Exhibit 4.4



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                               A.M. CASTLE & CO.

                                 NOTE AGREEMENT

                            Dated as of May 15, 1997

                          $25,000,000 Principal Amount
                               7.54% Senior Notes
                                Due May 30, 2009



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                                                                  PPN 148411 C*0
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                                TABLE OF CONTENTS


 ss.1. DESCRIPTION OF NOTES AND COMMITMENT COMMITMENT .......................1

       1.1. Description of Notes ............................................1
       1.2. Commitment; Closing Date ........................................1

 ss.2. PREPAYMENT OF NOTES ..................................................2

       2.1. Required Prepayments ............................................2
       2.2. Optional Prepayments ............................................2
       2.3. Notice of Prepayments ...........................................3
       2.4. Surrender of Notes on Prepayment or Exchange ....................3
       2.5. Direct Payment and Deemed Date of Receipt .......................3
       2.6. Allocation of Payments ..........................................3
       2.7. Payments Due on Saturdays, Sundays and Holidays .................4

 ss.3. REPRESENTATIONS ......................................................4

       3.1. Representations of the Company ..................................4
       3.2. Representations of the Purchaser ...............................10

 ss.4. CLOSING CONDITIONS ..................................................12

       4.1. Representations and Warranties .................................12
       4.2. Legal Opinions .................................................12
       4.3. Events of Default ..............................................12
       4.4. Payment of Fees and Expenses ...................................12
       4.5. Legality of Investment .........................................12
       4.6. Private Placement Number ...................................... 12
       4.7. Proceedings and Documents ......................................12

 ss.5. INTERPRETATION OF AGREEMENT .........................................13

       5.1. Certain Terms Defined ..........................................13
       5.2. Accounting Principles ..........................................20
       5.3. Valuation Principles ...........................................20
       5.4. Direct or Indirect Actions .....................................20

 ss.6. AFFIRMATIVE COVENANTS ...............................................21

       6.1. Corporate Existence ............................................21
       6.2. Insurance ......................................................21
       6.3. Taxes, Claims for Labor and Materials ..........................21
       6.4. Maintenance of Properties ......................................21

                                        i


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       6.5.  Maintenance of Records ........................................21
       6.6.  Financial Information and Reports .............................22
       6.7.  Inspection of Properties and Records ..........................24
       6.8.  ERISA .........................................................24
       6.9.  Compliance with Laws ..........................................25
       6.10. Acquisition of Notes ..........................................25
       6.11. Private Placement Number ......................................26

 ss.7. NEGATIVE COVENANTS ..................................................26

       7.1.  Adjusted Consolidated Net Worth ...............................26
       7.2.  Consolidated Debt .............................................26
       7.3.  Net Working Capital ...........................................26
       7.4.  Liens .........................................................26
       7.5.  Merger or Consolidation .......................................27
       7.6.  Sale of Assets ................................................27
       7.7.  Disposition of Stock of Subsidiaries ..........................28
       7.8.  Leases ........................................................28
       7.9.  Transactions with Affiliates ..................................28
       7.10. Nature of Business ............................................29

 ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR .............................29

       8.1.  Nature of Events ..............................................29
       8.2.  Remedies on Default ...........................................30
       8.3.  Annulment of Acceleration of Notes ............................31
       8.4.  Other Remedies ................................................31
       8.5.  Conduct No Waiver; Collection Expenses ........................31
       8.6.  Remedies Cumulative ...........................................31
       8.7.  Notice of Default .............................................32

 ss.9. AMENDMENTS, WAIVERS AND CONSENTS ....................................32

       9.1.  Matters Subject to Modification ...............................32
       9.2.  Solicitation 0f Holders of Notes ..............................32
       9.3.  Binding Effect ................................................33

ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE
       AND REPLACEMENT .....................................................33

       10.1. Form of Notes .................................................33
       10.2. Note Register .................................................33
       10.3. Issuance of New Notes upon Exchange or Transfer ...............33
       10.4. Replacement of Notes ..........................................34


                                       ii

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ss.11. MISCELLANEOUS .......................................................34

       11.1. Expenses ......................................................35
       11.2. Notices .......................................................35
       11.3. Reproduction of Documents .....................................35
       11.4. Successors and Assigns ........................................35
       11.5. Law Governing .................................................35
       11.6. Headings ......................................................35
       11.7. Counterparts ..................................................35
       11.8. Reliance on and Survival of Provisions ........................35
       11.9. Integration and Severability ..................................36



                                       iii

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                               A. M. CASTLE & CO.



                                 NOTE AGREEMENT


                                                        Dated as of May 15, 1997


    To the Purchasers Named in the
      Attached Schedule I

     Ladies and Gentlemen:

     A. M. CASTLE & CO., a Delaware corporation (the "Company"), agrees with
you as follows:

ss.1. DESCRIPTION OF NOTES AND COMMITMENT


      1.1, Description of Notes. The Company has authorized the issuance end
sale of $25,000O00 aggregate principal amount of its Senior Notes (the "Notes"),
to be dated the date of issuance, to bear interest from such date (computed on
the basis of a 360-day year comprised of twelve 30-day months), payable
semi-annually in arrears on May 30 and November 30 of each year, commencing
November 30, 1997, and at maturity, at the rate of 7.54% per annum prior to
maturity and to bear interest on any overdue principal (including any overdue
optional or required prepayment), on any overdue Make-Whole Amount (to the
extent legally enforceable), and on any overdue installment of interest (to the
extent legally enforceable) at a per annum rate equal to the greater of (a)
9.54% and (b) the sum of the reference rate announced by Bank of America
Illinois from time to time as its "prime rate" for United States domestic loans
in United States dollars plus 2%. The Notes shall be expressed to mature on May
30, 2009 and shall be substantially in the form attached as Exhibit A The term
"Notes" as used herein shall include each Note delivered pursuant to this Note
Agreement (the "Agreement") and each Note delivered in substitution or exchange
therefor and, where applicable, shall include the singular number as well as the
plural. Any reference to you in this Agreement shall in all instances be deemed
to include any nominee of yours or any separate account or other person on whose
behalf you are purchasing Notes. You and the other purchasers are sometimes
referred to herein individually as a "Purchaser" and collectively as the
"Purchasers."

      1.2. Commitment: Closing Date. Subject to the terms and conditions hereof
and on the basis representations and warranties hereinafter set forth, the
Company agrees to issue and sell to you and you agree to purchase from the
Company, Notes in the aggregate principal amount set forth opposite your name in
the attached Schedule I at a price of 100% of the principal amount thereof.

<PAGE>


      Delivery of and payment for the Notes shall be made at the offices of
Gardner, Carton & Doug1as, 321 North Clark Street, Quaker Tower, Chicago,
Illinois 60610, at 9:00 am. Chicago time, on May 30, 1997 or at such later time
or on such later date, not later than Noon, Chicago time, on May 30, 1997, as
may be mutually agreed upon by the Company and the Purchasers (the "Closing
Date"). The Notes shall be delivered to you in the form of one or more Notes in
fully registered form, issued in your name or in the name of your nominee.
Delivery of the Notes to you on time Closing Date shall be against payment of
the purchase price thereof in Federal funds or other funds in U.S. dollars
immediately available at The Northern Trust Chicago, Illinois. ABA #O7lO 0015 2
for time account of A. M. Castle & Co.. Account #82171. If on the Closing Date
the Company shall fail to tender the Notes to you, you shall be relieved of all
remaining obligations under this Agreement. Nothing in the preceding sentence
shall relieve the Company of any liability occasioned by such failure to deliver
the Notes.

ss.2. PREPAYMENT OF NOTES

      2.1. Required Prepayments. addition to payment of all outstanding
principal of the Notes at maturity and except as provided below in Section 2.2,
regardless of the amount of Notes which may be outstanding from time to time,
the Company shall prepay and there shall become due and payable on May 30 in
each year $5,000,000 of the principal amount of the Notes or such lesser amount
as would constitute payment in full on the Notes, commencing May 3O, 2005 and
ending May 30, 2008, inclusive, with the remaining principal payable on May 30,
2009. Each such prepayment shall be at a price of 100% of the principal amount
prepaid, together with interest accrued thereon to the date of prepayment,
without a Make-Whole Amount or other premium or penalty.

      2.2 Optional Prepayments

      (a) Upon notice as provided in Section 2.3(a) and (b), the Company may
prepay the Notes, in whole or in part, on any interest payment date, in an
aggregate principal amount not less than $1,O0O,0O0, and in integral multiples
of $100,000 in excess thereof or such lesser amount as shall constitute payment
in fill of the Notes. Each such prepayment shall be at a price of 100% of the
principal amount to be prepaid, plus interest accrued thereon to the date of
prepayment, plus the Make-Whole Amount.

      (b) Any optional prepayment of less than all of the Notes outstanding
pursuant to Section 2.2(a) and Section 7.6 shall be applied to reduce, pro rata,
the prepayments and payment at maturity required by Section 2.1.

      (c) Except as provided in Section 2.1, Section 7.6 and in this Section
2.2, the Notes shall not be prepayable in whole or in part.

                                       -2-

<PAGE>


      2.3. Notice of Prepayments

      (a) The Company shall give notice of any optional prepayment of the Notes
pursuant to Section 2.2(a) to each holder of the Notes not less than 30 days nor
more than 60 days before the date fixed for prepayment, specifying (i) such
date, (ii) the principal amount of the holder's Notes to be prepaid on such
date, (iii) the Determination Date for calculating the Make-Whole Amount, (iv) a
calculation of the estimated amount of the Make-Whole Amount, showing in
reasonable detail the method of calculation, and (v) the accrued interest
applicable to the prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
the actual Make-Whole Amount, if any, and the accrued interest thereon shall
become due and payable on the prepayment date.

      (b) The Company also shall give notice to each holder of the Notes to be
prepaid pursuant to Section 2.2(a) by telecopy, telegram, telex or other
same-day written communication, two Business Days prior to the prepayment date,
of the actual Make-Whole Amount applicable to such prepayment and the details of
the calculations used to determine the amount of such Make-Whole Amount.

      2.4. Surrender of Notes on Prepayment or Exchange. Subject to Section
2.5, upon any partial prepayment of a Note pursuant to this Section 2 or partial
exchange of a Note pursuant to Section 10.3, such Note may, at the option of the
holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in
exchange for a new Note or Notes equal to the principal amount remaining unpaid
on the surrendered Note, or (ii) be made available to the Company, at the
Company's principal office, for notation thereon of the portion of the principal
so prepaid or exchanged. In case the entire principal amount of any Note is
prepaid, such Note shall be surrendered to the Company following such prepayment
for cancellation and shall not be reissued. No Note shall be issued in lieu of a
Note the entire principal amount of which has been prepaid.

      2.5. Direct Payment and Deemed Date of Receipt. Notwithstanding any other
provision contained in the Notes or this Agreement, the Company will pay all
sums becoming due on each Note held by you or any subsequent Institutional
Holder by wire transfer of immediately available funds to such account as you
have designated in Schedule I, or as you or such subsequent Institutional Holder
may otherwise designate by notice to the Company, in each case without
presentment and, subject to Section 2.4(ii) above, without notations being made
thereon, except that any such Note so paid or prepaid in full shall be
surrendered to the Company, upon its written request, for cancellation. Any wire
transfer shall identify such payment in the manner set forth in Schedule I and
shall identify the payment as principal, Make-Whole Amount, if any, and/or
interest. Any payment made pursuant to this Section 2.5 shall be deemed received
on the payment date only if received before Noon, Chicago time. Payments
received after Noon. Chicago time, shall be deemed received on the next
succeeding Business Day,, with the Make-Whole Amount, if any, and/or interest
payable to such Business Day.

      2.6. Allocation of Payments. In the case of a prepayment pursuant to
Section 2.2(a), if less than the entire principal amount of all of the Notes
outstanding is to be paid, the Company will prorate the aggregate prncipal
amount to be prepaid among the outstandina Notes in proport to the unpaid
principal amounts thereof.

                                       -3-

<PAGE>


      2.7. Payment Due on Saturdays, Sundays and Holidays. If any interest
payment date on the Notes or the date fixed for any other payment of any Note or
exchange of any Note is a day other than a Business Days, then such payment or
exchange need not be made on such date but may be made on the next succeeding
Business Day, with the Make~Whole Amount, if any, and/or interest payable to the
actual date of payment.

ss.3. REPRESENTATIONS

      3.1. Representations of the Company. As an inducement to, and as part of
the consideration for, your purchase of the Notes pursuant to this Agreement,
the Company represents and warrants to you as follows:

      (a) Corporate Organization and Authority. The Company is a solvent
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and as
presently proposed to be conducted, to enter into and perform under the
Agreement and to issue and sell the Notes as contemplated in the Agreement.

      (b) Qualification to Do Business. The Company is duly qualified or
licensed and in good standing as a foreign corporation authorized to do business
in each jurisdiction where the nature of the business transacted by it or the
character of its properties owned or leased makes such qualification or
1icensing necessary, except for jurisdictions, individually or in the aggregate,
where the failure to be so licensed or qualified would not have a Material
Adverse Effect.

      (c) Subsidiaries. The Company has no Subsidiaries except those listed in
the attached Annex I, which correctly sets forth the jurisdiction of
incorporation or formation and the percentage of the outstanding Voting Stock or
other equity interests of each Subsidiary which is owned, of record or
beneficially, by the Company and/or one or more Subsidiaries. Each Subsidiary
has been, duly organized and is validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization and is duly licensed
or qualified and in good standing as a foreign corporation or other organization
in each other jurisdiction where the nature of the business transacted by it or
the character of its properties owned or leased makes such qualification or
licensing necessary, except for jurisdictions, individually or in the aggregate,
where the failure to be so licensed or qualified would not have a Material
Adverse Effect. Each Subsidiary has full corporate or other power and authority
to own and operate its properties and to carry on its business as now conducted
and as presently proposed to be conducted. The Company and each Subsidiary have
good and transferable title to all of the shares of capital stock, or all of the
equity interests, they purport to own of each Subsidiary, free and clear in each
case of any Lien, except as otherwise described in Annex I, and all such shares
or interests have been duly issued and are fully paid and nonassessable.

                                       -4-

<PAGE>


      (d) Financial Statements. The consolidated balance sheets of the Company
and its Subsidiaries as of December 31, 1996, 1995, 1994, 1993 and 1992, and the
related consolidated statements of income7 reinvested earnings and cash flows
for each of the years ended on such dates, accompanied by the reports and
unqualified opinions of Arthur Andersen LLP, independent public accountants,
copies of which have heretofore bean delivered to you, were prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as otherwise rioted therein) and present fairly the consolidated
financial position of the Company and its Subsidiaries on such dates and the
consolidated results of their operations and their cash flows for the years
then. ended.

      (e) No Contingent Liabilities or Adverse Changes. Neither the Company nor
any of its Subsidiaries has any contingent liabilities which, individually or in
the aggregate, are material to the Company and its Subsidiaries, taken as a
whole, other than as indicated in the most recent audited financial statements
described in Section 3.1(d), and except as indicated as aforesaid, since
December 31, 1996. there have been no changes in the condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated basis except
changes occurring in the ordinary course of business, none of which,
individually or in the aggregate, have had a Material Adverse Effect.

      (f) No Pending Litigation or Proceedings. Except as described in Annex II,
there are no actions, suits or proceedings pending or, to the Company's
knowledge, threatened against or affecting the Company or any of its
Subsidiaries, at law or in equity or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have individually or in the
aggregate, a Material Adverse Effect.

      (g) Compliance with Law.

            (i) Neither the Company nor any of its Subsidiaries is: (x) in
      default with respect to any order, writ, injunction or decree of any court
      to which it is a named party; or (y) in default under any law, rule,
      regulation, ordinance or order relating to its or their respective
      businesses, the sanctions and penalties resulting from such defaults
      described in clauses (x) and (y) would have, individually or in the
      aggregate, a Material Adverse Effect.

            (ii) None of the Company, any Subsidiary or any Affiliate of the
      Company is an entity defined as a "designated national" within the meaning
      of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V (other than
      Castle de Mexico. S.A. de C.V.), or is in violation of any Federal statute
      or Presidential Executive Order, or any rules or regulations of any
      department, agency or administrative body promulgated under any such
      statute or Order, concerning trade or other relations with any foreign
      country or any citizen or national thereof or the ownership or operation
      of any property, and no restriction or prohibition applicable to the
      Company or any Subsidiary under any such statute, Order, rule or
      regulation has or would have, individually or in the aggregate, a Material
      Adverse Effect.

                                       -5-

<PAGE>


      (h) ERISA.

            (i) The Company and each ERJSA Affiliate have operated and
      administered each Plan in compliance with all applicable laws, except for
      such instances of noncompliance as have not resulted in and would not
      result in a Material Adverse Effect. Neither the Company nor any EIUSA.
      Affiliate has incurred any liability pursuant to Tide I or IV of EPJSA
      (other than benefit liabilities pursuant to Plan terms) or the penalty or
      excise tax provisions of the Code relating to employee benefit plans (as
      defined in Section 3 of ERJSA), and no event, transaction or condition has
      occurred or exists that would result in the incurrence of any such
      liability by the Company or any ERISA Affiliate, or in the imposition of
      any Lien on any of the rights, properties or assets of the Company or any
      ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
      such penalty or excise tax provisions or to Section 401 (a)(29) or 412 of
      the Code, other than such liabilities or Liens as would not be
      individually or in the aggregate material.

            (ii) The present value of the aggregate benefit liabilities under
      each of the Plans subject to Title IV of EIUSA (other than multiemployer
      plans), determined as of the end of such Plan's most recently ended plan
      year on the basis of the actuarial assumptions specified for funding
      purposes in such Plan's most recent actuarial valuations report, did not
      exceed the aggregate current value of the assets of such Plan allocable to
      such benefit liabilities. The term "benefit liabilities" has the meaning
      specified in Section 4001 of ERISA and the terms "current value" and
      "present value" have the meanings specified in Section 3 of ERISA.

            (iii) The Company arid its ERISA Affiliates have not incurred
      withdrawal liabilities (and are not subject to contingent withdrawal
      liabilities) under Section 4201 or 4204 of ERISA in respect of
      Multiemployer Plans that individually or in the aggregate are material.

            (iv) The expected postretirement benefit obligation (determined as
      of the last day of the Company's most recently ended fIscal year in
      accordance with Financial Accounting Standards Board Statement No. 106,
      without regard to liabilities attributable to continuation coverage
      mandated by Section 4980B of the Code) of the Company and its
      Subsidiaries, is not material.

            (v) The execution and delivery of this Agreement and the issuance
      and sale of the Notes hereunder will not involve any transaction that is
      subject to the prohibitions of Section 406 of ERISA or in connection with
      which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of
      the Code. The representation by the Company in the first sentence of this
      clause (v) is made in reliance upon and subject to the accuracy of your
      representation in Section 3.2(b) as to the sources of the funds used to
      pay the purchase price of the Notes to be purchased by you.

      (i) Title to Properties. Except as disclosed on the most recent audited
consolidated balance sheet described in the foregoing paragraph (d) of this
Section 11, the Company and each Subsidiary have (x) good and

                                      -6-

<PAGE>

marketable title in fee simple or its equivalent under applicable law to all the
real property owned by them and (y) good and marketable title to all of the
other property reflected in such balance sheet as owned by them or subsequently
acquired by the CompanY or any Subsidiary (except as sold or otherwise disposed
of in the ordinary course of business), in each case free from all Liens or
defects in title except those permitted by Section 7.4.

      (j) Leases. The Company and each Subsidiary enjoy peaceful and undisturbed
possession under all leases under which the Company or such Subsidiary is a
lessee or is operating, except for leases the termination of which, individually
or in the aggregate, would not have a Material Adverse Effect.

      (k) Franchises, Patents, Trademarks and Other Rights. The Company and each
Subsidiary have all franchises, permits, licenses and other authority necessary
to carry on or used in their business as now being conducted, except for
franchises, permits, licenses or other authority the 1ack or loss of which,
individually or in the aggregate, would not have a Material Adverse Effect, and
none are in default under any of such franchises, permits, licenses, or other
authority for defaults, individually or in the aggregate, which would not have a
Material Adverse Effect The Company and each Subsidiary own or possess all
patents, trademarks, service marks, trade names, copyrights, and licenses, or
rights with respect to the foregoing, necessary for or used by them in, the
present conduct of their businesses, without any known conflict with the rights
of others.

      (1) Authorization. This Agreement and the Notes have been duly authorized
on the part of the Company and the Agreement does, and the Notes when issued
will, constitute the legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except to the extent that
enforcement of this Agreement or the Notes may be limited by applicable
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or
similar laws of genera1 application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in equity or at law. The sale of the Notes, the execution
and delivery of the Agreement and compliance by the Company with all of the
provisions of this Agreement and of the Notes (i) are within the corporate
powers of the Company, (ii) have been duly authorized by proper corporate
action, (iii) are legal and will not violate any provisions of any law or
regulation or order of any court, governmental authority or agency, and (iv)
wi11 not result in any breach of any of the provisions of, constitute a default
under, or result in the creation of any Lien on any property of the Company or
any Subsidiary under the provisions of any charter document, by-law, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their property may be bound.

      (m) No Defaults. No event has occurred and no condition exists which, upon
the issuance of the Notes, would constitute a Default or an Event of Default
under this Agreement. Neither the Company nor any Subsidiary is in default under
any charter document, by-law, loan agreement or other material agreement or
material instrument to which it is a party or by which it or its property may be
bound.

                                      -7-

<PAGE>


      (n) Governmental Consent. None of the nature of the Company or any of its
Subsidiaries, their respective businesses or properties, any relationship
between the Company or any of its Subsidiaries and any other Person, or any
circumstances relative to the offer, issuance, sale or delivery of the Notes or
execution and delivery of this Agreement is such as to require a consent,
approval or authorization of, withholding of objection on the part of, or
filing, registration or qualification with, any governmental authority on the
part of the Company or any of its Subsidiaries in connection with the execution
and delivery of this Agreement or the offer, issuance, sale de1ivery of the
Notes.

      (o) Taxes. All tax or information returns required to be filed by the
Company or any Subsidiary in any jurisdiction have been timely flied, and all
taxes, assessments, fees and other governmental charges or levies upon the
Company or any Subsidiary, or upon any of their respective properties, assets,
income or franchises, which are due and payable, have been paid timely or
contested in good faith by appropriate proceedings that stay the collection
thereof by the applicable governmental authority during the period of the
contest and as to which adequate reserves are maintained in accordance with
GAAP. The Company does not know of any proposed additional tax assessment
against it or any Subsidiary for which adequate provision has not been made on
its books in accordance with GAAP. The United States Federal income tax
liability of (i) the Company and. its Subsidiaries for all taxable years up to
and including the taxable year ended December 31, _____ , has been finally
determined, and no material controversy in respect of additional taxes due by
the Company or any Subsidiary since such date is pending or, to the Company's
knowledge, threatened. The provisions for taxes on the books of the Company and
each Subsidiary are adequate for all open years and for the current fiscal
period.

      (p) Status under Certain Statutes. Neither the Company nor any Subsidiary
is: (i) a "public utility company" or a "holding company," or an "affiliate" or
a "subsidiary company" of a "holding company," or an "affiliate" of such a
"subsidiary company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, (ii) a "public utility" as defined in the
Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.

      (q) Private Offering. Neither the Company, nor BA Securities, Inc., the
only Person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering of the Notes or any similar security
of the Company, has offered any of the Notes or any similar security of the
Company for sale to, or solicited offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with, any prospective purchaser,
other than ___ institutional investors, including the Purchaser, each of whom
was offered all or a portion of the Notes at private sale for investment.
Neither the Company nor anyone acting on its authorization will offer the Notes
or any part thereof or any similar security for issuance or sale to, or solicit
any offer to acquire any of the same from, anyone so as to cause the issuance
and sale of the Notes to be subject to the provisions of Section 5 of the
Securities Act.

                                      -8-

<PAGE>


      (r) Effect of Other Instruments. Neither the Company nor any Subsidiary is
bound by any agreement or instrument or subject to any charter or other
corporate restriction which in any way restricts any Subsidiary's ability to pay
dividends or make advances to the Company or which has a Material Adverse
Effect.

      (s) Use of Proceeds. The Company will use the net proceeds from the sale
of the Notes for general corporate purposes. None of the transactions
contemplated in this Agreement (including without limitation thereof, the use of
the proceeds from the sale of the Notes) will violate or result in a violation
of Section 7 of the Exchange Act, or any regulations issued pursuant thereto,
including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System (12 C.F.R., Chapter II). Neither the
Company nor any Subsidiary owns nor does the Company or any Subsidiary intend to
carry or purchase any "margin stock" within the meaning of Regulation G, and
none of the proceeds from the sale of the Notes will be used to purchase or
carry or refinance any borrowing the proceeds of which were Used to purchase or
carry any "margin stock" or "margin security" in violation of Regulations G, T,
U or X.

      (t) Condition of Property. All of the facilities of the Company and its
Subsidiaries are in good Operating condition and repair, except for facilities
being repaired in the ordinary of course of business or facilities which,
individually or in the aggregate, are not material to the Company and its
Subsidiaries, on a consolidated basis.

      (u) Books and Records. The Company and each of its Subsidiaries (i)
maintain books, records and accounts in reasonable detail which accurately and
fairly reflect their respective transactions and business affairs, and (ii)
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and to permit preparation of
financial statements in accordance with GAAP.

      (v) Environmental Compliance. Except as disclosed in the attached Annex
II, the Company and each Subsidiary (including their operations and the
conditions at or in their Facilities) comply with all Environmental Laws except
for violations which, individually or in the aggregate, would not have a
Material Adverse Effect; the Company and each Subsidiary have obtained all
permits under Environmental Laws necessary to their respective operations, all
such permits are in full force and effect, and the Company and each Subsidiary
are in compliance with all material terns and conditions of such permits except
for permits, individually or in the aggregate, the lack of which or
noncompliance with which would not have a Material Adverse Effect; and except as
disclosed in the attached Annex II, neither the Company nor any of its
Subsidiaries has any liability (contingent or otherwise) in connection with any
Release of any Hazardous Material or the existence of any Hazardous Material on,
under or about any Facility that could give rise to an Environmental Claim that
would have a Material Adverse Effect.

      (w) Debt. Annex III sets forth a list of all outstanding Debt of the
Company and its Subsidiaries as of the date of this Agreement, since which date
there has been no material change in the amounts, interest rates, sinking funds,
installment payments or maturities thereof. Neither the Company nor any

                                      -9-

<PAGE>


Subsidiary is in default, and no waiver of default is currently in effect, in
the payment of any principal or interest on any Debt of the Company or such
Subsidiary and no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment Except as disclosed in Annex III, neither the Company nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by Section 7..4.

     (x) Full Disclosure. None of the financial statements referred to in
Section 3.1(d), this Agreement, and any other written statement or document
furnished by or on behalf of the Company to you in connection with the
negotiation of the sale of the Notes and the execution and delivery of the
Agreement, taken together, contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading in light of the circumstances under which they were made.
There is no fact (exclusive of general economic, political or social conditions
or trends) particular to the Company and known by the Company that the Company
has not disclosed to you in writing and that has a Material Adverse Effect or,
to the Company's best knowledge, will have, individually or in the aggregate, a
Material Adverse Effect.


      3.2. Representations of the Purchaser.
           ---------------------------------

      (a) You represent, and in entering into this Agreement the Company
understands, that you are acquiring the Notes for your own account and not with
a view to any distribution thereof, provided that the disposition of your
property shall at all times be and remain within your control; subject, however,
to compliance with Federal securities laws. You acknowledge that the Notes have
not been registered under the Securities Act and you understand that the Notes
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. You have
been advised that the Company does not contemplate registering, and is not
legally required to register, the Notes under the Securities Act.

      (b) You further represent that, as of the date of this Agreement, at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by you to pay the purchase price of the Notes
to be purchased by you hereunder:

            (i) if you are an insurance company, the Source does not include
      assets allocated to any separate account maintained by you in which any
      employee benefit plan (or its related trust) has any interest, other than
      a separate account that is maintained solely in connection with your fixed
      contractual obligations under which the amounts payable, or credited, to
      such plan and to any participant or beneficiary of such plan (including
      any annuitant) are not affected in any manner by the investment
      performance of the separate account;

                                      -10-

<PAGE>


            (ii) the Source is either (x) an insurance company pooled separate
      account within the meaning of Prohibited Transaction Exemption ("PTE")
      90-1 (issued January 9, 1990), or (y) a bank collective investment fund,
      within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you
      have disclosed to the Company in writing pursuant to this paragraph (b),
      no employee benefit plan or group of plans maintained by the same employer
      or employee organization beneficially owns more than 10% of all assets
      allocated to such pooled separate account or collective investment fund;

            (iii) the Source constitutes assets of an "investment fund" (within
      the meaning of Part V of the QPAM Exemption) managed by a "qualified
      professional asset manages' or "QPAM" (within the meaning of Part V of the
      QPAM Exemption), no employee benefit plan's assets that are included in
      such investment fund, when combined with the assets of all other employee
      benefit plans established or maintained by the same employer or by an
      affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
      such employer or by the same employee organization and managed by such
      QPAM, exceed 20% of the total client assets managed by such QPAM, the
      conditions of Part I of the QPAM Exemption are satisfied, neither the QPAM
      nor a person controlling or controlled by the QPAM (applying the
      definition of "control" in Section V(e) of the QPAM Exemption) owns a 5%
      or more interest in the Company and (x) the identity of such QPAM and (y)
      the names of all employee benefit plans whose assets are included in such
      investment fund have been disclosed to the Company in writing pursuant to
      this clause (iii);

            (iv) the Source is a governmental plan;

            (v) the Source is one or more employee benefit plans, or a separate
      account or trust fund comprised of one or more employee benefit plans,
      each of which has been identified to the Company in writing pursuant to
      this paragraph (b)(v);

            (vi) the Source does not include assets of any employee benefit
      plan, ether than a plan exempt from the coverage of ERISA; or

            (vii) if you are an insurance company and the Source includes assets
      of your general account, (A) your purchase of Notes is entitled to the
      exemption afforded by PTE. 95-60 (issued July 12, 1995), provided the
      Company is not an affiliate (within the meaning of Section v(a) of PTE
      95-60) of you, or (B) there is no Plan with respect to which the assets of
      your general account's reserves (as determined under Section 807(d) of the
      Code) for all contracts held by or on behalf of such Plan and all other
      Plans maintained by the same employer or its affiliates (as so defined) or
      by the same employee organization exceeds 10% of the liabilities of your
      general account.

      As used in this Section 3.2(b), the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.

                                      -11-

<PAGE>


ss.4. CLOSING CONDITIONS

      Your obligation to purchase the Notes on the Closing Date shall be subject
to the performance by the Company of its agreements hereunder, which are to be
performed at or prior to the time of delivery of the Notes, and to the following
conditions to be satisfied on or before the Closing Date:

      4.1 Representations and Warranties. The representations and warranties of
the Company contained in this Agreement, in the certificates delivered pursuant
to this Section 4 or otherwise made in connection herewith shall be true and
correct on or as of the Closing Date and the Company shall have delivered to you
a certificate to such effect, dated the Closing Date and executed by the
president, the chief financial officer, the chief accounting officer or the
Treasurer of the Company.

      4.2. Legal Opinions. You shall have received from Gardner, Carton &
Douglas, who is acting as your special counsel in this transaction, and from
Jerry M. Aufox, corporate counsel to the Company, his opinions, dated such
Closing Date, in form and substance satisfactory to you and covering
substantially the matters set forth or provided in the attached Exhibits B and
C, respectively.

      4.3. Events of Default. No Default or Event of Default shall have occurred
and be continuing on the Closing Date, and the Company shall have delivered to
you a certificate to such effect, dated the Closing Date and executed by the
president, the chief financial officer, the chief financial officer or the
Treasurer of the Company.

      4.4. Payment of Fees and Expenses. The Company shall have paid all of the
fees and expenses of Gardner, Carton & Douglas, your special counsel, through
the Closing Date.

      4.5. Legality of Investment. Your acquisition of the Notes shall
constitute a legal investment as of the Closing Date under the laws and
regulations of each jurisdiction to which you may be subject (without resort to
any "basket" or "leeway" provision which permits the making of an investment
without restrictions as to the character of the particular investment being
made), and such acquisition shall not subject you to any penalty or other
onerous condition in or pursuant to any such law or regulation; and you shall
have received such certificates or other evidence as you may reasonably request
to establish compliance with this condition.

      4.6. A private placement number with respect to the Notes shall have been
issued by S&P.

      4.7. Proceedings and Documents. All proceedings taken in connection with
the transactions contemplated by this Agreement, and all documents necessary to
the consummation of such transactions shall be satisfactory in form and
substance to you and your special counsel, and you and your special counsel
shall have received copies (executed or certified as may be appropriate) of all
legal documents or proceedings which you and they may reasonably request.

                                      -12-

<PAGE>


ss.5. INTERPRETATION OF AGREEMENT

      5.1. Certain Terms Defined. The terms hereinafter set forth when used in
this Agreement shall have the following meanings:

      Adjusted Conso1idated Net Worth - Consolidated Stockholder' Equity less
all Restricted Investments that exceed, in the aggregate, 10% of Consolidated
Stockholders' Equity.

      Affiliate - Any Person (other than a Subsidiary or an original Purchaser)
(i) who is a director or executive officer of the Company or any Subsidiary,
(ii) which directly or indirectly through the or more intermediaries controls,
or is controlled by, or is under common control with the Company, (iii) which
beneficially owns or holds securities representing 10% or more of the combined
voting power of the Voting Stock of the Company, or (iv) of which securities
representing 10% or more of the combined voting power of its Voting Stock (or in
the case of a Person not a corporation, 10% or more of its equity) is
beneficially owned or held by the Company or any Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

      Agreement - As defined in Section 1.1.

      Business Day - Any day, other than Saturday, Sunday or a legal holiday or
any other day on which banking institutions in Chicago, Illinois generally are
authorized by law to close.

      Capitalized Lease - Any lease the obligation for Rentals with respect to
which, in accordance with GAAP, would be required to be capitalized on a balance
sheet of the lessee or for which the amount of the asset and liability
thereunder, as if so capitalized, would be required to be disclosed in a note to
such balance sheet.

      Capitalized Lease Obligations - Any amounts required to be capitalized
under any Capitalized Lease.

      Closing Date - As defined in Section 1.2.

      Code - The Internal Revenue Code of 1986, as amended.

      Commission - The Securities and Exchange Commission.

      Consolidated - Debt - Debt of the Company and its Subsidiaries
consolidated in accordance with GAAP.

      Consolidated Indebtedness - Indebtedness of the Company and its
Subsidiaries consolidated in accordance with GAAP.

      Consolidated Net Income - For any period, the net income (or deficit) of
the Company and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.

                                      -13-

<PAGE>


      Consolidated Stockholders' Equity - The stockholders' equity of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.

      Consolidated Total Assets - The assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

      Consolidated Total Capitalization - The sum of (i) Consolidated
Stockholders' Equity, (ii) 50% the LIPO Reserve, and (iii) Consolidated Debt,
less Restricted Investments in excess of 10% of consolidated Stockholders'
Equity.

      Debt - The sum of (i) all Indebtedness (excluding obligations with respect
to bankers' acceptances and trade acceptance financings to the extent such
obligations, in the aggregate, are less then $,O00,000, but including any such
obligations, in the aggregate, in excess of such amount), and (ii) the Total
Investment.

      Default - Any event which, with the lapse of time or the giving of notice,
or both, would become an Event of Default.

      Determination Date - Two Business Days before the date fixed for a
prepayment pursuant to Section 2.2(a), Section 7.6 or the date of declaration
pursuant to Section 8.2.

      Environmental Claim - Any notice of violation, claim, demand, abatement
order or other order by any Person for any damage, including personal injury
(including sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon (i) the existence of a Release (whether sudden or non-sudden or accidental
or non-accidental) of, or exposure to, any Hazardous Material in, into or onto
the environment at, in, by, from or related to any Facility, (ii) the use,
handling, transportation, storage, treatment or disposal of Hazardous Material$
in connection with the operation of any Facility, or (iii) the violation, or
alleged violation, of any statute, rule, regulation, ordinance, order, permit,
license or authorization of or from any governmental authority, agency or court
relating to environmental matters pertaining to the Facilities.

     Environmental Laws - All laws relating to environmental matters, including
those relating to (i) fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
Release or threatened Release of Hazardous Materials and to the generation, use,
storage, transportation, or disposal of Hazardous Materials, in any manner
applicable to the Company or any of its Subsidiaries or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C.ss.9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Safe Drinking Water Act
(42 U.S.C.ss.300f et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety
and Health Act (2(degree)U.S.C.ss.651 et seq.), and the Emergency Planning and

                                      -14-

<PAGE>


Community Right-to-Know Act (42 U.S.C.ss.11001 et seq.), and (ii) environmental
protection, including the National Environmental Policy Act (42 U.S.C.ss.4321
et seq.), and comparable state and foreign laws, each as amended or
supplemented, and any similar or analogous local, state, federal and foreign
statutes the regulations promulgated pursuant thereto, each as in effect as of
the date of determination.

      ERISA - The Employee Retirement Income Act of 1974, as amended from time
to time and any successor statute.

      ERISA Affiliate - The Company and (1) any corporation that is a member of
a controlled group of corporations within the meaning of Section 414(b) of the
Code of which the Company is a member, (ii) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Code of which the
Company is a member; and (iii) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Code of which the Company, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member.

      Event of Default - As defined in Section 8.1.

      Exchange Act - The Securities Exchange Act of 1934, as amended.

      Facilities - Any and all real property (including all buildings, fixtures
or other improvements located thereon) now or heretofore or hereafter owned,
leased, operated or used (under permit or otherwise) by the Company or any of
its Subsidiaries.

      GAAP - Generally accepted accounting principles in effect from time to
time in the United States.

      Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of a
Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or
other obligation of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor; (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition, or (z) otherwise to advance or make available funds for
the purchase or payment of such Indebtedness or obligation; (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such Indebtedness or obligation against
loss in respect thereof; or (iv) otherwise to assure the owner of the
Indebtedness or obligation against loss in respect thereof. For the purposes of
all computations made under this Agreement, Guaranties in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and Guaranties in respect of any other o1igation or liability or any
dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.

                                      -15-

<PAGE>


     Hazardous Materials - (i) Any chemical, material or substance defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous waste," "restricted hazardous
waste," or "toxic substances" or "pollutant" or words of similar import under
any Environmental Laws; (ii) any oil, petroleum or petroleum derived substance,
any drilling fluid, produced water or other waste associated with the
exploration, development or production of crude oil, any flammable substance or
explosive, any radioactive material, any hazardous waste or substance, any toxic
waste or substance or any other material or pollutant that (x) poses a hazard to
any property of the Company or any of its Subsidiaries or to Persons on or about
such property, or (y) causes such property to be in violation of any
Environmental Law; (iii) any friable asbestos, urea formaidehyde foam
insulation, electrical equipment which contains any oil or dielectric fluid with
levels of polychiorinated biphenyls in excess of fifty parts per million; and
(iv) any other chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.

     Indebtedness - For any Person, without duplication, all (i) obligations for
borrowed money or to pay the deferred purchase price of property or assets
(except trade account payable, (ii) obligations secured by any Lien upon
property or assets owned by such Person, whether or not such Person has assumed
or become liable for the payment of such ob1igations, (iii) obligations created
or arising under any conditional sale or other title retention agreement with
respect to property acquired, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, (iv) Capitalized Lease
Obligations, and (v) Guaranties of obligations of others of the character
referred to in the foregoing clauses (i) through (iv), but excluding from
Indebtedness the Total Investment.

      Institutional Holder - Any bank, trust company, insurance company, pension
fund, Mutual fund or other similar financial institution, including, without
limiting the foregoing, any "qualified institutional buyer" within the meaning
of Rule 144A under the Securities Act, which is or becomes a holder of any Note.

      Investments - All investments made, in cash or by delivery of property,
directly or indirectly, in any other Person, whether by acquisition of shares of
capital stock, equity interests, indebtedness or other obligations or securities
or by loan advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.

      Lien - Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
tbereof, including a Capitalized Lease, and the filing of or agreement to file
any financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing.

       LIFO Reserve - The difference between the cost of inventory using the
last-in, first-out ("LIFO") method of valuing inventory under GAAP and the cost
of inventory using the rep1acement cost method under GAAP, so long as the
Company and its Subsidiaries are reporting the value of their inventory under
the LIFO method for purposes of GAAP.

                                      -16-

<PAGE>


      Make-Whole Amount - As of any Determination Date, to the extent that the
Reinvestment Yield on such Determination Date is lower than the interest rate
payable on or in respect of the Notes the excess of (a) the present value of the
principal and interest payments to be foregone by any prepayment (exclusive of
accrued interest on such Notes through the date of prepayment) on such Notes
(taking into account the manner of application of such prepayment required by
Section 1.2(b)), determined by discounting (semi-annually on the basis of a
360-day year composed of twelve 30-day months), such payments at a rate that is
equal to the Reinvestment Yield over (b) the aggregate principal amount of such
Notes then to be prepaid or paid. To the extent that the Reinvestment Yield on
any Determination Date is equal to or higher than the interest rate payable on
or in respect of such Notes, the Make-Whole Amount is zero.

      Material Adverse Effect - (i) A material adverse effect on the business,
assets, properties, profits, prospects, operations or condition, financial or
otherwise, of the Company and its Subsidiaries, on a consolidated basis, (ii)
the impairment of the ability of the Company to perform its obligations under
this Agreement or the Notes, or (iii) the impairment of the ability of the
holders of the Notes to enforce the Company's obligations under this Agreement
of the Notes.

      Moody's - Investor Service, Inc.

      Net Working Capital - The sum of (i) the current assets of the Company and
its Subsidiaries determined in accordance with GAAP and (ii)75% of the LIPO
Reserve, less the current liabilities of the Company and its Subsidiaries
determined in accordance with GAAP.

      Notes - As defined in Section 1.1.

      PBGC - The Pension Benefit Guaranty Corporation or any successor thereto.

      Person - Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization or government or any governmental authority, agency or political
subdivision.

      Plan - Any employee pension benefit plan, as defined in Section 3(2) of
ERISA, that has been estab1ished by, or contributed to, or is maintained by the
Company, any Subsidiary or any ERISA Affiliate.

      Purchaser - As defined in Section 1.1.

      Receivables Purchase Agreement - The Receivables Purchase Agreement dated
as of March I. 1995, among the Company, various financial institutions named
therein, Bank of America Illinois, as administrative agent, and PNC Bank,
National Association, as managing agent and documentation agent.

                                      -17-

<PAGE>


      Reinvestment Yield - The sum of (i) 0.50% plus (ii) the yield reported, as
of 10:00 AM. (New York City time) on the Determination Date, on the
Cantor-Fitzgerald Brokerage Screen available on the Bloomberg and Knight Ridder
Information System (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United States government
securities) for actively traded U.S. Treasury securities having a maturity equal
to the Weighted Average Life to Maturity of the Notes then being prepaid or paid
as of the date of prepayment or payment, rounded to the nearest month, or if
such yields shall not be reported as of such time or the yields reported as of
such time are not ascertainable in accordance with the preceding clause, then
the arithmetic mean of the yields published in the statistical release
designated H.15(519) (or any successor publication) of the Board of Governors of
the Federal Reserve System under the caption "U.S. Government
Securities--Treasury Constant Maturities" (the statistical release") for the
maturity corresponding to the remaining Weighted Average Life to Maturity of the
Notes as of the date of such prepayment or payment rounded to the nearest month
For purposes of calculating the Reinvestment Yield, the most recent weekly
statistical release published prior to the applicable Determination Date shall
be used. In the event the statistical release is not published, the arithmetic
mean of such reasonably comparable index, as may be designated by the holders of
at least 51% in aggregate principal amount of the Notes, for the maturity
corresponding to the remaining Weighted Average Life to Maturity of the Notes as
of the date of prepayment or payment, as the case may be, rounded to the nearest
month shall be used. If no maturity exactly corresponding to such rounded
Weighted Average Life to Maturity shall appear therein, yields for the two most
closely corresponding published maturities (one of which occurs prior and the
other subsequent to the Weighted Average Life to Maturity) shall be calculated
pursuant to the foregoing sentence and the Reinvestment Yield shall be
interpolated from such yields on a straight-line basis (rounding, in each of
such relevant periods, to the nearest month).

      Release - Any release, spill, emission, leaking, pumping, pouring,
emptying, dumping, injection, escaping, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including the
abandonment or disposal of any barrel, container or other c1osed receptacle
containing any Hazardous Material), or into or out of any Facility, including
the movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.

      Rentals - As of the date of any determination thereof, all fixed payments
(including all payments which the lessee is obligated to make to the lessor on
termination of the lease or surrender of the property) payable by the Company or
a Subsidiary, as lessee or sublessee under a lease or real or personal property,
but exclusive of any amounts required to be paid by the Company or a Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes, assessments, amortization and similar
charges. Fixed rents under any so-called "percentage leases" shall be computed
on the basis of the minimum rents, if any, required to be paid by the lessee,
regardless of sales volume or gross revenues.

                                      -18-

<PAGE>

      Restricted Investments - Any Investments of the Company and its
Subsidiaries other than:

            (i) Investments in existing and hereafter created or designated
      Subsidiaries and any Person that concurrently with such Investment becomes
      a Subsidiary;

            (ii) Investments in (A) commercial paper of a domestic issuer
      maturing in 270 days or less from the date of issuance which is rated P-2
      or better by Moody's or A-2 or better by S&P, (B) certificates of deposit
      or banker's acceptances issued by commercial banks or trust companies
      located in the United States of America and organized under its laws or
      the laws of any state thereof each having a combined capital, surplus and
      undivided profits of $100,000,000 or more, (C) obligations of or fully
      guaranteed by the United States of America or an agency thereof maturing
      within three tears from the date of acquisition, (D) municipal securities
      maturing within three years from the date of acquisition which are rated
      in one of the top two rating classifications by at least one national
      rating agency, or (B) money market instrument programs which are
      classified as current assets in accordance with (GAAP;

            (iii) Extensions of credit in the nature of accounts receivable or
      notes receivable arising from the sale of goods and services in the
      ordinary course of business;

            (iv) Shares of stock, obligations or other securities received in
      settlement of claims arising in the ordinary course of business;

            (v) Participations in notes maturing within 60 days which are rated
      P-2 or better by Moody's or A-2 or better by S&P.

            (vi) Advances to officers, employees, subcontractors or suppliers
      not exeeding $5,000,000 in the aggregate; and

            (vii) Investments existing as of the date of this Agreement and
      described in the attached Annex IV.

            S&P - Standard & Poor's Corporation.

      Securities Act - The Securities Act of 1933, as amended.

      Subsidiary - Any Person a majority or more of the shares of Voting Stock
of which, or in the case of a Person which is not a corporation a majority or
more of the equity of which, is owned or controlled, directly or indirectly, by
the Company.

      Total Investment - As defined in the Receivables Purchase Agreement as in
effect on the date of this Agreement.

                                      -19-

<PAGE>


      Voting Stock - Capital stock of any class of a corporation having power
under ordinary circumstances to vote for the election of members of the board of
directors of such corporation, or persons performing similar functions.

      Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes at any date, the number of years obtained by dividing (a)
the then outstanding principal amount of the Notes to be prepaid into (b) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity, or other required payment,
including payment at final maturity, foregone by virtue of such prepayment of
the Notes, by (ii) the number of years (calculated to the nearest 1/12th) which
would have elapsed between such date and the making of such payment.

      Wholly Owned - When applied to a Subsidiary, any Subsidiary 100% of the
Voting Stock or other equity interests of which is owned by the Company and/or
its Wholly-Owned Subsidiaries, other than directors' qualifying shares or, in
the case of Subsidiaries organized under the laws of a jurisdiction other than
the United States or a state thereof, nominal shares held by foreign nationals
in accordance with local law.

      Terms which are not defined in this Section and are defined in other
Sections of this Agreement shall have the meanings specified therein.

      5.2. Accounting Principles. Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP,
except where such principles are inconsistent with the requirements of this
Agreement.

      5.3. Valuation Principles. Except where indicated expressly to the
contrary by the use of terms such as "fair value," "fair market value" or
"market value," each asset, each liability and each capital item of any Person,
and any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof for
all purposes of this Agreement. "Net book value" with respect to any asset,
liability or capital item of any Person shall mean the amount at which the same
is recorded or, in accordance with GAAP should have been recorded, in the books
of account of such Person, as reduced by any reserves which have been or, in
accordance with GAAP should have been, set aside with respect thereto, but in
every case (whether or not permitted in accordance with GAAP) without giving
effect to any write-up, write-down or write-off (other than any write-down or
write-off the entire amount of which was charged to Consolidated Net Income or
to a reserve which was a charge to Consolidated Net Income) relating thereto
which wag made after the date of this Agreement.

      5.4. Direct or Indirect Actions. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such Person.

                                      -20-

<PAGE>


ss.6. AFFIRMATIVE COVENANTS

      The Company agrees that, for so long as any amount remains unpaid on any
      Note:

      6.1. Corporate Existence. The Company will maintain and preserve, and will
cause each Subsidiary to maintain and preserve, its corporate or partnership
existence and right to carry on its business and maintain, preserve, renew and
extend all of its rights, powers, privileges and franchises necessary to the
proper conduct of its business; provided, however, that the foregoing shall not
prevent any transaction permitted by Section 7.5, Section 7.6 or Section 7.7, or
the termination of the corporate or partnership existence of any Subsidiary or
of any right, power, privilege or franchise of any Subsidiary if, in the
reasonable good faith opinion of the Board of Directors of the Company, such
termination is in the best interests of the Company, is not disadvantageous to
the holders of the Notes, and is not otherwise prohibited by this Agreement.

      6.2. Insurance, The Company will, arid will cause each Subsidiary to,
maintain insurance coverage with financially sound and reputable insurers in
such forms and amounts, with such deductibles and against such risks as are
required by law or sound business practice and are customary for corporations
engaged in the same or similar businesses and owning and operating similar
properties as the Company and its Subsidiaries.

      6.3. Taxes, Claims for Labor and Materials. The Company will, and will
cause each Subsidiary to, file timely all tax returns required to be filed in
any jurisdiction and pay and discharge all taxes, assessments, fees and other
governmental charges or levies imposed upon the Company or any Subsidiary or
upon any of their respective properties, including leased properties (but only
to the extent required to do so by the applicable lease), assets, income or
franchises, prior to the date on which penalties attach thereto, and all lawful
claims which, if unpaid. might become a Lien upon any of their respective
properties or assets not permitted by Section 7.4, provided that neither the
Company nor any Subsidiary shall be required to pay any such tax, assessment,
fee, charge, levy or claim, the payment of which is being contested in good
faith and by proper proceedings that will stay the collection thereof or the
forfeiture or sale of any property and with respect to which adequate reserves
are maintained in accordance with GAAP.

      6.4. Maintenance of Properties. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties (whether owned in fee or a leasehold interest), other than any
property which is obsolete or, in the good faith judgment of the Company, no
longer necessary for the operation of the business of the Company or any
Subsidiary, in good repair and working order, ordinary wear and tear excepted,
and from time to time will make all necessary repairs, replacements, renewals
and additions thereto so that the business carried on in connection therewith
may be properly conducted.

      6.5. Maintenance of Records. The Company will keep, and will cause each
Subsidiary to keep, at all times proper books of record and account in which
full, true and correct entries will be made of a.l1 dealings or transactions of
or in relation to the business and affairs of the Company or such Subsidiary in
accordance with GAAP consistently applied throughout the period involved (except
for such changes as are disclosed in such financial statements or in the notes

                                      -21-

<PAGE>


thereto and concurred in by the Company's independent certified public
accountants), and the Company will and will cause each Subsidiary to, provide
reasonable protection against loss or damage to such books of record and
account.

      6.6. Financial Information and Reports. The Company will furnish to you
and to any other Institutional Holder (in duplicate if you or such other holder
so request) the following;

      (a) As soon as available and in any event within 45 days after the end of
each of the first three quarterly accounting periods of each fiscal year of the
Company, a consolidated balance sheet of the Company and its Subsidiaries as of
the end of such period and consolidated statements of income and cash. flows of
the Company and its Subsidiaries for the periods beginning on the first day of
such fiscal year and the first day of such quarterly accounting period (for the
statements of income) and ending on the date of such balance sheet, setting
forth in comparative form the corresponding consolidated figures for the
corresponding periods of the preceding fiscal year. all in reasonable detail1
prepared in accordance with GAAP consistently applied throughout the periods
involved and certified by the chief financial officer or chief accounting
officer of the Company (i) outlining the basis of presentation, and (ii) stating
that the information presented in such financial statements contains all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the consolidated financial position of the Company and its
Subsidiaries as of such dates and the consolidated results of their operations
and cash flows for the periods then ended, except that such financial statements
condense or omit certain footnotes pursuant to the rules and regulations of the
Commission. Delivery within the time period specified above of copies of the
Company's Quarterly Reports on Form lO-Q prepared in compliance with the
requirements therefor and filed with the Commission shall be deemed to satisfy
the requirements of this Section 6.6(a).

      (b) As soon as available and in any event within 90 days after the last
day of each fiscal year, a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income, reinvested earnings and cash flows for such fiscal year,
in each case setting forth in comparative form figures for the preceding fiscal
year, all in reasonable detail, prepared in accordance with GAAP consistently
applied throughout the period involved (except for changes disclosed in such
financial statements or in the notes thereto and concurred in by the Company's
independent certified public accountants) and accompanied by a report as to the
consolidated balance sheet end the related consolidated statements of income,
reinvested earnings and cash flows unqualified as to scope of audit and
unqualified as to going concern by Arthur Andersen LLP, or any other firm of
independent public accountants of recognized national standing selected by the
Company, to the effect that such financial statements gave been prepared in
conformity with GAAP and present fairly, in all materiel respects, the
consolidated financial position and results of operations and cash flows of the
Company and its Subsidiaries and that the examination of such financial
statements by such accounting firm has been made in accordance with generally
accepted auditing standards. Delivery within the time period specified above of
the Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders prepared pursuant to Rule 14a-3 under
the Exchange Act) prepared in compliance with the requirements therefor and

                                      -22-

<PAGE>


filed with the Commission, together with the accountants certificate described
in this Section 6.6(b), shall be deemed to satisfy the requirements of this
Section 6.6(b).

      (c) Together with the consolidated financial statements delivered pursuant
to paragraphs (a) and (b) of this Section 6.6, a certificate of the chief
financial officer, chief accounting officer or Treasurer of the Company, (I) to
the effect that such officer has reexamined the terms and provisions of this
Agreement and that on the date such calculations were made, during the periods
covered by such financial reports and as of the end of such periods the Company
is not, or was not, in default in the fulfillment of any of the terms,
covenants, provisions and conditions of this Agreement and that no Default or
Event of Default is occurring or has occurred as of the date of such
certificate, during the periods covered by such financial statements and as of
the end of such periods, or if such officer is aware of any Default or Event of
Default, such officer shall disclose in such statement the nature thereof, its
period of existence and what action, if any, the Company has taken or proposes
to take with respect thereto, and (ii) stating whether the Company is in
compliance with Sections 7.I through 7.10 and setting forth, in sufficient
detail, the information and computations required to establish whether or not
the Company was in compliance with the requirements of Sections 7.1 through 7.8
during the periods covered by the financial stateme~1ts then being furnished and
as of the end of such periods.

      (d) Together with the financial reports delivered pursuant to paragraph
(I,) of this Section 6.6, a letter of the Company's independent certified public
accountants stating that they have reviewed this Agreement and stating whether,
in making their audit, they have become aware of any condition or event that
then constitutes a Default or an Event of Default, end, if they are aware that
any such condition or event then exists, specifying the nature and period of the
existence thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants should be obtained knowledge
thereof in making an audit in accordance with generally accepted auditing
standards or did not make such an audit).

      (e) Concurrently with notice flied with the Commission, notice of (1) the
filing of any suit, action, claim or counterclaim against the Company or any
Subsidiary in which the amount claimed as damages against the Company or any
Subsidiary exceeds $5,000,000 after deducting the amount which the Company
reasonably believes is covered by insurance, and (ii) the entering of any
judgment or decree against the Company or any Subsidiary if the aggregate amount
of all judgments and decrees then outstanding against the Company and all
Subsidiaries exceeds $2,500,000 after deducting the amount the Company or any
Subsidiary (x) is insured therefor and with respect to which the insurer has
assumed responsibility in writing, and (y) is otherwise indemnified therefor if
the terms of such indemnification are satisfactory to holders of 55% or inert in
aggregate principal amount of the Notes then outstanding.

      (f) As soon as available, copies of each financial statement, notice,
report and proxy statement which the Company furnishes to its shareholders
generally; within 15 days of filing, copies of each registration statement and
periodic report (without exhibits and other than registration statements
relating to employee benefit plans) which the Company files with the Commission,

                                      -23-

<PAGE>


and any similar or successor agency of the Federal government administering the
securities Act, the Exchange Act or the Trust Indenture Act of 1939, as amended;
without duplication, within 15 days of filing, copies of each report (other than
reports relating solely to the issuance of, or transactions by others involving,
its securities) relating to the Company or its securities which the Company
files with any securities exchange on which any of the Company's securities may
be registered; copies of any orders applicable to the Company or a Subsidiary in
any material proceedings to which the Company or any Subsidiary is a party,
issued by any governmental agency, Federal or state, having jurisdiction over
the Company or any Subsidiary and, at any time as the Company is not a reporting
company under Section 13 or 15(d) of the Exchange Act or has not complied with
the requirements for the exemption from registration under the Exchange Act set
forth in Rule 12g-3-2(b), such financial or other information as any holder of
the Notes or prospective purchaser of the Notes may reasonably request.

      (g) As soon as available, a copy of each other report submitted to the
Company or any Subsidiary by independent accountants retained by the Company or
any Subsidiary in connection with any special audit made by them of the books of
the Company or any Subsidiary.

      (h) Promptly following any change in the composition of the Company's
Subsidiaries from that set forth in Annex I, as theretofore updated pursuant to
this paragraph, arid also at the time of delivery of the financial statements
referred to in Section 6.6(b), an updated list setting forth the information
specified in Annex I.

      (i) Such additional information as you or such other Institutional Holder
of the Notes may reasonably request concerning the Company and its Subsidiaries.

      6.7. Inspection of Properties and Records. The Company will allow, and
will cause each Subsidiary to allow, any representative of you or any other
Institutional Holder, so long as you or such other Institutional Holder holds
any Note, to visit and inspect any of its properties, to examine (and, if at the
time thereof any Default or Event of Default has occurred and is continuing,
make copies and extracts of) its books of record and account and to discuss its
affairs, finances and accounts with its officers and its present and former
public accountants (and by this provision the Company authorizes such
accountants to discuss with you or such Institutional Holder the Company's and
any Subsidiary's affairs, finances and accounts), all at such reasonable times
and upon such reasonable notice and as often as you or such Institutional Holder
may reasonably request and, if at the time thereof any Default or Event of
Default has occurred and is continuing, at the Company's expense.

      6.8. ERISA. (a) All assumptions and methods used to determine the
actuarial valuation of employee benefits, both vested and unvested, under any
Plan subject to Title IV of ERISA, and each such Plan, whether now existing or
adopted after the date hereof, will comply in all material respects with ERISA.

      (b) The Company will not at any time permit any Plan to:

            (i) engage in any "prohibited transaction" as such term is defined
      in Section 4975 of the Code or in Section 406 of ERISA;

                                      -24-

<PAGE>


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

            (iii) be terminated under circumstances which are likely to result
      in the imposition of a Lien on the property of the Company or any ERISA
      Affiliate pursuant to Section 4068 of ERISA;

if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Company or an ERISA Affiliate to liabilities which,
individually or in the aggregate, would have a Material Adverse Effect.

      (c) Upon the request of you or any subsequent Institutional Holder, the
Company will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service.

      (d) Within 5 days after obtaining knowledge of any event specified in
clauses (i) through (vi) below that would result in a Material Adverse Effect,
the Company will give you and any subsequent Institutional Holder written notice
of: (i) a reportable event with respect to any Plan; (ii) the institution of any
steps by any of the Company, any ERISA Affiliate or the PBGC to terminate any
Plan; (iii) the institution of any steps by any of the Company or any ERISA
Affiliate to withdraw from any Plan; (iv) a prohibited transaction in connection
with any Plan; (v) any material increase in the contingent liability of the
Company or any Subsidiary with respect to any post-retirement welfare liability;
or (vi) the taking of any action by the Internal Revenue Service, the Department
of Labor or the PBGC with respect to any of the foregoing.

      6.9. Compliance with Laws.
           --------------------

      (a) The Company will comply, and will cause each Subsidiary to comply,
with all laws, rules and regulations, including Environmental Laws, relating to
its or their respective businesses, other than laws, rules and regulations the
failure to comply with which or the sanctions and penalties resulting therefrom,
individually or in the aggregate, would not have Material Adverse Effect.

      (b) Promptly upon the occurrence thereof, the Company will give you and
each other Institutional Holder notice of the institution of any proceedings
against, or the receipt of written notice of potential liability or
responsibility of, the Company or any Subsidiary for violation, or the alleged
violation, of any Environmental Law which violation would give rise to a
Material Adverse Effect.

      6.10. Acquisition of Notes. Neither the Company nor any Subsidiary nor any
Affiliate them, directly or indirectly, will repurchase, redeem, prepay or
otherwise acquire, directly or indirectly, any Notes except upon payment or
prepayment of the Notes pursuant to Section 2 or Section 7.6. The Company will
forthwith cancel any Notes in any manner or at any time acquired by the Company
or any Subsidiary or Affiliate of any of them, and such Notes shall not be
deemed to be outstanding for any of the purposes of this Agreement or the Notes.

                                      -25-

<PAGE>


      6.11. Private Placement Number. The Company consents to the filing by your
special counsel of copies of this Agreement with S&P to obtain a private
placement number.

ss.7. NEGATIVE COVENANTS

      The Company agrees that, for so long as any amount remains unpaid on any
Note:

      7.1. Adjusted Consolidated Net Worth. The Company will not permit its
Adjusted Consolidated Net Worth (calculated on the last day of each fiscal
quarter) to be less than $74,296,000 plus the cumulative sum of 40% of its
Consolidated Net Income (but only if a positive number) for (i) each completed
fiscal year of the Company ending after December 31, 1994, and (ii) the period
from the beginning of the fiscal year of which the fiscal quarter being measured
is a part to the last day of such fiscal quarter.

      7.2. Consolidated Debt. The Company will not permit the ratio (calculated
on the last day of each fiscal quarter) of Consolidated Debt to Consolidated
Total Capitalization to exceed the ratio of .55 to 1.0.

      7.3. Net Working Capital. The Company will not permit the ratio
(calculated on the last day of each fiscal quarter) of Net Working Capital to
Consolidated Debt to be less than 1.2 to 1.0.

      7.4. Lien. The Company will not, and will not permit any Subsidiary to,
permit to exist, create, assume or incur, directly or indirectly, any Lien on
its properties or assets, whether now owned or hereafter acquired, except:

      (a) Liens on property created substantially contemporaneously or within
180 days of the acquisition thereof to secure or provide for all or a portion of
the purchase price of such property, provided that (i) such Liens do not extend
to other property of the Company or any Subsidiary, (ii) the aggregate principal
amount of Indebtedness secured by each such Lien does not exceed 80% of the
purchase price at the time of acquisition of the property subject to such Lien,
and (iii) the Indebtedness secured by such Liens is otherwise permitted by
Section 7.2 and Section 73 of this Agreement;

      (b) Liens for taxes, assessments or governmental charges not then due and
delinquent or the validity of which is being contested in good faith by
appropriate proceedings and as to which the Company has established adequate
reserves therefor on its books in accordance with GAAP;

      (c) Liens arising in connection with court proceedings, provided the
execution of such Liens is effectively stayed, such Liens are being contested in
good faith by appropriate proceedings and the Company has established adequate
reserves therefor on its books in accordance with GAAP;

      (d) Liens arising in the ordinary course of business arid not incurred in
connection with the borrowing of money (including mechanic's and materialmen's
liens arid minor survey exceptions on real property) that in the aggregate do

                                      -26-

<PAGE>


not materially interfere with the conduct of the business of the Company or any
Subsidiary or materially impair the value of the property or assets subject to
such Liens;

      (e) Liens in connection with workers' compensation, unemployment insurance
or other social security laws to secure the public or statutory obligations of
the Company or any Subsidiary;

      (f) Liens securing Indebtedness of a Subsidiary to the Company;

      (g) Liens permitted by and arising under the Receivables Purchase
Agreement;

      (h) Liens existing on property or assets of the Company or any Subsidiary
as of the date of this Agreement that are described in the attached Annex V;

      (i) Liens not otherwise permitted by paragraphs (a) through (h) of this
Section 7.4 created, assumed or incurred subsequent to the Closing Date to
secure Indebtedness, provided that at the time of creating, assuming or
incurring such additional Indebtedness and after giving effect thereto and to
the application of the proceeds therefrom the sum (without duplication) of the
aggregate principal amount of outstanding Consolidated Indebtedness secured by
Liens permitted by this Section 7.4(1) does not exceed 10% of Adjusted
Consolidated Net Worth.

      7.5. Merger or Consolidation. The Company will not, and will not permit
any Subsidiary to, merge or consolidate with, or convey, transfer or lease all
or substantially all of its assets in a single transaction or series of
transactions to, any Person, except that:

      (a) The Company may merge into or consolidate with, or sell all or
substantially all of its assets to, any Person or permit any Person to merge
into or consolidate with it, provided that immediately after giving effect
thereto, (i) the Company is the successor corporation or, if the Company is not
the successor corporation, the successor corporation is a solvent corporation
organized under the laws of a state of the United States of America or the
District of Columbia and expressly assumes in writing the Company's obligations
under the Notes and this Agreement; and (ii) there shall exist no Default or
Event of Default.

      (b) Any Subsidiary may (i) merge into the Company or a Wholly-Owned
Subsidiary, (ii) convey, transfer or lease all or any part of its assets to the
Company or a Wholly-Owned Subsidiary, and (iii) merge with any Person which, as
a result of such merger, becomes a Wholly-Owned Subsidiary; provided in each
instance set forth in clauses (i) through (iii) that immediately before and
after giving effect thereto, there shall exist no Default or Event of Default.

      7.6. Sa1e of Assets. The Company will not, and will not permit any
Subsidiary to, sell lease, transfer or otherwise dispose of, including by way of
merger (collectively a "Disposition"), any assets, inc1uding capital stock or
equity interests of Subsidiaries, in one or a series of transactions, other than
in the ordinary course of business, to any Person, except to the Company
or a Wholly-Owned Subsidiary~ (i) if, in any fiscal year, after giving effect to
such Disposition, the aggregate net book value of assets subject to Dispositions

                                      -27-

<PAGE>


during such fiscal year would exceed 15% of Consolidated Total Assets as of the
end of the immediately preceding fiscal year or (ii) if a Default or Event of
Default exists or would exist. Notwithstanding the foregoing, the Company may,
or may permit a Subsidiary to, make a Disposition and the assets subject to such
Disposition shall not be subject to or included in the foregoing limitation and
computation contained in clause (i) of the preceding sentence to the extent that
(x) such assets are leased back by the Company or such Subsidiary, as lessee,
within 180 days following the date of the Disposition, or (y) the net proceeds
from such Disposition are (1) reinvested in productive assets of the Company or
a Subsidiary of at least equivalent value within 180 days of the date of such
Disposition, or (2) applied to the payment or prepayment of outstanding senior
Indebtedness. Any repayment of Notes pursuant to this Section 7.6 shall be in
accordance with Section 2.2(a).

      7.7. Disposition of Stock of Subsidiaries, The Company will not permit any
Subsidiary to issue its capital stock or other equity interests, or any
warrants, rights or options to purchase, or securities convertible into or
exchangeable for, such capital stock or other equity interests, to any Person
other than the Company or a Wholly-Owned Subsidiary. The Company will not, and
will not permit any Subsidiary to, sell, transfer or otherwise dispose of (other
than to the Company or a Wholly-Owned Subsidiary) any capital stock or other
equity interests (including any warrants, rights or options to purchase, or
securities convertible into or exchangeable for, capital stock or other equity
interests) or Indebtedness of any Subsidiary, unless:

      (a) simultaneously therewith all Investments in such Subsidiary owned by
the Company and every other Subsidiary are disposed of as an entirety;

      (b) such Subsidiary does not have any continuing Investment in the Company
or any other Subsidiary not being simultaneously disposed of; and

      (c) such sale, transfer or other disposition is permitted by Section 7.6.

      7.8. Leases. The Company will not, and will not permit any Subsidiary to,
enter into or permit to exist any Capitalized Lease which requires the payment
daring the remaining term thereof by the. Company or any Subsidiary of
Capitalized Lease Obligations which, after giving effect thereto, and to any
other Capitalized Lease Obligations of the Company and its Subsidiaries on a
consolidated basis, exceed in the aggregate 10% of Consolidated Total
Capitalization.

      7.9. Transactions with Affiliates. The Company will not, and will not
permit any Subsidiary to, enter into any transaction (including the furnishing
of goods or services) with an Affiliate, except on terms and conditions no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate, except for
(i) the transfer pricing between the Company and its joint venture, Castle
Metals de Mexico, S.A. de C.V., and (ii) benefit and compensation plans and
arrangements approved by a majority of the disinterested members of the Board of
Directors of the Company or any Subsidiary.

                                      -28-

<PAGE>


      7.10. Nature of Business - The Company will not permit any Subsidiary to,
engage in any business if, as a result thereof, the business then to be
conducted by the Company and its Subsidiaries, taken as a whole, would be
substantially changed from the business conducted on the Closing Date.

ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR

      8.1. Nature of Events. An "Event of Default" shall exist if any one or
more of the following occurs:

      (a) Any default in the payment of interest when due on any of the Notes
and continuance of such default for a period of five Business Days;

      (b) Any default in the payment of the principal of any of the Notes or the
Make-Whole Amount thereon, if any, at maturity, upon acce1eration of maturity or
at any date fixed for prepayment;

      (c) (i) Any default in the payment of the principal of, or interest or
premium on, any other Debt of the Company and its Subsidiaries aggregating in
excess of 53,000,000 as and whet due and payable (whether by lapse of time,
declaration, call for redemption or otherwise) and the continuation of such,
default beyond the period of grace, if any, allowed with respect thereto, or
(ii) any default (other than a payment default) under any mortgages, agreements
or other instruments of the Company and its Subsidiaries under or pursuant to
which Debt aggregating in excess of $3,000,000 is issued and the continuation of
such default beyond the period of grace, i: any, allowed with respect thereto;

      (d) Any default in the observance or performance of Sections 7.1 through
7.10 or in Section 8.7;

      (e) Any default in the observance or performance of any other covenant or
provision of this Agreement which is not remedied within 30 days after the date
on which the Company learns of such default;

      (f) Any representation or warranty made by the Company in this Agreement,
or mad' by the Company in airy written statement or certificate furnished by the
Company in connection with the issuance and sale of the Notes or furnished by
the Company pursuant to this Agreement proves incorrect in any material receipt
as of the date of the making or issuance thereof;

      (g) Any judgment, decree, writ or warrant of attachment or any similar
process in an aggregate amount in excess of $5,000,000 shall be entered or filed
against the Company or any Subsidiary or against any property or assets of
either and remain unpaid, unvacated, unbonded or unstayed (through appeal or
otherwise) for a period of 60 days after the Company or any Subsidiary receives
notice thereof, except for any judgment, decree, writ or warrant of attachment
or any similar process to the extent that the Company or any Subsidiary (i) is
insured therefor and with respect to which the insurer has assumed
responsibility in writing, or (ii) is indemnified therefor, provided the terms
of such indemnification are satisfactory to holders of 55% or more in aggregate
principal amount of the Notes then outstanding;

                                      -29-

<PAGE>


      (h) The Company or any Subsidiary shall

            (i)   generally not pay its debts as they become due or admit in
      writing its inability to pay its debts generally as they become due;

            (ii)  file a petition in bankruptcy or for reorganization or for the
      adoption of an arrangement under the Federal Bankruptcy Code, or any
      similar applicable bankruptcy or insolvency law, as now or in the future
      amended (herein collectively called "Bankruptcy Laws"); file an answer or
      other pleading admitting or failing to deny the material allegations of
      such a petition; fail to obtain the dismissal of such a petition within 60
      days of its filing or be subject to an order for relief or a decree
      approving such a petition; or file an answer or other pleading seeking,
      consenting to or acquiescing in relief provided for under the Bankruptcy
      Laws;

            (iii) make an assignment of all or a substantial part of its
      property for the benefit of its creditors;

            (iv)  seek or consent to or acquiesce in the appointment of a
      receiver, liquidator, custodian or trustee of it or for all or a
      substantial part of its property;

            (v)   be finally adjudicated bankrupt or insolvent;

            (vi)  be subject to the entry of a court order which shall not be
      vacated, set aside or stayed within 60 days of the date of entry, (A)
      appointing a receiver, liquidator, custodian or trustee of it or for all
      or a substantial part of its property, (B) for relief pursuant to an
      involuntary case brought under, or effecting an arrangement in,
      bankruptcy, (C) for a reorganization pursuant to the Bankruptcy Laws, or
      (D) for any other judicial modification or alteration of the rights of
      creditors; or

            (vii) be subject to the assumption of custody or sequestration by a
      court of competent jurisdiction of all or a substantial part of its
      property, which custody or sequestration shall not be suspended or
      terminated within 60 days from its inception.

      8.2. Remedies of Default. When any Event of Default described in
paragraphs (a) through (g) of Section 8.1 has occurred and is continuing, the
holders of 33% or more in aggregate principal amount of the Notes then
outstanding may, by notice to the Company, declare the entire principal,
together with the Make-Whole Amount (to the extent permitted by law) and all
interest accrued on all Notes to be, and such Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are expressly waived. Notwithstanding the
foregoing, (i) when any Event of Default described in paragraph (a) or (b) of
Section 8.1 has occurred and is continuing, any holder may by notice to the
Company declare the entire principal, together with the Make-Whole Amount (to
the extent permitted by law) and all interest accrued on the Notes then held by

                                      -30-

<PAGE>


such holder to be, and such Notes shall thereupon become, forthwith due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are expressly waived, and (ii) when any Event of Default described
in paragraph (h) of Section 8.1 has occurred, then the entire principaL together
with the Make-Whole Amount (to the extent permitted by law) and all interest
accrued on all outstanding Notes shall immediately become due and payable
without presentment, demand or notice of any kind. Upon the Notes or any of them
becoming due and payable as aforesaid, the Company will forthwith pay to the
holders of such Notes the entire principal of and interest accrued on such
Notes, plus the Make-Whole Amount (to the extent permitted by law) which shall
be calculated on the Determination Date.

      8.3. Annulment of Acceleration of Notes. The provisions of Section 8..2
are subject to the condition that if the principal of, the Make-Whole Amount and
accrued interest on the Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (g), inclusive, of Section 8.1, the holder or holders of 68% or more in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that (i) at the time such declaration is annulled
and rescinded no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement, (ii) all arrears of interest
upon all the Notes and all other sums payable under the Notes arid under this
Agreement (except any principal, Make-Whole Amount or interest on the Notes
which has become due and payable solely by reason of such declaration under
Section 8.2) shall have been duly paid, and (iii) each and every Default or
Event of Default shall have been cured or waived; and provided further, that no
such rescission and annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereto.

      8.4. Other Remedies. If any Event of Default shall be continuing, any
holder of Notes may enforce its rights by suit in equity, by action at law, or
by any other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in thIs
Agreement, and may enforce the payment of any Note held by such holder and any
of its other legal or equitable rights.

      8.5. Conduct No Waiver. Collection Expenses. No course of dealing on the
part of any holder of Notes, nor any delay or failure on the part of any holder
of Notes to exercise any of its rights, shall operate as a waiver of such rights
or otherwise prejudice such holder's rights, powers and remedies. If the Company
fails to pay, when due, the principal of, the Make-Whole Amount, or the interest
on, any Note, or fails to comply with any other provision of this Agreement, the
Company will pay to each holder, to the extent permitted by law, on demand, such
further amounts as shall be sufficient to cover the cost and expenses, including
but not limited to attorneys' fees, incurred by such holders of the Notes in
collecting any sums due on the Notes or in otherwise enforcing any of their
rights.

      8.6. Remedies Cumulative. No right or remedy conferred upon or reserved to
any holder of Notes under this Agreement is intended to be exclusive of any
other right or remedy, and every right and remedy shall be cumulative and in
addition to every other right or remedy given under this Agreement or now or

                                      -31-

<PAGE>


hereafter existing under any applicable law. Every right and remedy given by
this Agreement or by applicable law to any holder of Notes may be exercised from
time to time and as often as may be deemed expedient by such holder, as the case
may be.

      8.7. Notice of Default. With respect to Defaults, Events of Default or
claimed defaults, the Company will give the following notices:

      (a) The Company promptly will furnish to each holder of a Note written
notice of the occurrence of a Default or an Event of Default. Such notice shall
specify the nature of such default, the period of existence thereof and what
action the Company has taken or is taking or proposes to take with respect
thereto,

      (b) If the bolder of any Note or of any other evidence of Debt of the
Company or any Subsidiary gives any notice or takes any other action with
respect to a claimed default, the Company will forthwith give written notice
thereof to each holder of the then outstanding Notes, describing the notice or
action and the nature of the claimed default.

ss.9. AMENDMENTS, WAIVERS AND CONSENTS

      9.1. Matters Subject to Modification. Any term, covenant, agreement or
condition of this Agreement may, with the written consent of the Company, be
amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the Company
shall have obtained the consent in writing of the holder or holders of 51% or
more in aggregate principal amount of outstanding Notes; provided, however,
that, without the written consent of the holder or holders of all of the Notes
then outstanding, no such amendment, waiver, modification or alteration shall be
effective which will (i) change army of the provisions, including definitions,
relating to payment (including any required prepayment or optional prepayment)
of the principal of, Make-Whole Amount or interest on any Note, (ii) change the
amount of any payment or prepayment of principal or Make-Whole Amount, or change
the rate of interest thereon, or (iii) change any of the provisions of Section
8.1, Section 8.2, Section 8.3 or this Section 9.

      For the purpose of determining whether holders of the requisite principal
amount of Notes have made or concurred in any amendment, waiver, consent,
approval, notice or other communication under this Agreement, Notes held in the
name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate
thereof, shall not be deemed outstanding.

      9.2. Solicitation of Holders of Notes. Neither the Company nor any Person
acting on the Company's behalf will solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of the Notes (irrespective of the
amount of Notes then owned by it) shall concurrently be informed thereof by the
Company and shall be afforded the opportunity of considering the same and shall
be supplied by the Company with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct copies of
any waiver or consent effected pursuant to the provisions of this Section 9
shall be delivered by the Company to each holder of outstanding Notes forthwith

                                      -32-

<PAGE>


following the date on which the same shall have been executed and delivered by
the bolder or holders of the requisite percentage of outstanding Notes, The
Company will not, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of the Notes as consideration for or as an inducement
to the entering into by any bolder of the Notes of any waiver or amendment of
any of the terms and provisions of this Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to each holder of the then
outstanding Notes. Any consent made by a holder of Notes that has transferred or
has agreed to transfer its Notes to the Company, any Subsidiary, or any
Affiliate thereof arid has provided or has agreed to provide such written
consent as a condition to such transfer shall be void and of no force and effect
except solely as to such holder, and any amendments effected or waivers granted
or to be effected or granted that would not have been or would not be so
effected or granted but for such consent (and the consents of all other holders
of Notes that were acquired under the same or similar conditions) shall be void
and of no force and effect retroactive to the date such amendment or waiver
initially took or takes effect, except solely as to such holder.

      9.3. Binding Effect. Any such amendment, consent or waiver shall apply
equally to all the holders of the Notes and shall be binding upon them, upon
each future holder of any Note and upon the Company whether or not such Note
shall have been marked to indicate such amendment, consent or waiver and whether
or not such holder approved of such amendment, consent or waiver. No such
amendment, consent or waiver shall extend to or affect any obligation not
expressly amended, consented to or waived or impair any right related thereto,

ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT

       10.1. Form of Notes. Each Note initially delivered under this Agreement
will be in the form of one fully registered Note in the form attached as Exhibit
A. The Notes are issuable only in fully registered form and in denominations of
at least $1,000,000 (or the remaining outstanding balance thereof, if less than
$1,000,000).

       10.2. Note Register. The Company shall cause to be kept at its principal
office a register (the "Note Register") for the registration and transfer of the
Notes. The names and addresses of the holders of Notes, the transfer thereof and
the names and addresses of the transferees of the Notes shall be registered in
the Note Register. The Company may deem and treat the person in whose name a
Note is so registered as the holder and owner thereof for all purposes (subject
to the provisions of Section 2.5) and shall not be affected by any notice to the
contrary, until due presentment of such Note for registration of transfer as
provided in this Section 10.

       10.3. Issuance of New Notes upon Exchange or Transfer. Upon surrender for
exchange or registration of transfer of any Note at the office of the Company
designated for notices in accordance with Section 11.2, the Company shall
execute and deliver, at its expense, one or more new Notes of any authorized
denominations requested by the holder of the surrendered Note, each dated the
date to which interest has been paid on the Notes so surrendered (or, if no

                                      -33-

<PAGE>


interest has been paid, the date of such surrendered Note), but in the same
aggregate unpaid principal amount as such surrendered Note, and registered in
the name of such person or persons as shall be designated in writing by such
holder. Every Note surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or by his attorney duly authorized in writing.

       10.4. Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the ownership of and loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company or in the event of such mutilation upon surrender and cancellation
of the Note, the Company, without charge to the holder thereof, will make and
deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or
mutilated Note. If any such lost, stolen or destroyed Note is owned by you or
any other Institutional Holder, then the affidavit of an authorized officer of
such owner setting forth the fact of such loss, theft or destruction and of its
ownership of the Note at the time of such loss, theft or destruction shall be
accepted as satisfactory evidence thereof, arid no further indemnity shall be
required as a condition to the execution and delivery of a new Note, other than
a written agreement of such owner (in form reasonably satisfactory to the
Company) to indemnify the Company for any losses directly suffered by the
Company relating to the lost, stolen, destroyed or mutilated Note and the
issuance by the Company of a new Note.

ss.11. MISCELLANEOUS

       11.1. Expenses. Whether or not the purchase of Notes herein contemplated
shall be consummated, the Company agrees to pay directly all expenses (including
fees and expenses of counsel) in connection with the preparation, execution and
delivery of this Agreement and the transactions contemplated by this Agreement,
including, but not limited to, out-of-pocket expenses, filing fees of S&P in
connection with obtaining a private placement number, fees, charges and
disbursements of special counsel, photocopying and printing costs and charges
for shipping the Notes, adequately insured, to you at your home office or at
such other address as you may designate, and all similar expenses (including the
fees and expenses of counsel, and the fees and expenses of a financial advisor,
but only in connection with any work-out, renegotiation or restructuring in the
case of a financial advisor) relating to any amendments, waivers or consents in
connection with this Agreement or the Notes (whether or not any such amendments,
waivers or consents become effective), including, but not limited to, any such
amendments, waivers or consents resulting from any Default, Event of Default,
work-out, renegotiation or restructuring relating to the performance by the
Company of its obligations under this Agreement or the Notes. The Company also
agrees that it will pay and save you harmless against any and all liability with
respect to stamp and other documentary taxes, if any, which may be payable, or
which may be determined to be payable in connection with the execution and
delivery of this Agreement or the Notes (but not in connection with a transfer
or replacement of any Notes), whether or not any Notes are then outstanding. The
obligations of the Company under this Section 11.1. shall survive the retirement
of the Notes.

                                      -34-

<PAGE>


       11.2. Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and delivered
or sent by registered or certified mail, return receipt requested, or by
overnight courier (i) if to you, to the address set forth below your name in
Schedule I, or to such other address as you may in writing designate, (ii) if to
any other holder of the Notes, to such address as the holder may designate in
writing to the Company, and (iii) if to the Company, to A. M. Castle & Co..,
3400 North Wolf Road, Franklin Park, Illinois 60131, Attention: Treasurer, or to
such other address as the Company may in writing designate.

       11.3. Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (1) consents, waivers and
modifications which may hereafter be executed, (ii) documents received by you at
the closing of the purchase of the Notes (except the Notes themselves), and
(iii) financial statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process, and you may destroy any original document so reproduced. The Company
agrees and stipulates that any such reproduction which is legible shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence; provided that nothing herein contained shall
preclude the Company from objecting to the admission of any reproduction on the
basis that such reproduction is not accurate, has been altered or is otherwise
incomplete.

       11.4. Successors and Assigns. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns.

       11.5. Law Govening. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Illinois.

       11.6. Headings, The headings of the sections and subsections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

       11.7. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement-to produce or account for
more than one such counterpart or reproduction thereof permitted by Section
11.3.

       11.8. Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant to this Agreement, whether or not in connection
with a closing, (i) shall be presumed to have been relied upon by you,
notwithstanding any investigation heretofore or hereafter made by you or on your
behalf, and (ii) shall survive the delivery of this Agreement and the Notes.

                                      -35-

<PAGE>


       11.9. Integration and Severability. This Agreement embodies the entire
agreement and understanding between you and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. In case any
one or more of the provisions contained in this Agreement or in any Note, or
application thereof, shall be invalid, illegal or unenforceable in any respect,
the validity, legality arid enforceability of the remaining provisions contained
in this Agreement and in any Note, and any other application thereof, shall not
in any way be affected or impaired thereby.


                                     * * * *


                                      -36-

<PAGE>




     IN WITNESS WHEREOF, the Company and the Purchaser have caused this Note
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.


                                            A. M. CASTLE & CO.



                                            By:  /s/  Richard G. Mork
                                               --------------------------------
                                                      Richard G. Mork
                                            Title:    President and CEO




                                            MASSACHUSETTS MUTUAL LIFE
                                            INSURANCE COMPANY



                                            By:  /s/  Richard C. Morrison
                                               --------------------------------
                                                      Richard C. Morrison
                                            Title:    Managing Director




                                            UNITED OF OMAHA LIFE INSURANCE
                                            COMPANY



                                            BY:  /s/  Edwin H. Garrison Jr.
                                               --------------------------------
                                                      Edwin H. Garrison Jr.
                                            Title:    First Vice President


                                      -37-