UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

      (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                    For the fiscal year ended January 3, 2003
                                 ---------------

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
           For the transition period from ___________to______________
                         Commission File Number: 0-18645

                           TRIMBLE NAVIGATION LIMITED
             (Exact name of Registrant as specified in its charter)

                                   California
                                   ----------
         (State or other jurisdiction of incorporation or organization)

                                   94-2802192
                                   ----------
                      (I.R.S. Employer Identification No.)

                   645 North Mary Avenue, Sunnyvale, CA 94085
                   ------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (408) 481-8000

        Securities registered pursuant to Section 12(b) of the Act: NONE

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

                                  Common Stock
                         Preferred Share Purchase Rights
                                (Title of Class)

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

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

     The aggregate  market value of the Common Stock held by  non-affiliates  of
the  registrant,  based upon the last sale price of the Common Stock reported on
the Nasdaq National Market on June 28, 2002 was approximately $455 million.

     There were 29,350,366 shares of the registrant's Common Stock issued and
outstanding as of March 5, 2003.



<PAGE>



                       DOCUMENTS INCORPORATED BY REFERENCE

     Certain parts of Trimble  Navigation  Limited's Proxy Statement relating to
the  annual  meeting  of  stockholders  to be held on May 20,  2003 (the  "Proxy
Statement") are incorporated by reference into Part III of this Annual Report on
Form 10-K.






<PAGE>


                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K contains forward-looking  statements within
the meaning of Section 27A of the  Securities Act of 1933 and Section 21E of the
Securities  Exchange Act of 1934, which are subject to the "safe harbor" created
by those sections.  The forward-looking  statements  regarding future events and
the future results of Trimble Navigation Limited ("Trimble" or " The Company" or
"We" or "Our" or "Us") are based on current expectations,  estimates, forecasts,
and projections  about the industries in which Trimble  operates and the beliefs
and  assumptions  of the  management  of Trimble.  Discussions  containing  such
forward-looking statements may be found in "Management's Discussion and Analysis
of   Financial   Condition   and   Results  of   Operations."   In  some  cases,
forward-looking  statements  can be  identified  by  terminology  such as "may,"
"will,"  "should,"  "could,"  "predicts,"  "potential,"  "continue,"  "expects,"
"anticipates,"   "future,"  "intends,"  "plans,"  "believes,"  "estimates,"  and
similar expressions.  These forward-looking statements involve certain risks and
uncertainties that could cause actual results, levels of activity,  performance,
achievements  and  events  to  differ  materially  from  those  implied  by such
forward-looking  statements,  but are not  limited  to those  discussed  in this
Report under the section  entitled  "Other Risk Factors" and  elsewhere,  and in
other reports Trimble files with the Securities and Exchange Commission ("SEC"),
specifically  the most recent reports on Form 8-K and Form 10-Q,  each as it may
be amended from time to time.  These  forward-looking  statements are made as of
the date of this  Annual  Report on Form 10-K.  We  reserve  the right to update
these  statements for any reason,  including the occurrence of material  events.
The risks and  uncertainties  under the  caption  "Management's  Discussion  and
Analysis  of  Financial   Condition   and  Results  of   Operations--Risks   and
Uncertainties"  contained  herein,  among other things,  should be considered in
evaluating our prospects and future financial performance.  We have attempted to
identify  forward-looking  statements  in this report by placing an asterisk (*)
before paragraphs containing such material.




<PAGE>




                           TRIMBLE NAVIGATION LIMITED

                          2002 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS


         PART I

Item 1   Business..............................................................5

Item 2   Properties...........................................................17

Item 3   Legal Proceedings....................................................17

Item 4   Submission of Matters to a Vote of Security Holders..................18


         PART II

Item 5   Market for the Registrant's Common Equity and Related
         Stockholder Matters..................................................19

Item 6   Selected Financial Data..............................................20

Item 7   Management's Discussion and Analysis of Financial Condition and
         Results of Operations................................................23

Item 7A  Quantitative and Qualitative Disclosures about Market Risk...........52

Item 8   Financial Statements and Supplementary Data..........................56

Item 9   Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.................................................94


         PART III

Item 10  Directors and Executive Officers of the Registrant...................94

Item 11  Executive Compensation...............................................94

Item 12  Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters..........................................94

Item 13  Certain Relationships and Related Transactions.......................94

Item 14  Controls and Procedures..............................................94


         PART IV

Item 15  Exhibits, Financial Statement Schedules and Reports on Form 8-K..95-108





                                   TRADEMARKS

     Trimble,  SiteVision,   GeoExplorer,  AgGPS,  Thunderbolt,   FirstGPS,  and
CrossCheck are trademarks of Trimble Navigation Limited registered in the United
States Patent and Trademark Office.  Spectra Precision,  Lassen,  Force, Galaxy,
EZ-Guide,  Placer,  Trimble  Toolbox and  Telvisant  are  trademarks  of Trimble
Navigation  Limited.  All other  trademarks are the property of their respective
owners.







<PAGE>



                                     PART I



Item 1   Business Overview

     Trimble Navigation  Limited, a California  corporation  ("Trimble" or " the
Company" or "we" or "our" or "us"),  provides advanced  positioning products and
solutions to industrial,  commercial,  governmental  entities,  and professional
customers in a number of markets including surveying, construction, agriculture,
urban and resource management, military, transportation, and telecommunications.
Customer benefits  resulting from our products typically include cost savings or
avoidance,  improved quality,  higher  productivity,  and increased  efficiency.
Examples  of  our  products  and  solutions  include  guidance  for  earthmoving
operations,  surveying instrumentation,  fleet management for specialized trucks
such as concrete  mixers,  positioning  technology  for vehicle  navigation  and
telematics  products,  tractor  guidance  for  farming,  field  data  collection
equipment, and timing technology for synchronization of wireless networks.

     Our expertise is focused in  positioning,  communication,  and  information
technologies, which form the core of our products. Positioning technologies used
include the Global Positioning System (GPS), laser, optical, and inertial, while
communication  techniques  include both public  networks  such as cellular,  and
private  networks such as business band radio.  The unique nature of many of our
products  and  solutions  is created  through  information  technologies  - both
firmware that enables the positioning  solution and  applications  software that
allows the customer to make use of the positioning information.

     We design and market our own products.  Assembly and manufacturing for many
of our  products are  subcontracted  to third  parties.  We conduct our business
globally  with major  operations  in the United  States,  Sweden,  Germany,  New
Zealand,   and   the   Netherlands.   Products   are   sold   through   dealers,
representatives, partners, and other channels throughout the world. Products are
supported by sales offices in 22 countries.

     We began  operations in 1978 and  incorporated  in California in 1981.  Our
common  stock has been  publicly  traded on Nasdaq  since  1990 under the symbol
TRMB.


Technology Overview

     A major portion of our revenues is derived from applying GPS to terrestrial
applications.  GPS is a system of 24 orbiting  satellites and associated  ground
control that is funded and  maintained by the U. S.  Government and is available
worldwide free of charge. GPS positioning is based on a technique that precisely
measures  distances from four or more  satellites.  The satellites  continuously
transmit precisely timed radio signals using extremely accurate atomic clocks. A
GPS receiver  measures  distances from the satellites in view by determining the
travel time of a signal from the satellite to the receiver,  and then uses those
distances to compute its position. Under normal circumstances, a stand-alone GPS
receiver is able to calculate its position at any point on earth, in the earth's
atmosphere, or in lower earth orbit, to approximately 10 meters, 24 hours a day.
Much better  accuracies are possible  through a technique  called  "differential
GPS." In addition, GPS provides extremely accurate time measurement.

     The  usefulness of GPS is dependent  upon the locations of the receiver and
the GPS  satellites  that are above the horizon at any given time.  Reception of
GPS signals  requires  line-of-sight  visibility  between the satellites and the
receiver,  which can be blocked by  buildings,  hills,  and dense  foliage.  The
receiver must have a line of sight to at least four  satellites to determine its
latitude, longitude, altitude, and time. The accuracy of GPS may also be limited
by distortion of GPS signals from ionospheric and other atmospheric  conditions,
and intentional or inadvertent  signal  interference or Selective  Availability.
Selective  Availability,  which was the largest component of GPS distortion,  is
controlled by the U.S. Department of Defense and was deactivated on May 1, 2000.

     Our  GPS  products  are  based  on  proprietary  receiver  technology.  The
convergence of  positioning,  wireless,  and  information  technologies  enables
significant  new value to be added to positioning  systems,  thereby  creating a
more robust solution for the user. In addition,  recent developments in wireless
technology  and  deployments  of wireless  networks have enabled less  expensive
wireless communications.  These developments allow for the efficient transfer of
position data to locations away from the positioning field device,  allowing the
data to be accessed by more users and thereby increasing productivity.

     Our laser and optical  products  measure  distances  and angles  accurately
using light.  We generally  use  commercially  available  laser diodes to create
light beams for distance  measurement.  In addition,  our proprietary  precision
mechanics  and software  algorithms  in these  products  combine to give robust,
accurate  distance  and  angle  measurements  for  a  variety  of  agricultural,
surveying, and construction applications.



Business Strategy


     Our business  strategy  leverages our expertise in  positioning  to provide
solutions for our customers, built around several key initiatives:

o    Focus on attractive  markets - We focus on markets that offer potential for
     revenue growth, profitability, and market leadership.

o    Create innovative  solutions that provide significant  economic benefits to
     our customers - We seek to apply our technology to  applications  for which
     position  data has a high value.  We  anticipate  that further  advances in
     positioning, wireless, and information technologies will enable new classes
     of solutions to emerge that will create new opportunities.

o    Develop  distribution  channels  to best  access our markets - We utilize a
     range of  distribution  channels  to best  serve  the  needs of  individual
     markets. These channels can include independent dealers,  direct sales, OEM
     sales, and distribution  alliances with key partners.  In addition, we will
     continue to extend our international distribution.


Business Segments and Markets

     We are organized into four main operating segments encompassing our various
applications and product lines:  Engineering and Construction,  Field Solutions,
Component  Technologies,  and  Mobile  Solutions.  We also  operate  in  smaller
business  areas,  primarily  Military  and  Advanced  Systems,  and Tripod  Data
Systems,  which aggregate into the Portfolio Business segment.  Our segments are
distinguished  by the markets  they serve.  Each  division  is  responsible  for
product development,  marketing, sales, strategy,  financial performance, and is
headed by a general manager.

Segment Realignment

     In the first fiscal  quarter of 2002,  we realigned  two of our  reportable
segments.  The Agriculture  segment was combined with the Mapping and Geographic
Information Systems (GIS) business to form Field Solutions. Mapping and GIS were
previously part of Fleet and Asset Management.  The Mobile Positioning  business
that was part of Fleet and Asset Management is now Mobile Solutions.

     We began  breaking  out Mobile  Solutions as a separate  reporting  segment
during the first quarter of 2002 to address the growing importance of the mobile
asset management business and its impact on our profitability. At the same time,
we combined our GIS and  Agriculture  businesses to create a new segment  called
Field  Solutions  in  order to  recognize  the  synergies  and  similar  product
requirements between the two businesses.


Engineering and Construction

     We employ GPS, optical, lasers, communications,  and information technology
to  pursue  the  opportunities  in the  Engineering  and  Construction  industry
segment.  Products in this segment  increase  productivity  and accuracy for the
entire  construction  process  including the initial survey,  planning,  design,
earthmoving,  and  building  phases.  These  products  are aimed at making  each
individual  task more  efficient,  as well as speeding up the entire  process by
improving  information flow from one step to the next, and  facilitating  faster
redesign when needed.

     For example,  our GPS and robotic optical technology allows surveying tasks
to be completed faster and with a smaller crew. Similarly,  construction machine
guidance  products  allow the  operator  to  achieve  the  desired  landform  by
eliminating  stakeout and reducing  rework.  These steps in the operation can be
readily linked  together with data  collection  modules and software to minimize
the time and effort required to get the job done accurately.

     We sell and  distribute  our products  from this  segment  through a global
network of independent dealers and our sales staff. This channel is supplemented
by  relationships  that create  additional  channel breadth  including our joint
venture with Caterpillar and private branding arrangements with other companies.

     Competition  in this segment  comes from  companies  that provide  optical,
laser,  or GPS  positioning  products.  Our  principal  competitors  are  Topcon
Corporation and Leica  Geosystems.  Price points in this segment range from less
than $1,000 for certain  laser  systems to  approximately  $125,000  for a high-
precision, three-dimensional, machine control system.

Representative products sold in this segment include:

     5800 RTK Rover - This is an  integrated  unit that  allows the  surveyor to
make  centimeter-level  measurements or do  construction  stakeout with only one
person.  Wireless  technology  eliminates  cables that could  otherwise  snag on
foliage and  structures.  The rover weighs 3.5kg for an entire  system on a pole
including batteries.

     5600 Total Station - This optical total station series provides a choice of
increasing  levels of automation that allow the surveyor to choose a system that
will best suit his  work.  Depending  on the job,  these  configurations  enable
one-person  stakeout and survey. The included Attachable Control Unit (ACU) also
works  with the 5800 RTK  Rover  providing  complete  measurement  compatibility
regardless of the technology used.

     SiteVision(R) GPS System - SiteVision GPS is a machine-mounted, positioning
system that guides the  operator by comparing  the actual  position of the blade
with the digitized design that resides in a computer on the machine.  The use of
this  system  enables  faster  machine  speed,  eliminates  the need for placing
stakes,  and  lowers  the  number of passes  needed  to get the  desired  grade.
Applications include road construction and site preparation.

     Spectra  Precision(TM)  Laser GL 700 Series - This laser  product  provides
grade control  capability for heavy equipment on a construction  site. The level
surface of the laser light can be  precisely  controlled,  and  machines  with a
laser  receiver can be  controlled to establish a precise and uniform grade over
the desired area.  Applications include trenching,  pipe laying, machine control
grading, and road construction applications.


Field Solutions

     Our  Field  Solutions   division   addresses  the  two  business  areas  of
Agriculture and Geographical  Information  System (GIS).  Products and solutions
from the GIS business  area are  targeted at  collecting  feature and  attribute
information  in  the  field  to be  used  within  GIS  databases  and  providing
position-related  information  directly to a person  working in the field in the
mobile GIS market.  The manner in which information is presented or collected is
of key importance to the customer, as well as the applicability and value of the
information itself.

     In the agricultural  market, our products provide  navigation  guidance for
tractors and other farm equipment used in spraying,  planting,  cultivation, and
harvesting  applications.  The  benefits to the farmer  include  faster  machine
operation,  higher yields,  and lower consumption of chemicals.  We also provide
positioning   solutions   for  leveling   agricultural   fields  in   irrigation
applications  and  aligning  drainage  systems  to better  manage  water flow in
fields.

     Our distribution to the agricultural  market is through multiple  channels.
Revenue is generated  through  independent  dealers and through partners such as
CNH  Global.  Competitors  in  this  market  are  either  vertically  integrated
implement  companies  such  as  John  Deere,  or  agricultural   instrumentation
suppliers such as Raven, CSI Wireless, and Integrinautics.

     The other  principle  market  within  Field  Solutions is GIS. Our products
enable the efficient acquisition of features, attributes, and positions of fixed
infrastructure and natural resource assets. An example of the type of data being
collected  would  be  that of a  utility  company  performing  a  survey  of its
transmission  poles  including the age and condition of each telephone pole. Our
handheld unit enables this data to be collected and  automatically  stored while
confirming the location of the asset.  The collected data can then be downloaded
into a GIS  database.  This stored data could later be used to navigate  back to
any individual asset or item for maintenance or data update.

     Distribution  for GIS  applications  is  primarily  through  a  network  of
independent dealers and business partners, supported by an internal sales staff.
Competitors  in this market are  typically  either survey  instrument  companies
having GPS  technology  and/or  consumer GPS  companies.  Two examples are Leica
Geosystems and Garmin.

     Approximate  price points in this segment  range from $2,500 for a handheld
unit to $35,000 for a fully automated, farm equipment control system.

Representative products sold within this segment include:

     GeoExplorer(R)  CE Series - Combines a GPS  receiver  in a rugged  handheld
unit  running  Microsoft's  Windows CE  operating  system  that makes it easy to
collect and maintain data about objects in the field.

     AgGPS(R) Autopilot System - A GPS-enabled,  agricultural  navigation system
that  connects  to a  tractor's  steering  system and  automatically  steers the
tractor along a precise path to within three  centimeters or less.  This enables
both  higher  machine  productivity  and more  precise  application  of seed and
chemicals, thereby reducing costs to the farmer.

     AgGPS(R)  EZ-Guide(TM) System - A GPS-enabled,  manual guidance system that
provides the tractor operator with steering visual corrections  required to stay
on course to within 25  centimeters.  This system  reduces the overlap or gap in
spraying, fertilizing, and other field applications.


Component Technologies

     Our Component Technologies segment provides components for applications
that require embedded position or time, primarily based on GPS technology. Our
largest markets are in the telecommunications and automotive industries where we
supply modules, boards, custom integrated circuits and software, or single
application IP licenses to the customer according to the needs of the
application. Sales are made directly to original equipment manufacturers (OEMs)
and system integrators who incorporate our component into a sub-system or a
complete system-level product.

     In the telecommunication  infrastructure  market, we provide timing modules
that keep wireless  networks  synchronized and on frequency.  For example,  CDMA
cellular  telephone  networks  require  a high  level  of  both  short-term  and
long-term   frequency   stability  for  proper  operation   (synchronization  of
information/voice  flow to avoid dropped  calls).  Our timing modules meet these
needs at a much lower cost than the atomic standards or other specially prepared
components  that  would  otherwise  be  required.   Customers  include  wireless
infrastructure  companies  such  as  Nortel,  Samsung,  UTStarcom,  and  Grayson
Wireless.

     In the automotive  market, we provide a GPS component that is embedded into
in-vehicle  navigation  systems.  Our  focus  on  high  reliability,  continuous
improvement,  and low cost has earned us supplier awards and continuing business
in this market.  Customers include IVN system manufacturers and integrators such
as Siemens VDO Automotive AG, Blaupunkt, and Magnetti Marelli.

     * The declining size and power  requirements  for GPS  components,  coupled
with improving capabilities,  allow GPS to potentially be used in a new class of
applications  such as  position-aware  cellular  telephones  or  other  wireless
handheld  devices.  We expect our  strength  in GPS  technology  will expand our
participation in this market.

     Competitors  in  the   telecommunication   infrastructure   market  include
Symmetricom.  Competitors  in the  automotive  market  are  typically  component
companies with GPS capability including Japan Radio Corporation,  Motorola,  and
SiRF.

Representative products sold by this segment include:

     Thunderbolt(R)  GPS Disciplined  Clock - The Thunderbolt Clock is used as a
time source for the  synchronization  of wireless  networks.  By combining a GPS
receiver with a high-quality  quartz  oscillator,  the Thunderbolt  achieves the
performance of an atomic  standard with much higher  reliability  and much lower
price.

     FirstGPS(R)  Technology  - We license our FirstGPS  Technology,  which is a
host-based,  GPS system  available as two  integrated  circuits  and  associated
software.  The software  runs on a  customer's  existing  microprocessor  system
complementing  the work done by the  integrated  circuit to  generate  position,
velocity,  and time.  This  low-power  technology is  particularly  suitable for
small, mobile, battery-operated applications.

     Lassen(TM)  SQ  Module  - Our  new  Lassen  SQ  module  adds  complete  GPS
functionality  to a mobile  product  in a  postage  stamp-sized  footprint  with
ultra-low power  consumption,  consuming less than 100mW at 3.3V. This module is
designed  for  portable  handheld,  battery-powered  applications  such  as cell
phones, pagers, PDAs, digital cameras, and many others.


Mobile Solutions

     Our Mobile Solutions  segment  addresses the market for fleet management by
providing a bundled solution  including both hardware and software needed to run
the application.  In almost all cases, the software  solution is provided to the
user  through  Internet-enabled  access for a monthly  service  fee. The bundled
solution enables the fleet owner to dispatch,  track, and monitor the conditions
of vehicles in the fleet on a real-time basis. A  vehicle-mounted  unit consists
of a single module including a GPS receiver,  sensor  interface,  and a cellular
modem. Our solution includes the  communication  service from the vehicle to our
data center and access over the Internet to the application software,  relieving
the user of the need to maintain extensive computer operations.

     Our agreement with McNeilus Companies, Inc., a major manufacturer of trucks
for the ready mix  concrete and waste  management  industries,  facilitates  the
delivery  of a  complete  management  solution  when a new  fleet  is  acquired.
McNeilus'  sales team will market our solution,  which includes our  GPS-enabled
hardware and hosted software provided for a monthly service fee to its customers
as a retrofit for trucks already in the field, or as a factory-installed option.

     Our Mobile  Solutions  segment  maintains  multiple  distribution  channels
including  independent  dealers,  key accounts and  strategic  partners  such as
McNeilus.  Approximate  prices  for the  hardware  fall in the  range of $300 to
$3000,  while the monthly software service fees range from  approximately $20 to
approximately  $55,  depending on the customer service level.  Competition comes
largely from service-oriented  businesses such as @Road, @Track, Aether Systems,
and Minorplanet.

Representative products sold by this division include:

     Telvisant(TM)  System - Our fleet management  service  offering,  Telvisant
provides  different  levels of service that run from snapshots of fleet activity
to real-time fleet dispatch  capability.  Telvisant includes truck communication
service and computer  backbone support of the software.  Variations of Telvisant
are tailored for specific industry applications.

     CrossCheck(R)  Module - This  hardware,  mounted on the  vehicle,  provides
location and information  through its built-in cellular  interface.  This module
also includes GPS positioning,  sensor  interfaces for vehicle  conditions,  and
built-in intelligence for distributed decision-making.


Portfolio Business

     Our Portfolio  Business segment includes various operations that each equal
less than 10  percent  of our total  operating  revenue.  The  products  in this
segment are data collection  products as well as navigation modules and embedded
sensors that are used in avionics,  flight, and military  applications.  The two
most  significant  components in this segment are Tripod Data Systems (TDS), and
Military and Advanced Systems (MAS).

     TDS  designs and  markets  handheld  data  collectors  and data  collection
software for field use by surveyors and other  professionals.  Products are sold
directly,  through dealers, and other survey manufacturers.  Competitors in this
portion of the business are small and geographically diverse.

     Our MAS business  supplies GPS modules that use the  military's GPS Precise
Positioning  Service.   These  modules  are  most  often  used  in  aviation  or
ground-based  military  equipment.  Military  products are sold  directly by our
sales force to either the U.S.  Government or a contractor.  Sales are also made
to foreign governments,  with the sales of the encrypted components taking place
through the U.S.  Government.  Competitors in this market include Rockwell,  L3,
Raytheon, and Thales.

Representative products sold by this segment include:

     TDS Ranger(TM)  Series - The TDS Ranger device is a handheld data collector
supporting Microsoft's Windows CE operating system. Running TDS survey software,
this unit can control and collect  data from all major brands of optical and GPS
surveying  instruments.  The  operator  can also run his or her own  application
programs for the Microsoft Windows CE operating system on the platform.

     Force(TM) 5 Module - The Force 5 GPS Receiver  Application Module (GRAM) is
a  dual-frequency,  GPS module that is used in a variety of military  GPS signal
embedded airborne and ground applications.


Acquisitions and Joint Ventures


     The  markets in which we compete  require a wide  variety of  technologies,
products,  and  capabilities.  Through  acquisitions,   investments,  and  joint
development  agreements  or  alliances,  we are  able to  deliver  products  and
services to customers in target markets.  We employ the following  strategies to
satisfy  the  need for new or  enhanced  products  and  solutions:  develop  new
technologies and products  internally;  enter into joint ventures with strategic
partners;  resell another company's  product;  or acquire all or part of another
company.


Acquisitions


     * We have  acquired a number of companies in the past and we expect to make
acquisitions  in  the  future.   Mergers  and  acquisitions  of  high-technology
companies are inherently  risky.  No assurance can be given that our previous or
future  acquisitions will be successful or will not materially  adversely affect
our  financial  condition  or  operating  results.  The  risks  associated  with
acquisitions are more fully discussed in the "Risks and  Uncertainties"  section
contained in Part II, Item 7 of this Report.


     LeveLite - On August 15, 2002, we acquired LeveLite  Technology,  Inc. This
was a  strategic  acquisition  for  us,  as it not  only  extended  the  product
portfolio of our commercial  construction business in the entry-level market for
laser-levels,  but it also  strengthened  our  presence in certain  distribution
channels, such as the construction supply houses and power tool manufacturers.


Caterpillar Joint Venture

     On April 1, 2002, Trimble and Caterpillar  established and began operations
of a joint venture called  Caterpillar  Trimble  Control  Technologies,  LLC, in
which each company has a 50% ownership  stake and have equal voting rights.  The
purpose of this  joint  venture is to  develop  the next  generation  of machine
control products for the construction and mining markets.

     * Today,  we sell  construction  machine  control  products to  contractors
through our dealer channel,  for installation on bulldozers,  motorgraders,  and
excavators  that are already in the field (the  "after-market").  However,  both
companies believe that this "after-market"  solution will spur future demand for
a  machine  control  product  that  can be  integrated  into the  design  of new
Caterpillar  machines,  while  also still  being  available  for  "after-market"
installation.


Patents, Licenses and Intellectual Property

     We hold 582 U.S.  patents and 114 foreign  patents,  the  majority of which
cover GPS technology and  applications,  and over 100 of which cover optical and
laser technology and applications.

     We prefer to own the  intellectual  property used in our  products,  either
directly or though  subsidiaries.  Although this is not a significant  factor in
our business, from time to time we license technology from third parties.

     There  are 74  trademarks  registered  to  Trimble  and  its  subsidiaries.
Specifically,  "Trimble" with the sextant logo, "AgGPS", "GeoExplorer," and "GPS
Total  Station,"  are  examples  of  trademarks  of Trimble  Navigation  Limited
registered in the United States and other countries.  Additional  trademarks are
pending registration.

     Although we believe that our patents and trademarks  have value,  we cannot
be sure that  those  patents  and  trademarks,  or any  additional  patents  and
trademarks  that  may  be  obtained  in  the  future,  will  provide  meaningful
protection from  competition.  We actively  develop and protect our intellectual
property through a program of patenting, enforcement, and licensing.

     We do not  believe  that  any of our  products  infringe  patent  or  other
proprietary  rights of third parties,  but we cannot be certain that they do not
do so. (See Note 20 of the Notes to the Consolidated  Financial  Statements.) If
infringement is alleged, legal defense costs could be material, and there can be
no  assurance  that  the  necessary  licenses  could  be  obtained  on  terms or
conditions that would not have a material adverse effect on our profitability.


Sales and Marketing

     We currently  have  regional  sales  offices  throughout  North America and
Europe.  Offices serving the rest of the world include Australia,  China, Japan,
Philippines,  New Zealand,  Singapore,  and United Arab Emirates.  We tailor the
distribution channel to the needs of the product and regional market. Therefore,
we have a number of forms of sales channel solutions around the world.


North America

     We sell our  products  in the United  States and Canada  primarily  through
dealers,   distributors,   and  authorized  representatives.   This  channel  is
supplemented  and  supported  by our  employees  who  provide  additional  sales
support.  In some cases,  where third party  distribution  is not available,  we
utilize a direct sales force.  We also utilize  distribution  alliances  and OEM
relationships with other companies as a means to serve selected markets.


International

     We market to  end-users  through a network of dealers and  distributors  in
more than 85  countries.  Distributors  carry one or more product  lines and are
generally limited to selling either in one country or in a portion of a country.
We  occasionally  grant  exclusive  rights to  market  certain  products  within
specified countries.

     Sales  to  unaffiliated  customers  outside  the  United  States  comprised
approximately  49% in 2002, 50% in 2001, and 52% in 2000. During the 2002 fiscal
year, North and South America  represented 55%, and Europe,  the Middle East and
Africa  represented  32%, and Asia  represented  13%. In fiscal 2002, the United
States  comprised  approximately  51% and Germany  16% of sales to  unaffiliated
customers.


Support and Warranty

     The warranty  periods for our products are generally  between one and three
years from date of shipment.  Selected  military  programs may require  extended
warranty periods,  and certain products sold by our TDS subsidiary have a 90-day
warranty period. We support our GPS products through a circuit board replacement
program from locations in the United  Kingdom,  Germany,  Japan,  and the United
States.  The repair and  calibration of our non-GPS  products are available from
company-owned or authorized  facilities.  We reimburse  dealers and distributors
for all authorized warranty repairs they perform.

     While we  engage in  extensive  product  quality  programs  and  processes,
including actively monitoring and evaluating the quality of component suppliers,
our warranty  obligation is affected by product  failure rates,  material usage,
and service  delivery  costs  incurred in correcting a product  failure.  Should
actual product failure rates,  material usage, or service  delivery costs differ
from the  estimates,  revisions to the  estimated  warranty  accrual and related
costs may be required.


Seasonality of Business

     * Our  revenues  are  affected by seasonal  buying  patterns in some of our
business  areas.  Over half of our total revenue comes from our  Engineering and
Construction  business,  which  has the  biggest  seasonal  impact  on our total
revenue. This business, and therefore our total revenue, is seasonally strongest
during the second quarter due to the start of the construction  buying season in
the northern  hemisphere  in spring.  Typically,  we expect the first and fourth
quarters to be the  seasonal  lows due to the lack of  construction  and farming
during the winter  months.  If other  factors  such as  economic  conditions  or
underlying growth in the business are removed, the historical variability in our
total  quarterly  revenue  from  seasonality  has  generally  been  less than 10
percent.


Working Capital

     Our  working  capital  needs  are  typically  for   inventories,   accounts
receivable,  and short-term debt. As the business is generally  dependent upon a
steady stream of new products,  some amount of working capital is devoted to the
ramp up and ramp down of product  volumes as new  products  get  introduced  and
older models are taken out of production.


Backlog

     In most of our markets,  the time between  order  placement and shipment is
short. Therefore, we believe that backlog is not a reliable indicator of present
or future business conditions.


Manufacturing

     Manufacturing  for most of our GPS products is  subcontracted  to Solectron
Corporation.   Solectron  is   responsible   for   substantially   all  material
procurement,  assembly,  and testing.  We continue to manage  product  design up
through pilot  production for the  subcontracted  products,  and we are directly
involved in qualifying  suppliers and key  components  used in all our products.
During  the fourth  quarter  of 2002,  Solectron  began  assembling  some of our
Component Technologies products in China. Our current contract with Solectron is
due to expire in August 2003.

     We  manufacture  laser and  optics-based  products at our plants in Dayton,
Ohio;  Danderyd,  Sweden; and Jena and  Kaiserslautern,  Germany.  Some of these
products or portions of these products are also  subcontracted  to third parties
for assembly.

     Most of the  components  used in our products are  standard  parts  readily
available from more than one supplier.  A few components are from sole suppliers
or are custom parts unique to our company.  While custom parts make our products
hard to imitate,  they also  represent a  manufacturing  risk due to the lack of
alternative   suppliers.   If  these  parts  became  unavailable,   redesign  or
modification of our products could be required. In addition, suppliers may cease
manufacturing common components,  replacing them with newer parts, which require
requalification.  These  risks  could  cause an  interruption  in our ability to
provide a steady stream of products to our customers.


Research and Development

     We  believe  that  our  competitive  position  is  maintained  through  the
development and  introduction of new products having improved  features,  better
performance,  smaller size and weight,  lower cost, or some combination of these
factors.  We invest  substantially  in the development of new products.  We also
make significant investment in the positioning,  communication,  and information
technologies  that  underlie our products  and will likely  provide  competitive
advantages.

     Recent  developments  have produced  small,  low-power,  OEM GPS receivers,
accurate and versatile  rotating lasers for  construction  use, and light weight
and compact GPS surveying rovers.

     Our research and  development  expenditure,  net of reimbursed  amounts was
$61.2 million for fiscal 2002,  $62.9 million for fiscal 2001, and $46.5 million
for fiscal 2000.

     * We expect to continue investing in research and development with the goal
of maintaining or improving our competitive position, as well as the goal of
entering new markets and satisfying new needs for positioning related solutions.
There can be no assurance that we will succeed in doing so.


Employment

     As of January 3, 2003,  we employed a total of 2,050  employees,  including
686 in sales and marketing, 631 in manufacturing, 505 in engineering, and 228 in
general and administrative  positions.  Of these employees,  607 were located in
Europe and in the  Middle  East  (primarily  in Germany  and  Sweden),  252 were
situated  in the Asia  Pacific  region  (primarily  in New  Zealand),  and 1,191
employed in the Americas (primarily in the United States).

     Our employees are not  represented by unions except for those in Sweden and
Germany.  We also employ temporary and contract  personnel that are not included
in the above  headcount  numbers.  We have not  experienced  work  stoppages  or
similar labor actions.


Available Information

     Our  Internet  address is  www.trimble.com.  Information  contained  on our
website is not part of this annual report on Form 10-K. We make  available  free
of charge on www.trimble.com,  our annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed
or furnished  pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably  practicable  after we  electronically  file such  material  with, or
furnish it to, the SEC.

     In addition, you may request a copy of these filings (excluding exhibits)
at no cost by writing or telephoning us at the following address or telephone
number:

         Trimble Navigation Limited
         645 North Mary Avenue, Sunnyvale, CA 94088
         Attention: Investor Relations
         Telephone: 408-481-8000

Executive Officers

     The names, ages, and positions of the Company's executive officers as of
March 5, 2003 are as follows:

Name                     Age  Position
-------------------------------------------------------------------------
Steven W. Berglund.......51   President and Chief Executive Officer
Mary Ellen P. Genovese...43   Chief Financial Officer
William C. Burgess.......56   Vice President, Human Resources
Joseph F. Denniston, Jr..42   Vice President, Operations
Bryn A. Fosburgh.........40   Vice President and General Manager,
                              Geomatics and Engineering
John E. Huey.............53   Treasurer
Irwin L. Kwatek..........63   Vice President and General Counsel
Michael W. Lesyna........42   Vice President and General Manager,
                              Mobile Solutions
Bruce E. Peetz...........51   Vice President, Advanced Technology and Systems
Christopher J. Shephard..40   Vice President and General Manager,
                              Construction Instruments
Anup V. Singh............32   Corporate Controller
Alan R. Townsend.........54   Vice President and General Manager,
                              Field Solutions
Dennis L. Workman........57   Vice President and General Manager,
                              Component Technologies


Steven W.  Berglund - Steven  Berglund  joined  Trimble as  president  and chief
executive  officer in March 1999.  Prior to joining  Trimble,  Mr.  Berglund was
president  of Spectra  Precision,  Inc., a pioneer in the  development  of laser
systems.  He  spent 14  years  at  Spectra  Precision  in a  variety  of  senior
leadership  positions.  In the early 1980s, Mr. Berglund spent a number of years
at Varian  Associates  in Palo  Alto,  where he held a variety of  planning  and
manufacturing  roles.  Mr.  Berglund  began his career as a process  engineer at
Eastman Kodak in Rochester, New York. He attended the University of Oslo and the
University  of  Minnesota  where he received a B.S. in chemical  engineering  in
1974. He later received his M.B.A.  from the University of Rochester in New York
in 1977.

Mary Ellen Genovese - Mary Ellen  Genovese,  chief financial  officer,  has been
responsible  for the overall  financial  activities of Trimble  since  September
2000. Ms.  Genovese was vice president of finance and corporate  controller from
1997 to September  2000. From 1994 to 1997, Ms. Genovese served as business unit
controller   for  Software  and   Component   Technologies,   and  Tracking  and
Communications.  She joined Trimble as controller of manufacturing operations in
December  1992.  Prior to joining  Trimble,  Ms.  Genovese  was chief  financial
officer  for Minton  Co., a  distributing  company  to the  commercial  building
market,  from 1991 to 1992.  Prior to 1991, she worked for 10 years with General
Signal Corp. in several management positions. Ms. Genovese is a certified public
accountant  and received her B.S. in  accounting  from  Fairfield  University in
Connecticut in 1981.

William C. Burgess - William  Burgess  joined  Trimble in August of 2000 as vice
president of Human Resources,  with global  responsibility  for Human Resources.
Prior to joining Trimble,  Mr. Burgess was vice president of Human Resources and
Management Information Systems for Sonoma West Holdings, Inc. From 1993 to 1997,
he served as vice president of Human Resources for Optical  Coating  Laboratory,
from 1990 to 1993, he established  and managed the human  resources  function at
Teknekron Communications Systems, and from 1985 to 1990 he was vice president of
Human Resources for a $25 billion,  35,000-employee segment of Asea Brown Boveri
(ABB),  a global  technology  company.  Mr.  Burgess  received  a B.S.  from the
University of Nebraska and an M.S. in organizational development from Pepperdine
University.

Joseph F. Denniston,  Jr. - Joseph Denniston joined Trimble as vice president of
operations in April 2001, responsible for worldwide manufacturing,  distribution
and logistics strategy. Prior to Trimble, Denniston worked for 3Com Corporation.
During  his  14-year  tenure,  he  served  as vice  president  of  supply  chain
management  for the  Americas and held  several  positions in test  engineering,
manufacturing engineering and operations.  Previously at Sentry Schlumberger, he
held several positions including production  engineering,  production management
and test engineering over six years. Mr. Denniston received a B.S. in electrical
engineering  technology from the Missouri Institute of Technology in 1981 and an
M.S. in computer science engineering from Santa Clara University in 1990.

Bryn A.  Fosburgh - Bryn  Fosburgh  was  appointed  vice  president  and general
manager of the Geomatics and Engineering  (G&E) business area in July 2002, with
responsibility  for all the  division-level  activities  associated with survey,
construction,  and infrastructure solutions. From October 1999 to July 2002, Mr.
Fosburgh  served as division  vice  president of survey and  infrastructure.  In
1997, Mr. Fosburgh was appointed  director of development for the Company's land
survey  business  unit  where he  oversaw  the  development  of field and office
software  that enabled the  interoperability  of Trimble  survey  products.  Mr.
Fosburgh  joined  Trimble in 1994 as technical  service  manager for  surveying,
mining,  and construction.  Prior to Trimble,  Mr. Fosburgh was a civil engineer
with the Wisconsin  Department of  Transportation  where he was  responsible for
coordinating the planning, data acquisition, and data analysis for statewide GPS
surveying  projects in support of transportation  improvement  projects.  He has
also held various engineering,  research and operational  positions for the U.S.
Army Corps of Engineers and Defense Mapping Agency. Mr. Fosburgh received a B.S.
in geology from the  University of Wisconsin in Green Bay in 1985 and an M.S. in
civil engineering from Purdue University in 1989.

John E. Huey - John Huey joined Trimble in 1993 as director corporate credit and
collections,  and was promoted to assistant  treasurer in 1995 and  treasurer in
1996. Past experience includes two years with ENTEX Information  Services,  five
years with  National  Refractories  and Minerals  Corporation  (formerly  Kaiser
Refractories),  and thirteen years with Kaiser Aluminum and Chemical Sales, Inc.
He has held positions in credit management,  market research, inventory control,
sales,  and as an assistant  Controller.  Mr. Huey  received his B.A.  degree in
Business  Administration in 1971 from Thiel College in Greenville,  Pennsylvania
and an MBA in 1972 from West Virginia University in Morgantown, West Virginia.

Irwin L. Kwatek - Irwin Kwatek has served as vice president and general  counsel
of Trimble since November 2000.  Prior to joining  Trimble,  Mr. Kwatek was vice
president and general counsel of Tickets.com, a ticketing service provider, from
May 1999 to November 2000.  Prior to Tickets.com,  he was engaged in the private
practice  of law for more than six years.  During his  career,  he has served as
vice president and general counsel to several publicly held high-tech  companies
including   Emulex   Corporation,   Western  Digital   Corporation  and  General
Automation,  Inc. Mr. Kwatek received his B.B.A.  from Adelphi College in Garden
City, New York and an M.B.A.  from the  University of Michigan in Ann Arbor.  He
received his J.D. from Fordham University in New York City in 1968.

Michael W. Lesyna - Michael Lesyna has been vice  president and general  manager
of the Mobile  Solutions  business area since September 2000.  Prior to Trimble,
Mr.  Lesyna  spent six years at Booz  Allen &  Hamilton  where he most  recently
served as a principal in the operations  management group. Prior to Booz Allen &
Hamilton,  Mr. Lesyna held a variety of  engineering  positions at Allied Signal
Aerospace.  Mr.  Lesyna  received  his  M.B.A.,  as well as an M.S.  and B.S. in
mechanical engineering from Stanford University.

Bruce E. Peetz - Bruce Peetz has served as vice president of Advanced Technology
and  Systems  since 1998 and has been with  Trimble  for 15 years.  From 1996 to
1998,  Mr.  Peetz  served as general  manager of the Survey  Business.  Prior to
joining  Trimble,   Mr.  Peetz  was  a  research  and  development   manager  at
Hewlett-Packard  for 10  years.  Mr.  Peetz  received  his  B.S.  in  electrical
engineering   from   Massachusetts   Institute  of   Technology   in  Cambridge,
Massachusetts in 1973.

Anup V. Singh - Anup  Singh has served as  corporate  controller  since  joining
Trimble  in  December  2001.  Prior  to  joining  Trimble,  Mr.  Singh  was with
Excite@Home  from July 1999 to December 2001.  During his tenure at Excite@Home,
he held the  positions of senior  director of Corporate  Financial  Planning and
Analysis,  and  International  Controller.  Before  Excite@Home,  Mr. Singh also
worked for 3Com  Corporation  from December 1997 to July 1999, and Ernst & Young
LLP in San Jose, California and London,  England. Mr. Singh received his B.A. in
1991 and  M.A.  in 1995 in  economics  and  management  science  from  Cambridge
University in England.  He is also a chartered  accountant and was admitted as a
member of the Institute of Chartered Accountants in England and Wales in 1994.

Christopher  J.  Shephard - Chris  Shephard was  appointed  vice  president  and
general manager of the Construction  Instruments (CI) business area in July 2002
after  serving as division  vice  president of operations  for  Engineering  and
Construction  since  Trimble's  acquisition of Spectra  Precision  Group in July
2000.  Prior to  Trimble,  Mr.  Shephard  served  from  1998 to 2000 as  Spectra
Precision's  chief  financial  officer.  Mr.  Shephard also worked for more than
eight  years at Booz  Allen &  Hamilton.  Prior to Booz  Allen &  Hamilton,  Mr.
Shephard spent three years at Copeland  Corporation,  a division of Emerson,  in
their  management-training  program.  Mr.  Shephard  received a B.A. in business
studies from Manchester Polytechnic in England in 1985 and an M.M. from the J.L.
Kellogg  Graduate  School of Management at  Northwestern  University,  Evanston,
Illinois in 1990.

Alan R.  Townsend - Alan  Townsend  has  served as vice  president  and  general
manager of the Field Solutions business area since November 2001. He also serves
as the managing director of Trimble Navigation New Zealand Ltd. for which he has
overall site responsibility. From 1995 to 2001, Mr. Townsend was general manager
of Mapping  and GIS.  Mr.  Townsend  joined  Trimble  in 1991 as the  manager of
Trimble  Navigation  New Zealand  Ltd.  Prior to Trimble,  Mr.  Townsend  held a
variety of technical and senior  management  roles within the Datacomm  group of
companies  in New Zealand  including  Managing  Director  of  Datacomm  Software
Research Ltd. from 1986 to 1991. In addition,  Mr.  Townsend is a director of IT
Capital Ltd., a venture  capital company based in Auckland,  New Zealand.  He is
also a fellow of the New Zealand Institute of Management and a past president of
the New Zealand Software Exporters Association. Mr. Townsend received a B.S.c in
economics from the University of Canterbury in 1970.

Dennis L.  Workman - Dennis  Workman  has served as vice  president  and general
manager of Trimble's Component  Technologies business area since September 1999.
From 1998 to 1999, Mr. Workman was senior director and chief  technical  officer
of the newly formed Mobile and Timing  Technologies  (MTT) business group,  also
serving as general manager of Trimble's Automotive and Timing group. In 1997, he
was director of engineering for Software & Component  Technologies.  Mr. Workman
joined Trimble in 1995 as director of the newly created Timing vertical  market.
Prior to Trimble, Mr. Workman held various  senior-level  technical positions at
Datum Inc.  During his 9-year tenure at Datum,  he held the position of CTO. Mr.
Workman  received a B.S. in  mathematics  and physics from St. Marys  College in
1967 and an M.S. in electrical  engineering from the Massachusetts  Institute of
Technology in 1969.



I
tem 2            Properties

     The following table sets forth the significant real property that we own or
lease:


<table>
<caption>
<s>                      <c>      <c>                             <c>
Location                  Size in  Segment(s) served               Commitment
                          sq. feet

Sunnyvale, California;    309,400  All                             Leased, expiring 2003 - 2005;
      14 buildings                                                 approximately 100,000 sq. ft. subleased

Corvallis, Oregon         20,000   Engineering & Construction      Owned, encumbered by $1.8M mortgage

Chandler, Arizona         12,500   Mobile Solutions                Leased, expiring 2003

Westminster, Colorado;    73,000   Engineering & Construction,     Leased, expiring 2006;
      2 buildings                  Field Solutions                 44,000 sq. ft. vacant

Huber Heights (Dayton),   150,000  Engineering & Construction,     Owned, no encumbrances
Ohio                               
                          57,200   Field Solutions                 Leased, expiring in 2011

                          32,800   Distribution                    Leased, month to month

Danderyd, Sweden          93,900   Engineering & Construction      Leased, expiring 2005, 24 month
                                                                   notice, auto renewal for 3 years

Jena, Germany             28,700   Engineering & Construction      Leased, no expiration date,
                                                                   12 month notice

Kaiserslautern, Germany   26,000   Engineering & Construction      Leased, expiring 2005

Raunheim, Germany         28,700   Sales                           Leased, expiring 2011

Christchurch, New         65,000   Engineering & Construction,     Leased, expiring 2005 - 2010
Zealand; 2 buildings               Mobile Solutions, Field
                                    Solutions

</table>

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

     In addition, we lease a number of smaller offices around the world
primarily for sales.

     * We believe that our facilities are adequate to support current and
near-term operations.



Item 3            Legal Proceedings

     In January  of 2001,  Philip M.  Clegg  instituted  a lawsuit in the United
States  District  Court for the  District  of Utah,  Central  Division,  against
Spectra-Physics  Laserplane,  Inc.,  Spectra Precision AB and Trimble Navigation
Limited. On January 29, 2003, we settled this patent  infringement  lawsuit with
Mr. Clegg whereby we have purchased a fully paid-up, non-exclusive license under
U.S. Patent No. 4,807,131 from Mr. Clegg.

     * In  November of 2001,  Qualcomm  Inc.  filed a lawsuit  against us in the
Superior Court of the State of California.  The complaint  alleges claims for an
unspecified amount of money damages arising out of Qualcomm's  perceived lack of
assurances  in early 1999 that our  products  purchased  by Qualcomm  would work
properly after a scheduled week number  rollover event that took place in August
of 1999.  Qualcomm is the only  customer to make a claim against us based on the
week number rollover event. In the opinion of management, the resolution of this
lawsuit  is not  expected  to have a  material  adverse  effect  on our  overall
financial position.

     * We are also a party to other  disputes  incidental  to our  business.  We
believe that our ultimate liability as a result of such disputes,  if any, would
not be material to our overall  financial  position,  results of operations,  or
liquidity.



Item 4      Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of security holders during the fourth
quarter of 2002.



<PAGE>



                                     PART II


Item 5     Market for Registrant's Common Equity and Related Stockholder Matters


     Our common stock is traded on the Nasdaq  National  Market under the symbol
"TRMB." The table below sets forth,  during the periods indicated,  the high and
low per share bid prices for our common stock as reported on the Nasdaq National
Market.

                                       2002                     2001
                                       ----                     ----
                                  High       Low          High       Low
                                  --------------------------------------
            First Quarter        $17.14    $11.76        $28.50    $16.50
            Second Quarter        18.50     14.97         21.25     12.75
            Third Quarter         15.00     10.28         19.80     13.06
            Fourth Quarter        14.47      8.02         18.41     12.89

     As of January 3, 2003, there were approximately 1,132 holders of record of
our common stock. We made no sales of unregistered securities during the
year-ended January 3, 2003.


Dividend Policy

     We have not declared or paid any cash  dividends on our common stock during
any period for which financial  information is provided in this Annual Report on
Form 10-K. At this time, we intend to retain  future  earnings,  if any, to fund
the development and growth of our business and do not anticipate paying any cash
dividends on our common stock in the foreseeable future.

     We are currently restricted from paying dividends and are limited as to the
amount of our common stock that we can repurchase  under the terms of our credit
facilities.  We are allowed to pay dividends and repurchase shares of our common
stock up to 25% of net income in the previous fiscal year.


Equity Compensation Plan Information

     The following  table sets forth, as of January 3, 2003, the total number of
securities  outstanding  under our stock  option  plans,  the  weighted  average
exercise  price of such options,  and the number of options  available for grant
under such plans.


<table>
<caption>

Plan Category              Number of securities    Weighted average           Number of securities
                           to be issued upon       exercise price of          remaining available for
                           exercise of             outstanding options,       future issuance under equity
                           outstanding options,    warrants and rights        compensation plans (excluding
                           warrants and rights                                securities reflected in
                                                                              column (a))
                                    (a)                       (b)                          (c)
<s>                             <c>                        <c>                         <c>
Equity       compensation
plans     approved     by        5,126,633                  $18.53                      1,859,656
security holders.........

Equity       compensation
plans  not   approved  by                -                       -                              -
security holders.......
Total...................         5,126,633                  $18.53                      1,859,656
</table>



Item 6.           Selected Financial Data


HISTORICAL FINANCIAL REVIEW


     The  following  selected  consolidated  financial  data  should  be read in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" and our consolidated financial statements and related
notes  appearing  elsewhere in this annual  report.  Historical  results are not
necessarily indicative of future results. In particular,  because the results of
operations and financial  condition  related to our acquisitions are included in
our  consolidated  statement of operations and balance sheet data  commencing on
those respective acquisition dates, comparisons of our results of operations and
financial  condition for periods prior to and  subsequent to those  acquisitions
are not indicative of future results.

     We have  significant  intangible  assets on our balance  sheet that include
goodwill  and  other  purchased  intangibles  related  to  acquisitions.  At the
beginning of fiscal 2002, we adopted Statement of Financial Accounting Standards
No. 141 ("SFAS 141"),  Business  Combinations,  and No. 142,  Goodwill and Other
Intangible Assets ("SFAS 142").  Application of the non-amortization  provisions
of SFAS 142 significantly  reduced amortization expense of purchased intangibles
and goodwill to  approximately  $8.3 million for the fiscal year 2002 from $29.4
million in fiscal year 2001. We reclassified identifiable intangible assets with
indefinite  lives,  with a net book value of $73.6  million,  as defined by SFAS
142, to goodwill at the date of adoption.

     For  comparative  purposes,  the pro forma  adjusted  net  income per share
excluding   amortization  of  goodwill,   distribution  channel,  and  assembled
workforce is as follows:


<table>
<caption>
                                                  January 3,       December 28,     December 29,
                                                     2003              2001             2000

(In thousands)
<s>                                             <c>                <c>               <c>
Net income (loss)                                $   10,324         $ (22,879)        $  14,185
  Add back SFAS 142 adjustments:
      Amortization of goodwill                                           7,817            3,116
      Amortization of distribution channel                              11,230            5,176
      Amortization of assembled workforce                                1,834            1,225
                                                      -----              -----            -----
Adjusted net income (loss)                       $   10,324         $  (1,998)        $  23,702
                                                 ==========         ==========        =========
Weighted average shares outstanding
     Basic                                           28,573             24,727           23,601
     Diluted                                         29,052             24,727           25,976
Diluted net income (loss) per share              $     0.36         $   (0.93)        $    0.55
                                                 ----------         ---------         ---------
Pro forma adjusted diluted net income
    (loss) per share                             $     0.36         $   (0.08)        $    0.92
                                                 ==========         ==========        =========

</table>






<PAGE>


Summary Consolidated Statements of Operations Data


<table>
<caption>

                                                January 3,      December 28,      December 29,    December 31,   January 1,
Fiscal Years Ended                                2003             2001               2000            1999          1999
(In  thousands  of  dollars,   except  per
share data)
<s>                                             <c>              <c>              <c>            <c>           <c>
Revenue                                          $  466,602       $  475,292       $  369,798     $  271,364    $   268,323
Cost of revenue                                     232,170          238,057          173,237        127,117        141,075
                                                    -------          -------          -------        -------        -------
Gross margin                                     $  234,432       $  237,235       $  196,561     $  144,247    $   127,248

Operating expenses
   Research and development                          61,232           62,881           46,520         36,493         45,763
   Sales and marketing                               89,344          103,778           79,901         53,543         61,874
   General and administrative                        40,634           37,407           30,514         33,750         33,245
   Restructuring charges                              1,099            3,599               --             --         10,280
   Amortization of goodwill and other
     purchased intangible assets                      8,300           29,389           13,407             --             --
                                                      -----           ------           ------         ------         ------
Total operating expenses                            200,609          237,054          170,342        123,786        151,162
                                                    -------          -------          -------        -------        -------
Operating income (loss) from
      continuing operations                          33,823              181           26,219         20,461       (23,914)
Non-operating income (expense), net                (19,999)         (21,773)         (10,459)            274        (2,041)
                                                   -------           -------          -------            ---         ------
Income (loss) before income taxes
      from continuing operations                     13,824         (21,592)           15,760         20,735       (25,955)
Income tax provision                                  3,500            1,900            1,575          2,073          1,400
                                                      -----            -----            -----          -----          -----
Net income (loss) from continuing
      operations                                  $  10,324      $  (23,492)       $   14,185     $   18,662    $  (27,355)
                                                  ---------       ----------        ---------     ----------     ----------
Loss from discontinued operations
      (net of tax)                                       --               --               --             --        (5,760)
Gain (loss) on disposal of
      discontinued operations (net of tax)               --              613               --          2,931       (20,279)
                                                  ---------       ----------       ----------     ----------     ----------
Net income (loss)                                 $  10,324      $  (22,879)        $  14,185      $  21,593    $  (53,394)
                                                  =========      ===========        =========      =========    ===========

Basic earnings (loss) per share from
continuing operations                             $    0.36      $    (0.95)        $    0.60      $    0.83    $    (1.22)

Basic earnings (loss) per share from
       discontinued operations                           --             0.02               --           0.13         (1.16)
                                                       ----             ----             ----           ----          -----
Basic earnings (loss) per share                   $    0.36      $    (0.93)        $    0.60      $    0.96    $    (2.38)
                                                  =========      ===========        =========      =========    ===========
Shares used in calculating basic
       earnings per share                            28,573           24,727           23,601         22,424         22,470
                                                  =========      ===========        =========      =========    ===========
Diluted earnings (loss) per share
       from continuing operations                 $    0.36      $    (0.95)        $    0.55      $    0.82    $    (1.22)
Diluted earnings (loss) per share
       from discontinued operations                      --             0.02               --           0.13         (1.16)
                                                        ---             ----              ---           ----          -----
Diluted net income (loss) per share               $    0.36      $    (0.93)        $    0.55      $    0.95    $    (2.38)
                                                  =========      ===========        =========      =========    ===========
Shares used in calculating diluted
       earnings per share                            29,052           24,727           25,976         22,852         22,470
                                                  =========      ===========        =========      =========    ===========
Cash dividends per share                          $      --      $        --        $      --      $      --    $        --
                                                  =========      ===========        =========      =========    ===========
</table>



<PAGE>


Other Operating Data:

<table>
<caption>
                                               January 3      December 28,     December 29,     December 31,   January 1,
Fiscal Years ended                               2003             2001             2000            1999           1999
------------------------------------------- ---------------- ---------------- ---------------- -------------- --------------
(In thousand of dollars, except where
shown as a percentage of revenue)
<s>                                         <c>              <c>             <c>               <c>            <c>
Gross margin percentage                            50%              50%              53%              53%            47%
Operating income (loss) percentage                  7%               0%               7%               8%           (9%)
EBITDA (1)                                   $  46,025        $  41,038       $   49,196        $  29,345      $(13,637)
EBITDA as a percentage of revenue (1)              10%               9%              13%              11%           (5%)
Depreciation and amortization                $  18,150        $  41,524       $   23,476        $   9,073      $  12,510
Cash provided by operating
  activities                                 $  35,096        $  25,093       $   19,835        $  23,625      $   6,968
Cash provided (used) by investing
  activities                                 $ (5,766)        $(11,441)       $(167,180)        $(17,882)      $  22,484
Cash provided (used) by financing
  activities                                 $(31,729)        $(23,450)       $  138,957        $   2,656      $ (8,538)

</table>


Selected Consolidated Balance Sheet Data:

<table>
<caption>
                                              January 3,      December 28,     December 29,     December 31,   January 1,
As of                                            2003             2001             2000             1999          1999
------------------------------------------- ---------------- ---------------- ---------------- -------------- --------------
(In thousands)
<s>                                         <c>              <c>               <c>              <c>            <c>
Working capital (deficit)                    $  65,044        $  19,304         $ (10,439)       $ 111,808      $  81,956
Total assets                                   441,656          419,395            488,628         181,751        156,279
Non-current portion of long-term debt          114,051          131,759            143,553          33,821         31,640
   and other liabilities
Shareholders' equity                           201,351          138,489            134,943         100,796         74,691

</table>

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

(1)  EBITDA  consists of earnings from  continuing  operations  before  interest
     income, interest expense, income taxes, depreciation and amortization.  Our
     EBITDA is presented  because it is a widely accepted  financial  indicator.
     EBITDA  is not a  measure  of  financial  performance  in  accordance  with
     generally  accepted  accounting  principles and should not be considered in
     isolation or as an  alternative to net income (loss) as an indicator of our
     performance  or to cash flows  from  operating  activities  as a measure of
     liquidity. Our EBITDA may not be comparable to similarly titled measures as
     defined by other companies.





<PAGE>


     The following table sets forth, for the periods indicated, certain
financial data as a percentage of total revenue:


<table>
<caption>
                                        January 3,      December 28,      December 29,    December 31,   January 1,
Fiscal Years ended                        2003             2001               2000            1999          1999
<s>                                      <c>              <c>                <c>             <c>           <c>
Revenue                                   100%             100%               100%            100%          100%
Cost of revenue                            50%              50%                47%             47%           53%     
                                           ---              ---                ---             ---           ---
Gross margin                               50%              50%                53%             53%           47%

Operating expenses:
   Research and development                13%              13%                13%             13%           17%
   Sales and marketing                     19%              22%                22%             21%           23%
   General and administrative               9%               8%                 8%             12%           12%
   Restructuring charges                     -               1%                  -               -            4%
   Amortization of goodwill and
      other purchased intangibles           2%               6%                 4%              0%            0%
                                            --               --                 --              --            --
Total operating expense                    43%              50%                46%             46%           56%
                                           ---              ---                ---             ---           ---
Operating income (loss) from
      continuing operations                 7%                -                 7%              8%          (9%)
Non-operating income (expense),
      net                                 (4%)             (5%)               (3%)               -          (1%)
                                          ----             ----               ----             ---          ----
Income (loss) before income taxes
      from continuing operations            3%             (5%)                 4%              8%         (10%)
Income tax provision                        1%                -                  -              1%            1%
                                            --              ---                ---              --            --
Net income (loss) from
     continuing operations                  2%              5%)                 4%              7%         (10%)
                                            --             ----                 --              --         -----
Loss from discontinued
     operations, (net of tax)                -                -                  -               -          (2%)
Gain (loss) on disposal of
    discontinued operations
    (net of tax)                             -                -                  -              1%          (8%)
                                           ---              ---                ---              --          ----
Net income (loss)                           2%             (5%)                 4%              8%         (20%)
                                            ==             ====                 ==              ==         =====
</table>





Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     The  following   discussion   should  be  read  in  conjunction   with  the
consolidated   financial   statements  and  the  related  notes.  The  following
discussion contains forward-looking statements that reflect our plans, estimates
and beliefs.  Our actual results could differ materially from those discussed in
the forward-looking statements.  Factors that could cause or contribute to these
differences  include,  but are not limited to, those  discussed  below and those
listed under "Risks and Uncertainties."


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our critical accounting estimates and the related assumptions are evaluated
periodically as conditions  warrant,  and changes to such estimates are recorded
as new information or changed  conditions  require revision.  Application of the
critical  accounting  policies  requires  management's  judgments,  often as the
result of the need to make estimates of matters that are  inherently  uncertain.
If actual  results  were to  differ  materially  from the  estimates  made,  the
reported  results  could be  materially  affected.  For a summary  of all of our
significant   accounting   policies,   including  critical  accounting  policies
discussed  below, see Note 1 - "Summary of Significant  Accounting  Policies" of
the Notes to the Consolidated Financial Statements.


Revenue Recognition

     Our revenues are recorded in accordance  with the  Securities  and Exchange
Commission's   (SEC)  Staff   Accounting   Bulletin  (SAB)  No.  101,   "Revenue
Recognition."  Prior to  recognizing  revenue,  we require  the  following:  (i)
execution of a written  customer  order,  (ii) delivery of the product,  (iii) a
fixed or determinable fee, and (iv) probable  collectibility of the proceeds. We
recognize  revenue  from  product  sales when the  products  are  shipped to the
customer, title has transferred, and no significant obligations remain. We defer
revenue if there is  uncertainty  about customer  acceptance.  We reduce product
revenue for  estimated  customer  returns and for any  discounts  that may occur
under programs we have with our customers and partners.

     Our shipment terms are either FOB shipping point or FCA shipping point. FOB
(Free on  Board)  shipping  point  term  means  that  the  seller  fulfills  the
obligation  to deliver  when the goods have  passed  over the ship's rail at the
named  port of  shipment.  This  means  that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point.  The FOB term  requires
the seller to clear the goods for export. FCA (Free Carrier) shipping point term
means that the seller  fulfills  the  obligation  to deliver  when the goods are
handed over, cleared for export, and into the charge of the carrier named by the
buyer at the named  place or point.  If no  precise  point is  indicated  by the
buyer,  the  seller may choose  within the place or range  stipulated  where the
carrier shall take the goods into carrier's charge.

     Our shipment  terms for domestic  orders are typically FOB shipping  point.
International  orders  fulfilled  from  our  European  distribution  center  are
typically shipped FCA shipping point. Other international orders are shipped FOB
destination,  and accordingly these  international  orders are not recognized as
revenue until the product is delivered and title has transferred.

     Revenues  from  purchased  extended  warranty  and support  agreements  are
deferred and recognized  ratably over the term of the  warranty/support  period.
Substantially  all  technology  licenses and research  revenue have consisted of
initial license fees and royalties,  which were recognized when earned, provided
we had no remaining obligations.

     Sales to distributors and resellers are recognized upon shipment  providing
that there is evidence of such an arrangement  through a distribution  agreement
or purchase order, title has transferred,  no remaining performance  obligations
exist,  the price and terms of the sale are fixed,  and  collection is probable.
Distributors and resellers do not have a right of return.

     Our  software  arrangements  consist  of a  license  fee and post  contract
customer support (PCS). We have established  vendor specific  objective evidence
(VSOE) of fair  value for our PCS  contracts  based on the price of the  renewal
rate.  The  remaining  value of the  software  arrangement  is  allocated to the
license fee using the residual  method,  which  revenue is primarily  recognized
when the software  has been  delivered  and there are no remaining  obligations.
Revenue from PCS is recognized ratably over the period of the PCS agreement.


Allowance for Doubtful Accounts

     We evaluate the collectibility of our trade accounts  receivable based on a
number of factors.  In circumstances where we are aware of a specific customer's
inability to meet its financial  obligations to us, a specific allowance for bad
debts is estimated and recorded which reduces the  recognized  receivable to the
estimated  amount we believe  will  ultimately  be  collected.  In  addition  to
specific  customer  identification  of potential bad debts, bad debt charges are
recorded based on our recent past loss history and an overall assessment of past
due trade accounts receivable amounts outstanding.


Inventory Valuation

     Our inventory is recorded at the lower of cost or market. We use a standard
cost  accounting  system to value  inventory and these  standards are reviewed a
minimum  of  once  a  year  and  multiple  times  a  year  in  our  most  active
manufacturing  plants.  We adjust the inventory  value for estimated  excess and
obsolete inventory based on management's  assessment of future demand and market
conditions. If actual future demand or market conditions are less favorable than
those projected by management, additional inventory write-downs may be required.


Deferred Taxes

     Deferred  taxes are  provided on a liability  method  whereby  deferred tax
assets  are  recognized  for  deductible  temporary   differences  and  deferred
liabilities  are  recognized  for  taxable  temporary   differences.   Temporary
differences  are the  differences  between  the  reported  amounts of assets and
liabilities and their tax bases.  Deferred tax assets are reduced by a valuation
allowance  when it is determined to be more likely than not that some portion or
all of the deferred tax assets will not be realized.  In evaluating the need for
a valuation  allowance,  we consider  future taxable  income,  resolution of tax
uncertainties and prudent and feasible tax planning strategies.  If we determine
that we would not be able to realize all or part of our  deferred  tax assets in
the future, an adjustment to the carrying value of the deferred tax assets would
be charged to income in the period in which such determination was made.


Goodwill and Other Purchased Intangible Assets

     We have  significant  intangible  assets on our balance  sheet that include
goodwill  and  other  purchased  intangibles  related  to  acquisitions.  At the
beginning of fiscal 2002, we adopted Statement of Financial Accounting Standards
No. 141 ("SFAS 141"),  Business  Combinations,  and No. 142,  Goodwill and Other
Intangible Assets ("SFAS 142").  Application of the non-amortization  provisions
of SFAS 142 significantly  reduced amortization expense of purchased intangibles
and goodwill to  approximately  $8.3 million for the fiscal year 2002 from $29.4
million in the prior year. We reclassified  identifiable  intangible assets with
indefinite lives and net book value of $73.6 million, as defined by SFAS 142, to
goodwill at the date of adoption.

     For comparative purposes, the pro forma adjusted net income per share
excluding amortization of goodwill, distribution channel, and assembled
workforce is as follows:

                                            January 3, December 28, December 29,
                                               2003        2001         2000
------------------------------------------ ------------ ------------ -----------
(In thousands)

Net income (loss)                           $ 10,324    $ (22,879)    $  14,185
  Add back SFAS 142 adjustments:
      Amortization of goodwill                               7,817        3,116
      Amortization of distribution channel                  11,230        5,176
      Amortization of assembled workforce                    1,834        1,225
                                                             -----        -----

Adjusted net income (loss)                  $ 10,324    $  (1,998)    $  23,702
                                            ========    ==========    =========

Weighted average shares outstanding
     Basic                                    28,573        24,727       23,601
     Diluted                                  29,052        24,727       25,976
Diluted net income (loss) per share         $   0.36    $   (0.93)    $    0.55
Pro forma adjusted diluted net income
 (loss) per share                           $   0.36    $   (0.08)    $    0.92
                                            ========    ==========    =========

     In assessing the  recoverability of goodwill and indefinite life intangible
assets, we must make assumptions about the estimated future cash flows and other
factors to determine  the fair value of these assets.  Assumptions  about future
revenue and cash flows require significant judgment because of the current state
of the economy, the fluctuation of actual revenue, and the timing of expenses.

     For goodwill, the annual impairment evaluation includes a comparison of the
carrying  value of the reporting  unit  (including  goodwill) to that  reporting
unit's fair value.  If the  reporting  unit's  estimated  fair value exceeds the
reporting unit's carrying value, no impairment of goodwill  exists.  If the fair
value of the reporting unit does not exceed the unit's carrying  value,  then an
additional  analysis is performed  to allocate  the fair value of the  reporting
unit to all of the assets and  liabilities of that unit as if that unit had been
acquired  in a  business  combination  and the  fair  value  of the unit was the
purchase  price.  If the excess of the fair value of the reporting unit over the
fair value of the identifiable  assets and liabilities is less than the carrying
value  of the  unit's  goodwill,  an  impairment  charge  is  recorded  for  the
difference.

     Similarly,  the impairment evaluation for indefinite life intangible assets
includes a comparison of the asset's  carrying  value to the asset's fair value.
When the carrying value exceeds fair value an impairment  charge is recorded for
the amount of the  difference.  An  intangible  asset is  determined  to have an
indefinite  useful  life  when  there  are no  legal,  regulatory,  contractual,
competitive,  economic or any other factors that may limit the period over which
the asset is expected to  contribute  directly or  indirectly to the future cash
flows of our company.  In each reporting  period, we also evaluate the remaining
useful life of an  intangible  asset that is not being  amortized  to  determine
whether events and circumstances  continue to support an indefinite useful life.
If an  intangible  asset that is not being  amortized  is  determined  to have a
finite useful life, the asset will be amortized prospectively over the estimated
remaining useful life and accounted for in the same manner as intangible  assets
subject to amortization.

     We tested goodwill for impairment using the process  prescribed in SFAS No.
142. The first step is a screen for potential impairment,  while the second step
measures the amount of the  impairment,  if any. No impairment  charge  resulted
from the impairment  tests.  For comparative  purposes that depict the effect of
adopting SFAS No. 141 and 142 above, we have included the pro forma adjusted net
income per share excluding  amortization of goodwill,  distribution channel, and
assembled workforce.


Accounting  for  the  Long-Lived   Assets  Including   Intangibles   Subject  to
Amortization

     We adopted Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-lived Assets," at the beginning of fiscal
2002.  The effect of  adopting  SFAS 144 did not have a  material  impact on our
financial position or results of operations.

     Depreciation  and  amortization of our long-lived  assets is provided using
accelerated and straight-line methods over their estimated useful lives. Changes
in  circumstances  such as the  passage of new laws or  changes in  regulations,
technological advances, changes to our business model, or changes in the capital
strategy  could  result  in the  actual  useful  lives  differing  from  initial
estimates.  In  those  cases  where  we  determine  that  the  useful  life of a
long-lived  asset should be revised,  we will  depreciate  the net book value in
excess of the estimated  residual value over its revised  remaining useful life.
Factors  such as changes in the planned use of  equipment,  customer  attrition,
contractual  amendments,  or mandated  regulatory  requirements  could result in
shortened useful lives.

     Long-lived  assets and asset groups are evaluated for  impairment  whenever
events or changes in  circumstances  indicate  that the carrying  amount of such
assets may not be recoverable.  The estimated  future cash flows are based upon,
among other things,  assumptions about expected future operating performance and
may differ from actual cash flows.  Long-lived  assets  evaluated for impairment
are grouped with other assets to the lowest  level for which  identifiable  cash
flows are largely  independent  of the cash flows of other  groups of assets and
liabilities.  If the sum of the  projected  undiscounted  cash flows  (excluding
interest)  is less than the  carrying  value of the  assets,  the assets will be
written  down  to  the  estimated   fair  value  in  the  period  in  which  the
determination is made.

Warranties

     We provide for the estimated cost of product warranties at the time revenue
is  recognized.  While we engage  in  extensive  product  quality  programs  and
processes,  including  actively  monitoring  and  evaluating  the quality of our
component  suppliers,  our warranty  obligation  is affected by product  failure
rates,  material  usage,  and service  delivery  costs  incurred in correcting a
product failure. Should actual product failure rates, material usage, or service
delivery  costs differ from our estimates,  revisions to the estimated  warranty
accrual and related costs may be required.


Stock Compensation

     As  permitted  by the  provisions  of  Statement  of  Financial  Accounting
Standards (SFAS) No. 148, "Accounting for Stock-Based  Compensation - Transition
and  Disclosure," and Statement of Financial  Accounting  Standards ("SFAS 123")
No.  123,  "Accounting  for  Stock-Based   Compensation,"  we  apply  Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB
25) and related  interpretations  in  accounting  for our stock option plans and
stock  purchase plan.  Accordingly,  we do not recognize  compensation  cost for
stock  options  granted at a price  equal to fair market  value.  Note 14 of the
Notes to the Consolidated  Financial  Statements describes the plans we operate,
and Note 1 of the Notes to the  Consolidated  Financial  Statements  contains  a
summary of the pro forma  effects to  reported  net income  (loss) and  earnings
(loss)  per  share for  fiscal  2002,  2001,  and 2000 as if we had  elected  to
recognize  compensation  cost based on the fair value of the options  granted at
grant date, as prescribed by SFAS No. 123.


Investment in the Caterpillar  Trimble Control  Technologies LLC (CTCT or "Joint
Venture")

     We have adopted the equity method of accounting  for our  investment in the
Joint  Venture.  This  requires  that we record  our share of the Joint  Venture
profits or losses in a given fiscal  period.  During fiscal year 2002, the Joint
Venture  reported  a loss of $0.4  million  of which our share is $0.2  million,
which was recorded as a Non-operating  expense under the heading of "Expense for
affiliated  operations,  net," but which was  offset by the  amortization  of an
equal  amount of the original  deferred  gain on the sale of  technology  to the
Joint Venture.

     We have  elected  to treat  the cash  distribution  of $11.0  million  as a
deferred gain, being amortized to the extent that losses are  attributable  from
the Joint Venture under the equity method described above. When and if the Joint
Venture is profitable on a sustainable basis and future operating losses are not
anticipated, then we will recognize as a gain, the portion of the $11.0 million,
which is  un-amortized.  To the extent that it is possible that we will have any
future-funding  obligation  relating  to the Joint  Venture,  then the  relevant
amount of the $11.0  million  will be  deferred  until  such time,  the  funding
obligation no longer exists. Both our share of profits (losses) under the equity
method and the  amortization  of our $11.0  million  deferred  gain are recorded
under the heading of "Expense for affiliated  operations,  net" in Non-operating
income (expense).

     For further information, see `Recent Business Developments - Caterpillar
Joint Venture' section of Item 7 in this Report.


RECENT BUSINESS DEVELOPMENTS

Caterpillar Joint Venture

     On April 1, 2002,  Caterpillar  Trimble Control  Technologies  LLC, a Joint
Venture formed by Trimble and Caterpillar,  began operations. The Joint Venture,
50 percent  owned by Trimble  and 50 percent  owned by  Caterpillar,  with equal
voting rights, is developing and marketing next generation  advanced  electronic
guidance and control  products  for  earthmoving  machines in the  construction,
mining, and waste industries.  The Joint Venture is based in Dayton, Ohio. Under
the terms of the joint venture agreement,  Caterpillar contributed $11.0 million
cash plus selected  technology,  for a total contributed value of $14.5 million,
and we contributed selected existing machine control product technologies valued
at $25.5 million.  Additionally,  both companies have licensed patents and other
intellectual  property from their  portfolios to the Joint  Venture.  During the
first fiscal quarter of 2002, we received a special cash  distribution  of $11.0
million from the Joint Venture.

     During fiscal year 2002, we recorded approximately $4.0 million of expenses
under the heading of "Expense for affiliated  operations,  net" in Non-operating
income (expense) related to certain  transactions  between the Joint Venture and
us. This was  comprised  of  approximately  $4.9  million of  incremental  costs
incurred by us as a result of  purchasing  products  from the Joint Venture at a
higher  transfer  price  than  our  original   manufacturing  costs,  offset  by
approximately  $0.9 million of contract  manufacturing fees charged to the Joint
Venture  by us.  Due to the  nature of the  transfer  price  agreements  between
Trimble and the Joint Venture,  a related party,  the impact of these agreements
is classified under Non-operating income (expense).

     In addition,  during fiscal year 2002, we recorded lower operating expenses
of approximately $4.2 million due to the transfer of  employee-related  expenses
for  research  and  development  ($2.8  million),   and  sales,   marketing  and
administrative  functions  ($1.4 million) to the Joint Venture.  These employees
are devoted to the Joint  Venture and are primarily  engaged in developing  next
generation products and technology for that entity.


Acquisition of LeveLite Technology, Inc

     On August 15, 2002, we acquired LeveLite Technology,  Inc. ("LeveLite"),  a
California   corporation,   for  approximately  $5.7  million.   This  strategic
acquisition  complements our entry-level  construction  instrument product line.
The purchase price  consisted of 437,084 shares of our common stock.  The merger
agreement  provides  for Trimble to make  additional  earn-out  payments  not to
exceed $3.9 million (in common stock and cash payment) based on future  revenues
derived from existing product sales to a certain customer.  On January 22, 2003,
we issued the first earn-out  payment (stock and cash  combination)  with a fair
market  value of  approximately  $0.4  million,  related to the earn-out for the
quarter ended  January 3, 2003.  Also, if we receive any proceeds from a pending
litigation,  a portion will be paid to the former shareholders of LeveLite.  The
additional payments, if earned, will result in additional goodwill.



<PAGE>


RESULTS FROM CONTINUING OPERATIONS EXCLUDING INFREQUENT, AND ACQUISITION RELATED
ADJUSTMENTS

     Income (loss) from continuing  operations  include  certain  infrequent and
acquisition-related  charges  that  management  believes are not  reflective  of
on-going operations.  The following table, which does not purport to present the
results  of  continuing   operations  in  accordance  with  generally   accepted
accounting principles,  reflects results of operations to exclude the effects of
such items as follows (in thousands):


<table>
<caption>

                                                          January 3,        December 28,     December 29,
Fiscal Years Ended                                           2003               2001             2000
---------------------------------------------------------------------------------------------------------
<s>                                                       <c>                  <c>              <c>
Income (loss) before income taxes from continuing
  operations                                               $  13,824            $(21,592)        $ 15,760
Infrequent and acquisition-related charges:
   Loss on sale of business (other income and
     expense)                                                     --                  113              --
   Amortization of goodwill and other purchased
     intangibles                                               8,300               29,389          13,407
   Restructuring charges                                       1,099                3,599              --
   Gain on sale of minority investment
       (other income and expense)                              (165)                (270)         (1,274)
   Inventory purchase accounting adjustment
       (cost of sales)                                            --                  --            4,600
   Debt extinguishment costs (interest
        income and expense)                                       --                  --            1,185
   Write down of investment
        (other income and expense)                             1,453                  136              --
 Facility relocation costs - Boulder, Colorado
      (general and administrative)                                --                   --             917
                                                                 ---                  ---             ---
 Total infrequent and acquisition-related charges             10,687               32,967          18,835
                                                              ------               ------          ------
 Adjusted income before income taxes from
      continuing operations                                   24,511               11,375          34,595
Income tax provision                                           3,500                1,900           3,460
                                                               -----                -----           -----
Adjusted net income                                        $  21,011            $   9,475        $ 31,135
                                                           =========            =========        ========
</table>


RESULTS OF CONTINUING OPERATIONS

     Our annual  revenues  from  continuing  operations  decreased  from  $475.3
million in fiscal 2001 to $466.6  million in fiscal 2002.  In fiscal  2001,  our
annual  revenues from  continuing  operations  increased to $475.3  million from
$369.8 million in fiscal 2000. In fiscal 2002, we had net income from continuing
operations of $10.3 million, or $0.36 diluted earnings per share,  compared to a
net loss of $23.5  million,  or $0.95 loss per share,  in fiscal 2001, and a net
income from continuing  operations of $14.2 million,  or $0.55 diluted  earnings
per share,  in fiscal  2000.  The total net income  for fiscal  2002,  including
discontinued operations, was $10.3 million, or $0.36 diluted earnings per share,
compared  to a total net loss for 2001,  including  discontinued  operations  of
$22.9 million,  or $0.93 loss per share, and a total net income for fiscal 2000,
including  discontinued  operations of $14.2 million,  or $0.55 diluted earnings
per share. A summary of financial data by business segment is as follows.

     The following  table shows revenue and operating  income by segment for the
periods  indicated  and  should  be  read  in  conjunction  with  the  narrative
descriptions below.  Operating income by segment excludes unallocated  corporate
expenses,  which are comprised  primarily of general and  administrative  costs,
amortization of goodwill and other purchased intangibles, as well as other items
not controlled by the business segment.

     In the  first  fiscal  quarter  of fiscal  2002,  we  realigned  two of our
reportable segments and therefore the following table shows restated revenue and
operating income by segment to reflect this realignment. The Agriculture segment
was combined with the Mapping and GIS business to form Field Solutions.  Mapping
and  GIS  were  previously  part of  Fleet  and  Asset  Management.  The  Mobile
Positioning  business that was part of Fleet and Asset  Management is now Mobile
Solutions.

     We began  breaking  out Mobile  Solutions as a separate  reporting  segment
during the first quarter of 2002 to address the growing importance of the mobile
asset management business and its impact on our profitability. At the same time,
we combined our GIS and  Agriculture  businesses to create a new segment  called
Field  Solutions  in  order to  recognize  the  synergies  and  similar  product
requirements between the two businesses.


<table>
<caption>
                                                       % of                         % of                        % of
                                       January 3,      Total        December 28,    Total      December 29,     Total
Fiscal Years Ended                        2003        Revenue         2001         Revenue        2000         Revenue
------------------------------------ -------------   ---------     -------------  ---------    ------------   ---------
<s>                                   <c>              <c>       <c>                <c>       <c>               <c>
(Dollars in thousands)
Engineering and Construction
   Revenue                             $  305,490       66%       $  303,944         64%       $ 195,150         53%
   Segment operating income
     from continuing operations            54,931                     51,625                      43,937
   Segment operating income
    as a percent of segment                   18%                        17%                         23%
    revenue
Field Solutions
   Revenue                                 67,259       14%           68,519         14%          70,652         19%
   Segment operating income
     from continuing                       12,395                     13,652                      19,834
     operations
   Segment operating income
     (loss) as a percent of
     segment revenue                          18%                        20%                         28%
Mobile Solutions
   Revenue                                  8,486        2%           13,791          3%          20,471          6%
   Segment operating loss
     from continuing operations          (10,830)                    (8,966)                       (369)
   Segment operating loss
     as a percent of  segment
     revenue                               (128%)                      (65%)                        (2%)
Component Technologies
   Revenue                                 59,755       13%           58,083         12%          60,230         16%
   Segment operating income
     from continuing operations            11,290                     10,882                      14,850
   Segment operating income
     as a percent of segment
    revenue                                   19%                        19%                         25%
Portfolio Technologies
   Revenue                                 25,612        5%           30,955          7%          23,295          6%
   Segment operating income
     from continuing operations             5,072                      4,037                         965
   Segment operating income
     as a percent of segment
     revenue                                  20%                        13%                          4%
                                              --                         ---                          --
Total Revenue                          $  466,602                 $  475,292                   $ 369,798
Total Segment operating
    income from continuing
    operations                         $   72,858                 $   71,230                   $  79,217
</table>


     A  reconciliation  of  our  consolidated   segment  operating  income  from
continuing  operations  to  consolidated  income (loss) before income taxes from
continuing operations follows:


<table>
<caption>
                                                          January 3,       December 28,     December 29,
Fiscal Years Ended                                           2003              2001             2000
------------------------------------------------------- -------------     --------------   -------------
(In thousands)
<s>                                                     <c>               <c>               <c>
Consolidated segment operating income from
  continuing operations                                  $  72,858         $  71,230         $  79,217
Unallocated corporate expense                             (29,636)          (38,061)          (39,591)
Amortization of goodwill and other purchased
  intangible assets                                        (8,300)          (29,389)          (13,407)
Restructuring charges                                      (1,099)           (3,599)                 -
Non-operating expense, net                                (19,999)          (21,773)          (10,459)
                                                          -------           --------          --------
Income (loss) from continuing operations before
   income taxes                                          $  13,824         $(21,592)         $  15,760
                                                         =========         =========         =========

</table>



Basis of Presentation

     We have a 52-53 week fiscal year,  ending on the Friday nearest to December
31,  which for fiscal 2002 was January 3, 2003.  Fiscal 2002 was a 53-week  year
and as a result,  we  recorded  an extra week of  revenues,  costs,  and related
financial activities.

     Therefore,  the  financial  results of fiscal  year 2002,  having the extra
week, will not be exactly  comparable to the prior and subsequent 52-week fiscal
years.  Thus,  due to the inherent  nature of adopting a 52-53 week fiscal year,
Trimble,  analysts,  shareholders,  investors  and  others  will  have  to  make
appropriate  adjustments to any analysis performed when comparing our activities
and results in fiscal  years that  contain 53 weeks,  to those that  contain the
standard 52 weeks. Fiscal years 2001 and 2000 were both comprised of 52-weeks.


Revenue

     In fiscal 2002,  total revenue  decreased by $8.7 million or 1.8% to $466.6
million  from $475.3  million in fiscal  2001.  The  decrease in fiscal 2002 was
primarily  due to the  reduction of revenue in Mobile  Solutions  and  Portfolio
Technologies.  Total revenue in fiscal 2001 increased by $105.5 million or 28.5%
to $475.3  million  from $369.8  million in fiscal  2000,  primarily  due to the
full-year revenue effect of the Spectra Precision Group, acquired in July 2000.



<PAGE>


Engineering and Construction

Revenue

     Engineering  and  Construction  revenues  increased by $1.5 million or 0.5%
during fiscal 2002 as compared to fiscal 2001 due to the following:

o    Revenues increased due to the LeveLite acquisition by $3.6 million;

o    Strong performance by our machine control product offering as we continue
     to penetrate the after-market for machine guidance on earthmoving
     equipment;

o    Increased revenues were partially offset by a reduction in revenues in
     several other product areas due to continued difficult global economic
     conditions.


     Engineering and Construction revenues increased by $108.8 million or 56% in
fiscal 2001 over fiscal 2000 due to the following:

o    In fiscal 2001, we recorded a full year of revenues generated from the
     Spectra Precision Group compared to approximately half-year results in
     fiscal 2000, which accounted for approximately $85.0 million;

o    Strong demand for our land survey product line primarily due to the
     introduction of the Trimble Toolbox(TM) in the first fiscal quarter of
     2001;

o    Higher demand for GPS machine guidance equipment.


Operating Income

     Engineering and Construction operating income increased by $3.3 million or
6.4% in fiscal 2002 over fiscal 2001 due to the following:

o    A reduction of $4.2 million of operating expenses, due to the transfer of
     employee-related expenses to Caterpillar Trimble Control Technologies;

o    Higher revenues and lower operating expenses were partially offset by a
     reduction in gross margin as a result of product sales mix during fiscal
     2002.


     Engineering and Construction operating income increased by $7.7 million or
17% in fiscal 2001 over fiscal 2000 due to the following:

o    Fiscal 2001 included a full year of revenue from the Spectra Precision
     Group acquisition and the benefits of the consolidation of product lines in
     the Engineering and Construction business areas;

o    The worldwide cost reduction program, implemented as part of Trimble and
     the Spectra Precision Group integration, also favorably impacted operating
     income.


Field Solutions

Revenue

     Field Solutions experienced a revenue decline in fiscal 2002 of $1.3
million or 1.9% compared with fiscal 2001 due to the following:

o    Overall revenue decreased during the year due to the decline in the United
     States federal, state, and local government spending and a delay in the
     release of the new GeoExplorer(R) CE Series due to component supply issues;

o    This decrease was partially offset by the increased demand for both the
     manual and auto guidance product lines.


     Field Solutions revenue decreased by $2.1 million or 3% in fiscal 2001 over
fiscal 2000 due to the following:

o    Small  decrease in GIS  revenues  due to lower demand in the second half of
     fiscal 2001;

o    Significant decrease in price points in the Agriculture market on flat
     demand.


Operating Income

     Field Solutions operating income decreased by $1.3 million or 9.2% in
fiscal 2002 over fiscal 2001 due to the following:

o    Lower revenues primarily from the decrease in government spending described
     above;

o    Lower gross margin due to product sales mix, which was more weighted toward
     the relatively lower margin Agricultural business area.


     Field Solutions operating income decreased by $6.2 million or 31.2% in
fiscal 2001 over fiscal 2000 due to the following:

o    A product mix shift toward  lower-priced  products with a general reduction
     in prices;

o    Overall weak demand in the agricultural market in fiscal 2001;

o    The startup development, selling, and support costs associated with the
     ramp up of the Autopilot product line.


Mobile Solutions

Revenue

     Mobile Solutions revenues decreased by $5.3 million or 39% in fiscal 2002
over fiscal 2001 due to the following:

o    Revenue reduction of approximately $3 million in our satellite
     communications business as a result of our decision to discontinue the
     Galaxy(TM) Inmarsat-C product line in early 2001;

o    Slow  down in  system  integration  projects  due to  reduced  spending  at
     municipalities;

o    Reduced sales of wireless products of $0.9 million due to a transition from
     a sensor provider to a fully integrated service provider;

o    Sales of some product lines were down as a result of the economic slow down
     and the shift of technology from analog to digital.


     Mobile Solutions revenues decreased by $6.7 million or 33% in fiscal 2001
over fiscal 2000 due to the following:

o    A reduction of approximately $3.7 million in our GalaxyT Inmarsat-C line
     due to the announcement of our intention to discontinue certain of these
     product lines in early 2001, Mexico's satellite communications systems
     capacity limitations, and the general economic slow-down;

o    Sales of the CrossCheck and Placer(TM) receiver product lines were down by
     approximately $3.0 million as a result of the economic slow down.


Operating Loss


     Mobile Solutions operating loss increased by $1.9 million or 21% in fiscal
2002 over fiscal 2001 due to the following:

o    Lower revenues as described above;

o    Increased costs incurred in the development and marketing of a service
     platform to enable a range of asset management solutions.


     Mobile Solutions operating loss increased by $8.6 million in fiscal 2001
over fiscal 2000 due to the following:

o    Lower revenues as described above;

o    Decrease in margins due to the  sell-off of existing  Satcom  inventory  at
     reduced prices;

o    Significant costs incurred in the development of a service platform to
     enable a range of asset management solutions including an Internet
     delivered, cellular-based solution for vehicle fleet management.


Component Technologies

Revenue

     Component Technologies revenues increased by $1.7 million or 3% in fiscal
2002 over fiscal 2001 due to the following:

o    Timing revenue increased $4.6 million in fiscal 2002 over fiscal 2001 due
     to significant demand during the second half of fiscal 2002 from new and
     existing wireless infrastructure customers;

o    In-vehicle navigation revenue decreased $1.0 million in fiscal 2002 over
     fiscal 2001 as average selling prices declined by more than 9%;

o    License revenue  decreased $1.7 million in fiscal 2002 over fiscal 2001 due
     to an expired license contract.


     Component Technologies revenues decreased by $2.1 million or 4% in fiscal
2001 over fiscal 2000 due to the following:

o    Embedded  product  lines were down  approximately  $2.7  million due to the
     economic slowdown;

o    Timing product lines were down by $1.5 million due to reduced spending in
     the telecommunications market;

o    In-vehicle navigation sales increased by approximately $0.9 million. Volume
     grew by 29%, which was offset by a decrease of 19% in an average selling
     price of these products during the year.





<PAGE>


Operating Income

     Component Technologies operating income increased by $0.4 million or 4% in
fiscal 2002 over fiscal 2001 due to the following factors:

o    Higher gross margins  resulting from higher revenues and favorable  product
     mix;

o    This increase was partially offset by higher operating expenses, primarily
     in research & development and marketing.


     Component Technologies operating income decreased by $4.0 million or 27% in
fiscal 2001 over fiscal 2000 due to the following:

o    Lower revenue as described  above;

o    Higher expenses primarily due to new product development and channel
     development.


Portfolio Technologies


Revenue

     Portfolio Technologies revenues decreased by $5.3 million or 17 % in fiscal
2002 over fiscal 2001 due to the following:

o    Reduction of $4.4 million due to the sale of our air transport product line
     to Honeywell in fiscal 2001;

o    Revenues from the military business declined by $1.1 million.


     Portfolio Technologies revenues increased by $7.7 million or 33% in fiscal
2001 over fiscal 2000 due to the following:

o    In fiscal 2001, Trimble  experienced a full year of revenues generated from
     the purchase of Tripod Data Systems as compared to one and one-half  months
     in fiscal 2000,  which  accounted  for an increase of  approximately  $12.2
     million;

o    The above increase was partially offset by a $4.5 million  reduction in our
     commercial  aviation  product line during fiscal 2001.  The sale of the air
     transport product line to Honeywell was completed in March 2001.


Operating Income

     Portfolio Technologies operating income increased by $1 million or 26% in
fiscal 2002 over fiscal 2001 due to the following:

o    Increased operating performance from Tripod Data Systems business.


     Portfolio Technologies operating income increased by $3.1 million or 318%
in fiscal 2001 over fiscal 2000 primarily due to the following:

o    An incremental  increase  resulting from a full years operating  results of
     Tripod Data Systems acquired on November 14, 2000.

International Revenues

     Sales  to  unaffiliated  customers  outside  the  United  States  comprised
approximately  49% in 2002, 50% in 2001, and 52% in 2000. During the 2002 fiscal
year,  North and South  America  represented  55%,  Europe,  the Middle East and
Africa  represented  32%, and Asia  represented  13%. In fiscal 2002, the United
States  comprised  approximately  51% and Germany  16% of sales to  unaffiliated
customers.  We anticipate that sales to international customers will continue to
account  for a  significant  portion of our  revenue.  For this  reason,  we are
subject to the risks  inherent  in these  foreign  sales,  including  unexpected
changes in  regulatory  requirements,  exchange  rates,  governmental  approval,
tariffs, or other barriers.  Even though the U.S. Government  announced on March
29, 1996,  that it supports and  maintains  the GPS system,  and on May 1, 2000,
stated that it has no intent to ever again use  Selective  Availability  (SA), a
method of degrading  GPS accuracy,  there may be  reluctance in certain  foreign
markets  to  purchase  such  products  given  the  control  of GPS  by the  U.S.
Government.  Our results of  operations  could be adversely  affected if we were
unable to continue to generate significant sales in locations outside the U.S.

     No single customer accounted for 10% or more of our total revenues in
fiscal 2002, 2001, and 2000. It is possible, however, that in future periods the
failure of one or more large customers to purchase products in quantities
anticipated by us may adversely affect the results of operations.


Gross Margin

     Gross  margin  varies due to a number of  factors  including  product  mix,
international  sales mix,  customer type, the effects of production  volumes and
fixed manufacturing costs on unit product costs, and new product start-up costs.
Gross  margin as a  percentage  of total  revenues  was 50.2% in fiscal 2002 and
49.9% in fiscal 2001. The slight increase in gross margin  percentage for fiscal
2002, compared with fiscal 2001, was due partially to approximately $3.3 million
of  additional  charges  associated  with the  write-down of excess and obsolete
inventory in fiscal 2001, related to the  rationalization  and simplification of
product  lines,  and partially due to  inventories  in excess of our  forecasted
12-month demand.

     Because of  potential  product  mix changes  within and among the  industry
markets,  market  pressures  on  unit  selling  prices,   fluctuations  in  unit
manufacturing costs,  including increases in component prices and other factors,
current level gross margins  cannot be assured.  In addition,  should the global
economic conditions deteriorate further, gross margin could be further adversely
impacted.

Operating Expenses

     The following table shows operating expenses for the periods indicated and
should be read in conjunction with the narrative descriptions of those operating
expenses below:

                                       January 3,    December 28,   December 29,
Fiscal Years Ended                        2003           2001           2000
--------------------------------------------------------------------------------
(In thousands)

Research and development            $     61,232   $     62,881   $     46,520
Sales and marketing                       89,344        103,778         79,901
General and administrative                40,634         37,407         30,514
Restructuring charges                      1,099          3,599             --
Amortization of goodwill and other
  purchased intangible assets              8,300         29,389         13,407
                                    -------------- -------------  -------------
 Total                              $    200,609   $    237,054   $     170,342
                                    ============   =============  =============



<PAGE>


Research and Development

     Research and development  spending  decreased by $1.6 million during fiscal
2002 and  represented  13% of  revenue,  consistent  with 13% in fiscal 2001 due
primarily to:

o    The transfer of employee-related expenses to the Caterpillar joint venture
     of approximately $2.8 million, partially offset by an increase in
     engineering expenses associated with the introduction of new products.


     Research and development  spending increased by $16.4 million during fiscal
2001, and  represented  13% of revenue,  consistent  with 13% in fiscal 2000 due
primarily to the following:

o    In fiscal 2001, we experienced a full year of operations of the Spectra
     Precision Group compared with half a year in fiscal 2000, which accounted
     for approximately $11.7 million of the increase;

o    The increase was also due to approximately $5.0 million related to a full
     year of operations of Tripod Data Systems in fiscal 2001 compared with one
     and one-half months for fiscal 2000, as well as the inclusion of Grid Data
     for approximately nine months in fiscal 2001.

     * We believe that the development and introduction of new products are
critical to the Company's future success and expects to continue its active
development of new products.


Sales and Marketing

     Sales and marketing expense decreased by $14.4 million in fiscal 2002 and
represents 19% of revenue, compared with 22% in fiscal 2001 due primarily to the
following:

o    During fiscal 2001, we sold off many of our direct sales offices, which
     decreased sales and marketing expenses by approximately $7.0 million for
     fiscal 2002;

o    A decrease in overall compensation, travel, advertising, promotional, and
     trade show expenses of approximately $7.4 million for fiscal 2002 compared
     to the corresponding period in fiscal 2001.


     Sales and marketing  expense  increased by $23.9 million in fiscal 2001 and
represents 22% of revenue,  consistent  with 22% in fiscal 2000 primarily due to
the following:

o    Inclusion of a full year of operations of the Spectra Precision Group as
     compared with half a year in fiscal 2000, which accounted for approximately
     $23.1 million of the increase.


     * Our  future  growth  will  depend in part on the timely  development  and
continued  viability of the markets in which we currently compete as well as our
ability to continue to identify and exploit new markets for our products.


General and Administrative

     General and administrative expense increased by $3.2 million in fiscal 2002
representing 9% of revenue, compared with 8% in fiscal 2001 primarily due to the
following:

o    Increase  in bad debt  provisions  related  to  customers  in an  uncertain
     economic environment;

o    Bad debt expenses for accounts written off during the year due to customer
     defaults.


     General and administrative expense increased by $6.9 million in fiscal 2001
representing 8% of revenue, consistent with 8% in fiscal 2000 due primarily to
the following:

o    In fiscal 2001, we experienced a full year of operations of the Spectra
     Precision Group as compared with half a year in fiscal 2000, which
     accounted for approximately $5.6 million of the increase;

o    The increase was also due to approximately $0.9 million related to a full
     year of operations of Tripod Data Systems in fiscal 2001, as compared with
     one and one-half months for fiscal 2000.


Restructuring Charges

     Restructuring charges of $1.1 million were recorded in fiscal 2002 and $3.6
million were  recorded in fiscal 2001,  which related to severance  costs.  As a
result of these  actions,  our  headcount  decreased in fiscal 2002 by 49 and in
fiscal 2001 by 207 individuals.  As of January 3, 2003, all of the restructuring
charges have been paid.


Amortization of Goodwill, Purchased and Other Intangible Assets:


<table>
<caption>
                                                     January 3,     December 28,    December 29,
Fiscal Years Ended                                      2003            2001            2000
------------------                                      ----            ----            ----
(in thousands)
<s>                                                 <c>            <c>              <c>
Amortization of goodwill                             $     -        $  7,647         $  3,116
Amortization of purchased intangibles                  8,300          21,742           10,291
Amortization of other intangible assets                  868             917              930
                                                         ---             ---              ---
Total amortization of goodwill, purchased, and
     other intangible assets                         $ 9,168        $ 30,306         $ 14,337
                                                     =======        ========         ========
</table>



     We adopted  SFAS No. 142 on January 1, 2002.  As a result,  goodwill  is no
longer amortized and intangible assets with indefinite lives with net book value
of $73.6 million were reclassified to goodwill.

     Amortization expense of goodwill, purchased and other intangibles decreased
in fiscal  2002 by  approximately  $21.1  million  representing  2% of  revenue,
compared with 6% in fiscal 2001.  The decrease was primarily due to the adoption
of FAS 142 that does not require the  amortization  of goodwill  and  intangible
assets with indefinite lives.

     Amortization expense of goodwill and other purchased  intangibles increased
in fiscal  2001 by  approximately  $16.0  million  representing  6% of  revenue,
compared  with  4% in  fiscal  2000.  The  increase  was  primarily  due  to the
acquisition  of the Spectra  Precision  Group in July 2000,  which resulted in a
year-  over-year  increase  of  approximately  $15.0  million  in  goodwill  and
intangibles amortization.





<PAGE>


Non-operating Expense, Net

     The  following  table  shows  Non-operating  expenses,  net for the periods
indicated and should be read in conjunction  with the narrative  descriptions of
those expenses below:

                            January 3,      December 28,   December 29,
Fiscal Years Ended             2003            2001            2000
--------------------------------------------------------------------------------
(in thousands)

Interest income              $    659       $   1,118       $   4,478
Interest expense             (14,710)        (22,224)        (14,438)
Foreign exchange loss           (823)           (237)           (376)
Expenses for affiliated
   operations, net            (3,954)               -               -
Other expense                 (1,171)           (430)           (123)
                              ------            ----            ----
 Total                      $(19,999)       $(21,773)       $(10,459)
                            ========        ========        ========



     Non-operating expense, net decreased by $1.8 million during fiscal 2002 as
compared with fiscal 2001. The primary reasons for the decrease were as follows:

o    Decrease in net interest expense of $7.1 million due to significant
     repayment of debt balances during the year of approximately $52 million,
     combined with the effect of lower interest rates;

o    This was partially offset by expenses recorded for affiliated operations of
     $4.0 million as a result of transfer pricing effects on transactions
     between Trimble and CTCT, an increase in foreign exchange loss of $0.6
     million, and a write-down of minority investment of $1.5 million.


     Non-operating expense, net increased by $11.3 million during fiscal 2001 as
compared with fiscal 2000. The primary reasons for the increase were as follows:

o    Increase in interest expenses related to loans and credit facilities
     incurred primarily to finance the acquisition of the Spectra Precision
     Group accounted for approximately $7.8 million;

o    Decreased interest income resulting from the sale and maturities of
     short-term investments used to finance the acquisition of the Spectra
     Precision Group accounted for approximately $3.4 million.


Income Tax Provision

     Our effective income tax rates from continuing  operations for fiscal years
2002, 2001, and 2000 were 25%, (9%) and 10%,  respectively.  The fiscal 2002 and
2001  income  tax rates  differ  from the  federal  statutory  rate of 35%,  due
primarily  to foreign  taxes and the  inability  to realize  the  benefit of net
operating  losses.  The fiscal  2000  income  tax rate is less than the  federal
statutory  rate due primarily to the  realization of the benefits from prior net
operating losses and previously reserved deferred tax assets.


Litigation Matters

     * In November 2001,  Qualcomm Inc. filed a lawsuit  against  Trimble in the
Superior Court of the State of California.  The complaint  alleges claims for an
unspecified amount of money damages arising out of Qualcomm's  perceived lack of
assurances  in early 1999 that our  products  purchased  by Qualcomm  would work
properly after a scheduled week number  rollover event that took place in August
of 1999.  Qualcomm is the only  customer to make a claim against us based on the
week number rollover  event.  In our opinion,  the resolution of this lawsuit is
not  expected  to  have a  material  adverse  effect  on our  overall  financial
position.

     * We are also a party to other  disputes  incidental  to our  business.  We
believe that our ultimate liability as a result of such disputes,  if any, would
not be material to our overall  financial  position,  results of operations,  or
liquidity.


Off-balance Sheet Financings and Liabilities

     Other than lease commitments incurred in the normal course of business,  we
do not have any off-balance sheet financing  arrangements or liabilities.  We do
not  have  any  majority-owned   subsidiaries  that  are  not  included  in  the
consolidated financial statements. Additionally, we do not have any interest in,
or relationship with, any special purpose entities.


LIQUIDITY AND CAPITAL RESOURCES

<table>
<caption>

                                                    January 3,  December 28,  December 29,
As of and for the year ended                           2003        2001          2000
------------------------------------------------- ------------ -------------  ------------
(dollars in thousands)
<s>                                               <c>           <c>          <c>
Cash and cash equivalents                          $  28,679     $  31,078    $   40,876
As a percentage of total assets                         6.5%          7.4%          8.4%
Accounts receivable days sales outstanding (DSO)          58            55            57
Inventory turns per year                                 5.3           4.1           4.2
Cash provided by operating activities              $  35,096     $  25,093    $   19,835
Cash used by investing activities                  $ (5,766)     $(11,441)    $(167,180)
Cash provided (used) by financing activities       $(31,729)     $(23,450)    $  138,957
Net decrease in cash and cash equivalents          $ (2,399)     $ (9,798)    $  (8,388)

</table>


     In fiscal  2002,  our cash and cash  equivalents  decreased by $2.4 million
from fiscal 2001.  We repaid  $52.1  million of our debt  outstanding.  This was
financed by the issuance of common stock of approximately $21.4 million and cash
generated from operating activities of approximately $35.1 million. We also used
approximately $7.2 million for capital expenditures.

     At January 3, 2003, our debt mainly consisted of $67.6 million  outstanding
under senior secured credit facilities,  and $69.1 million outstanding under the
subordinated promissory note related to the acquisition of the Spectra Precision
Group. We have relied primarily on cash provided by operating activities to fund
capital expenditures and other investing activities.

     On March 20, 2002,  we used $21.4  million of net proceeds from our private
placement to retire accrued interest and principal under our  subordinated  note
with   Spectra-Physics   Holdings,   Inc.,  a  subsidiary  of  Thermo   Electron
Corporation,  reducing the  outstanding  principal  amount to $68.7 million.  In
addition,  we renegotiated the terms of the subordinated note. Under the revised
agreement,  the  maturity of the note was extended  until July 14, 2004,  at the
current  interest rate of  approximately  10.4% per year. In connection with the
amendment,  on March 20, 2002 we agreed to issue to Thermo  Electron a five-year
warrant to purchase  200,000  shares of our common stock at an exercise price of
$15.11.  Under the five-year  warrant,  the total number of warrants issued will
not exceed  376,233  shares.  On a  quarterly  basis  beginning  July 14,  2002,
Spectra-Physics'  warrant  became  exercisable  for an additional  250 shares of
common stock for every $1 million of principal  and interest  outstanding  until
the note is paid off in full.  These shares are  purchasable at a price equal to
the average of our stock's closing price for the five days immediately preceding
the last  trading day of each  quarter.  On July 14, 2002 an  additional  17,364
shares became  exercisable at an exercise price of $14.46 per share.  On October
14, 2002 an additional 17,824 shares became  exercisable at an exercise price of
$9.18. On January 14, 2003 an additional 18,284 shares became  exercisable at an
exercise price of $13.54.  These additional shares are exercisable over a 5-year
period.  The  approximate  fair  value  of the  warrants  of  $1.5  million  was
determined using the Black-Scholes pricing model with the following assumptions:
contractual life of 5-year period;  risk-free interest rate of 4%; volatility of
65%; and no dividends during the contractual  term. The value of the warrants is
amortized to interest expense over the term of the subordinated note.

     * In fiscal 2002, cash provided by operating  activities was $35.1 million,
as compared to $25.1  million in fiscal  2001.  The  increase of $10 million was
primarily  due to a one-time  special  cash  distribution  of $11  million  from
Caterpillar Trimble Control Technologies upon its formation in the first quarter
of fiscal 2002.  Trimble's  ability to continue to generate cash from operations
will  depend in large part on  revenues,  the rate of  collections  of  accounts
receivable, and profitability.  Both the inventory turns and accounts receivable
days sales  outstanding  metrics  were  similar at the end of fiscal 2002 to the
fiscal 2001 level.

     Cash flows used in investing activities were $5.8 million in fiscal 2002 as
compared to $11.4 million in fiscal 2001,  mostly due to  investment  activities
associated  with the  acquisition of an additional 25 percent equity interest in
Terrasat,  a German  Corporation,  and the acquisition in property and equipment
partially  offset by cash acquired through  LeveLite  acquisition.  Cash used in
investing  activities  in fiscal 2001  included  amounts  paid for the Grid Data
acquisition.

     Cash used in financing  activities  was $31.7  million in fiscal  2002,  as
compared to $23.5  million in fiscal 2001.  During  fiscal  2002,  we made $52.1
million of payments against our debt outstanding.  These payments were offset by
proceeds  from the issuance of common  stock to employees  pursuant to our stock
option  plan  and  employee  stock  purchase  plan of $4.1  million,  as well as
issuance of common stock under a private equity placement of $17 million.

     In July 2000, we obtained $200 million of senior, secured credit facilities
(the "Credit  Facilities")  from a syndicate of banks to support our acquisition
of  the  Spectra   Precision  Group,  the  Company's   ongoing  working  capital
requirements,  and to refinance  certain existing debt (see Note 10 of the Notes
to  the  to  the  Consolidated  Financial  Statements).  The  Credit  Facilities
consisted  of $100 million  available as a term loan and $100 million  available
under two  revolvers.  On January  14,  2003,  Trimble  executed  an Amended and
Restated Credit  Agreement,  which  restructured  the $100 million revolver into
four Tranches.  Tranches A and C belong to the $50 million U.S.  dollar revolver
and  Tranches  B and D  belong  to  the  $50  million  multi-currency  revolver.
Allocated to Tranche A is $12,500,000  with an expiration  date of July 14, 2003
and allocated to Tranche C is  $37,500,000  with an expiration  date of April 7,
2004.  Allocated to Tranche B is $1,500,000  with an expiration date of July 14,
2003 and allocated to Tranche D is $48,500,000  with an expiration date of April
7, 2004. As a result,  the $100 million  revolver will remain in effect  through
July 14,  2003 and be reduced to $86 million  for the period  starting  July 15,
2003 through April 7, 2004. As of January 3, 2003, outstanding balance under the
revolver was $35 million and under the term loan was $32.6 million.

     The Credit  Facilities  are secured by all material  assets of our company,
except for assets  that are  subject to foreign  tax  considerations.  Financial
covenants of the Credit Facilities  include leverage,  fixed charge, and minimum
net worth tests and all were amended during the third quarter of fiscal 2002. At
January 3, 2003,  and as of the date of this report,  we are in compliance  with
debt  covenants.  The amounts due under the revolver loans are paid as the loans
mature,  and the loan commitment fees are paid on a quarterly  basis.  Under the
five-year term loan portion of the Credit Facility,  we are due to make payments
(excluding  interest)  of  approximately  $24  million  in  fiscal  2003 and the
remaining $8.6 million in fiscal 2004.

     * We believe that our cash and cash  equivalents,  together with our credit
facilities,  will be sufficient to meet our anticipated operating cash needs for
at least the next twelve  months.  At January 3, 2003,  we had $28.7  million of
cash and cash  equivalents,  as well as access to $65  million of cash under the
terms of our revolver loans.

     Under the terms of the Credit Facilities,  we are currently restricted from
paying  dividends  and are limited as to the amount of our common  stock that we
can  repurchase.  We are allowed to pay dividends and  repurchase  shares of our
common  stock up to 25% of net  income  in the  previous  fiscal  year.  We have
obligations under non-cancelable operating leases for our office facilities (see
Note 11 of the Notes to the Consolidated Financial Statements).  In fiscal 2003,
the  payments  under these  non-cancelable  operating  leases are expected to be
approximately $12.1 million.

     * We expect fiscal 2003 capital expenditures to be approximately $8 million
to $11  million,  primarily  for computer  equipment,  software,  and  leasehold
improvements  associated with business expansion.  Decisions related to how much
cash is used for investing are  influenced by the expected  amount of cash to be
provided by operations.


     The following table summarizes our future repayment obligations  (excluding
interest):


<table>
<caption>

                                                                                              2006 and
January 3, 2003                           Total      2003       2004      2005      2006       Beyond
----------------------------------------------------------------------------------------------------------
(in thousands)
<s>                                      <c>       <c>       <c>          <c>       <c>        <c>
 Credit facilities:
    Five year term loan                   $ 32,600  $ 24,000     $8,600    $    -    $    -     $       -
    U.S. and multi-currency
      revolving credit facility             35,000     6,550     28,450        -          -             -
 Subordinated note                          69,136         -     69,136        -          -             -
 Promissory note and other                   1,789       110        110      110        110         1,349
                                             -----       ---        ---      ---        ---         -----
Total contractual cash obligations        $138,525  $ 30,660  $ 106,296    $ 110     $  110      $  1,349
                                          ========  ========  =========    =====     ======      ========
</table>



     Our future minimum payments required under non-cancelable operating leases
are follows:

                                                    Operating
                                                  Lease Payments
(In thousands)
2003                                                 $   12,067
2004                                                      7,438
2005                                                      6,958
2006                                                      1,795
2007                                                      1,461
Thereafter                                                5,115
                                                          -----
Total                                                $   34,834
                                                     ==========


New Accounting Standards

     We adopted Statement of Financial  Accounting  Standards  ("SFAS") No. 141,
Business  Combinations,  and SFAS No. 142, Goodwill and Other Intangible Assets,
at the beginning of fiscal 2002. Application of the non-amortization  provisions
of  SFAS  No.  142  significantly  reduced  amortization  expense  of  purchased
intangibles and goodwill to approximately  $8.3 million for the fiscal year 2002
from $29.4 million in the prior year. We  reclassified  identifiable  intangible
assets with indefinite lives with net book value of $73.6 million, as defined by
SFAS No.  142,  to  goodwill at the date of  adoption.  We tested  goodwill  for
impairment using the two-step process prescribed in SFAS No. 142. The first step
is a screen for potential impairment,  while the second step measures the amount
of the  impairment,  if any. No impairment  charge  resulted from the impairment
tests.


     In  October of 2001,  the FASB  issued  SFAS  No.144,  "Accounting  for the
Impairment or Disposal of Long-lived  Assets," which amends accounting  guidance
on asset impairment and provides a single accounting model for long-lived assets
to be disposed of. Among other provisions, the new rules change the criteria for
classifying an asset as  held-for-sale.  The standard also broadens the scope of
businesses  to be  disposed  of  that  qualify  for  reporting  as  discontinued
operations,  and changes the timing of recognizing losses on such operations. We
adopted SFAS No. 144 at the  beginning  of fiscal  2002.  The effect of adopting
SFAS No. 144 did not have a material impact on our financial position or results
of operations.


     In July of 2002,  the FASB  issued  SFAS No.  146,  "Accounting  for  Costs
Associated  with  Exit or  Disposal  Activities."  SFAS No.  146  addresses  the
financial  accounting  and reporting  for  obligations  associated  with an exit
activity, including restructuring, or with a disposal of long-lived assets. Exit
activities  include,  but are not limited to,  eliminating  or reducing  product
lines,  terminating employees and contracts,  and relocating plant facilities or
personnel.  SFAS No. 146 specifies  that a company will record a liability for a
cost  associated  with an exit or disposal  activity only when that liability is
incurred  and can be measured at fair value.  Therefore,  commitment  to an exit
plan or a plan of disposal  expresses  only our  intended  future  actions  and,
therefore,  does not meet the  requirement  for  recognizing a liability and the
related expense.  SFAS No. 146 is effective  prospectively  for exit or disposal
activities  initiated after December 31, 2002, with earlier adoption encouraged.
We do not  anticipate  that the  adoption  of SFAS No.  146 will have a material
effect on our financial position or results of operations.

     In November of 2002,  the FASB issued FASB  Interpretation  ("FIN") No. 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others."  FIN No. 45 requires  that a
liability  be  recorded  in the  guarantor's  balance  sheet upon  issuance of a
guarantee.  In addition,  FIN No. 45 requires  disclosures  about the guarantees
that an entity has issued,  including a  roll-forward  of the  entity's  product
warranty  liabilities.  We will apply the  recognition  provisions of FIN No. 45
prospectively to guarantees issued after December 31, 2002.

     While we  engage  in  extensive  product  quality  programs  and  processes
including actively monitoring and evaluating the quality of component suppliers,
our warranty  obligation is affected by product  failure rates,  material usage,
and service  delivery  costs  incurred in correcting a product  failure.  Should
actual product failure rates,  material usage, or service  delivery costs differ
from the  estimates,  revisions to the  estimated  warranty  accrual and related
costs may be required.

     Changes in our product warranty liability during the 12 months, ended
January 3, 2003 are as follows:


                                                  (in thousands)
                                                  --------------
                 Balance at December 28, 2001       $  6,827
                 Warranties accrued                    2,821
                 Warranty claims                     (3,254)
                                                     ------
                 Balance at January 3, 2003         $  6,394
                                                    ========


Our product warranty liability is classified as accrued warranty in the
accompanying balance sheet.


     In  November of 2002,  the EITF  reached a  consensus  on Issue No.  00-21,
"Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides
guidance  on how to account  for  arrangements  that  involve  the  delivery  or
performance of multiple  products,  services,  and/or rights to use assets.  The
provisions  of EITF Issue No. 00-21 will apply to revenue  arrangements  entered
into  in  fiscal  periods  beginning  after  June  15,  2003.  We are  currently
evaluating the effect that the adoption of EITF Issue No. 00-21 will have on our
results of operations and financial condition.

     In December of 2002, FASB issued FASB No. 148,  "Accounting for Stock-Based
Compensation  - Transition  and  Disclosure."  SFAS No. 148 amends FASB No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition for an entity that changes to the fair value method of accounting for
stock-based  employee  compensation.  In  addition,  SFAS  No.  148  amends  the
disclosure  provisions  of SFAS No. 123 to require  expanded and more  prominent
disclosure  of the effects of an  entity's  accounting  policy  with  respect to
stock-based employee compensation. This disclosure is required in the summary of
significant accounting policies footnote or its equivalent in annual and interim
financial  statements.  SFAS No.  148 does not  amend  SFAS No.  123 to  require
companies to account for their stock-based  employee awards using the fair value
method.  As  discussed  in Note 1 of the  Notes  to the  Consolidated  Financial
Statements,  for purposes of pro forma  disclosures,  we amortized the estimated
fair value of the options to expense over the options'  vesting period,  and the
estimated  fair value of purchases  under the employee  stock  purchase  plan is
expensed  in  the  year  of  purchase  as  well  as  the  stock-based   employee
compensation cost, net of related tax effects,  that would have been included in
the  determination of net income if the fair value based method had been applied
to all awards.  The effects on pro forma disclosure of applying SFAS No. 123 are
not likely to be representative of the effects on pro forma disclosure of future
years.

     In January of 2003, the FASB issued FIN No. 46,  "Consolidation of Variable
Interest  Entities."  FIN No.  46  requires  a  variable  interest  entity to be
consolidated  by a company if that  company is subject to a majority of the risk
of loss from the variable interest entity's  activities or entitled to receive a
majority  of  the  entity's   residual   returns  or  both.  The   consolidation
requirements  of FIN No. 46 apply  immediately  to  variable  interest  entities
created after January 31, 2003. The  consolidation  requirements  apply to older
entities in the first  fiscal year or interim  period  beginning  after June 15,
2003. We are currently  evaluating the provisions of FIN No. 46, however,  we do
not believe as of January 3, 2003,  the Company has any  investments in variable
interest entities.



RISKS AND UNCERTAINTIES

Our Inability to Accurately Predict Orders and Shipments May Affect Our Revenue,
Expenses and Earnings per Share.

     We  have  not  been  able in the  past to  consistently  predict  when  our
customers  will place  orders and request  shipments,  so that we cannot  always
accurately  plan our  manufacturing  requirements.  As a result,  if orders  and
shipments  differ from what we predict,  we may incur  additional  expenses  and
build excess inventory,  which may require additional accruals.  Any significant
change in our  customers'  purchasing  patterns  could have a  material  adverse
effect on our operating results and reported earnings per share for a particular
quarter.


     Our  Operating   Results  in  Each  Quarter  May  Be  Affected  by  Special
Conditions,  Such As Seasonality,  Late Quarter  Purchases,  and Other Potential
Issues.

     Due, in part, to the buying patterns of our customers, a significant
portion of our quarterly revenues occurs from orders received and immediately
shipped to customers in the last few weeks and days of each quarter, although
our operating expenses tend to remain fairly predictable. Engineering and
construction purchases tend to occur in early spring, and governmental agencies
tend to utilize funds available at the end of the government's fiscal year for
additional purchases at the end of our third fiscal quarter in September of each
year. Concentrations of orders sometimes also occur at the end of our other two
fiscal quarters. Additionally, a majority of our sales force earns commissions
on a quarterly basis, which may cause concentrations of orders at the end of any
fiscal quarter. If for any reason expected sales are deferred, orders are not
received, or shipments are delayed a few days at the end of a quarter, our
operating results and reported earnings per share for that quarter could be
significantly impacted.


We Are Dependent on a Sole Manufacturer and Assembler for Many of Our Products
and on Sole Suppliers of Critical Parts for Our Products.

     Since August 1999, we have been substantially dependent upon Solectron
Corporation as the exclusive manufacturing partner for many of our GPS products
previously manufactured out of our Sunnyvale facilities. Under the agreement
with Solectron, we provide to Solectron a twelve-month product forecast and
place purchase orders with Solectron sixty calendar days in advance of the
scheduled delivery of products to our customers. Although purchase orders placed
with Solectron are cancelable, the terms of the agreement would require us to
purchase from Solectron all material inventory not returnable or usable by other
Solectron customers. Accordingly, if we inaccurately forecast demand for our
products, we may be unable to obtain adequate manufacturing capacity from
Solectron to meet customers' delivery requirements or we may accumulate excess
inventories, if such inventories are not usable by other Solectron customers.

         Our current contract with Solectron expires in August of 2003.

     During the fourth quarter of 2002,  Solectron began  assembling some of our
Component Technology products in China. Although we believe that this initiative
in China  will bring  significant  cost  savings,  we cannot  predict  potential
effects that may result from this program.

     In  addition,  we rely on  sole  suppliers  for a  number  of our  critical
components.  We have  experienced  shortages of  components  in the past.  As an
example,  we were  affected by the  inability  of a display  supplier to provide
adequate  quantities  to meet our  requirements  in the  third  fiscal  calendar
quarter of 2002 that resulted in the deferral of $2.4 million in orders into the
fourth  quarter of 2002.  Our  current  reliance  on sole or a limited  group of
suppliers involves several risks,  including a potential  inability to obtain an
adequate  supply of required  components and reduced  control over pricing.  Any
inability to obtain  adequate  deliveries or any other  circumstance  that would
require  us to  seek  alternative  sources  of  supply  or to  manufacture  such
components  internally  could  significantly  delay  our  ability  to  ship  our
products,   which  could  damage  relationships  with  current  and  prospective
customers and could harm our reputation  and brand,  which could have a material
adverse effect on our business.


Our Annual and Quarterly Performance May Fluctuate.

     Our operating results have fluctuated and can be expected to continue to
fluctuate in the future on a quarterly and annual basis as a result of a number
of factors, many of which are beyond our control. Results in any period could be
affected by:

o    changes in market demand,

o    competitive market conditions,

o    market  acceptance  of existing or new  products,  especially in our Mobile
     Solutions business

o    fluctuations in foreign currency exchange rates,

o    the cost and availability of components,

o    our ability to manufacture and ship products,

o    the mix of our customer base and sales channels,

o    the mix of products sold,

o    our ability to expand our sales and marketing organization effectively,

o    our ability to attract and retain key technical and managerial employees,

o    the timing of shipments of products  under  contracts and sale of licensing
     rights, and

o    general global economic conditions.


     In addition, demand for our products in any quarter or year may vary due to
the  seasonal  buying  patterns  of  our  customers  in  the   agricultural  and
engineering  and  construction  industries.  Due to the foregoing  factors,  our
operating  results in one or more future  periods are  expected to be subject to
significant   fluctuations.   The  price  of  our  common  stock  could  decline
substantially in the event such fluctuations result in our financial performance
being below the expectations of public market analysts and investors,  which are
based  primarily  on  historical  models  that  are  not  necessarily   accurate
representations of the future.


Our Gross Margin Is Subject to Fluctuation.

     Our gross margin is affected by a number of factors, including product mix,
product  pricing,  cost of  components,  foreign  currency  exchange  rates  and
manufacturing  costs. For example,  since our Engineering and Construction (E&C)
and Geographic  Information  Systems (GIS) products  generally have higher gross
margins than our Component  Technologies (CT) products,  absent other factors, a
shift  in  sales  toward  E&C  and GIS  products  would  lead to a gross  margin
improvement.  On the other hand, if market conditions in the highly  competitive
E&C and GIS market  segments  forced us to lower unit prices,  we would suffer a
decline in gross margin unless we were able to timely offset the price reduction
by a reduction in  production  costs or by sales of other  products  with higher
gross margins.  A decline in gross margin could  negatively  impact our earnings
per share.


Our  Business  is  Subject to  Disruptions  and  Uncertainties  Caused by War or
Terrorism.

     Acts of war or acts of terrorism  could have a material  adverse  impact on
our  business,  operating  results,  and  financial  condition.  The  threat  of
terrorism and war and heightened  security and military response to this threat,
or any future acts of terrorism, may cause further disruption to our economy and
create  further   uncertainties.   To  the  extent  that  such   disruptions  or
uncertainties result in delays or cancellations of orders, or the manufacture or
shipment  of our  products,  our  business,  operating  results,  and  financial
condition could be materially and adversely affected.


Our  Substantial  Indebtedness  Could  Materially  Restrict Our  Operations  and
Adversely Affect Our Financial Condition.

     We now have, and for the  foreseeable  future expect to have, a significant
level of indebtedness. Our substantial indebtedness could:

o    increase  our  vulnerability  to  general  adverse  economic  and  industry
     conditions;

o    limit our ability to fund future working capital, capital expenditures,
     research and development and other general corporate requirements, or to
     make certain investments that could benefit us;

o    require us to  dedicate a  substantial  portion of our cash flow to service
     interest and  principal  payments on our debt;

o    limit our  flexibility to react to changes in our business and the industry
     in which we operate; and

o    limit our ability to borrow additional funds.


Our Credit Agreement Contains Stringent Financial Covenants.

     Two of the  financial  covenants in our Credit  Agreement  with The Bank of
Nova Scotia and certain other banks, dated July 14, 2000 as amended (the "Credit
Agreement"),  minimum  fixed charge  coverage and maximum  leverage  ratio,  are
extremely sensitive to changes in earnings before interest,  taxes, depreciation
and amortization  ("EBITDA").  In turn,  EBITDA is highly correlated to revenues
and costs.  Due to  uncertainties  associated with the downturn in the worldwide
economy,  our future  revenues by quarter are more  difficult to forecast and we
have put in place various cost cutting measures,  including the consolidation of
service  functions  and centers,  offices,  and of redundant  product  lines and
reductions in staff.  If revenues  should decline at a faster pace than the rate
of these cost cutting measures,  on a quarter-to-quarter  basis we may not be in
compliance with the two above-mentioned  financial  covenants.  If we default on
one or more  covenants,  we will have to obtain  either  negotiated  waivers  or
amendments to the Credit Agreement.  If we were unable to obtain such waivers or
amendments,  the banks  would have the right to  accelerate  the  payment of our
outstanding obligations under the Credit Agreement,  which would have a material
adverse effect on our financial condition and viability as an operating company.
In addition,  a default under one of our debt instruments may also trigger cross
defaults  under our other debt  instruments.  An event of default under any debt
instrument,  if not cured or waived, could have a material adverse effect on us.
In September of 2002, we reached an agreement to ease our financial  covenants..
These revised  covenants  will remain in effect  through the term of the current
credit facility.  On January 14, 2003,  Trimble executed an Amended and Restated
Credit  Agreement,  which  restructured  the $100  million  revolver  into  four
Tranches.  Tranches  A & C belong  to the $50  million  US dollar  revolver  and
Tranches B & D belong to the $50 million multi-currency  revolver.  Allocated to
Tranche A is $12,500,000  with an expiration date of July 14, 2003 and allocated
to Tranche C is $37,500,000 with an expiration date of April 07, 2004. Allocated
to  Tranche  B is  $1,500,000  with an  expiration  date of July  14,  2003  and
allocated to Tranche D is $48,500,000 with an expiration date of April 07, 2004.
As a result,  the $100 million  revolver will remain in effect  through July 14,
2003 and be reduced to $86 million for the period starting July 15, 2003 through
April 7, 2004.


We Are Dependent on Key Customers.

     An  increasing  amount of our  revenue is  generated  from  large  original
equipment  manufacturers  such as Siemens VDO Automotive  AG, Nortel,  McNeilus,
Caterpillar,  CNH Global,  DeWalt, Hilti, and Blaupunkt.  A reduction or loss of
business  with  these  customers  could have a  material  adverse  effect on our
financial condition and results of operations. There can be no assurance that we
will be able to  continue  to  realize  value from  these  relationships  in the
future.


We Are Dependent on New Products.

     Our future revenue stream depends to a large degree on our ability to bring
new products to market on a timely basis.  We must continue to make  significant
investments  in  research  and  development  in order to continue to develop new
products,  enhance  existing  products  and achieve  market  acceptance  of such
products.  We may incur problems in the future in innovating and introducing new
products.  Our development stage products may not be successfully  completed or,
if developed, may not achieve significant customer acceptance. If we were unable
to successfully  define,  develop and introduce  competitive  new products,  and
enhance existing  products,  our future results of operations would be adversely
affected.  Development and manufacturing  schedules for technology  products are
difficult to predict, and we might not achieve timely initial customer shipments
of new products.  The timely  availability of these products in volume and their
acceptance  by customers  are  important to our future  success.  A delay in new
product  introductions  could  have  a  significant  impact  on our  results  of
operations.


We Face Risks of Entering Into and Maintaining Alliances.

     We believe that in certain  emerging markets our success will depend on our
ability to form and maintain  alliances with  established  system  providers and
industry  leaders.  Our  failure to form and  maintain  such  alliances,  or the
preemption  of  such  alliances  by  actions  of  other  competitors  or us will
adversely affect our ability to penetrate emerging markets. No assurances can be
given that we will not experience  problems from current or future  alliances or
that we will realize value from any such strategic alliances.




We Are  Dependent  on the  Availability  of  Allocated  Bands  Within  the Radio
Frequency Spectrum.

     Our GPS  technology  is dependent  on the use of the  Standard  Positioning
Service ("SPS")  provided by the U.S.  Government's  Global  Positioning  System
(GPS). The GPS SPS operates in radio frequency bands that are globally allocated
for radio  navigation  satellite  services.  International  allocations of radio
frequency  are  made by the  International  Telecommunications  Union  (ITU),  a
specialized  technical  agency of the  United  Nations.  These  allocations  are
further  governed by radio  regulations that have treaty status and which may be
subject  to   modification   every  two  to  three  years  by  the  World  Radio
Communication Conference.

     Any ITU  reallocation of radio frequency  bands,  including  frequency band
segmentation  or sharing of spectrum,  may materially  and adversely  affect the
utility and reliability of our products,  which would, in turn, cause a material
adverse  effect on our operating  results.  Many of our products use other radio
frequency  bands,  together  with  the  GPS  signal,  to  provide  enhanced  GPS
capabilities,   such  as  real-time   kinematics   precision.   The   continuing
availability of these non-GPS radio frequencies is essential to provide enhanced
GPS products to our precision survey markets. Any regulatory changes in spectrum
allocation or in allowable  operating  conditions  may  materially and adversely
affect the utility and reliability of our products,  which would, in turn, cause
a material adverse effect on our operating results.

     In addition,  unwanted  emissions from mobile satellite  services and other
equipment  operating in adjacent  frequency  bands or in-band from  licensed and
unlicensed   devices  may  materially  and  adversely  affect  the  utility  and
reliability of our products,  which could result in a material adverse effect on
our  operating  results.  The  FCC  continually  receives  proposals  for  novel
technologies and services, such as ultra-wideband  technologies,  which may seek
to operate in, or across,  the radio  frequency  bands currently used by the GPS
SPS and other public safety services.  Adverse  decisions by the FCC that result
in harmful interference to the delivery of the GPS SPS and other radio frequency
spectrum  also used in our  products may  materially  and  adversely  affect the
utility  and  reliability  of our  products,  which  could  result in a material
adverse effect on our business and financial condition.


We Are Subject to the Adverse Impact of Radio Frequency Congestion.

     We have  certain  real-time  kinematics  products,  such as our Land Survey
5700, that use integrated  radio  communication  technology  requiring access to
available radio frequencies  allocated by the FCC. In addition,  access to these
frequencies by state agencies is under management by state radio  communications
coordinators.  Some  bands  are  experiencing  congestion  that  excludes  their
availability for access by state agencies in some states, including the state of
California.  An inability to obtain access to these radio frequencies could have
an adverse effect on our operating results.


Many of Our Products Rely on the GPS Satellite System.

     The GPS satellites and their ground support systems are complex  electronic
systems subject to electronic and mechanical failures and possible sabotage. The
satellites were  originally  designed to have lives of 7.5 years and are subject
to damage by the hostile space  environment in which they operate.  However,  of
the current  deployment  of 28  satellites  in place,  some have already been in
operation  for 13 years.  To repair  damaged  or  malfunctioning  satellites  is
currently not economically  feasible. If a significant number of satellites were
to  become  inoperable,  there  could be a  substantial  delay  before  they are
replaced with new satellites.  A reduction in the number of operating satellites
may impair the  current  utility of the GPS system and the growth of current and
additional market opportunities.

     In addition, there can be no assurance that the U.S. Government will remain
committed to the operation and maintenance of GPS satellites over a long period,
or that the policies of the U.S.  Government  for the use of GPS without  charge
will remain unchanged. However, a 1996 Presidential Decision Directive marks the
first time in the  evolution  of GPS that access for civilian use free of direct
user fees is specifically  recognized and supported by Presidential  policy.  In
addition,   Presidential   policy  has  been   complemented   by   corresponding
legislation, signed into law. Because of ever-increasing commercial applications
of GPS, other U.S. Government agencies may become involved in the administration
or the regulation of the use of GPS signals.  Any of the foregoing factors could
affect the  willingness  of buyers of our products to select  GPS-based  systems
instead of products based on competing technologies.

     Any  resulting  change in  market  demand  for GPS  products  could  have a
material  adverse  effect  on  our  financial  results.  For  example,  European
governments  have  expressed  interest  in  building  an  independent  satellite
navigation system, known as Galileo. Depending on the as yet undetermined design
and operation of this system,  there may be  interference to the delivery of the
GPS SPS and may materially and adversely  affect the utility and  reliability of
our products,  which could result in a material  adverse  effect on our business
and operating results.


We Face Risks in Investing in and Integrating New Acquisitions.

     We are continuously evaluating external investments in technologies related
to our business,  and have made relatively small strategic equity investments in
a number of GPS-related and laser-related technology companies.  Acquisitions of
companies, divisions of companies, or products entail numerous risks, including:

o    potential inability to successfully integrate acquired operations and
     products or to realize cost savings or other anticipated benefits from
     integration;

o    diversion of management's attention;

o    loss of key employees of acquired operations;

o    the  difficulty of  assimilating  geographically  dispersed  operations and
     personnel of the acquired companies;

o    the potential disruption of our ongoing business;

o    unanticipated expenses related to such integration;

o    the correct assessment of the relative percentages of in-process research
     and development expense that can be immediately written off as compared to
     the amount which must be amortized over the appropriate life of the asset;

o    the impairment of  relationships  with employees and customers of either an
     acquired company or our own business;

o    the potential unknown liabilities associated with acquired business; and

o    inability to recover strategic investments in development stage entities.


     As a result of such  acquisitions,  we have significant assets that include
goodwill and other purchased intangibles. The testing of these intangibles under
established  accounting  guidelines for impairment  requires  significant use of
judgment  and  assumptions.   Changes  in  business   conditions  could  require
adjustments  to the valuation of these assets.  Any such problems in integration
or  adjustments  to the  value of the  assets  acquired  could  harm our  growth
strategy and have a material adverse effect on our business, financial condition
and compliance with debt covenants.



We Face Competition in Our Markets.

     Our  markets  are highly  competitive  and we expect  that both  direct and
indirect  competition  will  increase  in the future.  Our  overall  competitive
position  depends  on a number of  factors  including  the  price,  quality  and
performance of our products,  the level of customer service,  the development of
new technology and our ability to participate in emerging  markets.  Within each
of our markets,  we encounter  direct  competition  from other GPS,  optical and
laser  suppliers and  competition may intensify from various larger domestic and
international  competitors  and new  market  entrants,  some of which may be our
current customers.  The competition in the future, may, in some cases, result in
price  reductions,  reduced margins or loss of market share,  any of which could
materially and adversely  affect our business,  operating  results and financial
condition.  We believe  that our ability to compete  successfully  in the future
against  existing and additional  competitors will depend largely on our ability
to execute our  strategy  to provide  systems and  products  with  significantly
differentiated  features compared to currently available products. We may not be
able to  implement  this  strategy  successfully,  and our  products  may not be
competitive  with other  technologies  or products  that may be developed by our
competitors,  many of whom  have  significantly  greater  financial,  technical,
manufacturing, marketing, sales and other resources than we do.


We Are Dependent on Proprietary Technology.

     Our  future  success  and  competitive   position  is  dependent  upon  our
proprietary  technology,  and we rely on patent,  trade  secret,  trademark  and
copyright  law to  protect  our  intellectual  property.  The  patents  owned or
licensed by us may be  invalidated,  circumvented,  and  challenged.  The rights
granted under these patents may not provide competitive advantages to us. Any of
our pending or future patent  applications may not be issued within the scope of
the claims sought by us, if at all.

     Others  may  develop  technologies  that are  similar  or  superior  to our
technology,  duplicate our  technology or design around the patents owned by us.
In addition,  effective  copyright,  patent and trade secret  protection  may be
unavailable,  limited or not applied for in certain foreign countries. The steps
taken by us to protect our technology might not prevent the  misappropriation of
such technology.

     The value of our products relies  substantially on our technical innovation
in fields in which there are many current patent  filings.  We recognize that as
new patents are issued or are  brought to our  attention  by the holders of such
patents, it may be necessary for us to withdraw products from the market, take a
license from such patent  holders,  or redesign our products.  We do not believe
any of our products  currently  infringe patents or other proprietary  rights of
third  parties,  but we cannot be certain  they do not do so. In  addition,  the
legal costs and engineering time required to safeguard  intellectual property or
to defend against  litigation could become a significant  expense of operations.
Such  events  could  have  a  material   adverse   effect  on  our  revenues  or
profitability.


We Must Carefully Manage Our Future Growth.

     Growth in our sales or continued  expansion in the scope of our  operations
could  strain  our  current  management,  financial,   manufacturing  and  other
resources  and may require us to implement  and improve a variety of  operating,
financial  and other  systems,  procedures  and controls.  Specifically  we have
experienced  strain in our financial and order management system, as a result of
our acquisitions.  We are expanding our sales,  accounting,  manufacturing,  and
other information systems to meet these challenges. These systems, procedures or
controls may not be adequate to support our  operations and may not be designed,
implemented or improved in a cost  effective and timely  manner.  Any failure to
implement,  improve and expand such systems, procedures and controls in a timely
and efficient  manner could harm our growth  strategy and  adversely  affect our
financial condition and ability to achieve our business objectives.



We Are Dependent on Retaining and  Attracting  Highly  Skilled  Development  and
Managerial Personnel.

     Our ability to maintain our competitive technological position will depend,
in a large  part,  on our  ability  to  attract,  motivate,  and  retain  highly
qualified  development  and  managerial  personnel.  Competition  for  qualified
employees in our industry and location is intense, and there can be no assurance
that we will be able to attract,  motivate and retain enough qualified employees
necessary for the future continued development of our business and products.


We May Encounter Problems Associated With International Operations and Sales.

     Our  customers  are located  throughout  the world.  Sales to  unaffiliated
customers in foreign locations represented  approximately 49% of our revenues in
our fiscal  year 2002,  50% in our fiscal  year 2001 and 52% in our fiscal  year
2000.  In addition,  we have  significant  international  operations,  including
manufacturing facilities,  sales personnel and customer support operations.  Our
international sales organization  contains offices in 21 foreign countries.  Our
international  manufacturing facilities are in Sweden and Germany, and we have a
regional  fulfillment  center in the  Netherlands.  Our  international  presence
exposes us to risks not faced by wholly  domestic  companies.  Specifically,  we
have experienced issues relating to integration of foreign  operations,  greater
difficulty in accounts receivable collection, longer payment cycles and currency
fluctuations. Additionally, we face the following risks, among others:

o    unexpected changes in regulatory requirements;

o    tariffs and other trade barriers;

o    political, legal and economic instability in foreign markets, particularly
     in those markets in which we maintain manufacturing and research
     facilities;

o    difficulties in staffing and management;

o    language and cultural barriers; seasonal reductions in business activities
     in the summer months in Europe and some other countries;

o    war and acts of terrorism; and

o    potentially adverse tax consequences.


     Although we  implemented  a program to attempt to manage  foreign  exchange
risks through hedging and other strategies,  there can be no assurance that this
program will be successful and that currency exchange rate fluctuations will not
have a material  adverse  effect on our results of operations.  In addition,  in
certain foreign markets,  there may be reluctance to purchase  products based on
GPS technology, given the control of GPS by the U.S. Government.


We are exposed to fluctuations in Currency Exchange Rates.

     A  significant  portion of our  business  is  conducted  outside the United
States, and as such, we face exposure to adverse movements in non-U.S.  currency
exchange  rates.  These  exposures  may change over time as  business  practices
evolve and could have a material  adverse  impact on our  financial  results and
cash flows.  Compared  to fiscal  2001,  in fiscal  2002,  the US  currency  has
weakened against other currencies.

     Currently,  we hedge only those currency exposures  associated with certain
assets and liabilities denominated in nonfunctional  currencies and periodically
will hedge  anticipated  foreign  currency  cash flows.  The hedging  activities
undertaken by us are intended to offset the impact of currency  fluctuations  on
certain  nonfunctional  currency assets and  liabilities.  Our attempts to hedge
against these risks may not be successful  resulting in an adverse impact on our
net income.

     The affect of the movement in foreign exchange rates has been reflected in
the Cumulative Translation Adjustment included in the Accumulative Other
Comprehensive Loss under Shareholders' Equity on our Consolidated Balance Sheet
Statement located in this Report.


We Are Subject to the Impact of Governmental and Other Similar Certifications.

     We market  certain  products that are subject to  governmental  and similar
certifications  before  they can be sold.  For  example,  CE  certification  for
radiated  emissions is required  for most GPS  receiver and data  communications
products sold in the European Union. An inability to obtain such  certifications
in a timely manner could have an adverse effect on our operating results.  Also,
our products  that use  integrated  radio  communication  technology  require an
end-user to obtain  licensing from the Federal  Communications  Commission (FCC)
for  frequency-band  usage.  These are  secondary  licenses  that are subject to
certain  restrictions.  During the fourth quarter of 1998,  the FCC  temporarily
suspended  the  issuance of licenses  for  certain of our  real-time  kinematics
products  because of  interference  with  certain  other users of similar  radio
frequencies.  An inability or delay in obtaining such  certifications or changes
to the rules by the FCC could adversely affect our ability to bring our products
to market,  which  could  harm our  customer  relationships  and have a material
adverse effect on our business.


Our Stock Price May Be Volatile.

     The price of our common stock can be expected to fluctuate substantially as
it has in the past.  The price  could react to actual or  anticipated  quarterly
variations in results of operations,  announcements of technological innovations
or new  products by us or our  competitors,  developments  related to patents or
other  intellectual  property  rights,  developments  in our  relationship  with
customers,  suppliers,  or strategic  partners  and other events or factors.  In
addition, any shortfall or changes in revenue, gross margins, earnings, or other
financial  results  from  analysts'  expectations  could  cause the price of our
common stock to fluctuate significantly. Additionally, macro-economic factors as
well as market  climate  for the  high-technology  sector  could also impact the
trading price of our stock.



I
tem 7A. Quantitative and Qualitative Disclosure about Market Risk

     We are exposed to market risk related to changes in interest rates and
foreign currency exchange rates. We use certain derivative financial instruments
to manage these risks. We do not use derivative financial instruments for
speculative or trading purposes. All financial instruments are used in
accordance with policies approved by our board of directors.

Market Interest Rate Risk

     We are exposed to market risk due to the  possibility of changing  interest
rates under our senior  secured  credit  facilities.  Our credit  facilities are
comprised  of a  U.S.  dollar-only  revolver,  a  multi-currency  revolver  both
expiring  April 7, 2004,  and a  five-year  term loan  expiring  July 14,  2004.
Borrowings under the credit facility have interest  payments based on a floating
rate of LIBOR  plus a number  of basis  points  tied to a  formula  based on our
leverage  ratio.  As of  January  3, 2003,  our  senior  debt to EBITDA  (senior
leverage  ratio) was  approximately  1.41. At this leverage ratio our pricing on
the Credit  Facility  is LIBOR plus 125 basis  points.  The U.S.  dollar and the
multi-currency  revolvers run through April 2004 and have outstanding  principal
balances at January 3, 2003 of $25.0 million and $10.0 million, respectively. As
of January 3, 2003, we have borrowed  from the  Multi-Currency  revolver in U.S.
currency  only.  The term loan  expires on July 14, 2004 and has an  outstanding
principal  balance of $32.6 million at January 3, 2003.  The  three-month  LIBOR
effective  rate at January 3, 2003 was 1.38%.  A  hypothetical  10%  increase in
three-month LIBOR rates could result in approximately $93,000 annual increase in
interest expense on the existing principal balances.

     In addition,  we have a $1.8 million promissory note, of which $110,000 was
classified as a current liability at the end of fiscal 2002. The note is payable
in monthly installments,  bearing a variable interest rate of 5.4% as of January
3, 2003. A hypothetical 10% increase in interest rates would not have a material
impact on the results of our operations.

     * The  hypothetical  changes and  assumptions  made above will be different
from what actually occurs in the future.  Furthermore,  the  computations do not
anticipate  actions that may be taken by our management  should the hypothetical
market changes actually occur over time. As a result, actual earnings effects in
the future will differ from those quantified above.


Foreign Currency Exchange Rate Risk

     We transact  business in various foreign  currencies and hedges  identified
risks  associated  with foreign  currency  transactions in order to minimize the
impact of changes in foreign  currency  exchange  rates on earnings.  We utilize
forward  contracts to hedge  certain  trade and  inter-company  receivables  and
payables.  These contracts  reduce the exposure to fluctuations in exchange rate
movements as the gains and losses  associated with foreign currency balances are
generally offset with the gains and losses on the hedge  contracts.  These hedge
instruments  are marked to market through  earnings  every period.  From time to
time, we may also utilize forward foreign exchange contracts  designated as cash
flow hedges of  operational  exposures  represented  by firm  backlog  orders to
specific  accounts over a specific period of time. We record changes in the fair
value of cash flow hedges in  accumulated,  other  comprehensive  income (loss),
until the firm  backlog  transaction  ships.  Upon  recognition  of revenue,  we
reclassify  the  gain  or  loss on the  cash  flow  hedge  to the  statement  of
operations.  For the fiscal  year ended  January 3, 2003,  we recorded a gain of
$57,000  reflecting  the net  change and ending  balance in  relation  to a firm
backlog hedge.  The critical terms of the cash flow hedging  instruments are the
same as the underlying forecasted transactions. The changes in fair value of the
derivatives  are intended to offset  changes in the expected  cash flow from the
forecasted  transactions.  All forward  contracts  have maturity of less than 12
months.

     * We do not  anticipate  any material  adverse  effect on our  consolidated
financial position utilizing our current hedging strategy.

     The following table provides information about our foreign exchange forward
contracts outstanding as of January 3, 2003:



                       Foreign Currency  Contract Value      Fair Value in
                            Amount            USD                 USD
Currency   Buy/Sell     (in thousands)   (in thousands)     (in thousands)

  CAD        Sell           1,630        $     1,033         $    1,039
  MXN        Sell           5,000                469                475
  JPY        Sell         751,668              6,259              6,302
  EUR        Buy          (6,200)            (6,348)            (6,024)
  EUR        Sell          14,939             14,652             15,534
  NZD        Buy          (2,017)              (967)            (1,060)
  SEK        Buy        (158,572)           (17,099)           (17,988)
  SEK        Sell          19,836              2,126              2,144
                                         $       125          $     422
                                         ===========          =========




<PAGE>


     The following table provides information about our foreign exchange forward
contracts outstanding as of December 28, 2001:

                          Foreign Currency     Contract Value     Fair Value in
                               Amount               USD                USD
Currency      Buy/Sell     (in thousands)      (in thousands)    (in thousands)
  EURO          Sell             3,769          $    3,365        $    3,332
  EURO          Buy              (800)               (716)             (712)
STERLING        Buy              (298)               (423)             (433)
  YEN           Sell           225,000               1,903             1,714
  YEN           Buy           (44,000)               (363)             (335)
                                                $    3,766        $    3,566
                                                ==========        ==========



<PAGE>





                             TRIMBLE NAVIGATION LTD
                          INDEX TO FINANCIAL STATEMENTS



<table>
<caption>
                                                                                      Page in this
                                                                                      Annual Report
                                                                                      on Form 10-K
<s>                                                                                     <c>
Consolidated Balance Sheets at January 3, 2003 and December 28, 2001                     56

Consolidated Statements of Operations for each of the three fiscal years
in the period ended January 3, 2003                                                      57

Consolidated Statement of Shareholders' Equity for the three fiscal years
in the period ended January 3, 2003                                                      58

Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended January 3, 2003                                                      59

Notes to Consolidated Financial Statements                                               60-92

Report of Ernst & Young LLP, Independent Auditors                                        93


</table>



<PAGE>



Item 8.           Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

<table>
<caption>
                                                                      January 3,       December 28,
As at                                                                    2003              2001
--------------------------------------------------------------------- -------------- ------------------
(in thousands)
ASSETS
<s>                                                                   <c>               <c>
Current assets:
   Cash and cash equivalents                                           $     28,679      $   31,078
    Accounts receivable, less allowance for doubtful accounts of
       $9,900 and $8,540, respectively                                       79,645          71,680
   Inventories, net                                                          61,144          51,810
   Other current assets                                                       8,477           6,536
                                                                              -----           -----
Total current assets                                                        177,945         161,104
Property and equipment, at cost less accumulated depreciation                22,037          27,542
Goodwill, less accumulated amortization                                     205,933         120,052
Other intangible assets, less accumulated amortization                       23,238         100,252
Deferred income taxes                                                           417             383
Other assets                                                                 12,086          10,062
                                                                             ------          ------
Total non-current assets                                                    263,711         258,291
                                                                            -------         -------
Total assets                                                           $    441,656      $  419,395
                                                                       ============      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Bank and other short-term borrowings                                $      6,556      $   40,025
   Current portion of long-term debt                                         24,104          23,443
   Accounts payable                                                          30,669          21,494
   Accrued compensation and benefits                                         17,728          13,786
   Accrued liabilities                                                       21,000          28,822
   Accrued warranty expense                                                   6,394           6,827
   Income taxes payable                                                       6,450           7,403
                                                                              -----           -----
Total current liabilities                                                   112,901         141,800

Non-current portion of long-term debt                                       107,865         127,097
Deferred gain on joint venture                                               10,792               -
Deferred income tax                                                           2,561           7,347
Other non-current liabilities                                                 6,186           4,662
                                                                              -----           -----
Total liabilities                                                           240,305         280,906
                                                                            -------         -------
Commitments and Contingencies
Shareholders' equity:
   Preferred stock no par value; 3,000 shares authorized; none
       outstanding                                                               --              --
   Common stock, no par value; 40,000 shares authorized;
        29,309, and 26,862 shares outstanding, respectively                 225,872         191,224
   Accumulated deficit                                                     (23,495)        (33,819)
   Accumulated other comprehensive loss                                     (1,026)        (18,916)
                                                                            ------         -------
Total shareholders' equity                                                  201,351         138,489
                                                                            -------         -------
Total liabilities and shareholders' equity                             $    441,656      $  419,395
                                                                       ============      ==========
</table>


     *See accompanying Notes to the Consolidated Financial Statements.



<PAGE>


CONSOLIDATED STATEMENTS OF OPERATIONS

<table>
<caption>
                                                       January 3,      December 28,      December 29,
Fiscal Years Ended                                        2003             2001              2000
---------------------------------------------------- ---------------- ---------------- ------------------
(In thousands, except per share data)
<s>                                                      <c>              <c>                <c>
Revenue                                                   $  466,602       $  475,292         $  369,798
Cost of revenue                                              232,170          238,057            173,237
                                                             -------          -------            -------
Gross margin                                                 234,432          237,235            196,561
Operating expenses
   Research and development                                   61,232           62,881             46,520
   Sales and marketing                                        89,344          103,778             79,901
   General and administrative                                 40,634           37,407             30,514
   Restructuring charges                                       1,099            3,599                 --
   Amortization of goodwill and other purchased
      intangible assets                                        8,300           29,389             13,407
                                                               -----           ------             ------
Total operating expenses                                     200,609          237,054            170,342
                                                             -------          -------            -------
Operating income from continuing
     operations                                               33,823              181             26,219
Non-operating income (expense), net
   Interest income                                               659            1,118              4,478
   Interest expense                                         (14,710)         (22,224)           (14,438)
   Foreign exchange loss                                       (823)            (237)              (376)
   Expenses for affiliated operations, net                   (3,954)               --                 --
   Other expense                                             (1,171)            (430)              (123)
                                                             -------            -----              -----
Total non-operating expense, net                            (19,999)         (21,773)           (10,459)
Income (loss) before income taxes from
     continuing operations                                    13,824         (21,592)             15,760
Income tax provision                                           3,500            1,900              1,575
                                                               -----            -----              -----
Net income (loss) from continuing operations                  10,324         (23,492)             14,185
Gain on disposal of discontinued
      operations (net of tax)                                     --              613                 --
                                                                                  ---
Net income (loss)                                          $  10,324      $  (22,879)         $   14,185
                                                           =========      ===========         ==========
Basic earnings (loss) per share from
      continuing operations                                 $   0.36       $   (0.95)          $    0.60
Basic earnings per share from
      discontinued operations                                     --             0.02                 --
                                                            =========      ===========         ==========
Basic earnings (loss) per share                             $   0.36       $   (0.93)          $    0.60
                                                            =========      ===========         ==========
Shares used in calculating basic
       earnings per share                                     28,573           24,727             23,601
Diluted earnings (loss) per share from
       continuing operations                                $   0.36       $   (0.95)          $    0.55
Diluted earnings per share from
       discontinued operations                                    --             0.02                 --
                                                            ========       ==========          =========
Diluted earnings (loss) per share                           $   0.36       $   (0.93)          $    0.55
                                                            ========       =========           =========
Shares used in calculating diluted
      earnings per share                                      29,052           24,727             25,976

</table>


     *See accompanying Notes to the Consolidated Financial Statements.



<PAGE>


CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


                                  Common stock
                                  and warrants
                            -------------------------


<table>
<caption>
                                                                                            Accumulative
                                                                              Retained          Other            Total
                                                                              earnings       Comprehensive   Shareholders'
                                                    Shares      Amount       (deficit)      Income/(loss)       Equity
-------------------------------------------------- ---------- ------------ --------------- ---------------- ----------------
(In thousands)
<s>                                                  <c>        <c>            <c>               <c>              <c>
Balance at January 1, 2000                            22,742     $126,962       $(25,125)         $(1,041)         $100,796

Components of comprehensive income (loss):
    Net income                                                                     14,185                            14,185
    Unrealized gain on short-term investments                                                          123              123
    Foreign currency translation adjustments                                                       (8,045)          (8,045)
                                                                                                                     ------
Comprehensive income                                                                                                  6,263
Subtotal                                                                                                            107,059
                                                                                                                    -------
Issuance of stock under employee plans and
    exercise of warrants                                 843       12,043                                            12,043
Issuance of stock for acquisition                        577       14,995                                            14,995
Issuance of warrants                                      --          846                                               846
                                                         ---          ---            ---              ---               ---

Balance at December 29, 2000                          24,162      154,846        (10,940)          (8,963)          134,943

Components of comprehensive income (loss):
    Net loss                                                                     (22,879)                          (22,879)
    Loss on interest rate swap                                                                       (203)            (203)
    Unrealized gain on investments                                                                      16               16
    Foreign currency translation adjustments                                                       (9,766)          (9,766)
                                                                                                                     ------
Comprehensive loss                                                                                                 (32,832)
                                                                                                                    -------
Subtotal                                                                                                            102,111
                                                                                                                    -------
Issuance of stock under employee plans and
    exercise of warrants                                 917       11,344                                            11,344
Issuance of stock in private placement                 1,783       25,034                                            25,034
Balance at December 28, 2001                          26,862     $191,224      $ (33,819)        $(18,916)        $ 138,489
                                                      ------     --------      ----------         --------        ---------
Components of comprehensive income (loss):
    Net income                                                                     10,324                            10,324
    Gain on interest rate swap                                                                         210              210
    Unrealized loss on investments                                                                    (17)             (17)
    Foreign currency translation adjustments                                                        17,697           17,697
                                                                                                                     ------
Comprehensive income                                                                                                 28,214
                                                                                                                     ------
Subtotal                                                                                                            166,703
                                                                                                                    -------
Issuance of stock for                                    793       12,033                                            12,033
acquisition
Issuance of stock under employee plans                   374        4,091                                             4,091
Issuance of warrants                                                1,528                                             1,528
Issuance of stock in private placement                 1,280       16,996                                            16,996
                                                       -----       ------                                            ------
Balance at January 3, 2003                            29,309     $225,872      $ (23,495)         $(1,026)        $ 201,351
                                                      ======     ========      ==========         ========        =========
</table>


     *See accompanying Notes to the Consolidated Financial Statements.



<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS

<table>
<caption>
                                                             January 3,       December 28,      December 29,
Fiscal Years Ended                                              2003              2001              2000
--------------------------------------------------------- ----------------- ----------------- -----------------
(In thousands)
<s>                                                         <c>              <c>                <c>
Cash flow from operating activities:
   Net income (loss)                                         $  10,324        $ (22,879)          $  14,185
Adjustments to reconcile net income (loss) to cash
   flows provided by operating activities:
   Depreciation expense                                          9,850            11,218              9,139
   Amortization expense                                          9,168            30,306             14,337
   Provision for doubtful accounts                               5,443             5,077              1,198
   (Gain) loss on sale of fixed assets                             423             (135)                 --
   Amortization of deferred gain                               (1,061)           (1,584)            (2,555)
   Amortization of debt issuance cost                            1,197               960                440
   Deferred income taxes                                         1,464             (887)              (908)
   Other                                                           193             (508)            (2,505)
Decrease (increase) in assets:
   Accounts receivable, net                                   (10,615)             6,842            (7,289)
   Inventories                                                 (7,649)             7,442            (5,994)
   Other current and non-current assets                        (3,920)             2,393            (3,743)
   Effect of foreign currency translation adjustment             3,218           (4,538)            (1,116)
Increase (decrease) in liabilities:
   Accounts payable                                              8,593           (4,954)             7,554
   Accrued compensation and benefits                             3,452           (3,112)            (6,362)
   Deferred gain on joint venture                               10,792                --                 --
   Accrued liabilities                                         (4,823)           (2,946)              5,595
   Income taxes payable                                          (953)             2,398            (2,141)
                                                                 ----              -----            -------
Net cash provided by operating activities                       35,096            25,093            19,835
                                                                ------            ------            -------
Cash flow from investing activities:
   Acquisition of property and equipment                       (7,157)           (7,254)            (7,555)
   Proceeds from sale of assets                                  1,407             1,177                 --
   Acquisitions, net of cash acquired                            1,718           (4,430)          (211,488)
   Costs of capitalized patents                                (1,734)             (934)              (900)
   Purchase of short-term investments                               --                --            (6,423)
   Maturities/sales of short-term investments                       --                --             59,186
                                                                ------            ------            -------
Net cash used by investing activities                          (5,766)          (11,441)          (167,180)
                                                                ======           =======           ========
Cash flow from financing activities:
   Issuance of common stock and warrants                        21,393            36,378             12,043
   (Payment)/collection of notes receivable                    (1,082)               872                196
   Proceeds from long-term debt and revolving credit
       lines                                                    18,000            30,062            162,000
   Payments on long-term debt and revolving credit
       lines                                                  (70,040)          (90,762)           (35,282)
                                                              --------          --------            -------
Net cash provided (used) by financing activities              (31,729)          (23,450)            138,957
                                                              --------          --------            -------
Decrease in cash and cash equivalents                          (2,399)           (9,798)            (8,388)
Cash and cash equivalents, beginning of period                  31,078            40,876             49,264
                                                                ------            ------             ------
Cash and cash equivalents, end of period                     $  28,679        $   31,078        $    40,876
                                                             =========        ==========        ===========
</table>


     *See accompanying Notes to the Consolidated Financial Statements.




<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Summary of Significant Accounting Policies:


Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying  notes.  Due to the  inherent  nature  of those  estimates,  actual
results could differ from expectations.


Basis of Presentation

     Trimble  has a 52-53 week  fiscal  year,  ending on the  Friday  nearest to
December  31,  which for fiscal  2002 was  January 3,  2003.  Fiscal  2002 was a
53-week  year and as a  result,  the  Company  has  included  an  extra  week of
revenues, costs and related financial activities.

     Therefore, the financial results of those fiscal years (as this fiscal year
2002)  having  the extra week will not be  exactly  comparable  to the prior and
subsequent 52-week fiscal years.  Fiscal years 2001 and 2000 were both comprised
of 52 weeks.

     The consolidated  financial  statements  include the results of Trimble and
its subsidiaries.  Inter-company accounts and transactions have been eliminated.
Certain  amounts  from  prior  years  have been  reclassified  to conform to the
current year presentation. Accrued interest expense and Deferred gain on sale of
assets have been reclassified to Accrued  liability in the Consolidated  Balance
Sheet at December 28, 2001.  Certain previously  allocated  corporate charges to
the  Portfolio   Technologies   business  segment  have  been   reclassified  to
unallocated  corporate  charges  in fiscal  2001 and  fiscal  2000 to conform to
current year presentation.


Foreign Currency

     Assets and liabilities of the Company's foreign subsidiaries are translated
into U.S.  dollars at year-end  exchange  rates,  and  revenues and expenses are
translated at average rates  prevailing  during the year.  Local  currencies are
considered  to  be  the  functional   currencies  for  the  Company's   non-U.S.
subsidiaries.  Translation  adjustments are included in shareholders'  equity in
the consolidated  balance sheet caption  "Accumulated other comprehensive income
(loss)." Foreign currency  transaction  gains and losses are included in results
of  operations  as  incurred,  and have not been  significant  to the  Company's
operating  results in any fiscal year presented.  The effect of foreign currency
rate changes on cash and cash equivalents is not material.


Cash and Cash Equivalents

        Cash and cash equivalents include all cash and highly liquid investments
with insignificant interest rate risk and original maturities of three months or
less. The carrying amount of cash and cash equivalents approximates fair value
because of the short maturity of those instruments.


Concentration of Risk

     In entering into forward foreign exchange contracts, Trimble has assumed
the risk that might arise from the possible inability of counter-parties to meet
the terms of their contracts. The counter-parties to these contracts are major
  multinational investment and commercial banks, and the Company does not expect
any losses as a result of counter-party defaults (see Note 6 of the Notes to the
Consolidated Financial Statements). The Company is also exposed to credit risk
in the Company's trade receivables, which are derived from sales to end-user
customers in diversified industries as well as various resellers. Trimble
performs ongoing credit evaluations of its customers' financial condition and
limits the amount of credit extended when deemed necessary but generally does
not require collateral.

     With the selection of Solectron Corporation in August 1999 as an exclusive
manufacturing partner for many of its GPS products, Trimble became substantially
dependent upon a sole supplier for the manufacture of many of its products. In
     addition, the Company relies on sole suppliers for a number of its critical
components.

     Many of Trimble's products use GPS as the positioning technology.  GPS is a
system of 24 orbiting satellites  established and funded by the U.S. Government,
which has been fully  operational  since March 1995. A significant  reduction in
the number of operating  satellites  would impair the current utility of the GPS
system  and the  growth of  current  and  additional  market  opportunities.  In
addition,  the U.S.  Government  may not remain  committed to the  operation and
maintenance  of GPS  satellites  over a long period,  and the policy of the U.S.
Government for the use of GPS without charge may change.


Allowance for Doubtful Accounts

     Trimble  maintains  allowances for doubtful  accounts for estimated  losses
resulting from the inability of its customers to make required payments.

     Trimble evaluates the collectibility of its trade accounts receivable based
on a number  of  factors.  In  circumstances  where  the  Company  is aware of a
specific customer's inability to meet its financial  obligations to the Company,
a specific  allowance for bad debts is estimated and recorded  which reduces the
recognized  receivable to the estimated  amount Trimble believes will ultimately
be collected.  In addition to specific customer  identification of potential bad
debts,  bad debt charges are recorded  based on the  Company's  recent past loss
history and an overall assessment of past due trade accounts  receivable amounts
outstanding. The expenses recorded for doubtful accounts were approximately $5.4
million in fiscal 2002,  $5.1 million in fiscal 2001, and $1.2 million in fiscal
2000.


Inventories

     Inventories  are  stated  at the  lower of  standard  cost or  market  (net
realizable value).  Standard costs approximate average actual costs. The Company
uses a standard cost  accounting  system to value  inventory and these standards
are reviewed at a minimum of once a year and  multiple  times a year in the most
active  manufacturing  plants.  The Company provides for the inventory value for
estimated  excess and obsolete  inventory,  based on management's  assessment of
future  demand  and  market  conditions.  If  actual  future  demand  or  market
conditions  are less favorable  than those  projected by management,  additional
inventory write-downs may be required.


Intangible and Non-Current Assets

     Intangible  assets  include  goodwill,  assembled  workforce,  distribution
channels, patents, licenses,  technology, and trademarks,  which are capitalized
at  cost.   Intangible   assets  with  definite   lives  are  amortized  on  the
straight-line  basis.  Useful  lives  generally  range from 2 to 10 years,  with
weighted  average useful life of 5.5 years.  Prior to January 1, 2002,  goodwill
was amortized  over 20 years,  except for goodwill from the Grid Data  purchase,
which was amortized over 5 years.

     If facts and  circumstances  indicate that the goodwill,  other  intangible
assets or property and  equipment  may be impaired,  an evaluation of continuing
value would be performed.  If an evaluation  is required,  the estimated  future
undiscounted  cash flows associated with these assets would be compared to their
carrying  amount to determine if a write down to fair market value or discounted
cash flow value is required.  Trimble  performed an impairment  test of goodwill
upon transition to FAS No. 142 on January 1, 2002, and an annual impairment test
on  September  30,  2002,  and found no  impairment.  Trimble  will  continue to
evaluate  its  goodwill  for  impairment  on an annual  basis at the end of each
fiscal third quarter and whenever  events and changes in  circumstances  suggest
that the carrying amount may not be recoverable.

     Trimble  adopted SFAS No. 142 on January 1, 2002. As a result,  goodwill is
no  longer   amortized  and  intangible   assets  with  indefinite   lives  were
reclassified to goodwill.


Revenue Recognition

     Trimble's  revenues  are recorded in  accordance  with the  Securities  and
Exchange  Commission's  (SEC) Staff Accounting  Bulletin (SAB) No. 101, "Revenue
Recognition."  The Company  requires the  following:  (i) execution of a written
customer  order,   (ii)  delivery  of  the  product,   (iii)  fee  is  fixed  or
determinable,  and (iv) collectibility of the proceeds is probable.  The Company
recognizes  revenue  from  product  sales when the  products  are shipped to the
customer, title has transferred,  and no significant obligations remain. Trimble
defers  revenue if there is  uncertainty  about  customer  acceptance.  Deferred
revenue is included in accrued  liabilities on the  consolidated  balance sheet.
Trimble  reduces  product  revenue  for  estimated  customer  returns,  and  any
discount, which may occur under programs it has with its customers and partners.

     The Company's  shipment terms are either FOB shipping point or FCA shipping
point.  FOB (Free on Board) - shipping point term means that the seller fulfills
the obligation to deliver when the goods have passed over the ship's rail at the
named  port of  shipment.  This  means  that the buyer has to bear all costs and
risks of loss of or damage to the goods from that point.  The FOB term  requires
the seller to clear the goods for export. FCA (Free Carrier) shipping point term
means that the seller  fulfills  the  obligation  to deliver  when the goods are
handed over, cleared for export, and into the charge of the carrier named by the
buyer at the named  place or point.  If no  precise  point is  indicated  by the
buyer,  the  seller may choose  within the place or range  stipulated  where the
carrier shall take the goods into carrier's charge.

     The Company's shipment terms for domestic orders are typically FOB shipping
point.  International orders fulfilled from the European distribution center are
typically shipped FCA shipping point. Other international orders are shipped FOB
destination,  and accordingly these  international  orders are not recognized as
revenue until the product is delivered and title has transferred.

     Revenues  from  purchased  extended  warranty  and support  agreements  are
deferred and recognized  ratably over the term of the  warranty/support  period.
Substantially  all  technology  licenses and research  revenue have consisted of
initial license fees and royalties,  which were recognized when earned, provided
the Company has no remaining obligations.

     Sales to distributors and resellers are recognized upon shipment  providing
that there is evidence of the  arrangement  through a distribution  agreement or
purchase order,  title has  transferred,  no remaining  performance  obligations
exist,  the price and terms of the sale are fixed,  and  collection is probable.
Distributors and resellers do not have a right of return.

     Software  arrangements  consist of a license fee and post contract customer
support (PCS). Trimble has established vendor specific objective evidence (VSOE)
of fair value for its PCS contracts  based on the price of the renewal rate. The
remaining  value of the  software  arrangement  is  allocated to the license fee
using the residual method,  under which revenue is primarily recognized when the
software has been delivered and there are no remaining obligations. Revenue from
PCS is recognized ratably over the period of the PCS agreement.


Support and Warranty

     The warranty periods for the Company's  products are generally  between one
and three years from date of shipment.  Selected  military  programs may require
extended warranty  periods,  and certain products sold by Trimble's TDS business
have a 90-day  warranty  period.  Trimble  supports its GPS  products  through a
circuit board replacement program from locations in the United Kingdom, Germany,
Japan,  and the United States.  The repair and calibration of Trimble's  non-GPS
products are available from company-owned or authorized facilities. The Company
reimburses  dealers and  distributors  for all authorized  warranty repairs they
perform. 

     While the  Company  engages  in  extensive  product  quality  programs  and
processes, including actively monitoring and evaluating the quality of component
suppliers,  its  warranty  obligation  is  affected  by product  failure  rates,
material  usage,  and service  delivery  costs  incurred in correcting a product
failure.  Should  actual  product  failure  rates,  material  usage,  or service
delivery  costs differ from the estimates,  revisions to the estimated  warranty
accrual and related costs may be required.

     Changes in the Company's product warranty liability during the 12 months,
ended January 3, 2003 are as follows:

                                                  (in thousands)
                                                 -----------------
                 Balance at December 28, 2001        $6,827
                 Warranties accrued                   2,821
                 Warranty claims                    (3,254)
                 Balance at January 3, 2003          $6,394


The Company's warranty liability is classified as accrued warranty in the
accompanying balance sheet.


Guarantees, Including Indirect Guarantees of Indebtedness of Others

     In November of 2002,  the FASB issued FIN No. 45,  "Guarantor's  Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others." FIN No. 45 requires that a liability be recorded in the
guarantor's balance sheet upon issuance of a guarantee.  In addition, FIN No. 45
requires  disclosures about the guarantees that an entity has issued including a
roll-forward of the entity's  product warranty  liabilities.  Trimble will apply
the  recognition  provisions of FIN No. 45  prospectively  to guarantees  issued
after December 31, 2002.


Advertising Costs

     Trimble's expenses advertising costs as incurred. Advertising expenses were
approximately $6.3 million, $6.8 million, and $7.9 million in fiscal 2002, 2001,
and 2000, respectively.


Research and Development Costs

     Research  and  development  costs are  charged  to expense  when  incurred.
Trimble  received  third  party  funding of  approximately  $5.3  million,  $4.1
million, and $4.8 million in fiscal 2002, 2001, and 2000, respectively.  Trimble
offsets research and development expenses with any third party funding received.

         The Company retains the rights to any technology developed.



Stock Compensation

     In  accordance  with the  provisions  of Statement of Financial  Accounting
Standards No. 123 ("SFAS 123"),  "Accounting for Stock-Based  Compensation"  and
"Statement of Financial Accounting  Standards No. 148 ("SFAS 148"),  "Accounting
for  Stock-Based  Compensation - Transition  and  Disclosure,"  Trimble  applies
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"  ("APB 25") and related  interpretations  in accounting for its stock
option  plans  and  stock  purchase  plan.  Accordingly,  the  Company  does not
recognize compensation cost for stock options granted at fair market value. Note
14 of the Notes to the  Consolidated  Financial  Statements  describes the plans
operated by Trimble.

     In December of 2002, the Financial  Accounting  Standards Board issued SFAS
No. 148, which amends SFAS No. 123, to provide alternative methods of transition
for  an  entity  that  changes  to the  fair  value  method  of  accounting  for
stock-based  employee  compensation.  In  addition,  SFAS  No.  148  amends  the
disclosure  provisions  of SFAS No. 123 to require  expanded and more  prominent
disclosure  of the effects of an  entity's  accounting  policy  with  respect to
stock-based employee compensation.

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
options is  amortized  to expense  over the  options'  vesting  period,  and the
estimated  fair value of purchases  under the employee  stock  purchase  plan is
expensed  in  the  year  of  purchase  as  well  as  the  stock-based   employee
compensation cost, net of related tax effects,  that would have been included in
the  determination of net income if the fair value based method had been applied
to all awards.  The effects on pro forma disclosure of applying SFAS No. 123 are
not likely to be representative of the effects on pro forma disclosure of future
years.

     Pro forma  information  regarding net income (loss) and earnings (loss) per
share is  required  by SFAS No. 123 and has been  determined  as if Trimble  had
accounted for its employee stock options and purchases  under the employee stock
purchase  plan using the fair value  method of SFAS  No.123.  The fair value for
these  options  was  estimated  at the  date  of  grant  using  a  Black-Scholes
option-pricing model with the following weighted-average  assumptions for fiscal
2002, 2001, and 2000:

                                         January 3,  December 28,   December 29,
                                            2003         2001           2000
                                        ----------- -------------  -------------
Expected dividend yield                       -            -               -
Expected stock price volatility          52.70%       69.59%          66.41%
Risk free interest rate                   3.13%        4.15%           6.21%
Expected life of options after vesting     1.18         1.20            1.22

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because  Trimble's  employee  stock  options  have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of its employee stock options.


<PAGE>


         Trimble's pro forma information is as follows:



<table>
<caption>
                                                       January 3,   December 28,   December 29,
Fiscal Years Ended                                        2003          2001           2000
--------------------------------------------------- -------------- --------------- -------------
(dollars in thousands)
<s>                                                   <c>          <c>                <c>
Net income (loss) - as reported                        $10,324      $ (22,879)         $14,185
Stock-based employee compensation expense
   determined under fair value method based for         11,641          12,718           8,287
   all awards, net of related tax effects
Net earnings (loss) - pro forma                        (1,317)        (35,597)           5,898
Basic earnings (loss) per share - as reported             0.36          (0.93)            0.60
Basic earnings (loss) per share - pro forma             (0.05)          (1.44)            0.25

Diluted earnings (loss) per share - as reported           0.36          (0.93)            0.55

Diluted earnings (loss) per share - pro forma           (0.05)          (1.44)            0.23

</table>


Depreciation

     Depreciation of property and equipment owned or under capitalized leases is
computed using the straight-line method over the shorter of the estimated useful
lives or the lease terms.  Useful  lives  include a range from two to four years
for machinery and equipment,  four to five years for furniture and fixtures, and
four to five years for leasehold improvements.


Income Taxes

     Income taxes are accounted for under the liability  method whereby deferred
tax asset or liability account balances are calculated at the balance sheet date
using current tax laws and rates in effect for the year in which the differences
are  expected to affect  taxable  income.  A valuation  allowance is recorded to
reduce the  carrying  amounts of  deferred  tax assets if it is more likely than
not, that such assets will not be realized.


Earnings (Loss) Per Share

     Number of shares used in calculation of basic earnings per share represents
the weighted  average common shares  outstanding  during the period and excludes
any dilutive  effects of options,  warrants,  and  convertible  securities.  The
dilutive effects of options,  warrants,  and convertible securities are included
in diluted earnings per share.



New Accounting Standards

     Trimble  adopted SFAS No. 144, at the beginning of fiscal 2002.  The effect
of  adopting  SFAS  No.  144 did not have a  material  impact  on the  Company's
financial position or results of operations.

     Trimble  adopted  SFAS No. 141,  Business  Combinations,  and SFAS No. 142,
Goodwill  and  Other  Intangible  Assets  , at the  beginning  of  fiscal  2002.
Application  of the  non-amortization  provisions of SFAS No. 142  significantly
reduced   amortization   expense  of  purchased   intangibles  and  goodwill  to
approximately  $8.3  million for the fiscal year 2002 from $29.4  million in the
prior  year.  The  Company  reclassified  identifiable  intangible  assets  with
indefinite  lives with net book value of $73.6  million,  as defined by SFAS No.
142, to goodwill  at the date of  adoption.  The  Company  tested  goodwill  for
impairment using the two-step process prescribed in SFAS No. 142. The first step
is a screen for potential impairment,  while the second step measures the amount
of the  impairment,  if any. No impairment  charge  resulted from the impairment
tests.


     In  October of 2001,  the FASB  issued  SFAS  No.144,  "Accounting  for the
Impairment or Disposal of Long-lived  Assets," which amends accounting  guidance
on asset impairment and provides a single accounting model for long-lived assets
to be disposed of. Among other provisions, the new rules change the criteria for
classifying an asset as  held-for-sale.  The standard also broadens the scope of
businesses  to be  disposed  of  that  qualify  for  reporting  as  discontinued
operations, and changes the timing of recognizing losses on such operations.

     In July of 2002,  the FASB  approved  SFAS No. 146,  "Accounting  for Costs
Associated  with  Exit or  Disposal  Activities."  SFAS No.  146  addresses  the
financial  accounting  and reporting  for  obligations  associated  with an exit
activity, including restructuring, or with a disposal of long-lived assets. Exit
activities  include,  but are not limited to,  eliminating  or reducing  product
lines,  terminating  employees and contracts and relocating  plant facilities or
personnel.  SFAS No. 146 specifies  that a company will record a liability for a
cost  associated  with an exit or disposal  activity only when that liability is
incurred  and can be measured at fair value.  Therefore,  commitment  to an exit
plan or a plan of disposal  expresses only management's  intended future actions
and,  therefore,  does not meet the  requirement for recognizing a liability and
the  related  expense.  SFAS  No.  146 is  effective  prospectively  for exit or
disposal  activities  initiated after December 31, 2002,  with earlier  adoption
encouraged.  The Company does not  anticipate  that the adoption of SFAS No. 146
will have a material effect on its financial position or results of operations.

     In November of 2002, the FASB issued FIN No. 45 "Guarantor's Accounting and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness of Others." FIN No. 45 requires that a liability be recorded in the
guarantor's balance sheet upon issuance of a guarantee.  In addition, FIN No. 45
requires disclosures about the guarantees that an entity has issued, including a
roll-forward of the entity's  product warranty  liabilities.  Trimble will apply
the  recognition  provisions of FIN No. 45  prospectively  to guarantees  issued
after December 31, 2002.  The disclosure  provisions of FIN No. 45 are effective
for financial statements of Trimble's fiscal year 2002.

     In  November of 2002,  the EITF  reached a  consensus  on Issue No.  00-21,
"Revenue Arrangements with Multiple Deliverables." EITF Issue No. 00-21 provides
guidance  on how to account  for  arrangements  that  involve  the  delivery  or
performance  of multiple  products,  services  and/or rights to use assets.  The
provisions  of EITF Issue No. 00-21 will apply to revenue  arrangements  entered
into in fiscal  periods  beginning  after June 15,  2003.  Trimble is  currently
evaluating the effect that the adoption of EITF Issue No. 00-21 will have on its
results of operations and financial condition.

     In January of 2003, the FASB issued FIN No. 46,  "Consolidation of Variable
Interest  Entities."  FIN No.  46  requires  a  variable  interest  entity to be
consolidated  by a company if that  company is subject to a majority of the risk
of loss from the variable interest entity's  activities or entitled to receive a
majority  of  the  entity's   residual   returns  or  both.  The   consolidation
requirements  of FIN No. 46 apply  immediately  to  variable  interest  entities
created after January 31, 2003. The  consolidation  requirements  apply to older
entities in the first  fiscal year or interim  period  beginning  after June 15,
2003. The Company is currently evaluating the provisions of FIN No. 46, however,
it does not believe as at January 3, 2003,  that the Company has any  investment
in variable interest entities.

Note 2 - Acquisitions:

     The following is a summary of  acquisitions  made by Trimble  during fiscal
2002, 2001, and 2000, all of which were accounted for as purchases:

<table>
<caption>

Acquisition              Primary Service or Product                   Acquisition Date
------------------------ -------------------------------------------- -----------------
<s>                     <c>                                          <c>
Spectra Precision Group  Optical and laser products                   July 14, 2000
Tripod Data Systems      Software for data collection applications    November 14, 2000
Grid Data                Wireless Application Service Provider        April 2, 2001
LeveLite Technology      Low-end construction instrument products     August 15, 2002

</table>


     The consolidated  financial statements include the results of operations of
acquired  companies  commencing on the date of  acquisition.  The total purchase
consideration  for each of the above  acquisitions  was  allocated to the assets
acquired and liabilities  assumed based on their estimated fair values as of the
date of acquisition. The Grid Data transaction was an asset purchase.




Allocation of Purchase Consideration

     The  following  is a  summary  of  purchase  price,  acquisition  costs and
purchase price allocation of the Spectra  Precision Group,  Tripod Data Systems,
Grid Data, and LeveLite acquisitions:


<table>
<caption>
                                                    Spectra         Tripod Data                        LeveLite
                                                Precision Group       Systems         Grid Data       Technology
                                                ----------------- ----------------- --------------- ----------------
(In thousands)
<s>                                             <c>                  <c>              <c>              <c>
Purchase price                                   $292,700             $14,995          $8,248           $6,031
Acquisition costs                                   7,719                 391              50              144
Restructuring costs                                 7,851                   -               -              555
                                                    -----                                                  ---
   Total purchase price                          $308,270             $15,386          $8,298           $6,730
                                                 ========             =======          ======           ======
Purchase Price Allocation:
    Fair value of tangible net assets acquired     65,913               4,261           (141)            6,115
    Deferred tax                                  (9,138)                   -               -                -
    Identified intangible assets:
      Distribution Channel                         78,600                   -               -                -
      Existing Technology                          25,200                   -               -                -
      Assembled Workforce                          18,300                   -               -                -
      Trade names, trade marks, patents, and
         other intellectual properties             10,800                   -               -                -
    Goodwill                                      118,595              11,125           8,439              615
                                                  -------              ------           -----              ---
                      Total                      $308,270             $15,386          $8,298           $6,730
                                                 ========             =======           =====            =====

</table>



Spectra Precision Group

     Spectra Precision,  a group of wholly-owned  businesses,  formerly owned by
Thermo  Electron  Corporation,  collectively  known  as the  "Spectra  Precision
Group," was acquired on July 14, 2000.  The  acquisition  was  completed  for an
aggregate  purchase price,  excluding  acquisition and  restructuring  costs, of
approximately  $293.8 million.  Subsequently,  in March 2002, the purchase price
was adjusted by $1.1 million as a result of the completion of final negotiations
with Thermo Electron relating to certain assets and liabilities  acquired.  This
adjustment  subsequently  decreased the purchase price to  approximately  $292.7
million and goodwill to approximately  $118.6 million.  The acquisition included
100% of the stock of Spectra  Precision  Inc., a Delaware  corporation;  Spectra
Precision SRL, an Italian  corporation;  Spectra Physics Holdings GmbH, a German
corporation;   and  Spectra  Precision  BV,  a  Netherlands   corporation.   The
acquisition  also included  certain assets and liabilities of Spectra  Precision
AB, a Swedish corporation; including 100% of the shares of Spectra Precision SA,
a French corporation;  Spectra Precision  Scandinavia AB, a Swedish corporation;
Spectra Precision of Canada Ltd., a Canadian corporation;  and Spectra Precision
Handelsges GmbH, an Austrian corporation.


Spectra Precision Group Restructuring Activities

     At  the  time  the  Company  acquired  the  Spectra  Precision  Group,  the
management  formulated  a  restructuring  plan and provided  approximately  $9.0
million  for  costs to close  certain  duplicative  office  facilities,  combine
operations  including  redundant  domestic and foreign  legal  entities,  reduce
workforce in overlapping areas, and relocate certain employees. These costs were
accrued for as part of the  allocation  of the purchase  price.  Included in the
total cost was  approximately  $2.7  million  related to the  discontinuance  of
overlapping  product  lines,  which was  included  in the accrual for excess and
obsolete inventory. The facility consolidation and employee relocations resulted
primarily from combining  certain office  facilities and duplicative  functions,
including management functions, of the Spectra Precision Group.

     In fiscal 2002, the Company used approximately $1.9 million of the accrual,
which consisted of $1.5 million for legal and tax consulting  expenses  relating
to  consolidation  of legal entities and, $0.4 million for facilities and direct
sales office closures. As of January 3, 2003, the accrual was fully utilized.

     In fiscal  2001,  the Company had used  approximately  $3.3  million of the
accrual,  which consisted of $0.9 million for legal and tax consulting  expenses
relating  to  consolidation  of  legal  entities,  $1.3  million  for  severance
expenses,  $0.7 million for  facilities and direct sales office  closures,  $0.3
million for an underfunded  pension plan,  and other costs of $0.1 million.  The
Company revised its final estimates for costs to complete the remaining  planned
activities and accordingly  reduced its  restructuring  accrual by approximately
$1.1 million, with a corresponding adjustment to goodwill, in the fourth quarter
of fiscal 2001.


     The elements of the restructuring accrual, which are included in accrued
liabilities in the balance sheet, are as follows:


                                Employee Severance   Facility Closure,    Total
                                  and Relocation   Legal and Tax Expense
(In thousands)

Total accrual                       $ 1,945           $  4,370           $ 6,315
Amounts paid                        (1,685)            (1,610)           (3,295)
Revision to estimates                 (260)              (812)           (1,072)
Balance as of December 28, 2001     $     -           $  1,948           $ 1,948
Amounts paid                              -            (1,948)           (1,948)
Balance as of January 3, 2003       $     -           $      -           $     -


Tripod Data Systems

     Tripod Data Systems, Inc., an Oregon corporation, was purchased on November
14, 2000 for an aggregate final purchase price of  approximately  $15.0 million.
The purchase price consisted of 576,726 shares of Trimble's  common stock valued
at the average  closing  price for the five trading days  preceding  the closing
date.


Grid Data, Inc.

     On April 2, 2001,  Trimble acquired certain assets of Grid Data, an Arizona
corporation,  for  approximately  $3.5  million  in cash and the  assumption  of
certain liabilities. In addition, the purchase agreement provided for Trimble to
make earn-out payments based upon the completion of certain business milestones.
In June 2002,  Trimble  issued  268,352 in settlement of all earn-out  payments,
which  resulted in additional  goodwill of $4.8 million,  with a final  purchase
price of approximately $8.3 million.


LeveLite Technology, Inc.

     On  August  15,  2002,   Trimble   acquired   LeveLite   Technology,   Inc.
("LeveLite"),  a California  corporation,  for approximately $5.7 million.  This
strategic  acquisition  complements  our  entry-level   construction  instrument
product  line.  The purchase  price  consisted  of 437,084  shares of our common
stock.  The merger  agreement  provides for Trimble to make additional  earn-out
payments not to exceed $3.9 million (in common stock and cash payment)  based on
future revenues  derived from existing product sales to a certain  customer.  On
January 22, 2003,  Trimble  issued the first  earn-out  payment  (stock and cash
combination) with a fair market value of approximately $0.4 million,  related to
the earn-out for the quarter  ended January 3, 2003.  Also, if Trimble  receives
any  proceeds  from a pending  litigation,  a portion will be paid to the former
shareholders of LeveLite.  The additional  payments,  if earned,  will result in
additional goodwill.



<PAGE>


Note 3 - Unaudited Pro Forma Information:

     The consolidated  statements of operations of Trimble presented  throughout
this report  include the operating  results of the acquired  companies  from the
date of the respective  acquisitions.  The following pro forma  information  for
fiscal 2002,  2001,  and 2000  presents net  revenue,  net loss from  continuing
operations,  and net loss for each of these periods as if the transactions  with
Spectra  Precision Group were  consummated on January 1, 2000. The following pro
forma information does not include Tripod Data Systems, Grid Data, and Levelite,
as these acquisitions were not material to the Company. This unaudited pro forma
data does not purport to represent  the Company's  actual  results of operations
had the Spectra  Precision  Group  acquisition  occurred on January 1, 2000, and
should not serve as a forecast of the Company's operating results for any future
periods.



<table>
<caption>

                                                              January 3,     December 28,     December 29,
Fiscal Years Ended                                               2003            2001             2000
----------------------------------------------------------- --------------- ---------------- ----------------
(In thousands, except for per share amounts)
<s>                                                            <c>              <c>             <c>
Net revenue                                                     $  466,602       $  475,292       $  491,436
Net income (loss) from continuing operations                        10,324         (23,492)          (1,920)
Net income (loss)                                                   10,324         (22,879)          (1,920)
Basic earnings (loss) per share from                            $     0.36       $   (0.95)       $   (0.08)
continuing operations
Basic earnings per share from discontinued
   Operations                                                           --             0.02               --
                                                                ----------       ----------       ----------
Basic earnings (loss) per share                                 $     0.36       $   (0.93)       $   (0.08)
                                                                ----------       ----------        ----------
Diluted earnings (loss) per share from continuing               $     0.36       $   (0.95)       $   (0.08)
   Operations
Diluted earnings per share from discontinued
   Operations                                                           --             0.02               --
                                                                 ----------       ---------        ---------
Diluted earnings (loss) per share                                 $   0.36       $   (0.93)       $   (0.08)
                                                                 ----------       ---------        ---------
</table>




<PAGE>


Note 4 - Goodwill and Intangible Assets:

Goodwill and purchased intangible assets consisted of the following:

                                                      January 3,    December 28,
                                                         2003            2001
(In thousands) Intangible assets:
  Intangible assets with indefinite life:
      Distribution channel                            $        -       $ 73,363
      Assembled workforce                                      -         17,773
                                                          ------         ------
  Total intangible assets with indefinite life                 -         91,136
  Intangible assets with definite life:
     Existing technology                                  25,986         23,907
     Trade names, trademarks, patents, and
      other intellectual properties                       21,594         18,394
                                                          ------         ------
Total intangible assets with definite life                47,580         42,301
                                                          ------         ------
Total intangible assets                                   47,580       $133,437
Less accumulated amortization                            (24,342)      (33,185)
                                                         -------       -------
Total net intangible assets                          $    23,238       $100,252
                                                     ===========       ========
Goodwill:
    Goodwill, Spectra Precision acquisition*             185,277        116,001
    Goodwill, other acquisitions*                         20,656         14,710
                                                          ------         ------
Total goodwill                                           205,933        130,711
Less accumulated amortization *                                -       (10,659)
                                                          ------        -------
Total net goodwill                                    $  205,933      $ 120,052
                                                      ==========      =========
--------------------------------------------------------------------------------


     *  Goodwill  as  of  January  3,  2003  includes  assembled  workforce  and
distribution channel amounts,  which were reclassified to goodwill in accordance
with SFAS  142.  Also,  January  3, 2003  amounts  are shown net of  accumulated
depreciation from December 28, 2001.


     The  intangible  asset  amortization  expense as of January 3, 2003 for the
five years following fiscal 2002 is projected as follows:

                        Year                (In thousands)
                        ----                --------------

                        2003                 $     7,126
                        2004                       7,084
                        2005                       5,327
                        2006                       1,892
                        2007                       1,116
                     Thereafter                      693
                                                     ---
                       Total                  $   23,238
                                              ==========



     Trimble  adopted SFAS No. 142 on January 1, 2002. As a result,  goodwill is
no  longer   amortized  and  intangible   assets  with  indefinite   lives  were
reclassified to goodwill.


     For  comparative  purposes,  the pro forma  adjusted  net  income per share
excluding   amortization  of  goodwill,   distribution  channel,  and  assembled
workforce is as follows:


<table>
<caption>
                                                             January 3,       December 28,     December 29,
                                                                2003              2001             2000
                                                                ----              ----             ----
(in thousands)
<s>                                                            <c>              <c>             <c>
Net income (loss)                                               $  10,324        $ (22,879)      $  14,185
  Add back SFAS 142 adjustments:
      Amortization of goodwill                                                        7,817          3,116
      Amortization of distribution channel                                           11,230          5,176
      Amortization of assembled workforce                                             1,834          1,225
Adjusted net income (loss)                                      $  10,324        $  (1,998)       $ 23,702
                                                                =========        ==========       ========
Weighted average shares outstanding
     Basic                                                         28,573            24,727         23,601
     Diluted                                                       29,052            24,727         25,976
Diluted net income (loss) per share                             $    0.36        $   (0.93)       $   0.55
                                                                ---------        ----------       --------
Pro forma adjusted diluted net income (loss) per share          $    0.36        $   (0.08)       $   0.92
                                                                =========        ==========       ========
</table>



Note 5 - Certain Balance Sheet Components:

         Inventories consisted of the following:

                                             January 3,        December 28,
                                                2003               2001
(in thousands)
Raw materials                             $   21,098           $   25,790
Work-in-process                                5,187                7,177
Finished goods                                34,859               18,843
                                              ------               ------
                                          $   61,144           $   51,810
                                          ==========           ==========


         Property and equipment consisted of the following:

                                              January 3,          December 28,
                                                 2003                 2001
(in thousands)
Machinery and equipment                      $  70,660            $  66,265
Furniture and fixtures                           6,538                6,367
Leasehold improvements                           6,451                5,882
Buildings                                        2,905                3,979
Land                                             1,391                1,657
                                                 -----                -----
                                                87,945               84,150
Less accumulated depreciation                 (65,908)             (56,608)
                                              --------             --------
                                             $  22,037            $  27,542
                                             =========            =========


Other current assets consisted of the following:

                                  January 3,             December 28,
                                     2003                    2001
(in thousands)
Notes receivable                $    1,685              $   2,130
Prepaid expenses                     5,495                  4,150
Other                                1,297                    256
                                     -----                    ---
                                $    8,477              $   6,536
                                ==========              =========



Other non-current assets consisted of the following:

                                          January 3,           December 28,
                                             2003                  2001
(in thousands)
Debt issuance costs, net                  $   2,493             $  3,046
Other investments                             1,381                2,737
Deposits                                      1,196                1,241
Demo inventory, net                           2,665                1,961
Receivables from employees                    1,223                  955
Other                                         3,128                  122
                                              -----                  ---
                                          $  12,086             $ 10,062
                                          =========             ========


Note 6 - Derivative Financial Instruments:

     Trimble  transacts  business  in  various  foreign  currencies  and  hedges
identified  risks  associated  with foreign  currency  transactions  in order to
minimize the impact of changes in foreign  currency  exchange rates on earnings.
Trimble  utilizes  forward  contracts to hedge certain  trade and  inter-company
receivables and payables. These contracts reduce the exposure to fluctuations in
exchange  rate  movements,  as the  gains and  losses  associated  with  foreign
currency  balances are  generally  offset with the gains and losses on the hedge
contracts.  These hedge  instruments are marked to market through earnings every
period.  From time to time,  Trimble may also utilize forward  foreign  exchange
contracts designated as cash flow hedges of operational exposures represented by
firm backlog orders to specific accounts over a specific period of time. Trimble
records  changes  in the fair  value of cash flow  hedges in  accumulated  other
comprehensive  income (loss),  until the firm backlog  transaction  ships.  Upon
recognition of revenue,  the Company  reclassifies  the gain or loss on the cash
flow hedge to the statement of operations.  For the fiscal year ended January 3,
2003,  Trimble  recorded a gain of $57,000  reflecting the net change and ending
balance in relation to a firm backlog hedge. The critical terms of the cash flow
hedging instruments are the same as the underlying forecasted transactions.  The
changes in fair value of the  derivatives  are intended to offset changes in the
expected cash flow from the forecasted transactions.  All forward contracts have
maturity  of less than 12  months.  As of  January  3,  2003,  the effect of all
outstanding  derivative  instruments  does not  have a  material  impact  on the
Company's financial position or results of operations.

     In July 2002,  Trimble  expanded its worldwide  hedging  program to include
inter-company  transactions among the former Spectra Precision Group entities in
order to minimize the impact of changes in foreign  exchange  rates on earnings.
The forward  foreign  currency  exchange  contracts  mature over the next twelve
months.  As of  January  3,  2003,  the  effect  of all  outstanding  derivative
instruments does not have a material impact on the Company's  financial position
or results of operations.




Note 7 - Disposition of Line of Business and Assets:

Disposition of Line of Business:

     On March  6,  2001,  the  Company  sold  certain  product  lines of its Air
Transport  Systems to  Honeywell  Inc. for  approximately  $4.5 million in cash.
Under the asset purchase  agreement,  Honeywell  International,  Inc.  purchased
product  lines that  included the HT 1000,  HT 9000,  HT 9100 and  Trimble's TNL
8100. As part of this sale, during the third quarter of fiscal 2001, the Company
also sold other product lines and discontinued its  manufacturing  operations in
Austin,  Texas. The Company also incurred  severance costs of approximately $1.7
million, which are included in restructuring charges, related to the termination
of employees associated with the product lines disposed of in fiscal 2001.

     At January 3,  2003,  the  Company  had an  accrual of  approximately  $1.1
million for related liabilities associated with the disposition of these product
lines and the discontinuance of its manufacturing operations.


Note 8 - The Company, Industry Segment, Geographic, and Customer Information:

     Trimble  is  a  designer  and  distributor  of  positioning   products  and
applications  enabled  by  GPS,  optical,  laser,  and  wireless  communications
technology.  The Company designs and markets products,  by delivering integrated
information  solutions such as collecting,  analyzing,  and displaying  position
data to its  end-users.  Trimble  offers an integrated  product line for diverse
applications in its targeted markets.

     To achieve distribution,  marketing,  production, and technology advantages
in  Trimble's  targeted  markets,  the  Company  manages its  operations  in the
following five segments:

o    Engineering  and  Construction  - Consists  of products  currently  used by
     survey and  construction  professionals  in the field for positioning  data
     collection,   field  computing,  data  management,  and  automated  machine
     guidance  and  control.  These  products  provide  solutions  for  numerous
     construction applications including surveying,  general construction,  site
     preparation and excavation,  road and runway construction,  and underground
     construction.

o    Field Solutions - Consists of products that provide  solutions in a variety
     of  agriculture  and fixed asset  applications,  primarily  in the areas of
     precise land leveling,  machine guidance,  yield monitoring,  variable-rate
     applications of fertilizers and chemicals,  and fixed asset data collection
     for a variety of  governmental  and private  entities.  This  segment is an
     aggregation of the Mapping and GIS operation and the Agriculture operation.
     Trimble has  aggregated  these business  operations  under a single general
     manager in order to continue  to  leverage  its  research  and  development
     activities due to the similarities of products across the segment.

o    Mobile  Solutions - Consists of products  that enable  end-users to monitor
     and  manage  their  mobile   assets  by   communicating   location-relevant
     information  from  the  field  to the  office.  Trimble  offers  a range of
     products  that address a number of sectors of this market  including  truck
     fleets, security, telematics, and public safety vehicles.

o    Component  Technologies  -  Currently,  Trimble  markets its GPS  component
     products through an extensive network of OEM relationships.  These products
     include  proprietary  chipsets,  modules,  and a  variety  of  intellectual
     property.  The applications into which end-users currently  incorporate the
     component products include:  timing applications for synchronizing wireless
     and computer  systems;  in-vehicle  navigation  and  telematics  (tracking)
     systems;  fleet management;  security systems; data collection systems; and
     wireless handheld consumer products.

o    Portfolio  Technologies - The various operations that comprise this segment
     were  aggregated on the basis that no single  operation  accounted for more
     than 10% of the total revenue.  These markets include the operations of the
     Military and Advanced Systems business and Tripod Data Systems.


     In the first fiscal  quarter of fiscal 2002,  Trimble  realigned two of its
reportable segments and therefore the following table shows restated revenue and
operating income by segment to reflect this realignment. The Agriculture segment
was combined with the Mapping and GIS business to form Field Solutions.  Mapping
and  GIS  were  previously  part of  Fleet  and  Asset  Management.  The  Mobile
Positioning  business that was part of Fleet and Asset  Management is now Mobile
Solutions.

     The Company  began  breaking out Mobile  Solutions as a separate  reporting
segment  during the first  quarter of 2002 to address the growing  importance of
the mobile asset management business and its impact on Trimble's  profitability.
At the same time,  the Company  combined its GIS and  Agriculture  businesses to
create a new segment called Field  Solutions in order to recognize the synergies
and similar product requirements between the two businesses.

     Trimble  evaluates  each  of  these  segment's  performance  and  allocates
resources based on profit and loss from operations before income taxes, and some
corporate allocations.

     The  accounting  policies  applied by each of the  segments are the same as
those used by Trimble in general.

     The  following  table  presents  revenues,  operating  income  (loss),  and
identifiable  assets  for  the  five  segments.  The  information  includes  the
operations of Spectra  Precision Group after July 14, 2000,  Tripod Data Systems
after November 14, 2000, Grid Data after April 2, 2001, and LeveLite Technology,
Inc.  after  August  15,  2002.  Operating  income  (loss) is net  revenue  less
operating expenses, excluding general corporate expenses, goodwill amortization,
restructuring  charges,  non-operating  income (expense),  and income taxes. The
identifiable  assets that  Trimble's  Chief  Operating  Decision  Maker views by
segment are accounts receivable and inventory.



<table>
<caption>
                                                               Fiscal Year Ended
                                                                 January 3, 2003
                                                                 (in thousands)
                             Engineering
                                 and         Field         Mobile       Component       Portfolio
                            Construction   Solutions      Solutions   Technologies    Technologies       Total
<s>                          <c>          <c>            <c>          <c>             <c>           <c>
External net revenue          $ 305,490    $  67,259      $   8,486    $  59,755       $   25,612    $   466,602
Inter-segment net
     Revenue                      6,193            -              -            -          (6,193)              -
Operating income (loss)
   before corporate
   allocations                   54,931       12,395       (10,830)       11,290            5,072         72,858
Operating income (loss)       $  54,931    $  12,395      $(10,830)     $ 11,290       $    5,072     $   72,858

Assets:
Accounts receivable (2)       $  71,415    $  11,598      $   1,960     $ 11,276       $    4,025     $  100,274
Inventories                   $  44,905    $   7,337      $   1,986     $  2,853       $    4,063     $   61,144

</table>





<table>
<caption>
                                                               Fiscal Year Ended
                                                               December 28, 2001
                                                                 (in thousands)
                             Engineering
                                and          Field          Mobile      Component       Portfolio
                            Construction   Solutions      Solutions   Technologies    Technologies       Total
<s>                         <c>           <c>            <c>          <c>             <c>            <c>
External net revenue         $  303,944     $  68,519     $  13,791    $  58,083       $   30,955     $  475,292
Inter-segment net
    revenue                       2,080             -             -            -          (2,080)              -
Operating income (loss)
   before corporate
   allocations                   51,625        13,652       (8,966)       10,882            4,037         71,230
Operating income (loss)      $   51,625     $  13,652     $ (8,966)    $  10,882       $    4,037      $  71,230

Assets:
Accounts receivable (2)      $   62,471     $  10,191     $   4,274    $   7,392       $    7,249      $  91,577
Inventories                  $   36,896     $   4,639     $   1,992    $   2,490       $    5,463      $  51,480

</table>



<table>
<caption>

                                                                Fiscal Year Ended
                                                                December 29, 2000
                                                                  (in thousands)

                              Engineering      Field         Mobile     Component       Portfolio
                                  and        Solutions     Solutions   Technologies    Technologies       Total
                             Construction

<s>                          <c>            <c>          <c>          <c>             <c>            <c>
External net revenue          $ 195,150      $ 70,652     $  20,471    $  60,230       $   23,295     $  369,798
Operating income (loss)
   before corporate
   allocations                   43,937        19,834         (369)       14,850              965         79,217
Corporate allocations (1)
                               (15,120)        (8,112)      (2,844)      (4,788)          (2,687)       (33,551)
Operating income (loss)       $  28,817     $  11,722     $ (3,213)    $  10,062       $  (1,722)     $   45,666
Assets:
Accounts receivable (2)       $  58,693     $  12,439     $   4,374    $  11,892       $    8,522     $   95,920
Inventories                   $  39,146     $   4,416     $   3,133    $   2,360       $    8,074     $   57,129

</table>



(1)  In fiscal 2002 and 2001, Trimble did not allocate corporate expenses to its
     individual business segments. In fiscal 2000, the Company determined the
     amount of corporate allocations charged to each of its segments based on a
     percentage of the segments' monthly revenue, gross profit, and controllable
     spending (research and development, sales and marketing, and general and
     administrative).

(2)  As presented, accounts receivable excludes cash received in advance and
     allowances for doubtful accounts, which are not allocated between segments.




<PAGE>


     The following are reconciliations corresponding to totals in the
accompanying consolidated financial statements:


<table>
<caption>

                                                     January 3,      December 28,    December 29,
Fiscal Years Ended                                      2003            2001            2000
---------------------------------------------    ---------------- --------------- ----------------
(in thousands)
<s>                                                <c>              <c>            <c>
Operating income from continuing operations:
   Total for reportable divisions                    $  72,858       $  71,230      $    45,666
   Unallocated corporate expenses

                                                      (39,035)        (71,049)         (19,447)
                                                      --------        --------         --------
 Operating income from continuing operations         $  33,823       $     181      $    26,219
                                                     =========       =========      ===========
</table>



                                                    January 3,     December 28,
                                                       2003            2001
                                                 --------------  ---------------
(in thousands)
Assets:
   Accounts receivable total for reportable
       segments                                     $  100,274        $  91,577
   Unallocated (1)                                    (20,629)         (19,897)
       Total                                        $   79,645        $  71,680
                                                    ==========        =========

   Inventory total for reportable segments          $   61,144        $  51,480
   Common inventory (2)
                                                             -              330
                                                             -              ---
       Total                                        $   61,144        $  51,810
                                                    ==========        =========


----------

(1) Includes cash in advance, other receivables, and accruals that are not
allocated by segment.

(2) Consists of common inventory that can be used by multiple segments.


The following table presents revenues by product groups.

                               January 3,       December 28,     December 29,
Fiscal Years Ended                2003              2001            2000
---------------------------- ---------------   -------------   -------------
(in thousands)

GPS products                     $269,835        $274,439        $274,215
Laser and optical products        182,650         186,948          93,879
Other                              14,117          13,905           1,704
                                   ------          ------           -----
Total revenue                    $466,602        $475,292        $369,798
                                 ========        ========        ========




<PAGE>


     The geographic  distribution of Trimble's revenues and identifiable  assets
is summarized in the table below.  Other foreign  countries  include  Canada and
countries within South and Central America. Identifiable assets indicated in the
table below exclude  inter-company  receivables,  investments  in  subsidiaries,
goodwill, and intangibles assets.


<table>
<caption>

                                                         Geographic Area
                                    -----------------------------------------------------------
                                                        Europe/                       Other
                                                        Middle                       Foreign
Fiscal year ended                           U.S.       East/Africa     Asia         Countries      Eliminations      Total
(In thousands)
January 3, 2003
<s>                                     <c>            <c>           <c>           <c>             <c>           <c>
Sales to unaffiliated customers (1)      $  235,716     $  136,551    $   60,878    $   33,457      $        -    $  466,602
Inter-geographic transfers                   62,843         73,625            -          4,121        (140,589)            -
                                         ----------     ----------    ----------    ----------        --------    ----------
Total revenue                            $  298,559     $  210,176    $   60,878    $   37,578        (140,589)   $  466,602
                                         ----------     ----------    ----------    ----------        --------    ----------
Identifiable assets                      $  127,594     $   70,057    $    9,955    $    5,743            (864)   $  212,485

December 28, 2001
Sales to unaffiliated customers (1)      $  236,665     $  143,051    $   54,710    $   40,866      $       -     $  475,292
Inter-geographic transfers                   57,481         49,940         2,137             -        (109,558)           -
                                         ----------     ----------    ----------    -----------        ---------  ----------
Total revenue                            $  294,146     $  192,991    $   56,847    $   40,866      $ (109,558)   $  475,292
                                         ----------     ----------    ----------    -----------        --------   ----------
Identifiable assets                      $  120,403     $    71,081   $   10,048    $    3,829      $   (5,494)   $  199,867

December 29, 2000
Sales to unaffiliated customers (1)      $  175,993     $  103,455    $   43,922    $   46,428      $        -    $  369,798
Inter-geographic transfers                   65,117         12,108         8,320             -         (85,545)            -
Total revenue                            $  241,110     $  115,563    $   52,242    $   46,428      $  (85,545)   $  369,798
Identifiable assets                      $  146,821     $   84,358    $   12,016    $    4,588      $   (6,274)   $  241,509

</table>


(1) Sales attributed to countries based on the location of the customer.

     Transfers  between  U.S.  and foreign  geographic  areas are made at prices
based on total costs and  contributions  of the supplying  geographic  area. The
Company's  subsidiaries in Asia,  except for Japan,  which is a buy/sell entity,
have derived revenue from  commissions  from domestic  operations in each of the
periods  presented.  These  commission  revenues and expenses are excluded  from
total revenue and operating  income (loss) in the preceding  table. The Japanese
entity's revenue and expenses are included in total revenue and operating income
(loss) in the  preceding  table.  In fiscal 2002,  the United  States  comprised
approximately 51% and Germany 16% of sales to unaffiliated customers.

     No single customer accounted for 10% or more of Trimble's total revenues in
fiscal years 2002, 2001, and 2000.


Note 9 - Restructuring Charges:

     Restructuring charges of $1.1 million were recorded in fiscal 2002 and $3.6
million was recorded in fiscal 2001,  which  related to  severance  costs.  As a
result of these actions,  Trimble's headcount decreased in fiscal 2002 by 49 and
in  fiscal  2001  by  207  individuals.  As of  January  3,  2003,  all  of  the
restructuring charges have been paid.



Note 10 - Long-term Debt:

     Trimble's long-term debt consists of the following:

                                                     January 3,     December 28,
                                                        2003            2001
(In thousands)

Credit Facilities:
    Five-year term loan                             $ 32,600         $  61,300
    U.S. and multi-currency revolving
        credit facility                               35,000            40,000
    Subordinated note                                 69,136            84,000
Promissory notes and other                             1,789             5,265
                                                     138,525           190,565
                                                     -------           -------
Less Bank and other short-term borrowings              6,556            40,025
Less current portion of long-term debt                24,104            23,443
                                                      ------            ------
 Non-current portion                               $ 107,865        $  127,097
                                                   =========        ==========


     The following summarizes the future cash payment obligations (excluding
interest):


<table>
<caption>
                                                                                              2006 and
January 3, 2003                           Total      2003       2004      2005      2006       Beyond
-------------------------------------------------------------------------------------------------------
(In thousands)
<s>                                    <c>         <c>        <c>        <c>       <c>        <c>
Credit Facilities:
    Five-year term loan                  $32,600    $24,000    $ 8,600    $   -     $    -     $     -
    U.S. and multi-currency
      revolving credit facility           35,000      6,550     28,450        -          -           -
 Subordinated note                        69,136         -      69,136        -          -           -
 Promissory note and other                 1,789        110        110      110        110       1,349
                                           -----        ---        ---      ---        ---       -----
Total contractual cash obligations      $138,525   $ 30,660   $106,296    $ 110     $  110     $ 1,349
                                        ========   ========   ========    =====     ======     =======

</table>


Credit Facilities

     In July of 2000,  Trimble  obtained $200 million of senior,  secured credit
facilities  (the "Credit  Facilities")  from a syndicate of banks to support the
acquisition  of  Spectra   Precision  Group  and  its  ongoing  working  capital
requirements and to refinance certain existing debt. At January 3, 2003, Trimble
has  approximately  $67.6  million  outstanding  under  the  Credit  Facilities,
comprised of $32.6 million under a $100 million five-year term loan, $25 million
under a $50 million U.S. dollar only revolving credit facility ("revolver"), and
$10 million under a $50 million multi-currency  revolver. The Company has access
to an additional $65 million of cash under the terms of the revolver loans.  The
Company has commitment  fees on the unused portion of 0.5% if the leverage ratio
(which is defined as all  outstanding  debt,  excluding the seller  subordinated
note,  over Earnings  before  Interest,  Taxes,  Depreciation  and  Amortization
(EBITDA),  as defined in the related  agreement) is 2.0 or greater and 0.375% if
the leverage ratio is less than 2.0.

     Pricing for any  borrowings  under the Credit  Facilities was fixed for the
first six months at LIBOR  plus 275 basis  points  and is  thereafter  tied to a
formula,  based on the leverage ratio.  The weighted average interest rate under
the Credit Facilities was 4.9% for the month of December ending January 3, 2003.

     The Credit Facilities are secured by all of the Company's  material assets,
except for assets  that are  subject to foreign  tax  considerations.  Financial
covenants of the Credit Facilities  include leverage,  fixed charge, and minimum
net worth tests,  all of which were amended during the third quarter of 2002. At
January 3, 2003,  Trimble  was in  compliance  with  these debt  covenants.  The
amounts due under the revolver loans are paid as the loans mature,  and the loan
commitment fees are paid on a quarterly basis.

     Two of the financial covenants, minimum fixed charge coverage and maximum
leverage ratios are sensitive to EBITDA. EBITDA is correlated to Trimble's
results of operations. Due to uncertainties associated with the downturn in the
worldwide economy and other factors, future revenues by quarter are difficult to
forecast. Cost cutting measures have been put in place by the management team;
however, if revenues should decline at a higher rate than cost cutting measures
on a quarter-to-quarter basis, Trimble may violate the two above-mentioned
financial covenants.


Subordinated Note

     In July of 2000, as part of the acquisition of Spectra Precision Group, the
Company issued  Spectra-Physics  Holdings USA, Inc., a subordinated  seller note
that had a stated two-year  maturity ($40 million was due in fiscal 2001 and $40
million in fiscal 2002). On March 20, 2002, the Company  renegotiated  the terms
of the subordinated note. Under the revised agreement, Spectra-Physics Holdings,
Inc., a subsidiary of Thermo  Electron,  extended the due date of the note until
July 14, 2004, at the current interest rate of approximately 10.4% per year.

     As of January 3, 2003 the principal  amount  outstanding was  approximately
$69.1  million.  To the extent that  interest and  principal due on the maturity
date becomes delinquent, an additional 4% interest rate per annum will apply.

     The Credit  Facilities allow Trimble to repay the subordinated  note at any
time (in part or in whole),  provided  that (a) Trimble's  leverage  ratio (Debt
(excluding  the seller  note)/EBITDA)  prior to such repayment is less than 1.0x
and (b) after giving effect to such repayment  Trimble would have (i) a leverage
ratio (Debt (excluding any remaining  portion of the subordinated  note)/EBITDA)
of less than 2.0x and (ii) cash and unused  availability  under the revolvers of
the Credit  Facilities  of at least $35  million.  The note,  by its  terms,  is
subordinated to the Credit Facilities.


Promissory Note

     The promissory note consists of a $1.8 million  liability  arising from the
purchase of a building for Trimble's Corvallis, Oregon site. The note is payable
in monthly  installments  through April 2015,  bearing a variable  interest rate
(5.4% as of January 3, 2003).


Weighted Average Cost of Debt

     The weighted average cost of debt is approximately 7.6% for fiscal 2002 and
8.0% for fiscal 2001.



<PAGE>


Note 11 - Lease Obligations and Commitments:

     Trimble's  principal  facilities  in the United  States  are  leased  under
non-cancelable  operating  leases that expire at various dates through 2011. The
Company  has options to renew  certain of these  leases for an  additional  five
years.  Trimble  also leases  facilities  under  operating  leases in the United
Kingdom, Sweden, and Germany that expire in 2005.

Future minimum payments required under non-cancelable operating leases are as
follows:

                                                   Operating
                                                 Lease Payments
                 (In thousands)

                 2003                               $   12,067
                 2004                                    7,438
                 2005                                    6,958
                 2006                                    1,795
                 2007                                    1,461
                 Thereafter                              5,115
                                                         -----
                 Total                              $   34,834
                                                    ==========

     Rent expense under operating leases was $11.6 million in fiscal 2002, $13.1
million in fiscal 2001, and $10.6 million in fiscal 2000.


Note 12 - Fair Value of Financial Instruments:

     Statement of Financial  Accounting  Standards No. 107,  "Disclosures  about
Fair  Value of  Financial  Instruments"  requires  disclosure  of the  following
information about the fair value of certain  financial  instruments for which it
is currently practicable to estimate such value. None of the Company's financial
instruments are held or issued for trading  purposes.  The carrying  amounts and
fair values of Trimble's financial instruments are as follows:



<table>
<caption>
                                                      Carrying       Fair          Carrying          Fair
                                                       Amount        Value          Amount           Value
                                                       ------        -----          ------           -----
                                                        January 3, 2003                 December 28, 2001
(In thousands)
<s>                                                   <c>            <c>           <c>              <c>
Assets:
   Cash and cash equivalents (See Note 1*)             $28,679        $28,679       $ 31,078         $ 31,078
   Forward foreign currency exchange contracts              93             93            191              191
      (See Note 6*)
   Accounts receivable                                  79,645         79,645         71,680           71,680
Liabilities:
   Subordinated notes (See Note 10*)                   $69,136        $65,798       $ 84,000         $ 81,290
   Credit facilities (See Note 10*)                     67,600         67,600        101,300          101,300
   Promissory notes and other (See Note 10*)             1,789          1,421          5,189            4,958
   Accounts payable                                     30,669         30,669         21,494           21,494

</table>



     * See the Notes to the Consolidated Financial Statements

     The fair value of the subordinated notes, bank borrowings, promissory note,
and the  long-term  commitment  have been  estimated  using an  estimate  of the
interest  rate  Trimble  would have had to pay on the  issuance  of notes with a
similar maturity and discounting the cash flows at that rate. The fair values do
not give an indication of the amount that Trimble would currently have to pay to
extinguish any of this debt.

     The fair value of forward foreign exchange contracts is estimated, based on
quoted market prices of comparable  contracts.  These  contracts are adjusted to
fair value at the end of every month.


Note 13 - Income Taxes:

         Trimble's income tax provision consists of the following:

                                January 3,       December 28,    December 29,
Fiscal Years Ended                 2003              2001            2000
(in thousands)

Federal:
      Current                  $      -         $      -        $   1, 408
      Deferred                        -                -                 -
                                      -                -             1,408
State:
      Current                       142               58               144
      Deferred                        -                -
                                    142               58               144
Foreign:
       Current                    2,052            2,729               931
       Deferred                   1,306            (887)             (908)
                                  3,358            1,842                23

Income tax provision           $  3,500        $   1,900        $    1,575


     The domestic (loss) income from continuing  operations  before income taxes
was  approximately  $3.3  million,  $(29.3)  million and $14.4 million in fiscal
years 2002, 2001 and 2000, respectively.


     The income tax provision  differs from the amount  computed by applying the
statutory  federal  income tax rate to income before taxes.  The sources and tax
effects of the differences are as follows:


<table>
<caption>

                                                         January 3,      December 28,    December 29,
Fiscal Years Ended                                          2003             2001           2000
(dollars in thousands)
<s>                                                     <c>           <c>                 <c>
Expected tax from continuing operations at 35%
   in all years                                          $   4,839     $   (7,557)         $   5,516
Operating loss not utilized (utilized)                     (1,156)           9,704           (5,115)
Foreign withholding taxes                                        -             115               141
Foreign tax rate differential                                (137)           (970)               307
Goodwill amortization                                            -             747               370
Other                                                         (46)           (139)               356
Income tax provision                                     $   3,500      $    1,900          $  1,575
Effective tax rate                                             25%            (9%)               10%

</table>




The components of deferred taxes consist of the following:

                                                    January 3,      December 28,
                                                       2003             2001
(in thousands)
Deferred tax liabilities:
    Purchased intangibles                            $    381       $    6,933
    Depreciation and amortization                       2,258                -
    Other items                                          (78)              300
           Total deferred tax liabilities               2,561            7,233
Deferred tax assets:
   Inventory valuation differences                     12,069           11,741
   Expenses not currently deductible                    5,762            5,103
   Federal credit carry forwards                        8,172            7,300
   Deferred revenue                                     4,317              808
   State credit carry forwards                          6,215            5,377
   Warranty                                             2,374            2,596
   Depreciation and amortization                        3,184            6,091
   Federal net operating loss (NOL) carry forward       4,451            1,086
   Other items                                          1,827            1,147
Total deferred tax assets                              48,371           51,249
Valuation allowance                                  (47,878)         (50,974)
Total deferred tax assets                                 493              275
Total net deferred tax liabilities                  $ (2,068)        $ (6,958)

     The Company has $12.7 million  federal net operating  loss carry  forwards,
which expire  beginning in 2022. The total federal credit carry forwards of $8.2
million expire beginning in 2005. The Company has state research and development
credit carry forwards of approximately $6.2 million, which do not expire.

     Valuation  allowances  reduce the  deferred tax assets to that amount that,
based upon all available evidence,  is more likely than not to be realized.  The
valuation  allowance  decreased by $3.1  million in 2002 and  increased by $13.1
million in 2001.  Approximately  $12.1  million of the  valuation  allowance  at
January 3, 2003 relates to the tax benefits of stock  option  deductions,  which
will be credited to equity if and when realized.


Note 14 - Shareholder's Equity:

Common Stock

     On December 21, 2001,  Trimble  completed a private  placement of 1,783,337
shares of its common  stock at a price of $15.00 per share to certain  qualified
investors,  resulting in gross  proceeds of  approximately  $26.8 million to the
Company.  On January  15,  2002,  Trimble  had a second  closing of the  private
placement issuing 1,280,004 shares of common stock at $15.00 per share resulting
in gross proceeds of an additional $19.2 million.


2002 Stock Plan

     In 2002,  Trimble's  Board of Directors  adopted the 2002 Stock Plan ("2002
Plan"). The 2002 Plan approved by the shareholders  provides for the granting of
incentive and  non-statutory  stock options for up to 2,000,000  shares plus any
shares currently reserved but un-issued to employees, consultants, and directors
of Trimble.  Incentive  stock options may be granted at exercise prices that are
not less  than  100% of the fair  market  value of  Common  Stock on the date of
grant.  Employee stock options granted under the 2002 Plan have 120-month terms,
and  vest  at a rate of 20% at the  first  anniversary  of  grant,  and  monthly
thereafter  at an annual rate of 20%,  with full vesting  occurring at the fifth
anniversary  of the grant.  The exercise  price of  non-statutory  stock options
issued  under the 2002 Plan  must be at least  85% of the fair  market  value of
Common  Stock on the date of grant.  As of January 3, 2003,  options to purchase
782,715  shares were  outstanding  and 1,217,285 were available for future grant
under the 2002 Plan.


1993 Stock Option Plan

     In 1992,  Trimble's  Board of Directors  adopted the 1993 Stock Option Plan
("1993 Plan").  The 1993 Plan, as amended to date and approved by  shareholders,
provides for the granting of incentive and non-statutory stock options for up to
6,375,000  shares of Common Stock to  employees,  consultants,  and directors of
Trimble.  Incentive stock options may be granted at exercise prices that are not
less than 100% of the fair  market  value of Common  Stock on the date of grant.
Employee  stock options  granted under the 1993 Plan have 120-month  terms,  and
vest at a rate of 20% at the first anniversary of grant, and monthly  thereafter
at an annual rate of 20%, with full vesting  occurring at the fifth  anniversary
of grant.  The exercise  price of  non-statutory  stock options issued under the
1993 Plan must be at least 85% of the fair market  value of Common  Stock on the
date of grant. As of January 3, 2003,  options to purchase 4,009,585 shares were
outstanding,  and 606,955  shares were available for future grant under the 1993
Plan.


1990 Director Stock Option Plan

     In December 1990,  Trimble adopted a Director Stock Option Plan under which
an aggregate of 380,000  shares of Common Stock have been  reserved for issuance
to non-employee directors as approved by the shareholders to date. At January 3,
2003,  options to purchase  208,333 shares were  outstanding,  and 35,416 shares
were available for future grants under the Director Stock Option Plan.


1992 Management Discount Stock Option Plan

     In 1992, Trimble's Board of Directors approved the 1992 Management Discount
Stock  Option  Plan  ("Discount   Plan").   Under  the  Discount  Plan,  300,000
non-statutory  stock options were reserved for grant to management  employees at
exercise prices that may be significantly  discounted from the fair market value
of Common Stock on the dates of grant.  Options are  generally  exercisable  six
months  from the date of grant.  As of  January  3,  2003,  there were no shares
available for future grants. For accounting purposes, compensation cost on these
grants is measured by the excess over the discounted exercise prices of the fair
market  value of  Common  Stock on the  dates of  option  grant.  There  were no
discounted  options  granted in the plan in fiscal 2002,  2001,  and 2000. As of
January 3, 2003,  options to purchase 126,000 shares were outstanding  under the
1992 Management Discount Stock Option Plan.


1988 Employee Stock Purchase Plan

     In 1988, Trimble established an employee stock purchase plan under which an
aggregate  of 3,350,000  shares of Common  Stock have been  reserved for sale to
eligible  employees as approved by the  shareholders  to date.  The plan permits
full-time  employees to purchase Common Stock through payroll  deductions at 85%
of the lower of the fair market value of the Common Stock at the beginning or at
the end of each  six-month  offering  period.  In fiscal 2002 and 2001,  241,608
shares  and  208,154  shares,  respectively,  were  issued  under  the  plan for
aggregate   proceeds  to  the  Company  of  $2.9   million  and  $3.1   million,
respectively.  At  January 3, 2003,  the  number of shares  reserved  for future
purchases by eligible employees was 504,203.


SFAS 123 Disclosures

     As stated in Note 1 of the Notes to the Consolidated  Financial Statements,
Trimble has elected to follow APB 25 and related  interpretations  in accounting
for its employee stock options and stock purchase plans.  The  alternative  fair
value  accounting  provided for under SFAS 123  requires  use of option  pricing
models that were not developed for use in valuing employee stock options.  Under
APB 25,  because the exercise  price of Trimble's  employee stock options equals
the  market  price of the  underlying  stock on date of grant,  no  compensation
expense is recognized.


     For purposes of pro forma disclosure assumptions,  see the related SFAS 123
information in Note 1 of the Notes to the Consolidated Financial Statements.

     Exercise prices for options  outstanding as of January 3, 2003, ranged from
$8.00 to  $51.69.  The  weighted  average  remaining  contractual  life of those
options is 7.13  years.  In view of the wide range of exercise  prices,  Trimble
considers it  appropriate  to provide the following  additional  information  in
respect of options outstanding:


<table>
<caption>
                                                                                    Currently exercisable
                                                                            -------------------------------------
                                          Total          Weighted-average                    Weighed-average
                       Number        Weighted-average        Remaining          Number        Exercise price
Range              (in thousands)     Exercise price     contractual life   (in thousands)
<s>                    <c>              <c>                <c>               <c>                  <c>
$8.00 -   $ 8.66          574,141         $8.13             5.64                444,958              8.14
$8.88 -   $11.94          819,055        $10.99             6.25                583,583            $10.90
$12.00 - $13.99          344,701         $12.81             6.55                190,177            $12.57
$15.34 - $15.34          608,765         $15.34             9.47                     -                 -
$15.38 - $17.05          545,163         $15.80             6.23                350,324            $15.60
$17.13 - $17.47          734,211         $17.35             8.51                230,411            $17.34
$17.50 - $19.94          557,278         $18.63             6.22                400,771            $18.48
$21.00 - $34.13          228,382         $26.92             7.02                134,454            $27.20
$41.13 - $41.13          688,037         $41.13             7.65                321,806            $41.13
$51.69 - $51.69           26,900         $51.69             7.55                 13,401            $51.69
$8.00 - $51.69         5,126,633         $18.53             7.13              2,669,885            $17.54

</table>




Activity during fiscal 2002, 2001, and 2000, under the combined plans was as
follows:


<table>
<caption>

                                            January 3, 2003              December 28, 2001           December 29, 2000
                                     ------------------------------- --------------------------- ---------------------------
                                                                                    Weighted                    Weighted
                                                    Weighted average                average                      average
         Fiscal Years Ended              Options     exercise price    Options   exercise price   Options    exercise price
-------------------------------------- ------------ ----------------- ---------- --------------- ----------- ----------------
(In  thousands, except for per share
data)
<s>                                       <c>            <c>            <c>           <c>          <c>             <c>
Outstanding at beginning of year           4,621          $19.04         4,260         $19.09       4,009           $12.36
     Granted                                 850           14.82         1,070          17.08       1,379            34.39
     Exercised                             (132)           10.00         (291)          12.91       (706)            13.08
     Cancelled                             (211)           20.19         (418)          18.55       (422)            15.51
Outstanding at end of year                 5,127          $18.53         4,621         $19.04       4,260           $19.07
Exercisable at end of year                 2,670          $17.54         2,006         $16.26       1,429           $12.94
Available for grant                        1,860                         1,043                      1,527
Weighted-average fair value of
options granted during year                                $8.46                        $9.58                       $19.04

</table>




Non-statutory Options

     On May 3, 1999,  Trimble entered into an agreement to grant a non-statutory
option to purchase up to 30,000  shares of common stock at an exercise  price of
$9.75 per share, with an expiration date of March 29, 2004.

     As of January 3, 2003, these non-statutory options have not been exercised.


Warrants

     On  December  21,  2001,  Trimble  granted  five-year  warrants to purchase
356,670 shares of common stock at an exercise price of $19.475 per share.  These
warrants  were  granted  to  investors  as part of a  private  placement  of the
Company's common stock.

     On January 15, 2002, in connection  with the second closing of the December
21, 2001 private  placement  of the  Company's  common  stock,  Trimble  granted
five-year  warrants to purchase an  additional  256,002  shares of common stock,
subject to certain adjustments, at an exercise price of $19.475 per share.

     On April 12, 2002,  the Company  issued to  Spectra-Physics  Holdings  USA,
Inc., a warrant to purchase up to 376,233 shares of Trimble's  common stock over
a fixed  period of time.  Initially,  Spectra-Physics'  warrant  entitles  it to
purchase  200,000 shares of common stock over a five-year  period at an exercise
price of $15.11  per  share.  On a  quarterly  basis  beginning  July 14,  2002,
Spectra-Physics'  warrant  became  exercisable  for an additional  250 shares of
common stock for every $1 million of principal  and interest  outstanding  until
the note is paid off in full.  These shares are  purchasable at a price equal to
the average of Trimble's  closing price for the five days immediately  preceding
the last  trading day of each  quarter.  On July 14, 2002 an  additional  17,364
shares became  exercisable at an exercise price of $14.46 per share.  On October
14, 2002 an additional 17,824 shares became  exercisable at an exercise price of
$9.18. On January 14, 2003, an additional 18,284 shares became exercisable at an
exercise price of $13.54.  The additional  shares are exercisable  over a 5-year
period.

     The  approximate  fair value of the warrants of $1.5 million was determined
using  the   Black-Scholes   pricing  model  with  the  following   assumptions:
contractual life of 5-year period,  risk-free interest rate of 4%; volatility of
65%; and no dividends during the contractual  term. The value of the warrants is
amortized to interest expense over the term of the subordinated note.



Common Stock Reserved for Future Issuances

     As of January 3, 2003,  Trimble had reserved  8,478,397  common  shares for
issuance upon exercise of options and warrants outstanding and options available
for grant under the 2002 Plan,  the 1993 Plan,  the 1990 Director  Plan, and the
1992  Management  Discount  Plan,  and  available  for  issuance  under the 1988
Employee Stock Purchase Plan.



Note 15 - Benefit Plans:


401(k) Plan

     Under  Trimble's  401(k)  Plan,  U.S.  employee   participants   (including
employees of certain subsidiaries) may direct the investment of contributions to
their  accounts among certain  mutual funds and the Trimble  Navigation  Limited
Common Stock Fund.  The Trimble Fund sold net 23,813  shares of Common Stock for
an aggregate of $291,565 in fiscal 2002.  Trimble,  at its  discretion,  matches
individual  employee 401(k) Plan contributions at a rate of fifty cents of every
dollar  that  the  employee  contributes  to  the  401(k)  Plan  up to 5% of the
employee's  annual  salary to an annual  maximum of $2,500.  Trimble's  matching
contributions  to the 401(k) Plan were $1.8 million in fiscal 2002, $1.7 million
in fiscal 2001, and $0.8 million in fiscal 2000.


Profit-Sharing Plan

     In 1995,  Trimble introduced an employee  profit-sharing  plan in which all
employees,  excluding executives and certain levels of management,  participate.
The plan distributes to employees approximately 5% of quarterly adjusted pre-tax
income.  Payments  under the plan during  fiscal  2002,  2001 and 2000 were $1.1
million, $0.9 million, and $2.1 million, respectively.


Defined Contribution Pension Plans

     Certain  of  the  Company's  European  subsidiaries  participate  in  state
sponsored  pension plans.  Contributions  are based on specified  percentages of
employee salaries.  For these plans,  Trimble contributed and charged to expense
approximately  $1.4 million for fiscal 2002,  $1.4 million for fiscal 2001,  and
$0.3 million for fiscal 2000.


Defined Benefit Pension Plan

     The  Swedish  and German  subsidiaries  have an  unfunded  defined  benefit
pension plan that covered substantially all of their full-time employees through
1993. Benefits are based on a percentage of eligible earnings. The employee must
have had a projected  period of  pensionable  service of at least 30 years as of
1993. If the period was shorter,  the pension benefits were reduced accordingly.
Active  employees  do not  accrue any future  benefits;  therefore,  there is no
service cost and the liability will only increase for interest cost.

Net periodic benefit costs in fiscal 2002 and 2001 were not material. The fair
value of the plan assets were as follows:

                                                 January 3,     December 28,
                                                   2003             2001
-----------------------------------------------------------------------------
(in thousands)

Fair value of plan assets at beginning of year      $ 503        $ 465
Actual return on plan assets                           60           56
Employer contribution                                   -            -
Plan participants' contributions                       23           33
Benefits paid                                           -            -
Translation adjustment                                 76         (51)
                                                       --         ---
Fair value of plan assets at end of year            $ 662        $ 503
                                                    =====        =====



The defined benefit plan activity was as follows:

                                              January 3, 2003  December 28, 2001
(in thousands)
Change in benefit obligation:
  Benefit obligation at beginning of year         $ 4,706          $  4,811
   Interest cost                                      131               134
   Translation adjustment                           (237)             (312)
   Actuarial (gain) loss                              282                73
Benefit obligation at end of year                 $ 4,318           $ 4,706
                                                  -------           -------
Unrecognized prior service cost                         -                 -
Unrecognized net actuarial gain                         -                 -
Accrued pension costs (included in accrued
    liabilities)                                  $ 4,318           $ 4,706
                                                  =======           =======


     Actuarial assumptions used to determine the net periodic pension costs for
the year ended January 3, 2003 were as follows:

                                   Swedish Subsidiary     German Subsidiaries
                                 ---------------------- ----------------------
Discount rate                                5.5%                 6.25%
Rate of compensation increase                2.5%                  1.5%





<PAGE>



Note 16 - Earnings Per Share:

     The following data show the amounts used in computing  earnings  (loss) per
share and the  effect  on the  weighted-average  number  of  shares of  dilutive
potential Common Stock.


<table>
<caption>

                                                      January 3,      December 28,    December 29,
Fiscal Years Ended                                       2003             2001            2000
--------------------------------------------------- ---------------- --------------- ---------------
(in thousands, except per share data)
<s>                                                  <c>           <c>               <c>
Numerator:
  Income available to common shareholders:
    Used in basic and diluted earnings (loss)
       per share from continuing operations           $  10,324     $  (23,492)       $  14,185
    Used in basic and diluted earnings
       per share from discontinued operations
                                                             --             613               -
                                                                            ---
    Used in basic and diluted earnings (loss)
       per share                                      $  10,324     $  (22,879)       $  14,185
                                                      =========     ===========       =========

Denominator:
  Weighted-average number of common shares
      used in basic earnings (loss) per share            28,573          24,727          23,601

   Effect of dilutive securities (using treasury stock method):
      Common stock options                                  470               -           2,098
      Common stock warrants                                   9               -             277
  Weighted-average number of common shares
      and dilutive potential common shares used
      in diluted income  per share                       29,052          24,727          25,976

Basic earnings (loss) per share from continuing
      operations                                       $   0.36       $   (0.95)        $  0.60
Basic earnings per share from discontinued
      operations
                                                              -            0.02               -
                                                              -            ----               -
Basic earnings (loss) per share                        $   0.36       $   (0.93)        $  0.60
                                                       --------       ---------         -------
Diluted earnings (loss) per share from
      continuing operations                            $   0.36       $   (0.95)        $  0.55
                                                       ========       =========         =======
Diluted  earnings per share from discontinued
      operations
                                                              -            0.02              -
                                                              -            ----              -
Diluted income (loss) per share                        $   0.36       $   (0.93)        $  0.55
                                                       ========       =========         =======
</table>


     Due to the fact  that the  Company  reported  a net  loss in  fiscal  2001,
options and warrants were not included in the  computation of earnings per share
in fiscal  2001.  If the Company  had  reported  net income in 2001,  additional
938,000 common  equivalent  shares  related to outstanding  options and warrants
would have been included in the calculation of diluted loss per share.





<PAGE>


Note 17 - Comprehensive Income (Loss):

The components of other comprehensive income (loss), net of related tax as
follows:


<table>
<caption>

                                             January 3,      December 28,    December 29,
Fiscal Years Ended                              2003             2001            2000
------------------------------------------ ---------------- --------------- ---------------
(in thousands)
<s>                                         <c>             <c>              <c>
Cumulative foreign currency translation
   adjustments                               $   17,697      $   (9,766)      $  (8,045)
Net gain (loss) on interest rate swap               210            (203)              -
Net unrealized gain (loss) on investments           (17)             16             123

   Other comprehensive income (loss)         $   17,890      $   (9,953)      $  (7,922)

</table>



Accumulated other comprehensive income (loss) on the consolidated balance sheets
consists of unrealized gains on available for sale investments and foreign
currency translation adjustments.

The components of accumulated other comprehensive (loss), net of related tax as
follows:

                                                        January 3   December 28,
                                                          2003          2001
(in thousands)
Cumulative foreign currency translation adjustments   $ (1,032)      $  (18,729)
Unrealized gain-hedges of forecasted transactions             7                0
Net gain (loss) on interest rate swap                                      (203)
                                                              -
Net unrealized gain (loss) on investments                   (1)               16
                                                            ---               --
   Accumulated other comprehensive loss               $ (1,026)      $  (18,916)
                                                      =========     ============


Note 18 - Related-Party Transactions:

Related-Party Lease

     Trimble  currently leases office space in Ohio from an association of three
individuals,  one of whom is an  employee  of one of the U.S.  operating  units,
under a non-cancelable  operating lease arrangement expiring in 2011. The annual
rent is subject to adjustment  based on the terms of the lease. The Consolidated
Statements of Operations  include  expenses from this operating  lease of $0.345
million for fiscal 2002,  $0.345 million for fiscal 2001, and $0.172 million for
fiscal 2000.


Related-Party Notes Receivable

     Trimble has notes  receivable from officers and employees of  approximately
$1.2 million as of January 3, 2003 and  $955,000 as of December  28,  2001.  The
notes bear  interest from 4.49% to 6.62% and have an average  remaining  life of
2.89 years as of January 3, 2003.


Caterpillar Joint Venture

     On April 1, 2002,  Caterpillar  Trimble Control  Technologies LLC (CTCT, or
"Joint  Venture"),  a Joint  Venture  formed by Trimble  and  Caterpillar  began
operations.  The Joint Venture, 50 percent owned by Trimble and 50 percent owned
by  Caterpillar,  with equal voting  rights,  is developing  and marketing  next
generation  advanced  electronic  guidance and control  products for earthmoving
machines in the construction, mining, and waste industries. The Joint Venture is
based  in  Dayton,  Ohio.  Under  the  terms  of the  joint  venture  agreement,
Caterpillar contributed $11.0 million cash plus selected technology, for a total
contributed value of $14.5 million,  and Trimble  contributed  selected existing
machine control product technologies valued at $25.5 million. Additionally, both
companies  have  licensed  patents and other  intellectual  property  from their
portfolios  to the Joint  Venture.  During  the first  fiscal  quarter  of 2002,
Trimble  received a special cash  distribution  of $11.0  million from the Joint
Venture.

     Trimble has elected to treat the cash distribution of $11.0 million as a
deferred gain, being amortized to the extent that losses are attributable from
the Joint Venture under the equity method described above. When and if the Joint
Venture is profitable on a sustainable basis, and future operating losses are
not anticipated, then Trimble will recognize as a gain, the portion of the $11.0
million, which is un-amortized. To the extent that it is possible that the
Company will have any future-funding obligation relating to the Joint Venture,
then the relevant amount of the $11.0 million will be deferred until such a
time, as the funding obligation no longer exists. Both Trimble's share of
profits (losses) under the equity method and the amortization of our $11.0
million deferred gain are recorded under the heading of "Expense for affiliated
operations, net" in Non-operating income (expense).

     During fiscal year 2002,  Trimble  recorded  approximately  $4.0 million of
expenses  under the  heading of  "Expense  for  affiliated  operations,  net" in
Non-operating income (expense) related to certain transactions between the Joint
Venture  and  Trimble.  This was  comprised  of  approximately  $4.9  million of
incremental  costs  incurred by Trimble as a result of purchasing  products from
the Joint  Venture at a higher  transfer  price than its original  manufacturing
costs,  offset by  approximately  $0.9  million of contract  manufacturing  fees
charged to the Joint Venture by Trimble. Due to the nature of the transfer price
agreements between Trimble and the Joint Venture, a related party, the impact of
these agreements is classified under Non-operating income (expense).

     In addition,  during fiscal year 2002,  Trimble  recorded  lower  operating
expenses of  approximately  $4.2 million due to the transfer of employee related
expenses for research and development ($2.8 million), and sales, marketing,  and
administrative  functions  ($1.4 million) to the Joint Venture.  These employees
are devoted to the Joint  Venture and are primarily  engaged in developing  next
generation products and technology for that entity.

     Trimble has adopted the equity method of accounting  for its  investment in
the Joint Venture. This requires that the Company records its share of the Joint
Venture profits or losses in a given fiscal period. During fiscal year 2002, the
Joint Venture  reported a loss of $0.4 million of which  Trimble's share is $0.2
million,  which was  recorded as a  Non-operating  expense  under the heading of
"Expense  for  affiliated  operations,   net",  but  which  was  offset  by  the
amortization  of an equal  amount of the original  deferred  gain on the sale of
technology to the Joint Venture.



Note 19 - Statement of Cash Flow Data:

                                       January 3,    December 28,   December 29,
Fiscal Years Ended                        2003          2001            2000
(in thousands)
Supplemental disclosure of cash
   flow information:
Interest paid                           $  12,215      $ 17,363       $  9,037
Income taxes paid                        $  2,635        $  825       $  3,835





<PAGE>


Note 20 - Litigation:

     In January  of 2001,  Philip M.  Clegg  instituted  a lawsuit in the United
States  District  Court for the  District  of Utah,  Central  Division,  against
Spectra-Physics  Laserplane,  Inc.,  Spectra Precision AB and Trimble Navigation
Limited.  On January  29,  2003,  Trimble  and Mr.  Clegg  settled  this  patent
infringement   lawsuit   whereby   Trimble  has   purchased  a  fully  paid  up,
non-exclusive license under U.S. Patent No. 4,807,131 from Mr. Clegg.

     In November of 2001,  Qualcomm Inc. filed a lawsuit  against Trimble in the
Superior Court of the State of California.  The complaint  alleges claims for an
unspecified amount of money damages arising out of Qualcomm's  perceived lack of
assurances in early 1999 that  Trimble's  products  purchased by Qualcomm  would
work properly  after a scheduled  week number  rollover event that took place in
August of 1999.  Qualcomm is the only customer to make a claim  against  Trimble
based on the week  number  rollover  event.  In the opinion of  management,  the
resolution of this lawsuit is not expected to have a material  adverse effect on
the Company's overall financial position.

     The Company is also a party to other  disputes  incidental to its business.
Trimble  believes that its ultimate  liability as a result of such disputes,  if
any,  would not be  material  to its  overall  financial  position,  results  of
operations, or liquidity.


Note 21 - Selected Quarterly Financial Data (unaudited):



<table>
<caption>
                                                 First           Second            Third           Fourth
                                                Quarter          Quarter          Quarter          Quarter
------------------------------------------- ---------------- ---------------- ---------------- ----------------
(In thousands, except per share data)
<s>                                             <c>             <c>               <c>              <c>
Fiscal 2002
     Total revenue                               $ 104,029       $ 123,256         $ 114,748        $ 124,569
     Gross margin                                   54,333          60,951            57,581           61,567
     Net income (loss)                               (715)           4,326             2,708            4,005
                                                     ----            -----             -----            -----
     Basic net income (loss) per share           $  (0.03)       $    0.15         $    0.09        $    0.14
                                                  ========         =======          ========         ========
     Diluted net income (loss) per share         $  (0.03)       $    0.15         $    0.09        $    0.14
                                                 ========        =========          ========         ========
Fiscal 2001
     Total revenue                               $ 117,863       $ 133,587         $ 117,437        $ 106,405
     Gross margin                                   57,500          65,531            60,315           53,889
     Net loss                                     (11,587)         (1,974)           (2,686)          (6,632)
                                                   -------          ------            ------           ------
     Basic net loss per share                    $  (0.48)       $  (0.08)         $  (0.11)        $  (0.26)
                                                 =========       =========          ========         ========
     Diluted net loss per share                  $  (0.48)       $  (0.08)         $  (0.11)        $  (0.26)
                                                  ========        ========          ========         ========
</table>





     Significant quarterly items include the following: (i) in the first quarter
of 2002 a $0.3 million  charge or $0.01 per diluted share  relating to workforce
reduction (ii) in the second quarter of 2002 a $0.2 million charge, or $0.01 per
diluted  share  relating to work force  reduction  (iii) in the third quarter of
2002 a $0.2 million  charge,  or $0.01 per diluted share  relating to work force
reduction and a $0.2 million  gain,  or $0.01 per diluted share  relating to the
sale of an investment; (iv) in the fourth quarter of 2002 a $0.5 million charge,
or $0.02 per diluted share  relating to work force  reduction and a $1.5 million
charge, or $0.05 per diluted share relating to the write-down of an investment.



     Significant quarterly items include the following: (i) in the first quarter
of 2001 a $2.0  million  charge or $0.08 per diluted  share  relating to loss on
sale of Air Transport business and the exiting of certain product lines; (ii) in
the second  quarter of 2001 a $0.9 million  charge,  or $0.04 per diluted  share
relating  to work  force  reduction;  and $0.2  million  in  income or $0.01 per
diluted share relating to a gain on the sale of a minority investment;  (iii) in
the third  quarter of 2001 a $0.4  million  charge,  or $0.01 per diluted  share
relating  to work force  reduction;  (iv) in the  fourth  quarter of 2001 a $0.5
million charge,  or $0.02 per diluted share relating to work force reduction;  a
$0.1 million gain,  or $0.01 per diluted  share on sale of business;  and a $0.1
million  charge,  or $0.01 per diluted  share  relating to the  write-down of an
investment.






<PAGE>


               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


The Board of Directors and Shareholders, Trimble Navigation Limited

     We have audited the  accompanying  consolidated  balance  sheets of Trimble
Navigation  Limited as of January 3, 2003 and December 28, 2001, and the related
consolidated statements of operations,  shareholders' equity, and cash flows for
each of the three  years in the period  ended  January 3, 2003.  Our audits also
included the financial  statement schedule listed in the index at Item 14(a)(2).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule, based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial  statements  and schedule  referred to above
present fairly, in all material respects, the consolidated financial position of
Trimble  Navigation  Limited at January 3, 2003 and December  28, 2001,  and the
consolidated  results of its operations and its cash flows for each of the three
years in the period  ended  January  3,  2003,  in  conformity  with  accounting
principles  generally accepted in the United States.  Also, in our opinion,  the
related financial statement  schedule,  when considered in relation to the basic
consolidated  financial  statements  taken as a whole,  presents  fairly  in all
material respects the information set forth therein.



                                                            s/ Ernst & Young LLP


January 24, 2003

Palo Alto, California
<page>


                           TRIMBLE NAVIGATION LIMITED
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


I
tem 9    Changes in and  Disagreements  with  Accountants  on Accounting  and
          Financial Disclosure

          None


                                    PART III



Item 10   Directors and Executive Officers of the Registrant

     The information  required by this item,  insofar as it relates to Trimble's
directors,  will be contained  under the captions  "Election of  Directors"  and
"Section 16 Beneficial  Ownership  Reporting  Compliance" in the Proxy Statement
and is incorporated herein by reference.



Item 11  Executive Compensation

     The  information  required  by this  item  will be  contained  in the Proxy
Statement under the caption "Executive  Compensation" and is incorporated herein
by reference.



Item 12   Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters

     The information required by this item will be contained in the Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management Related Stockholder Matters" and is incorporated herein by reference.



Item 13   Certain Relationships and Related Transactions

     The  information  required  by this  item  will be  contained  in the Proxy
Statement under the caption "Certain Relationships and Related Transactions" and
is incorporated herein by reference.



Item 14   Controls and Procedures

     (a) Evaluation of disclosure controls and procedures.

     Our chief  executive  officer and chief  financial  officer  evaluated  the
effectiveness  of our  disclosure  controls and  procedures  (as defined in Rule
13a-14(c) and 15(d)-14(c) under the Securities Exchange Act of 1934, as amended)
within 90 days of the  filing of this Form  10-K (the  "Evaluation  Date")  and,
based  on that  evaluation,  concluded  that,  as of the  Evaluation  Date,  our
disclosure  controls and procedures are effective to timely alert  management to
material  information  relating to Trimble  during the period when our  periodic
reports are being prepared.

     (b) Changes in internal controls.

     Since the Evaluation Date,  there have not been any significant  changes to
our internal controls or in other factors that could significantly  affect these
controls,   including  any   corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.


                                     PART IV


Item 15. Exhibits, Financial Statement Schedules, and Reports on form 8-K

     (a) 1. Financial Statements

     The following  consolidated  financial statements required by this item are
included in Part II Item 8 hereof under the caption  "Financial  Statements  and
Supplementary Data."


<table>
<caption>
                                                                             Page in this
                                                                             Annual Report
                                                                             on Form 10-K
<s>                                                                            <c>
Consolidated Balance Sheets at January 3, 2003 and December 28, 2001            56

Consolidated Statements of Operations for each of the three fiscal years
in the period ended January 3, 2003                                             57

Consolidated Statement of Shareholders' Equity for the three fiscal years
in the period ended January 3, 2003                                             58
Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended January 3, 2003                                             59

Notes to Consolidated Financial Statements                                      60-92

Report of Ernst & Young LLP, Independent Auditors                               93

</table>


     2.  Financial Statement Schedules


     The following financial statement schedule is filed as part of this report:



                                                                    Page in this
                                                                   Annual Report
                                                                    on Form 10-K

         Schedule II - Valuation and Qualifying Accounts            S-1

     All other schedules have been omitted as they are either not required or
not applicable, or the required information is included in the consolidated
financial statements or the notes thereto.


    3.  Exhibits

    Exhibit
    Number

     3.1  Restated Articles of Incorporation of the Company filed June 25, 1986.
          (6)

     3.2  Certificate of Amendment of Articles of  Incorporation  of the Company
          filed October 6, 1988. (6)

     3.3  Certificate of Amendment of Articles of  Incorporation  of the Company
          filed July 18, 1990. (6)

     3.4  Certificate of  Determination  of the Company filed February 19, 1999.
          (6)

     3.8  Amended and Restated Bylaws of the Company. (15)

     4.1  Specimen  copy of  certificate  for  shares  of  Common  Stock  of the
          Company. (1)

     4.2  Preferred Shares Rights Agreement dated as of February 18, 1999. (5)

     4.3  First  Amended  and  Restated  Stock and  Warrant  Purchase  Agreement
          between and among the Company and the investors  thereto dated January
          14, 2002. (10)

     4.4  Form of Warrant to Purchase  Shares of Common Stock dated  January 14,
          2002. (11)

     4.5  Form of Warrant dated April 12, 2002. (12)

    10.4+ Form  of  Indemnification   Agreement  between  the  Company  and  its
          officers and directors. (1)

    10.32+ 1990  Director  Stock Option Plan,  as amended,  and form of Outside
          Director Non-statutory Stock Option Agreement. (4)

    10.35 Sublease Agreement dated January 2, 1991,  between the Company,  Aetna
          Insurance Company, and Poqet Computer Corporation for property located
          at 650 North Mary Avenue, Sunnyvale, California. (2)

    10.40 Industrial  Lease  Agreement  dated  December  3,  1991,  between  the
          Company and Aetna Life Insurance  Company for property  located at 585
          North Mary Avenue, Sunnyvale, California. (3)

    10.41 Industrial  Lease  Agreement  dated  December  3,  1991,  between  the
          Company and Aetna Life Insurance  Company for property  located at 570
          Maude Court, Sunnyvale, California. (3)

    10.42 Industrial  Lease  Agreement  dated  December  3,  1991,  between  the
          Company and Aetna Life Insurance  Company for property  located at 580
          Maude Court, Sunnyvale, California. (3)

    10.46+ 1992 Management Discount Stock Option and form of Nonstatutory Stock
          Option Agreement. (3)

    10.59+ 1993 Stock Option Plan, as amended May 11, 2000. (8)

    10.60+ 1988 Employee Stock Purchase Plan, as amended May 11, 2000. (8)

    10.65+ Standby  Consulting  Agreement  between the Company and  Bradford W.
          Parkinson dated September 1, 1998. (6)

    10.66+ Standby  Consulting  Agreement  between  the  Company  and Robert S.
          Cooper dated September 1, 1998. (6)

    10.67+ Employment  Agreement  between the  Company and Steven W.  Berglund
          dated March 17, 1999. (6)

    10.68+ Nonqualified  deferred  Compensation  Plan of the Company  effective
          February 10, 1994. (6)

    10.70***Supply  Agreement  dated  August  10,  1999  by and  among  Trimble
          Navigation  Limited and Solectron  Corporation  and Solectron  Federal
          Systems, Inc. (7)

    10.77+ Australian  Addendum to the Trimble  Navigation  1988 Employee Stock
          Purchase Plan. (9)

    10.80 Amended  and  Restated  Subordinated  Promissory  Note dated March 20,
          2002. (13)

    10.81+ 2002 Stock Plan, including form of Option. (14)

    10.82 Amended and Restated Credit Agreement dated January 14, 2003. (16)

    10.83 Letter dated May 8, 2002 exercising renewal option of the Supply
          Agreement dated August 10, 1999 by and among Trimble Navigation
          Limited and Solectron Corporation and Solectron Federal Systems, Inc.
          (16)

     21.1 Subsidiaries of the Company. (16)

     23.1 Consent of Ernst & Young LLP, independent auditors. (16)

     24.1 Power of Attorney included on signature page herein.

     99.1 Certification of CEO pursuant to Section 906 of the Sarbanes-Oxley Act
          of 2002. (16)

     99.2 Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act
          of 2002. (16)

     ***  Confidential treatment has been granted for certain portions of this
          exhibit pursuant to an order dated effective October 5, 1999.

     +    Management contract or compensatory plan or arrangement required to be
          filed as an exhibit to this Annual Report on Form 10-K pursuant to

          Item 14(c) thereof.

     (1)  Incorporated by reference to identically numbered exhibits to the
          registrant's Registration Statement on Form S-1, as amended (File No.
          33-35333), which became effective July 19, 1990.

     (2)  Incorporated by reference to identically numbered exhibits to the
          registrant's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1990.

     (3)  Incorporated  by reference  to  identically  numbered  exhibits to the
          registrant's  Registration  Statement on Form S-1 (File No. 33-45990),
          which was filed February 18, 1992.

     (4)  Incorporated by reference to identically numbered exhibits to the
          registrant's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1993.

     (5)  Incorporated  by  reference  to  Exhibit  No.  1 to  the  registrant's
          Registration  Statement  on Form 8-A,  which was filed on February 18,
          1999.

     (6)  Incorporated by reference to identically numbered exhibits to the
          registrant's Annual Report on Form 10-K for the fiscal year ended
          January 1, 1999.

     (7)  Incorporated by reference to identically numbered exhibits to the
          registrant's Report on Form 8-K, which was filed on August 25, 1999.

     (8)  Incorporated by reference to identically numbered exhibits to the
          registrant's registration statement on Form S-8 filed on June 1, 2000.

     (9)  Incorporated by reference to identically numbered exhibits to the
          registrant's Annual Report on Form 10-K for the fiscal year ended
          December 29, 2000.

     (10) Incorporated by reference to exhibit number 4.1 to the registrant's
          Current Report on Form 8-K filed on January 16, 2002.

     (11) Incorporated by reference to exhibit number 4.2 to the registrant's
          Current Report on Form 8-K filed on January 16, 2002.

     (12) Incorporated by reference to exhibit number 4.1 to the registrant's
          Registration Statement on Form S-3 filed on April 19, 2002.

     (13) Incorporated by reference to exhibit number 10.80 to the registrant's
          Quarterly Report on Form 10-Q for the quarter ended March 29, 2002.

     (14) Incorporated by reference to exhibit number 10.82 to the registrant's
          Quarterly Report on Form 10-Q for the quarter ended June 28, 2002.

     (15) Incorporated by reference to exhibit number 3.8 to the registrant's
          Quarterly Report on Form 10-Q for the quarter ended September 27,
          2002.

     (16) Filed herewith.


     (b)  Reports on Form 8-K.

         On October 24, 2002, the Company filed a report on Form 8-K reporting
the Company's quarterly earnings for the third fiscal quarter of 2002.





                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                    TRIMBLE NAVIGATION LIMITED


                                    By: /s/ Steven W. Berglund                 
                                      ----------------------------------------
                                      Steven W. Berglund,
                                      President and Chief Executive Officer


                                      March 6, 2003


                                POWER OF ATTORNEY

     Know all  persons  by these  presents,  that each  person  whose  signature
appears   below   constitutes   and   appoints   Steven  W.   Berglund   as  his
attorney-in-fact,  with  the  power  of  substitution,  for  him in any  and all
capacities,  to sign any amendments to this Report on Form 10-K, and to file the
same, with exhibits  thereto and other documents in connection  therewith,  with
the Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact,  or his substitute or substitutes,  may do or cause to be
done by virtue hereof.


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Annual  Report on Form 10-K has been signed  below by the  following  persons on
behalf of the registrant and in the capacities and on the dates indicated:


Signature                  Capacity in which Signed               Date         

/s/ Steven W. Berglund     President, Chief Executive             March 6, 2003
-----------------------    Officer, Director     
Steven W. Berglund         


/s/ Mary Ellen Genovese    Chief Financial Officer and Assistant  March 7, 2003
------------------------   Secretary (Principal Financial Officer)     
Mary Ellen Genovese        


/s/ Anup V. Singh          Corporate Controller                   March 7, 2003
-------------------        (Principal Accounting Officer)
Anup V. Singh              


/s/ Robert S. Cooper       Director                               March 4, 2003
-----------------------
Robert S. Cooper


/s/ John B. Goodrich       Director                               March 7, 2003
----------------------                                                       
John B. Goodrich


/s/ William Hart          Director                                March 6, 2003
----------------                                              
William Hart


/s/ Ulf J. Johansson      Director                                March 4, 2003
---------------------
Ulf J. Johansson


/s/ Bradford W. Parkinson Director                                March 4, 2003
-------------------------
Bradford W. Parkinson                                   
                                                


<PAGE>




                                 CERTIFICATIONS
                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER


         I, Steven W. Berglund, certify that:

     1.   I have reviewed this annual report on Form 10-K of Trimble  Navigation
          Limited.

     2.   Based on my knowledge,  this Annual Report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this Annual Report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this Annual Report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               Annual Report is being prepared;

          b)   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this Annual Report (the "Evaluation Date"); and

          c)   Presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls;

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this Annual Report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.

 Date:  March 6, 2003               /s/ Steven W. Berglund
                                    ----------------------

                                    Steven W. Berglund
                                    Chief Executive Officer





<PAGE>



                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

         I, Mary Ellen Genovese, certify that:

     1.   I have reviewed this annual report on Form 10-K of Trimble  Navigation
          Limited.

     2.   Based on my knowledge,  this Annual Report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this Annual Report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this Annual Report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

          a)   Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               Annual Report is being prepared;

          b)   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this Annual Report (the "Evaluation Date"); and

          c)   Presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent functions):

          a)   All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b)   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls;

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this Annual Report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.

Date:  March 7, 2003                /s/ Mary Ellen Genovese
                                    -----------------------

                                    Mary Ellen Genovese
                                    Chief Financial Officer


<PAGE>





<PAGE>



                                   SCHEDULE II

                           TRIMBLE NAVIGATION LIMITED
                        VALUATION AND QUALIFYING ACCOUNTS
                            (IN THOUSANDS OF DOLLARS)


                                     January 3,  December 28,   December 29, 
Allowance for doubtful accounts:        2003         2001          2000
                                    ---------------------------------------
Balance at beginning of period         $ 8,540    $ 6,538        $ 2,949
  Acquired allowance (1)                     -          -          4,445
  Bad debt expense                       5,443      5,077          1,198
  Write-offs, net of recoveries        (4,083)    (3,075)        (2,054)
                                    ----------- ---------- --------------
Balance at end of period                $9,900     $8,540         $6,538
                                    ----------- ---------- --------------

Inventory allowance:
Balance at beginning of period         $23,274    $19,285       $14, 109
  Acquired allowance  (2)                    -          -          7,672
  Additions to allowance                 3,901      7,242            188
  Write-offs, net of recoveries        (2,025)    (3,253)        (2,684)
                                    ----------- ---------- --------------
Balance at end of period               $25,150    $23,274        $19,285
                                    ----------- ---------- --------------


     (1)  Includes  $4,419,000  acquired  at  July  14,  2000  as  part  of  the
acquisition of Spectra Precision Group and $26,000 acquired at November 14, 2000
as part of the acquisition of Tripod Data Systems.

     (2)  Includes  $7,659,000  acquired  at  July  14,  2000  as  part  of  the
acquisition of Spectra Precision Group and $13,000 acquired at November 14, 2000
as part of the acquisition of Tripod Data Systems.





























































                                 	EXHIBIT 10.82

                              AMENDED AND RESTATED
                                CREDIT AGREEMENT

                          Dated as of January 14, 2003

                                      among

                           TRIMBLE NAVIGATION LIMITED,
                                 as the Company,

                            THE SUBSIDIARY BORROWERS,

                       THE INSTITUTIONS FROM TIME TO TIME
                           PARTIES HERETO AS LENDERS,

                            THE BANK OF NOVA SCOTIA,
           as Administrative Agent, Issuing Bank, and Swing Line Bank,

                              FLEET NATIONAL BANK,
                              as Syndication Agent,

                                       and

                             BANK OF AMERICA, N.A.,
                             as Documentation Agent,

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

                                   Arranged By

                            THE BANK OF NOVA SCOTIA,
                     as Lead Arranger and Sole Book Runner,

                                       and

                             FLEET SECURITIES, INC.,
                                 as Co-Arranger
                                                                              



<PAGE>


                                       -2-

                      AMENDED AND RESTATED CREDIT AGREEMENT


         This AMENDED AND  RESTATED  CREDIT  AGREEMENT,  dated as of January 14,
2003, is entered into by and among,  TRIMBLE  NAVIGATION  LIMITED,  a California
corporation (the "Company"),  the institutions  from time to time parties hereto
as Lenders,  whether by execution of this  Agreement or an Assignment  Agreement
pursuant to Section 14.3,  THE BANK OF NOVA SCOTIA  ("BNS"),  in its capacity as
administrative  agent for  itself  and the other  Lenders  (the  "Administrative
Agent"),  FLEET  NATIONAL  BANK,  in its  capacity  as  syndication  agent  (the
"Syndication   Agent"),   and  BANK  OF  AMERICA,   N.A.,  in  its  capacity  as
documentation agent (the "Documentation Agent").


R E C I T A L S:

         A.  Pursuant  to the Credit  Agreement,  dated
 as of July 14,  2000 (as
amended,  supplemented,  amended and restated or otherwise modified prior to the
date hereof, the "Existing Credit  Agreement"),  among the Company,  the various
financial  institutions  and other Persons from time to time parties  thereto as
lenders (the "Existing  Lenders"),  the Syndication Agent, BNS, as documentation
agent, and ABN Amro Bank N.V., as administrative agent thereunder,  the Existing
Lenders  were  committed  to make  extensions  of credit to the  Company and the
Subsidiary  Borrowers  on the terms and  conditions  set forth  therein and made
revolving loans (the "Existing  Revolving  Loans") and term loans (the "Existing
Term Loans",  and collectively with the Existing  Revolving Loans, the "Existing
Loans") to the Company and the Subsidiary Borrowers.

         B. In order to provide  for the  ongoing  working  capital  and general
corporate  needs of the Company,  the Company  desires to,  among other  things,
continue  certain of the  Existing  Loans as Loans under this  Agreement  and to
obtain the commitments to make Loans set forth herein.

         C. The Company has  requested  that the  Existing  Credit  Agreement be
amended and  restated in its  entirety  to become  effective  and binding on the
Company pursuant to the terms of this Agreement,  and the Lenders (including the
Existing  Lenders) have agreed (subject to the terms of this Agreement) to amend
and restate the Existing  Credit  Agreement in its entirety to read as set forth
in this Agreement,  and it has been agreed by the parties to the Existing Credit
Agreement  that (a) the  commitments  which the Existing  Lenders have agreed to
extend to the Company under the Existing  Credit  Agreement shall be extended or
advanced upon the amended and restated  terms and  conditions  contained in this
Agreement and (b) the Existing Loans and other Obligations outstanding under the
Existing  Credit  Agreement  shall be governed  by and deemed to be  outstanding
under the amended and restated terms and conditions contained in this Agreement,
with the intent that the terms of this  Agreement  shall  supersede the terms of
the Existing  Credit  Agreement  (each of which shall  hereafter have no further
effect upon the parties thereto,  other than for accrued fees and expenses,  and
indemnification  provisions,  accrued and owing under the terms of the  Existing
Credit  Agreement  on or prior to the date  hereof or arising (in the case of an
indemnification)  under the terms of the Existing  Credit  Agreement);  provided
that any  Hedging  Agreements  with any one or more  Existing  Lenders (or their
respective Affiliates) shall continue unamended and in full force and effect.

     D. All  Obligations  are and shall  continue to be secured by,  among other
things, the Collateral Documents and the other Loan Documents.

     E. The Lenders are willing to extend such financial  accommodations  on the
terms and conditions set forth herein.

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


ARTICLE I:  DEFINITIONS

         1.1 Certain Defined Terms. In addition to the terms defined above,  the
following  terms  used in this  Agreement  shall  have the  following  meanings,
applicable both to the singular and the plural forms of the terms defined.

         As used in this Agreement:

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

         "Acquisition  Documents" means the Stock and Asset Purchase  Agreement,
the documents  evidencing the Subordinated  Seller Debt and the other documents,
certificates and agreements  delivered in connection with the Spectra  Precision
Acquisition.

         "Administrative  Agent" is defined in the preamble  and  includes  each
other Person appointed as the successor Administrative Agent pursuant to Section
12.11.

         "Advance"  means a  borrowing  hereunder  consisting  of the  aggregate
amount  of the  several  Loan(s)  made  by  some  or all of the  Lenders  to the
applicable  Borrower  of the same Type  and,  in the case of  Eurocurrency  Rate
Advances and  Alternate  Currency  Loans,  in the same currency and for the same
Interest Period.

         "Affected Lender" is defined in Section 2.20 hereof.

         "Affiliate" of any Person means any other Person directly or indirectly
controlling,  controlled by or under common  control with such Person.  A Person
shall be deemed to  control  another  Person  if the  controlling  Person is the
"beneficial  owner" (as defined in Rule 13d-3 under the Securities  Exchange Act
of 1934)  of  greater  than ten  percent  (10%) or more of any  class of  voting
securities (or other voting  interests) of the  controlled  Person or possesses,
directly  or  indirectly,  the power to direct  or cause  the  direction  of the
management or policies of the controlled  Person,  whether through  ownership of
Capital Stock, by contract or otherwise.

         "Aggregate  Revolving  Loan  Commitment"  means,  as  of  any  date  of
determination,  the sum of (a) the Aggregate Tranche A Revolving Loan Commitment
as of such date,  (b) the Aggregate  Tranche B Revolving  Loan  Commitment as of
such date, (c) the Aggregate Tranche C Revolving Loan Commitment as of such date
and (d) the Aggregate Tranche D Revolving Loan Commitment as of such date.

         "Aggregate  Tranche A Revolving Loan Commitment" means the aggregate of
the Tranche A Revolving  Loan  Commitments  of all the  Lenders,  as they may be
adjusted from time to time pursuant to the terms hereof. The Aggregate Tranche A
Revolving Loan Commitment  shall not be greater than the difference  between the
Aggregate  Tranche C  Revolving  Loan  Commitment  and Fifty  Million and 00/100
Dollars ($50,000,000.00).

         "Aggregate  Tranche B Revolving Loan Commitment" means the aggregate of
the Tranche B Revolving  Loan  Commitments  of all the  Lenders,  as they may be
adjusted from time to time pursuant to the terms hereof. The Aggregate Tranche B
Revolving Loan Commitment  shall not be greater than the difference  between the
Aggregate  Tranche D  Revolving  Loan  Commitment  and Fifty  Million and 00/100
Dollars ($50,000,000.00).

         "Aggregate  Tranche C Revolving Loan Commitment" means the aggregate of
the Tranche C Revolving  Loan  Commitments  of all the  Lenders,  as they may be
adjusted from time to time pursuant to the terms hereof. The Aggregate Tranche C
Revolving  Loan  Commitment  shall not be greater than Fifty  Million and 00/100
Dollars ($50,000,000.00).

         "Aggregate  Tranche D Revolving Loan Commitment" means the aggregate of
the Tranche D Revolving  Loan  Commitments  of all the  Lenders,  as they may be
adjusted from time to time pursuant to the terms hereof. The Aggregate Tranche D
Revolving  Loan  Commitment  shall not be greater than Fifty  Million and 00/100
Dollars ($50,000,000.00).

         "Agreed  Currencies"  means (a) Dollars,  (b) so long as such  currency
remains an Eligible  Currency,  euros, and (c) any other Eligible Currency which
the  applicable  Borrower  requests  the  Administrative  Agent to include as an
Agreed  Currency  hereunder  and which is agreed to by all of the Lenders with a
Tranche B Revolving Loan  Commitment and a Tranche D Revolving Loan  Commitment;
provided that the Administrative Agent shall promptly notify each such Lender of
each such  request  and each such  Lender  shall be deemed not to have agreed to
each such request unless and until its written consent thereto has been received
by the Administrative Agent.

         "Agreement"  means,  on any date,  the  Existing  Credit  Agreement  as
amended and restated hereby and as further  amended,  supplemented,  amended and
restated or otherwise modified from time to time and in effect on such date.

         "Agreement  Accounting  Principles" means generally accepted accounting
principles  as applied in a manner  consistent  with that used in preparing  the
financial statements of the Company referred to in Section 6.4 hereof;  provided
that for the purposes of determining compliance with the financial covenants set
forth in Section 7.4 hereof,  "Agreement Accounting  Principles" means generally
accepted accounting principles as in effect as of the date of this Agreement.

         "Alternate  Base  Rate"  means,  for any  day,  a  fluctuating  rate of
interest  per annum equal to in the case of Loans in Dollars,  the higher of (a)
the Prime Rate for such day and (b) the sum of (i) the Federal  Funds  Effective
Rate for such day and (ii) one half percent  (.50%) per annum and in the case of
Loans in other Eligible Currencies,  the comparable rate for such other Eligible
Currency,  as reasonably determined by the Administrative Agent or the Alternate
Currency Bank, as applicable.

         "Alternate  Currency" shall mean any Eligible  Currency which is not an
Agreed  Currency  and which the  applicable  Borrower  requests  the  applicable
Alternate  Currency Bank to include as an Alternate Currency hereunder and which
is  acceptable  to the  applicable  Alternate  Currency Bank and with respect to
which an Alternate Currency Addendum has been executed by a Subsidiary  Borrower
or the  Company  and  the  applicable  Alternate  Currency  Bank  in  connection
therewith.

         "Alternate  Currency  Addendum" means an addendum  substantially in the
form of Exhibit H hereto with such modifications thereto as shall be approved by
the applicable Alternate Currency Bank and the Administrative Agent.

         "Alternate Currency Bank" means BNS and any other Lender with a Tranche
B Revolving  Loan  Commitment or a Tranche D Revolving  Loan  Commitment (or any
Affiliate,  branch or agency  thereof) to the extent it is party to an Alternate
Currency Addendum as the "Alternate  Currency Bank"  thereunder.  If any agency,
branch or Affiliate  of such Lender  shall be a party to an  Alternate  Currency
Addendum,  such  agency,  branch  or  Affiliate  shall,  to  the  extent  of any
commitment extended and any Loans made by it, have all the rights of such Lender
hereunder;  provided  that such Lender  shall to the  exclusion  of such agency,
branch or Affiliate,  continue to have all the voting rights vested in it by the
terms hereof.

         "Alternate Currency Borrowing" means any borrowing consisting of a Loan
made in an Alternate Currency.

         "Alternate Currency  Commitment" means, for any Alternate Currency Bank
for each Alternate  Currency,  the obligation of such Alternate Currency Bank to
make  Alternate  Currency Loans not exceeding the Dollar Amount set forth in the
applicable Alternate Currency Addendum, as such amount may be modified from time
to time  pursuant to the terms of this  Agreement and the  applicable  Alternate
Currency Addendum.

         "Alternate  Currency  Interest  Period"  means,  with  respect  to  any
Alternate  Currency Loan, the Interest  Period as set forth in, or determined in
accordance with, the applicable Alternate Currency Addendum.

         "Alternate  Currency  Loan" means any Loan  denominated in an Alternate
Currency made by the applicable Alternate Currency Bank to a Subsidiary Borrower
or the Company pursuant to Section 2.21 and an Alternate Currency Addendum.

         "Alternate Currency Rate" means, for any day for any Alternate Currency
Loan, the per annum rate of interest  selected by the applicable  Borrower under
and as set forth in the applicable Alternate Currency Addendum.

         "Amendment  Effective  Date"  means the date upon which the  applicable
conditions  precedent  set forth in Article V have been  satisfied and the Loans
hereunder made.

         "Applicable  Commitment  Fee  Percentage"  means,  as at  any  date  of
determination,  the rate per annum then applicable in the  determination  of the
amount payable under Section 2.15(c)(i) hereof determined in accordance with the
provisions of Section 2.15(d)(ii) hereof.

         "Applicable   Eurocurrency   Margin"   means,   as  at  any   date   of
determination,  the rate per annum then  applicable to  Eurocurrency  Rate Loans
determined in accordance with the provisions of Section 2.15(d)(ii) hereof.

         "Applicable   Floating   Rate  Margin"   means,   as  at  any  date  of
determination,  the rate per  annum  then  applicable  to  Floating  Rate  Loans
determined in accordance with the provisions of Section 2.15(d)(ii) hereof.

         "Applicable L/C Fee Percentage" means, as at any date of determination,
a rate per annum equal to the Applicable  Eurocurrency  Margin for  Eurocurrency
Rate Loans in effect on such date.

         "Approved  Fund"  means,  with  respect to any Lender that is a fund or
commingled  investment  vehicle that invests in commercial loans, any other fund
that  invests  in  commercial  loans  and is  managed  or  advised  by the  same
investment advisor as such Lender or by an Affiliate of such investment advisor.

         "Approximate  Equivalent  Amount" of any  currency  with respect to any
amount of Dollars shall mean the Equivalent Amount of such currency with respect
to such amount of Dollars at such date, rounded up to the nearest amount of such
currency as determined by the Administrative Agent from time to time.

         "Arrangers"  means each of BNS, as Lead  Arranger and Sole Book Runner,
and Fleet Securities,  Inc., as Co-Arranger,  in their respective  capacities as
arrangers for the loan transaction evidenced by this Agreement.

         "Asset  Sale"  means,  with  respect to any  Person,  the sale,  lease,
conveyance,  disposition  or other  transfer by such Person of any of its assets
(including by way of a sale-leaseback  transaction) to any Person other than the
Company or any of its Wholly-Owned Subsidiaries other than (a) the sale or lease
of  Inventory  in the  ordinary  course  of  business,  (b) the  sale  or  other
disposition of any obsolete,  excess,  damaged or worn-out Equipment disposed of
in the  ordinary  course of  business  and (c) the sale or  liquidation  of Cash
Equivalents,  (d)  dispositions  or  transfers  in the  nature of a  license  or
sublicense  of  intellectual  property,  other than  licenses that are exclusive
across  all  regions  and  fields  and (e) other  sales,  dispositions,  leases,
conveyances  or transfers in the ordinary  course of business,  consistent  with
past  practices;  provided  that sales,  dispositions,  leases,  conveyances  or
transfers  described in clauses (b), (d) and (e) shall only be excluded from the
definition  of Asset Sale to the extent that they do not exceed  $10,000,000  in
any fiscal year.

         "Assigning Lender" is defined in Section 14.3.

         "Assignment  Agreement"  means an assignment and  acceptance  agreement
entered into in connection with an assignment pursuant to Section 14.3 hereof in
substantially the form of Exhibit D hereto.

         "Assumption  Letter"  means a letter  of a  Subsidiary  of the  Company
addressed to the Lenders in substantially  the form of Exhibit J hereto pursuant
to which such Subsidiary agrees to become a Subsidiary Borrower and agrees to be
bound by the terms and conditions hereof.

         "Authorized  Officer"  means  any of the  Chairman  of the  Board,  the
President,  the Treasurer,  any Vice President or the Chief Financial Officer of
the Company, acting singly.

         "Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer  Plan or a Foreign  Employee  Benefit Plan)
and in respect of which the Company or any other member of the Controlled  Group
is, or within the  immediately  preceding  six (6) years was, an  "employer"  as
defined in Section 3(5) of ERISA.

         "BNS" is defined in the preamble.
      
         "Borrower" means, as applicable,  any of the Company and the Subsidiary
Borrowers,   together  with  their  respective   successors  and  assigns;   and
"Borrowers" shall mean, collectively, the Company and the Subsidiary Borrowers.

         "Borrowing Date" means a date on which a Loan is made hereunder.

         "Borrowing/Conversion/Continuation  Notice" is  defined in Section  2.8
hereof.

         "Business Day" means (a) with respect to any borrowing, payment or rate
selection of Loans bearing interest at the Eurocurrency  Rate, a day (other than
a Saturday or Sunday) on which banks are open for business in Chicago, Illinois,
New York, New York and San Francisco,  California and (i) in addition, for Loans
denominated in Agreed Currencies (other than euro), on which dealings in Dollars
and  the  other  applicable  Agreed  Currencies  are  carried  on in the  London
interbank market and (ii) in addition,  for Loans  denominated in euro, on which
dealings in euro are carried on in Brussels,  Belgium interbank market,  and (b)
for all other  purposes a day (other  than a Saturday  or Sunday) on which banks
are  open  for  business  in  Chicago,  Illinois,  New  York,  New  York and San
Francisco, California.

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

         "Capital  Stock"  means  (a) in the  case of a  corporation,  corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests,  participations,  rights or other equivalents (however designated) of
corporate  stock,  (c) in  the  case  of a  partnership,  partnership  interests
(whether  general or limited) and (d) any other interest or  participation  that
confers on a Person the right to receive a share of the  profits  and losses of,
or distributions of assets of, the issuing Person; provided that "Capital Stock"
shall not include any debt securities  convertible into equity  securities prior
to such conversion.

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

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

         "Cash  Equivalents"  means (a) marketable direct  obligations issued or
unconditionally  guaranteed by the government of the United States and backed by
the full faith and credit of the United  States  government;  (b)  domestic  and
Eurocurrency certificates of deposit and time deposits, bankers' acceptances and
floating rate  certificates  of deposit issued by any commercial  bank organized
under  the laws of the  United  States,  any  state  thereof,  the  District  of
Columbia,  any  foreign  bank,  or  its  branches  or  agencies,  the  long-term
indebtedness  of which  institution  at the time of  acquisition is rated A- (or
better)  by  Standard  & Poor's  Ratings  Group  or A3 (or  better)  by  Moody's
Investors  Services,  Inc., and which  certificates of deposit and time deposits
are fully protected  against currency  fluctuations for any such deposits with a
term of more than  ninety  (90)  days;  (c)  shares of money  market,  mutual or
similar funds having assets in excess of  $100,000,000  and the  investments  of
which are limited to (i) investment grade securities (i.e.,  securities rated at
least Baa by  Moody's  Investors  Service,  Inc.  or at least BBB by  Standard &
Poor's  Ratings  Group) and (ii)  commercial  paper of United States and foreign
banks and bank holding  companies and their  subsidiaries  and United States and
foreign finance,  commercial  industrial or utility companies which, at the time
of acquisition,  are rated A-1 (or better) by Standard & Poor's Ratings Group or
P-1 (or  better) by Moody's  Investors  Services,  Inc.  (all such  institutions
being,   "Qualified   Institutions");   (d)   commercial   paper  of   Qualified
Institutions;  provided that the maturities of such Cash  Equivalents  shall not
exceed three hundred sixty-five (365) days from the date of acquisition  thereof
and (e) other Investments properly classified as "cash" or "cash equivalents" in
accordance with Agreement Accounting  Principles and made in accordance with the
Company's  investment  policy,  as approved by the Company's  Board of Directors
from time to time.

         "Change" is defined in Section 4.2 hereof.

         "Change of Control" means an event or series of events by which:


         (a) any  "person" or "group" (as such terms are used in Sections  13(d)
         and 14(d) of the Exchange Act of 1934),  becomes the "beneficial owner"
         (as defined in Rules 13d-3 and 13d-5  under the  Exchange  Act of 1934,
         provided that a person shall be deemed to have  "beneficial  ownership"
         of all  securities  that such person has the right to acquire,  whether
         such right is  exercisable  immediately  or only  after the  passage of
         time), directly or indirectly,  of twenty-five percent (25%) or more of
         the combined  voting power of the Company's  outstanding  Capital Stock
         ordinarily having the right to vote at an election of directors; or

         (b) the  majority of the board of  directors  of the Company  fails to
         consist of Continuing Directors; or

         (c) the Company consolidates with or merges into another corporation or
         conveys,  transfers or leases all or substantially  all of its property
         to any Person, or any corporation  consolidates with or merges into the
         Company,  in  either  event  pursuant  to a  transaction  in which  the
         outstanding  Capital  Stock of the Company is  reclassified  or changed
         into or exchanged for cash, securities or other property.

         "Closing Date" means July 14, 2000, the date the initial Existing Loans
were made under the Existing Credit Agreement.

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

         "Collateral Agent" means the collateral agent for the Lenders, selected
pursuant to Section 12.13.

         "Collateral   Documents"   means,   collectively,   (a)  the   Security
Agreements,  the  Mortgages,  the  Pledge  Agreements  and  all  other  security
agreements,  mortgages, deeds of trust, patent and trademark assignments,  lease
assignments,  guarantees  and other similar  agreements  between any Borrower or
Guarantor and the Lenders,  the Administrative Agent or the Collateral Agent for
the  benefit of the Lenders  now or  hereafter  delivered  to the  Lenders,  the
Administrative  Agent or the Collateral  Agent pursuant to or in connection with
the  transactions   contemplated   hereby,  and  all  financing  statements  (or
comparable  documents  now or  hereafter  fixed  in  accordance  with the UCC or
comparable  law)  against any  Borrower or  Guarantor  as debtor in favor of the
Lenders, the Administrative Agent or the Collateral Agent for the benefit of the
Lenders as secured party,  and (b) any amendments,  supplements,  modifications,
renewals, replacements,  consolidations,  substitutions and extensions of any of
the foregoing.

         "Commission" means the Securities and Exchange Commission of the United
States of America and any Person succeeding to the functions thereof.

         "Company"  is  defined  in the  preamble  and  includes  such  Person's
successors  and  assigns,  including  a  debtor-in-possession  on behalf of such
Person.

         "Consolidated Net Assets" means the total assets of the Company and its
Subsidiaries  on a consolidated  basis  (determined in accordance with Agreement
Accounting   Principles),   but  excluding  therefrom  all  goodwill  and  other
intangible assets under Agreement Accounting Principles.

         "Consolidated Net Worth" means, at a particular date, all amounts which
would be included under shareholders'  equity on the consolidated  balance sheet
for the Company and its consolidated Subsidiaries, in each case as determined in
accordance  with  Agreement  Accounting  Principles  but  excluding the effects,
whether positive or negative, of foreign exchange translation  adjustments after
the Closing Date.

         "Contaminant" means any waste,  pollutant,  hazardous substance,  toxic
substance,  hazardous  waste,  special  waste,  petroleum  or  petroleum-derived
substance  or  waste,  asbestos,  polychlorinated  biphenyls  ("PCBs"),  or  any
constituent of any such  substance or waste,  and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.

         "Contingent   Obligation",   as  applied  to  any  Person,   means  any
Contractual Obligation,  contingent or otherwise, of that Person with respect to
any  Indebtedness  of another  or other  obligation  or  liability  of  another,
including, without limitation, any such Indebtedness, obligation or liability of
another  directly  or  indirectly  guaranteed,   endorsed  (otherwise  than  for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with  recourse  by that  Person,  or in respect of which that  Person is
otherwise  directly or  indirectly  liable,  including  Contractual  Obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such Indebtedness,  obligation or liability or any security
therefor,  or to provide funds for the payment or discharge  thereof (whether in
the  form  of  loans,  advances,  stock  purchases,   capital  contributions  or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition,  or to make payment other than for value received.  The amount of any
Contingent  Obligation  shall be  equal  to the  portion  of the  obligation  so
guaranteed or otherwise supported,  in the case of known recurring  obligations,
and the maximum  reasonably  anticipated  liability in respect of the portion of
the  obligation  so guaranteed  or otherwise  supported  assuming such Person is
required to perform thereunder, in all other cases.

         "Continuing  Director" means, with respect to any Person as of any date
of  determination,  any member of the board of  directors of such Person who (a)
was a member of such board of directors on the date hereof or (b) was  nominated
for  election  or elected to such board of  directors  with the  approval of the
Continuing  Directors  who  were  members  of  such  board  at the  time of such
nomination or election.

         "Contractual Obligation", as applied to any Person, means any provision
of any  equity  or debt  securities  issued  by that  Person  or any  indenture,
mortgage,  deed  of  trust,  security  agreement,  pledge  agreement,  guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to which
that Person is a party or by which it or any of its  properties is bound,  or to
which it or any of its properties is subject.

         "Controlled  Group" means the group  consisting of (a) any  corporation
which is a member  of the same  controlled  group of  corporations  (within  the
meaning of Section  414(b) of the Code) as the  Company;  (b) a  partnership  or
other trade or  business  (whether or not  incorporated)  which is under  common
control (within the meaning of Section 414(c) of the Code) with the Company; and
(c) a member of the same affiliated service group (within the meaning of Section
414(m) of the Code) as the Company, in each case ((a), (b) or (c)) giving effect
to the consummation of the  transactions  contemplated by the Loan Documents and
the Acquisition Documents.

         "Customary Permitted Liens" means:
      
                  (a) Liens (other than  Environmental  Liens and Liens in favor
         of the  IRS  or the  PBGC)  with  respect  to  the  payment  of  taxes,
         assessments or governmental  charges in all cases which are not yet due
         or  (so  long  as  foreclosure,   distraint,   sale  or  other  similar
         proceedings  shall not have been commenced or any such proceeding after
         being  commenced is stayed) which are being  contested in good faith by
         appropriate  proceedings  properly instituted and diligently  conducted
         and  with  respect  to which  adequate  reserves  or other  appropriate
         provisions are being maintained in accordance with Agreement Accounting
         Principles;

                  (b)  Statutory  Liens of  landlords  and  Liens of  suppliers,
         mechanics, carriers,  materialmen,  warehousemen,  service providers or
         workmen and other  similar Liens imposed by law created in the ordinary
         course of  business  for amounts not more than sixty (60) days past due
         or which  thereafter  can be paid  without  penalty  or which are being
         contested in good faith by appropriate  proceedings properly instituted
         and diligently conducted and with respect to which adequate reserves or
         other  appropriate  provisions are being  maintained in accordance with
         Agreement Accounting Principles;

                  (c)  Liens  arising  with  respect  to  zoning   restrictions,
         easements,    encroachments,    licenses,   reservations,    covenants,
         rights-of-way,  utility  easements,  building  restrictions  and  other
         similar  charges,  restrictions  or  encumbrances  on the  use of  real
         property which do not in any case materially  detract from the value of
         the property subject thereto or materially  interfere with the ordinary
         use or occupancy of the real  property or with the ordinary  conduct of
         the business of the Company or any of its Subsidiaries;

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

                  (e) Liens arising from or upon any judgment or award; provided
         that such judgment or award is being  contested in good faith by proper
         appeal  proceedings  and  only so long as  execution  thereon  shall be
         stayed;

                  (f)  Deposits  to  secure  the  performance  of  bids,   trade
         contracts (other than for  Indebtedness  for borrowed  money),  leases,
         statutory  obligations,  surety  bonds,  performance  bonds  and  other
         obligations  of a like nature  incurred in the  ordinary  course of the
         Company's or any Subsidiary's business;

                  (g) Leases or subleases and licenses and  sublicenses  granted
         to  others  in the  ordinary  course  of  the  Company's  business  not
         interfering  in any  material  respect with the business of the Company
         and its  Subsidiaries  taken as a whole, and any interest or title of a
         lessor, licensor or under any lease or license;

                  (h) Liens in favor of customs and revenue  authorities arising
         as a matter of law to secure payment of customs duties in connection 
         with the importation of goods; and

                  (i) Liens that are subordinate to the Lien of the 
         Administrative Agent or Lenders which constitute rights of set-off of a
         customary nature or bankers' liens with respect to amounts on deposit,
         whether arising by operation  of law or by  contract,  in  connection
         with arrangements entered into with banks in the ordinary course of 
         business.

         "Default" means an event described in Article VIII hereof.

         "Disqualified  Stock" means any class or series of capital stock of any
Person that by its terms or otherwise:  (a) is required to be redeemed  prior to
the date  which is six  months  after  the  Facility  Termination  Date,  (b) is
redeemable  at the option of the holder of such class or series of capital stock
at any time prior to the date which is six months after the Facility Termination
Date; or (c) is convertible  into or exchangeable  or  exchangeable  for capital
stock  referred  to in  clause  (a) or (b) or  Indebtedness  having a  scheduled
maturity  prior to the date which is six months after the  Facility  Termination
Date.

         "Documentation  Agent" is defined in the  preamble  and  includes  such
Person's successors and assigns.

         "DOL"  means the  United  States  Department  of Labor  and any  Person
succeeding to the functions thereof.

         "Dollar"  and "$" means  dollars in the lawful  currency  of the United
States of America.

         "Dollar  Amount" of any  currency at any date shall mean (a) the amount
of such  currency if such  currency is Dollars or (b) the  Equivalent  Amount of
Dollars if such currency is any currency other than Dollars.

         "Domestic Subsidiary" means a Subsidiary of the Company organized under
the laws of a jurisdiction located in the United States of America.

         "EBITDA" means, for any period, on a consolidated basis for the Company
and  its  Subsidiaries,  the  sum  of  the  amounts  for  such  period,  without
duplication,  of (a) Net Income,  plus (b) cash  Interest  Expense to the extent
deducted in computing Net Income,  plus (c) charges  against income for foreign,
federal,  state and local taxes to the extent  deducted in computing Net Income,
plus (d)  depreciation  expense to the extent  deducted in computing Net Income,
plus (e) amortization expense,  including,  without limitation,  amortization of
goodwill and other  intangible  assets to the extent  deducted in computing  Net
Income, plus (f) other extraordinary  non-cash charges to the extent deducted in
computing Net Income,  minus (g) other extraordinary cash or non-cash credits to
the extent added in computing Net Income.

         "Eligible  Currency" means any currency other than Dollars with respect
to which  the  Administrative  Agent or the  applicable  Borrower  has not given
notice in  accordance  with Section 2.23 and that is readily  available,  freely
traded,  in which  deposits  are  customarily  offered  to  banks in the  London
interbank market (or other market where the Administrative  Agent's or Alternate
Currency Bank's, as applicable,  foreign currency  operations in respect of such
currency   are  then  being   conducted),   convertible   into  Dollars  in  the
international interbank market available to the Lenders in such market and as to
which an Equivalent Amount may be readily calculated.  If, after the designation
pursuant to the terms of this Agreement of any currency as an Agreed Currency or
Alternate  Currency,  (a) currency  control or other  exchange  regulations  are
imposed in the  country in which such  currency  is issued  with the result that
different types of such currency are introduced,  such country's currency is, in
the  determination of the  Administrative  Agent, no longer readily available or
freely  traded  or (b) in the  determination  of the  Administrative  Agent,  an
Equivalent  Amount for such currency is not readily  calculable  (each of clause
(a) and (b), a  "Disqualifying  Event"),  then the  Administrative  Agent  shall
promptly notify the Lenders and the Company,  and such country's  currency shall
no longer be an Agreed  Currency or  Alternate  Currency  until such time as the
Disqualifying  Event(s)  no  longer  exist,  but in any  event  within  five (5)
Business  Days of receipt of such  notice  from the  Administrative  Agent,  the
applicable  Borrowers  shall  repay  all  Loans in such  currency  to which  the
Disqualifying  Event  applies  or  convert  such Loan into  Loans in  Dollars or
another  Agreed  Currency  or  Alternate  Currency,  subject to the other  terms
contained in Articles II and IV.

         "Environmental,  Health  or  Safety  Requirements  of  Law"  means  all
Requirements  of Law derived  from or relating  to foreign,  federal,  state and
local laws or regulations  relating to or addressing  pollution or protection of
the environment,  or protection of worker health or safety,  including,  but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., the Occupational Safety and Health Act of 1970,
29 U.S.C.  ss. 651 et seq.,  and the Resource  Conservation  and Recovery Act of
1976, 42 U.S.C. ss. 6901 et seq., in each case including any amendments thereto,
any successor statutes, and any regulations or guidance promulgated  thereunder,
and any state or local equivalent thereof.

         "Environmental  Lien"  means  a  lien  in  favor  of  any  Governmental
Authority  for  (a)  any  liability  under   Environmental,   Health  or  Safety
Requirements  of Law, or (b) damages  arising  from,  or costs  incurred by such
Governmental  Authority  in response  to, a Release or  threatened  Release of a
Contaminant into the environment.

         "Equipment"  means all of the Company's and its  Subsidiaries'  present
and  future   (a)   equipment,   including,   without   limitation,   machinery,
manufacturing,  distribution,  selling,  data  processing and office  equipment,
assembly  systems,   tools,  molds,  dies,  fixtures,   appliances,   furniture,
furnishings,  vehicles, vessels, aircraft, aircraft engines, and trade fixtures,
(b)  other  tangible   personal  property  (other  than  the  Company's  or  its
Subsidiaries'   Inventory),   and  (c)  any  and  all   accessions,   parts  and
appurtenances  attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.

         "Equity  Interests"  means Capital  Stock and all warrants,  options or
other rights to acquire  Capital Stock (but  excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "Equivalent  Amount"  of any  currency  with  respect  to any amount of
Dollars at any date shall mean the equivalent in such currency of such amount of
Dollars, calculated on the basis of the arithmetic mean of the buy and sell spot
rates of exchange of the  Administrative  Agent or Alternate  Currency  Bank, as
applicable,   in  the  London  interbank  market  (or  other  market  where  the
Administrative  Agent's or Alternate  Currency  Bank's,  as applicable,  foreign
exchange  operations in respect of such currency are then being  conducted)  for
such other  currency at or about 11:00 a.m.  (local time) two (2) Business  Days
prior to the date on which such  amount is to be  determined,  rounded up to the
nearest  amount of such  currency  as  determined  by the  applicable  Alternate
Currency  Bank  from  time to  time;  provided  that if at the  time of any such
determination,  for  any  reason,  no  such  spot  rate  is  being  quoted,  the
Administrative  Agent or Alternate  Currency  Bank, as  applicable,  may use any
reasonable  method it deems  appropriate  to  determine  such  amount,  and such
determination shall be conclusive absent manifest error.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time including (unless the context otherwise  requires) any
rules or regulations promulgated thereunder.

         "euro" means the euro  referred to in the Council  Regulation  (EC) No.
1103/97 dated 17 June 1997 passed by the Council of the European  Union,  or, if
different,  the then lawful  currency of the member states of the European Union
that participate in the third stage of the Economic and Monetary Union.

         "Eurocurrency  Base Rate" means,  with respect to a  Eurocurrency  Rate
Loan for any specified  Interest Period,  (a) for any Eurocurrency  Rate Loan in
any Agreed  Currency other than euro,  either (i) the rate of interest per annum
equal  to the  rate  for  deposits  in the  applicable  Agreed  Currency  in the
approximate amount of the Pro Rata Tranche A Revolving Share, Pro Rata Tranche B
Revolving  Share,  Pro Rata  Tranche  C  Revolving  Share,  Pro Rata  Tranche  D
Revolving  Share or Pro Rata Term Share,  as applicable,  of the  Administrative
Agent of such Eurocurrency Rate Advance with a maturity  approximately  equal to
such Interest  Period which appears on Telerate Page 3740 or Telerate Page 3750,
as  applicable,  or, if there is more than one such  rate,  the  average of such
rates rounded to the nearest 1/100 of 1%, as of 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest  Period or (ii) if no such
rate of  interest  appears on  Telerate  Page 3740 or  Telerate  Page  3750,  as
applicable, for any specified Interest Period, the rate at which deposits in the
applicable  Agreed  Currency  are  offered  by  the   Administrative   Agent  to
first-class  banks in the London interbank  market at  approximately  11:00 a.m.
(London  time) two (2)  Business  Days  prior to the first day of such  Interest
Period, in the approximate amount of the Pro Rata Tranche A Revolving Share, Pro
Rata Tranche B Revolving  Share,  Pro Rata Tranche C Revolving  Share,  Pro Rata
Tranche  D  Revolving  Share or Pro  Rata  Term  Share,  as  applicable,  of the
Administrative  Agent  of such  Eurocurrency  Rate  Loan and  having a  maturity
approximately  equal  to such  Interest  Period;  and (b)  with  respect  to any
Eurocurrency  Rate Loan in euro for any Interest  Period,  the interest rate per
annum equal to the rate determined by the Administrative Agent to be the rate at
which  deposits in euro appear on Telerate  Page 248 as of 11:00 a.m.  (Brussels
time),  on the date that is two (2) TARGET  Settlement  Days preceding the first
day of such  Interest  Period;  provided  that if such rate  does not  appear on
Telerate Page 248, then the Eurocurrency Base Rate shall be an interest rate per
annum  equal to the  arithmetic  mean  determined  by the  Administrative  Agent
(rounded  upwards to the nearest .01%) of the rates per annum at which  deposits
in euro are offered by the three (3) leading  banks in the  euro-zone  interbank
market on or about  11:00  a.m.  (Brussels  time),  on the date which is two (2)
TARGET  Settlement  Days prior to the first day of such Interest Period to other
leading banks in the euro-zone interbank market. The terms "Telerate Page 3740",
"Telerate  Page 3750" and  "Telerate  Page 248" mean the display  designated  as
"Page  3740",  "Page  3750" and "Page 248",  as  applicable,  on the  Associated
Press-Dow  Jones Telerate  Service (or such other page as may replace Page 3740,
Page 3750 or Page 248, as applicable, on the Associated Press-Dow Jones Telerate
Service  or such other  service  as may be  nominated  by the  British  Bankers'
Association  as the  information  vendor for the purpose of  displaying  British
Bankers'  Association  interest rate  settlement  rates for the relevant  Agreed
Currency).

         "Eurocurrency  Payment Office" of the Administrative  Agent shall mean,
for each of the  Agreed  Currencies,  any  agency,  branch or  Affiliate  of the
Administrative  Agent,  specified as the "Eurocurrency  Payment Office" for such
Agreed Currency in Exhibit A-1 hereto or such other agency, branch, Affiliate or
correspondence  bank of the  Administrative  Agent,  as it may from time to time
specify to the applicable  Borrowers and each Lender as its Eurocurrency Payment
Office.

         "Eurocurrency Rate" means, with respect to a Eurocurrency Rate Loan for
the  relevant  Interest  Period,  the  sum  of  (a)  the  quotient  of  (i)  the
Eurocurrency  Base Rate  applicable to such Interest  Period divided by (ii) one
minus the Reserve Requirement plus (b) the then Applicable  Eurocurrency Margin,
changing as and when the Applicable Eurocurrency Margin changes.

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

         "Eurocurrency  Rate  Loan"  means a Loan made by a Lender  pursuant  to
Section 2.1, which bears interest at the Eurocurrency Rate.

         "Excess  Cash Flow"  means,  for any  period,  for the  Company and its
Subsidiaries on a consolidated  basis, (a) the sum of (i) Net Income,  plus (ii)
amortization,  depreciation and other non-cash charges, minus (b) the sum of (i)
Capital  Expenditures,  plus (ii)  principal  payments made on all  Indebtedness
(exclusive  of  mandatory  prepayments  made for Excess  Cash Flow  during  such
period), and minus (c) the increase (or plus the decrease,  as the case may be),
as of the last day of a fiscal  year  from the last day of the  previous  fiscal
year in the excess of Current Assets over Current  Liabilities.  For purposes of
this definition, "Current Assets" means all accounts receivable and Inventory of
the  Company and its  Subsidiaries,  calculated  in  accordance  with  Agreement
Accounting  Principles,  excluding  cash  and  Cash  Equivalents  and  excluding
Accounts due from Affiliates and "Current  Liabilities" means all liabilities of
the Company and its  Subsidiaries  which should,  in accordance  with  Agreement
Accounting  Principles,  be classified as current liabilities,  and in any event
shall  include  all  Indebtedness  payable on demand or within one year from the
date of determination without any option on the part of the obligor to extend or
renew  beyond  such year,  all  accruals  for federal or other taxes based on or
measured by income and  payable  within  such year,  and the current  portion of
long-term  Indebtedness  required  to be paid  within  one year  (excluding  the
Revolving Credit Obligations).

         "Existing Credit Agreement" is defined in the first recital.

         "Existing Lenders" is defined in the first recital.

         "Existing Loans" is defined in the first recital.

         "Existing Revolving Loans" is defined in the first recital.

         "Existing Term Loans" is defined in the first recital.

         "Facility Termination Date" is defined in Section 2.19.

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the  weighted  average of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds  brokers on such day, as published  for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Business  Day, the average of the  quotations at  approximately  11:00 a.m. (New
York time) on such day on such transactions received by the Administrative Agent
from  three  Federal  funds  brokers  of  recognized  standing  selected  by the
Administrative Agent in its sole discretion.

         "Fixed Charge Coverage  Ratio" means, as of any date of  determination,
the ratio of (a) EBITDA to (b) Fixed Charges in each case for the period of four
fiscal quarters ending on such date.

         "Fixed Charges" means, with respect to the Company and its Subsidiaries
on a  consolidated  basis,  as of any date of  determination,  (a) cash interest
expenses  (other than  unscheduled  payments of interest under the  Subordinated
Seller  Note) paid on  outstanding  Indebtedness  for the period of four  fiscal
quarters  ending  on the date of  determination,  plus (b)  scheduled  principal
payments on Indebtedness  (other than the Subordinated  Seller Note) made during
such period,  plus (c) dividends  paid on stock,  plus (d) Capital  Expenditures
made during such period.

         "Fixed-Rate  Advance"  means an Advance  which  bears  interest  at the
Eurocurrency Rate or at a fixed Alternate Currency Rate.

         "Fixed-Rate Loans" means, collectively, the Eurocurrency Rate Loans and
the Alternate Currency Loans.

         "Floating Rate" means, for any day for any Loan, a rate per annum equal
to (a) in the case of Loans in Dollars,  the  Alternate  Base Rate for such day,
changing when and as the Alternate Base Rate changes,  plus the then  Applicable
Floating Rate Margin,  and (b) in the case of Alternate Currency Loans, the rate
specified as such in the applicable Alternate Currency Addendum.

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

         "Floating  Rate Loan"  means a Loan,  or portion  thereof,  which bears
interest at the Floating Rate.

         "Foreign  Employee  Benefit  Plan" means any  employee  benefit plan as
defined in Section 3(3) of ERISA which is maintained or  contributed  to for the
benefit of the employees of the Company,  any of its Subsidiaries or any members
of its  Controlled  Group and is not covered by ERISA  pursuant to ERISA Section
4(b)(4).

         "Foreign  Subsidiary"  means a Subsidiary of the Company which is not a
Domestic Subsidiary.

         "Foreign  Pension Plan" means any employee benefit plan as described in
Section 3(3) of ERISA which (a) is maintained or  contributed to for the benefit
of  employees  of the  Company,  any of its  Subsidiaries  or any  member of its
Controlled  Group,  (b) is not covered by ERISA  pursuant to Section  4(b)(4) of
ERISA,  and (c) under  applicable  local law, is required to be funded through a
trust or other funding vehicle.

         "Governmental Acts" is defined in Section 3.10(a) hereof.

         "Governmental  Authority" means any nation or government,  any federal,
state,  local or other political  subdivision  thereof and any entity exercising
executive,  legislative,  judicial,  regulatory or  administrative  authority or
functions of or  pertaining  to  government,  including  any  authority or other
quasi-governmental entity established to perform any of such functions.

         "Guaranteed Obligations" is defined in Section 10.1 hereof.

         "Guarantor"  means each  Domestic  Subsidiary  of the Company that from
time to time is party to a Guaranty.

         "Guaranty"  means each of (a) that  certain  Guaranty  (and any and all
supplements thereto) executed from time to time by each Subsidiary Borrower that
is a Domestic  Subsidiary and each other  Domestic  Subsidiary of the Company as
required pursuant to Section 7.2(k) in favor of the Administrative Agent for the
benefit of itself and the Holders of Obligations,  in substantially  the form of
Exhibit G-1 attached  hereto,  and (b) the guaranty by the Company of all of the
Obligations  of the  Subsidiary  Borrowers  pursuant to this  Agreement  and the
Alternate Currency Addenda, in each case as amended,  supplemented,  amended and
restated or otherwise modified from time to time.

         "Hedging Agreements" is defined in Section 7.3(n) hereof.

         "Hedging Obligations" of a Person means any and all obligations of such
Person,  whether  absolute or contingent and howsoever and  whensoever  created,
arising,   evidenced  or  acquired  (including  all  renewals,   extensions  and
modifications  thereof  and  substitutions  therefor),  under  (a)  any  and all
agreements,  devices  or  arrangements  designed  to protect at least one of the
parties  thereto from the  fluctuations  of interest  rates,  commodity  prices,
exchange rates or forward rates  applicable to such party's assets,  liabilities
or exchange transactions,  including, but not limited to,  dollar-denominated or
cross-currency  interest rate exchange  agreements,  forward  currency  exchange
agreements,  interest  rate cap or collar  protection  agreements,  forward rate
currency  or  interest  rate  options,  puts and  warrants,  and (b) any and all
cancellations,  buy backs, reversals,  terminations or assignments of any of the
foregoing.

         "Holders of Obligations" means the holders of the Obligations from time
to time and shall  include  (a) each  Lender in respect  of its Loans,  (b) each
Issuing  Bank in  respect  of  Reimbursement  Obligations  owed  to it,  (c) the
Administrative  Agent, the Lenders and the Issuing Banks in respect of all other
present  and future  obligations  and  liabilities  of the Company or any of its
Subsidiaries of every type and  description  arising under or in connection with
this Agreement or any other Loan Document, (d) each Indemnitee in respect of the
obligations  and  liabilities of the Company or any of its  Subsidiaries to such
Person  hereunder or under the other Loan  Documents,  and (e) their  respective
successors, transferees and assigns.

         "Indebtedness" of a Person means,  without  duplication,  such Person's
(a) obligations for borrowed money,  (b) obligations  representing  the deferred
purchase price of property or services  (other than accounts  payable arising in
the ordinary course of such person's  business payable on terms customary in the
trade), (c) obligations,  whether or not assumed, secured by Liens on or payable
out of the  proceeds or  production  from  property  now or  hereafter  owned or
acquired  by  such  Person,  (d)  obligations  which  are  evidenced  by  notes,
acceptances,  or other similar  instruments,  (e) Capitalized Lease Obligations,
(f) Hedging Obligations,  (g) Contingent Obligations,  (h) actual and contingent
reimbursement  obligations in respect of letters of credit,  and (i) the implied
debt  component of synthetic  leases of which such Person is lessee or any other
off-balance sheet financing  arrangements  (including,  without limitation,  any
such arrangements  giving rise to any Off-Balance Sheet  Liabilities);  provided
that the term  "Indebtedness"  shall not  include  any (a)  accrued or  deferred
interest or other  expenses,  unless  capitalized  in accordance  with Agreement
Accounting Principles, or (b) lease properly classified as an operating lease in
accordance  with  Agreement  Accounting  Principles.  The  amount of any item of
Indebtedness, except for any item of Indebtedness described in clause (h), shall
be the amount of any liability in respect  thereof  appearing on a balance sheet
properly  prepared in accordance with Agreement  Accounting  Principles,  except
that the  amount of any item of  Indebtedness  described  in clause (g) shall be
determined in accordance  with the definition of Contingent  Obligations and the
amount of any item of  Indebtedness  described  in clause (i) above shall be the
"principal-equivalent" amount of such obligation.

         "Interest Expense" means, for any period, the total interest expense of
the  Company  and  its  consolidated  Subsidiaries,   whether  paid  or  accrued
(including the interest  component of Capitalized  Leases,  commitment  fees and
fees for stand-by  letters of credit),  all as  determined  in  conformity  with
Agreement Accounting Principles.

         "Interest  Period" means (a) with respect to Alternate  Currency Loans,
any Alternate  Currency  Interest  Period and (b) with respect to a Eurocurrency
Rate Loan,  a period of one (1),  two (2),  three (3) or six (6) months or, with
the consent of all of the Lenders, nine (9) months, commencing on a Business Day
selected by the applicable Borrower on which a Eurocurrency Rate Advance is made
to such Borrower  pursuant to this Agreement.  Such Interest Period described in
clause  (b)  above  shall  end  on  (but  exclude)  the  day  which  corresponds
numerically  to such  date  one,  two,  three,  six or nine  months  thereafter;
provided that if there is no such  numerically  corresponding  day in such next,
second,  third or sixth succeeding  month, such Interest Period shall end on the
last Business Day of such next,  second,  third or sixth succeeding month. If an
Interest  Period would  otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding  Business Day, provided that if
said next succeeding  Business Day falls in a new calendar month,  such Interest
Period shall end on the immediately preceding Business Day.

         "Inventory"   shall  mean  any  and  all  goods,   including,   without
limitation,  goods  in  transit,  wheresoever  located,  whether  now  owned  or
hereafter acquired by the Company or any of its Subsidiaries, which are held for
sale,  rental or lease,  furnished  under any contract of service or held as raw
materials,  work in process or supplies,  and all materials  used or consumed in
the business of the Company or any of its  Subsidiaries,  and shall  include all
right,  title and  interest  of the  Company or any of its  Subsidiaries  in any
property the sale or other  disposition  of which has given rise to  Receivables
and which has been  returned  to or  repossessed  or  stopped  in transit by the
Company or any of its Subsidiaries.

         "Investment"  means,  with  respect to any Person,  (a) any purchase or
other acquisition by that Person of any Indebtedness,  Equity Interests or other
securities, or of a beneficial interest in any Indebtedness, Equity Interests or
other securities, issued by any other Person, (b) any purchase by that Person of
all or  substantially  all of the assets of a business  (whether  of a division,
branch, unit operation,  or otherwise)  conducted by another Person, and (c) any
loan,  advance  (other than deposits with financial  institutions  available for
withdrawal  on  demand,  prepaid  expenses,  accounts  receivable,  advances  to
employees and similar items made or incurred in the ordinary course of business)
or  capital  contribution  by that  Person to any other  Person,  including  all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business.

         "IRS" means the Internal  Revenue Service and any Person  succeeding to
the functions thereof.

         "Issuing  Banks"  means BNS or any of its  Affiliates  in its  separate
capacity as an issuer of Letters of Credit pursuant to Sections 3.1 and 3.2.

         "L/C Documents" is defined in Section 3.4 hereof.

         "L/C Draft" means a draft drawn on an Issuing Bank pursuant to a Letter
of Credit.

         "L/C Interest" shall have the meaning  ascribed to such term in Section
3.6 hereof.

         "L/C Obligations" means,  without  duplication,  an amount equal to the
sum of (a) the  aggregate  amount then  available  for drawing under each of the
Letters  of  Credit,   (b)  the  face  amount  of  all  outstanding  L/C  Drafts
corresponding  to the Letters of Credit,  which L/C Drafts have been accepted by
the  applicable  Issuing  Bank,  (c) the  aggregate  outstanding  amount  of all
Reimbursement Obligations at such time and (d) the aggregate amount equal to the
face  amount of all Letters of Credit  requested  by the  Borrowers  but not yet
issued (unless the request for an unissued Letter of Credit has been denied).

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

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

         "Letter of Credit" means standby  letters of credit to be (a) issued by
the Issuing  Banks  pursuant  to Section 3.1 hereof or (b) deemed  issued by the
Issuing Banks pursuant to Section 3.2 hereof.

         "Leverage Ratio" means, as of any date of  determination,  the ratio of
(a) Total Indebtedness (not including the Seller Subordinated Debt) on such date
of determination to (b) EBITDA for the most recently ended period of four fiscal
quarters (including any fiscal quarters ending on the date of determination.)

         "Lien"  means  any  lien  (statutory  or  other),   mortgage,   pledge,
hypothecation,  assignment,  deposit  arrangement,  encumbrance  or  preference,
priority  or security  agreement  of any kind or nature  whatsoever  (including,
without  limitation,  the interest of a vendor or lessor  under any  conditional
sale, Capitalized Lease or other title retention agreement); provided that in no
event shall the lessor's  interest  under any lease  properly  classified  as an
operating lease in accordance with Agreed Accounting  Principles be a "Lien" for
purposes of this definition.

         "Loan(s)" means,  (a) in the case of any Lender,  such Lender's portion
of any Advance made pursuant to Section 2.1 hereof, in the case of any Alternate
Currency Bank,  any Alternate  Currency Loan made by it pursuant to Section 2.21
and the applicable  Alternate  Currency  Addendum,  and in the case of the Swing
Line Bank,  any Swing Line Loan made by it  pursuant  to  Section  2.3,  and (b)
collectively,  all Revolving Loans,  Term Loans,  Alternate  Currency Loans, and
Swing Line Loans.

         "Loan Account" is defined in Section 2.13(a) hereof.

         "Loan Documents" means this Agreement, each Alternate Currency Addendum
executed hereunder,  each Assumption Letter executed  hereunder,  the Collateral
Documents, the Guaranty, the Subordination Agreement, the New Fee Letter and all
other  documents,  instruments,  notes and  agreements  executed  in  connection
therewith  or  contemplated  thereby,  as the same may be  amended,  restated or
otherwise modified and in effect from time to time.

         "Loan Parties" means each of the Company,  each Subsidiary Borrower and
each of the Guarantors.

         "Margin  Stock"  shall  have  the  meaning  ascribed  to  such  term in
Regulation U.

         "Material  Adverse Effect" means a material adverse effect upon (a) the
business,   condition   (financial  or  otherwise),   operations,   performance,
properties  or  prospects  of the Company or the  Company and its  Subsidiaries,
taken as a whole,  (b) the ability of the Company or any of its  Subsidiaries to
perform  their  respective  obligations  under  the Loan  Documents,  or (c) the
ability of the Lenders or the Administrative Agent to enforce the Obligations.

         "Mortgages"  means  one or more  deeds of trust,  mortgages,  leasehold
mortgages,  assignments of rents or similar documents,  satisfactory in form and
substance to the Administrative Agent, executed and delivered by the Company and
its Domestic  Subsidiaries  pursuant to or in connection  with the  transactions
contemplated  hereby,  as the same may be  amended,  supplemented  or  otherwise
modified from time to time.

         "Multiemployer Plan" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately  preceding six (6) years
was, or was required to be,  contributed  to by either the Company or any member
of the Controlled Group.

         "National Currency Unit" means the unit of currency (other than a euro)
of each member state of the European Union that  participates in the third stage
of Economic and Monetary Union.

         "Net  Income"  means,  for any  period,  the net income (or loss) after
taxes of the  Company  and its  Subsidiaries  on a  consolidated  basis for such
period  taken  as a single  accounting  period  determined  in  conformity  with
Agreement Accounting Principles.

         "Net  Proceeds"  means (a) with  respect to any Asset Sale,  the sum of
cash or readily marketable cash equivalents received (including by way of a cash
generating sale or discounting of a note or receivable,  but excluding any other
consideration received in the form of assumption by the acquiring Person of debt
or other  obligations  relating  to the  properties  or assets so disposed of or
received  in any other  non-cash  form)  therefrom,  whether at the time of such
disposition or subsequent  thereto,  or (b) with respect to any sale or issuance
of any debt or equity  securities  of the  Company  or any  Subsidiary,  cash or
readily  marketable cash equivalents  received (but excluding any other non-cash
form) therefrom,  whether at the time of such  disposition,  sale or issuance or
subsequent  thereto,  net, in either case, of all legal, title and recording tax
expenses, commissions and other fees and all costs and expenses incurred and all
federal,  state,  local and other  taxes  required  to be paid or  accrued  as a
liability as a consequence of such transactions.

         "New Fee Letter"  means that  certain fee letter,  dated as of November
2002, by and between the Company and BNS, as the Administrative Agent.

         "Notice of Assignment" is defined in Section 14.3(b) hereof.

         "Obligations"  means  all  Loans,  L/C  Obligations,  advances,  debts,
liabilities,  obligations, covenants and duties owing by the Borrowers or any of
their Subsidiaries to the Administrative Agent, any Lender, the Swing Line Bank,
any  Arranger,  any  Affiliate of the  Administrative  Agent or any Lender,  any
Issuing  Bank or any  Indemnitee,  of any kind or  nature,  present  or  future,
arising under this Agreement, the L/C Documents, any Alternate Currency Addendum
or any other Loan  Document,  whether or not evidenced by any note,  guaranty or
other  instrument,  whether or not for the payment of money,  whether arising by
reason of an extension of credit,  loan,  guaranty,  indemnification,  or in any
other  manner,   whether  direct  or  indirect   (including  those  acquired  by
assignment),  absolute  or  contingent,  due or to become due,  now  existing or
hereafter arising and however acquired.  The term includes,  without limitation,
all  interest,   charges,   expenses,   fees,  reasonable  attorneys'  fees  and
disbursements,  reasonable  paralegals'  fees  (in  each  case  whether  or  not
allowed), and any other sum chargeable to the Company or any of its Subsidiaries
under this Agreement or any other Loan Document.

         "Obligor" is defined in Section 10.1 hereof.

         "Off-Balance  Sheet  Liabilities"  of a Person means (i) any repurchase
obligation or liability of such Person or any of its  Subsidiaries  with respect
to  Receivables  sold  by  such  Person  or any of its  Subsidiaries,  (ii)  any
liability of such Person or any of its Subsidiaries under any sale and leaseback
transactions  which do not create a liability on the consolidated  balance sheet
of such Person,  (iii) any  liability of such Person or any of its  Subsidiaries
under any financing lease or so-called  "synthetic" lease  transaction,  or (iv)
any obligations of such Person or any of its  Subsidiaries  arising with respect
to any other  transaction  which is the  functional  equivalent  of or takes the
place of borrowing but which does not constitute a liability on the consolidated
balance sheets of such Person and its Subsidiaries.

         "Original  Fee Letter"  means that certain fee letter,  dated as of May
15,  2000,  by  and  between  the  Company  and  ABN  AMRO  Bank  N.V.,  as  the
Administrative Agent.

         "Other Taxes" is defined in Section 2.15(e)(ii) hereof.

         "Participants" is defined in Section 14.2(a) hereof.

         "Payment  Date" means the last day of each March,  June,  September and
December,  the date on which  the  Aggregate  Revolving  Loan  Commitment  shall
terminate or be cancelled, and the Facility Termination Date.

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

         "Permitted Acquisition" is defined in Section 7.3(f) hereof.

         "Permitted  Existing  Contingent   Obligations"  means  the  Contingent
Obligations of the Company and its  Subsidiaries  identified as such on Schedule
1.1.1 to this Agreement.

         "Permitted Existing Indebtedness" means the Indebtedness of the Company
and its Subsidiaries identified as such on Schedule 1.1.2 to this Agreement.

         "Permitted  Existing  Investments" means the Investments of the Company
and its Subsidiaries identified as such on Schedule 1.1.3 to this Agreement.

         "Permitted Existing Liens" means the Liens on assets of the Company and
its Subsidiaries identified as such on Schedule 1.1.4 to this Agreement.

         "Person"  means  any   individual,   corporation,   firm,   enterprise,
partnership,  trust, incorporated or unincorporated association,  joint venture,
joint stock company,  limited  liability company or other entity of any kind, or
any  government  or  political   subdivision   or  any  agency,   department  or
instrumentality thereof.

         "Plan" means an employee benefit plan defined in Section 3(3) of ERISA,
other than a  Multiemployer  Plan, in respect of which the Company or any member
of the Controlled  Group is, or within the  immediately  preceding six (6) years
was, an "employer" as defined in Section 3(5) of ERISA.

         "Pledge  Agreements" means one or more pledge agreements,  each in form
and substance  satisfactory to the Administrative  Agent, executed and delivered
by the Company and/or certain of its  Subsidiaries  pursuant to or in connection
with  transactions  contemplated by this Agreement,  as the same may be amended,
supplemented or otherwise modified from time to time.

         "Prime Rate" means the "prime  rate" of interest  announced by BNS from
time to  time at its  Chicago  office,  changing  when  and as said  prime  rate
changes.

         "Pro Rata  Revolving  Share"  means,  with  respect to any Lender,  the
percentage  obtained by dividing (a) such Lender's  Revolving Loan Commitment at
such time (as adjusted  from time to time in accordance  with the  provisions of
this Agreement) by (b) the Aggregate  Revolving Loan Commitment at such time (as
adjusted from time to time in accordance with the provisions of this Agreement);
provided that if all of the Revolving Loan  Commitments are terminated  pursuant
to the terms of this  Agreement,  then "Pro Rata  Revolving  Share" means,  with
respect to any Lender,  the  percentage  obtained by dividing (i) the sum of (A)
such Lender's  Revolving Loans,  plus (B) such Lender's share of the obligations
to purchase  participations  in Alternate  Currency  Loans and Letters of Credit
plus  (C)  such  Lender's  share  of  the  obligations  to  refund  or  purchase
participations  in  Swing  Line  Loans,  by (ii)  the  sum of (A) the  aggregate
outstanding  amount of all Revolving Loans,  plus (B) the aggregate  outstanding
amount of all Alternate  Currency Loans and all Letters of Credit,  plus (C) the
aggregate outstanding amount of all Swing Line Loans.

         "Pro Rata Share"  means,  with  respect to any Lender,  the  percentage
obtained by dividing (a) the sum of (i) such Lender's  Revolving Loan Commitment
at such time (as adjusted from time to time in accordance with the provisions of
this  Agreement)  plus (ii) such  Lender's  Term Loans by (b) the sum of (i) the
Aggregate  Revolving Loan Commitment at such time (as adjusted from time to time
in accordance  with the  provisions of this  Agreement)  plus (ii) the aggregate
outstanding amount of all Term Loans; provided that if all of the Revolving Loan
Commitments are terminated  pursuant to the terms of this  Agreement,  then "Pro
Rata Share"  means,  with  respect to any  Lender,  the  percentage  obtained by
dividing  (i) the sum of (A)  such  Lender's  Revolving  Loans,  plus  (B)  such
Lender's Term Loans, plus (C) such Lender's share of the obligations to purchase
participations  in Alternate  Currency Loans and Letters of Credit plus (D) such
Lender's share of the obligations to refund or purchase  participations in Swing
Line  Loans,  by (ii) the sum of (A) the  aggregate  outstanding  amount  of all
Revolving Loans,  plus (B) the aggregate  outstanding  amount of all Term Loans,
plus (C) the aggregate  outstanding  amount of all Alternate  Currency Loans and
all Letters of Credit,  plus (D) the aggregate  outstanding  amount of all Swing
Line Loans.

         "Pro Rata Term Share" means, with respect to any Lender, the percentage
obtained by  dividing  such  Lender's  Term Loans by the  aggregate  outstanding
amount of all Term Loans.

         "Pro Rata Tranche A Revolving Share" means, with respect to any Lender,
the percentage  obtained by dividing (a) such Lender's  Tranche A Revolving Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions  of this  Agreement) by (b) the  Aggregate  Tranche A Revolving  Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions of this  Agreement);  provided that if all of the Tranche A Revolving
Loan  Commitments are terminated  pursuant to the terms of this Agreement,  then
"Pro Rata Tranche A Revolving  Share"  means,  with  respect to any Lender,  the
percentage  obtained by dividing (i) such Lender's  Tranche A Revolving Loans by
(ii) the aggregate outstanding amount all Tranche A Revolving Loans.

         "Pro Rata Tranche B Revolving Share" means, with respect to any Lender,
the percentage  obtained by dividing (a) such Lender's  Tranche B Revolving Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions  of this  Agreement) by (b) the  Aggregate  Tranche B Revolving  Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions of this  Agreement);  provided that if all of the Tranche B Revolving
Loan  Commitments are terminated  pursuant to the terms of this Agreement,  then
"Pro Rata Tranche B Revolving  Share"  means,  with  respect to any Lender,  the
percentage  obtained  by  dividing  (i) the sum of (A) such  Lender's  Tranche B
Revolving  Loans plus (B) such  Lender's  share of the  obligations  to purchase
Alternate  Currency  Loans,  by (ii)  the sum of (A) the  aggregate  outstanding
amount of all  Tranche B Revolving  Loans,  plus (B) the  aggregate  outstanding
amount of all Alternate Currency Loans.

         "Pro Rata Tranche C Revolving Share" means, with respect to any Lender,
the percentage  obtained by dividing (a) such Lender's  Tranche C Revolving Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions  of this  Agreement) by (b) the  Aggregate  Tranche C Revolving  Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions of this  Agreement);  provided that if all of the Tranche C Revolving
Loan  Commitments are terminated  pursuant to the terms of this Agreement,  then
"Pro Rata Tranche C Revolving  Share"  means,  with  respect to any Lender,  the
percentage  obtained  by  dividing  (i) the sum of (A) such  Lender's  Tranche C
Revolving  Loans,  plus (B) such Lender's  share of the  obligations to purchase
participations  in  Letters  of  Credit  plus  (C)  such  Lender's  share of the
obligations to refund or purchase participations in Swing Line Loans by (ii) the
sum of (A) the aggregate  outstanding  amount of all Tranche C Revolving  Loans,
plus (B) the aggregate outstanding amount of all Letters of Credit, plus (C) the
aggregate outstanding amount of all Swing Line Loans.

         "Pro Rata Tranche D Revolving Share" means, with respect to any Lender,
the percentage  obtained by dividing (a) such Lender's  Tranche D Revolving Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions  of this  Agreement) by (b) the  Aggregate  Tranche D Revolving  Loan
Commitment at such time (as adjusted  from time to time in  accordance  with the
provisions of this  Agreement);  provided that if all of the Tranche D Revolving
Loan  Commitments are terminated  pursuant to the terms of this Agreement,  then
"Pro Rata Tranche D Revolving  Share"  means,  with  respect to any Lender,  the
percentage  obtained  by  dividing  (i) the sum of (A) such  Lender's  Tranche D
Revolving  Loans plus (B) such  Lender's  share of the  obligations  to purchase
Alternate  Currency  Loans,  by (ii)  the sum of (A) the  aggregate  outstanding
amount of all  Tranche D Revolving  Loans,  plus (B) the  aggregate  outstanding
amount of all Alternate Currency Loans.

         "Purchasers" is defined in Section 14.3(a) hereof.

         "Rate Option"  means the  Eurocurrency  Rate,  the Floating Rate or the
Alternate Currency Rate, as applicable.

         "Receivable(s)"  means  and  includes  all of  the  Company's  and  its
Subsidiaries'  presently  existing and hereafter  arising or acquired  accounts,
accounts receivable,  notes receivable, and all present and future rights of the
Company or its Subsidiaries,  as applicable, to payment for goods sold or leased
or for services  rendered  (except  those  evidenced by  instruments  or chattel
paper),  whether or not they have been earned by performance,  and all rights in
any  merchandise or goods which any of the same may  represent,  and all rights,
title, security and guaranties with respect to each of the foregoing, including,
without limitation, any right of stoppage in transit.

         "Register" is defined in Section 14.3(c) hereof.

         "Regulation  T" means  Regulation  T of the Board of  Governors  of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by and to brokers and dealers of securities  for the purpose
of purchasing or carrying margin stock (as defined therein).

         "Regulation  U" means  Regulation  U of the Board of  Governors  of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks,  non-banks and non-broker  lenders for the purpose
of purchasing or carrying Margin Stock applicable to member banks of the Federal
Reserve System.

         "Regulation  X" means  Regulation  X of the Board of  Governors  of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by foreign lenders for the purpose of purchasing or carrying
margin stock (as defined therein).

         "Reimbursement Obligation" is defined in Section 3.7 hereof.

         "Release"  means  any  release,  spill,  emission,   leaking,  pumping,
injection, deposit, disposal,  discharge,  dispersal, leaching or migration into
the  indoor or outdoor  environment,  including  the  movement  of  Contaminants
through or in the air, soil, surface water or groundwater.

         "Replacement Lender" is defined in Section 2.20 hereof.

         "Reportable  Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section,  with respect to a Plan,
excluding,  however, such events as to which the PBGC by regulation or otherwise
waived the  requirement of Section  4043(a) of ERISA that it be notified  within
thirty (30) days after such event  occurs,  provided  that a failure to meet the
minimum funding standards of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

         "Required  Lenders" means Lenders  hereunder whose Pro Rata Shares,  in
the aggregate, are at least fifty-one percent (51%).

         "Requirements of Law" means, as to any Person,  the charter and by-laws
or other organizational or governing documents of such Person, and any law, rule
or  regulation,   or  determination  of  an  arbitrator  or  a  court  or  other
Governmental  Authority,  in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including,  without  limitation,  the  Securities  Act of 1933,  the  Securities
Exchange Act of 1934,  Regulations T, U and X, ERISA,  the Fair Labor  Standards
Act, the Worker  Adjustment and Retraining  Notification Act, the Americans with
Disabilities  Act of 1990, and any certificate of occupancy,  zoning  ordinance,
building,  environmental  or land use  requirement  or permit or  environmental,
labor,  employment,  occupational  safety or  health  law,  rule or  regulation,
including Environmental, Health or Safety Requirements of Law.

         "Reserve  Requirement" shall mean, at any time,  the maximum  reserve
requirement,  as the prescribed by the Board of Governors of the Federal Reserve
System (or any  successor)  with  respect to  "Eurocurrency  liabilities"  or in
respect  of any  other  category  of  liabilities  which  includes  deposits  by
reference to which the interest rate on Eurocurrency Rate Loans is determined or
category of  extensions  of credit or other  assets  which  includes  loans by a
non-United States office of any Lender to United States residents.

         "Restricted  Payment"  means (a) any  dividend  or other  distribution,
direct or indirect,  on account of any Equity Interests of the Company or any of
its Subsidiaries now or hereafter outstanding,  except a dividend payable solely
in the Company's or such Subsidiaries'  Equity Interests other than Disqualified
Stock or in options, warrants or other rights to purchase such common stock, (b)
any redemption,  retirement,  purchase or other acquisition for value, direct or
indirect,  of any Equity Interests of the Company or any of its Subsidiaries now
or hereafter outstanding, other than in exchange for Equity Interests other than
Disqualified Stock of the Company, and (c) any redemption, purchase, retirement,
defeasance,  prepayment or other acquisition for value,  direct or indirect,  of
any Indebtedness subordinated to the Obligations.

         "Revolving Credit  Obligations"  means, at any particular time, the sum
of (a) the Tranche A Revolving  Credit  Obligations  at such time,  plus (b) the
Tranche B  Revolving  Credit  Obligations  at such time,  plus (c) the Tranche C
Revolving  Credit  Obligations  at such time,  plus (d) the  Tranche D Revolving
Credit Obligations at such time.

         "Revolving Loan" is defined in Section 2.1 hereof.

         "Revolving Loan Commitment"  means,  for each Lender,  the aggregate of
such Lender's  Tranche A Revolving  Loan  Commitment,  such  Lender's  Tranche B
Revolving Loan Commitment, such Lender's Tranche C Revolving Loan Commitment and
such Lender's Tranche D Revolving Loan Commitment.

         "Revolving  Loan  Termination  Date"  means,  as the case  may be,  the
Tranche  A  Revolving  Loan  Termination  Date,  the  Tranche B  Revolving  Loan
Termination Date, the Tranche C Revolving Loan Termination Date or the Tranche D
Revolving Loan Termination Date.

         "Sale and  Leaseback  Transaction"  shall  mean any  lease,  whether an
operating  lease  or a  Capitalized  Lease,  of any  property  (whether  real or
personal  or mixed),  (a) which the Company or one of its  Subsidiaries  sold or
transferred  or is to sell or  transfer  to any other  Person,  or (b) which the
Company or one of its  Subsidiaries  intends to use for  substantially  the same
purposes as any other property which has been or is to be sold or transferred by
the Company or one of its  Subsidiaries  to any other Person in connection  with
such lease.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Security  Agreements" means one or more security  agreements,  each in
form and  substance  satisfactory  to the  Administrative  Agent,  executed  and
delivered  by the  Company  and  its  Domestic  Subsidiaries  pursuant  to or in
connection with transactions  contemplated by this Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.

         "Seller" means Spectra Precision Holdings, Inc. and each party to the 
Stock and Asset Purchase Agreement, other than the Company.

         "Single  Employer Plan" means a Benefit Plan  maintained by the Company
or any member of the Controlled Group for employees of the Company or any member
of the Controlled Group.

         "Solvent" means, when used with respect to any Person, that at the time
of determination:

                  (a) the fair value of its assets (both at fair  valuation  and
         at present fair  saleable  value) is equal to or in excess of the total
         amount of its liabilities,  including,  without limitation,  contingent
         liabilities; and


                  (b) it is then  able and  expects  to be able to pay its debts
         as they mature; and


                  (c) it has capital sufficient to carry on its business as 
         conducted and as proposed to be conducted.

With respect to  contingent  liabilities  (such as  litigation,  guarantees  and
pension  plan  liabilities),  such  liabilities  shall be computed at the amount
which,  in  light of all the  facts  and  circumstances  existing  at the  time,
represent  the amount which can be reasonably be expected to become an actual or
matured liability.

         "Spectra Precision Acquisition" means the acquisition made pursuant to
the  Stock  and Asset  Purchase  Agreement  and  pursuant  to which the  Company
purchased  substantially  all of the assets and all of the capital  stock of the
Seller and certain  Subsidiaries thereof and modified the corporate structure of
the Seller's  European  holdings for tax planning purposes and pursuant to which
the Seller became a Subsidiary of the Company.

         "Stock and Asset Purchase Agreement" means that certain Stock and Asset
Purchase Agreement dated May 11, 2000 by and among the Company,  Spectra Physics
Holdings USA, Inc.,  Spectra Precision AB and Spectra Precision Europe Holdings,
BV, as amended,  supplemented,  amended and restated or otherwise  modified from
time to time.

         "Subordinated Seller Debt" means the Indebtedness of the Company to 
Spectra Physics Holdings USA, Inc., evidenced by the Seller Subordinated Note,
which Indebtedness is subordinated to the Obligations.

         "Subordinated Seller Note" means the $80,000,000 promissory note issued
to Spectra Physics  Holdings USA, Inc. by the Company  pursuant to the Stock and
Asset  Purchase  Agreement,  as amended,  supplemented,  amended and restated or
otherwise modified from time to time in accordance with its terms.

         "Subordination  Agreement" means that certain  Subordination  Agreement
(and  any  and  all  supplements  thereto)  executed  from  time to time by each
Subsidiary  of the Company which may now or in the future have any claim against
any Loan Party and each other Subsidiary of the Company as required  pursuant to
Section  7.2(k) in favor of the  Administrative  Agent for the benefit of itself
and the  Holders  of  Obligations,  in  substantially  the form of  Exhibit  G-2
attached hereto, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

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

         "Subsidiary Borrower" means each Subsidiary of the Company (whether now
existing or hereafter formed) duly designated by the Company pursuant to Section
2.24 to request Advances hereunder, which Subsidiary shall have delivered to the
Administrative  Agent an Assumption  Letter in accordance  with Section 2.24 and
such other documents as may be required pursuant to this Agreement, in each case
together   with   its   respective   successors   and   assigns,   including   a
debtor-in-possession on behalf of such Subsidiary Borrower.

         "Swing Line Bank" means BNS and its successors and assigns.

         "Swing Line Commitment"  means the obligation of the Swing Line Bank to
make Swing Line Loans up to a maximum principal amount of $10,000,000 at any one
time outstanding.

         "Swing  Line Loan"  means a Loan made to the  Company by the Swing Line
Bank pursuant to Section 2.3 hereof.

         "Syndication  Agent" is  defined  in the  preamble  and  includes  such
Person's successors and assigns.

         "TARGET  Settlement  Day"  means  any day on which  the  Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.

         "Taxes" is defined in Section 2.15(e)(i) hereof.

         "Term Loan" means the Existing Term Loans, as continued under the terms
of this Agreement,  in an aggregate amount on the Amendment Effective Date equal
to $32,600,000 and, collectively, all such term loans.

         "Term Loan Maturity Date" means June 30, 2004.
         
         "Termination  Event" means (a) a  Reportable  Event with respect to any
Benefit Plan;  (b) the withdrawal of the Company or any member of the Controlled
Group  from a  Benefit  Plan  during a plan year in which  the  Company  or such
Controlled  Group  member  was a  "substantial  employer"  as defined in Section
4001(a)(2)  of  ERISA  or the  cessation  of  operations  which  results  in the
termination of employment of twenty  percent (20%) of Benefit Plan  participants
who are employees of the Company or any member of the Controlled  Group; (c) the
imposition of an obligation on the Company or any member of the Controlled Group
under Section 4041 of ERISA to provide affected parties written notice of intent
to  terminate  a Benefit  Plan in a distress  termination  described  in Section
4041(c)  of  ERISA;  (d) the  institution  by the  PBGC or any  similar  foreign
governmental  authority  of  proceedings  to terminate a Benefit Plan or Foreign
Pension Plan; (e) any event or condition which constitutes grounds under Section
4042 of ERISA which are reasonably  likely to lead to the termination of, or the
appointment  of a trustee to  administer,  any Benefit Plan;  (f) that a foreign
governmental  authority  shall  appoint or  institute  proceedings  to appoint a
trustee  to  administer  any  Foreign  Pension  Plan in  place  of the  existing
administrator,  or (g) the partial or complete  withdrawal of the Company or any
member of the  Controlled  Group from a  Multiemployer  Plan or Foreign  Pension
Plan.

         "Total Indebtedness"  means, without duplication,  (a) all Indebtedness
for borrowed money of the Company and its Subsidiaries, on a consolidated basis,
plus, without duplication, (b) (i) the face amount of all outstanding letters of
credit  (including  Letters of  Credit)  in respect of which the  Company or any
Subsidiary has any actual or contingent reimbursement obligation,  plus (ii) the
principal  amount of all  Indebtedness  of any  Person in  respect  of which the
Company or any Subsidiary has a Contingent  Obligation,  plus (iii) Indebtedness
of the Company and its Subsidiaries  evidenced by notes,  acceptances or similar
instruments,  plus (iv)  Capitalized  Lease  Obligations  of the Company and its
Subsidiaries,  plus (v) the implied debt component of synthetic  leases of which
the Company or any of its Subsidiaries is lessee,  plus (vi) Hedging Obligations
of the Company and its subsidiaries.

         "Tranche A Advance"  means an Advance  comprised of Tranche A Revolving
Loans.

         "Tranche A Revolving  Credit  Availability"  means,  at any  particular
time, the amount by which (a) the Aggregate  Tranche A Revolving Loan Commitment
at such time  exceeds (b) the Dollar  Amount of the  Tranche A Revolving  Credit
Obligations outstanding at such time.

         "Tranche A Revolving Credit Obligations" means, at any particular time,
the sum of the  outstanding  principal  Dollar Amount of the Tranche A Revolving
Loans at such time.

         "Tranche A Revolving Loan" is defined in Section 2.1 hereof.

         "Tranche A Revolving  Loan  Commitment"  means,  for each  Lender,  the
obligation  of such Lender to make Tranche A Revolving  Loans not  exceeding the
amount set forth on Exhibit A to this Agreement  opposite its name thereon under
the heading  "Tranche A Revolving Loan  Commitment" or the signature page of the
assignment  and  acceptance  by which it became a Lender as such  amount  may be
modified  from time to time  pursuant to the terms of this  Agreement or to give
effect to any applicable assignment and acceptance.

         "Tranche A Revolving Loan Termination Date" means July 14, 2003.

         "Tranche B Advance"  means an Advance  comprised of Tranche B Revolving
Loans.

         "Tranche B Revolving  Credit  Availability"  means,  at any  particular
time, the amount by which (a) the Aggregate  Tranche B Revolving Loan Commitment
at such time  exceeds  (b) the sum of (i) the  Dollar  Amount  of the  Tranche B
Revolving  Credit  Obligations  outstanding at such time plus (ii) the aggregate
unused Alternate Currency Commitments at such time.

         "Tranche B Revolving Credit Obligations" means, at any particular time,
(a) the outstanding  principal Dollar Amount of the Tranche B Revolving Loans at
such time, plus (b) the Dollar Amount of the outstanding principal amount of the
Alternate Currency Loans at such time.

         "Tranche B Revolving Loan" is defined in Section 2.1 hereof.

         "Tranche B Revolving  Loan  Commitment"  means,  for each  Lender,  the
obligation of such Lender to make Tranche B Revolving  Loans and to  participate
in Alternate  Currency  Loans not exceeding the amount set forth on Exhibit A to
this Agreement  opposite its name thereon under the heading "Tranche B Revolving
Loan Commitment" or the signature page of the assignment and acceptance by which
it became a Lender as such amount may be modified  from time to time pursuant to
the terms of this Agreement or to give effect to any  applicable  assignment and
acceptance.

         "Tranche B Revolving Loan Termination Date" means July 14, 2003.

         "Tranche C Advance"  means an Advance  comprised of Tranche C Revolving
Loans.

         "Tranche C Revolving  Credit  Availability"  means,  at any  particular
time, the amount by which (a) the Aggregate  Tranche C Revolving Loan Commitment
at such time  exceeds (b) the Dollar  Amount of the  Tranche C Revolving  Credit
Obligations outstanding at such time.

         "Tranche C Revolving Credit Obligations" means, at any particular time,
the  sum of (a)  the  outstanding  principal  Dollar  Amount  of the  Tranche  C
Revolving  Loans at such time,  plus (b) the outstanding L/C Obligations at such
time, plus (c) the outstanding  principal amount of all Swing Line Loans at such
time.

         "Tranche C Revolving Loan" is defined in Section 2.1 hereof.

         "Tranche C Revolving  Loan  Commitment"  means,  for each  Lender,  the
obligation  of such  Lender  to make  Tranche C  Revolving  Loans,  to  purchase
participations  in Letters of Credit and to refund or  participate in Swing Line
Loans not exceeding the amount set forth on Exhibit A to this Agreement opposite
its name thereon under the heading  "Tranche C Revolving Loan Commitment" or the
signature  page of the  assignment and acceptance by which it became a Lender as
such  amount may be  modified  from time to time  pursuant  to the terms of this
Agreement or to give effect to any applicable assignment and acceptance.

         "Tranche C Revolving Loan Termination Date" means April 7, 2004.

         "Tranche D Advance"  means an Advance  comprised of Tranche D Revolving
Loans.

         "Tranche D Revolving  Credit  Availability"  means,  at any  particular
time, the amount by which (a) the Aggregate  Tranche D Revolving Loan Commitment
at such time  exceeds  (b) the sum of (i) the  Dollar  Amount  of the  Tranche D
Revolving  Credit  Obligations  outstanding at such time plus (ii) the aggregate
unused Alternate Currency Commitments at such time.

         "Tranche D Revolving Credit Obligations" means, at any particular time,
(a) the outstanding  principal Dollar Amount of the Tranche D Revolving Loans at
such time, plus (b) the Dollar Amount of the outstanding principal amount of the
Alternate Currency Loans at such time.

         "Tranche D Revolving Loan" is defined in Section 2.1 hereof.

         "Tranche D Revolving  Loan  Commitment"  means,  for each  Lender,  the
obligation of such Lender to make Tranche D Revolving  Loans and to  participate
in Alternate  Currency  Loans not exceeding the amount set forth on Exhibit A to
this Agreement  opposite its name thereon under the heading "Tranche D Revolving
Loan Commitment" or the signature page of the assignment and acceptance by which
it became a Lender as such amount may be modified  from time to time pursuant to
the terms of this Agreement or to give effect to any  applicable  assignment and
acceptance.

         "Tranche D Revolving Loan Termination Date" means April 7, 2004.

         "Transferee" is defined in Section 14.5 hereof.

         "Trigger  Event Date"  means the date on which the  Company  shall have
demonstrated to the reasonable satisfaction of the Administrative Agent that (a)
no Default or Unmatured  Default  then exists and (b) the Leverage  Ratio of the
Company and its Subsidiaries, as reflected in the financial statements delivered
pursuant to Section  7.1(a)(i)  and (ii) shall have been less than 2.00 for four
consecutive fiscal quarters after the Closing Date.

         "Type" means,  with respect to any Loan,  its nature as a Floating Rate
Loan or a Eurocurrency Rate Loan.

         "UCC"  means the Uniform  Commercial  Code as in effect in the State of
Illinois.

         "Unfunded  Liabilities" means (a) in the case of Single Employer Plans,
the  amount  (if any) by which the  aggregate  accumulated  benefit  obligations
exceeds the aggregate  fair market value of assets of all Single  Employer Plans
as of the most recent measurement date for which actuarial  valuations have been
completed and certified to the Company, all as determined under FAS 87 using the
methods and assumptions used by the Company for financial  accounting  purposes,
and (b) in the case of Multiemployer  Plans, the withdrawal liability that would
be  incurred by the  Controlled  Group if all  members of the  Controlled  Group
completely withdrew from all Multiemployer Plans.

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

         "Wholly-Owned  Subsidiary"  of a Person means (a) any Subsidiary all of
the  outstanding  voting  securities  of  which  shall  at the  time be owned or
controlled,  directly or indirectly,  by such Person or one or more Wholly-Owned
Subsidiaries  of such  Person,  or by such  Person and one or more  Wholly-Owned
Subsidiaries of such Person, or (b) any partnership,  limited liability company,
association,  joint  venture  or  similar  business  organization  100%  of  the
ownership  interests  having ordinary voting power of which shall at the time be
so owned or controlled,  in each case,  other than director  qualifying  shares.
Unless  the  context  otherwise  requires,  "Wholly-Owned  Subsidiary"  means  a
wholly-owned subsidiary of the Company.

         The  foregoing  definitions  shall be  equally  applicable  to both the
singular and plural forms of the defined  terms.  Any  accounting  terms used in
this Agreement which are not specifically defined herein shall have the meanings
customarily  given  them  in  accordance  with  generally  accepted   accounting
principles in existence as of the date hereof.

         1.2 References. Any references to Subsidiaries of the Company set forth
herein shall not in any way be construed as consent by the Administrative  Agent
or  any  Lender  to  the  establishment,   maintenance  or  acquisition  of  any
Subsidiary, except as may otherwise be permitted hereunder.

         1.3 Rounding and Other Consequential Changes.  Without prejudice to any
method of conversion or rounding  prescribed by any legislative  measures of the
Council of the  European  Union,  each  reference  in this  Agreement to a fixed
amount or to fixed  amounts in a National  Currency Unit to be paid to or by the
Administrative  Agent shall be replaced by a reference  to such  comparable  and
convenient fixed amount or fixed amounts in euro as the Administrative Agent may
from time to time specify unless such National  Currency Unit remains  available
and the Company and the Administrative Agent agree to use such National Currency
Unit instead of the euro.


ARTICLE II: LOAN FACILITIES

On the terms and  subject  to the  conditions  of this  Agreement,  the  Lenders
severally agree to the continuation and reallocation (as the case may be) of the
Existing Loans and to make the Loans as set forth below.


         2.1      Revolving Loans.

         (a)  Each of the  parties  hereto  acknowledges  and  agrees  that  the
         Existing  Revolving  Loans shall  continue as  Revolving  Loans for all
         purposes  under  this  Agreement  and the Loan  Documents,  subject  to
         reallocation pursuant to Section 2.26.


         (b) Upon the  satisfaction  of the  conditions  precedent  set forth in
         Sections  5.1,  5.2 and 5.3,  as  applicable,  from and  including  the
         Amendment  Effective  Date and prior to the  applicable  Revolving Loan
         Termination  Date, each Lender severally and not jointly agrees, on the
         terms and  conditions  set forth in this  Agreement,  to make revolving
         loans to the  Borrowers  from time to time (i) in Dollars,  in a Dollar
         Amount not to exceed such  Lender's Pro Rata Tranche A Revolving  Share
         of  Tranche  A  Revolving  Credit   Availability  at  such  time  (each
         individually,  a "Tranche A  Revolving  Loan"  and,  collectively,  the
         "Tranche A Revolving  Loans");  (ii) in Dollars or any Agreed Currency,
         in a Dollar  Amount  not to exceed  such  Lender's  Pro Rata  Tranche B
         Revolving Share of Tranche B Revolving Credit Availability at such time
         (each individually, a "Tranche B Revolving Loan" and, collectively, the
         "Tranche B Revolving Loans");  (iii) in Dollars, in a Dollar Amount not
         to exceed such Lender's Pro Rata Tranche C Revolving Share of Tranche C
         Revolving  Credit  Availability  at such  time  (each  individually,  a
         "Tranche C Revolving Loan" and, collectively,  the "Tranche C Revolving
         Loans"); and (iv) in Dollars or any Agreed Currency, in a Dollar Amount
         not to exceed  such  Lender's  Pro Rata  Tranche D  Revolving  Share of
         Tranche  D   Revolving   Credit   Availability   at  such  time   (each
         individually,  a "Tranche D Revolving  Loan",  and,  collectively,  the
         "Tranche D Revolving Loans" and,  together with the Tranche A Revolving
         Loans, the Tranche B Revolving Loans and the Tranche C Revolving Loans,
         the "Revolving  Loans");  provided that (i) at no time shall the Dollar
         Amount  of the  Tranche  A  Revolving  Credit  Obligations  exceed  the
         Aggregate  Tranche A Revolving Loan  Commitment;  (ii) at no time shall
         the Dollar Amount of the Tranche B Revolving Credit  Obligations exceed
         the Aggregate  Tranche B Revolving  Loan  Commitment;  (iii) at no time
         shall the Dollar Amount of the Tranche C Revolving  Credit  Obligations
         exceed the Aggregate  Tranche C Revolving Loan  Commitment;  (iv) at no
         time  shall  the  Dollar  Amount  of the  Tranche  D  Revolving  Credit
         Obligations  exceed the Aggregate  Tranche D Revolving Loan Commitment;
         (v)  at no  time  shall  the  Dollar  Amount  of the  Revolving  Credit
         Obligations  of any Subsidiary  Borrower that is a Domestic  Subsidiary
         exceed  $40,000,000;  (vi) at no time shall the aggregate Dollar Amount
         of the Revolving Credit Obligations of all Foreign  Subsidiaries exceed
         $30,000,000  and  (vii) no  Tranche  A  Revolving  Loans or  Tranche  C
         Revolving  Loans shall be made to any Borrower  which is not  organized
         under  the laws of a  jurisdiction  located  in the  United  States  of
         America.  Subject to the terms of this  Agreement,  the  Borrowers  may
         borrow,  repay and  reborrow  Revolving  Loans at any time prior to the
         applicable  Revolving Loan Termination Date.  Revolving Loans shall be,
         at the option of the applicable  Borrower,  selected in accordance with
         Section 2.10, and shall be either  Floating Rate Loans or  Eurocurrency
         Rate Loans.  On the applicable  Revolving Loan  Termination  Date, each
         Borrower  shall  repay in full the  outstanding  principal  balance  of
         Revolving Loans made to it. The Tranche A Revolving Loans shall be made
         by each Lender  ratably in proportion to such Lender's  respective  Pro
         Rata Tranche A Revolving  Share, the Tranche B Revolving Loans shall be
         made by each Lender  ratably in proportion to such Lender's  respective
         Pro Rata Tranche B Revolving Share, the Tranche C Revolving Loans shall
         be  made  by  each  Lender  ratably  in  proportion  to  such  Lender's
         respective  Pro Rata  Tranche  C  Revolving  Share  and the  Tranche  D
         Revolving  Loans shall be made by each Lender  ratably in proportion to
         such Lender's respective Pro Rata Tranche D Revolving Share.

         (c) Making of Tranche A Revolving Loans.  Promptly after receipt of the
         Borrowing/  Conversion/Continuation Notice under Section 2.8 in respect
         of Tranche A Revolving  Loans,  the  Administrative  Agent shall notify
         each  Lender  with  a  Tranche  A  Revolving  Loan  Commitment,  of the
         requested  Tranche  A  Revolving  Loan.  Each  Lender  with a Tranche A
         Revolving Loan Commitment  shall make available its Tranche A Revolving
         Loan in  accordance  with the terms of Section 2.7. The  Administrative
         Agent  will  promptly  make the  funds  so  received  from the  Lenders
         available  to the  applicable  Borrower at the  Administrative  Agent's
         office in New York, New York on the applicable Borrowing Date and shall
         disburse  such proceeds in accordance  with the  applicable  Borrower's
         disbursement instructions set forth in such
         Borrowing/Conversion/Continuation  Notice. The failure of any Lender to
         deposit the amount described above with the Administrative Agent on the
         applicable  Borrowing  Date shall not relieve  any other  Lender of its
         obligations  hereunder  to make its  Tranche A  Revolving  Loan on such
         Borrowing Date.

         (d) Making of Tranche B Revolving Loans.  Promptly after receipt of the
         Borrowing/Conversion/Continuation  Notice under  Section 2.8 in respect
         of Tranche B Revolving  Loans,  the  Administrative  Agent shall notify
         each  Lender  with  a  Tranche  B  Revolving  Loan  Commitment,  of the
         requested  Tranche  B  Revolving  Loan.  Each  Lender  with a Tranche B
         Revolving Loan Commitment  shall make available its Tranche B Revolving
         Loan in  accordance  with the terms of Section 2.7. The  Administrative
         Agent  will  promptly  make the  funds  so  received  from the  Lenders
         available  to the  applicable  Borrower at the  Administrative  Agent's
         office in New York, New York on the applicable Borrowing Date and shall
         disburse  such proceeds in accordance  with the  applicable  Borrower's
         disbursement instructions  set  forth  in  such
         Borrowing/Conversion/Continuation  Notice. The failure of any Lender to
         deposit the amount described above with the Administrative Agent on the
         applicable  Borrowing  Date shall not relieve  any other  Lender of its
         obligations  hereunder  to make its  Tranche B  Revolving  Loan on such
         Borrowing Date.

         (e) Making of Tranche C Revolving Loans.  Promptly after receipt of the
         Borrowing/Conversion/Continuation Notice under Section 2.8 in respect
         of Tranche C Revolving  Loans,  the  Administrative  Agent shall notify
         each  Lender  with  a  Tranche  C  Revolving  Loan  Commitment,  of the
         requested  Tranche  C  Revolving  Loan.  Each  Lender  with a Tranche C
         Revolving Loan Commitment  shall make available its Tranche C Revolving
         Loan in  accordance  with the terms of Section 2.7. The  Administrative
         Agent  will  promptly  make the  funds  so  received  from the  Lenders
         available  to the  applicable  Borrower at the  Administrative  Agent's
         office in New York, New York on the applicable Borrowing Date and shall
         disburse  such proceeds in accordance  with the  applicable  Borrower's
         disbursement instructions   set  forth  in  such
         Borrowing/Conversion/Continuation  Notice. The failure of any Lender to
         deposit the amount described above with the Administrative Agent on the
         applicable  Borrowing  Date shall not relieve  any other  Lender of its
         obligations  hereunder  to make its  Tranche C  Revolving  Loan on such
         Borrowing Date.

         (f) Making of Tranche D Revolving Loans.  Promptly after receipt of the
         Borrowing/Conversion/Continuation  Notice under  Section 2.8 in respect
         of Tranche D Revolving  Loans,  the  Administrative  Agent shall notify
         each  Lender  with  a  Tranche  D  Revolving  Loan  Commitment,  of the
         requested  Tranche  D  Revolving  Loan.  Each  Lender  with a Tranche D
         Revolving Loan Commitment  shall make available its Tranche D Revolving
         Loan in  accordance  with the terms of Section 2.7. The  Administrative
         Agent  will  promptly  make the  funds  so  received  from the  Lenders
         available  to the  applicable  Borrower at the  Administrative  Agent's
         office in New York, New York on the applicable Borrowing Date and shall
         disburse  such proceeds in accordance  with the  applicable  Borrower's
         disbursement  instructions   set  forth  in  such
         Borrowing/Conversion/Continuation  Notice. The failure of any Lender to
         deposit the amount described above with the Administrative Agent on the
         applicable  Borrowing  Date shall not relieve  any other  Lender of its
         obligations  hereunder  to make its  Tranche D  Revolving  Loan on such
         Borrowing Date.


         2.2      Term Loans.

         (a)  Each of the  parties  hereto  acknowledges  and  agrees  that  the
         Existing Term Loans shall continue as Term Loans for all purposes under
         this Agreement and the Loan Documents, with each Lender's share of Term
         Loans being set forth  opposite its name on Exhibit A to this Agreement
         or set  forth in a Lender  Assignment  Agreement  under  the Term  Loan
         column,  as such amount may be adjusted  from time to time  pursuant to
         the terms hereof.  Amounts  borrowed as a Term Loan which are repaid or
         prepaid by the Company may not be  reborrowed.  The Company shall repay
         all  outstanding  principal and all accrued but unpaid  interest on the
         Term Loan Maturity Date.

         (b) Term  Loan  Amortization.  The Term  Loans  shall  continue  to be
         payable in quarterly installments in the amounts and on the dates as 
         follows:

                    PAYMENT DATE                  AMOUNT

                    March 31, 2003                $6,000,000
                    June 30, 2003                 $6,000,000
                    September 30, 2003            $6,000,000
                    December 31, 2003             $6,000,000
                    March 31, 2004                $6,000,000
                    June 30, 2004                 $2,600,000 or such other
                                                  amount as shall then be
                                                  outstanding.

         2.3      Swing Line Loans.
  
         (a) Amount of Swing Line Loans. Upon the satisfaction of the conditions
         precedent  set forth in Section 5.1, 5.2 and 5.3, as  applicable,  from
         and including the Amendment  Effective  Date and prior to the Tranche C
         Revolving Loan  Termination  Date,  the Swing Line Bank agrees,  on the
         terms and  conditions  set forth in this  Agreement,  to make revolving
         swing  line  loans  (each,  individually,   a  "Swing  Line  Loan"  and
         collectively,  the "Swing Line Loans") to the Company from time to time
         in Dollars;  provided that at no time shall the  aggregate  outstanding
         principal  amount  of all  Swing  Line  Loans  exceed  the  Swing  Line
         Commitment; provided, further, that, at no time shall the Dollar Amount
         of the  Tranche C Revolving  Credit  Obligations  exceed the  Aggregate
         Tranche C Revolving Loan Commitment; provided, further, that at no time
         shall the sum of (i) the outstanding principal amount of the Swing Line
         Loans  plus (ii) the Dollar  Amount of the Swing  Line  Bank's Pro Rata
         Tranche  C  Revolving  Share  of the  amount  equal  to the  Tranche  C
         Revolving Credit  Obligations less the outstanding  principal amount of
         Swing Line Loans, exceed the Swing Line Bank's Tranche C Revolving Loan
         Commitment at such time.

         (b)   Borrowing/Conversion/Continuation   Notice;  Interest  Rate.  The
         Company   and/or  the   applicable   Borrower   shall  deliver  to  the
         Administrative Agent and the Swing Line Bank (if the Swing Line Bank is
         not BNS) a Borrowing/Conversion/Continuation  Notice, signed by it, not
         later than 12:00  noon (New York  time) on the  Borrowing  Date of each
         Swing  Line Loan (or at such  later  time as may be  acceptable  to the
         Swing Line Bank in its sole discretion),  specifying (i) the applicable
         Borrowing Date (which date shall be a Business Day and which may be the
         same date as the date the  Borrowing/Conversion/Continuation  Notice is
         given,  (ii) the aggregate amount of the requested Swing Line Loan, the
         amount of which  shall be not less than  $1,000,000  and (iii)  payment
         instructions  for the  disbursement of such Loans. The Swing Line Loans
         shall bear interest at the Floating Rate.

         (c) Making of Swing  Line  Loans.  Not later  than 3:00 p.m.  (New York
         time) on the applicable  Borrowing Date, the Swing Line Bank shall make
         available  its Swing Line Loan, in funds  immediately  available in New
         York,  New York to the  Administrative  Agent at its address  specified
         pursuant to Article XV. The Administrative Agent will promptly make the
         funds so received from the Swing Line Bank  available to the Company on
         the Borrowing Date at the Administrative Agent's aforesaid address.

         (d)  Repayment of Swing Line Loans.  Each Swing Line Loan shall be paid
         in full by the  Company on or before the  seventh  (7th)  Business  Day
         after the Borrowing  Date for such Swing Line Loan.  The Company may at
         any time pay,  without penalty or premium,  all outstanding  Swing Line
         Loans. In addition, the Administrative Agent (i) may at any time in its
         sole discretion  with respect to any outstanding  Swing Line Loan, (ii)
         shall at any time upon the  request  of the Swing Line Bank in its sole
         discretion,  or (iii) shall on the seventh (7th) Business Day after the
         Borrowing  Date of any Swing  Line  Loan,  require  (by  giving  notice
         thereof to each Lender with a Tranche C Revolving  Loan  Commitment not
         later than 10:00 a.m.  (New York time) one Business Day before the date
         of such Loan) each Lender with a Tranche C  Revolving  Loan  Commitment
         (including  the Swing Line Bank) to make a Tranche C Revolving  Loan in
         the amount of such Lender's Pro Rata Tranche C Revolving  Share of such
         Swing Line Loan,  for the  purpose of repaying  all or any  outstanding
         portion of such Swing  Line  Loan.  Not later than 2:00 p.m.  (New York
         time) on the  date of any  notice  received  pursuant  to this  Section
         2.3(d),  each  Lender  shall  make  available  its  required  Tranche C
         Revolving  Loan,  in  funds  immediately  available  in New York to the
         Administrative  Agent at its address specified  pursuant to Article XV.
         Tranche C Revolving  Loans made  pursuant to this Section  2.3(d) shall
         initially  be Floating  Rate Loans and  thereafter  may be continued as
         Floating Rate Loans or converted  into  Eurocurrency  Rate Loans in the
         manner provided in Section 2.10 and subject to the other conditions and
         limitations  therein set forth and set forth in this Article II. Unless
         a Lender shall have  notified the Swing Line Bank,  prior to its making
         any Swing Line Loan, that any applicable  condition precedent set forth
         in  Sections  5.1,  5.2 and  5.3,  as  applicable,  had not  then  been
         satisfied,  such Lender's  obligation to make Tranche C Revolving Loans
         pursuant  to this  Section  2.3(d) to repay  Swing Line Loans  shall be
         unconditional,  continuing,  irrevocable  and absolute and shall not be
         affected by any circumstances,  including,  without limitation, (a) any
         set-off,  counterclaim,  recoupment,  defense or other right which such
         Lender may have against the  Administrative  Agent, the Swing Line Bank
         or any other Person, (b) the failure to satisfy any condition set forth
         herein or the  occurrence  or  continuance  of a Default  or  Unmatured
         Default,  (c)  any  adverse  change  in  the  condition  (financial  or
         otherwise) of the Company, or (d) any other circumstances, happening or
         event whatsoever. In the event that any Lender fails to make payment to
         the  Administrative  Agent of any amount due under this Section 2.3(d),
         the Administrative Agent shall be entitled to receive, retain and apply
         against such obligation the principal and interest otherwise payable to
         such Lender  hereunder  until the  Administrative  Agent  receives such
         payment  from  such  Lender  or  such  obligation  is  otherwise  fully
         satisfied.  In addition to the foregoing,  if for any reason any Lender
         fails to make  payment  to the  Administrative  Agent of any amount due
         under this Section  2.3(d) or may not make any Revolving  Loan required
         by this Section 2.3, such Lender shall be deemed,  at the option of the
         Administrative  Agent or the Swing Line Bank,  to have  unconditionally
         and irrevocably purchased from the Swing Line Bank, without recourse or
         warranty,  an undivided  interest and  participation  in the Swing Line
         Loan in the  amount  of such  Revolving  Loan,  and such  interest  and
         participation  shall be paid by such  Lender  upon  demand by the Swing
         Line Bank together with interest thereon at the Federal Funds Effective
         Rate for each day during the  period  commencing  on the date of demand
         and  ending  on the date  such  amount is  received.  On the  Tranche C
         Revolving  Loan  Termination  Date, the Company shall repay in full the
         outstanding principal balance of the Swing Line Loans.

         2.4    Rate  Options for all  Advances;  Maximum  Interest  Periods.  
         
     The  Revolving  Loans  and Term  Loans may be  Floating  Rate  Advances  or
Eurocurrency Rate Advances, or a combination thereof, selected by the Company or
the  applicable  Borrower in  accordance  with Section 2.9;  provided that Loans
denominated in euros may not be Floating Advances. The Company or the applicable
Borrower may select,  in accordance  with Section 2.9, Rate Options and Interest
Periods  applicable to portions of the Revolving Loans, Term Loans and Alternate
Currency  Loans;  provided that there shall be no more than twelve (12) Interest
Periods in effect with respect to all of the Loans at any time (unless otherwise
provided in the applicable Alternate Currency Addendum with respect to Alternate
Currency  Loans).  Each  Alternate  Currency  Loan  shall bear  interest  on the
outstanding  principal  amount  thereof,  for  the  Interest  Period  applicable
thereto, at the Alternate Currency Rate as set forth in the applicable Alternate
Currency Addendum.
         
         
         2.5      Optional Payments; Mandatory Prepayments.
  
         (a) Optional Payments.  The Company or the applicable Borrower may from
         time to time and at any time upon at least one (1) Business Day's prior
         written  notice repay or prepay  without  penalty or premium all or any
         part of  outstanding  Floating  Rate  Advances in an aggregate  minimum
         amount of $5,000,000 and in integral  multiples of $1,000,000 in excess
         thereof.  Eurocurrency  Rate  Advances  may be  voluntarily  repaid  or
         prepaid  prior  to the  last  day of the  applicable  Interest  Period,
         subject to the  indemnification  provisions  contained  in Section 4.4,
         provided that the  applicable  Borrower may not so prepay  Eurocurrency
         Rate Advances  unless it shall have provided at least four (4) Business
         Days'  prior  written  notice  to  the  Administrative  Agent  of  such
         prepayment.  Each Subsidiary Borrower may, upon prior written notice to
         the Administrative  Agent and to the applicable Alternate Currency Bank
         as  prescribed  in  the  applicable  Alternate  Currency  Addendum  and
         specifying  that it is  prepaying  all or a  portion  of its  Alternate
         Currency  Loans,  prepay its Alternate  Currency  Loans in whole at any
         time,  or from  time to time  in part in a  Dollar  Amount  aggregating
         $5,000,000 or any larger  multiple  Dollar Amount of $1,000,000  (or as
         otherwise  specified in the applicable  Alternate Currency Addendum) by
         paying the  principal  amount to be paid  together with all accrued and
         unpaid interest thereon to and including the date of payment;  provided
         that any such payment  occurring  prior to the last day of any Interest
         Period related to such Alternate  Currency Loan shall be subject to the
         indemnification provisions contained in Section 4.4.

         (b)  Mandatory  Prepayments  of  Loans.  

                    (i)  If  at  any  time  and  for  any  reason   (other  than
               fluctuations in currency exchange rates) the Dollar Amount of the
               Tranche A Revolving Credit  Obligations,  the Tranche B Revolving
               Credit Obligations, the Tranche C Revolving Credit Obligations or
               the Tranche D Revolving  Credit  Obligations  is greater than the
               Aggregate  Tranche A Revolving  Loan  Commitment,  the  Aggregate
               Tranche B Revolving  Loan  Commitment,  the  Aggregate  Tranche C
               Revolving  Loan  Commitment or the Aggregate  Tranche D Revolving
               Loan Commitment, respectively, the Company shall immediately make
               or cause  to be made a  mandatory  prepayment  of the  Tranche  A
               Revolving  Credit  Obligations,  the Tranche B  Revolving  Credit
               Obligations,  the Tranche C Revolving  Credit  Obligations or the
               Tranche D Revolving Credit Obligations, as the case may be, in an
               amount equal to such excess.

                    (ii)  On  the  last   Business   Day  of  each  month,   the
               Administrative  Agent shall  calculate  the Dollar  Amount of all
               outstanding  Alternate Currency Loans, Tranche B Revolving Credit
               Obligations and Tranche D Revolving Credit Obligations using, for
               each currency, the arithmetic mean of the buy and sell spot rates
               of exchange of the  Administrative  Agent in the London interbank
               market (or other market where the Administrative  Agent's foreign
               exchange  operations  in respect of such  currency are then being
               conducted) and if, on such Business Day:

                  (A)      the Dollar  Amount of the Tranche B Revolving  Credit
                           Obligations exceeds one hundred percent (100%) of the
                           Aggregate  Tranche B Revolving  Loan  Commitment as a
                           result of  fluctuations  in currency  exchange rates,
                           the  Borrowers  shall  immediately  prepay  Tranche B
                           Revolving  Loans in an  aggregate  amount  such  that
                           after giving effect  thereto the Dollar Amount of the
                           Tranche B Revolving  Credit  Obligations is less than
                           or equal to the  Aggregate  Tranche B Revolving  Loan
                           Commitment; or

                  (B)      the Dollar  Amount of the Tranche D Revolving  Credit
                           Obligations exceeds one hundred percent (100%) of the
                           Aggregate  Tranche D Revolving  Loan  Commitment as a
                           result of  fluctuations  in currency  exchange rates,
                           the  Borrowers  shall  immediately  prepay  Tranche D
                           Revolving  Loans in an  aggregate  amount  such  that
                           after giving effect  thereto the Dollar Amount of the
                           Tranche D Revolving  Credit  Obligations is less than
                           or equal to the  Aggregate  Tranche D Revolving  Loan
                           Commitment; or


                  (C)      the  Dollar  Amount  of  the  aggregate   outstanding
                           principal  amount of Alternate  Currency Loans in the
                           same   Alternate   Currency   exceeds  the  aggregate
                           Alternate  Currency  Commitments with respect thereto
                           as a result  of  fluctuations  in  currency  exchange
                           rates,  the applicable  Borrowers  shall on such date
                           prepay  Alternate  Currency  Loans in such  Alternate
                           Currency  in an  aggregate  amount  such  that  after
                           giving  effect  thereto  the  Dollar  amount  of  all
                           Alternate Currency Loans is less than or equal to the
                           aggregate Alternate Currency Commitments with respect
                           thereto.

                    (iii)  The  Company  shall  make all  mandatory  prepayments
               required under Section 2.6.

                    (iv) At any time prior to the Trigger Event Date and so long
               as any Term Loans are  outstanding,  the Company shall prepay the
               Term  Loans in an  amount  equal to 100% of (A) the Net  Proceeds
               realized  upon  any  Asset  Sale  made  by  the  Company  or  its
               Subsidiaries,  (B) any insurance proceeds received by the Company
               or its  Subsidiaries  in respect of any casualty  involving  such
               Person's property and (C) any payments received by the Company or
               its Subsidiaries  from a condemnation of such Person's  property,
               to the extent any of the  foregoing  amounts  are not applied (or
               committed to be applied) within one hundred and twenty (120) days
               after the consummation or receipt thereof, as applicable,  to the
               purchase  of similar  assets that are not  classified  as current
               assets  under  Agreement  Accounting  Principles  and are used or
               useful in the business of the Company or its  Subsidiaries  or to
               the repair or restoration  of the Company's or its  Subsidiaries'
               property. If the Company or the applicable Subsidiary does intend
               to so reinvest any such amounts, the Company shall give notice of
               such intent (and the amount  intended  to be  reinvested)  to the
               Administrative Agent upon receipt of such proceeds.  Pending such
               reinvestment,  the Company shall use such amounts to pay down the
               principal  amount of the  Revolving  Loans to the extent  thereof
               (but  without  a  permanent   reduction  of  the  Revolving  Loan
               Commitments).  If the Company or the applicable  Subsidiary  does
               not  intend to so  reinvest  such  proceeds  or if the period set
               forth in the immediately  preceding  sentence expires without the
               Company or such Subsidiary having  reinvested such proceeds,  the
               Company  shall prepay the Term Loans (within one (1) Business Day
               of the  expiration  of said one  hundred  and  twenty  (120)  day
               period) in an amount equal to such  proceeds  after giving effect
               to all reinvestments permitted by this subsection.

                    (v) At any time prior to the Trigger  Event Date and so long
               as any Term Loans are outstanding,  within ninety (90) days after
               the end of each fiscal  year,  the Company  shall prepay the Term
               Loans in an amount  equal to fifty  percent  (50%) of the  Excess
               Cash Flow, if any,  generated by the Company and its Subsidiaries
               during the immediately preceding fiscal year of the Company.
         
                    (vi) At any time prior to the Trigger Event Date and so long
               as  any  Term  Loans  are  outstanding,  if  the  Company  or any
               Subsidiary  shall  issue new  Equity  Interests  or  receive  any
               capital  contributions  other than Equity Interests issued to the
               Company or another Subsidiary and capital contributions  received
               from  the  Company  or  another  Subsidiary,  the  Company  shall
               promptly  notify the  Administrative  Agent of the  estimated Net
               Proceeds of such issuance or of such capital  contribution  to be
               received in respect thereof. Promptly upon, and in no event later
               than one (1) Business  Day after,  receipt by the Company or such
               Subsidiary  of Net  Proceeds of such  issuance or of such capital
               contribution,  the  Company  shall  prepay  the Term  Loans in an
               amount equal to 50% of such Net Proceeds or capital  contribution
               (unless a Default or Unmatured Default shall have occurred and be
               continuing, in which case the Company shall prepay the Term Loans
               in an  amount  equal  to 100% of such  Net  Proceeds  or  capital
               contribution).  Notwithstanding the foregoing,  in no event shall
               the Company's  obligation to prepay the Term Loans pursuant to an
               issuance under this Section  2.5(b)(vi) exceed an amount equal to
               the Net  Proceeds of such  issuance  less any  prepayment  of the
               Subordinated  Seller Note made with respect to such  issuance and
               required under Section 4.2 of the  Subordinated  Seller Note (but
               only  to the  extent  otherwise  permitted  by the  subordination
               provisions of the Subordinated Seller Note).

                    (vii) At any time  prior to the  Trigger  Event  Date and so
               long  as any  Term  Loans  are  outstanding,  the  Company  shall
               immediately  prepay the Term Loans in an amount  equal to 100% of
               the Net Proceeds of any Indebtedness issued by the Company or any
               Subsidiary (excluding  Indebtedness permitted pursuant to Section
               7.3(c)).

                    (viii) All of the mandatory  prepayments  made under Section
               2.5(b)(i)-(iii)  shall be  applied  to the  Tranche  A  Revolving
               Credit  Obligations,  the Tranche B Revolving Credit Obligations,
               the  Tranche C  Revolving  Credit  Obligations  or the  Tranche D
               Revolving Credit  Obligations,  as applicable,  first to Floating
               Rate  Loans and to any  Eurocurrency  Rate  Loans  and  Alternate
               Currency  Loans  maturing  on such date and then to  subsequently
               maturing  Eurocurrency Rate Loans and Alternate Currency Loans in
               order of maturity.

                    (ix) Any prepayments  pursuant to Sections  2.5(b)(iv)-(vii)
               shall be applied to the outstanding principal balance of the Term
               Loans against all remaining scheduled  principal  installments in
               inverse order of maturity.

          2.6      Reductions and Adjustments of Revolving Loan Commitments.

          (a) The Company may  permanently  reduce (i) the  Aggregate  Tranche A
          Revolving  Loan  Commitment  in whole,  or in part  ratably  among the
          Lenders with a Tranche A Revolving  Loan  Commitment,  in an aggregate
          minimum amount of $5,000,000  and in integral  multiples of $1,000,000
          in excess of that  amount  (unless the  Aggregate  Tranche A Revolving
          Loan  Commitment is reduced in whole),  (ii) the  Aggregate  Tranche B
          Revolving  Loan  Commitment  in whole,  or in part  ratably  among the
          Lenders with a Tranche B Revolving  Loan  Commitment,  in an aggregate
          minimum amount of $5,000,000  and in integral  multiples of $1,000,000
          in excess of that  amount  (unless the  Aggregate  Tranche B Revolving
          Loan  Commitment is reduced in whole),  (iii) the Aggregate  Tranche C
          Revolving  Loan  Commitment  in whole,  or in part  ratably  among the
          Lenders with a Tranche C Revolving  Loan  Commitment,  in an aggregate
          minimum amount of $5,000,000  and in integral  multiples of $1,000,000
          in excess of that  amount  (unless the  Aggregate  Tranche C Revolving
          Loan  Commitment is reduced in whole),  (iv) the  Aggregate  Tranche D
          Revolving  Loan  Commitment  in whole,  or in part  ratably  among the
          Lenders with a Tranche D Revolving  Loan  Commitment,  in an aggregate
          minimum amount of $5,000,000  and in integral  multiples of $1,000,000
          in excess of that  amount  (unless the  Aggregate  Tranche D Revolving
          Loan Commitment is reduced in whole) or (v) the Swing Line Commitments
          in whole or in part in amounts of  $1,000,000  upon at least three (3)
          Business  Day's prior written notice to the  Administrative  Agent and
          the Swing Line Bank, which notice shall specify the amount of any such
          reduction;  provided  that (a) the amount of the  Aggregate  Tranche A
          Revolving  Loan  Commitment  may not be  reduced  below the  aggregate
          principal Dollar Amount of the outstanding  Tranche A Revolving Credit
          Obligations,  (b) the amount of the Aggregate Tranche B Revolving Loan
          Commitment  may not be reduced  below the aggregate  principal  Dollar
          Amount of the outstanding  Tranche B Revolving  Credit  Obligations or
          below the aggregate amount of Alternate Currency Commitments,  (c) the
          amount of the Aggregate Tranche C Revolving Loan Commitment may not be
          reduced below the aggregate principal Dollar Amount of the outstanding
          Tranche C Revolving  Credit  Obligations or below the aggregate amount
          of the Swing  Line  Commitment  and (d) the  amount  of the  Aggregate
          Tranche D  Revolving  Loan  Commitment  may not be  reduced  below the
          aggregate  principal  Dollar  Amount  of  the  outstanding  Tranche  D
          Revolving  Credit   Obligations  or  below  the  aggregate  amount  of
          Alternate Currency  Commitments.  All accrued commitment fees shall be
          payable on the effective  date of any  termination  of all or any part
          the  obligations  of  the  Lenders  to  make  Loans  hereunder.   Each
          Subsidiary  Borrower  may,  upon three (3) Business Days prior written
          notice to the  Administrative  Agent and to the  applicable  Alternate
          Currency Bank,  terminate  entirely at any time or reduce from time to
          time by an aggregate  amount of $5,000,000  or any larger  multiple of
          $1,000,000  (or as set  forth  on the  applicable  Alternate  Currency
          Addendum),  the unused portions of the applicable  Alternate  Currency
          Commitment as specified by the applicable  Subsidiary Borrower in such
          notice  to the  Administrative  Agent  and  the  applicable  Alternate
          Currency Bank;  provided that at no time shall the Alternate  Currency
          Commitment  of any  Lender in  respect of any  Alternate  Currency  be
          reduced to an amount less than the total outstanding  principal amount
          of all Alternate  Currency Loans of such Lender made in such Alternate
          Currency.

          (b) Any Lender (i) with a Tranche A  Revolving  Loan  Commitment  may,
          upon  three  (3)   Business   Day's  prior   written   notice  to  the
          Administrative  Agent and the  Company,  convert  all of its Tranche A
          Revolving Loan Commitment to a Tranche C Revolving Loan Commitment and
          upon such conversion such Lender shall have a Tranche C Revolving Loan
          Commitment  in an  amount  equal  to such  Lender's  prior  Tranche  A
          Revolving  Loan  Commitment,  such Lender's  prior Tranche A Revolving
          Loan Commitment shall be permanently reduced to zero and the Aggregate
          Tranche A Revolving Loan Commitment shall be permanently reduced by an
          amount equal to such Lender's new Tranche C Revolving Loan  Commitment
          and (ii) with a Tranche B Revolving  Loan  Commitment  may, upon three
          (3) Business  Day's prior written notice to the  Administrative  Agent
          and  the  Company,  convert  all  of  its  Tranche  B  Revolving  Loan
          Commitment  to a Tranche D  Revolving  Loan  Commitment  and upon such
          conversion   such  Lender  shall  have  a  Tranche  D  Revolving  Loan
          Commitment  in an  amount  equal  to such  Lender's  prior  Tranche  B
          Revolving  Loan  Commitment,  such Lender's  prior Tranche B Revolving
          Loan Commitment shall be permanently reduced to zero and the Aggregate
          Tranche B Revolving Loan Commitment shall be permanently reduced by an
          amount equal to such Lender's new Tranche D Revolving Loan Commitment.

          (c) If any  prospective  Lender  has  indicated  its desire to provide
          commitments (i) with respect to Tranche C Revolving Loans, the Company
          may,  simultaneously  with the execution by such prospective Lender of
          an Assignment  Agreement pursuant to Section 14.3,  permanently reduce
          the Aggregate  Tranche A Revolving Loan  Commitment  ratably among the
          Lenders with a Tranche A Revolving Loan  Commitment in an amount equal
          to the new Tranche C Revolving  Loan  Commitment  of such  prospective
          Lender with a concurrent ratable transfer of any outstanding Tranche A
          Revolving  Loans to Tranche C Revolving Loans and (ii) with respect to
          Tranche D Revolving  Loans, the Company may,  simultaneously  with the
          execution  by  such  prospective  Lender  of an  Assignment  Agreement
          pursuant to Section 14.3,  permanently  reduce the Aggregate Tranche B
          Revolving Loan  Commitment  ratably among the Lenders with a Tranche B
          Revolving  Loan  Commitment  in an amount  equal to the new  Tranche D
          Revolving Loan Commitment of such prospective Lender with a concurrent
          ratable  transfer  of any  outstanding  Tranche B  Revolving  Loans to
          Tranche D Revolving Loans.

     2.7 Method of  Borrowing.  Not later than 2:00 p.m. (New York time) on each
Borrowing  Date,  each  Lender  shall  make  available  its  Revolving  Loan  in
immediately   available   funds  in  the  applicable   Agreed  Currency  to  the
Administrative Agent at its address specified on its signature page hereto or as
otherwise specified pursuant to Article XV, unless the Administrative  Agent has
notified  the Lenders that such Loan is to be made  available to the  applicable
Borrower at the  Administrative  Agent's  Eurocurrency  Payment office, in which
case each Lender shall make  available its Loan or Loans,  in funds  immediately
available to the  Administrative  Agent at its Eurocurrency  Payment Office, not
later than  12:00 noon  (local  time in the city of the  Administrative  Agent's
Eurocurrency   Payment  Office)  in  the  Agreed  Currency   designated  by  the
Administrative  Agent. The Administrative  Agent will promptly make the funds so
received  from  the  Lenders  available  to  the  applicable   Borrower  at  the
Administrative  Agent's  aforesaid  address or Eurocurrency  Payment Office,  as
applicable.

         2.8 Method of Selecting  Types and Interest  Periods for Advances.  The
applicable  Borrower  shall  select the Type of Advance and, in the case of each
Eurocurrency Rate Advance, the Interest Period, Agreed Currency and/or Alternate
Currency  applicable to each Advance from time to time. The applicable  Borrower
shall give the Administrative Agent irrevocable notice in substantially the form
of  Exhibit B hereto (a  "Borrowing/Conversion/Continuation  Notice")  not later
than 11:00 a.m.  (New York time) (a) one (1) Business  Day before the  Borrowing
Date of each Floating  Rate Advance,  and (b) three (3) Business Days before the
Borrowing Date for each Eurocurrency Rate Advance to be made in Dollars, and (c)
four (4) Business  Days before the  Borrowing  Date for each  Eurocurrency  Rate
Advance to be made in any Agreed  Currency  other than Dollars and (d) three (3)
Business Days before the  Borrowing  Date for each  Alternate  Currency Loan (or
such  other  period  as may be  agreed  to by the  Administrative  Agent and the
applicable  Borrower),  and the  applicable  Borrower  shall give the applicable
Alternate  Currency Bank irrevocable notice by 11:00 a.m. (local time) three (3)
Business Days prior to the Borrowing Date for such  Alternate  Currency Loan (or
such other period as may be agreed to by the applicable  Alternate Currency Bank
or specified in the applicable Alternate Currency Addendum), specifying: (i) the
Borrowing  Date  (which  shall  be a  Business  Day) of such  Advance;  (ii) the
aggregate  amount of such  Advance;  (iii) the Type of  Advance  selected;  (iv)
whether the Advance will be a Tranche A Advance,  a Tranche B Advance, a Tranche
C Advance or a Tranche D Advance;  and (v) in the case of each Eurocurrency Rate
Loan, the Interest Period and Agreed Currency or Alternate  Currency  applicable
thereto.  Each  Floating Rate Advance,  each  Alternate  Currency Loan bearing a
fluctuating  Alternate  Currency Rate and all Obligations other than Loans shall
bear interest from and including the date of the making of such Advance,  in the
case of Loans, and the date such Obligation is due and owing in the case of such
other  Obligations,  to (but not including) the date of repayment thereof at the
Floating Rate or Alternate  Currency Rate, as  applicable,  changing when and as
such Floating Rate or Alternate Currency Rate, as applicable,  changes.  Changes
in the rate of interest on that portion of any Advance  maintained as a Floating
Rate Loan will take effect simultaneously with each change in the Alternate Base
Rate.  Changes in the rate of interest on any portion of any Alternate  Currency
Loan  bearing  a   fluctuating   Alternate   Currency   Rate  will  take  effect
simultaneously   with  each  change  in  such  Alternate   Currency  Rate.  Each
Eurocurrency  Rate Advance  shall bear interest from and including the first day
of the Interest Period applicable thereto to (but not including) the last day of
such  Interest  Period at the interest  rate  determined  as  applicable to such
Eurocurrency   Rate  Advance  and  shall  change  as  and  when  the  Applicable
Eurocurrency Margin changes.

         2.9 Minimum Amount of Each Advance. Each Advance (other than an Advance
to repay a Swing Line Loan or Reimbursement  Obligation) shall be in the minimum
Dollar Amount of $5,000,000 (or the Approximate  Equivalent Amount of any Agreed
Currency  other than Dollars or any  Alternate  Currency)  and in Dollar  Amount
multiples of  $1,000,000  (or the  Approximate  Equivalent  Amount of any Agreed
Currency other than Dollars or any Alternate  Currency) if in excess thereof (or
such other  amounts as may be specified  in the  applicable  Alternate  Currency
Addendum),  provided  that any Floating Rate Advance may be in the amount of the
unused  Aggregate  Tranche A  Revolving  Loan  Commitment,  Aggregate  Tranche B
Revolving Loan  Commitment,  Aggregate  Tranche C Revolving  Loan  Commitment or
Aggregate Tranche D Revolving Loan Commitment, as the case may be.

     2.10 Method of Selecting  Types and  Interest  Periods for  Conversion  and
Continuation of Advances.

         (a) Right to Convert.  The  applicable  Borrower may elect from time to
         time,  subject to the  provisions of Section 2.4 and this Section 2.10,
         to convert  all or any part of a Loan (other than a Swing Line Loan) of
         any Type into any other Type or Types of Loans (other than a Swing Line
         Loan);  provided that any conversion of any  Eurocurrency  Rate Advance
         shall be made on,  and only  on,  the last day of the  Interest  Period
         applicable thereto.

         (b) Automatic  Conversion and  Continuation.  Floating Rate Loans shall
         continue as Floating  Rate Loans  unless and until such  Floating  Rate
         Loans are converted into  Eurocurrency  Rate Loans.  Eurocurrency  Rate
         Loans shall  continue as  Eurocurrency  Rate Loans until the end of the
         then  applicable   Interest  Period   therefor,   at  which  time  such
         Eurocurrency Rate Loans shall be automatically  converted into Floating
         Rate Loans unless the Company shall have given the Administrative Agent
         notice in accordance with Section 2.10(d)  requesting  that, at the end
         of such Interest  Period,  such  Eurocurrency  Rate Loans continue as a
         Eurocurrency  Rate  Loan.  Unless  a  Borrowing/Conversion/Continuation
         Notice  shall have  timely been given in  accordance  with the terms of
         this Section 2.10,  Eurocurrency  Rate  Advances in an Agreed  Currency
         other than Dollars and  Alternate  Currency  Loans shall  automatically
         continue as  Eurocurrency  Rate Advances in the same Agreed Currency or
         Alternate Currency Loans in the same Alternate Currency, as applicable,
         with an Interest Period of one (1) month.

         (c)   No   Conversion    Post-Default   or   Post-Unmatured    Default.
         Notwithstanding  anything to the contrary  contained in Section 2.10(a)
         or Section  2.10(b),  no Loan may be  converted  into or continued as a
         Eurocurrency  Rate  Loan  (except  with  the  consent  of the  Required
         Lenders)  when any Default or  Unmatured  Default has  occurred  and is
         continuing.

         (d)  Borrowing/Conversion/Continuation  Notice.  The Company shall give
         the  Administrative  Agent a  Borrowing/Conversion/Continuation  Notice
         with  respect  to  each  conversion  of a  Floating  Rate  Loan  into a
         Eurocurrency  Rate Loan or continuation of a Eurocurrency Rate Loan not
         later than 11:00 a.m. (New York time) (i) three (3) Business Days prior
         to the date of the requested  conversion or continuation,  with respect
         to any Loan to be converted or continued as a Eurocurrency Rate Loan in
         Dollars, (ii) four (4) Business Days prior to the date of the requested
         conversion or continuation  with respect to any Loan to be converted or
         continued as a Eurocurrency  Rate Loan in an Agreed Currency other than
         Dollars,  and  (iii)  five (5)  Business  Days  before  the date of the
         requested conversion or continuation Borrowing Date with respect to the
         conversion  or  continuation  of any  Alternate  Currency Loan (or such
         other period as may be agreed to by the Administrative  Agent), and the
         applicable  Subsidiary  Borrower  shall give the  applicable  Alternate
         Currency Bank  irrevocable  notice by 11:00 a.m. (local time) three (3)
         Business Days prior to the conversion or continuation of such Alternate
         Currency Loan (or such other period as may specified in the  applicable
         Alternate Currency Addendum), specifying: (x) the requested date (which
         shall be a Business Day) of such  conversion or  continuation;  (y) the
         amount and Type of the Loan to be converted or  continued;  and (z) the
         amount of Eurocurrency Rate Loan(s) or Alternate  Currency Loan(s),  as
         applicable,  into which such Loan is to be converted or continued,  the
         Agreed Currency or Alternate Currency, as applicable,  and the duration
         of the Interest Period applicable thereto.

         (e) Notwithstanding  anything herein to the contrary,  (i) Eurocurrency
         Rate  Advances in an Agreed  Currency may be continued as  Eurocurrency
         Rate Advances only in the same Agreed Currency, (ii) Alternate Currency
         Loans in an Alternate  Currency may be continued as Alternate  Currency
         Loans only in the same Alternate Currency, (iii) Tranche A Advances may
         only be  continued  as Tranche A Advances,  (iv) Tranche B Advances may
         only be  continued  as Tranche B Advances,  (v) Tranche C Advances  may
         only be continued as Tranche C Advances and (vi) Tranche D Advances may
         only be continued as Tranche D Advances.

         2.11 Default Rate. After the occurrence and during the continuance of a
Default,  each  outstanding Loan shall bear interest at a rate equal to the rate
otherwise  applicable  thereto  (giving  effect  to the  provisions  of  Section
2.15(d)(ii)) plus 2% per annum.

         2.12 Method of Payment.  All  payments of  principal,  interest,  fees,
commissions,  and other amounts payable hereunder shall be made, without setoff,
deduction or counterclaim in immediately  available funds to the  Administrative
Agent (a) at the Administrative Agent's address specified pursuant to Article XV
with respect to Advances or other Obligations  denominated in Dollars and (b) at
the  Administrative  Agent's  Eurocurrency  Payment  Office with  respect to any
Advance  or other  Obligations  denominated  in an Agreed  Currency  other  than
Dollars,  or at any  other  Lending  Installation  of the  Administrative  Agent
specified in writing by the  Administrative  Agent to the Company,  by 1:00 p.m.
(New  York  time) on the date when due and shall be  applied  ratably  among the
applicable  Lenders with respect to any principal and interest due in connection
with Loans.  Each Advance  shall be repaid or prepaid in the Agreed  Currency in
which it was made in the amount borrowed and interest payable thereon shall also
be paid in such currency. Each payment delivered to the Administrative Agent for
the account of any Lender  shall be  delivered  promptly  by the  Administrative
Agent to such  Lender in the same type of funds which the  Administrative  Agent
received  at its  address  specified  pursuant  to Article XV or at any  Lending
Installation  specified in a notice  received by the  Administrative  Agent from
such  Lender.  The Company  authorizes  the  Administrative  Agent to charge the
account  of the  Company  maintained  with BNS for each  payment  of  principal,
interest,  fees,  commissions  and L/C  Obligations as it becomes due hereunder.
Each  reference to the  Administrative  Agent in this Section 2.12 shall also be
deemed to refer,  and shall apply equally,  to each Issuing Bank, in the case of
payments  required  to be made by the Company to any  Issuing  Bank  pursuant to
Article III.

         All  payments to be made by the  Borrowers  hereunder in respect of any
Alternate Currency Loans shall be made in the currencies in which such Loans are
denominated  and in funds  immediately  available,  at the office or branch from
which the Loan was made  pursuant to Section 2.20 and the  applicable  Alternate
Currency  Addendum  not later than 3:00 p.m.  (local  time) on the date on which
such  payment  shall  become  due.  Promptly,  and in any event  within  two (2)
Business  Days after  receipt,  upon  receipt of any payment of principal of the
Alternate  Currency  Loans the  applicable  Alternate  Currency  Bank shall give
written notice to the  Administrative  Agent by telex or telecopy of the receipt
of such payment.

         Notwithstanding the foregoing provisions of this Section, if, after the
making of any Advance in any currency  other than Dollars,  currency  control or
exchange  regulations  are  imposed in the  country  which  issues  such  Agreed
Currency or Alternate  Currency,  as applicable,  with the result that different
types of such Agreed Currency or Alternate  Currency,  as applicable,  (the "New
Currency") are introduced and the type of currency in which the Advance was made
(the  "Original  Currency") no longer exists or any Borrower is not able to make
payment to the Administrative  Agent for the account of the Lenders or Alternate
Currency Bank, as applicable, in such Original Currency, then all payments to be
made  by  the  Borrowers  hereunder  in  such  currency  shall  be  made  to the
Administrative  Agent or Alternate Currency Bank, as applicable,  in such amount
and such type of the New  Currency  or  Dollars  as shall be  equivalent  to the
amount of such payment  otherwise  due  hereunder in the Original  Currency,  it
being the intention of the parties  hereto that the Borrowers  take all risks of
the  imposition  of any  such  currency  control  or  exchange  regulations.  In
addition,  notwithstanding the foregoing  provisions of this Section,  if, after
the making of any Advance in any currency  other than  Dollars,  the  applicable
Borrower is not able to make payment to the Administrative Agent for the account
of the Lenders or the applicable Alternate Currency Bank in the type of currency
in which such Advance was made because of the  imposition  of any such  currency
control or exchange  regulation,  then such Advance shall instead be repaid when
due in Dollars in a principal  amount equal to the Dollar Amount (as of the date
of repayment) of such Advance.

         2.13     Evidence of Debt.

         (a) Each Lender shall maintain in accordance with its usual practice an
         account or accounts (a "Loan Account")  evidencing the  indebtedness of
         the  Borrowers  owing  to such  Lender  hereunder  from  time to  time,
         including  the amounts of principal  and  interest  payable and paid to
         such Lender from time to time hereunder.

         (b) The Register  maintained by the  Administrative  Agent  pursuant to
         Section  14.3(c) shall reflect (i) the date and the amount of each Loan
         made  hereunder,  the Type  thereof and the  Interest  Period,  if any,
         applicable  thereto,  (ii) the amount and the currency of any principal
         or  interest  due and  payable  or to become due and  payable  from the
         Borrowers to each Lender hereunder, (iii) the effective date and amount
         of each  Assignment  Agreement  delivered to and accepted by it and the
         parties  thereto  pursuant to Section 14.3,  (iv) the amount of any sum
         received by the  Administrative  Agent hereunder for the account of the
         Lenders and each Lender's share thereof,  and (v) all other appropriate
         debits and credits as provided in this  Agreement,  including,  without
         limitation, all fees, charges, expenses and interest.

         (c) The entries  made in the Loan  Account,  the Register and the other
         accounts  maintained pursuant to subsections (a) or (b) of this Section
         shall be presumptively correct for all purposes, absent manifest error;
         provided that the failure of any Lender or the Administrative  Agent to
         maintain  such  accounts or any error  therein  shall not in any manner
         affect the  obligation  of the  Borrowers to repay the  Obligations  in
         accordance with the terms of this Agreement.

         (d) Any Lender may  request  that the Tranche A  Revolving  Loans,  the
         Tranche B Revolving Loans, the Tranche C Revolving Loans, the Tranche D
         Revolving  Loans or the Term  Loans made by it each be  evidenced  by a
         promissory note in substantially the forms of Exhibit I-1, Exhibit I-2,
         Exhibit I-3, Exhibit I-4 or Exhibit I-5, respectively, to evidence such
         Lender's Tranche A Revolving Loans,  Tranche B Revolving Loans, Tranche
         C  Revolving  Loans,  Tranche  D  Revolving  Loans  or Term  Loans,  as
         applicable.  In such event,  the  applicable  Borrower  shall  promptly
         prepare,  execute and deliver to such Lender a promissory note for such
         Loans payable to the order of such Lender and in a form approved by the
         Administrative  Agent and consistent  with the terms of this Agreement.
         Thereafter,  the Loans  evidenced by such  promissory note and interest
         thereon  shall at all times  (including  after  assignment  pursuant to
         Section 14.3) be  represented by one or more  promissory  notes in such
         form payable to the order of the payee named therein.

         2.14 Telephonic  Notices.  The Borrowers  authorize the Lenders and the
Administrative Agent to extend Loans, effect selections of Types of Advances and
to transfer funds based on telephonic  notices made by any person or persons the
Administrative Agent or any Lender in good faith believes to be acting on behalf
of the  applicable  Borrower.  The  Borrowers  agree to deliver  promptly to the
Administrative Agent a written confirmation, signed by an Authorized Officer. If
the written  confirmation  differs in any material respect from the action taken
by the Administrative  Agent and the Lenders,  the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

        2.15 Promise to Pay;  Interest and Fees;  Interest Payment Dates;  
Interest and Fee Basis; Taxes; Loan and Control Accounts.

         (a) Promise to Pay. Each Borrower  unconditionally promises to pay when
         due the  principal  amount  of each  Loan  and  all  other  Obligations
         incurred  by it, and to pay all unpaid  interest  accrued  thereon,  in
         accordance  with  the  terms  of  this  Agreement  and the  other  Loan
         Documents.

         (b) Interest Payment Dates. Interest accrued on each Floating Rate Loan
         and each  Alternate  Currency  Loan  bearing  a  fluctuating  Alternate
         Currency  Rate shall be payable on each Payment Date,  commencing  with
         the first such date to occur after the date hereof, upon any prepayment
         whether by  acceleration  or  otherwise,  and at  maturity  (whether by
         acceleration  or otherwise).  Interest  accrued on each Fixed-Rate Loan
         shall be payable on the last day of its applicable  Interest Period, on
         any  date  on  which  the  Fixed-Rate  Loan  is  prepaid,   whether  by
         acceleration or otherwise,  and at maturity.  Interest  accrued on each
         Fixed-Rate  Loan having an  Interest  Period  longer than three  months
         shall  also be  payable  on the last day of each  three-month  interval
         during such Interest Period.  Interest accrued on the principal balance
         of all other  Obligations  shall be payable in arrears  (i) on the last
         day of each calendar month,  commencing on the first such day following
         the incurrence of such Obligation,  (ii) upon repayment thereof in full
         or in part, and (iii) if not theretofore paid in full, at the time such
         other  Obligation  becomes due and payable  (whether by acceleration or
         otherwise).

         (c)      Fees.

                  (i) The Company shall pay to the Administrative  Agent (A) for
         the account of the Lenders in accordance  with their Pro Rata Tranche A
         Revolving  Shares,  from and after the date of this Agreement until the
         Tranche A Revolving Loan Termination Date, a commitment fee accruing at
         the  rate of the  then  Applicable  Commitment  Fee  Percentage  on the
         unutilized   portion  of  such  Lender's   Tranche  A  Revolving   Loan
         Commitment, (B) for the account of the Lenders in accordance with their
         Pro Rata  Tranche B Revolving  Shares,  from and after the date of this
         Agreement  until the  Tranche B  Revolving  Loan  Termination  Date,  a
         commitment fee accruing at the rate of the then  Applicable  Commitment
         Fee  Percentage on the  unutilized  portion of such Lender's  Tranche B
         Revolving Loan (treating  Alternate  Currency Loans as usage),  (C) for
         the account of the Lenders in accordance  with their Pro Rata Tranche C
         Revolving  Shares,  from and after the date of this Agreement until the
         Tranche C Revolving Loan Termination Date, a commitment fee accruing at
         the  rate of the  then  Applicable  Commitment  Fee  Percentage  on the
         unutilized portion of such Lender's Tranche C Revolving Loan Commitment
         (treating  Letters of Credit,  but not Swing Line Loans,  as usage) and
         (D) for the  account of the Lenders in  accordance  with their Pro Rata
         Tranche D Revolving  Shares,  from and after the date of this Agreement
         until the Tranche D Revolving Loan  Termination  Date, a commitment fee
         accruing at the rate of the then  Applicable  Commitment Fee Percentage
         on the  unutilized  portion of such Lender's  Tranche D Revolving  Loan
         (treating  Alternate Currency Loans as usage). The commitment fee shall
         be payable in arrears on each Payment Date hereafter, and, in addition,
         on any date on which  the  Tranche A  Revolving  Loan  Commitment,  the
         Tranche B Revolving  Loan  Commitment,  the  Tranche C  Revolving  Loan
         Commitment or the Tranche D Revolving Loan  Commitment,  as applicable,
         shall be  terminated  in whole  or,  with  respect  to such  terminated
         amount, in part.

                  (ii) The Company  agrees to pay to the  Administrative  Agent,
         for the sole  account of the  Administrative  Agent  (unless  otherwise
         agreed  between the  Administrative  Agent and any Lender) the fees set
         forth in the  Original  Fee  Letter,  payable  at the  times and in the
         amounts set forth therein.

                  (iii) The applicable  Borrower agrees to pay to each Alternate
         Currency Bank,  for its sole account,  a fronting fee equal to 0.25% of
         the average daily outstanding  Dollar Amount of all Alternate  Currency
         Loans made by such Alternate Currency Bank.


          (d)  Interest  and Fee Basis;  Applicable  Floating  Rate Margin,
          Applicable   Eurocurrency   Margin  and   Applicable   Commitment  Fee
          Percentage.

                  (i)  Interest  on all  Fixed-Rate  Loans  (except as  provided
         otherwise in the applicable  Alternate Currency Addendum in the case of
         an Alternate  Currency  Loan) and fees shall be  calculated  for actual
         days elapsed on the basis of a 360-day  year.  Interest on all Floating
         Rate Loans shall be calculated  for actual days elapsed on the basis of
         a 365-, or when appropriate  366-, day year.  Interest shall be payable
         for  the  day an  Obligation  is  incurred  but  not for the day of any
         payment on the amount  paid if payment is  received  prior to 3:00 p.m.
         (local time) at the place of payment. If any payment of principal of or
         interest on a Loan or any payment of any other Obligations shall become
         due on a day which is not a Business Day, such payment shall be made on
         the  next  succeeding  Business  Day and,  in the  case of a  principal
         payment,  such  extension  of  time  shall  be  included  in  computing
         interest, fees and commissions in connection with such payment.

                  (ii)  The   Applicable   Floating   Rate  Margin,   Applicable
         Eurocurrency  Margin and Applicable  Commitment Fee Percentage shall be
         determined  from  time to  time on the  basis  of the  then  applicable
         Leverage Ratio in accordance with the following table:

                                     APPLICABLE    APPLICABLE    APPLICABLE
                                   FLOATING RATE  EUROCURRENCY   COMMITMENT
        LEVERAGE RATIO               MARGIN          MARGIN     FEE PERCENTAGE
        Less than 1.50                0.25%           1.25%       0.375%
        1.50 or greater, 
        but less than 2.00            0.75%           1.75%       0.375%
        2.00 or greater, 
        but less than 2.50            1.25%           2.25%       0.500%
        2.50 or greater, 
        but less than 2.75            1.75%           2.75%       0.500%
        2.75 or greater, 
        but less than 3.00            2.00%           3.00%       0.500%
        3.00 or greater               2.25%           3.25%       0.500%

                  Upon receipt of the  financial  statements  to be delivered by
         the  Company  in  accordance   with  Section   7.1(a)(i)  or  (ii),  as
         applicable,  for any fiscal quarter or, if earlier, upon receipt of the
         Company's  audited  financial  statements  for  any  fiscal  year,  the
         Applicable  Floating Rate Margin,  Applicable  Eurocurrency  Margin and
         Applicable Commitment Fee Percentage shall be adjusted, such adjustment
         being  effective  five (5) Business Days  following the  Administrative
         Agent's  receipt  of  such  financial  statements  and  the  compliance
         certificate  required to be delivered in connection  therewith pursuant
         to Section  7.1(a)(iii);  provided  that if the Company  shall not have
         timely  delivered its financial  statements in accordance  with Section
         7.1(a)(i) or (ii),  as  applicable,  then  commencing  on the date upon
         which  such  financial   statements  should  have  been  delivered  and
         continuing until such financial  statements are actually delivered,  it
         shall be assumed for purposes of determining  the  Applicable  Floating
         Rate Margin,  Applicable  Eurocurrency Margin and Applicable Commitment
         Fee  Percentage  that the Leverage  Ratio was greater than 2.50 to 1.0.
         Notwithstanding  the  foregoing,  for so long as any Default shall have
         occurred  and be  continuing,  the  Applicable  Floating  Rate  Margin,
         Applicable Eurocurrency Margin and Applicable Commitment Fee Percentage
         shall  be the  highest  Applicable  Floating  Rate  Margin,  Applicable
         Eurocurrency  Margin and Applicable  Commitment Fee Margin set forth in
         the foregoing table.


         (e)      Taxes.

                  (i) Any and all payments by the Borrowers  hereunder  (whether
         in respect of principal,  interest,  fees or  otherwise)  shall be made
         free and clear of and  without  deduction  for any and all  present  or
         future taxes, levies, imposts,  deductions,  charges or withholdings or
         any  interest,  penalties  and  liabilities  with  respect  thereto but
         excluding,  in the case of each  Lender and the  Administrative  Agent,
         such taxes (including  income taxes,  franchise taxes and branch profit
         taxes)  as  are  imposed  on  or  measured  by  such  Lender's  or  the
         Administrative  Agent's,  as the case may be,  net income by the United
         States of America or any  Governmental  Authority  of the  jurisdiction
         under the laws of which such Lender or the Administrative Agent, as the
         case  may be,  is  organized  (all  such  non-excluded  taxes,  levies,
         imposts, deductions,  charges,  withholdings, and liabilities which the
         Administrative  Agent or a Lender  determines  to be applicable to this
         Agreement,  the other Loan Documents,  the Revolving Loan  Commitments,
         the Loans or the  Letters of Credit  being  hereinafter  referred to as
         "Taxes").  If any  Borrower  shall  be  required  by law to  deduct  or
         withhold  any Taxes from or in respect of any sum payable  hereunder or
         under the other  Loan  Documents  to any  Lender or the  Administrative
         Agent,  (i) the sum payable  shall be  increased as may be necessary so
         that after making all required  deductions or  withholdings  (including
         deductions  applicable  to  additional  sums payable under this Section
         2.15(e))  such Lender or Agent (as the case may be)  receives an amount
         equal to the sum it  would  have  received  had no such  deductions  or
         withholdings  been made,  (ii) the applicable  Borrower shall make such
         deductions or withholdings, and (iii) the applicable Borrower shall pay
         the full amount deducted or withheld to the relevant taxation authority
         or other authority in accordance with applicable law.

                  (ii) In addition,  the  Borrowers  agree to pay any present or
         future  stamp or  documentary  taxes or any other  excise  or  property
         taxes,  charges,  or similar  levies  which arise from any payment made
         hereunder,  from the issuance of Letters of Credit  hereunder,  or from
         the execution,  delivery or registration  of, or otherwise with respect
         to,  this  Agreement,  the other Loan  Documents,  the  Revolving  Loan
         Commitments,  the Loans or the Letters of Credit (hereinafter  referred
         to as "Other Taxes").

                  (iii) The Company and each Subsidiary Borrower shall indemnify
         each Lender and the  Administrative  Agent for the full amount of Taxes
         and Other  Taxes  (including,  without  limitation,  any Taxes or Other
         Taxes imposed by any  Governmental  Authority on amounts  payable under
         this Section 2.15(e)) paid by such Lender or the  Administrative  Agent
         (as the case may be) and any liability (including penalties,  interest,
         and expenses) arising therefrom or with respect thereto, whether or not
         such Taxes or Other  Taxes were  correctly  or legally  asserted.  This
         indemnification  shall be made  within  thirty (30) days after the date
         such  Lender  or the  Administrative  Agent  (as the case may be) makes
         written demand  therefor.  A certificate  as to any  additional  amount
         payable to any Lender or the  Administrative  Agent under this  Section
         2.15(e)  submitted to the  applicable  Borrower and the  Administrative
         Agent  (if  a  Lender  is  so   submitting)   by  such  Lender  or  the
         Administrative Agent shall show in reasonable detail the amount payable
         and the  calculations  used to determine such amount and shall,  absent
         manifest  error,  be final,  conclusive  and  binding  upon all parties
         hereto.

                  (iv) Within  thirty (30) days after the date of any payment of
         Taxes or Other Taxes by the  Company or any  Subsidiary  Borrower,  the
         Company  shall  furnish to the  Administrative  Agent the original or a
         certified copy of a receipt evidencing payment thereof.

                  (v) Without  prejudice to the survival of any other  agreement
         of the Company and the Subsidiary Borrowers  hereunder,  the agreements
         and  obligations  of the  Borrowers  contained in this Section  2.15(e)
         shall survive the payment in full of all  Obligations,  the termination
         of the Letters of Credit and the termination of this Agreement.

                  (vi)  Each  Lender   (including  any  Replacement   Lender  or
         Purchaser)  that is not  created  or  organized  under  the laws of the
         United  States of America or a political  subdivision  thereof  (each a
         "Non-U.S.  Lender") shall deliver to the Company and the Administrative
         Agent on or before the Closing  Date,  or, if later,  the date on which
         such Lender becomes a Lender  pursuant to Section 14.3 hereof (and from
         time  to  time  thereafter  upon  the  request  of the  Company  or the
         Administrative  Agent, but only for so long as such Non-U.S.  Lender is
         legally entitled to do so), either (A) two (2) duly completed copies of
         either (x) IRS Form W-8BEN,  or (y) IRS Form W-8ECI,  or in either case
         an applicable  successor  form or (B) in the case of a Non-U.S.  Lender
         that is not legally  entitled  to deliver  either form listed in clause
         (vi)(A)(I),  (I) a  certificate  of a duly  authorized  officer of such
         Non-U.S.  Lender to the effect that such  Non-U.S.  Lender is not (x) a
         "bank" within the meaning of Section  881(c)(3)(A)  of the Code,  (y) a
         "10  percent  shareholder"  of the Company or any  Subsidiary  Borrower
         within  the  meaning  of  Section  881(c)(3)(B)  of the Code,  or (z) a
         controlled foreign corporation receiving interest from a related person
         within  the  meaning  of  Section   881(c)(3)(C)   of  the  Code  (such
         certificate,   an  "Exemption  Certificate")  and  (II)  two  (2)  duly
         completed copies of IRS Form W-8BEN or applicable  successor form. Each
         such  Lender   further  agrees  to  deliver  to  the  Company  and  the
         Administrative  Agent from time to time a true and accurate certificate
         executed in duplicate by a duly authorized  officer of such Lender in a
         form satisfactory to the Company and the Administrative  Agent,  before
         or promptly upon the occurrence of any event  requiring a change in the
         most recent certificate  previously  delivered by it to the Company and
         the Administrative Agent pursuant to this Section 2.15(e)(vi). Further,
         each  Lender  which  delivers a form or  certificate  pursuant  to this
         clause  (vi)  covenants  and agrees to deliver to the  Company  and the
         Administrative  Agent within  fifteen (15) days prior to the expiration
         of such form, for so long as this Agreement is still in effect, another
         such  certificate   and/or  two  (2)  accurate  and  complete  original
         newly-signed  copies of the  applicable  form (or any successor form or
         forms required under the Code or the applicable regulations promulgated
         thereunder).

                  Each  Lender  shall  promptly  furnish to the  Company and the
         Administrative  Agent such  additional  documents as may be  reasonably
         required by any Borrower or the  Administrative  Agent to establish any
         exemption  from or reduction of any Taxes or Other Taxes required to be
         deducted or withheld and which may be obtained without undue expense to
         such  Lender.  Notwithstanding  any  other  provision  of this  Section
         2.15(e), no Borrower shall be obligated to gross up any payments to any
         Lender  pursuant  to Section  2.15(e)(i),  or to  indemnify  any Lender
         pursuant to Section  2.15(e)(iii),  in respect of United States federal
         withholding  taxes to the extent imposed as a result of (x) the failure
         of such Lender to deliver to the  Company  the form or forms  and/or an
         Exemption  Certificate,  as  applicable  to such  Lender,  pursuant  to
         Section  2.15(e)(vi),  or (y)  such  form  or  forms  and/or  Exemption
         Certificate  not  establishing a complete  exemption from U.S.  federal
         withholding  tax or the information or  certifications  made therein by
         the Lender  being  untrue or  inaccurate  on the date  delivered in any
         material  respect,  provided  that  the  applicable  Borrower  shall be
         obligated  to gross up any  payments  to any such  Lender  pursuant  to
         Section  2.15(e)(i),  and to  indemnify  any such  Lender  pursuant  to
         Section  2.15(e)(iii),  in respect of United States federal withholding
         taxes  if (x)  any  such  failure  to  deliver  a form or  forms  or an
         Exemption Certificate or the failure of such form or forms or exemption
         certificate  to  establish  a  complete  exemption  from  U.S.  federal
         withholding  tax or inaccuracy or untruth  contained  therein  resulted
         from a change in any applicable  statute,  treaty,  regulation or other
         applicable law or any interpretation of any of the foregoing  occurring
         after the date  hereof,  which  change  rendered  such Lender no longer
         legally entitled to deliver such form or forms or Exemption Certificate
         or otherwise  ineligible  for a complete  exemption  from U.S.  federal
         withholding tax, or rendered the information or the certifications made
         in such form or forms or Exemption  Certificate untrue or inaccurate in
         any material respect, or (y) the obligation to gross up payments to any
         such Lender  pursuant to Section  2.15(e)(i),  or to indemnify any such
         Lender pursuant to Section 2.15(e)(iii), is with respect to a Purchaser
         that  becomes  a  Purchaser  as a result of an  assignment  made at the
         request of the Company.

         2.16  Notification  of  Advances,   Interest  Rates,   Prepayments  and
Aggregate Revolving Loan Commitment Reductions.  Promptly after receipt thereof,
the  Administrative  Agent  will  notify  each  Lender of the  contents  of each
Aggregate       Revolving      Loan      Commitment       reduction      notice,
Borrowing/Conversion/Continuation  Notice,  and repayment  notice received by it
hereunder.  The  Administrative  Agent  will  notify the  Company or  applicable
Borrower and each Lender of the interest rate and Agreed Currency  applicable to
each  Fixed-Rate  Loan  promptly  upon  determination  of such interest rate and
Agreed  Currency and will give each Lender  prompt  notice of each change in the
Alternate Base Rate.

         2.17 Lending  Installations.  Each Lender may book its Loans or Letters
of Credit at any Lending Installation selected by such Lender and may change its
Lending  Installation from time to time. All terms of this Agreement shall apply
to any such  Lending  Installation.  Each Lender  may,  by written or  facsimile
notice  to the  Administrative  Agent  and  the  Company,  designate  a  Lending
Installation  through  which Loans will be made by it and for whose account Loan
payments and/or payments of L/C Obligations are to be made.

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

         2.19 Termination Date. This Agreement shall be effective until the date
(the "Facility  Termination  Date") upon which (a) all of the Obligations (other
than contingent  indemnity  obligations)  shall have been fully and indefeasibly
paid  and  satisfied,  (b) all  commitments  of the  Lenders  to  extend  credit
hereunder  have  expired or have been  terminated  and (c) all of the Letters of
Credit shall have expired,  been  canceled or  terminated.  Notwithstanding  the
occurrence of the Facility  Termination  Date,  obligations of the Borrowers and
other terms  hereof  which by the terms of this  Agreement  survive  termination
shall survive the Facility Termination Date.

         2.20 Replacement of Certain Lenders.  In the event a Lender  ("Affected
Lender") shall have: (a) failed to fund its Pro Rata Tranche A Revolving  Share,
Pro Rata Tranche B Revolving  Share,  Pro Rata Tranche C Revolving  Share or Pro
Rata  Tranche D  Revolving  Share of any  Advance  requested  by the  applicable
Borrower, or to make payment in respect of any Alternate Currency Loan purchased
by such Lender  pursuant to Section  2.21(e),  which such Lender is obligated to
fund under the terms of this Agreement and which failure has not been cured, (b)
requested  compensation from any Borrower under Sections 2.15(e),  4.1 or 4.2 to
recover  Taxes,  Other Taxes or other  additional  costs incurred by such Lender
which are not being  incurred  generally by the other Lenders except as provided
under any  applicable  Alternate  Currency  Addendum,  or (c) delivered a notice
pursuant  to  Section  4.3  claiming  that  such  Lender  is  unable  to  extend
Eurocurrency  Rate Loans to the Company for reasons not generally  applicable to
the other Lenders,  then, in any such case,  after the engagement of one or more
"Replacement   Lenders"   (as  defined   below)  by  the   Company   and/or  the
Administrative  Agent, the Company or the Administrative  Agent may make written
demand on such Affected Lender (with a copy to the  Administrative  Agent in the
case of a  demand  by the  Company  and a copy to the  Company  in the case of a
demand by the Administrative  Agent) for the Affected Lender to assign, and such
Affected Lender shall use commercially  reasonable efforts to assign pursuant to
one or more duly executed Assignment Agreements five (5) Business Days after the
date of such demand, to one or more financial  institutions that comply with the
provisions of Section 14.3(a) which the Company or the Administrative  Agent, as
the case may be,  shall have  engaged for such  purpose  (each,  a  "Replacement
Lender"),  all of such  Affected  Lender's  rights  and  obligations  under this
Agreement  and the other Loan  Documents  (including,  without  limitation,  its
Revolving  Loan  Commitment,  all Loans  owing to it,  all of its  participation
interests in existing  Letters of Credit,  and its  obligation to participate in
additional  Letters  of  Credit  and  Alternate  Currency  Loans  hereunder)  in
accordance with Section 14.3. The Administrative  Agent is authorized to execute
one or more of such assignment  agreements as attorney-in-fact  for any Affected
Lender  failing to execute and deliver  the same within five (5)  Business  Days
after the date of such  demand.  With  respect to such  assignment  the Affected
Lender shall be entitled to receive,  in cash,  all amounts due and owing to the
Affected Lender hereunder or under any other Loan Document,  including,  without
limitation, the aggregate outstanding principal amount of the Loans owed to such
Lender,  together  with  accrued  interest  thereon  through  the  date  of such
assignment, amounts payable under Sections 2.15(e), 4.1, and 4.2 with respect to
such Affected Lender and compensation payable under Section 2.15(c) in the event
of any replacement of any Affected Lender under clause (b) or clause (c) of this
Section  2.20;  provided  that upon such  Affected  Lender's  replacement,  such
Affected  Lender  shall  cease to be a party  hereto  but shall  continue  to be
entitled to the benefits of Sections  2.15(e),  4.1, 4.2, 4.4, and 11.6, as well
as to any fees  accrued for its account  hereunder  and not yet paid,  and shall
continue to be obligated under Section 12.8.

         2.21     Alternate Currency Loans.

         (a) Upon the  satisfaction  of the  conditions  precedent  set forth in
         Article V hereof  and set forth in the  applicable  Alternate  Currency
         Addendum,  from and including  the later of the date of this  Agreement
         and the date of execution of the applicable Alternate Currency Addendum
         and prior to the termination of the Aggregate  Tranche B Revolving Loan
         Commitment or the Aggregate  Tranche D Revolving  Loan  Commitment,  as
         applicable (or such earlier  termination  date as shall be specified in
         or  pursuant  to the  applicable  Alternate  Currency  Addendum),  each
         Alternate  Currency Bank agrees,  on the terms and conditions set forth
         in this Agreement and in the applicable Alternate Currency Addendum, to
         make Alternate Currency Loans under such Alternate Currency Addendum to
         the applicable  Borrower party to such Alternate Currency Addendum from
         time to time in the applicable Alternate Currency,  in an amount not to
         exceed  each  such  Alternate  Currency  Bank's  applicable   Alternate
         Currency  Commitment;  provided that at no time shall the Dollar Amount
         of the Alternate  Currency  Loans for any specific  Alternate  Currency
         exceed the maximum  amount  specified  as the  maximum  amount for such
         Alternate Currency in the applicable  Alternate Currency Addendum other
         than as a result of currency  fluctuations  and then only to the extent
         permitted in Section 2.5(b)(ii) and provided,  further, that at no time
         shall  (i)  the  Dollar  Amount  of  the  Tranche  B  Revolving  Credit
         Obligations  exceed the Aggregate  Tranche B Revolving Loan Commitments
         or (ii) the Dollar Amount of the Tranche D Revolving Credit Obligations
         exceed the Aggregate Tranche D Revolving Loan  Commitments.  Subject to
         the  terms of this  Agreement  and the  applicable  Alternate  Currency
         Addendum,  the  applicable  Borrowers  may borrow,  repay and  reborrow
         Alternate  Currency Loans in the applicable  Alternate  Currency at any
         time prior to the termination of the Aggregate Tranche B Revolving Loan
         Commitment or the Aggregate  Tranche D Revolving  Loan  Commitment,  as
         applicable (or such earlier  termination  date as shall be specified in
         or pursuant to the  applicable  Alternate  Currency  Addendum).  On the
         termination of the Aggregate Tranche B Revolving Loan Commitment or the
         Aggregate  Tranche D Revolving Loan Commitment,  as applicable (or such
         earlier  termination  date as shall be  specified in or pursuant to the
         applicable  Alternate  Currency  Addendum),  the outstanding  principal
         balance of the  Alternate  Currency  Loans shall be paid in full by the
         applicable  Borrower  and  prior to the  termination  of the  Aggregate
         Tranche  B  Revolving  Loan  Commitment  or  the  Aggregate  Tranche  D
         Revolving Loan Commitment,  as applicable (or such earlier  termination
         date as shall be specified in or pursuant to the  applicable  Alternate
         Currency Addendum) prepayments of the Alternate Currency Loans shall be
         made  by the  applicable  Borrower  if and to the  extent  required  by
         Section  2.5(b)(ii).  For the avoidance of doubt, it is understood that
         no Lender shall have any  obligation  hereunder to execute an Alternate
         Currency Addendum and so to become an Alternate Currency Bank.

         (b) Borrowing  Notice.  When the applicable  Borrower desires to borrow
         under this Section 2.21, the  applicable  Borrower shall deliver to the
         applicable  Alternate  Currency  Bank  and the  Administrative  Agent a
         Borrowing/Conversion/Continuation  Notice, signed by it, as provided in
         Section 2.8  specifying  that such  Borrower is requesting an Alternate
         Currency Loan pursuant to this Section 2.21 and whether such  borrowing
         shall be made as a  Tranche B  Revolving  Loan or  Tranche D  Revolving
         Loan,  and the  Administrative  Agent shall give  prompt  notice to the
         Lenders  with a  Tranche B  Revolving  Loan  Commitment  or a Tranche D
         Revolving Loan  Commitment,  as applicable,  of any such request for an
         Alternate Currency Loan. Any  Borrowing/Conversion/Continuation  Notice
         given pursuant to this Section 2.21 shall be irrevocable.

         (c) Termination.  Except as otherwise required by applicable law, in no
         event shall any  Alternate  Currency  Bank have the right to accelerate
         the Alternate  Currency Loans outstanding under any Alternate  Currency
         Addendum or to terminate its  commitments  (if any)  thereunder to make
         Alternate  Currency  Loans  prior  to the  stated  termination  date in
         respect  thereof,  except that each Alternate  Currency Bank shall have
         such rights upon an  acceleration of the Loans and a termination of the
         Aggregate Revolving Loan Commitments pursuant to Article IX.

         (d)  Statements.  Each  Alternate  Currency  Bank shall  furnish to the
         Administrative  Agent not less frequently  than monthly,  at the end of
         each calendar quarter,  and at any other time at the reasonable request
         of the Administrative  Agent, a statement setting forth the outstanding
         Alternate  Currency  Loans made and repaid  during the period since the
         last such report under such Alternate Currency Addendum.

         (e)  Risk   Participation.   Immediately  and  automatically  upon  the
         occurrence of a Default under Sections 8.1(a),  (e) or (f), each Lender
         with a Tranche B  Revolving  Loan  Commitment  or a Tranche D Revolving
         Loan Commitment, as applicable, shall be deemed to have unconditionally
         and irrevocably  purchased from the applicable Alternate Currency Bank,
         without   recourse  or   warranty,   an   undivided   interest  in  and
         participation  in each  Alternate  Currency  Loan  ratably in an amount
         equal to such  Lender's Pro Rata Tranche B Revolving  Share or Pro Rata
         Tranche D Revolving  Share,  as applicable,  of the amount of principal
         and accrued  interest of such Loan, and immediately  and  automatically
         all Alternate Currency Loans shall be converted to and redenominated in
         Dollars equal to the Dollar Amount of each such Alternate Currency Loan
         determined  as of the  date of such  conversion;  provided  that to the
         extent such conversion shall occur other than at the end of an Interest
         Period, the applicable  Borrower shall pay to the applicable  Alternate
         Currency  Bank,  all  losses  and  breakage  costs  related  thereto in
         accordance  with  Section  4.4.  Each of the  Lenders  shall pay to the
         applicable Alternate Currency Bank not later than two (2) Business Days
         following a request for payment from such  Alternate  Currency Bank, in
         Dollars, an amount equal to the undivided interest in and participation
         in the  Alternate  Currency Loan  purchased by such Lender  pursuant to
         this  Section  2.21(e).  In the  event  that any  Lender  fails to make
         payment to the  applicable  Alternate  Currency  Bank of any amount due
         under this Section 2.21(e),  the Administrative Agent shall be entitled
         to receive,  retain and apply against such obligation the principal and
         interest   otherwise   payable  to  such  Lender  hereunder  until  the
         Administrative  Agent receives from such Lender an amount sufficient to
         discharge  such  Lender's  payment  obligation  as  prescribed  in this
         Section  2.21(e)  together with  interest  thereon at the Federal Funds
         Effective Rate for each day during the period commencing on the date of
         demand by the applicable Alternate Currency Bank and ending on the date
         such  obligation  is fully  satisfied.  The  Administrative  Agent will
         promptly  remit  all  payments   received  as  provided  above  to  the
         applicable  Alternate  Currency  Bank.  In  consideration  of the  risk
         participations  prescribed in this Section  2.21(e),  each Lender shall
         receive,  from  the  accrued  interest  paid for  periods  prior to the
         conversion  of any Alternate  Currency  Loan as described  above by the
         applicable  Borrower on each  Alternate  Currency  Loan, a fee equal to
         such Lender's Pro Rata Tranche B Revolving  Share or Pro Rata Tranche D
         Revolving Share, as applicable,  of the Applicable  Eurocurrency Margin
         component of the interest  accrued on such Loan, as in effect from time
         to time during the period such  interest  accrued.  Such portion of the
         interest paid by the applicable Borrower on Alternate Currency Loans to
         the  applicable  Alternate  Currency  Bank shall be paid as promptly as
         possible by such Alternate Currency Bank to the  Administrative  Agent,
         and the Administrative Agent shall as promptly as possible convert such
         amount into Dollars at the spot rate of exchange in accordance with its
         normal banking  practices and apply such resulting amount ratably among
         the Lenders  (including the Alternate  Currency Banks) in proportion to
         their  Pro  Rata  Tranche  B  Revolving  Share or Pro  Rata  Tranche  D
         Revolving Share, as applicable.

         (f) Other  Provisions  Applicable  to  Alternate  Currency  Loans.  The
         specification  of payment of  Alternate  Currency  Loans in the related
         Alternate Currency at a specific place pursuant to this Agreement is of
         the essence. Such Alternate Currency shall, subject to Section 2.21, be
         the currency of account and payment of such Loans under this  Agreement
         and  the  applicable   Alternate  Currency  Addendum.   Notwithstanding
         anything in this Agreement,  the obligation of the applicable  Borrower
         in respect of such Loans shall not be  discharged  by an amount paid in
         any other currency or at another place,  whether pursuant to a judgment
         or otherwise,  to the extent the amount so paid,  on prompt  conversion
         into the  applicable  Alternate  Currency  and  transfer to such Lender
         under  normal  banking  procedure,  does not yield  the  amount of such
         Alternate Currency due under this Agreement or the applicable Alternate
         Currency Addendum. In the event that any payment, whether pursuant to a
         judgment or otherwise, upon conversion and transfer, does not result in
         payment  of the  amount  of such  Alternate  Currency  due  under  this
         Agreement or the applicable  Alternate Currency  Addendum,  such Lender
         shall have an independent cause of action against each of the Borrowers
         for  the  currency  deficit.  In  the  event  that  any  payment,  upon
         conversion and transfer,  results in payment in excess of the amount of
         such  Alternate  Currency due under this  Agreement  or the  applicable
         Alternate  Currency  Addendum,  such Lender shall refund such excess to
         the applicable Borrower.

         2.22 Judgment  Currency.  If, for the purposes of obtaining judgment in
any court,  it is necessary to convert a sum due from any Borrower  hereunder in
the currency  expressed to be payable  herein (the  "specified  currency")  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  Administrative  Agent  could
purchase the specified  currency with such other currency at the  Administrative
Agent's office in New York, New York on the Business Day preceding that on which
the final, non-appealable judgment is given. The obligations of each Borrower in
respect  of any sum due to any  Lender  or the  Administrative  Agent  hereunder
shall,  notwithstanding  any  judgment  in a currency  other than the  specified
currency,  be  discharged  only to the extent that on the Business Day following
receipt by such Lender or the  Administrative  Agent (as the case may be) of any
sum  adjudged  to  be  so  due  in  such  other  currency  such  Lender  or  the
Administrative  Agent  (as  the  case  may be) may in  accordance  with  normal,
reasonable  banking  procedures  purchase the specified currency with such other
currency.  If the amount of the specified currency so purchased is less than the
sum originally due to such Lender or the  Administrative  Agent, as the case may
be, in the specified currency,  each Borrower agrees, to the fullest extent that
it may effectively do so, as a separate  obligation and notwithstanding any such
judgment,  to indemnify such Lender or the Administrative Agent, as the case may
be, against such loss, and if the amount of the specified  currency so purchased
exceeds (a) the sum originally due to any Lender or the Administrative Agent, as
the case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate  payment
to such Lender under Section 13.2, such Lender or the  Administrative  Agent, as
the case may be, agrees to remit such excess to such Borrower.

         2.23  Market  Disruption;   Denomination  of  Amounts  in  Dollars;  
Dollar Equivalent of Reimbursement Obligations.

         (a)  Notwithstanding  the satisfaction of all conditions referred to in
         this  Article  II with  respect to any  Advance in any Agreed  Currency
         other than Dollars or an Alternate  Currency,  as applicable,  if there
         shall  occur  on or prior to the date of such  Advance  any  change  in
         national or international  financial,  political or economic conditions
         or  currency  exchange  rates or exchange  controls  which would in the
         reasonable  opinion  of  the  Company,  any  Subsidiary  Borrower,  any
         Alternate  Currency  Bank,  the  Administrative  Agent or the  Required
         Lenders  make it  impracticable  for the  Eurocurrency  Rate  Loans  or
         Alternate  Currency Loans  comprising such Advance to be denominated in
         the Agreed Currency or Alternate Currency, as applicable,  specified by
         the applicable Borrower,  then the Administrative Agent shall forthwith
         give notice  thereof to the Company or such  Borrower,  the  applicable
         Alternate  Currency Bank and the Lenders,  or the  applicable  Borrower
         shall give notice to the Administrative Agent, the applicable Alternate
         Currency  Bank  and  the  Lenders,   as  the  case  may  be,  and  such
         Eurocurrency  Rate  Loans or  Alternate  Currency  Loans  shall  not be
         denominated  in such currency but shall be made on such  Borrowing Date
         in Dollars, in an aggregate principal amount equal to the Dollar Amount
         of the aggregate  principal amount  specified in the related  Borrowing
         Notice, as Floating Rate Loans, unless the applicable Borrower notifies
         the Administrative Agent at least one (1) Business Day before such date
         that (i) it  elects  not to  borrow  on such  date or (ii) it elects to
         borrow  on a date at least  three (3)  Business  Days  thereafter  in a
         different Agreed Currency or Alternate Currency, as the case may be, in
         which  the  denomination  of such  Loans  would in the  opinion  of the
         Administrative  Agent, any Alternate Currency Bank, if applicable,  and
         the  Required  Lenders be  practicable  and in an  aggregate  principal
         amount equal to the Dollar  Amount of the  aggregate  principal  amount
         specified in the related Borrowing Notice.

         (b) Except as set forth in  Sections  2.1,  2.5 and 2.21,  all  amounts
         referenced  in this  Article  II shall be  calculated  using the Dollar
         Amount  determined based upon the Equivalent Amount in effect as of the
         date of any  determination  thereof;  provided  to the extent  that any
         Borrower  shall be  obligated  hereunder  to pay in Dollars any Advance
         denominated in a currency other than Dollars, such amount shall be paid
         in Dollars  using the Dollar  Amount of the Advance  (calculated  based
         upon the  Equivalent  Amount in effect on the date of payment  thereof)
         and in the event that the  applicable  Borrower  does not reimburse the
         Administrative Agent and the Lenders are required to fund a purchase of
         a participation in such Advance, such purchase shall be made in Dollars
         in an amount  equal to the Dollar  Amount of such  Advance  (calculated
         based  upon the  Equivalent  Amount in  effect  on the date of  payment
         thereof).  Notwithstanding  anything  herein to the contrary,  the full
         risk of currency  fluctuations  shall be borne by the Borrowers and the
         Borrowers  agree to indemnify and hold harmless each Issuing Bank,  the
         Alternate Currency Banks, the Administrative Agent and the Lenders from
         and against any loss  resulting  from any  borrowing  denominated  in a
         currency  other  than in  Dollars  and for  which the  Lenders  are not
         reimbursed on the day of such borrowing.

         2.24 Subsidiary Borrowers.  The Company may at any time or from time to
time,  with the  consent  of the  Administrative  Agent,  add as a party to this
Agreement any Wholly-Owned Subsidiary to be a "Subsidiary Borrower" hereunder by
the execution and delivery to the Administrative  Agent and the Lenders of (a) a
duly completed Assumption Letter by such Subsidiary, with the written consent of
the  Company at the foot  thereof  and (b) such  other  guaranty,  security  and
subordinated   intercompany   indebtedness   documents   (and  related   closing
documentation) as may be reasonably  required by the Administrative  Agent, such
documents  with  respect  to any  additional  Subsidiaries  to be  substantially
similar in form and  substance  to the Loan  Documents  executed on or about the
Closing  Date by or in  respect  of the  Subsidiaries  parties  hereto as of the
Closing Date.  Upon such execution,  delivery and consent such Subsidiary  shall
for all purposes be a party  hereto as a  Subsidiary  Borrower as fully as if it
had executed  and  delivered  this  Agreement.  So long as the  principal of and
interest on any Advances made to any  Subsidiary  Borrower  under this Agreement
shall have been paid in full,  all  Letters of Credit  issued for the account of
such  Subsidiary  Borrower have expired or been returned and  terminated and all
other  obligations of such  Subsidiary  Borrower under this Agreement shall have
been fully performed,  the Company may, by not less than five (5) Business Days'
prior  notice to the  Administrative  Agent  (which  shall  promptly  notify the
Lenders thereof),  terminate such Subsidiary  Borrower's status as a "Subsidiary
Borrower".

         2.25 Security.  All  Obligations of the Borrowers  under this Agreement
and all other Loan Documents  shall be secured in accordance with the Collateral
Documents.

         2.26 Assignment and  Reallocation of Existing  Commitments and Existing
Loans.  Each of the parties  hereto  severally and for itself agrees that on the
Amendment  Effective  Date,  each  Existing  Lender  hereby  irrevocably  sells,
transfers,  conveys and assigns,  without  recourse,  representation or warranty
(except as expressly set forth  herein),  to each Lender that is not an Existing
Lender,  and each such Lender hereby  irrevocably  purchases  from such Existing
Lender,  a portion of the rights and  obligations of such Existing  Lender under
the Existing  Credit  Agreement  and each other Loan  Document in respect of its
Existing  Loans and  Commitments  under (and as defined in) the Existing  Credit
Agreement  such  that,  after  giving  effect to the  foregoing  assignment  and
delegation, each Lender's Revolving Loan Commitments and portion of the Existing
Loans for the purposes of this Agreement and each other Loan Document will be as
set forth opposite such Person's name on Exhibit A to this Agreement.

         (a) Each Existing Lender hereby represents and warrants to each Lender,
         that  immediately  before  giving  effect  to the  provisions  of  this
         Section,  (i) such Existing Lender is the legal and beneficial owner of
         the portion of its rights and  obligations  in respect of its  Existing
         Loans being  assigned to each Lender as set forth above;  and (ii) such
         rights and obligations  being assigned and sold by such Existing Lender
         are free and clear of any adverse claim or encumbrance  created by such
         Existing Lender.

         (b) Each of the Lenders hereby  acknowledges  and agrees that (i) other
         than the representations and warranties  contained above, no Lender nor
         the Administrative  Agent has made any representations or warranties or
         assumed  any  responsibility   with  respect  to  (A)  any  statements,
         warranties  or  representations  made  in or in  connection  with  this
         Agreement  or  the  execution,   legality,  validity,   enforceability,
         genuineness  or  sufficiency  of this  Agreement,  the Existing  Credit
         Agreement or any other Loan Document or (B) the financial  condition of
         any Borrower or the  performance  by any  Borrower of the  Obligations;
         (ii) it has received such  information as it has deemed  appropriate to
         make its own credit analysis and decision to enter into this Agreement;
         and (iii) it has made and continues to make its own credit decisions in
         taking or not taking  action under this  Agreement,  independently  and
         without reliance upon the Administrative Agent or any other Lender.

         (c) The  Borrowers,  each of the Lenders and the  Administrative  Agent
         also  agree  that  each  of the  Lenders  shall,  as of  the  Amendment
         Effective  Date,  have all of the rights and  interests  as a Lender in
         respect of the Loans  purchased and assumed by it, to the extent of the
         rights and obligations so purchased and assumed by it.

         (d) Each Lender which is purchasing  any portion of the Existing  Loans
         shall deliver to the Administrative  Agent immediately  available funds
         in the full amount of the  purchase  made by it and the  Administrative
         Agent  shall,  to the extent of the funds so  received,  disburse  such
         funds to the Existing  Lenders that are making sales and assignments in
         the amount of the portions so sold and assigned.

ARTICLE III:  THE LETTER OF CREDIT FACILITY

         3.1  Obligation  to Issue  Letters of Credit.  Subject to the terms and
conditions  of  this  Agreement  and  in  reliance  upon  the   representations,
warranties  and  covenants  of the Company  herein set forth,  each Issuing Bank
hereby agrees to issue for the account of the Company or any Subsidiary Borrower
through such Issuing  Bank's  branches as it and the Company may jointly  agree,
one or more Letters of Credit  denominated  in Dollars in  accordance  with this
Article III,  from time to time during the period,  commencing  on the Amendment
Effective  Date and ending on the Business Day prior to the  termination  of the
Aggregate Tranche C Revolving Loan Commitment.

         3.2 Transitional Provision. Schedule 3.2 contains a schedule of certain
letters of credit  issued for the account of the  Company  and its  Subsidiaries
prior to the Amendment  Effective Date.  From and after the Amendment  Effective
Date,  such  letters of credit  shall be deemed to be  Letters of Credit  issued
pursuant to this Article III.

          3.3 Types and Amounts. No Issuing Bank shall have any obligation to
and no Issuing Bank shall:
       
          (a) issue (or amend)  any Letter of Credit if on the date of  issuance
          (or amendment),  before or after giving effect to the Letter of Credit
          requested hereunder,  (i) the amount of the Tranche C Revolving Credit
          Obligations  at  such  time  would  exceed  the  Aggregate  Tranche  C
          Revolving  Loan  Commitment  at  such  time,  or  (ii)  the  aggregate
          outstanding amount of the L/C Obligations would exceed $25,000,000; or

          (b) issue (or amend) any Letter of Credit which has an expiration date
          later  than the date  which is the  earlier  of one (1) year after the
          date of issuance  thereof or the Tranche C Revolving Loan  Termination
          Date;  provided  that any Letter of Credit  with a one-year  tenor may
          provide for the renewal thereof for additional  one-year  periods (not
          to extend beyond the Tranche C Revolving Loan  Termination  Date) with
          the consent of the applicable Issuing Bank.

          3.4 Conditions. In addition to being subject to the satisfaction of 
the conditions contained in Sections 5.1, 5.2 and 5.3, the obligation of an 
Issuing Bank to issue any Letter of Credit is subject to the satisfaction in 
full of the following conditions:

          (a) the Company shall have  delivered to the  applicable  Issuing Bank
          (at such times and in such manner as such Issuing Bank may  reasonably
          prescribe)  and the  Administrative  Agent,  a request for issuance of
          such  Letter of Credit in  substantially  the form of Exhibit C hereto
          (each such request a "Request For Letter of  Credit"),  duly  executed
          application  for such  Letter of  Credit,  and such  other  documents,
          instructions  and agreements as may be required  pursuant to the terms
          thereof  (all  such   applications,   documents,   instructions,   and
          agreements being referred to herein as the "L/C  Documents"),  and the
          proposed  Letter of Credit shall be  reasonably  satisfactory  to such
          Issuing Bank as to form and content; and

          (b) as of the date of  issuance  no order,  judgment  or decree of any
          court, arbitrator or Governmental Authority shall purport by its terms
          to enjoin or restrain  the  applicable  Issuing Bank from issuing such
          Letter of Credit and no law,  rule or  regulation  applicable  to such
          Issuing  Bank and no request or  directive  (whether or not having the
          force of law) from a  Governmental  Authority with  jurisdiction  over
          such  Issuing  Bank shall  prohibit or request  that such Issuing Bank
          refrain  from the  issuance  of  Letters  of Credit  generally  or the
          issuance of that Letter of Credit.

          3.5  Procedure  for  Issuance of Letters of Credit.  

          (a)  Subject  to the  terms and  conditions  of this  Article  III and
          provided that the applicable conditions set forth in Sections 5.1, 5.2
          and 5.3 hereof have been satisfied, the applicable Issuing Bank shall,
          on the  requested  date,  issue a Letter  of  Credit  on behalf of the
          Company or a Subsidiary  Borrower,  as applicable  in accordance  with
          such Issuing  Bank's usual and customary  business  practices  and, in
          this  connection,  such  Issuing  Bank may assume that the  applicable
          conditions  set forth in Sections  3.3(b),  3.4(b) and 5.3 hereof have
          been  satisfied  unless it shall have received  notice to the contrary
          from the  Administrative  Agent or a Lender or has knowledge  that the
          applicable conditions have not been met.

          (b)  Promptly,  and in any event not more  than one (1)  Business  Day
          following the date of issuance of any Letter of Credit, the applicable
          Issuing  Bank shall  give the  Administrative  Agent  written or telex
          notice, or telephonic notice confirmed promptly thereafter in writing,
          of the  issuance of a Letter of Credit  (provided  that the failure to
          provide such notice  shall not result in any  liability on the part of
          such Issuing Bank), and the  Administrative  Agent shall promptly give
          notice to the Lenders of each such issuance.

          (c) No Issuing Bank shall extend or amend any Letter of Credit  unless
          the requirements of this Section 3.5 are met as though a new Letter of
          Credit was being requested and issued.

          3.6 Letter of Credit  Participation.  On the Amendment Effective Date,
with  respect  to  the  Letters  of  Credit  identified  on  Schedule  3.2,  and
immediately  upon the issuance of each Letter of Credit  hereunder,  each Lender
shall be deemed to have automatically, irrevocably and unconditionally purchased
and  received  from  the  applicable  Issuing  Bank an  undivided  interest  and
participation in and to such Letter of Credit, the obligations of the Company in
respect   thereof,   and  the   liability  of  such   Issuing  Bank   thereunder
(collectively, an "L/C Interest") in the amount available for drawing under such
Letter of Credit multiplied by such Lender's Pro Rata Tranche C Revolving Share.


          3.7 Reimbursement  Obligation. 

          (a) The Company agrees unconditionally,  irrevocably and absolutely to
          pay immediately to the  Administrative  Agent,  for the account of the
          Lenders with Tranche C Revolving Loan Commitments,  the amount of each
          advance  drawn under or pursuant to a Letter of Credit or an L/C Draft
          related  thereto  (such  obligation  of the Company to  reimburse  the
          Administrative  Agent for an advance  made under a Letter of Credit or
          L/C  Draft  being   hereinafter   referred  to  as  a   "Reimbursement
          Obligation" with respect to such Letter of Credit or L/C Draft),  each
          such  reimbursement  to be made  by the  Company  no  later  than  the
          Business Day on which the  applicable  Issuing  Bank makes  payment of
          each such L/C Draft or, if the Company shall have received notice of a
          Reimbursement Obligation later than 12:00 noon (New York time), on any
          Business  Day or on a day which is not a Business  Day,  no later than
          12:00 noon (New York time), on the immediately  following Business Day
          or, in the case of any  other  draw on a Letter  of  Credit,  the date
          specified  in the demand of such Issuing  Bank.  If the Company at any
          time  fails  to  repay a  Reimbursement  Obligation  pursuant  to this
          Section 3.7, the Issuing Bank shall promptly notify the Administrative
          Agent and the  Administrative  Agent shall promptly notify each Lender
          and the Company shall be deemed to have  requested to borrow Tranche C
          Revolving  Loans  from the  Lenders  with  Tranche  C  Revolving  Loan
          Commitments,  as of  the  date  of  the  advance  giving  rise  to the
          Reimbursement   Obligation,   equal  to  the   amount  of  the  unpaid
          Reimbursement Obligation. Such Tranche C Revolving Loans shall be made
          as of the  date of the  payment  giving  rise  to  such  Reimbursement
          Obligation,  automatically, without notice and without any requirement
          to satisfy the conditions precedent otherwise applicable to an Advance
          of Tranche C Revolving Loans.

          (b) Each Lender with a Tranche C Revolving Loan Commitment  shall upon
          any  notice   pursuant  to  Section   3.7(a)  make  available  to  the
          Administrative  Agent for the account of the relevant  Issuing Bank an
          amount in Dollars and in immediately  available funds equal to its Pro
          Rata Tranche C Revolving Share of the amount of the drawing, whereupon
          such Lenders shall (subject to Section  3.7(d)) each be deemed to have
          made a  Revolving  Loan  constituting  a Floating  Rate  Advance,  the
          proceeds of which  Advance  shall be used to repay such  Reimbursement
          Obligation.  If any Lender so notified  fails to make available to the
          Administrative Agent for the account of the Issuing Bank the amount of
          such Lender's Pro Rata Tranche C Revolving  Share of the amount of the
          drawing by no later than 2:00 p.m.  (New York time) on the date of the
          advance  giving rise to the  Reimbursement  Obligation,  then interest
          shall accrue on such Lender's  obligation  to make such payment,  from
          such date to the date such Lender  makes such  payment,  at a rate per
          annum equal to the Federal Funds Effective Rate in effect from time to
          time during such period. The  Administrative  Agent will promptly give
          notice  of  the   occurrence   of  the  draw,   but   failure  of  the
          Administrative  Agent to give any such  notice in  sufficient  time to
          enable  any  Lender  to effect  such  payment  on such date  shall not
          relieve such Lender from its obligations under this Section 3.7.

          (c) Each Lender's obligation in accordance with this Agreement to make
          the Tranche C Revolving Loans, as contemplated by this Section 3.7, as
          a result of a drawing under a Letter of Credit,  shall be absolute and
          unconditional  and without recourse to the Issuing Banks and shall not
          be  affected  by  any   circumstance,   including   (i)  any  set-off,
          counterclaim,  recoupment, defense or other right which such Revolving
          Lender  may have  against an Issuing  Bank,  the  Company or any other
          Person for any reason  whatsoever;  (ii) the occurrence or continuance
          of a Default,  an Unmatured  Default or a Material Adverse Effect;  or
          (iii) any other circumstance,  happening or event whatsoever,  whether
          or not similar to any of the foregoing.

          (d) If, for any  reason,  the Company  fails to repay a  Reimbursement
          Obligation on the day such  Reimbursement  Obligation  arises and, for
          any reason,  the Lenders are unable to make or have no  obligation  to
          make Revolving Loans,  then such  Reimbursement  Obligation shall bear
          interest from and after such day,  until paid in full, at the interest
          rate applicable to a Floating Rate Advance.

          3.8      Letter of Credit Fees.  The Company agrees to pay:

          (a) quarterly, in arrears, to the Administrative Agent for the ratable
          benefit of the Lenders  with a Tranche C Revolving  Loan  Commitment a
          letter of credit fee at a rate per annum equal to the  Applicable  L/C
          Fee Percentage on the average daily  outstanding  amount available for
          drawing under all Letters of Credit;

          (b) quarterly, in arrears, to the applicable Issuing Bank, a letter of
          credit fronting fee in an amount agreed to between the Company and the
          applicable  Issuing Bank on the average daily  outstanding face amount
          available  for  drawing  under all  Letters  of Credit  issued by such
          Issuing Bank; and

          (c) to the applicable  Issuing Bank, all reasonable and customary fees
          and other issuance, amendment,  document examination,  negotiation and
          presentment  expenses  and  related  charges  in  connection  with the
          issuance,  amendment,   presentation  of  L/C  Drafts,  and  the  like
          customarily  charged by such  Issuing  Banks  with  respect to standby
          letters of credit.

          3.9 Issuing  Bank Reporting  Requirements.  In addition to the notices
required by Section  3.5(b),  each Issuing  Bank shall,  no later than the tenth
(10th)  Business  Day  following  the last  day of each  month,  provide  to the
Administrative  Agent, upon the Administrative  Agent's request,  schedules,  in
form and substance reasonably  satisfactory to the Administrative Agent, showing
the date of issue,  account  party,  amount,  expiration  date and the reference
number of each Letter of Credit issued by it outstanding at any time during such
month and the  aggregate  amount  paid by the  Company  during  such  month.  In
addition,  upon the request of the Administrative Agent, each Issuing Bank shall
furnish  to the  Administrative  Agent  copies of any  Letter of Credit  and any
application for or reimbursement agreement with respect to a Letter of Credit to
which the Issuing Bank is party and such other  documentation  as may reasonably
be requested by the  Administrative  Agent. Upon the request of any Lender,  the
Administrative  Agent will provide to such Lender  information  concerning  such
Letters of Credit.

          3.10 Indemnification; Exoneration.  

          (a) In  addition  to amounts  payable as  elsewhere  provided  in this
          Article III, the Company hereby agrees to protect,  indemnify, pay and
          save  harmless the  Administrative  Agent,  each Issuing Bank and each
          Lender from and against  any and all  liabilities  and costs which the
          Administrative Agent, such Issuing Bank or such Lender may incur or be
          subject to as a consequence,  direct or indirect,  of (i) the issuance
          of any  Letter of Credit  other  than,  in the case of the  applicable
          Issuing  Bank,  as  a  result  of  its  gross  negligence  or  willful
          misconduct,  as  determined  by  the  final  judgment  of a  court  of
          competent jurisdiction,  or (ii) the failure of the applicable Issuing
          Bank to honor a  drawing  under a Letter  of Credit as a result of any
          act or  omission,  whether  rightful  or  wrongful,  of any present or
          future de jure or de facto  Governmental  Authority  (all such acts or
          omissions herein called "Governmental Acts").

          (b) As among the Company,  the Lenders,  the Administrative  Agent and
          the  Issuing  Banks,  the  Company  assumes  all risks of the acts and
          omissions  of, or misuse of such Letter of Credit by, the  beneficiary
          of any Letters of Credit.  In furtherance and not in limitation of the
          foregoing,   subject  to  the  provisions  of  the  Letter  of  Credit
          applications and Letter of Credit reimbursement agreements executed by
          the Company at the time of request  for any Letter of Credit,  neither
          the  Administrative  Agent,  any Issuing  Bank nor any Lender shall be
          responsible (in the absence of gross negligence or willful  misconduct
          of such party in  connection  therewith,  as  determined  by the final
          judgment  of a court of  competent  jurisdiction):  (i) for the  form,
          validity,  sufficiency,  accuracy,  genuineness or legal effect of any
          document submitted by any party in connection with the application for
          and issuance of the Letters of Credit, even if it should in fact prove
          to be in  any  or  all  respects  invalid,  insufficient,  inaccurate,
          fraudulent  or forged;  (ii) for the  validity or  sufficiency  of any
          instrument  transferring  or  assigning or  purporting  to transfer or
          assign a Letter of Credit or the  rights  or  benefits  thereunder  or
          proceeds  thereof,  in whole or in part, which may prove to be invalid
          or ineffective for any reason; (iii) for failure of the beneficiary of
          a Letter  of  Credit to comply  duly  with  conditions  not  expressly
          provided on the face of such Letter of Credit and required in order to
          draw  upon  such  Letter  of  Credit;  (iv)  for  errors,   omissions,
          interruptions  or delays in  transmission or delivery of any messages,
          by  mail,   cable,   telegraph,   telex,  or  other  similar  form  of
          teletransmission  or otherwise;  (v) for errors in  interpretation  of
          technical trade terms;  (vi) for any loss or delay in the transmission
          or otherwise of any document required in order to make a drawing under
          any  Letter  of  Credit  or of the  proceeds  thereof;  (vii)  for the
          misapplication  by  the  beneficiary  of a  Letter  of  Credit  of the
          proceeds  of any drawing  under such Letter of Credit;  and (viii) for
          any  consequences  arising  from  causes  beyond  the  control  of the
          Administrative  Agent,  the Issuing Banks and the Lenders,  including,
          without  limitation,  any  Governmental  Acts. None of the above shall
          affect, impair, or prevent the vesting of any Issuing Bank's rights or
          powers under this Section 3.10.

          (c) In furtherance and extension and not in limitation of the specific
          provisions  hereinabove set forth,  any action taken or omitted by any
          Issuing Bank under or in connection  with the Letters of Credit or any
          related  certificates shall not, in the absence of gross negligence or
          willful misconduct,  as determined by the final judgment of a court of
          competent   jurisdiction,   put  the  applicable   Issuing  Bank,  the
          Administrative  Agent or any Lender under any  resulting  liability to
          the Company or relieve the Company of any of its obligations hereunder
          to any such Person.

          (d) Without  prejudice to the  survival of any other  agreement of the
          Company  hereunder,  the  agreements  and  obligations  of the Company
          contained in this  Section  3.10 shall  survive the payment in full of
          principal and interest  hereunder,  the  termination of the Letters of
          Credit and the termination of this Agreement.

         3.11 Cash Collateral.  Notwithstanding  anything to the contrary herein
or in any  application  for a Letter of Credit,  after the occurrence and during
the  continuance of a Default,  the Company  shall,  on the Business Day that it
receives the Administrative  Agent's demand, deliver to the Administrative Agent
for the benefit of the Lenders and the Issuing Banks,  cash, or other collateral
of a type satisfactory to the Required Lenders, having a value, as determined by
such Lenders, equal to one hundred percent (100%) of the aggregate Dollar Amount
of the  outstanding  L/C  Obligations.  In addition,  if the Tranche C Revolving
Credit Availability is at any time less than the Dollar Amount of all contingent
L/C  Obligations  outstanding  at any  time,  the  Company  shall  deposit  cash
collateral  with the  Administrative  Agent in  Dollars  in an  amount  equal to
one-hundred  five  percent  (105%)  of the  Dollar  Amount  by  which  such  L/C
Obligations  exceed  such  Tranche C  Revolving  Credit  Availability.  Any such
collateral  shall  be held by the  Administrative  Agent in a  separate  account
appropriately  designated  as a cash  collateral  account  in  relation  to this
Agreement and the Letters of Credit and retained by the Administrative Agent for
the benefit of the Lenders and the Issuing Banks as collateral  security for the
Company's  obligations  in respect of this  Agreement and each of the Letters of
Credit and L/C Drafts.  Such amounts  shall be applied to reimburse  the Issuing
Banks for  drawings  or  payments  under or pursuant to Letters of Credit or L/C
Drafts, or if no such reimbursement is required, to payment of such of the other
Obligations as the Administrative Agent shall determine.  If no Default shall be
continuing,  amounts  remaining  in  any  cash  collateral  account  established
pursuant  to this  Section  3.11  which are not to be applied  to  reimburse  an
Issuing  Bank for amounts  actually  paid or to be paid by such  Issuing Bank in
respect of a Letter of Credit or L/C Draft,  shall be  returned  to the  Company
within one (1)  Business  Day (after  deduction  of the  Administrative  Agent's
expenses incurred in connection with such cash collateral account).


ARTICLE IV:  CHANGE IN CIRCUMSTANCES

     4.1 Yield Protection.  If any law or any governmental or quasi-governmental
rule,  regulation,  policy,  guideline or  directive  (whether or not having the
force of law) adopted after the date of this Agreement or any  interpretation or
application   thereof   by  any   Governmental   Authority   charged   with  the
interpretation  or  application   thereof,  or  the  compliance  of  any  Lender
therewith,  subjects any Lender or any applicable  Lending  Installation  to any
tax,  duty,  charge or  withholding  on or from  payments  due from any Borrower
(excluding  taxation  of the  overall  net income of any Lender or taxation of a
similar basis,  which are governed by Section 2.14(e)),  or changes the basis of
taxation of payments to any Lender in respect of its Revolving Loan  Commitment,
Loans,  its L/C  Interests,  the  Letters  of  Credit  or other  amounts  due it
hereunder, or imposes or increases or deems applicable any reserve,  assessment,
insurance  charge,  special  deposit or similar  requirement  against assets of,
deposits  with or for the account of, or credit  extended  by, any Lender or any
applicable Lending  Installation (other than reserves and assessments taken into
account in determining the interest rate applicable to Eurocurrency  Rate Loans)
with respect to its  Revolving  Loan  Commitment,  Loans,  L/C  Interests or the
Letters of  Credit,  or imposes  any other  condition  the result of which is to
increase  the cost to any  Lender  or any  applicable  Lending  Installation  of
making,  funding or maintaining its Revolving Loan  Commitment,  Loans,  the L/C
Interests or the Letters of Credit or reduces any amount  received by any Lender
or any applicable  Lending  Installation  in connection  with its Revolving Loan
Commitment, Loans or Letters of Credit, or requires any Lender or any applicable
Lending  Installation to make any payment  calculated by reference to the amount
of Revolving Loan Commitment,  Loans or L/C Interests held or interest  received
by it or by reference to the Letters of Credit,  by an amount deemed material by
such Lender;  and the result of any of the  foregoing is to increase the cost to
that Lender of making,  renewing or maintaining  its Revolving Loan  Commitment,
Loans,  L/C  Interests,  or Letters  of Credit or to reduce any amount  received
under this  Agreement,  then,  within  fifteen  (15) days  after  receipt by the
Company or any other  Borrower  of written  demand by such  Lender  pursuant  to
Section 4.5, the applicable Borrowers shall pay such Lender that portion of such
increased  expense incurred or reduction in an amount received which such Lender
reasonably  determines is  attributable  to making,  funding and maintaining its
Loans, L/C Interests, Letters of Credit and its Revolving Loan Commitment.

         4.2 Changes in Capital Adequacy Regulations. If a Lender determines (a)
the amount of capital required or expected to be maintained by such Lender,  any
Lending  Installation of such Lender or any corporation  controlling such Lender
is increased as a result of a "Change" (as defined below), and (b) such increase
in capital will result in an increase in the cost to such Lender of  maintaining
its Revolving Loan Commitment,  Loans,  L/C Interests,  the Letters of Credit or
its  obligation to make Loans  hereunder,  then,  within fifteen (15) days after
receipt by the Company or any other  Borrower  of written  demand by such Lender
pursuant to Section  4.5,  the  applicable  Borrowers  shall pay such Lender the
amount  necessary to  compensate  for any shortfall in the rate of return on the
portion of such  increased  capital which such Lender  reasonably  determines is
attributable to this Agreement,  its Revolving Loan  Commitment,  its Loans, its
L/C Interests,  the Letters of Credit or its obligation to make Loans  hereunder
(after  taking into  account  such  Lender's  policies as to capital  adequacy).
"Change"  means  (i)  any  change  after  the  date  of  this  Agreement  in the
"Risk-Based Capital Guidelines" (as defined below) excluding,  for the avoidance
of doubt, the effect of any phasing in of such Risk-Based  Capital Guidelines or
any other  capital  requirements  passed prior to the date  hereof,  or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation,  policy,  guideline,  interpretation,  or directive  (whether or not
having  the force of law) after the date of this  Agreement  which  affects  the
amount of capital  required or expected  to be  maintained  by any Lender or any
Lending  Installation  or any corporation  controlling  any Lender.  "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement,  including  transition  rules,  and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside  the  United  States  implementing  the July  1988  report  of the Basle
Committee   on   Banking   Regulation   and   Supervisory   Practices   Entitled
"International  Convergence  of Capital  Measurements  and  Capital  Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.

         4.3  Availability  of Types of Advances.  If (a) any Lender  determines
that  maintenance  of  its  Eurocurrency   Rate  Loans  at  a  suitable  Lending
Installation  would violate any applicable  law, rule,  regulation or directive,
whether or not having the force of law, or (b) the  Required  Lenders  determine
that (i)  deposits of a type,  currency or  maturity  appropriate  to match fund
Fixed-Rate  Advances are not available or (ii) the interest rate applicable to a
Fixed-Rate Advance does not accurately reflect the cost of making or maintaining
such an Advance, then the Administrative Agent shall suspend the availability of
the  affected  Type of Advance and, in the case of any  occurrence  set forth in
clause (a),  require any Advances of the affected Type to be repaid or converted
into another Type.

         4.4 Funding  Indemnification.  If any payment of a  Fixed-Rate  Advance
occurs on a date which is not the last day of the  applicable  Interest  Period,
whether  because of  acceleration,  prepayment,  or  otherwise,  or a Fixed-Rate
Advance is not made on the date  specified  by the  applicable  Borrower for any
reason other than default by the Lenders,  the Borrowers  shall  indemnify  each
Lender  for any loss or cost  incurred  by it  resulting  therefrom,  including,
without  limitation,  any  loss or cost in  liquidating  or  employing  deposits
acquired  to fund or  maintain  the  Fixed-Rate  Advance or Swing Line Loan,  as
applicable.

         4.5 Lender Statements;  Survival of Indemnity.  If reasonably possible,
each Lender shall designate an alternate  Lending  Installation  with respect to
its  Fixed-Rate  Loans to reduce any  liability  of any  Borrower to such Lender
under Sections 4.1 and 4.2 or to avoid the  unavailability  of a Type of Advance
under  Section  4.3,  so long  as such  designation  is  not,  in such  Lender's
judgment,  disadvantageous to such Lender. Any demand for compensation  pursuant
to this  Article IV shall be in writing  and shall state the amount due, if any,
under  Section  4.1,  4.2 or 4.4 and shall set forth in  reasonable  detail  the
calculations upon which such Lender determined such amount.  Such written demand
shall be rebuttably presumed correct for all purposes.  Determination of amounts
payable  under such  Sections  in  connection  with a  Fixed-Rate  Loan shall be
calculated as though each Lender funded its Fixed-Rate Loan through the purchase
of a deposit of the type,  currency  and maturity  corresponding  to the deposit
used as a reference  in  determining  the  Fixed-Rate  applicable  to such Loan,
whether in fact that is the case or not. The  obligations of the Company and the
other  Borrowers  under  Sections 4.1, 4.2 and 4.4 shall survive  payment of the
Obligations and termination of this Agreement.

ARTICLE V:  CONDITIONS PRECEDENT

         5.1 Effectiveness. The amendment and restatement of the Existing Credit
Agreement (and the  obligations of the Lenders to continue the Existing Loans as
Loans  under  this  Agreement)  shall  become  effective  when the  Company  has
furnished to the  Administrative  Agent each of the following,  with  sufficient
copies  for the  Lenders,  and the other  conditions  set forth  below have been
satisfied:

          (a) Copies of the Certificate of Incorporation or equivalent  document
          of each of the Loan  Parties,  together with all  amendments  thereto,
          and, to the extent applicable, a certificate of good standing, in each
          case  certified  by  the  appropriate   governmental  officer  in  its
          jurisdiction of incorporation.

          (b) Copies,  certified by the Secretary or Assistant Secretary of each
          of  the  Loan  Parties  of  their   respective   Board  of  Directors'
          resolutions authorizing the execution of the Loan Documents.

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

          (d)  A  certificate,   in  form  and  substance  satisfactory  to  the
          Administrative  Agent,  executed by the chief financial officer of the
          Company,  stating  that  on the  Amendment  Effective  Date,  all  the
          representations  and  warranties  of the  Loan  Parties  in  the  Loan
          Documents  are  true  and  correct  (unless  such  representation  and
          warranty  is  made  as  of  a  specific  date,  in  which  case,  such
          representation  and  warranty  shall be true as of such  date)  and no
          Default or Unmatured Default has occurred and is continuing.

          (e)  A   reaffirmation   of  the  Guaranty,   in  form  and  substance
          satisfactory to the  Administrative  Agent,  dated as of the Amendment
          Effective  Date,  executed by the Secretary or Assistant  Secretary of
          each Subsidiary  Borrower that is a Domestic Subsidiary and each other
          Domestic  Subsidiary  of the Company as  required  pursuant to Section
          7.2(k).

          (f) Written opinions of the Loan Parties' United States counsel,  and,
          if applicable,  foreign counsel, addressed to the Administrative Agent
          and  the  Lenders,   in  form  and  substance   satisfactory   to  the
          Administrative Agent.

          (g) Such other documents as the Administrative Agent or its counsel or
          the Required Lenders may have reasonably requested.

          (h) There  shall not have  occurred a material  adverse  change  since
          December  31, 2001 in the  business,  assets,  liabilities  (actual or
          contingent),   operations,   condition  (financial  or  otherwise)  or
          prospects of the Company and its Subsidiaries taken as a whole.

          (i) The  Administrative  Agent,  Lenders and/or their Affiliates shall
          have received all fees and expenses, including the reasonable fees and
          expenses of Mayer, Brown, Rowe & Maw, required to be paid on or before
          the Amendment Effective Date.

         5.2 Initial Advance to Each New Subsidiary Borrower. No Lender shall be
required to make an Advance  hereunder or purchase  participations in Letters of
Credit or  Alternate  Currency  Loans  hereunder,  no Swing  Line Bank  shall be
required to make any Swing Line Loans hereunder,  and no Alternate Currency Bank
shall be required to make any Alternate  Currency Loans, in each case, to or for
the account of a new  Subsidiary  Borrower  added after the Amendment  Effective
Date  unless  the  Company  has  furnished  or  caused  to be  furnished  to the
Administrative Agent with sufficient copies for the Lenders:


         (a) The  Assumption  Letter  executed and delivered by such  Subsidiary
         Borrower and containing the written consent of the Company thereon,  as
         contemplated by Section 2.24.

         (b) Copies, certified by the Secretary,  Assistant Secretary,  Director
         or  Officer  of the  Subsidiary  Borrower,  of its Board of  Directors'
         resolutions approving the Assumption Letter.

         (c) An incumbency  certificate,  executed by the  Secretary,  Assistant
         Secretary,  Director or Officer of the Subsidiary Borrower, which shall
         identify by name and title and bear the  signature  of the  officers of
         such Subsidiary  Borrower  authorized to sign the Assumption Letter and
         the other  documents  to be executed and  delivered by such  Subsidiary
         Borrower hereunder, upon which certificate the Administrative Agent and
         the Lenders  shall be entitled to rely until  informed of any change in
         writing by the Company.

         (d) An opinion of counsel  to such  Subsidiary  Borrower,  in form and
         substance satisfactory to the Administrative Agent.

         (e) Guaranty  documentation  and contribution  agreement  documentation
         from such Subsidiary Borrower in form and substance satisfactory to the
         Administrative Agent.

         (f) With respect to the initial Advance made to any Subsidiary Borrower
         organized under the laws of England and Wales, the Administrative Agent
         shall have received  originals  and/or copies,  as  applicable,  of all
         filings   required   to  be  made  and  such  other   evidence  as  the
         Administrative  Agent may require  establishing  to the  Administrative
         Agent's  satisfaction  that each Lender and Issuing Bank is entitled to
         receive  payments  under  the  Loan  Documents   without  deduction  or
         withholding   of  any  English  taxes  or  with  such   deductions  and
         withholding of English taxes as may be acceptable to the Administrative
         Agent.

         5.3 Each  Advance and Each Letter of Credit.  The Lenders  shall not be
required  to make any  Loan,  or issue  any  Letter  of  Credit,  unless  on the
applicable  Borrowing  Date,  or in the case of a Letter of Credit,  the date on
which the Letter of Credit is to be issued:

          (a) There  exists no Default or  Unmatured  Default  and no Default or
          Unmatured  Default  would result after giving  effect to the making of
          any Loan or issuance of any Letter of Credit;

          (b) All of the representations and warranties  contained in Article VI
          are  true  and  correct  as  of  such   Borrowing  Date  (unless  such
          representation  and warranty is made as of a specific  date,  in which
          case, such representation and warranty shall be true as of such date);

          (c) (i) The Tranche A Revolving  Credit  Obligations do not, and after
          making such proposed Advance would not, exceed the Aggregate Tranche A
          Revolving  Loan  Commitment,  (ii)  the  Tranche  B  Revolving  Credit
          Obligations do not, and after making such proposed  Advance would not,
          exceed the Aggregate  Tranche B Revolving  Loan  Commitment,  (ii) the
          Tranche C Revolving  Credit  Obligations do not, and after making such
          proposed  Advance or issuing such Letter of Credit  would not,  exceed
          the Aggregate Tranche C Revolving Loan Commitment and (iv) the Tranche
          D Revolving Credit  Obligations do not, and after making such proposed
          Advance  would not,  exceed the  Aggregate  Tranche D  Revolving  Loan
          Commitment;  and 

          (d) the  Administrative  Agent has received a timely  Borrowing Notice
          with respect to the applicable Loan.

         Each  Borrowing/Conversion/Continuation  Notice  with  respect to a new
Advance  and the letter of credit  application  with  respect to each  Letter of
Credit or Letter of Credit  amendment  shall  constitute  a  representation  and
warranty by the Company that the conditions  contained in Sections  5.3(a),  (b)
and (c) have been satisfied.

ARTICLE VI:  REPRESENTATIONS AND WARRANTIES

         In order to induce the  Administrative  Agent and the  Lenders to enter
into this  Agreement,  to continue the Existing Loans  hereunder and to make the
Loans and the other financial  accommodations  to the Borrowers and to issue the
Letters  of  Credit  described  herein,  each of the  Borrowers  represents  and
warrants as follows to each Lender and the  Administrative  Agent as of the date
of  this  Agreement,  giving  effect  to the  consummation  of the  transactions
contemplated by the Loan  Documents,  and thereafter on each date as required by
Sections 5.2 and 5.3:

         6.1  Organization;  Corporate  Powers.  Each  of the  Company  and  its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of its jurisdiction of formation and has all requisite authority to conduct
its business in each  jurisdiction  in which its business is  conducted,  except
where the failure to do so would not have a Material Adverse Effect.

         6.2  Authorization  and  Validity.  Each of the  Loan  Parties  has the
requisite  power and  authority  and legal right to execute and deliver the Loan
Documents to which it is a party and to perform its obligations thereunder.  The
execution  and  delivery by each of the Loan  Parties of the Loan  Documents  to
which it is a party and the performance of its obligations  thereunder have been
duly authorized by proper  proceedings,  and the Loan Documents to which it is a
party  constitute  legal,  valid  and  binding  obligations  of each of the Loan
Parties  enforceable  against each of the Loan Parties in accordance  with their
terms,  except as  enforceability  may be limited by  bankruptcy,  insolvency or
similar laws affecting the enforcement of creditors' rights generally.

         6.3 No Conflict; Government Consent. Neither the execution and delivery
by  the  Loan  Parties  of the  Loan  Documents,  nor  the  consummation  of the
transactions  contemplated  thereby,  nor compliance with the provisions thereof
will violate any law,  rule,  regulation,  order,  writ,  judgment,  injunction,
decree or award binding on the Company or any Subsidiary or the Company's or any
Subsidiary's   articles  of  incorporation  or  by-laws  or  other  constitutive
documents and agreements or the provisions of any material indenture, instrument
or agreement to which the Company or any Subsidiary is a party or is subject, or
by which it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of or on the
property of the Company or any of its Subsidiaries  pursuant to the terms of any
such indenture,  instrument or agreement. No order, consent, approval,  license,
authorization,  or validation of, or filing,  recording or registration with, or
exemption by, any  governmental or public body or authority,  or any subdivision
thereof,  is required to authorize any Loan Party, or is required to be obtained
by any Loan Party in connection with the execution, delivery and performance of,
or the legality,  validity, binding effect or enforceability of, any of the Loan
Documents.

         6.4 Financial Statements. Each of the consolidated financial statements
of the Company and its  Subsidiaries for the fiscal years ended January 2, 1998,
January 1, 1999 and December 31, 1999 were prepared in accordance with Agreement
Accounting  Principles and fairly present the consolidated  financial  condition
and  operations  of the  Company  and its  Subsidiaries  at such  dates  and the
consolidated results of their operations for the periods then ended.

         6.5  Material  Adverse  Change.  Since  December  31,  2001,  there has
occurred no change in the business,  assets, liabilities (actual or contingent),
operations,  condition (financial or otherwise) or prospects, of the Company, or
the Company and its Subsidiaries  taken as a whole, or any other event which has
had or could reasonably be expected to have a Material Adverse Effect.

         6.6  Taxes.  The  Company  and the  Subsidiaries  have filed all United
States federal tax returns and all other material tax returns which are required
to be filed and have paid all taxes due  pursuant to said returns or pursuant to
any assessment received by the Company or any Subsidiary,  except such taxes, if
any, as are being contested in good faith and as to which adequate reserves have
been  provided.  No tax liens have been  filed and no claims are being  asserted
with respect to any such taxes. The charges,  accruals and reserves on the books
of  the  Company  and  the  Subsidiaries  in  respect  of  any  taxes  or  other
governmental charges are adequate.

         6.7  Litigation  and  Contingent  Obligations.  There is no litigation,
arbitration,  governmental  investigation,  proceeding or inquiry pending or, to
the  knowledge of any of the  Borrowers,  threatened  against or  affecting  the
Company  or  any of its  Subsidiaries  (a)  challenging  the  Spectra  Precision
Acquisition or the validity or enforceability  of any material  provision of the
Loan  Documents  or (b) which  could  reasonably  be expected to have a Material
Adverse  Effect.  There is no material  loss  contingency  within the meaning of
Agreement Accounting Principles which has not been reflected in the consolidated
financial  statements  of the  Company or  prepared  and  delivered  pursuant to
Section 7.1(a) for the fiscal period during which such material loss contingency
was incurred.  Neither the Company nor any of its  Subsidiaries is subject to or
in default with respect to any final  judgment,  writ,  injunction,  restraining
order  or  order of any  nature,  decree,  rule or  regulation  of any  court or
Governmental  Authority  which could  reasonably  be expected to have a Material
Adverse Effect.

         6.8 Subsidiaries.  Schedule 6.8 hereto contains an accurate list of all
of the Subsidiaries of the Company in existence on the Amendment Effective Date,
setting forth their respective  jurisdictions of formation and the percentage of
their  respective  capital stock owned  directly or indirectly by the Company or
other  Subsidiaries.  All of the issued and  outstanding  Capital  Stock of such
Subsidiaries  have been  duly  authorized  and  issued  and are  fully  paid and
non-assessable.  Except as set forth on Schedule 6.8, no authorized but unissued
or treasury shares of capital stock of any Subsidiary are subject to any option,
warrant,  right to call or commitment  of any kind or  character.  Except as set
forth  on  Schedule  6.8,  neither  the  Company  nor  any  Subsidiary  has  any
outstanding stock or securities  convertible into or exchangeable for any shares
of its capital stock,  or any right issued to any Person  (either  preemptive or
other) to subscribe  for or to purchase,  or any options for the purchase of, or
any agreements  providing for the issuance  (contingent or otherwise) of, or any
calls,  commitments  or claims of any  character  relating to any of its capital
stock or any stock or securities convertible into or exchangeable for any of its
capital stock other than as expressly set forth in the  certificate  or articles
of incorporation of the Company or such Subsidiary.  Neither the Company nor any
Subsidiary is subject to any obligation  (contingent or otherwise) to repurchase
or  otherwise  acquire  or  retire  any  shares  of  its  capital  stock  or any
convertible securities, rights or options of the type described in the preceding
sentence  except as otherwise set forth on Schedule 6.8.  Except as set forth on
Schedule  6.8, as of the date hereof the Company does not own or hold,  directly
or  indirectly,  any  capital  stock or equity  security  of,  or any  equity or
partnership interest in any Person other than such Subsidiaries.

         6.9 ERISA.  As at December  31, 1999 the  Unfunded  Liabilities  of all
Single  Employer  Plans did not in the aggregate  exceed  $5,000,000.  Each Plan
complies and has been  maintained in all material  respects with all  applicable
requirements  of law and  regulations.  No  Reportable  Event has occurred  with
respect to any Single  Employer Plan having any Unfunded  Liability which has or
may  reasonably be expected to result in a liability to the Company in excess of
$10,000,000.  Neither the Company nor any other members of the Controlled  Group
has  terminated  any Single  Employer Plan without in each instance  funding all
vested benefit obligations  thereunder.  Each member of the Controlled Group has
fulfilled its minimum  funding  obligations  with respect to each  Multiemployer
Plan.  No  Termination  Event has occurred or is  reasonably  expected to occur.
There are no material  actions,  suits or claims (other than routine  claims for
benefits)  pending  or, to the  knowledge  of the  Company or its  Subsidiaries,
threatened with respect to any Plan or Multiemployer Plan.

         6.10 Accuracy of Information. None of the (a) information,  exhibits or
reports  furnished or to be furnished  by the Company or any  Subsidiary  to the
Administrative  Agent or to any Lender in connection with the negotiation of the
Loan  Documents,  or (b)  representations  or  warranties  of the Company or any
Subsidiary  contained in this  Agreement,  the other Loan Documents or any other
document, certificate or written statement furnished to the Administrative Agent
or the  Lenders  by or on behalf of the  Company  or any  Subsidiary  for use in
connection with the  transactions  contemplated  by this  Agreement,  contained,
contains or will  contain any untrue  statement  of a material  fact or omitted,
omits  or will  omit to state a  material  fact  necessary  in order to make the
statements   contained  herein  or  therein  not  misleading  in  light  of  the
circumstances  in which the same were made. The pro forma financial  information
contained in such materials is based upon good faith  estimates and  assumptions
believed  by the  Company to be  reasonable  at the time made.  There is no fact
known to the Company (other than matters of a general  economic nature) that has
had or could  reasonably be expected to have a Material  Adverse Effect and that
has not been  disclosed  herein or in such  other  documents,  certificates  and
statements  furnished to the Lenders for use in connection with the transactions
contemplated by this Agreement.  No information,  exhibit or report furnished by
the Company or any  Subsidiary to any  Administrative  Agent or to any Lender in
connection  with the  negotiation  of, or compliance  with, the Loan  Documents,
contained any material  misstatement of fact or omitted to state a material fact
or any fact  necessary to make the statements  contained  therein not materially
misleading.

         6.11  Regulation  U. Margin  Stock  constitutes  less than 25% of those
assets of the Company and its  Subsidiaries  which are subject to any limitation
on sale, pledge, or other restriction hereunder.

         6.12  Material   Agreements.   Neither  the  Company  nor  any  of  its
Subsidiaries is a party to any  Contractual  Obligation the performance of which
could  reasonably  be expected to have a Material  Adverse  Effect.  Neither the
Company  nor  any  of its  Subsidiaries  is  subject  to any  charter  or  other
restriction in any  constitutive  agreement or document  affecting its business,
properties,  financial condition, prospects or results of operations which could
reasonably be expected to have a Material  Adverse  Effect.  Neither the Company
nor any Subsidiary is in default in the  performance,  observance or fulfillment
of any of the obligations,  covenants or conditions contained in any Contractual
Obligation to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect.

         6.13  Compliance  With Laws.  The  Company  and its  Subsidiaries  have
complied  with  all   Requirements  of  Law  except  to  the  extent  that  such
non-compliance  could not  reasonably  be  expected  to have a Material  Adverse
Effect.  Neither the Company nor any  Subsidiary  has received any notice to the
effect that its operations are not in material  compliance with any Requirements
of Law or the subject of any federal or state  investigation  evaluating whether
any remedial  action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.

         6.14  Ownership of  Properties.  On the Amendment  Effective  Date, the
Company and its Subsidiaries  have good title,  free of all Liens, to all of the
properties  and assets  reflected in its  December  31, 2001  audited  financial
statements as owned by it (other than  properties and assets  disposed of in the
ordinary  course of business  since such date),  except  Liens  permitted  under
Section 7.3(c).

         6.15 Statutory Indebtedness  Restrictions.  Neither the Company nor any
of its  Subsidiaries  is subject to regulation  under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate  Commerce Act, or the
Investment  Company  Act of 1940,  or any  other  federal  or state  statute  or
regulation  which  limits its  ability to incur  indebtedness  or its ability to
consummate the transactions contemplated hereby.

         6.16 Environmental Matters. Each of the Company and its Subsidiaries is
in compliance with all Environmental,  Health or Safety  Requirements of Laws in
effect in each jurisdiction where it is presently doing business and as to which
the  failure  to so  comply,  in the  aggregate  for all  such  failures,  would
reasonably  be likely to  subject  the  Company to  liability  that would have a
Material  Adverse  Effect.  Neither the Company nor any Subsidiary is subject to
any liability under the Environmental,  Health or Safety Requirements of Laws in
effect in any  jurisdiction  where it is  presently  doing  business  that could
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
neither the Company nor any Subsidiary has received any:


         (a)  notice  from  any  Governmental  Authority  by  which  any  of the
         Company's or such Subsidiary's  present or  previously-owned  or leased
         property  has been  identified  in any manner by any such  Governmental
         Authority as a hazardous  substance  disposal or removal  site,  "Super
         Fund" clean-up site or candidate for removal or closure pursuant to any
         Environmental, Health or Safety Requirements of Law; or

         (b)  notice  of any  Lien  arising  under  or in  connection  with  any
         Environmental,  Health or Safety  Requirements of Law that has attached
         to any of the Company's or such  Subsidiary's  owned or leased property
         or any revenues of the Company's or such  Subsidiary's  owned or leased
         property; or

         (c)  communication,  written or oral, from any  Governmental  Authority
         concerning  action or  omission by the  Company or such  Subsidiary  in
         connection  with its ownership or leasing of any property  resulting in
         the release of any  hazardous  substance  resulting in any violation of
         any Environmental, Health or Safety Requirements of Law;

where  the  effect  of  which,  in  the  aggregate  for  all  such  notices  and
communications, could reasonably be expected to have a Material Adverse Effect.

         6.17  Insurance.  The properties and assets and business of the Company
and its Subsidiaries are insured with financially sound and reputable  insurance
companies  not  Subsidiaries  of  the  Company,  in  such  amounts,   with  such
deductibles  and  covering  such risks as are  customarily  carried by companies
engaged in similar businesses and are similarly situated.

         6.18  Labor  Matters.  As of the  Amendment  Effective  Date,  no labor
disputes,  strikes or walkouts affecting the operations of the Company or any of
its  Subsidiaries,  are pending,  or, to the  Company's  knowledge,  threatened,
planned or  contemplated  which could  reasonably be expected to have a Material
Adverse Effect.

         6.19 Solvency. After giving effect to (i) the extensions of credit made
hereunder  on the Closing Date or such other date as Loans  requested  hereunder
were made,  (ii) the other  transactions  contemplated by this Agreement and the
other Loan Documents, including the Spectra Precision Acquisition, and (iii) the
payment and accrual of all transaction costs with respect to the foregoing,  the
Company and its Subsidiaries are Solvent.

          6.20  Default.  No Default or  Unmatured  Default has  occurred and is
continuing.

          6.21  Foreign  Employee  Benefit  Matters.  

          (a)  Each  Foreign  Employee  Benefit  Plan  is in  compliance  in all
          material  respects  with all laws,  regulations  and rules  applicable
          thereto and the respective requirements of the governing documents for
          such Plan;

          (b) the aggregate of the  accumulated  benefit  obligations  under all
          Foreign  Pension  Plans  does not  exceed to any  material  extent the
          current  fair market value of the assets held in the trusts or similar
          funding vehicles for such Plans;

          (c) with  respect to any Foreign  Employee  Benefit Plan (other than a
          Foreign Pension Plan),  reasonable  reserves have been  established in
          accordance  with  prudent  business  practice  or  where  required  by
          ordinary  accounting  practices in the jurisdiction in which such Plan
          is maintained;  and (d) there are no material actions, suits or claims
          (other than routine claims for benefits)  pending or, to the knowledge
          of the Company and its Subsidiaries, threatened against the Company or
          any  Subsidiary  of it or any  member  of its  Controlled  Group  with
          respect to any Foreign Employee Benefit Plan.

         6.22  Acquisition  Documents.  The Acquisition  Documents as originally
executed and  delivered by the parties  thereto have not been  amended,  waived,
supplemented or modified  without the consent of the  Administrative  Agent. The
representations  and  warranties  of the Company set forth  therein  and, to the
knowledge  of the  Company,  the  representations  and  warranties  of the other
parties set forth  therein are true and correct in all  material  respects as of
the date  thereof.  On the date of this  Agreement,  neither the Company nor any
other party to any of the Acquisition Documents is in default in the performance
of or  compliance  with any  provisions  under the  Acquisition  Documents.  The
Spectra Precision Acquisition (other than certain modifications to the corporate
structure  of the  Seller's  European  holdings  in a manner  acceptable  to the
Administrative  Agent) has been  consummated in accordance  with applicable laws
and regulations.

         6.23  Collateral Documents. All representations and  warranties  of the
Borrowers contained in the Collateral Documents are true and correct.

         6.24 Security. The provisions of the Collateral Documents are effective
to create and give the Administrative  Agent, for the benefit of the Lenders, as
security for the repayment of the obligations  secured thereby, a legal,  valid,
perfected and  enforceable  Lien (which  priority is subject only to prior Liens
permitted by such agreements) upon all right,  title and interest of the Company
and its  Subsidiaries in any and all of the Collateral  described  therein.  The
Mortgages,  upon their  execution and delivery,  will be effective to create and
give the Administrative  Agent, for the benefit of the Lenders,  as security for
repayment of the obligations to be secured thereby,  a legal,  valid,  perfected
and  enforceable  Lien  (which  priority  will be  subject  only to prior  Liens
permitted by such mortgages) upon all right, title and interest of the Borrowers
in the Collateral described therein. The Pledge Agreement is effective to create
and give the Administrative  Agent, for the benefit of the Lenders,  as security
for the repayment of the obligations secured thereby, a legal, valid,  perfected
and  enforceable  first priority Lien upon and security  interest in the capital
stock pledged thereby.

         6.25 Subordinated Seller Debt. Each Borrower incurring the same has the
corporate  power  and  authority  to incur  the  Indebtedness  evidenced  by the
Subordinated  Seller Debt.  The  subordination  provisions  of the  Subordinated
Seller Debt will be enforceable  against the holders of the Subordinated  Seller
Debt by any Holder of Obligations which has not effectively  waived the benefits
thereof.  All  Obligations,  including the  Obligations  to pay principal of and
interest on the Loans,  constitute senior Indebtedness  entitled to the benefits
of  subordination  created  by  the  Subordinated  Seller  Debt.  The  Borrowers
acknowledge that the Administrative Agent and each Lender are entering into this
Agreement and are extending the Aggregate  Revolving  Loan  Commitment  and Term
Loans in reliance upon the subordination  provisions of the Subordinated  Seller
Note and this Section 6.25.

         6.26 Subsidiaries. Except as set forth on Schedule 6.8, each Subsidiary
of the Company is a Wholly-Owned Subsidiary.
 
         6.27  Representations  and  Warranties of each  Subsidiary  Borrower.
Each Subsidiary Borrower further represents and warrants to the Administrative
Agent and the Lenders that:

         (a) Organization and Corporate Powers.  Such Subsidiary Borrower (i) is
         a company duly formed and validly  existing and in good standing  under
         the laws of the state or country of its organization (such jurisdiction
         being  hereinafter  referred  to as the "Home  Country");  (ii) has the
         requisite  power and  authority  to own its  property and assets and to
         carry on its business  substantially  as now conducted except where the
         failure  to have such  requisite  authority  would not have a  material
         adverse effect on such Subsidiary Borrower; and (iii) has the requisite
         power  and  authority  and  legal  right to  execute  and  deliver  any
         Alternate  Currency Addendum to which it is a party and each other Loan
         Document  to  which  it is a  party  and the  performance  by it of its
         obligations  thereunder have been duly  authorized by proper  corporate
         proceedings.

         (b) Binding Effect. Each Loan Document,  including, without limitation,
         any Alternate Currency Addendum,  executed by such Subsidiary  Borrower
         is the legal, valid and binding obligations of such Subsidiary Borrower
         enforceable  in  accordance  with  their  respective  terms,  except as
         enforceability may be limited by bankruptcy, insolvency or similar laws
         affecting the  enforcement of creditors'  rights  generally and general
         equitable principles.

         (c) No Conflict; Government Consent. Neither the execution and delivery
         by such  Subsidiary  Borrower  of the Loan  Documents  to which it is a
         party,  nor  the  consummation  by  it  of  the  transactions   therein
         contemplated to be consummated by it, nor compliance by such Subsidiary
         Borrower  with the  provisions  thereof  will  violate  any law,  rule,
         regulation, order, writ, judgment,  injunction, decree or award binding
         on  such  Subsidiary  Borrower  or  any  of its  Subsidiaries  or  such
         Subsidiary Borrower's or any of its Subsidiaries' memoranda or articles
         of  association  or the  provisions  of any  indenture,  instrument  or
         agreement to which such Subsidiary  Borrower or any of its Subsidiaries
         is a party or is subject, or by which it, or its property, is bound, or
         conflict  with or  constitute  a default  thereunder,  or result in the
         creation or  imposition  of any lien in, of or on the  property of such
         Subsidiary Borrower or any of its Subsidiaries pursuant to the terms of
         any such  indenture,  instrument  or  agreement  in any such case which
         violation,  conflict,  default, creation or imposition could reasonably
         be  expected  to have a  material  adverse  effect  on such  Subsidiary
         Borrower.  No order,  consent,  approval,  license,  authorization,  or
         validation of, or filing,  recording or registration with, or exemption
         by, any governmental agency is required to authorize, or is required in
         connection  with the  execution,  delivery and  performance  of, or the
         legality,  validity,  binding effect or  enforceability  of, any of the
         Loan Documents.

         (d) Filing.  To ensure the  enforceability or admissibility in evidence
         of this  Agreement  and each Loan  Document  to which  such  Subsidiary
         Borrower  is a party  (including,  without  limitation,  any  Alternate
         Currency  Addendum) in its Home Country,  it is not necessary that this
         Agreement or any other Loan Document to which such Subsidiary  Borrower
         is a party or any other document be filed or recorded with any court or
         other authority in its Home Country or that any stamp or similar tax be
         paid to or in respect of this  Agreement or any other Loan  Document of
         such  Subsidiary  Borrower.  The  qualification  by any  Lender  or the
         Administrative  Agent for  admission  to do business  under the laws of
         such Subsidiary Borrower's Home Country does not constitute a condition
         to, and the failure to so qualify does not affect,  the exercise by any
         Lender or the Administrative Agent of any right,  privilege,  or remedy
         afforded to any Lender or the  Administrative  Agent in connection with
         the Loan Documents to which such Subsidiary  Borrower is a party or the
         enforcement  of any such  right,  privilege,  or  remedy  against  such
         Subsidiary   Borrower.   The   performance   by  any   Lender   or  the
         Administrative Agent of any action required or permitted under the Loan
         Documents will not (i) violate any law or regulation of such Subsidiary
         Borrower's  Home Country or any  political  subdivision  thereof,  (ii)
         result in any tax or other monetary liability to such party pursuant to
         the  laws of such  Subsidiary  Borrower's  Home  Country  or  political
         subdivision or taxing authority thereof (provided that, should any such
         action result in any such tax or other monetary liability to the Lender
         or the  Administrative  Agent,  the Borrowers hereby agree to indemnify
         such Lender or the  Administrative  Agent,  as the case may be, against
         (x) any such tax or other  monetary  liability  and (y) any increase in
         any tax or other monetary  liability  which results from such action by
         such  Lender  or  the  Administrative  Agent  and,  to the  extent  the
         Borrowers make such  indemnification,  the incurrence of such liability
         by the  Administrative  Agent  or any  Lender  will  not  constitute  a
         Default) or (iii) violate any rule or  regulation of any  federation or
         organization or similar entity of which the such Subsidiary  Borrower's
         Home Country is a member.

         (e) No Immunity. Neither such Subsidiary Borrower nor any of its assets
         is entitled to immunity from suit, execution, attachment or other legal
         process.  Such Subsidiary Borrower's execution and delivery of the Loan
         Documents  to which it is a party  constitute,  and the exercise of its
         rights and  performance of and compliance  with its  obligations  under
         such Loan Documents will  constitute,  private and commercial acts done
         and performed for private and commercial purposes.

         (f) Application of Representations and Warranties. It is understood and
         agreed by the parties hereto that the representations and warranties of
         each Subsidiary Borrower (other than any Subsidiary Borrower that shall
         be a Subsidiary  Borrower as of the Amendment  Effective  Date) in this
         Section 6.27 shall only be  applicable to such  Subsidiary  Borrower on
         and after the date of its  execution  of an  Assumption  Letter and, if
         applicable, an Alternate Currency Addendum.

ARTICLE VII:  COVENANTS

         The Company  covenants  and agrees that so long as any  Revolving  Loan
Commitments are  outstanding and thereafter  until payment in full of all of the
Obligations (other than contingent indemnity obligations) and termination of all
Letters of Credit,  unless  the  Required  Lenders  shall  otherwise  give prior
written consent:

         7.1 Reporting. The Company shall:

         (a) Financial Reporting. Furnish to the Administrative Agent and the
         Lenders:

                  (i) Quarterly Reports. As soon as practicable and in any event
         within  forty-five (45) days after the end of the first three quarterly
         periods of each of its fiscal years,  for itself and the  Subsidiaries,
         consolidated and  consolidating  unaudited balance sheets as at the end
         of each such period and  consolidated  and  consolidating  statement of
         income  and  consolidated  and  consolidating  statement  of changes in
         owners'  equity,  and a statement of cash flows for the period from the
         beginning of such fiscal year to the end of such quarter,  presented on
         the same basis as described in Section  7.1(a)(ii) and on a comparative
         basis with the  statements  for such period in the prior fiscal year of
         the Company.

                  (ii) Annual Reports. As soon as practicable,  and in any event
         within ninety (90) days after the end of each of its fiscal years,  (a)
         an audit report,  certified (as to consolidated,  but not consolidating
         statements) by internationally  recognized independent certified public
         accountants,  prepared in accordance with generally accepted accounting
         principles,  on a consolidated and  consolidating  basis for itself and
         the  Subsidiaries,  including  balance  sheets  as of the  end of  such
         period,  related statement of income and consolidated and consolidating
         statement of changes in owners' equity,  and a statement of cash flows,
         which  audit  report  shall be  unqualified  and shall  state that such
         financial statements fairly present the consolidated financial position
         of the Company and its  Subsidiaries  as at the dates indicated and the
         results of  operations  and cash  flows for the  periods  indicated  in
         conformity with generally accepted  accounting  principles and that the
         examination by such  accountants in connection  with such  consolidated
         and consolidating financial statements has been made in accordance with
         generally accepted auditing standards and (b) projected balance sheets,
         statements  of income and cash flows for each fiscal  year  through the
         Termination  Date,  prepared  in  accordance  with  generally  accepted
         accounting  principles,  on a  consolidated  basis,  together  with the
         appropriate   supporting   details  and  a  statement   of   underlying
         assumptions,  all in form  similar to those  delivered  to the  Lenders
         prior to the Closing Date.

                  (iii)  Officer's  Certificate.  Together with each delivery of
         any  financial  statement  (a) pursuant to clauses (i) and (ii) of this
         Section 7.1(a), an Officer's Certificate of the Company,  substantially
         in the form of  Exhibit  E  attached  hereto  and  made a part  hereof,
         stating that as of the date of such Officer's Certificate no Default or
         Unmatured  Default  exists,  or if any  Default  or  Unmatured  Default
         exists,  stating  the nature and status  thereof  and (b)  pursuant  to
         clauses (i) and (ii) of this Section 7.1(a), a compliance  certificate,
         substantially  in the form of Exhibit F attached hereto and made a part
         hereof,  signed  by  the  Company's  chief  financial  officer,   chief
         accounting  officer or treasurer,  setting forth  calculations  for the
         period then ended for Section 2.5(b), if applicable,  which demonstrate
         compliance,  when  applicable,  with the provisions of Sections  7.3(a)
         through (h),  Section  7.3(p) and Section 7.4, and which  calculate the
         Leverage Ratio for purposes of determining the then Applicable Floating
         Rate Margin,  Applicable  Eurocurrency Margin and Applicable Commitment
         Fee Percentage.


         (b)  Notice  of  Default.  Promptly  upon  any of the  chief  executive
         officer, chief operating officer,  chief financial officer,  treasurer,
         controller or other executive  officer of the Company  obtaining actual
         knowledge (i) of any condition or event which  constitutes a Default or
         Unmatured  Default,  (ii) that any Lender or  Administrative  Agent has
         given any written  notice to any  Authorized  Officer with respect to a
         claimed  Default or Unmatured  Default under this  Agreement,  or (iii)
         that any Person has given any written notice to any Authorized  Officer
         or any Subsidiary of the Company or taken any other action with respect
         to a claimed  default or event or condition of the type  referred to in
         Section 8.1(d), the Company shall deliver to the  Administrative  Agent
         and the Lenders an Officer's Certificate  specifying (A) the nature and
         period of  existence of any such claimed  default,  Default,  Unmatured
         Default,  condition  or event,  (B) the notice given or action taken by
         such Person in  connection  therewith,  and (C) what action the Company
         has taken, is taking or proposes to take with respect thereto.

         (c) Lawsuits.  (i) Promptly upon the Company obtaining actual knowledge
         of the  institution  of,  or  written  threat  of,  any  action,  suit,
         proceeding, governmental investigation or arbitration, by or before any
         Governmental Authority,  against or affecting the Company or any of its
         Subsidiaries or any property of the Company or any of its  Subsidiaries
         not previously  disclosed pursuant to Section 6.7, which action,  suit,
         proceeding,  governmental  investigation or arbitration  exposes, or in
         the  case  of  multiple  actions,  suits,   proceedings,   governmental
         investigations  or  arbitrations   arising  out  of  the  same  general
         allegations or circumstances which expose, in the Company's  reasonable
         judgment,  the Company or any of its  Subsidiaries  to  liability in an
         amount  aggregating  $5,000,000 or more (exclusive of claims covered by
         insurance policies of the Company or any of its Subsidiaries unless the
         insurers of such claims have disclaimed  coverage or reserved the right
         to disclaim  coverage on such claims),  give written  notice thereof to
         the  Administrative  Agent  and the  Lenders  and  provide  such  other
         information  as may be  reasonably  available to enable each Lender and
         the Administrative  Agent and its counsel to evaluate such matters; and
         (ii) in  addition to the  requirements  set forth in clause (i) of this
         Section  7.1(c),  upon  request  of  the  Administrative  Agent  or the
         Required  Lenders,  promptly  give written  notice of the status of any
         action,  suit,  proceeding,  governmental  investigation or arbitration
         covered by a report delivered  pursuant to clause (i) above and provide
         such other  information as may be reasonably  available to it to enable
         the Required  Lenders and the  Administrative  Agent and its counsel to
         evaluate such matters.

         (d)  ERISA   Notices.   Deliver  or  cause  to  be   delivered  to  the
         Administrative  Agent and the Lenders,  at the Company's  expense,  the
         following  information and notices as soon as reasonably possible,  and
         in any event:

                  (i) within  ten (10)  Business  Days after the  Company or any
         member of the  Controlled  Group obtains  knowledge  that a Termination
         Event has occurred or a lawsuit involving a Plan or Multiemployer  Plan
         has been  filed,  in each case which  could  reasonably  be expected to
         subject the Company to  liability  in excess of  $5,000,000,  a written
         statement of the chief financial officer,  treasurer or designee of the
         Company describing such Termination Event and the action, if any, which
         the member of the Controlled  Group has taken, is taking or proposes to
         take  with  respect  thereto,  and  when  known,  any  action  taken or
         threatened by the IRS, DOL or PBGC with respect thereto;

                  (ii) within ten (10) Business Days after the Company or any of
         its  Subsidiaries   obtains   knowledge  that  a  material   prohibited
         transaction  (defined in Sections  406 of ERISA and Section 4975 of the
         Code)  has  occurred,  a  statement  of the  chief  financial  officer,
         treasurer or designee of the Company  describing  such  transaction and
         the action which the Company or such Subsidiary has taken, is taking or
         proposes to take with respect thereto;

                  (iii) within ten (10)  Business  Days after the Company or any
         of its  Subsidiaries  receives notice of any unfavorable  determination
         letter from the IRS regarding the qualification of a Plan under Section
         401(a) of the Code, copies of each such letter;

                  (iv) within ten (10)  Business  Days after the filing  thereof
         with the IRS, a copy of each funding  waiver request filed with respect
         to any Benefit Plan and all communications received by the Company or a
         member of the Controlled Group with respect to such request;

                  (v) within ten (10) Business Days after receipt by the Company
         or any  member  of the  Controlled  Group of the  PBGC's  intention  to
         terminate a Benefit Plan or to have a trustee appointed to administer a
         Benefit Plan, copies of each such notice;

                  (vi)  within ten (10)  Business  Days after the Company or any
         member of the Controlled Group fails to make a required  installment or
         any other  required  payment under Section 412 of the Code on or before
         the due date for such  installment or payment,  a notification  of such
         failure;

                  (vii) within ten (10) Business Days after the establishment of
         any Foreign Employee Benefit Plan or the commencement of, or obligation
         to  commence,  contributions  to any Foreign  Employee  Benefit Plan to
         which the Company or any Subsidiary  was not  previously  contributing,
         where the  aggregate  annual  contributions  to such Plan(s)  resulting
         therefrom  are or could  reasonably  be  expected  to be in  excess  of
         $5,000,000,   notification  of  such  establishment,   commencement  or
         obligation to commence and the amount of such contributions; and

     For purposes of this Section 7.1(d),  the Company,  any of its Subsidiaries
and any member of the  Controlled  Group shall be deemed to know all facts known
by the administrator of any Plan which is a Single Employer Plan.

         (e) Labor Matters.  Notify the Administrative  Agent and the Lenders in
         writing,  promptly  upon  an  Authorized  Officer  learning  of (i) any
         material labor dispute to which the Company or any of its  Subsidiaries
         may  become  a  party,  including,  without  limitation,  any  strikes,
         lockouts or other disputes  relating to such Persons'  plants and other
         facilities  and (ii) any  material  Worker  Adjustment  and  Retraining
         Notification Act liability  incurred with respect to the closing of any
         plant or other facility of the Company or any of its Subsidiaries.

         (f) Other Indebtedness.  Deliver to the Administrative Agent (i) a copy
         of each regular report, notice or communication  regarding potential or
         actual  defaults  (including any  accompanying  officer's  certificate)
         delivered by or on behalf of the Company to the holders of Indebtedness
         for money borrowed with an aggregate  outstanding  principal  amount in
         excess of $10,000,000 pursuant to the terms of the agreements governing
         such Indebtedness, such delivery to be made at the same time and by the
         same means as such notice of default is delivered to such holders,  and
         (ii) a copy of each  notice  or  other  communication  received  by the
         Company from the holders of  Indebtedness  for money  borrowed  with an
         aggregate   outstanding  principal  amount  in  excess  of  $10,000,000
         regarding  potential or actual  defaults  pursuant to the terms of such
         Indebtedness,  such delivery to be made  promptly  after such notice or
         other communication is received by the Company.

         (g)  Other   Reports.   Deliver  or  cause  to  be   delivered  to  the
         Administrative  Agent  and the  Lenders  copies  of (i)  all  financial
         statements,  reports  on Form S-1,  8-K,  10-K or 10-Q and  non-routine
         notices, if any, sent or made available generally by the Company to its
         securities  holders or filed with the  Commission  by the Company,  and
         (ii) all  notifications  received from the Commission by the Company or
         its  Subsidiaries  pursuant to the Securities  Exchange Act of 1934 and
         the rules  promulgated  thereunder  other  than  routine  reminders  or
         notices that do not relate to specific  violations of rules promulgated
         by the Commission.  The Company shall include the Administrative  Agent
         and the  Lenders  on its  standard  distribution  lists  for all  press
         releases  made  available  generally  by  the  Company  or  any  of the
         Company's  Subsidiaries to the public concerning material  developments
         in the business of the Company or any such Subsidiary.

         (h) Environmental  Notices. As soon as possible and in any event within
         fifteen  (15)  days  after  receipt  by  the  Company,  deliver  to the
         Administrative  Agent and the Lenders a copy of (i) any notice or claim
         to the effect that the Company or any of its  Subsidiaries is or may be
         liable to any Person as a result of the Release by the Company,  any of
         its  Subsidiaries,  or any  other  Person of any  Contaminant  into the
         environment,  and  (ii)  any  notice  alleging  any  violation  of  any
         Environmental,  Health or Safety  Requirements of Law by the Company or
         any of its  Subsidiaries  if,  in  either  case,  such  notice or claim
         relates to an event which could  reasonably  be expected to subject the
         Company and each of its  Subsidiaries  to liability  individually or in
         the aggregate in excess of $10,000,000.

         (i) Other Information.  Promptly upon receiving a request therefor from
         the  Administrative  Agent,  prepare and deliver to the  Administrative
         Agent and the  Lenders  such  other  information  with  respect  to the
         Company  or any of its  Subsidiaries,  as  from  time  to  time  may be
         reasonably requested by the Administrative Agent.

         7.2      Affirmative Covenants.

         (a) Corporate  Existence,  Etc. Subject to Section 7.3(i),  the Company
         shall,  and  shall  cause  each of its  Subsidiaries  to,  at all times
         maintain its corporate  existence and preserve and keep, or cause to be
         preserved and kept, in full force and effect its rights and  franchises
         material to its businesses  except where,  in the case of  Subsidiaries
         which  are  not  Subsidiary  Borrowers,  failure  to  do so  could  not
         reasonably be expected to have a Material Adverse Effect.

         (b) Corporate Powers; Conduct of Business. The Company shall, and shall
         cause each of its  Subsidiaries  to, qualify and remain qualified to do
         business  in each  jurisdiction  in which the  nature  of its  business
         requires it to be so qualified and where the failure to be so qualified
         will have or could  reasonably  be expected to have a Material  Adverse
         Effect.

         (c) Compliance with Laws,  Etc. The Company shall,  and shall cause its
         Subsidiaries  to,  (a)  comply  with  all  Requirements  of Law and all
         restrictive covenants affecting such Person or the business, prospects,
         properties,  assets or  operations  of such  Person,  and (b) obtain as
         needed all permits  necessary  for its  operations  and  maintain  such
         permits  in good  standing  unless  failure  to comply  or obtain  such
         permits  could not  reasonably  be expected to have a Material  Adverse
         Effect.

         (d) Payment of Taxes and Claims; Tax  Consolidation.  The Company shall
         pay, and cause each of its Subsidiaries to pay, (i) all material taxes,
         assessments and other governmental charges imposed upon it or on any of
         its  properties  or  assets  or in  respect  of any of its  franchises,
         business,  income or property  before any  penalty or interest  accrues
         thereon, and (ii) all claims (including, without limitation, claims for
         labor,  services,  materials and supplies) for material sums which have
         become  due and  payable  and  which by law  have or may  become a Lien
         (other  than  a Lien  permitted  by  Section  7.3(c))  upon  any of the
         Company's or such  Subsidiary's  property or assets,  prior to the time
         when any  penalty  or fine  shall be  incurred  with  respect  thereto;
         provided  that no such  taxes,  assessments  and  governmental  charges
         referred  to in clause (i) above or claims  referred  to in clause (ii)
         above (and interest,  penalties or fines relating thereto) need be paid
         if being contested in good faith by appropriate  proceedings diligently
         instituted  and  conducted  and if such  reserve  or other  appropriate
         provision,  if any, as shall be required in conformity  with  Agreement
         Accounting Principles shall have been made therefor.

         (e)  Insurance.  The  Company  will  maintain,  and  will  cause  to be
         maintained on behalf of each of its Subsidiaries, insurance coverage by
         financially  sound and reputable  insurance  companies or associations,
         against such  casualties and  contingencies,  of such types and in such
         amounts as are customary for  companies  engaged in similar  businesses
         and owning and operating similar  properties,  it being understood that
         the Company and its  Subsidiaries  may self-insure  against hazards and
         risks with  respect to which,  and in such  amounts,  as the Company in
         good faith  determines  prudent  and  consistent  with sound  financial
         practice,  and  as are  customary  for  companies  engaged  in  similar
         businesses  and owning and operating  similar  properties.  The Company
         shall  furnish to any Lender upon  request full  information  as to the
         insurance carried.

         (f) Inspection of Property; Books and Records; Discussions. The Company
         shall permit and cause each of the  Company's  Subsidiaries  to permit,
         any   authorized    representative(s)    designated   by   either   the
         Administrative  Agent or the Required Lenders to visit and inspect, for
         a reasonable  purpose,  any of the  properties of the Company or any of
         its  Subsidiaries,  to examine,  audit,  check and make copies of their
         respective financial and accounting records,  books, journals,  orders,
         receipts  and any  correspondence  and  other  data  relating  to their
         respective   businesses  or  the   transactions   contemplated   hereby
         (including,   without  limitation,  in  connection  with  environmental
         compliance,  hazard  or  liability),  and  to  discuss  their  affairs,
         finances  and  accounts  with  their  officers  and  their  independent
         certified public  accountants,  all upon reasonable  notice and at such
         reasonable  times  during  normal  business  hours,  as often as may be
         reasonably  requested.  The Company shall keep and maintain,  and cause
         each of the Company's Subsidiaries to keep and maintain proper books of
         record  and  account  in which  entries in  conformity  with  Agreement
         Accounting Principles shall be made of all dealings and transactions in
         relation to their respective businesses and activities.

         (g) ERISA  Compliance.  The Company shall,  and shall cause each of the
         Company's  Subsidiaries to,  establish,  maintain and operate all Plans
         (and,  to the  extent  it is  within  the  power  of the  Company  or a
         Subsidiary, all Multiemployer Plans) to comply in all material respects
         with the provisions of ERISA,  the Code, all other applicable laws, and
         the  regulations  and  interpretations  thereunder  and the  respective
         requirements of the governing documents for such Plans.

         (h) Maintenance of Property.  The Company shall cause all property used
         or  useful  in the  conduct  of its  business  or the  business  of any
         Subsidiary  to be  maintained  and kept in good  condition,  repair and
         working order and supplied with all necessary equipment and shall cause
         to be made all necessary repairs, renewals,  replacements,  betterments
         and improvements  thereof, all as in the judgment of the Company may be
         necessary so that the business  carried on in connection  therewith may
         be properly and advantageously conducted at all times and except to the
         extent  that the  failure to so  maintain  such  property  could not be
         reasonably expected to have a Material Adverse Effect.

         (i) Environmental  Compliance.  The Company shall, and shall cause each
         of the Company's Subsidiaries to comply with, all Environmental, Health
         or Safety  Requirements  of Law, except where  noncompliance  could not
         reasonably be expected to have a Material Adverse Effect.

         (j) Use of  Proceeds.  The  Borrowers  shall  use the  proceeds  of the
         Advances to make payments on the Seller  Subordinated  Note (subject to
         the  provisions of this Agreement and the  subordination  provisions of
         the Seller  Subordinated  Note) and to provide funds for the additional
         working  capital  needs and other  general  corporate  purposes  of the
         Company  and  its  Subsidiaries,  including,  without  limitation,  the
         financing of Permitted Acquisitions.  The Company will not, nor will it
         permit any  Subsidiary  to, use any of the  proceeds of the Advances to
         make any Acquisition  other than a Permitted  Acquisition made pursuant
         to Section 7.3(g).

         (k) Subsidiary Guarantees;  Subsidiary  Subordination  Agreement.  The
         Company will:

               (i) cause each Subsidiary  Borrower that is a Domestic Subsidiary
          and each  Domestic  Subsidiary  that has  assets  with a book value in
          excess of  $10,000,000 to execute the Guaranty (and from and after the
          Amendment  Effective Date cause each other Subsidiary Borrower that is
          a Domestic  Subsidiary  and each other Domestic  Subsidiary  which has
          such assets to execute and deliver to the Administrative Agent, within
          ten (10) days after becoming a Subsidiary Borrower or another Domestic
          Subsidiary  which has such assets,  as  applicable,  an  assumption or
          joinder agreement pursuant to which it agrees to be bound by the terms
          and provisions of the Guaranty (whereupon such Subsidiary shall become
          a  "Guarantor"  under this  Agreement))  and cause such  Guarantors to
          execute  and  deliver  to the  Administrative  Agent  such  Collateral
          Documents as the Administrative Agent may require;

               (ii) in the event  that at any time the book  value of the assets
          of all  Domestic  Subsidiaries  which are not  Guarantors  exceeds the
          lesser of (a) twelve percent (12%) of the  Consolidated  Net Assets of
          the Company  and its  Subsidiaries  at such time and (b)  $25,000,000,
          within ten (10) days thereafter cause one or more of such Subsidiaries
          to execute and deliver to the  Administrative  Agent an  assumption or
          joinder  agreement  pursuant  to which it or they agree to be bound by
          the  terms  and  provisions  of  the  Guaranty  (whereupon  each  such
          Subsidiary shall become a "Guarantor" under this Agreement) such that,
          after  giving  effect  thereto,  the book  value of the  assets of all
          Domestic  Subsidiaries  which are not  Guarantors  does not exceed the
          lesser of (a) twelve percent (12%) of the  Consolidated  Net Assets of
          the Company and its Subsidiaries at such time and (b) $25,000,000, and
          cause such  Guarantors  to execute and  deliver to the  Administrative
          Agent  such  Collateral  Documents  as the  Administrative  Agent  may
          require;

               (iii) cause each Subsidiary, before it makes a loan to any of the
          Borrowers,  to execute the Subordination Agreement (and from and after
          the Amendment  Effective  Date cause each other  Subsidiary to execute
          and deliver to the  Administrative  Agent,  within ten (10) days after
          becoming  a  Subsidiary,  as  applicable,  an  assumption  or  joinder
          agreement  pursuant  to which it  agrees  to be bound by the terms and
          provisions of the Subordination Agreement);

               (iv)  deliver and cause such  Subsidiaries  to deliver  corporate
          resolutions,   opinions   of   counsel,   and  such  other   corporate
          documentation as the Administrative  Agent may reasonably request, all
          in form and substance  reasonably  satisfactory to the  Administrative
          Agent; and

               (v) cause each Subsidiary to be a Wholly-Owned Subsidiary, except
          as set forth on Schedule 6.8. 

         (l) Foreign Employee Benefit  Compliance.  The Company shall, and shall
         cause each of its  Subsidiaries and each member of its Controlled Group
         to, establish,  maintain and operate all Foreign Employee Benefit Plans
         to comply in all material respects with all laws, regulations and rules
         applicable  thereto and the  respective  requirements  of the governing
         documents for such Plans,  except for failures to comply which,  in the
         aggregate,  would not be reasonably  expected to subject the Company or
         any of its Subsidiaries to liability, individually or in the aggregate,
         in excess of $5,000,000.

         (m)  Subordinated  Seller Debt. The Company shall, and shall cause each
         of  its  Subsidiaries  to,  comply  at all  times  with  each  covenant
         contained in the documents  evidencing the Subordinated Seller Debt and
         shall not permit any potential or actual defaults to occur with respect
         to the Seller Subordinated Debt.

         7.3      Negative Covenants.

         (a) Sales of Assets.  The  Company  shall not,  nor shall it permit any
         Subsidiary to, sell or otherwise  dispose of any  Receivables,  with or
         without recourse or consummate any Asset Sale, except:

               (i)  transfers of assets to the Company,  between the Company and
          any  Guarantor  which is a Domestic  Subsidiary  or  between  any such
          Guarantors; and

               (ii) sales,  assignments,  transfers,  lease conveyances or other
          dispositions  of other assets if such  transaction (a) is for not less
          than fair market value (as  determined  in good faith by the Company's
          chief  financial  officer),  and (b) when combined with all such other
          transactions  (each such  transaction  being valued at book value) and
          all Sale and  Leaseback  Transactions  (each  such Sale and  Leaseback
          Transaction  being  valued at book  value)  during the period from the
          Closing Date to the date of such proposed transaction,  represents the
          disposition  of not greater  than ten percent  (10%) of the  Company's
          Consolidated  Net  Assets at the end of the  fiscal  year  immediately
          preceding  that in which such  transaction  is  proposed to be entered
          into.


         (b) Liens.  The Company  shall not, nor shall it permit any  Subsidiary
         to, directly or indirectly create,  incur,  assume or permit to exist a
         Lien on or with respect to the Capital  Stock of any  Subsidiary of the
         Company.  In addition,  the Company  shall not, nor shall it permit any
         Subsidiary to, directly or indirectly create,  incur,  assume or permit
         to exist any Lien on or with respect to any of their  respective  other
         property or assets except:

                 (i)      Permitted Existing Liens;

                 (ii)     Customary Permitted Liens;

                 (iii) Liens with respect to Equipment  acquired by the Company
         or any  of  its  Subsidiaries  after  the  date  hereof  pursuant  to a
         Permitted  Acquisition  (and  not  created  in  contemplation  of  such
         acquisition);  provided  that  such  Liens  shall  extend  only  to the
         property so acquired;

                 (iv) Liens securing Indebtedness of a Subsidiary to the Company
          or to another Wholly-Owned Subsidiary;

                 (v)  Liens securing Indebtedness permitted under  Section
          7.3(c)(vii); and

                 (vi) Additional Liens;  provided that the Indebtedness secured
         thereby does not exceed in the aggregate  $10,000,000  (less the amount
         of any Indebtedness secured by Liens permitted under clause (v)).


         (c)  Indebtedness.  The  Company  shall  not,  nor shall it permit  any
         Subsidiary to, cause or permit,  directly or indirectly create,  incur,
         assume or otherwise become or remain directly or indirectly liable with
         respect to any Indebtedness, except:

                  (i)      the Obligations;

                  (ii)     the Subordinated Seller Debt;

                  (iii)    Permitted Existing Indebtedness;

                  (iv) Indebtedness arising from intercompany loans and advances
         from the Company or any Domestic Subsidiary to any Subsidiary, provided
         that (A) such intercompany  Indebtedness  shall not be evidenced by any
         note  or  similar  instrument;  (B) the  Company  and  each  applicable
         Subsidiary  shall  record  all   intercompany   transactions  on  their
         respective   books  and  records  in  a  manner   satisfactory  to  the
         Administrative  Agent;  (C) the  obligations  of each  Subsidiary  with
         respect to any such  intercompany  loans shall be  subordinated  to any
         Obligations of such  Subsidiary  hereunder in a manner  satisfactory to
         the  Administrative  Agent;  (D) no Default or Unmatured  Default would
         occur  and be  continuing  after  giving  effect  to any such  proposed
         intercompany  loan; (E) the aggregate Dollar Amount outstanding of such
         intercompany  loans  owing by  Foreign  Subsidiaries  other  than loans
         pursuant  to  the  Spectra  Precision   Acquisition  shall  not  exceed
         $30,000,000  at any time  and (F)  other  than  loans  pursuant  to the
         Spectra Precision Acquisition, such intercompany loans shall be made in
         the ordinary course of business, consistent with past practices and the
         proceeds of such loans shall be used to fund operating  expenses of the
         applicable Subsidiary;

                  (v)  Contingent  Obligations to the extent  permitted  under
         Section 7.3(d); 

                  (vi)  Hedging  Obligations  to the  extent  permitted  under
               Section 7.3(n);

                  (vii)  Indebtedness  with respect to Capital Lease Obligations
         and  purchase  money  Indebtedness  with  respect  to real or  personal
         property in an aggregate amount not to exceed $10,000,000;

                 (viii) Indebtedness incurred for the purpose of refinancing any
         of the Indebtedness permitted under clause (iii); and

                 (ix) additional unsecured  Indebtedness in an aggregate amount
         at  any  time   outstanding   not  exceeding   $50,000,000   (less  any
         Indebtedness  described  in clause  (vii) above) of which not more than
         $25,000,000  may be incurred by  Subsidiaries  which are not Subsidiary
         Borrowers or Guarantors.

         (d) Contingent Obligations.  The Company shall not, nor shall it permit
         any Subsidiary to, directly or indirectly create or become or be liable
         with  respect  to  any  Contingent  Obligation,  except:  (i)  recourse
         obligations  resulting from  endorsement of negotiable  instruments for
         collection in the ordinary course of business;  (ii) Permitted Existing
         Contingent Obligations; (iii) obligations,  warranties,  guaranties and
         indemnities,  not relating to  Indebtedness  of any Person,  which have
         been or are  undertaken or made in the ordinary  course of business and
         not for the  benefit of or in favor of an  Affiliate  of the Company or
         such Subsidiary; (iv) Contingent Obligations of the Subsidiaries of the
         Company under the Guaranty to which they are a party,  (v)  obligations
         arising  under  or  related  to the  Loan  Documents;  (vi)  Contingent
         Obligations  in  respect  of the  Subordinated  Seller  Debt  or  other
         Indebtedness  permitted by Section 7.3(c) above,  and (vii)  additional
         Contingent  Obligations  in an  aggregate  amount  not to exceed in the
         aggregate five percent (5%) of  Consolidated  Net Worth at any one time
         outstanding.

         (e) Restricted Payments. The Company shall not, nor shall it permit any
         Subsidiary  to, make or declare  any  Restricted  Payments  (other than
         Restricted Payments by a Subsidiary to the Company) except that (i) the
         Company may make prepayments of the Seller  Subordinated  Note from the
         proceeds of equity  offerings  as required by Section 4.2 of the Seller
         Subordinated  Note (but only to the extent  otherwise  permitted by the
         subordination provisions of the Seller Subordinated Note); (ii) so long
         as no Default  or  Unmatured  Default  then  exists,  the  Company  may
         repurchase shares from its employees, officers or directors pursuant to
         any vesting  provisions with respect  thereto;  and (iii) so long as no
         Default  or  Unmatured  Default  then  exists,  the  Company  may  make
         Restricted  Payments not to exceed,  for any fiscal year,  an aggregate
         amount  equal  to  twenty-five  percent  (25%)  of Net  Income  for the
         previous fiscal year.

         (f) Conduct of Business; Subsidiaries;  Acquisitions. The Company shall
         not,  nor shall it permit any  Subsidiary  to,  engage in any  business
         other than the businesses  engaged in by the Company on the date hereof
         and any business or activities which are similar, related or incidental
         thereto or logical  extensions  thereof.  The Company shall not create,
         acquire or capitalize any  Subsidiary  after the date hereof unless (i)
         no Default or Unmatured  Default  shall have occurred and be continuing
         or would result  therefrom;  (ii) after such  creation,  acquisition or
         capitalization,  all of the  representations  and warranties  contained
         herein shall be true and correct in all material  respects (unless such
         representation  and  warranty is made as of a specific  date,  in which
         case, such  representation  or warranty shall be true as of such date);
         and (iii)  after  such  creation,  acquisition  or  capitalization  the
         Company shall be in compliance  with the terms of Section  7.2(k).  The
         Company  shall  not  make any  Acquisitions,  other  than  Acquisitions
         meeting the following requirements (each such Acquisition  constituting
         a "Permitted Acquisition"):

               (i) no Default or Unmatured  Default  shall have  occurred and be
          continuing or would result from such  Acquisition or the incurrence of
          any Indebtedness in connection therewith;

               (ii)  the  purchase  is  consummated  pursuant  to  a  negotiated
          acquisition  agreement  on a  non-hostile  basis and  approved  by the
          target company's board of directors (and  shareholders,  if necessary)
          prior to the consummation of the Acquisition;

               (iii)  if the  purchase  price  payable  in  respect  to any such
          Acquisition (including,  without limitation, cash or stock (other than
          Equity  Interests  (other  than  Disqualified  Stock) of the  Company)
          consideration  paid and  Indebtedness  or other  liabilities  assumed)
          exceeds $25,000,000, prior to each such Acquisition, the Company shall
          have  delivered  to  the  Administrative   Agent  and  the  Lenders  a
          certificate from one of the Authorized  Officers,  demonstrating  that
          after  giving  effect to such  Acquisition,  on a pro  forma  basis in
          respect  of each  such  Acquisition  as if the  Acquisition  and  such
          incurrence  of  Indebtedness  had  occurred  on the  first  day of the
          twelve-month  period  ending  on the  last day of the  Company's  most
          recently  completed  fiscal  quarter,  the Company  would have been in
          compliance  with  the  financial  covenants  in  Section  7.4  and not
          otherwise in Default;

                (iv) if the  purchase  price  for the  Acquisition  (excluding
         consideration in the form of the Company's Equity Interests (other than
         Disqualified  Stock))  exceeds,   together  with  all  other  Permitted
         Acquisitions permitted under this Section 7.3(f) during the same fiscal
         year,  $25,000,000 (the "Permitted  Acquisition Basket") (including the
         incurrence or assumption of any Indebtedness in connection  therewith),
         the Required Lenders shall have consented to such Acquisition;

               (v) the businesses being acquired shall be similar to that of the
          Company  and its  Subsidiaries  as of the  Closing  Date,  related  or
          incidental thereto or logical extensions thereof; and

               (vi)  such   Acquisition   shall  be   structured   as  an  asset
          acquisition,  as an acquisition  of one hundred  percent (100%) of the
          outstanding  voting equity  securities  of the target  company or as a
          merger permitted hereby.


         (g) Investments.  Neither the Company nor any of its Subsidiaries shall
         purchase  or  acquire,  or make any  commitment  therefor,  any  Equity
         Interest,  or any  obligations or other  securities of, or any interest
         in, any Person, or make or commit to make any advance,  loan, extension
         of credit or capital  contribution  to or any other  investment in, any
         Person including any Affiliate of the Company, except for:

               (i)   Investments  by  the  Company  or  any  Subsidiary  in  any
          Wholly-Owned Subsidiary which is a Guarantor;

               (ii)  Investments  incurred  in  order  to  consummate  Permitted
          Acquisitions otherwise permitted herein;

               (iii) Loans  giving  rise to  Indebtedness  permitted  by Section
          7.3(c)(iv); 

               (iv)  Advances to employees  for business  expenses not to exceed
          $1,000,000 in the aggregate outstanding at any one time;

               (v) other loans to employees  in the ordinary  course of business
          and consistent  with past practices,  not to exceed  $5,000,000 in the
          aggregate outstanding at any one time;

               (vi) Investments in Cash Equivalents;

               (vii) Permitted Existing Investments; and

               (viii) other Investments in an aggregate amount not to exceed the
          sum of (A) $20,000,000 (based on the initial amount invested) plus (B)
          proceeds  (net  of  the  initial  amount  invested)  from  Investments
          permitted hereunder.


         (h) Transactions with Shareholders and Affiliates.  Neither the Company
         nor any of its Subsidiaries  shall directly or indirectly enter into or
         permit to exist any transaction  (including,  without  limitation,  the
         purchase,  sale,  lease or exchange of any property or the rendering of
         any service)  with,  or make loans or advances to, any Affiliate of the
         Company  which is not its  Wholly-Owned  Subsidiary,  on terms that are
         less  favorable  to  the  Company  or  any  of  its  Subsidiaries,   as
         applicable,  than  those  that  might be  obtained  in an arm's  length
         transaction  at the time  from  Persons  who are not  such a holder  or
         Affiliate, except for Restricted Payments permitted by Section 7.3(f).

         (i) Restriction on Fundamental Changes.  Neither the Company nor any of
         its  Subsidiaries  shall  enter  into any merger or  consolidation,  or
         liquidate,   wind-up  or  dissolve  (or  suffer  any   liquidation   or
         dissolution), or convey, lease, sell, transfer or otherwise dispose of,
         in one transaction or series of transactions,  all or substantially all
         of  the  Company's   consolidated   business  or  property  (each  such
         transaction a "Fundamental Change"), whether now or hereafter acquired,
         except (i) Fundamental Changes permitted under Sections 7.3(a),  7.3(b)
         or 7.3(f),  (ii) a  Subsidiary  of the  Company  may be merged  into or
         consolidated  with the Company or any  Wholly-Owned  Subsidiary  of the
         Company  (in which  case the  Company or such  Wholly-Owned  Subsidiary
         shall be the surviving  corporation);  provided that if the predecessor
         Subsidiary was a Guarantor,  the surviving  Subsidiary,  if applicable,
         shall be a Guarantor hereunder, (iii) any liquidation of any Subsidiary
         of the Company into the Company or another  Subsidiary  of the Company,
         as applicable, and (iv) the Company may merge with any other Person, or
         any  Subsidiary of the Company may  consolidate or merge with any other
         Person,  provided that (A) no Default or Unmatured  Default shall exist
         immediately  before or after giving effect to such Fundamental  Change,
         (B) in the  case of any  merger  of the  Company,  the  Company  is the
         surviving  corporation  in such merger and such merger is with a Person
         in a line of business  substantially similar to that of the Company and
         its  Subsidiaries  as of the Closing Date or any business or activities
         which are similar,  related or incidental thereto or logical extensions
         thereof,  and (C) in the case of any  merger  or  consolidation  of any
         Subsidiary  of  the  Company,   the  surviving   corporation   in  such
         Fundamental  Change is or  becomes as a result  thereof a  Wholly-Owned
         Subsidiary  of the  Company  and if the  predecessor  Subsidiary  was a
         Guarantor, the surviving Subsidiary shall be a Guarantor hereunder, and
         (D)  such   transaction  is  with  a  Person  in  a  line  of  business
         substantially  similar  to or related  to that of the  Company  and its
         Subsidiaries as of the Closing Date or is a logical extension thereof.

         (j)  Margin   Regulations.   Neither   the  Company  nor  any  of  its
         Subsidiaries,   shall  use  all  or  any   portion  of  the   proceeds
         of any credit  extended  under this  Agreement to
         purchase or carry Margin Stock.

         (k)  ERISA.  

               (i) The Company shall not:

                  (A) engage,  or permit any of its  Subsidiaries to engage,  in
         any material prohibited  transaction described in Sections 406 of ERISA
         or 4975 of the Code for which a  statutory  or class  exemption  is not
         available or a private exemption has not been previously  obtained from
         the DOL;

                  (B) permit to exist any  accumulated  funding  deficiency  (as
         defined in Sections 302 of ERISA and 412 of the Code),  with respect to
         any Benefit Plan, whether or not waived;

                  (C) fail,  or permit any  Controlled  Group member to fail, to
         pay timely required material  contributions or annual  installments due
         with respect to any waived funding deficiency to any Benefit Plan;

                  (D)  terminate,  or  permit  any  Controlled  Group  member to
         terminate,  any  Benefit  Plan  which  would  result  in  any  material
         liability of the Company or any Controlled  Group member under Title IV
         of ERISA;

                  (E) fail to make any material  contribution  or payment to any
         Multiemployer Plan which the Company or any Controlled Group member may
         be required to make under any agreement  relating to such Multiemployer
         Plan, or any law pertaining thereto;

                  (F)  permit  any  unfunded  liabilities  with  respect  to any
         Foreign  Pension  Plan  except  to the  extent  that any such  unfunded
         liabilities  are  being  funded  by  annual  contributions  made by the
         Company  or  any  member  of  its  Controlled  Group  and  such  annual
         contributions  are not less than the minimum amounts,  if any, required
         under applicable local law;

                  (G) fail,  or permit  any of its  Subsidiaries  or  Controlled
         Group members to fail, to pay any required contributions or payments to
         a  Foreign  Pension  Plan on or before  the due date for such  required
         installment or payment;

                  (H) fail,  or permit any  Controlled  Group member to fail, to
         pay any required  material  installment  or any other payment  required
         under  Section  412 of the  Code on or  before  the due  date  for such
         installment or other payment; or

                  (I) amend,  or permit any Controlled  Group member to amend, a
         Plan resulting in a material increase in current liability for the plan
         year such that the Company or any  Controlled  Group member is required
         to provide security to such Plan under Section 401(a)(29) of the Code.

               (ii) For purposes of this Section  7.3(k),  "material"  means any
          noncompliance  or  basis  for  liability  which  could  reasonably  be
          expected  to  subject  the  Company  or  any of  its  Subsidiaries  to
          liability, individually or in the aggregate, in excess of $5,000,000.


         (l) Certain Documents.  Neither the Company nor any of its Subsidiaries
         shall amend,  modify or otherwise change any of the terms or provisions
         of  (i)  the  Acquisition  Documents,  or of any  of  their  respective
         constituent  documents  as in effect on the date  hereof in any  manner
         materially  adverse  to  the  interests  of the  Lenders  or  (ii)  the
         documents evidencing the Subordinated Seller Debt.

         (m)  Fiscal  Year.  Neither  the  Company  nor any of its  consolidated
         Subsidiaries  shall  change  its  fiscal  year  for  accounting  or tax
         purposes from a period consisting of the twelve-month  period ending on
         Friday  nearest to  December  31 of each year,  except as  required  by
         Agreement Accounting  Principles or by law and disclosed to the Lenders
         and the Administrative Agent.

         (n) Hedging Obligations. The Company shall not and shall not permit any
         of its  Subsidiaries  to enter into any  interest  rate,  commodity  or
         foreign currency  exchange,  swap,  collar,  cap or similar  agreements
         evidencing  Hedging  Obligations,  other than  interest  rate,  foreign
         currency or commodity exchange, swap, collar, cap or similar agreements
         entered into by the Company or its  Subsidiaries  pursuant to which the
         Company  or its  Subsidiaries  has  hedged  its  actual or  anticipated
         interest rate, foreign currency or commodity  exposure.  Such permitted
         hedging  agreements entered into by the Company or its Subsidiaries and
         any Lender or any  Affiliate  of any Lender are  sometimes  referred to
         herein as "Hedging Agreements".

         (o) Capital  Expenditures.  The Company shall not, and shall not permit
         any of its  Subsidiaries  to, make Capital  Expenditures  in any fiscal
         year to the extent that during any fiscal year the aggregate  amount of
         Capital  Expenditures for the Company and its Subsidiaries would exceed
         $15,000,000,   excluding  any  amount   attributable   to  a  Permitted
         Acquisition (the "Capital  Expenditures  Limit").  Notwithstanding  the
         foregoing,  in the event that the Company and its  Subsidiaries  do not
         expend the entire Capital  Expenditures  Limit for any fiscal year, the
         Company  and its  Subsidiaries  may carry  forward  to the  immediately
         succeeding   fiscal  year  the  unutilized   portion  of  such  Capital
         Expenditures Limit.

         (p)  Restrictive  Agreements.  Other than (x) the  Subordinated  Seller
         Note, (y) customary  provisions in licenses or similar  agreements that
         restrict  the  ability of the  Company or its  Subsidiaries  to assign,
         transfer,  license or sublicense any  intellectual  property subject to
         such  license  or  agreement  and (z)  negative  pledge  provisions  in
         Equipment  financing  agreements  which  restrict  only  Liens  on  the
         Equipment  subject  to such  agreement  together  with any  accessions,
         additions,  replacements  or  proceeds of such  Equipment,  the Company
         shall not, nor shall it permit any of its  Subsidiaries  to, enter into
         any  indenture,   agreement,  instrument  or  other  arrangement  which
         directly or  indirectly  prohibits or  restrains,  or has the effect of
         prohibiting or restraining,  or imposes  materially  adverse conditions
         upon, the ability of the Company or any Subsidiary to create Liens upon
         their assets  securing the  Obligations or of any Subsidiary to (i) pay
         dividends or make other distributions or Restricted Payments (A) on its
         Capital   Stock  or  (B)  with   respect  to  any  other   interest  or
         participation  in, or  measured  by,  its  profits,  (ii) make loans or
         advances  to or other  investments  in the  Company or any  Subsidiary,
         (iii)  repay loans or advances  from the Company or any  Subsidiary  or
         (iv) transfer any of its properties to the Company or any Subsidiary.

         7.4      Financial Covenants.

          (a) Minimum Fixed Charge Coverage Ratio. The Company shall maintain as
          of the end of each  fiscal  quarter  set  forth  below a Fixed  Charge
          Coverage  Ratio for the four fiscal  quarter period then ending of not
          less than the ratio set forth below opposite such period:

                  Fiscal Quarter Ending                           Ratio
                  ---------------------                           -----
                  September 30, 2002 through June 30, 2003       1.10:1.00
                  September 30, 2003 and thereafter              1.20:1.00

          (b) Maximum  Leverage Ratio. The Company shall at all times during the
          periods  specified below maintain a Leverage Ratio for the four fiscal
          quarter  period then  ending of not  greater  than the ratio set forth
          below opposite such period:

                   Fiscal Quarter Ending                            Ratio
                   ---------------------                            -----
                  September 30, 2002 through June 30, 2003         2.00:1.00
                  September 30, 2003 and thereafter                1.75:1.00


         (c) Minimum  Consolidated  Net Worth.  The Company shall not permit its
         Consolidated  Net  Worth at any time to be less than the sum of (i) 85%
         of  Consolidated  Net Worth on June 28,  2002 plus (ii)  fifty  percent
         (50%)  of Net  Income  (if  positive)  calculated  separately  for each
         subsequent quarterly accounting period, in each case, excluding changes
         in cumulative foreign exchange translation  adjustment,  plus (iii) the
         aggregate amount of all Equity Interests issued after June 28, 2002.

ARTICLE VIII:  DEFAULTS

        8.1 Defaults. Each of the following occurrences shall constitute a 
Default under this Agreement:

         (a) Failure to Make  Payments  When Due. The Company or any  Subsidiary
         Borrower  shall  (i)  fail  to pay  when  due  any  of the  Obligations
         consisting of principal  with respect to any Loan or (ii) shall fail to
         pay within five (5) Business Days of the date when due any of the other
         Obligations under this Agreement or the other Loan Documents.

         (b)  Breach  of  Certain  Covenants.  The  Company  or any  Subsidiary
         Borrower  shall fail duly and  punctually  to  perform or observe  any
         agreement, covenant or obligation binding on it under:

               (i) Sections 7.1(b),  7.1(c), 7.1(f), 7.2(j), 7.2(k), 7.2(m), 7.3
          or 7.4 or

               (ii) any section of this Agreement or any other Loan Document not
          covered by Section 8.1(a),  8.1(b)(i) or 8.1(m) and such failure shall
          continue unremedied for thirty (30) days after the occurrence thereof.


         (c)  Breach  of  Representation  or  Warranty.  Any  representation  or
         warranty made or deemed made by the Company or any Subsidiary  Borrower
         to the  Administrative  Agent or any Lender herein or by the Company or
         any  Subsidiary  Borrower  or any of their  Subsidiaries  in any of the
         other Loan  Documents or in any statement or certificate or information
         at any  time  given  by any  such  Person  pursuant  to any of the Loan
         Documents  shall  be false in any  material  respect  on the date as of
         which made or deemed made.

         (d)  Default  as to  Other  Indebtedness.  The  Company  or  any of its
         Subsidiaries  shall  fail to pay when due (i) any  Subordinated  Seller
         Debt or (ii)  any  Indebtedness  in  excess  of  $5,000,000  (any  such
         Indebtedness being "Material  Indebtedness");  or the Company or any of
         its  Subsidiaries  shall fail to perform  (beyond the applicable  grace
         period with respect thereto,  if any) any term,  provision or condition
         contained in any agreement  under which any such Material  Indebtedness
         was created or is governed, or any other event shall occur or condition
         exist,  the effect of which default or event is to cause,  or to permit
         the holder or  holders of such  Material  Indebtedness  to cause,  such
         Material  Indebtedness to become due prior to its stated  maturity;  or
         any  Material  Indebtedness  of the Company or any of its  Subsidiaries
         shall be  declared  to be due and  payable or required to be prepaid or
         repurchased (other than by a regularly  scheduled payment) prior to the
         stated maturity thereof.


         (e) Involuntary Bankruptcy; Appointment of Receiver, Etc.

                  (i) An involuntary case shall be commenced against the Company
         or any of the  Company's  Subsidiaries  and the  petition  shall not be
         dismissed,  stayed,  bonded or discharged  within  forty-five (45) days
         after  commencement of the case; or a court having  jurisdiction in the
         premises  shall  enter a decree or order for  relief in  respect of the
         Company or any of the Company's  Subsidiaries  in an involuntary  case,
         under any applicable bankruptcy, insolvency or other similar law now or
         hereinafter  in effect;  or any other  similar  relief shall be granted
         under any applicable federal, state, local or foreign law.

                  (ii) A decree or order of a court having  jurisdiction  in the
         premises for the appointment of a receiver,  liquidator,  sequestrator,
         trustee,  custodian or other  officer  having  similar  powers over the
         Company  or  any  of  the  Company's  Subsidiaries  or  over  all  or a
         substantial part of the property of the Company or any of the Company's
         Subsidiaries shall be entered; or an interim receiver, trustee or other
         custodian of the Company or any of the Company's Subsidiaries or of all
         or a  substantial  part of the  property  of the  Company or any of the
         Company's  Subsidiaries  shall be appointed or a warrant of attachment,
         execution  or  similar  process  against  any  substantial  part of the
         property of the Company or any of the Company's  Subsidiaries  shall be
         issued and any such event  shall not be  stayed,  dismissed,  bonded or
         discharged  within  forty-five  (45) days after entry,  appointment  or
         issuance.


         (f) Voluntary Bankruptcy;  Appointment of Receiver, Etc. The Company or
         any of the Company's  Subsidiaries  shall (i) commence a voluntary case
         under any applicable bankruptcy, insolvency or other similar law now or
         hereafter  in effect,  (ii) consent to the entry of an order for relief
         in an involuntary  case, or to the conversion of an involuntary case to
         a voluntary case,  under any such law, (iii) consent to the appointment
         of or taking  possession by a receiver,  trustee or other custodian for
         all or a substantial part of its property, (iv) make any assignment for
         the benefit of creditors or (v) take any corporate  action to authorize
         any of the foregoing.

         (g) Judgments and Attachments. Any money judgment(s) writ or warrant of
         attachment,  or similar  process  against the  Company or any  Domestic
         Subsidiary or any of their  respective  assets  involving in any single
         case or in the  aggregate an amount in excess of  $5,000,000  is or are
         entered and shall remain undischarged,  unvacated, unbonded or unstayed
         for a period of thirty  (30) days or in any event  later  than  fifteen
         (15) days prior to the date of any proposed sale thereunder.

         (h) Dissolution. Any order, judgment or decree shall be entered against
         the  Company  or any  Domestic  Subsidiary  decreeing  its  involuntary
         dissolution  or split up and such order shall remain  undischarged  and
         unstayed for a period in excess of forty-five (45) days; or the Company
         or any Domestic  Subsidiary shall otherwise  dissolve or cease to exist
         except as specifically permitted by this Agreement.

         (i) Termination Event. Any Termination Event occurs which the Required
         Lenders  believe  is  reasonably  likely to  subject  the  Company  to
         liability in excess of  $5,000,000.  The Unfunded  Liabilities  of all
         Single Employer Plans shall exceed in the aggregate $10,000,000.

         (j) Waiver of Minimum Funding  Standard.  If the plan  administrator of
         any Plan applies under  Section  412(d) of the Code for a waiver of the
         minimum  funding  standards  of  Section  412(a)  of the  Code  and the
         Administrative  Agent or the Required  Lenders  believe the substantial
         business  hardship upon which the  application  for the waiver is based
         could  reasonably  be  expected  to subject  either the  Company or any
         Controlled Group member to liability in excess of $5,000,000.

         (k) Change of Control.  A Change of Control shall occur.

         (l)  Guarantor  Revocation.  Any Guaranty  shall fail to remain in full
         force or  effect  or any  action  shall be taken to  discontinue  or to
         assert the  invalidity  or  unenforceability  of any  Guaranty,  or any
         Guarantor  shall fail to comply with any of the terms or  provisions of
         any Guaranty to which it is a party,  or any Guarantor  shall deny that
         it has any further liability under any Guaranty to which it is a party,
         or  shall  give  notice  to such  effect;  in each  case  other  than a
         Guarantor's  ceasing to be a  Subsidiary  Borrower  pursuant to Section
         2.23 hereof or the  disposition  of such  Guarantor in any  transaction
         permitted by Section 7.3(b) hereof.

         (m) Collateral Documents. Any Collateral Documents shall fail to remain
         in full force or effect or any action shall be taken to  discontinue or
         to  assert  the  invalidity  or   unenforceability  of  any  Collateral
         Document, or any "Default" or "Unmatured Default" shall occur under and
         as defined in any Collateral  Document or shall deny, or give notice to
         such effect,  that it has any further  liability  under such Collateral
         Document or any Collateral Document shall for any reason fail to create
         a  valid  and  perfected,  first  priority  security  interest  in  any
         collateral purported to be covered thereby,  except as permitted by the
         terms of such Collateral Document.


         A Default shall be deemed  "continuing"  until cured or until waived in
writing in accordance with Section 9.2.

ARTICLE IX:  ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES

         9.1  Termination of Revolving Loan  Commitments;  Acceleration.  If any
Default described in Section 8.1(e) or 8.1(f) occurs with respect to the Company
or any  Subsidiary  Borrower,  the  obligations  of the  Lenders  to make  Loans
(including,  without  limitation,  Alternate  Currency Loans)  hereunder and the
obligation  of any  Issuing  Banks to issue  Letters of Credit  hereunder  shall
automatically  terminate and the Obligations  shall  immediately  become due and
payable without any election or action on the part of the  Administrative  Agent
or any  Lender.  If any other  Default  occurs,  the  Required  Lenders,  or the
Administrative  Agent  acting  at the  direction  of the  Required  Lenders  may
terminate or suspend the  obligations  of the Lenders to make Loans  (including,
without  limitation,  Alternate  Currency Loans) hereunder and the obligation of
the  Issuing  Banks to  issue  Letters  of  Credit  hereunder,  or  declare  the
Obligations  to be due and payable,  or both,  whereupon the  Obligations  shall
become  immediately due and payable,  without  presentment,  demand,  protest or
notice of any kind, all of which the Borrowers expressly waive.

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

          (a) Postpone or extend the Revolving Loan  Termination  Date, the Term
          Loan  Maturity  Date or any other date  scheduled  for any  payment of
          principal of, or interest on, the Loans, the Reimbursement Obligations
          or any fees or other  amounts  payable  to such  Lender  (except  with
          respect to a waiver of the application of the default rate of interest
          pursuant to Section 2.12 hereof).

          (b) Reduce the principal  amount of any Loans or L/C  Obligations,  or
          reduce  the rate or extend the time of  payment  of  interest  or fees
          thereon.

          (c) Reduce the  percentage  specified  in the  definition  of Required
          Lenders or any other percentage of Lenders  hereunder  specified to be
          the  applicable  percentage  in  this  Agreement  to act on  specified
          matters or amend the  definitions  of  "Required  Lenders",  "Pro Rata
          Revolving Share",  "Pro Rata Share",  "Pro Rata Term Share", "Pro Rata
          Tranche A Revolving Share", "Pro Rata Tranche B Revolving Share", "Pro
          Rata  Tranche C  Revolving  Share" or "Pro  Rata  Tranche D  Revolving
          Share".

          (d) Increase the amount of the Revolving Loan Commitment of any Lender
          hereunder.

          (e) Permit the Company or any Subsidiary Borrower to assign its rights
          under this Agreement or any Guaranty.

          (f) Release the Company or any Guarantor  from any of its  obligations
          under  the  Guaranty  set  forth  in  Article  X hereof  or any  other
          Guaranty.

          (g) Amend this Section 9.2. 

          (h) Release all or a  substantial  portion of the  collateral  pledged
          pursuant to the  Collateral  Documents  (except as expressly  provided
          therein).

          (i) Amend the definition of "Trigger Event Date".

         No amendment of any  provision  of this  Agreement  relating to (a) the
Administrative  Agent shall be  effective  without  the  written  consent of the
Administrative  Agent,  (b) any  Issuing  Bank shall be  effective  without  the
written  consent  of such  Issuing  Bank and (c) any Swing  Line  Loan  shall be
effective without the written consent of the Swing Line Bank. The Administrative
Agent may waive  payment  of the fee  required  under  Section  14.3(b)  without
obtaining the consent of any of the Lenders.

         9.3 Preservation of Rights.  No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be  construed  to be a waiver of any  Default  or an  acquiescence
therein,  and the  making  of a Loan  or the  issuance  of a  Letter  of  Credit
notwithstanding  the  existence of a Default or the  inability of the Company or
any other Borrower to satisfy the conditions  precedent to such Loan or issuance
of such Letter of Credit shall not  constitute any waiver or  acquiescence.  Any
single or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment or
other  variation of the terms,  conditions or  provisions of the Loan  Documents
whatsoever  shall be valid unless in writing  signed by the requisite  number of
Lenders  required  pursuant to Section  9.2, and then only to the extent in such
writing  specifically set forth. All remedies contained in the Loan Documents or
by  law  afforded  shall  be  cumulative  and  all  shall  be  available  to the
Administrative  Agent and the Lenders  until the  Obligations  have been paid in
full.


ARTICLE X:  GUARANTY

         10.1  Guaranty.  For  valuable  consideration,  the receipt of which is
hereby  acknowledged,  and to  induce  the  Lenders  to  make  advances  to each
Subsidiary  Borrower and to make,  issue and  participate  in Letters of Credit,
Swing Line Loans and Alternate Currency Loans, the Company hereby absolutely and
unconditionally  guarantees prompt payment when due, whether at stated maturity,
upon  acceleration  or otherwise,  and at all times  thereafter,  of any and all
existing and future obligations including without limitation the Obligations, of
each Subsidiary  Borrower to the  Administrative  Agent, the Lenders,  the Swing
Line Bank, the Issuing  Lenders,  the Alternate  Currency Banks, or any of them,
under or with  respect  to the Loan  Documents  or under or with  respect to any
Hedging  Agreement  entered into in connection with this Agreement,  whether for
principal,  interest, (including interest accruing after the commencement of any
bankruptcy insolvency or similar proceeding whether or not allowed as a claim in
such  proceeding)  fees,  expenses or otherwise  (collectively,  the "Guaranteed
Obligations",   and  each  such  Subsidiary  Borrower  being  an  "Obligor"  and
collectively, the "Obligors").

         10.2  Waivers.  The Company  waives  notice of the  acceptance  of this
guaranty and of the extension or continuation  of the Guaranteed  Obligations or
any part thereof.  The Company further waives  presentment,  protest,  notice of
notices  delivered  or demand  made on any Obligor or action or  delinquency  in
respect of the Guaranteed  Obligations or any part thereof,  including any right
to require  the  Administrative  Agent and the Lenders to sue any  Obligor,  any
other  guarantor or any other Person  obligated  with respect to the  Guaranteed
Obligations or any part thereof, or otherwise to enforce payment thereof against
any  collateral  securing the Guaranteed  Obligations  or any part thereof.  The
Administrative  Agent and the Lenders  shall have no  obligation  to disclose or
discuss with the Company their  assessments  of the  financial  condition of the
Obligors.

         10.3 Guaranty Absolute.  This guaranty is a guaranty of payment and not
of collection, is a primary obligation of the Company and not one of surety, and
the  validity  and  enforceability  of  this  guaranty  shall  be  absolute  and
unconditional  irrespective  of, and shall not be impaired or affected by any of
the following: (a) any extension, modification or renewal of, or indulgence with
respect to, or substitutions for, the Guaranteed Obligations or any part thereof
or any agreement  relating  thereto at any time;  (b) any failure or omission to
enforce any right, power or remedy with respect to the Guaranteed Obligations or
any part thereof or any agreement relating thereto,  or any collateral;  (c) any
waiver of any right, power or remedy with respect to the Guaranteed  Obligations
or any part  thereof or any  agreement  relating  thereto or with respect to any
collateral;  (d)  any  release,  surrender,   compromise,   settlement,  waiver,
subordination or modification, with or without consideration, of any collateral,
any other  guaranties  with respect to the  Guaranteed  Obligations  or any part
thereof,  or any other  obligation of any Person with respect to the  Guaranteed
Obligations  or any part  thereof;  (e) the  enforceability  or  validity of the
Guaranteed Obligations or any part thereof or the genuineness, enforceability or
validity of any agreement  relating  thereto or with respect to any  collateral;
(f) the  application  of  payments  received  from any source to the  payment of
obligations other than the Guaranteed  Obligations,  any part thereof or amounts
which are not covered by this guaranty even though the Administrative  Agent and
the Lenders  might  lawfully  have elected to apply such payments to any part or
all of the  Guaranteed  Obligations  or to amounts which are not covered by this
guaranty;  (g) any change in the  ownership  of any  Obligor or the  insolvency,
bankruptcy  or any  other  change in the legal  status of any  Obligor;  (h) the
change in or the imposition of any law, decree, regulation or other governmental
act  which  does or might  impair,  delay  or in any way  affect  the  validity,
enforceability  or the payment when due of the Guaranteed  Obligations;  (i) the
failure of the Company or any  Obligor to  maintain  in full force,  validity or
effect or to obtain or renew when required all governmental and other approvals,
licenses or consents  required in connection with the Guaranteed  Obligations or
this  guaranty,  or to take any other  action  required in  connection  with the
performance of all  obligations  pursuant to the Guaranteed  Obligations or this
guaranty;  (j) the  existence  of any claim,  setoff or other  rights  which the
Company  may have at any time  against  any  Obligor,  or any  other  Person  in
connection herewith or an unrelated transaction;  (k) the Administrative Agent's
or any Lender's election,  in any case or proceeding instituted under chapter 11
of the  Bankruptcy  Code,  of  the  application  of  section  1111(b)(2)  of the
Bankruptcy  Code;  (l) any  borrowing,  use of cash  collateral,  or  grant of a
security interest by the Company, as debtor in possession,  under section 363 or
364 of the United States  Bankruptcy  Code; (m) the  disallowance  of all or any
portion any Lender's  claims for repayment of the Guaranteed  Debt under section
502 or 506 of the United States Bankruptcy Code; or (n) any other circumstances,
whether or not similar to any of the foregoing, which could constitute a defense
to a  guarantor;  all  whether  or not the  Company  shall  have had  notice  or
knowledge  of any act or  omission  referred  to in the  foregoing  clauses  (a)
through  (n) of this  paragraph.  It is  agreed  that  the  Company's  liability
hereunder  is  several  and  independent  of  any  other   guaranties  or  other
obligations at any time in effect with respect to the Guaranteed  Obligations or
any part  thereof and that the  Company's  liability  hereunder  may be enforced
regardless of the existence,  validity,  enforcement or  non-enforcement  of any
such other  guaranties or other  obligations  or any provision of any applicable
law  or  regulation  purporting  to  prohibit  payment  by  any  Obligor  of the
Guaranteed  Obligations  in the manner  agreed upon  between the Obligor and the
Administrative Agent and the Lenders.

         10.4  Acceleration.  The Company agrees that, as between the Company on
the one hand, and the Lenders and the  Administrative  Agent, on the other hand,
the obligations of each Obligor  guaranteed under this Article X may be declared
to be forthwith  due and payable,  or may be deemed  automatically  to have been
accelerated,  as provided in Section 9.1 hereof for  purposes of this Article X,
notwithstanding  any  stay,  injunction  or  other  prohibition  (whether  in  a
bankruptcy  proceeding  affecting  such Obligor or  otherwise)  preventing  such
declaration  as against such Obligor and that, in the event of such  declaration
or automatic  acceleration,  such obligations (whether or not due and payable by
such Obligor) shall forthwith become due and payable by the Company for purposes
of this Article X.

         10.5   Marshaling;   Reinstatement.   None  of  the   Lenders  nor  the
Administrative  Agent nor any Person  acting for or on behalf of the  Lenders or
the  Administrative  Agent shall have any  obligation  to marshall any assets in
favor of the  Company or  against or in payment of any or all of the  Guaranteed
Obligations. If the Company, any other Borrower or any other guarantor of all or
any part of the Guaranteed Obligations makes a payment or payments to any Lender
or the  Administrative  Agent, which payment or payments or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
and/or required to be repaid to such Borrower, the Company, such other guarantor
or any other Person,  or their respective  estates,  trustees,  receivers or any
other party,  including,  without limitation,  the Company, under any bankruptcy
law, state or federal law, common law or equitable cause, then, to the extent of
such payment or repayment, the part of the Guaranteed Obligations which has been
paid,  reduced or satisfied by such amount shall be reinstated  and continued in
full force and effect as of the time immediately preceding such initial payment,
reduction or satisfaction.

         10.6  Subrogation.  Until  the  irrevocable  payment  in  full  of  the
Obligations  and  termination  of all  commitments  which could give rise to any
Guaranteed  Obligation,  the  Company  shall have no right of  subrogation  with
respect to the  Guaranteed  Obligations,  and hereby waives any right to enforce
any remedy  which the  Administrative  Agent  and/or the  Lenders now has or may
hereafter have against the Company,  any endorser or any other  guarantor of all
or any part of the  Guaranteed  Obligations,  and the Company  hereby waives any
benefit of, and any right to participate in, any security or collateral given to
the Administrative  Agent and/or the Lenders to secure payment of the Guaranteed
Obligations  or any part  thereof or any other  liability  of any Obligor to the
Administrative Agent and/or the Lenders.

         10.7  Termination  Date.  Subject to Section 10.5 this  guaranty  shall
continue in effect until the later of (a) the Facility Termination Date, and (b)
the date on which this  Agreement  has otherwise  expired or been  terminated in
accordance with its terms and all of the Guaranteed  Obligations  have been paid
in full in cash.


ARTICLE XI:  GENERAL PROVISIONS

         11.1 Survival of Representations. All representations and warranties of
the Company contained in this Agreement shall survive delivery of this Agreement
and the  making  of the  Loans  herein  contemplated  so long as any  principal,
accrued  interest,  fees,  or any other  amount due and  payable  under any Loan
Document is  outstanding  and unpaid (other than  contingent  reimbursement  and
indemnification  obligations) and so long as the Revolving Loan Commitments have
not been terminated.

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

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

        11.4 Entire  Agreement.  The Loan Documents embody the entire agreement
and understanding among the Borrowers,  the Administrative Agent and the Lenders
and supersede all prior agreements and understandings  among the Borrowers,  the
Administrative  Agent and the Lenders  relating to the  subject  matter  thereof
other than the New Fee Letter.

        11.5 Several  Obligations;  Benefits of this Agreement.  The respective
obligations  of the  Lenders  hereunder  are several and not joint and no Lender
shall be the partner or agent of any other Lender (except to the extent to which
the  Administrative  Agent is  authorized  to act as such).  The  failure of any
Lender to perform any of its  obligations  hereunder shall not relieve any other
Lender from any of its obligations hereunder.  Any obligation of "the Borrowers"
hereunder shall be joint and several obligation of the Borrowers. This Agreement
shall not be  construed  so as to confer  any right or  benefit  upon any Person
other than the parties to this  Agreement and their  respective  successors  and
assigns.

         11.6     Expenses; Indemnification.

         (a) Expenses.  The Borrowers shall reimburse the  Administrative  Agent
         for  any  reasonable  costs  and  out-of-pocket   expenses   (including
         reasonable   attorneys'  and  paralegals'  fees  and  time  charges  of
         attorneys and paralegals for the Administrative  Agent,  Issuing Banks,
         Swing Line Bank and Alternative Currency Banks) paid or incurred by the
         Administrative  Agent in connection with the preparation,  negotiation,
         execution,  delivery,   syndication,   review,  proposed  or  completed
         amendment,  waiver  or  modification,  and  administration  of the Loan
         Documents.  The Borrowers  also agree to reimburse  the  Administrative
         Agent,  each  Alternate  Currency  Bank,  each Arranger and each of the
         Lenders for any costs and out-of-pocket  expenses (including reasonable
         attorneys'  and  paralegals'  fees and time  charges of  attorneys  and
         paralegals for the Administrative  Agent, each Alternate Currency Bank,
         each Arranger and each Lender,  which  attorneys and  paralegals may be
         employees of the  Administrative  Agent, such Alternate  Currency Bank,
         such Arranger,  or the Lenders) paid or incurred by the  Administrative
         Agent,  the Alternate  Currency  Banks,  the Arrangers or any Lender in
         connection  with the collection of the  Obligations  and enforcement of
         the  Loan  Documents.   The  Administrative  Agent  shall  provide  the
         Borrowers  with a detailed  statement of all  reimbursements  requested
         under this Section 11.6(a).

         (b)  Indemnity.  The  Borrowers  hereby  further agree to indemnify the
         Administrative Agent, the Arrangers,  the Alternate Currency Banks, the
         Issuing  Banks  and  each  and all of the  Lenders  and  each of  their
         respective  Affiliates,   and  each  of  the  Administrative   Agent's,
         Arrangers',  Alternate  Currency Bank's,  Issuing Bank's,  Lender's and
         Affiliate's directors,  officers, employees,  attorneys and agents (all
         such  persons,  "Indemnitees")  against  all losses,  claims,  damages,
         penalties,  judgments,  liabilities  and expenses  (including,  without
         limitation,  all expenses of litigation or preparation therefor whether
         or not such Indemnitee is a party thereto) which any of them may pay or
         incur  arising  out of or relating  to this  Agreement,  the other Loan
         Documents,   the  Spectra  Precision   Acquisition,   the  transactions
         contemplated  hereby or the direct or indirect  application or proposed
         application of the proceeds of any Loan hereunder  except to the extent
         that they are determined in a final non-appealable  judgment by a court
         of competent jurisdiction to have resulted from the gross negligence or
         willful misconduct of the party seeking indemnification.

          (c) Waiver of Certain Claims. The Borrowers further agree to assert no
          claim  against  any of the  Indemnitees  on any  theory  of  liability
          seeking  consequential,   special,  indirect,  exemplary  or  punitive
          damages.

          (d) Survival of  Agreements.  The  obligations  and  agreements of the
          Borrowers  under this Section 11.6 shall  survive the  termination  of
          this Agreement.

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

         11.8 Accounting.  Except with respect to the pricing grid  calculations
in Section 2.15 and the financial covenant  calculations in Section 7.4, both of
which shall be made in accordance  with  Agreement  Accounting  Principles as in
effect on the date hereof, all accounting terms used herein shall be interpreted
and all accounting  determinations  hereunder  shall be made in accordance  with
generally  accepted  accounting  principles  as in  effect  from  time to  time,
consistently applied.

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

         11.10 Nonliability of Lenders.  The relationship  between the Borrowers
and the  Lenders and the  Administrative  Agent shall be solely that of borrower
and  lender.  Neither  the  Administrative  Agent nor any Lender  shall have any
fiduciary  responsibilities  to the  Borrowers  or the  Guarantors.  Neither the
Administrative  Agent  nor  any  Lender  undertakes  any  responsibility  to any
Borrower  or  Guarantor  to review or inform any  Borrower or  Guarantor  of any
matter in connection with any phase of the Borrowers' business or operations.

         11.11   GOVERNING  LAW.  ANY  DISPUTE  BETWEEN  ANY  BORROWER  AND  THE
ADMINISTRATIVE  AGENT, ANY LENDER OR ANY OTHER HOLDER OF OBLIGATIONS ARISING OUT
OF, CONNECTED WITH,  RELATED TO, OR INCIDENTAL TO THE  RELATIONSHIP  ESTABLISHED
BETWEEN  THEM IN  CONNECTION  WITH,  THIS  AGREEMENT  OR ANY OF THE  OTHER  LOAN
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED  IN  ACCORDANCE  WITH THE  INTERNAL  LAWS  (BUT  WITHOUT  REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.

         11.12    CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.

         (a) EXCLUSIVE JURISDICTION.  EXCEPT AS PROVIDED IN SUBSECTION (b), EACH
         OF THE PARTIES  HERETO AGREES THAT ALL DISPUTES  AMONG THEM ARISING OUT
         OF,  CONNECTED  WITH,  RELATED TO, OR  INCIDENTAL  TO THE  RELATIONSHIP
         ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE
         OTHER LOAN DOCUMENTS  WHETHER  ARISING IN CONTRACT,  TORT,  EQUITY,  OR
         OTHERWISE,  SHALL BE RESOLVED  EXCLUSIVELY  BY STATE OR FEDERAL  COURTS
         LOCATED  IN NEW  YORK,  BUT THE  PARTIES  HERETO  ACKNOWLEDGE  THAT ANY
         APPEALS  FROM  THOSE  COURTS  MAY HAVE TO BE  HEARD BY A COURT  LOCATED
         OUTSIDE OF NEW YORK.  EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES
         BROUGHT  PURSUANT TO THIS SUBSECTION (a) ANY OBJECTION THAT IT MAY HAVE
         TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.

         (b) OTHER  JURISDICTIONS.  EACH BORROWER AGREES THAT THE ADMINISTRATIVE
         AGENT,  ANY LENDER OR ANY OTHER  HOLDER OF  OBLIGATIONS  SHALL HAVE THE
         RIGHT TO PROCEED AGAINST EACH BORROWER OR ITS RESPECTIVE  PROPERTY IN A
         COURT IN ANY  LOCATION  TO ENABLE  SUCH  PERSON TO (1) OBTAIN  PERSONAL
         JURISDICTION  OVER ANY  BORROWERS (2) IN ORDER TO ENFORCE A JUDGMENT OR
         OTHER COURT ORDER  ENTERED IN FAVOR OF SUCH PERSON OR (3)  FORECLOSE ON
         COLLATERAL LOCATED IN SUCH  JURISDICTION.  EACH BORROWER AGREES THAT IT
         WILL  NOT  ASSERT  ANY  PERMISSIVE   UNRELATED   COUNTERCLAIMS  IN  ANY
         PROCEEDING  BROUGHT BY SUCH PERSON TO REALIZE ON ANY  SECURITY  FOR THE
         OBLIGATIONS  OR TO ENFORCE A JUDGMENT  OR OTHER COURT ORDER IN FAVOR OF
         SUCH PERSON. EACH BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
         LOCATION OF THE COURT IN WHICH SUCH PERSON HAS  COMMENCED A  PROCEEDING
         DESCRIBED IN THIS SUBSECTION (b).

         (c) VENUE. EACH BORROWER  IRREVOCABLY WAIVES ANY OBJECTION  (INCLUDING,
         WITHOUT  LIMITATION,  ANY  OBJECTION OF THE LAYING OF VENUE OR BASED ON
         THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE
         TO THE BRINGING OF ANY SUCH ACTION OR  PROCEEDING  WITH RESPECT TO THIS
         AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT  EXECUTED OR
         DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.

         (d) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
         ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,  WHETHER
         SOUNDING IN CONTRACT,  TORT,  OR OTHERWISE,  ARISING OUT OF,  CONNECTED
         WITH,  RELATED TO OR INCIDENTAL TO THE RELATIONSHIP  ESTABLISHED  AMONG
         THEM  IN  CONNECTION  WITH  THIS  AGREEMENT  OR ANY  OTHER  INSTRUMENT,
         DOCUMENT OR AGREEMENT  EXECUTED OR DELIVERED  IN  CONNECTION  HEREWITH.
         EACH OF THE PARTIES  HERETO  AGREES AND  CONSENTS  THAT ANY SUCH CLAIM,
         DEMAND,  ACTION  OR CAUSE OF ACTION  SHALL BE  DECIDED  BY COURT  TRIAL
         WITHOUT  A JURY  AND  THAT  ANY  PARTY  HERETO  MAY  FILE  AN  ORIGINAL
         COUNTERPART  OR A COPY OF THIS  AGREEMENT  WITH ANY  COURT  AS  WRITTEN
         EVIDENCE OF THE  CONSENT OF THE  PARTIES  HERETO TO THE WAIVER OF THEIR
         RIGHT TO TRIAL BY JURY.

         (e) ADVICE OF COUNSEL.  EACH OF THE PARTIES  REPRESENTS  TO EACH OTHER
         PARTY HERETO THAT IT HAS DISCUSSED THIS  AGREEMENT AND,  SPECIFICALLY,
         THE  PROVISIONS  OF  SECTION  11.6 AND THIS  SECTION  11.12,  WITH ITS
         COUNSEL.

         11.13  Other  Transactions.  Each  of  the  Administrative  Agent,  the
Arrangers, the Lenders, the Issuing Banks, the Swing Line Bank and the Borrowers
acknowledge that the Administrative  Agent and the Lenders (or Affiliates of the
Administrative   Agent  and  the  Lenders)  may,  from  time  to  time,   effect
transactions  for their own  accounts  or the  accounts of  customers,  and hold
positions  in  loans  or  options  on  loans  of  the  Company,   the  Company's
Subsidiaries  and  other  companies  that  may be the  subject  of  this  credit
arrangement  and nothing in this  Agreement  shall  impair the right of any such
Person to enter into any such  transaction  (to the  extent it is not  expressly
prohibited by the terms of this Agreement) or give any other Person any claim or
right  of  action  hereunder  as  a  result  of  the  existence  of  the  credit
arrangements  hereunder,  all of which are hereby waived.  In addition,  certain
Affiliates of one or more of the Lenders are or may be  securities  firms and as
such may effect,  from time to time,  transactions for their own accounts or for
the  accounts  of  customers  and hold  positions  in  securities  or options on
securities of the Company,  the Company's  Subsidiaries and other companies that
may be the subject of this  credit  arrangement  and  nothing in this  Agreement
shall impair the right of any such Person to enter into any such transaction (to
the extent it is not  expressly  prohibited  by the terms of this  Agreement) or
give any other Person any claim or right of action  hereunder as a result of the
existence of the credit arrangements hereunder,  all of which are hereby waived.
Other business units affiliated with the  Administrative  Agent may from time to
time  provide  other  financial  services  and  products  to the Company and its
Subsidiaries.


ARTICLE XII:  THE ADMINISTRATIVE AGENT

         12.1  Appointment;  Nature of  Relationship.  BNS is  appointed  by the
Lenders  as the  Administrative  Agent  hereunder  and  under  each  other  Loan
Document,  and each of the Lenders  irrevocably  authorizes  the  Administrative
Agent to act as the  contractual  representative  of such Lender with the rights
and duties  expressly  set forth  herein and in the other  Loan  Documents.  The
Administrative  Agent agrees to act as such contractual  representative upon the
express conditions contained in this Article XII. Notwithstanding the use of the
defined term "Administrative  Agent," it is expressly understood and agreed that
the Administrative  Agent shall not have any fiduciary  responsibilities  to any
Holder of Obligations  by reason of this  Agreement and that the  Administrative
Agent is merely  acting as the  representative  of the  Lenders  with only those
duties  as are  expressly  set  forth  in  this  Agreement  and the  other  Loan
Documents.  In its  capacity as the  Lenders'  contractual  representative,  the
Administrative  Agent (i) does not  assume  any  fiduciary  duties to any of the
Holders of Obligations, (ii) is a "representative" of the Holders of Obligations
within the meaning of Section 9-105 of the Uniform  Commercial Code and (iii) is
acting as an independent contractor,  the rights and duties of which are limited
to those  expressly set forth in this  Agreement  and the other Loan  Documents.
Each of the Lenders,  for itself and on behalf of its  Affiliates  as Holders of
Obligations,  agrees to assert no claim against the Administrative  Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Holder of Obligations waives.

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

         12.3 General Immunity.  Neither the Administrative Agent nor any of its
directors,  officers,  agents or employees  shall be liable to the Company,  the
Lenders or any Lender for any action  taken or omitted to be taken by it or them
hereunder  or under  any  other  Loan  Document  or in  connection  herewith  or
therewith  except to the  extent  such  action or  inaction  is found in a final
judgment by a court of competent  jurisdiction to have arisen primarily from the
gross negligence or willful misconduct of such Person.

         12.4 No  Responsibility  for Loans,  Creditworthiness,  Recitals,  Etc.
Neither the Administrative Agent nor any of its directors,  officers,  agents or
employees shall be responsible for or have any duty to ascertain,  inquire into,
or verify (a) any statement,  warranty or representation made in connection with
any Loan Document or any borrowing hereunder;  (b) the performance or observance
of any of the covenants or  agreements  of any obligor under any Loan  Document;
(c) the satisfaction of any condition  specified in Article V, except receipt of
items  required to be  delivered  solely to the  Administrative  Agent;  (d) the
existence  or  possible   existence   of  any  Default  or  (e)  the   validity,
effectiveness  or  genuineness  of any Loan Document or any other  instrument or
writing furnished in connection therewith. The Administrative Agent shall not be
responsible  to any  Lender for any  recitals,  statements,  representations  or
warranties  herein or in any of the other Loan Documents,  or for the execution,
effectiveness, genuineness, validity, legality, enforceability,  collectibility,
or  sufficiency  of this  Agreement  or any of the other Loan  Documents  or the
transactions  contemplated  thereby,  or  for  the  financial  condition  of any
guarantor  of  any  or  all  of  the  Obligations,  the  Company  or  any of its
Subsidiaries.

         12.5 Action on Instructions of Lenders.  The Administrative Agent shall
in all  cases be fully  protected  in  acting,  or in  refraining  from  acting,
hereunder  and  under  any  other  Loan  Document  in  accordance  with  written
instructions  signed by the Required Lenders (or all of the Lenders in the event
that and to the extent that this Agreement  expressly  requires such),  and such
instructions  and any action taken or failure to act pursuant  thereto  shall be
binding on all of the  Lenders  and on all owners of Loans and on all Holders of
Obligations.  The  Administrative  Agent shall be fully  justified in failing or
refusing to take any action  hereunder and under any other Loan Document  unless
it shall  first be  indemnified  to its  satisfaction  by the  Lenders  pro rata
against any and all  liability,  cost and expense that it may incur by reason of
taking or continuing to take any such action.

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

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

         12.8 The Administrative Agent's,  Issuing Banks', Swing Line Bank's and
Alternate  Currency Banks'  Reimbursement and  Indemnification.  

          (a) The Lenders agree to reimburse  and  indemnify the  Administrative
          Agent ratably in proportion  to their  respective  Pro Rata Shares (i)
          for any expenses incurred by the Administrative Agent on behalf of the
          Lenders,  in connection  with the  preparation,  execution,  delivery,
          administration  and enforcement of the Loan Documents and (ii) for any
          liabilities,   obligations,   losses,  damages,  penalties,   actions,
          judgments,  suits,  costs,  expenses or  disbursements of any kind and
          nature  whatsoever  which may be imposed  on,  incurred by or asserted
          against the Administrative Agent in any way relating to or arising out
          of the Loan  Documents or any other  document  delivered in connection
          therewith or the transactions contemplated thereby, or the enforcement
          of any of the terms thereof or of any such other  documents;  provided
          that no Lender shall be liable for any of the  foregoing to the extent
          any of the foregoing is found in a final non-appealable  judgment by a
          court of  competent  jurisdiction  to have arisen  primarily  from the
          gross negligence or willful misconduct of the Administrative Agent.

          (b) The Lenders with a Revolving  Loan  Commitment  agree to reimburse
          and indemnify the  Administrative  Agent, the Issuing Banks, the Swing
          Line Bank and the  Alternate  Currency  Banks ratably in proportion to
          their  respective  Pro  Rata  Revolving  Shares  (i) any  amounts  not
          reimbursed  by any Borrower for which the  Administrative  Agent,  the
          Issuing  Banks,  the Swing Line Bank and the Alternate  Currency Banks
          are  entitled  to   reimbursement  by  any  Borrower  under  the  Loan
          Documents,  (ii) for any other expenses incurred by the Administrative
          Agent, any Issuing Bank, the Swing Line Bank or any Alternate Currency
          Bank on behalf of the Lenders,  in  connection  with the  preparation,
          execution,  delivery,  administration  and  enforcement  of  the  Loan
          Documents and (iii) for any liabilities, obligations, losses, damages,
          penalties, actions, judgments, suits, costs, expenses or disbursements
          of any kind and nature whatsoever which may be imposed on, incurred by
          or asserted  against the  Administrative  Agent, any Issuing Bank, the
          Swing Line Bank or any Alternate  Currency Bank in any way relating to
          or arising out of the Loan Documents or any other  document  delivered
          in connection therewith or the transactions  contemplated  thereby, or
          the  enforcement  of any of the  terms  thereof  or of any such  other
          documents;  provided  that no Lender  shall be  liable  for any of the
          foregoing  to the  extent  any of the  foregoing  is  found in a final
          non-appealable  judgment by a court of competent  jurisdiction to have
          arisen  primarily from the gross  negligence or willful  misconduct of
          the Administrative  Agent, the applicable Issuing Bank, the Swing Line
          Bank or the applicable Alternate Currency Bank.

         12.9 Rights as a Lender. With respect to its Revolving Loan Commitment,
Loans made by it,  Swing Line Loans made by it and  Letters of Credit  issued by
it, the Administrative Agent shall have the same rights and powers hereunder and
under any other Loan Document as any Lender or Issuing Bank and may exercise the
same as though it were not the  Administrative  Agent,  and the term "Lender" or
"Lenders",  "Swing Line Bank",  "Issuing Bank" or "Issuing Banks" shall,  unless
the  context  otherwise  indicates,  include  the  Administrative  Agent  in its
individual  capacity.  The  Administrative  Agent may accept deposits from, lend
money to,  and  generally  engage in any kind of  trust,  debt,  equity or other
transaction,  in addition to those  contemplated  by this Agreement or any other
Loan Document,  with the Company or any of its Subsidiaries in which such Person
is not prohibited hereby from engaging with any other Person.

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

         12.11 Successor  Administrative  Agent.  The  Administrative  Agent may
resign at any time by giving  written  notice  thereof  to the  Lenders  and the
Company. Upon any such resignation, the Required Lenders shall have the right to
appoint, on behalf of the Borrowers and the Lenders, a successor  Administrative
Agent. If no successor  Administrative Agent shall have been so appointed by the
Required  Lenders and shall have  accepted such  appointment  within thirty days
after the retiring Administrative Agent's giving notice of resignation, then the
retiring  Administrative  Agent may appoint,  on behalf of the Borrowers and the
Lenders, a successor  Administrative Agent. Such successor  Administrative Agent
shall be a  commercial  bank having  capital and  retained  earnings of at least
$500,000,000. Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor  Administrative  Agent,  such successor  Administrative
Agent shall thereupon succeed to and become vested with all the rights,  powers,
privileges  and duties of the retiring  Administrative  Agent,  and the retiring
Administrative  Agent  shall be  discharged  from  its  duties  and  obligations
hereunder and under the other Loan Documents.  After any retiring Administrative
Agent's  resignation  hereunder as Administrative  Agent, the provisions of this
Article  XII shall  continue in effect for its benefit in respect of any actions
taken or  omitted  to be taken by it while it was  acting as the  Administrative
Agent hereunder and under the other Loan Documents.

         12.12 No Duties Imposed Upon Syndication Agent,  Documentation Agent or
Arrangers.  None of the Persons  identified on the cover page to this Agreement,
the  signature  pages to this  Agreement  or  otherwise  in this  Agreement as a
"Syndication Agent",  "Documentation  Agent" or "Arranger" shall have any right,
power, obligation, liability,  responsibility or duty under this Agreement other
than, (a) expressly granted  indemnification  rights and (b) if such Person is a
Lender, those applicable to all Lenders as such. Without limiting the foregoing,
none  of the  Persons  identified  on the  cover  page to  this  Agreement,  the
signature  pages  to  this  Agreement  or  otherwise  in  this  Agreements  as a
"Syndication Agent", "Documentation Agent" or "Arranger" shall have or be deemed
to have any  fiduciary  duty to or fiduciary  relationship  with any Lender.  In
addition  to the  agreements  set forth in Section  12.10,  each of the  Lenders
acknowledges that it has not relied, and will not rely, on any of the Persons so
identified  in deciding to enter into this  Agreement or in taking or not taking
action hereunder.

         12.13 Collateral Agent. The Lenders agree that the Administrative Agent
may,  on their  behalf,  appoint a  Collateral  Agent under the  Mortgages  with
respect to real estate located in the State of Ohio and related title insurance,
surveys and other documentation. All references to the "Administrative Agent" in
Article XII shall also be deemed to be references to the Collateral Agent.


ARTICLE XIII:  SETOFF; RATABLE PAYMENTS

         13.1 Setoff.  In addition to, and without  limitation of, any rights of
the Lenders under  applicable law, if any Default occurs and is continuing,  any
Indebtedness from any Lender to the Company or any other Borrower (including all
account balances,  whether  provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Obligations owing
to such Lender,  whether or not the Obligations,  or any part hereof, shall then
be due.

         13.2 Ratable Payments.  If any Lender,  whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments  received pursuant to
Sections  4.1,  4.2 or 4.4  and  payments  expressly  hereunder  provided  to be
distributed  on other than a pro rata basis or payments made and  distributed in
accordance with Section 2.12) in a greater  proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender,  whether in connection with
setoff or  amounts  which  might be  subject  to setoff or  otherwise,  receives
collateral or other  protection  for its Obligation or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in  proportion  to the  obligations  owing to them.  In case any such payment is
disturbed by legal process, or otherwise,  appropriate further adjustments shall
be made.

       13.3 Application of Payments.  The  Administrative  Agent shall apply all
payments and prepayments in respect of any Obligations in the following order:
first,  to pay interest on and then  principal of any portion of the Loans which
the Administrative Agent may have advanced on behalf of any Lender for which the
Administrative  Agent  has  not  then  been  reimbursed  by such  Lender  or the
applicable  Borrower and to pay any Swing Line Loan,  Alternate Currency Loan or
Reimbursement  Obligation that has not been paid; second, to the ratable payment
of the  Obligations  then due and payable;  and third, to the ratable payment of
all other Obligations.

         13.4  Relations  Among  Lenders.   The  Lenders  are  not  partners  or
co-venturers,  and no Lender  shall be liable for the acts or  omissions  of, or
(except  as  otherwise  set forth  herein in case of the  Administrative  Agent)
authorized to act for, any other Lender.

ARTICLE XIV:  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

         14.1  Successors  and  Assigns.  The terms and  provisions  of the Loan
Documents  shall be binding upon and inure to the benefit of the  Borrowers  and
the Lenders and their  respective  successors  and  assigns,  except that (a) no
Borrower shall have any right to assign its rights or obligations under the Loan
Documents without the consent of all of the Lenders,  and any such assignment in
violation of this Section 14.1(a) shall be null and void, and (b) any assignment
by  any  Lender  must  be  made  in   compliance   with   Section  14.3  hereof.
Notwithstanding  clause (b) of this Section 14.1 or Section 14.3, (i) any Lender
may at any time, without the consent of any Borrower or the Administrative Agent
(unless a Default or Unmatured Default has occurred and is continuing,  in which
case the consent of the  Administrative  Agent shall be required,  which consent
shall not  unreasonably  be  withheld),  assign all or any portion of its rights
under this  Agreement  to a Federal  Reserve Bank and (ii) any Lender which is a
fund or commingled  investment  vehicle that invests in commercial  loans in the
ordinary  course of its  business  may at any time,  without  the consent of any
Borrower or the Administrative  Agent (unless a Default or Unmatured Default has
occurred  and is  continuing,  in which case the  consent of the  Administrative
Agent shall be required,  which  consent  shall not  unreasonably  be withheld),
pledge or assign all or any part of its rights under this Agreement to a trustee
or other  representative  of holders of obligations owed or securities issued by
such Lender as collateral to secure such  obligations  or  securities;  provided
that no such  assignment or pledge shall release the transferor  Lender from its
obligations  hereunder.  The  Administrative  Agent may treat each Lender as the
owner of the Loans made by such Lender  hereunder for all purposes hereof unless
and until  such  Lender  complies  with  Section  14.3  hereof in the case of an
assignment  thereof or, in the case of any other  transfer,  a written notice of
the transfer is filed with the Administrative  Agent. Any assignee or transferee
of a Loan,  Revolving Loan  Commitment,  L/C Interest or any other interest of a
lender under the Loan Documents agrees by acceptance  thereof to be bound by all
the terms and  provisions  of the Loan  Documents.  Any  request,  authority  or
consent of any  Person,  who at the time of making  such  request or giving such
authority or consent is the owner of any Loan,  shall be conclusive  and binding
on any subsequent owner, transferee or assignee of such Loan.

         14.2     Participations.

         (a) Permitted  Participants;  Effect. Subject to the terms set forth in
         this  Section  14.2,  any Lender  may,  in the  ordinary  course of its
         business and in accordance with applicable law, at any time sell to one
         or  more  banks  or  other  entities   ("Participants")   participating
         interests  in any  Loan  owing  to  such  Lender,  any  Revolving  Loan
         Commitment of such Lender, any L/C Interest of such Lender or any other
         interest  of such  Lender  under  the Loan  Documents  on a pro rata or
         non-pro rata basis.  Notice of such participation to the Administrative
         Agent shall be required prior to any participation  becoming  effective
         with  respect to a  Participant  which is not a Lender or an  Affiliate
         thereof.  Upon receiving said notice,  the  Administrative  Agent shall
         record  the  participation  in the  Register  it  maintains.  Moreover,
         notwithstanding  such  recordation,  such  participation  shall  not be
         considered an assignment  under Section 14.3 of this Agreement and such
         Participant  shall not be considered a Lender. In the event of any such
         sale by a Lender of  participating  interests  to a  Participant,  such
         Lender's  obligations  under the Loan Documents shall remain unchanged,
         such Lender shall remain solely responsible to the other parties hereto
         for the performance of such  obligations,  such Lender shall remain the
         owner  of all  Loans  made  by it  for  all  purposes  under  the  Loan
         Documents,  all amounts  payable by the applicable  Borrower under this
         Agreement  shall be  determined  as if such  Lender  had not sold  such
         participating   interests,   and  the   applicable   Borrower  and  the
         Administrative  Agent shall  continue to deal solely and directly  with
         such Lender in  connection  with such Lender's  rights and  obligations
         under the Loan  Documents  except that,  for purposes of Article IV and
         Section  9.2  hereof,  the  Participants  shall be entitled to the same
         rights as if they were Lenders.

         (b) Voting Rights.  Each Lender shall retain the sole right to approve,
         without the consent of any Participant, any amendment,  modification or
         waiver of any provision of the Loan Documents other than any amendment,
         modification  or waiver with  respect to any Loan,  Letter of Credit or
         Revolving  Loan  Commitment in which such  Participant  has an interest
         which forgives principal, interest or fees or reduces the interest rate
         or fees payable pursuant to the terms of this Agreement with respect to
         any such Loan or Revolving  Loan  Commitment,  postpones any date fixed
         for any  regularly-scheduled  payment of  principal  of, or interest or
         fees on, any such Loan or Revolving Loan Commitment.

         14.3     Assignments.

         (a) Permitted  Assignments.  

               (i) Any Lender  (each such  assigning  Lender  under this Section
          14.3 being an "Assigning  Lender") may, in the ordinary  course of its
          business and in accordance  with applicable law, at any time assign to
          one or more banks or other entities  (other than the Company or any of
          its  Affiliates)  ("Purchasers")  all or a portion  of its  rights and
          obligations under this Agreement (including,  without limitation,  its
          Tranche A Revolving  Loan  Commitment,  its  Tranche B Revolving  Loan
          Commitment,  its Tranche C Revolving  Loan  Commitment,  its Tranche D
          Revolving  Loan  Commitment,  any  Loans  owing  to  it,  all  of  its
          participation  interests  in  existing  Letters of Credit,  Swing Line
          Loans and Alternate  Currency Loans, and its obligation to participate
          in  additional  Letters  of Credit,  Swing  Line  Loans and  Alternate
          Currency  Loans  hereunder) in accordance  with the provisions of this
          Section 14.3. Such assignment  shall be  substantially  in the form of
          Exhibit D hereto  and shall not be  permitted  hereunder  unless  such
          assignment  is either for all of such  Assigning  Lender's  rights and
          obligations  under the Loan  Documents  or,  without the prior written
          consent of the  Administrative  Agent and the Company,  involves loans
          and commitments as a consequence of which neither the Assigning Lender
          nor the Purchaser will have a Revolving Loan Commitment or Term Loans,
          as applicable,  of less than  $5,000,000;  provided that the foregoing
          restrictions  with respect to such Revolving Loan  Commitments or Term
          Loans  having a minimum  aggregate  amount  (A) shall not apply to any
          assignment between Lenders, or to an Affiliate or Approved Fund of any
          Lender,  and (B) in any  event  may be  waived  by the  Administrative
          Agent. The written consent of the Administrative  Agent, and, prior to
          the occurrence of a Default,  the Company (which consent, in each such
          case, shall not be unreasonably withheld),  shall be required prior to
          an assignment  becoming effective with respect to a Purchaser which is
          not a Lender or an Affiliate or Approved Fund of such Lender.

               (ii)  Notwithstanding  anything to the contrary contained herein,
          any  Lender  (each  such  Lender,  a  "Granting  Bank") may grant to a
          special  purpose  funding  vehicle (each such special  purpose funding
          vehicle, a "SPC"),  identified as such in writing from time to time by
          the  applicable  Granting  Bank to the  Administrative  Agent  and the
          Company,  the option to provide to the Company and the other Borrowers
          all or any part of any Advance that such Granting Bank would otherwise
          be  obligated  to make to the  applicable  Borrower  pursuant  to this
          Agreement;  provided  that  (i)  nothing  herein  shall  constitute  a
          commitment  by any SPC to make any Advance,  (ii) if an SPC elects not
          to exercise such option or otherwise  fails to provide all or any part
          of such Advance,  the  applicable  Granting Bank shall be obligated to
          make such  Advance  pursuant  to the terms  hereof.  The  making of an
          Advance  by  any  SPC  hereunder  shall  utilize  the  Revolving  Loan
          Commitment of the applicable  Granting Bank to the same extent, and as
          if, such Advance were made by such  Granting  Bank.  Each party hereto
          hereby  agrees that no SPC shall be liable for any  indemnity or other
          similar  payment  obligation  under this  Agreement (all liability for
          which shall remain with the  applicable  Granting  Bank).  All notices
          hereunder to any Granting Bank or the related SPC, and all payments in
          respect of the  Obligations  due to such  Granting Bank or the related
          SPC, shall be made to such Granting  Bank. In addition,  each Granting
          Bank shall vote as a Lender  hereunder  without  giving  effect to any
          assignment under this Section 14.3(a)(ii),  and not SPC shall have any
          vote as a Lender under this Agreement for any purpose.  In furtherance
          of the  foregoing,  each party hereto hereby  agrees (which  agreement
          shall survive the  termination of this Agreement)  that,  prior to the
          date  that is one year and one day after  the  payment  in full of all
          outstanding  commercial paper or other senior indebtedness of any SPC,
          it will not institute against, or join any other person in instituting
          against,  such  SPC  any  bankruptcy,   reorganization,   arrangement,
          insolvency  or  liquidation  proceedings  under the laws of the United
          States or any State thereto. In addition,  notwithstanding anything to
          the  contrary  contained in this  Section  14.3,  any SPC may (A) with
          notice to, but without the prior  written  consent of, the Company and
          the  Administrative   Agent  and  without  paying  any  processing  or
          administrative  fee therefor,  assign all or a portion of its interest
          in any Advances to the Granting Bank or to any financial  institutions
          (consented  to  by  the  Company  and  the  Administrative   Agent  in
          accordance with the terms of Section  14.3(a)(i))  providing liquidity
          and/or credit support to or for the account of such SPC to support the
          funding or  maintenance of Advances and (B) disclose on a confidential
          basis any  non-public  information  relating  to its  Advances  to any
          rating  agency,  commercial  paper  dealer or  provider of any surety,
          guarantee or credit or liquidity enhancement to such SPC. This Section
          14.3(a)(ii) may not be amended without the written consent of each SPC
          affected thereby.


         (b) Effect;  Effective  Date.  Upon (i) delivery to the  Administrative
         Agent  and the  Alternate  Currency  Banks of a notice  of  assignment,
         substantially in the form attached as Appendix I to Exhibit D hereto (a
         "Notice of Assignment"),  together with any consent required by Section
         14.3(a)  hereof,  (ii)  payment of a $3,500 fee by the  assignee or the
         assignor (as agreed) to the  Administrative  Agent for processing  such
         assignment,  and (iii) the completion of the recording  requirements in
         Section 14.3(c), such assignment shall become effective on the later of
         such date when the requirements in clauses (i), (ii), and (iii) are met
         or the  effective  date  specified  in such Notice of  Assignment.  The
         Notice of Assignment shall contain a representation by the Purchaser to
         the effect that none of the consideration  used to make the purchase of
         the Revolving  Loan  Commitment,  Loans and L/C  Obligations  under the
         applicable  assignment  agreement  are "plan  assets" as defined  under
         ERISA and that the rights and  interests of the  Purchaser in and under
         the Loan Documents will not be "plan assets" under ERISA.  On and after
         the effective date of such assignment, such Purchaser, if not already a
         Lender,  shall for all purposes be a Lender party to this Agreement and
         any other Loan Documents executed by the Lenders and shall have all the
         rights and  obligations  of a Lender under the Loan  Documents,  to the
         same  extent as if it were an  original  party  hereto,  and no further
         consent or action by any Borrower,  the Lenders, the Alternate Currency
         Banks or the  Administrative  Agent  shall be  required  to release the
         Assigning  Lender  with  respect  to the  percentage  of the  Aggregate
         Revolving Loan Commitment, Loans and Letter of Credit, Swing Line Loans
         and Alternate Currency Loan participations  assigned to such Purchaser.
         Upon the consummation of any assignment to a Purchaser pursuant to this
         Section 14.3(b),  the Assigning Lender, the  Administrative  Agent, the
         Alternate  Currency  Banks and the  Borrowers  shall  make  appropriate
         arrangements  so that, to the extent notes have been issued to evidence
         any of the  transferred  Loans,  replacement  notes are  issued to such
         Assigning Lender and new notes or, as appropriate,  replacement  notes,
         are  issued  to such  Purchaser,  in each  case  in  principal  amounts
         reflecting  their Revolving Loan  Commitment,  as adjusted  pursuant to
         such assignment.  Notwithstanding  anything to the contrary herein,  no
         Borrower  shall, at any time, be obligated to pay under Section 2.14(e)
         to any Lender that is a Purchaser,  assignee or  transferee  any sum in
         excess of the sum which such Borrower  would have been obligated to pay
         to the Lender that was the Assigning Lender, assignor or transferor had
         such assignment or transfer not been effected.

         (c) The  Register.  Notwithstanding  anything  to the  contrary in this
         Agreement,  each Borrower hereby designates the  Administrative  Agent,
         and the Administrative Agent hereby accepts such designation,  to serve
         as such Borrower's  contractual  representative  solely for purposes of
         this Section 14.3(c).  In this  connection,  the  Administrative  Agent
         shall  maintain  at its address  referred to in Section  15.1 a copy of
         each  assignment  delivered  to and  accepted  by it  pursuant  to this
         Section 14.3 and a register (the "Register") for the recordation of the
         names and addresses of the Lenders,  the Revolving  Loan  Commitment of
         each Lender,  the  principal  amount of and interest on the Loans owing
         to,  each  Lender  from  time to time and  whether  such  Lender  is an
         original  Lender or the  assignee  of  another  Lender  pursuant  to an
         assignment  under this Section 14.3.  The entries in the Register shall
         be conclusive and binding for all purposes,  absent manifest error, and
         the Company and each of its Subsidiaries,  the Administrative 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 any  Borrower or any
         Lender at any  reasonable  time and from  time to time upon  reasonable
         prior notice.

         14.4 Confidentiality. Subject to Section 14.5, the Administrative Agent
and the Lenders and their  respective  representatives  shall hold all nonpublic
information  obtained  pursuant  to  the  requirements  of  this  Agreement  and
identified as such by the Company or any other Borrower in accordance  with such
Person's  customary  procedures  for handling  confidential  information of this
nature and in accordance  with safe and sound  commercial  lending or investment
practices  and in  any  event  may  make  disclosure  reasonably  required  by a
prospective  Transferee in connection  with the  contemplated  participation  or
assignment  or as required or  requested  by any  Governmental  Authority or any
securities  exchange or similar  self-regulatory  organization or representative
thereof or pursuant to a  regulatory  examination  or legal  process,  or to any
direct  or  indirect  contractual   counterparty  in  swap  agreements  or  such
contractual   counterparty's   professional  advisor.  In  no  event  shall  the
Administrative  Agent or any  Lender be  obligated  or  required  to return  any
materials  furnished by the Company;  provided that each prospective  Transferee
shall be required to agree that if it does not become a participant  or assignee
it shall return all materials  furnished to it by or on behalf of the Company in
connection with this Agreement.

         14.5 Dissemination of Information. Each Borrower authorizes each Lender
to disclose to any  Participant  or Purchaser  or any other Person  acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective  Transferee  any and all  information  in such  Lender's  possession
concerning  the Company and its  Subsidiaries;  provided  that prior to any such
disclosure,  such  prospective  Transferee shall agree to preserve in accordance
with Section 14.4 the confidentiality of any confidential  information described
therein.


ARTICLE XV:  NOTICES

         15.1 Giving Notice.  Except as otherwise  permitted by Section  2.10(d)
with respect to Borrowing/Conversion/Continuation Notices, all notices and other
communications  provided to any party hereto  under this  Agreement or any other
Loan Documents  shall be in writing or by telex or by facsimile and addressed or
delivered to such party at its address set forth below its  signature  hereto or
at such  other  address  as may be  designated  by such party in a notice to the
other  parties.  Any  notice,  if mailed and  properly  addressed  with  postage
prepaid,  shall be deemed given when  received;  any notice,  if  transmitted by
telex or facsimile, shall be deemed given when transmitted (answerback confirmed
in the case of telexes).

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

         15.3  Authority of Company.  Each of the Subsidiary  Borrowers,  by its
execution  hereof or of an  Assumption  Letter (a)  irrevocably  authorizes  the
Company, on behalf of such Subsidiary Borrower,  to give and receive all notices
under the Loan Documents and to make all elections  under the Loan Documents and
to give all Borrowing/Conversion/Continuation  Notices on its behalf, (b) agrees
to be  bound  by  any  such  notices  or  elections  and  (c)  agrees  that  the
Administrative Agent and Lenders may rely upon any such policies or elections as
if they had been given or made by such Subsidiary Borrower.


ARTICLE XVI:  COUNTERPARTS

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



<PAGE>



         IN WITNESS WHEREOF, the Company, the Subsidiary Borrowers,  the Lenders
and the  Administrative  Agent have executed this Agreement as of the date first
above written.

                   TRIMBLE NAVIGATION LIMITED, as the Company



                   By:  /s/ Mary Ellen Genovese
                        ------------------------
                        Name: Mary Ellen Genovese
                        Title: CFO and Asst. Secretary

                   Address:           645 North Mary Avenue
                                      Sunnyvale, CA 94086

                   Attention:         Mary Ellen Genovese
                   Telephone No.:     (408) 481-7856
                   Facsimile No.:     (408) 481-2996



<PAGE>


               THE BANK OF NOVA SCOTIA, as Administrative Agent, Issuing Bank,
               Swing Line Bank, Alternate Currency Bank, Arranger and Lender


               By:/s/ Liz Hanson
                  ---------------
                  Name: Liz Hanson
                  Title: Director




                Address:           The Bank of Nova Scotia
                                   580 California Street, Suite 2100
                                   San Francisco, CA 94104


                Attention:         Liz Hanson
                Telephone No.:     (415) 616-4153
                Facsimile No.:     (415) 397-0791




<PAGE>


               FLEET NATIONAL BANK, as Syndication Agent and Lender



               By:/s/ Lee A. Merkly-Raymond
                  -------------------------
                  Name:  Lee A. Merkle-Raymond
                  Title: Director

                  Address:           100 Federal Street
                                     Boston, MA  02110

                  Attention:         Chris Mathon
                  Telephone No.:     (617) 434-5726
                  Facsimile No.:     (617) 434-0382



<PAGE>


                   BANK of AMERICA, N.A., as Documentation Agent and as Lender


                   By:/s/ John C. Plecque
                      -------------------
                      Name:  John C. Plecque
                      Title: Senior Vice President
                             Credit Products Officer

                   Address:             530 Lytton Avenue, 2nd Floor
                                        Palo Alto, CA  94301
                   
                   Attention:           John C. Plecque
                   Telephone No.:       (650) 853-4475
                   Facsimile No.:       (650) 853-4529




<PAGE>

                    ERSTE BANK, NEW YORK BRANCH, as Lender


                    By:/s/ Robert J. Wagman
                       --------------------
                       Name: Robert J. Wagman
                       Title: Vice President


                    By:/s/ John Fay
                         ------------
                       Name: John Fay
                       Title: Vice President

                    Address:            280 Park Avenue
                                        West Building
                                        New York, NY 10017
                    Attention:          Robert J. Wagman
                    Telephone No.:      (212) 984-5633
                    Facsimile No.:      (212) 986-5627


<PAGE>

              WELLS FARGO BANK, as Lender


               By:/s/ Jill B. Ta
                  --------------
                  Name: Jill B. Ta
                  Title: Vice President

               
                Address:                400 Hamilton Avenue
                                        Palo Alto, CA 94301
                Attention:              Jill B. Ta
                Telephone No.:          (650) 855-6629
                Facsimile No.:          (650) 328-0814



<PAGE>


                   NORDEA BANK FINLAND PLC, NEW YORK BRANCH, as Lender


                   By: /s/ Ulf Forsstrom
                       ------------------
                       Name: Ulf Forsstrom
                       Title: Vice President


                   By:/s/ Leena Parker
                      ----------------
                      Name: Leena Parker
                      Title: Vice President


                   Address:              437 Madison Avenue
                                         New York, NY 10022
                   Attention:            Ulf Forsstrom
                   Telephone No.:       (212) 318-9302
                   Facsimile No.:       (212) 421-4420



<PAGE>

                BANK OF THE WEST, as Lender


                By:/s/ Tien Lim
                   ------------
                   Name: Tien Lim
                   Title:  Assistant Vice President

                Address:                220 Almaden Blvd., 2nd Floor
                                        San Jose, CA  95113
                Attention:              Tien Lim
                Telephone No.:          (408) 299-1630
                Facsimile No.:          (408) 292-4092



<PAGE>


                 NATIONAL CITY BANK OF KENTUCKY, as Lender


                 By:/s/ Tom Gurbach
                 ------------------
                    Name: Tom Gurbach
                    Title: Vice President

                  Address:              1900 East 9th Street
                                        Locator 2077
                                        Cleveland, OH 44114
                  Attention:            Tom Gurbach
                  Telephone No.:        (216) 222-9324
                  Facsimile No.:        (216) 222-0003



<PAGE>


                  IBM CREDIT CORPORATION, as Lender


                  By:/s/
                      Name:
                      Title:

                  Address:              North Castle Drive
                                        Armonk, NY 10504
                  Attention:            Ronald J. Bachner
                  Telephone No.:        (914) 765-6068
                  Facsimile No.:        (914) 765-6271



<PAGE>


                    UNION BANK OF CALIFORNIA, N.A., as Lender


                    By:/s/ Allan B. Miner
                    ---------------------
                       Name: Allan B. Miner
                       Title: Vice President

                    Address:             99 Almaden Blvd., Suite 200
                                         San Jose, CA  95113
                    Attention:           Al Miner
                    Telephone No.:      (408) 279-7742
                    Facsimile No.:      (408) 280-7163



<PAGE>


                                    EXHIBIT A

                          LOAN COMMITMENTS AND AMOUNTS

<table>
<caption>
                                  Amount of    Amount of      Amount of      Amount of
                                  Tranche A    Tranche B      Tranche C      Tranche D 
                                  Revolving    Revolving      Revolving      Revolving
                                  Loan         Loan           Loan           Loan                          Total Commitment/
                                  Commitment   Commitment     Commitment     Commitment      Term Loans    Loans
Lender                                                                                        
------                            
<s>                              <c>        <c>              <c>             <c>            <c>           <c>                      
The Bank of Nova Scotia                $0          $0         $6,500,000      $8,500,000      $4,238,000    $19,238,000

Fleet National Bank                    $0          $0         $3,625,000      $9,875,000      $4,401,000    $17,901,000

Bank of America, N.A.                  $0          $0         $7,500,000      $7,500,0000     $4,075,000    $19,075,000

National City Bank of Kentucky         $0          $0         $3,750,000      $3,750,000      $2,445,000     $9,945,000

Kentucky Bank of the West          $1,910,377  $1,066,514         $0              $0          $2,445,000     $5,421,891

Nordea Bank Finland PLC, 
New York Branch                      $0           $0          $3,750,000      $3,750,000      $2,445,000     $9,945,000

Wells Fargo Bank                       $0          $0         $3,750,000      $3,750,000      $2,445,000     $9,945,000

Erste Bank, New York Branch            $0          $0         $2,500,000      $2,500,000      $1,630,000     $6,630,000

Union Bank of California, N.A.         $0          $0         $6,125,000      $8,875,000          $0        $15,000,000

ABN AMRO Bank N.V.                     $0      $1,086,611         $0              $0          $4,401,000     $5,487,611

IBM Credit Corporation            $12,500,000      $0             $0              $0          $4,075,000    $16,575,000

TOTAL                             $12,500,000  $1,500,000    $37,500,000     $48,500,000     $32,600,000    $132,600,000
                                  ===========  ==========    ===========     ===========     ===========    ============

</table>





<PAGE>


                                Table of Contents
                                   (continued)
                                      -vi-
                                Table of Contents

                                                                            

                                       -i-

ARTICLE I:  DEFINITIONS.......................................................2

1.1 Certain Defined Terms.....................................................2

1.2 References...............................................................33

1.3 Rounding and Other Consequential Changes.................................33

ARTICLE II: LOAN FACILITIES..................................................33

2.1 Revolving Loans..........................................................33

2.2 Term Loans...............................................................36

2.3 Swing Line Loans.........................................................36

2.4 Rate Options for all Advances; Maximum Interest Periods..................38

2.5 Optional Payments; Mandatory Prepayments.................................38

2.6 Reductions and Adjustments of Revolving Loan Commitments.................41

2.7 Method of Borrowing......................................................43

2.8 Method of Selecting Types and Interest Periods for Advances..............43

2.9 Minimum Amount of Each Advance...........................................44

2.10 Method of Selecting Types and Interest Periods for Conversion 
and Continuation of Advances.................................................44

2.11 Default Rate............................................................46

2.12 Method of Payment.......................................................46

2.13 Evidence of Debt........................................................47

2.14 Telephonic Notices......................................................48

2.15 Promise to Pay; Interest and Fees; Interest Payment Dates; 
Interest and Fee Basis; Taxes; Loan and Control
Accounts.....................................................................48

2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate 
Revolving Loan Commitment Reductions.........................................53

2.17 Lending Installations...................................................54

2.18 Non-Receipt of Funds by the Administrative Agent........................54

2.19 Termination Date........................................................54

2.20 Replacement of Certain Lenders..........................................54

2.21 Alternate Currency Loans................................................55

2.22 Judgment Currency.......................................................58

2.23 Market Disruption; Denomination of Amounts in Dollars; 
Dollar Equivalent of Reimbursement Obligations...............................58

2.24 Subsidiary Borrowers....................................................59

2.25 Security................................................................60

2.26 Assignment and Reallocation of Existing Commitments and 
Existing Loans...............................................................60

ARTICLE III:  THE LETTER OF CREDIT FACILITY..................................61

3.1 Obligation to Issue Letters of Credit....................................61

3.2 Transitional Provision...................................................61

3.3 Types and Amounts........................................................61

3.4 Conditions...............................................................62

3.5 Procedure for Issuance of Letters of Credit..............................62

3.6 Letter of Credit Participation...........................................63

3.7 Reimbursement Obligation.................................................63

3.8 Letter of Credit Fees....................................................64

3.9 Issuing Bank Reporting Requirements......................................64

3.10 Indemnification; Exoneration............................................65

3.11 Cash Collateral.........................................................66

ARTICLE IV:  CHANGE IN CIRCUMSTANCES.........................................66

4.1 Yield Protection.........................................................66

4.2 Changes in Capital Adequacy Regulations..................................67

4.3 Availability of Types of Advances........................................68

4.4 Funding Indemnification..................................................68

4.5 Lender Statements; Survival of Indemnity.................................68

ARTICLE V:  CONDITIONS PRECEDENT.............................................69

5.1 Effectiveness............................................................69

5.2 Initial Advance to Each New Subsidiary Borrower..........................70

5.3 Each Advance and Each Letter of Credit...................................70

ARTICLE VI:  REPRESENTATIONS AND WARRANTIES..................................71

6.1 Organization; Corporate Powers...........................................71

6.2 Authorization and Validity...............................................71

6.3 No Conflict; Government Consent..........................................72

6.4 Financial Statements.....................................................72

6.5 Material Adverse Change..................................................72

6.6 Taxes....................................................................72

6.7 Litigation and Contingent Obligations....................................73

6.8 Subsidiaries.............................................................73

6.9 ERISA....................................................................73

6.10 Accuracy of Information.................................................74

6.11 Regulation U............................................................74

6.12 Material Agreements.....................................................74

6.13 Compliance With Laws....................................................74

6.14 Ownership of Properties.................................................75

6.15 Statutory Indebtedness Restrictions.....................................75

6.16 Environmental Matters...................................................75

6.17 Insurance...............................................................75

6.18 Labor Matters...........................................................76

6.19 Solvency................................................................76

6.20 Default.................................................................76

6.21 Foreign Employee Benefit Matters........................................76

6.22 Acquisition Documents...................................................76

6.23 Collateral Documents....................................................76

6.24 Security................................................................76

6.25 Subordinated Seller Debt................................................77

6.26 Subsidiaries............................................................77

6.27 Representations and Warranties of each Subsidiary Borrower..............77

ARTICLE VII:  COVENANTS......................................................79

7.1 Reporting................................................................79

7.2 Affirmative Covenants....................................................83

7.3 Negative Covenants.......................................................86

7.4 Financial Covenants......................................................94

ARTICLE VIII:  DEFAULTS......................................................94

8.1 Defaults.................................................................94

ARTICLE IX:  ACCELERATION, DEFAULTING LENDERS; WAIVERS, 
AMENDMENTS AND REMEDIES......................................................97

9.1 Termination of Revolving Loan Commitments; Acceleration..................97

9.2 Amendments...............................................................97

9.3 Preservation of Rights...................................................98

ARTICLE X:  GUARANTY.........................................................99

10.1 Guaranty................................................................99

10.2 Waivers.................................................................99

10.3 Guaranty Absolute.......................................................99

10.4 Acceleration...........................................................100

10.5 Marshaling; Reinstatement..............................................100

10.6 Subrogation............................................................101

10.7 Termination Date.......................................................101

ARTICLE XI:  GENERAL PROVISIONS.............................................101

11.1 Survival of Representations............................................101

11.2 Governmental Regulation................................................101

11.3 Headings...............................................................101

11.4 Entire Agreement.......................................................101

11.5 Several Obligations; Benefits of this Agreement........................102

11.6 Expenses; Indemnification..............................................102

11.7 Numbers of Documents...................................................103

11.8 Accounting.............................................................103

11.9 Severability of Provisions.............................................103

11.10 Nonliability of Lenders...............................................103

11.11 Governing Law.........................................................103

11.12 Consent to Jurisdiction; Service of Process; Jury Trial...............103

11.13 Other Transactions....................................................105

ARTICLE XII:  THE ADMINISTRATIVE AGENT......................................105

12.1 Appointment; Nature of Relationship....................................105

12.2 Powers.................................................................106

12.3 General Immunity.......................................................106

12.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc...........106

12.5 Action on Instructions of Lenders......................................106

12.6 Employment of Agents and Counsel.......................................107

12.7 Reliance on Documents; Counsel.........................................107

12.8 The Administrative Agent's, Issuing Banks', Swing Line Bank's and 
Alternate Currency Banks' Reimbursement and Indemnification.................107

12.9 Rights as a Lender.....................................................108

12.10 Lender Credit Decision................................................108

12.11 Successor Administrative Agent........................................108

12.12 No Duties Imposed Upon Syndication Agent, 
Documentation Agent or Arrangers............................................109

12.13 Collateral Agent......................................................109

ARTICLE XIII:  SETOFF; RATABLE PAYMENTS.....................................109

13.1 Setoff.................................................................109

13.2 Ratable Payments.......................................................109

13.3 Application of Payments................................................110

13.4 Relations Among Lenders................................................110

ARTICLE XIV:  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............110

14.1 Successors and Assigns.................................................110

14.2 Participations.........................................................111

14.3 Assignments............................................................111

14.4 Confidentiality........................................................114

14.5 Dissemination of Information...........................................114

ARTICLE XV:  NOTICES........................................................115

15.1 Giving Notice..........................................................115

15.2 Change of Address......................................................115

15.3 Authority of Company...................................................115

ARTICLE XVI:  COUNTERPARTS..................................................115






                                 EXHIBIT 10.83


May 8, 2002



Solectron Federal Systems, Inc.
Attention: Kiran Patel
Executive Vice President, Corporate Development
Chief Financial Officer
847 Gibraltar Drive
Milpitas, CA 95035
Via Fed-Ex

Re: Supply Agreement

Dear Mr. Patel,

Pursuant to Section 26.2 of the Supply Agreement dated August 13, 1999 between
Solectron Federal Systems, Inc., Solectron Corporation and Trimble Navigation
Limited ("Trimble"), Trimble hereby exercises its option to extend the term of
the Agreement for an additional period of one year.

Very truly yours,

Trimble Navigation Limited

/s/ Irwin L. Kwatek
Irwin L. Kwatek
Vice President and General Counsel







Cc: Solectron Corporation
Attn: Corporate Legal Department
847 Gibraltar Drive
Milpitas, CA 95035





                                  EXHIBIT 21.1
                           TRIMBLE NAVIGATION LIMITED
                       LIST OF SUBSIDIARIES OF REGISTRANT

Name of Subsidiary                                              Jurisdiction of 
                                                                 Incorporation

Trimble Navigation Australia Pty Limited                             Australia

Spectra Precision Pty Ltd.                                           Australia

Trimble Austria Ges.mbH                                              Austria

Trimble Belgium BVBA                                                 Belgium

Trimble Brasil Limitada                                              Brazil

Datacom Software Limited                                             California

Jamestown Manufacturing Corporation                                  California

Trimble Export Limited                                               California

Trimble Navigation International Limited                             California

Trimble Specialty Products, Inc.                                     California

TR Navigation Corporation                                            California

Trimble Canada Ltd.                                                  Canada

Trimble Navigation Technology (Shanghai) Co. Ltd.                    China

SPHM Inc.                                                            Delaware

Trimble Middle East WLL                                              Egypt

Trimble France S.A.S.                                                France

Trimble GmbH                                                         Germany

Trimble Holdings GmbH                                                Germany

Trimble Kaiserslautern GmbH                                          Germany

Trimble terraSat GmbH                                                Germany

ZSP Geodetic Systems GmbH                                            Germany

Trimble Italia SRL                                                   Italy

Trimble Navigation Italia s.r.l                                      Italy

Trimble Japan K.K.                                                   Japan

Spectra Precision de Mexico, SA de CV                                Mexico
                                                      
Trimble Mexico S de RL                                               Mexico

Trimble Europe B.V.                                                  Netherlands

Trimble Navigation New Zealand Limited                               New Zealand

Datacom Software Research Limited                                    New Zealand

Tripod Data Systems
                                                  Oregon

Trimble Navigation Singapore PTE Limited                             Singapore

Trimble International Holdings S.L.                                  Spain

Trimble Navigation Iberica S.L.                                      Spain

Spectra Precision Scandinavia AB                                     Sweden

Trimble AB                                                           Sweden

TNL Flight Services, Inc                                             Texas

Trimble Navigation Europe Limited                               United Kingdom

Trimble Pty Ltd.                                                United Kingdom




                                  EXHIBIT 23.1
                           TRIMBLE NAVIGATION LIMITED

               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

     We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos.  33-37384,  33-39647,  33-45167,  33-45604,  33-46719,  33-50944,
33-57522,  33-62078,  33-78502,   33-84362,  33-91858,   333-04670,   333-28429,
333-53703, 333-84949, 333-38264, 333-65758, 333-65760, and 333-97979) pertaining
to the 1983 Stock Option Plan,  the Trimble  Navigation  Savings and  Retirement
Plan,  the 1990 Director  Stock Option Plan,  the "Position for Us for Progress"
1992 Employee Stock Bonus Plan, the 1992 Management  Discount Stock Option Plan,
the 1993 Stock Option Plan, C. Trimble  Non-statutory  Option Plan, and the 2002
Stock Option Plan and the related Prospectuses,  of our report dated January 24,
2003 with  respect to the  consolidated  financial  statements  and  schedule of
Trimble  Navigation  Limited  included in the Annual  Report (Form 10-K) for the
year ended January 3, 2003.



                                                     /s/ Ernst & Young LLP



March 4, 2003
Palo Alto, California







                                EXHIBIT NO. 99.1


            CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of Trimble Navigation
Limited (the "Company") for the period ended January 3, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Steven W.
Berglund, as Chief Executive Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

     (1) the Report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934, and

     (2) the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

        /s/  Steven W. Berglund
        -----------------------
        Steven W. Berglund
        Chief Executive Officer
        
        March 6, 2003

        


     This  certification  accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  be deemed  filed by the  Company  for  purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.





                                EXHIBIT NO. 99.2


            CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of Trimble Navigation
Limited (the "Company") for the period ended January 3, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Mary Ellen
Genovese, as Chief Financial Officer of the Company, hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of her knowledge, that:

     (1) the Report fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934, and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

        /s/  Mary Ellen Genovese
        ------------------------
        Mary Ellen Genovese
        Chief Financial Officer

        March 7, 2003



     This  certification  accompanies this Report pursuant to Section 906 of the
Sarbanes-Oxley  Act of 2002 and shall not,  except to the extent required by the
Sarbanes-Oxley  Act of 2002,  be deemed  filed by the  Company  for  purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.