  Acceptance  with
respect to such  assignment)  shall in no event be less than  $10,000,000  or an
integral  multiple of $1,000,000 in excess  thereof,  (iii) each such assignment
shall be to an Eligible Assignee,  (iv) each such assignment made as a result of
a demand by the Borrower  pursuant to this Section  8.07(a) shall be arranged by
the Borrower after consultation with the Agent and shall be either an assignment
of all  of the  rights  and  obligations  of the  assigning  Lender  under  this
Agreement  or an  assignment  of a portion of such rights and  obligations  made
concurrently  with  another  such  assignment  or other  such  assignments  that
together cover all of the rights and  obligations of the assigning  Lender under
this Agreement,  (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrower pursuant to this Section 8.07(a) unless and
until such  Lender  shall have  received  one or more  payments  from either the
Borrower or one or more Eligible Assignees in an aggregate amount at least equal
to the  aggregate  outstanding  principal  amount of the Advances  owing to such
Lender,  together with accrued  interest  thereon to the date of payment of such
principal  amount  and all other  amounts  payable  to such  Lender  under  this
Agreement,  and (vi) the  parties  to each such  assignment  shall  execute  and
deliver to the Agent,  for its  acceptance  and  recording in the  Register,  an
Assignment and  Acceptance,  together with any Revolving  Credit Note subject to
such  assignment  and a  processing  and  recordation  fee of $3,000.  Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance,  (x) the assignee  thereunder shall
be a party hereto and, to the extent that rights and obligations  hereunder have
been assigned to it pursuant to such Assignment and Acceptance,  have the rights
and  obligations of a Lender  hereunder and (y) the Lender  assignor  thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such  Assignment  and  Acceptance,  relinquish  its rights and be
released  from its  obligations  under this  Agreement  (and,  in the case of an
Assignment and Acceptance  covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

(b) By executing  and  delivering  an Assignment  and  Acceptance,  the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties  hereto as follows:  (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or  warranty  and  assumes no  responsibility  with  respect to any  statements,
warranties or  representations  made in or in connection  with this Agreement or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of this Agreement or any other instrument or document  furnished  pursuant
hereto;  (ii) such  assigning  Lender  makes no  representation  or warranty and
assumes  no  responsibility  with  respect  to the  financial  condition  of the
Borrower  or  the  performance  or  observance  by  the  Borrower  of any of its
obligations  under this Agreement or any other instrument or document  furnished
pursuant  hereto;  (iii) such  assignee  confirms that it has received a copy of
this Agreement,  together with copies of the financial statements referred to in
Section  4.01  and  such  other  documents  and  information  as it  has  deemed
appropriate  to make its own credit  analysis  and  decision  to enter into such
Assignment and Acceptance;  (iv) such assignee will,  independently  and without
reliance upon the Agent,  such assigning Lender or any other Lender and based on
such  documents  and  information  as it shall  deem  appropriate  at the  time,
continue to make its own credit  decisions in taking or not taking  action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee  appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and  discretion  under this  Agreement as
are  delegated to the Agent by the terms  hereof,  together with such powers and
discretion as are reasonably  incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations  that
by the terms of this Agreement are required to be performed by it as a Lender.

(c) Upon its receipt of an  Assignment  and  Acceptance  executed by an
assigning Lender and an assignee  representing that it is an Eligible  Assignee,
together with any Revolving Credit Note or Notes subject to such assignment, the
Agent shall,  if such  Assignment  and  Acceptance  has been completed and is in
substantially  the form of Exhibit C hereto,  (i)  accept  such  Assignment  and
Acceptance,  (ii) record the information  contained  therein in the Register and
(iii) give prompt notice thereof to the Borrower.

(d) The Agent shall maintain at its address referred to in Section 8.02
a copy of each Assumption Agreement and each Assignment and Acceptance delivered
to and  accepted  by it and a  register  for the

recordation of the names and addresses of the Lenders and the Commitment of, and
principal  amount of the  Advances  owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the  Register as a Lender  hereunder
for all  purposes  of this  Agreement.  The  Register  shall  be  available  for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

(e) Each Lender may sell  participations  to one or more banks or other
entities  (other than the Borrower or any of its  Affiliates)  in or to all or a
portion of its rights and obligations under this Agreement  (including,  without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender's obligations
under this  Agreement  (including,  without  limitation,  its  Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender  shall  remain the holder of any such Note for all purposes of
this  Agreement,  (iv) the  Borrower,  the  Agent and the  other  Lenders  shall
continue to deal solely and directly  with such Lender in  connection  with such
Lender's  rights and  obligations  under this  Agreement and (v) no  participant
under any such  participation  shall have any right to approve any  amendment or
waiver of any  provision of this  Agreement  or any Note,  or any consent to any
departure by the Borrower  therefrom,  except to the extent that such amendment,
waiver or consent  would reduce the  principal  of, or interest on, the Notes or
any fees or other amounts payable hereunder,  in each case to the extent subject
to such  participation,  or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation.  The Borrower agrees that
each  participant  shall be entitled to the benefits of Sections 2.11,  2.14 and
8.04(b) and (c) to the same extent as if it were a Lender and had  acquired  its
interest  by  assignment  pursuant  to  this  Section  8.07;  provided  that  no
participant shall be entitled to receive any greater amount pursuant to any such
section  than the  transferor  Lender  would  have been  entitled  to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such participation occurred.

(f) Any Lender may, in connection with any assignment or  participation
or proposed assignment or participation  pursuant to this Section 8.07, disclose
to the  assignee  or  participant  or  proposed  assignee  or  participant,  any
information relating to the Borrower furnished to such Lender by or on behalf of
the  Borrower;  provided  that,  prior to any such  disclosure,  the assignee or
participant  or proposed  assignee or  participant  shall agree to preserve  the
confidentiality  of  any  Confidential  Information  relating  to  the  Borrower
received by it from such Lender.

(g)  Notwithstanding  any other  provision set forth in this Agreement,
any Lender may at any time  create a security  interest in all or any portion of
its rights under this Agreement  (including,  without  limitation,  the Advances
owing to it and any Note or Notes  held by it) in favor of any  Federal  Reserve
Bank in  accordance  with  Regulation A of the Board of Governors of the Federal
Reserve System.

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender shall
disclose any Confidential Information to any other Person without the consent of
the  Borrower,  other than (a) to the Agent's or such  Lender's  Affiliates  and
their officers,  directors,  employees, agents and advisors and, as contemplated
by Section 8.07(f),  to actual or prospective  assignees and  participants,  and
then  only  on a  confidential  basis,  (b) as  required  by any  law,  rule  or
regulation or judicial  process,  and (c) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.

SECTION  8.09.  Governing  Law.  This  Agreement and the Notes shall be
governed by, and  construed  in  accordance  with,  the laws of the State of New
York.

SECTION 8.10. Execution in Counterparts. This Agreement may be executed
in any  number of  counterparts  and by  different  parties  hereto in  separate
counterparts,  each of which when so executed  shall be deemed to be an original
and all of which taken  together shall  constitute  one and the same  agreement.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopier shall be effective as delivery of a manually executed  counterpart of
this Agreement.

SECTION 8.11.  Judgment.  (a) If for the purposes of obtaining judgment
in any court it is  necessary  to convert a sum due  hereunder  in Dollars  into
another currency,  the parties hereto agree, to the fullest extent that they may
effectively  do so,  that the rate of  exchange  used  shall be that at which in
accordance with normal banking  procedures the Agent could purchase Dollars with
such  other  currency  at  Citibank's  principal  office in London at 11:00 A.M.
(London  time) on the Business  Day  preceding  that on which final  judgment is
given.

(b) If for the  purposes  of  obtaining  judgment  in any  court  it is
necessary to convert a sum due hereunder in a Foreign Currency into Dollars, the
parties agree to the fullest  extent that they may  effectively  do so, that the
rate of exchange used shall be that at which in accordance  with normal  banking
procedures  the Agent could  purchase  such  Foreign  Currency  with  Dollars at
Citibank's  principal  office  in  London  at 11:00  A.M.  (London  time) on the
Business Day preceding that on which final judgment is given.

(c) The obligation of the Borrower in respect of any sum due from it in
any  currency  (the  "Primary  Currency")  to any Lender or the Agent  hereunder
shall, notwithstanding any judgment in any other currency, be discharged only to
the extent  that on the  Business  Day  following  receipt by such Lender or the
Agent  (as the case  may be),  of any sum  adjudged  to be so due in such  other
currency,  such Lender or the Agent (as the case may be) may in accordance  with
normal banking  procedures  purchase the applicable  Primary  Currency with such
other currency; if the amount of the applicable Primary Currency so purchased is
less than  such sum due to such  Lender or the Agent (as the case may be) in the
applicable Primary Currency,  the Borrower agrees, as a separate  obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be)  against  such loss,  and if the amount of the  applicable  Primary
Currency so  purchased  exceeds  such sum due to any Lender or the Agent (as the
case may be) in the applicable  Primary  Currency,  such Lender or the Agent (as
the case may be) agrees to remit to the Borrower such excess.

SECTION 8.12. Jurisdiction,  Etc. (a) Each of the parties hereto hereby
irrevocably and  unconditionally  submits,  for itself and its property,  to the
nonexclusive  jurisdiction  of any New York State court or federal  court of the
United States of America  sitting in New York City, and any appellate court from
any  thereof,  in any action or  proceeding  arising  out of or relating to this
Agreement or the Notes, or for  recognition or enforcement of any judgment,  and
each of the parties hereto hereby  irrevocably and  unconditionally  agrees that
all  claims  in  respect  of any such  action  or  proceeding  may be heard  and
determined in any such New York State court or, to the extent  permitted by law,
in such federal court. The Borrower hereby  irrevocably  consents to the service
of process in any action or proceeding in such courts by the mailing  thereof by
any parties hereto by registered or certified  mail,  postage  prepaid,  with an
additional notice by telecopier or by reputable  overnight delivery service,  to
the  Borrower at its address  specified  pursuant to Section  8.02.  Each of the
parties  hereto  agrees that a final  judgment in any such action or  proceeding
shall be conclusive  and may be enforced in other  jurisdictions  by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect  any  right  that any  party may  otherwise  have to bring any  action or
proceeding  relating  to  this  Agreement  or the  Notes  in the  courts  of any
jurisdiction.

(b) Each of the parties hereto irrevocably and unconditionally  waives,
to the fullest  extent it may legally and  effectively do so, any objection that
it may now or  hereafter  have to the  laying  of venue of any  suit,  action or
proceeding  arising out of or relating to this Agreement or the Notes in any New
York State or federal  court.  Each of the  parties  hereto  hereby  irrevocably
waives,  to the fullest extent  permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

SECTION  8.13.  Substitution  of  Currency.  If a change in any Foreign
Currency  occurs  pursuant to any  applicable  law,  rule or  regulation  of any
governmental,  monetary or multi-national  authority, this Agreement (including,
without limitation,  the definitions of Eurocurrency Rate and LIBO Rate) will be
amended  to  the  extent  determined  by the  Agent  (acting  reasonably  and in
consultation  with the  Borrower)  to be  necessary  to  reflect  the  change in
currency and to put the Lenders and the Borrower in the same position, so far as
possible, that they would have been in if no change in such Foreign Currency had
occurred.  No such change in currency  nor any economic  consequences  resulting
therefrom  shall (a) give rise to any right to terminate  prematurely,  contest,
cancel,  rescind,  alter, modify or renegotiate the provisions of this Agreement
or (b) discharge,  excuse or otherwise affect the performance of any obligations
of any of the Borrower or the Lenders under this Agreement.

SECTION 8.15. Waiver of Jury Trial. Each of the Borrower, the Agent and
the Lenders hereby  irrevocably waives all right to trial by jury in any action,
proceeding  or  counterclaim  (whether  based on  contract,  tort or  otherwise)
arising out of or relating to this  Agreement or the Notes or the actions of the
Agent  or  any  Lender  in  the  negotiation,  administration,   performance  or
enforcement thereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized,  as of the date
first above written.

SNAP-ON INCORPORATED

By /s/ Don Huml
Title:  Senior Vice President-Finance
and Chief Financial Officer

CITIBANK, N.A.,
as Agent

By /s/ Robert D. Wetrus
Title: Vice President

Initial Lenders
Commitment                    Administrative Agent

$100,000,000                            CITIBANK, N.A.

By /s/ Robert D. Wetrus
Title: Vice President

Syndication Agent

$100,000,000                            THE FIRST NATIONAL BANK OF CHICAGO

By /s/ Deborah Stevens
Title: Senior Vice President

Co-Agents

$50,000,000                             BANK OF AMERICA, N.A.

By /s/ M.H. Claggett
Title: Vice President

$50,000,000                             MORGAN GUARANTY BANK AND TRUST COMPANY
OF NEW YORK

By /s/ So Vanna Day
Title: Vice President

$50,000,000                             SVENSKA HANDELSBANKEN AB (publ)

By /s/ Geoffrey Walker
Title: Senior Vice President

By /s/ Henrik Jensen
Title: Vice President

Lenders

$33,333,333                             BARCLAYS BANK PLC

By  /s/ Marlene Wechselblatt
Title: Vice President

$10,000,000                             FIRSTAR BANK MILWAUKEE, N.A.

By /s/ R. Bruce Anthony
Title: Assistant Vice President

$6,666,667                              CIBC INC.

By  /s/ Dominic Sorresso
Title: Executive Director

$400,000,000 Total of the Commitments

SCHEDULE I
SNAP-ON INCORPORATED
364-DAY CREDIT AGREEMENT
APPLICABLE LENDING OFFICES

Name of Initial Lender  Domestic Lending Office   Eurocurrency Lending Office
----------------------- ------------------------- ------------------------------
Bank of America, N.A.   1850 Gateway Blvd.        1850 Gateway Blvd.
Concord, CA 94520         Concord, CA 94520
Attn: Debbie Conchongco   Attn: Debbie Conchongco
T: 925 675-8913           T: 925 675-8913
F: 925 675-7539           F: 925 675-7539
----------------------- ------------------------- ------------------------------
Barclays Bank PLC       222 Broadway              222 Broadway
New York, NY 10038        New York, NY 10038
Attn: C. Tenn             Attn: C. Tenn
T: 212 412-3728           T: 212 412-3728
F: 212 412-5308           F: 212 412-5308
----------------------- ------------------------- ------------------------------
CIBC Inc.               Two Paces West            Two Paces West
2727 Paces Ferry Road,    2727 Paces Ferry Road,
Suite 1200               Suite 1200
Atlanta, GA 30339         Atlanta, GA 30339
Attn: Charlene Harris     Attn: Charlene Harris
T: 770 319-4881           T: 770 319-4881
F: 770 319-4950           F: 770 319-4950
----------------------- ------------------------- ------------------------------
Citibank, N.A.          Two Penns Way             Two Penns Way
New Castle, DE 19720      New Castle, DE 19720
Attn: Maureen Prytula     Attn: Maureen Prytula
T: 302 894-6089           T: 302 894-6089
F: 302 894-6120           F: 302 894-6120
----------------------- ------------------------- ------------------------------
Firstar Bank            777 E. Wisconsin Ave.     777 E. Wisconsin Ave.
Milwaukee, N.A.        Milwaukee, WI 53202       Milwaukee, WI 53202
Attn: Bruce Anthony       Attn: Bruce Anthony
T: 414 765-4724           T: 414 765-4724
F: 414 765-5367           F: 414 765-5367
----------------------- ------------------------- ------------------------------
The First National      One First National Plaza, One First National Plaza,
Bank of Chicago       Suite 0088                Suite 0088
Chicago, IL 60670         Chicago, IL 60670
Attn: Edna Guerra         Attn: Edna Guerra
T: 312 732-9609           T: 312 732-9609
F: 312 732-2715           F: 312 732-2715
----------------------- ------------------------- ------------------------------
Morgan Guaranty Bank    60 Wall Street            c/o J.P. Morgan Services Inc.
and Trust Company      New York, NY 100260-0060  Euro-Loan Servicing Unit
of New York            Attn:                     500 Stanton Christiana Road
T:                        Newark DE 19713
F;                        Attn:
T;
F; 302 634-1094
----------------------- ------------------------- ------------------------------
Svenska Handelsbanken   153 East 53rd Street      153 East 53rd Street
AB (publ)              New York, NY 10022        New York, NY 10022
Attn: Henrik Jenson       Attn: Henrik Jenson
T: 212 326-5125           T: 212 326-5125
F: 212 326-5151           F: 212 326-5151
----------------------- ------------------------- ------------------------------

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 199_

FOR VALUE RECEIVED, the undersigned,  SNAP-ON INCORPORATED,  a Delaware
corporation  (the   "Borrower"),   HEREBY  PROMISES  TO  PAY  to  the  order  of
_________________________  (the  "Lender")  for the  account  of its  Applicable
Lending Office on the later of the Termination  Date and the Maturity Date (each
as defined in the  Credit  Agreement  referred  to below) the  principal  sum of
U.S.$[amount  of the Lender's  Commitment in figures] or, if less, the aggregate
principal  amount of the  Revolving  Credit  Advances  made by the Lender to the
Borrower  pursuant to the 364-Day Credit  Agreement  dated as of August 23, 1999
among the  Borrower,  the Lender and  certain  other  lenders  parties  thereto,
Salomon Smith Barney Inc.,  as Lead Arranger and Book Manager,  Banc One Capital
Markets Inc., as Co-Arranger, The First National Bank of Chicago, as Syndication
Agent,  and  Citibank,  N.A. as Agent for the Lender and such other  lenders (as
amended or modified from time to time, the "Credit Agreement"; the terms defined
therein being used herein as therein defined) outstanding on such date.

The Borrower promises to pay interest on the unpaid principal amount of
each Revolving  Credit  Advance from the date of such  Revolving  Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.

Both principal and interest in respect of each Revolving Credit Advance
(i) in Dollars  are payable in lawful  money of the United  States of America to
the Agent at its  account  maintained  at 399 Park  Avenue,  New York,  New York
10043, in same day funds and (ii) in any Committed  Currency are payable in such
currency at the  applicable  Payment  Office in same day funds.  Each  Revolving
Credit  Advance  owing to the  Lender by the  Borrower  pursuant  to the  Credit
Agreement,  and all  payments  made on account of  principal  thereof,  shall be
recorded by the Lender and, prior to any transfer  hereof,  endorsed on the grid
attached hereto which is part of this Promissory Note.

This Promissory  Note is one of the Revolving  Credit Notes referred to
in,  and is  entitled  to the  benefits  of, the  Credit  Agreement.  The Credit
Agreement,  among other things,  (i) provides for the making of Revolving Credit
Advances by the Lender to the Borrower from time to time in an aggregate  amount
not to  exceed  at any time  outstanding  the U.S.  dollar  amount  first  above
mentioned,  the indebtedness of the Borrower  resulting from each such Revolving
Credit Advance being evidenced by this Promissory Note, (ii) contains provisions
for determining the Dollar  Equivalent of Revolving Credit Advances  denominated
in Committed  Currencies and (iii) contains  provisions for  acceleration of the
maturity  hereof  upon the  happening  of  certain  stated  events  and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

SNAP-ON INCORPORATED

By     
Title:

ADVANCES AND PAYMENTS OF PRINCIPAL

Amount of
Amount of      Principal Paid     Unpaid Principal    Notation
Date         Advance         or Prepaid           Balance        Made By
----         -------         ----------           -------        -------

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

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

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

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

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

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

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

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

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

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

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

EXHIBIT A-2 - FORM OF
COMPETITIVE BID
PROMISSORY NOTE

U.S.$_______________                               Dated:  _______________, 199_

FOR VALUE RECEIVED, the undersigned,  SNAP-ON INCORPORATED,  a Delaware
corporation  (the   "Borrower"),   HEREBY  PROMISES  TO  PAY  to  the  order  of
_________________________  (the  "Lender")  for the  account  of its  Applicable
Lending  Office (as defined in the 364-Day Credit  Agreement  dated as of August
23,  1999 among the  Borrower,  the Lender and  certain  other  lenders  parties
thereto,  Salomon Smith Barney Inc., as Lead Arranger and Book Manager, Banc One
Capital  Markets Inc., as  Co-Arranger,  The First National Bank of Chicago,  as
Syndication  Agent,  and Citibank,  N.A., as Agent for the Lender and such other
lenders (as amended or modified from time to time, the "Credit  Agreement";  the
terms   defined   therein   being   used   herein  as  therein   defined)),   on
_______________,  199_, the principal  amount of  [U.S.$_______________]  [for a
Competitive Bid Advance in a Foreign Currency,  list currency and amount of such
Advance].

The Borrower  promises to pay interest on the unpaid  principal  amount
hereof from the date hereof until such principal  amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:

Interest Rate:  _____% per annum  (calculated on the basis of a year of
_____ days for the actual number of days elapsed).

Both   principal   and   interest   are  payable  in  lawful  money  of
________________  to  Citibank,  as agent,  for the account of the Lender at the
office of  _________________________,  at  _________________________ in same day
funds.

This  Promissory  Note is one of the  Competitive Bid Notes referred to
in,  and is  entitled  to the  benefits  of, the  Credit  Agreement.  The Credit
Agreement,  among other things,  contains  provisions  for  acceleration  of the
maturity hereof upon the happening of certain stated events.

The Borrower hereby waives presentment,  demand,  protest and notice of
any kind.  No  failure  to  exercise,  and no delay in  exercising,  any  rights
hereunder  on the part of the holder  hereof  shall  operate as a waiver of such
rights.

This  Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York.

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT B-1 - FORM OF NOTICE OF
REVOLVING CREDIT BORROWING

Citibank, N.A., as Agent 
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720
[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The  undersigned,  SNAP-ON  INCORPORATED,  refers to the 364-Day Credit
Agreement,  dated as of August 23,  1999 (as  amended or  modified  from time to
time,  the "Credit  Agreement",  the terms defined  therein being used herein as
therein  defined),  among the  undersigned,  certain  Lenders  parties  thereto,
Salomon Smith Barney Inc.,  as Lead Arranger and Book Manager,  Banc One Capital
Markets Inc., as Co-Arranger, The First National Bank of Chicago, as Syndication
Agent,  and  Citibank,  N.A.,  as Agent for said  Lenders,  and hereby gives you
notice,  irrevocably,  pursuant to Section 2.02 of the Credit Agreement that the
undersigned  hereby  requests  a  Revolving  Credit  Borrowing  under the Credit
Agreement,  and in that connection sets forth below the information  relating to
such Revolving Credit Borrowing (the "Proposed  Revolving Credit  Borrowing") as
required by Section 2.02(a) of the Credit Agreement:

(i)  The  Business  Day  of  the  Proposed   Revolving  Credit
Borrowing is _______________, 199_.

(ii) The Type of Advances  comprising  the Proposed  Revolving
Credit Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].

(iii) The aggregate  amount of the Proposed  Revolving  Credit
Borrowing is [$_______________]  [for a Revolving Credit Borrowing in a
Committed  Currency,  list  currency  and  amount of  Revolving  Credit
Borrowing].

[(iv) The initial Interest Period for each  Eurocurrency  Rate
Advance  made as part of the  Proposed  Revolving  Credit  Borrowing is
_____ month[s].]

The undersigned hereby certifies that the following statements are true
on the  date  hereof,  and will be true on the  date of the  Proposed  Revolving
Credit Borrowing:

(A) the  representations  and warranties  contained in Section
4.01 of the Credit Agreement (except the  representations  set forth in
the last  sentence of subsection  (e) thereof and in subsection  (f)(i)
thereof)  are correct,  before and after giving  effect to the Proposed
Revolving  Credit  Borrowing  and to the  application  of the  proceeds
therefrom, as though made on and as of such date; and

(B) no event has occurred and is  continuing,  or would result
from such Proposed  Revolving  Credit Borrowing or from the application
of the proceeds therefrom, that constitutes a Default.

Very truly yours,

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT B-2 - FORM OF NOTICE OF
COMPETITIVE BID BORROWING

Citibank, N.A., as Agent
for the Lenders parties
to the Credit Agreement
referred to below
Two Penns Way
New Castle, Delaware 19720
[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The  undersigned,  SNAP-ON  INCORPORATED,  refers to the 364-Day Credit
Agreement,  dated as of August 23,  1999 (as  amended or  modified  from time to
time,  the "Credit  Agreement",  the terms defined  therein being used herein as
therein  defined),  among the  undersigned,  certain  Lenders  parties  thereto,
Salomon Smith Barney Inc.,  as Lead Arranger and Book Manager,  Banc One Capital
Markets Inc., as Co-Arranger, The First National Bank of Chicago, as Syndication
Agent,  and  Citibank,  N.A.,  as Agent for said  Lenders,  and hereby gives you
notice,  irrevocably,  pursuant to Section 2.03 of the Credit Agreement that the
undersigned  hereby  requests  a  Competitive  Bid  Borrowing  under the  Credit
Agreement, and in that connection sets forth the terms on which such Competitive
Bid Borrowing  (the  "Proposed  Competitive  Bid  Borrowing") is requested to be
made:

(A)  Date of Competitive Bid Borrowing     ________________________
(B)  Amount of Competitive Bid Borrowing   ________________________
(C)  [Maturity Date] [Interest Period]     ________________________
(D)  Interest Rate Basis                   ________________________
(E)  Day Count Convention                  ________________________
(F)  Interest Payment Date(s)              ________________________
(G)  Currency                              ________________________
(H)  Borrower's Account Location           ________________________
[(I) Prepayments Permitted                 ________________________]
(J)  ___________________                   ________________________

The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Competitive Bid
Borrowing:

(a) the  representations  and warranties  contained in Section
4.01 are  correct,  before  and after  giving  effect  to the  Proposed
Competitive  Bid  Borrowing  and to  the  application  of the  proceeds
therefrom, as though made on and as of such date;

(b) no event has occurred and is  continuing,  or would result
from the Proposed  Competitive Bid Borrowing or from the application of
the proceeds therefrom, that constitutes a Default;

(c) no event  has  occurred  and no  circumstance  exists as a
result of which the  information  concerning the  undersigned  that has
been  provided  to the Agent  and each  Lender  by the  undersigned  in
connection with the Credit  Agreement would include an untrue statement
of a  material  fact or omit to  state  any  material  fact or any fact
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading; and

(d) the  aggregate  amount  of the  Proposed  Competitive  Bid
Borrowing,  if accepted by the Borrower, and all other Borrowings to be
made on the same day under the Credit Agreement is within the aggregate
amount of the unused Commitments of the Lenders.

Very truly yours,

SNAP-ON INCORPORATED

By     
Title:

EXHIBIT C - FORM OF
ASSIGNMENT AND ACCEPTANCE

Reference is made to the 364-Day  Credit  Agreement  dated as of August
23,  1999 (as  amended or modified  from time to time,  the "Credit  Agreement")
among Snap-On Incorporated, a Delaware corporation (the "Borrower"), the Lenders
(as  defined  in the Credit  Agreement),  Salomon  Smith  Barney  Inc.,  as Lead
Arranger and Book Manager,  Banc One Capital Markets Inc., as  Co-Arranger,  The
First National Bank of Chicago,  as Syndication  Agent,  and Citibank,  N.A., as
agent for the Lenders (the "Agent").  Terms defined in the Credit  Agreement are
used herein with the same meaning.

The  "Assignor"  and the  "Assignee"  referred  to on Schedule I hereto
agree as follows:

1. The  Assignor  hereby  sells and  assigns to the  Assignee,  and the
Assignee hereby  purchases and assumes from the Assignor,  an interest in and to
the Assignor's  rights and obligations under the Credit Agreement as of the date
hereof (other than in respect of Competitive  Bid Advances and  Competitive  Bid
Notes) equal to the  percentage  interest  specified on Schedule 1 hereto of all
outstanding  rights and obligations  under the Credit  Agreement  (other than in
respect of Competitive  Bid Advances and  Competitive  Bid Notes).  After giving
effect to such sale and assignment,  the Assignee's Commitment and the amount of
the  Revolving  Credit  Advances  owing to the Assignee  will be as set forth on
Schedule 1 hereto.

2. The Assignor (i)  represents  and warrants  that it is the legal and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability,  genuineness,  sufficiency
or value of the Credit Agreement or any other  instrument or document  furnished
pursuant  thereto;  (iii) makes no  representation  or  warranty  and assumes no
responsibility  with respect to the  financial  condition of the Borrower or the
performance  or observance by the Borrower of any of its  obligations  under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Credit Note, if any held by the Assignor.

3. The Assignee (i) confirms  that it has received a copy of the Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 4.01 thereof and such other  documents and  information as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance  upon the Agent,  the  Assignor  or any other  Lender and based on such
documents and information as it shall deem appropriate at the time,  continue to
make its own credit  decisions  in taking or not taking  action under the Credit
Agreement;  (iii) represents to the Assignor, the Agent and the Borrower that it
is an Eligible  Assignee;  (iv) appoints and  authorizes  the Agent to take such
action as agent on its behalf and to exercise such powers and  discretion  under
the  Credit  Agreement  as are  delegated  to the  Agent by the  terms  thereof,
together with such powers and discretion as are reasonably  incidental  thereto;
(v) agrees  that it will  perform  in  accordance  with  their  terms all of the
obligations  that by the  terms  of the  Credit  Agreement  are  required  to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
forms required under Section 2.14 of the Credit Agreement.

4. Following the execution of this Assignment and  Acceptance,  it will
be  delivered  to the Agent for  acceptance  and  recording  by the  Agent.  The
effective date for this Assignment and Acceptance  (the "Effective  Date") shall
be the date of acceptance  hereof by the Agent,  unless  otherwise  specified on
Schedule 1 hereto.

5. Upon such acceptance and recording by the Agent, as of the Effective
Date,  (i) the  Assignee  shall be a party to the Credit  Agreement  and, to the
extent  provided  in  this  Assignment  and  Acceptance,  have  the  rights  and
obligations of a Lender  thereunder and (ii) the Assignor  shall,  to the extent
provided  in this  Assignment  and  Acceptance,  relinquish  its  rights  and be
released from its obligations under the Credit Agreement.

6. Upon such acceptance and recording by the Agent,  from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the  Revolving  Credit  Notes  in  respect  of  the  interest   assigned  hereby
(including, without limitation, all payments of principal, interest and facility
fees with respect thereto) to the Assignee. The Assignor and Assignee shall make
all  appropriate  adjustments  in payments  under the Credit  Agreement  and the
Revolving  Credit Notes for periods prior to the Effective Date directly between
themselves.

7. This  Assignment and Acceptance  shall be governed by, and construed
in accordance with, the laws of the State of New York.

8. This  Assignment  and  Acceptance  may be  executed in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier  shall
be effective as delivery of a manually  executed  counterpart of this Assignment
and Acceptance.

IN WITNESS WHEREOF,  the Assignor and the Assignee have caused Schedule
1 to this  Assignment and Acceptance to be executed by their officers  thereunto
duly authorized as of the date specified thereon.

Schedule 1
to
Assignment and Acceptance

Percentage interest assigned:                                           _____%

Assignee's Commitment:                                              $__________

Aggregate outstanding principal amount of Revolving
Credit Advances assigned:                                          $__________

Principal amount of Revolving Credit Note payable to Assignee:      $__________

Principal amount of Revolving Credit Note payable to Assignor:      $__________

Effective Date 1:     _______________, 199_

[NAME OF ASSIGNOR], as Assignor

By     
Title:

Dated:  _______________, 199_

[NAME OF ASSIGNEE], as Assignee

By     
Title:

Dated:  _______________, 199_

Domestic Lending Office:
[Address]

Eurocurrency Lending Office:
[Address]

------------
1  This date should be no earlier than five Business Days after the delivery of
this Assignment and Acceptance to the Agent.

Accepted [and Approved] 2 this
__________ day of _______________, 199_

CITIBANK, N.A., as Agent

By                           
Title:

[Approved this __________ day
of _______________, 199_

SNAP-ON INCORPORATED

By                           ] 3
Title:

-------------
2  Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".
3  Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".

EXHIBIT D - FORM OF
OPINION OF COUNSEL
FOR THE BORROWER

EXECUTION COPY WITH
EXHIBITS D-1 AND D-2
AND SHEARMAN & STERLING
OPINION AS SEPARATELY EXECUTED

U.S. $400,000,000

364-DAY CREDIT AGREEMENT

Dated as of August 23, 1999

Among

SNAP-ON INCORPORATED

as Borrower

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

SALOMON SMITH BARNEY INC.

as Lead Arranger and Book Manager

and

BANC ONE CAPITAL MARKETS INC.

as Co-Arranger

and

CITIBANK, N.A.

as Administrative Agent

and

THE FIRST NATIONAL BANK OF CHICAGO

as Syndication Agent

XXX.XXXXXX.XA
-1-

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01.  Certain Defined Terms        1
SECTION 1.02.  Computation of Time Periods 11
SECTION 1.03.  Accounting Terms     11

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01.  The Revolving Credit Advances       11
SECTION 2.02.  Making the Revolving Credit Advances      11
SECTION 2.03.  The Competitive Bid Advances13
SECTION 2.04.  Fees  16
SECTION 2.05.  Termination or Reduction of the Commitments      17
SECTION 2.06.  Repayment of Revolving Credit Advances    17
SECTION 2.07.  Interest on Revolving Credit Advances     17
SECTION 2.08.  Interest Rate Determination 18
SECTION 2.09.  Optional Conversion of Revolving Credit Advances 19
SECTION 2.10.  Prepayments of Revolving Credit Advances  20
SECTION 2.11.  Increased Costs      20
SECTION 2.12.  Illegality   21
SECTION 2.13.  Payments and Computations   21
SECTION 2.14.  Taxes 22
SECTION 2.15.  Sharing of Payments, Etc.   24
SECTION 2.16.  Evidence of Debt     24
SECTION 2.17.  Use of Proceeds      25
SECTION 2.18.  Extension of Termination Date      25

ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01.  Conditions Precedent to Effectiveness of Sections
2.01 and 2.03  27
SECTION 3.02.  Conditions Precedent to Sandvik Funding Date     28
SECTION 3.04.  Conditions Precedent to Each Competitive Bid
Borrowing   29
SECTION 3.05.  Determinations Under Section 3.01  30

ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01.  Representations and Warranties of the Borrower    30

ARTICLE V COVENANTS OF THE BORROWER
SECTION 5.01.  Affirmative Covenants        31
SECTION 5.02.  Negative Covenants   33
SECTION 5.03.  Financial Covenant   34

ARTICLE VI EVENTS OF DEFAULT
SECTION 6.01.  Events of Default    35

ARTICLE VII THE AGENT

SECTION 7.01.  Authorization and Action    37
SECTION 7.02.  Agent's Reliance, Etc.      37
SECTION 7.03.  Citibank and Affiliates     37
SECTION 7.04.  Lender Credit Decision      37
SECTION 7.05.  Indemnification      38
SECTION 7.06.  Successor Agent      38

SECTION 7.07.  Sub-Agent    38
SECTION 7.08.  Other Agents.38

ARTICLE VIII MISCELLANEOUS
SECTION 8.01.  Amendments, Etc.     38
SECTION 8.02.  Notices, Etc.39
SECTION 8.03.  No Waiver; Remedies  39
SECTION 8.04.  Costs and Expenses   39
SECTION 8.05.  Right of Set-off     40
SECTION 8.06.  Binding Effect       41
SECTION 8.07.  Assignments and Participations     41
SECTION 8.08.  Confidentiality      43
SECTION 8.09.  Governing Law43
SECTION 8.10.  Execution in Counterparts   43
SECTION 8.11.  Judgment     43
SECTION 8.12.  Jurisdiction, Etc.   44
SECTION 8.13.  Substitution of Currency    44
SECTION 8.15.  Waiver of Jury Trial 44

Schedules

Schedule I - List of Applicable Lending Offices

Schedule 3.01(b) - Disclosed Litigation

Schedule 5.02(a) - Existing Liens

Exhibits

Exhibit A-1   -   Form of Revolving Credit Note

Exhibit A-2   -   Form of Competitive Bid Note

Exhibit B-1   -   Form of Notice of Revolving Credit Borrowing

Exhibit B-2   -   Form of Notice of Competitive Bid Borrowing

Exhibit C     -   Form of Assignment and Acceptance

Exhibit D-1   -   Form of Opinion of Counsel for the Borrower

Exhibit D-2   -   Form of Opinion of Counsel for the Borrower

<ARTICLE>                     5
<LEGEND>
THE  SCHEDULE  CONTAINS  SUMMARY  FINANCIAL   INFORMATION   EXTRACTED  FROM  THE
CONSOLIDATED  FINANCIAL  STATEMENTS  OF SNAP-ON  INCORPORATED  AS OF AND FOR THE
THIRTY-NINE  WEEKS ENDED  OCTOBER 2, 1999 AND IS  QUALIFIED  IN ITS  ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>                                   1,000

<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                              JAN-01-2000
<PERIOD-START>                                 JAN-03-1999
<PERIOD-END>                                   OCT-02-1999
<CASH>                                         42,688
<SECURITIES>                                   0
<RECEIVABLES>                                  592,254
<ALLOWANCES>                                   23,594
<INVENTORY>                                    498,070
<CURRENT-ASSETS>                               1,265,954
<PP                                         754,351
<DEPRECIATION>                                 (403,349)
<TOTAL-ASSETS>                                 2,206,946
<CURRENT-LIABILITIES>                          504,282
<BONDS>                                        669,715
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    0
<COMMON>                                       66,718
<OTHER-SE>                                     744,067
<TOTAL-LIABILITY-AND-EQUITY>                   2,206,946
<SALES>                                        1,378,895
<TOTAL-REVENUES>                               1,378,895
<CGS>                                          716,310
<TOTAL-COSTS>                                  716,310
<OTHER-EXPENSES>                               527,215
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             15,360
<INCOME-PRETAX>                                155,444
<INCOME-TAX>                                   55,654
<INCOME-CONTINUING>                            99,790
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   99,790
<EPS-BASIC>                                  1.71
<EPS-DILUTED>                                  1.69